Legislature(2017 - 2018)BUTROVICH 205

03/14/2018 03:30 PM Senate RESOURCES

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03:30:03 PM Start
03:30:51 PM Confirmation Hearing(s): Commercial Fisheries Entry Commission
04:18:20 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Consideration of Governor's Appointees TELECONFERENCED
Commercial Fisheries Entry Commission:
-Commissioner Designee Dale Kelley
-Commissioner Designee Vance Fate Putman
-- Public Testimony on Appointees --
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                         March 14, 2018                                                                                         
                           3:30 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator John Coghill, Vice Chair                                                                                                
Senator Natasha von Imhof                                                                                                       
Senator Kevin Meyer                                                                                                             
Senator Bill Wielechowski                                                                                                       
Senator Click Bishop                                                                                                            
MEMBERS ABSENT                                                                                                                
Senator Cathy Giessel, Chair                                                                                                    
Senator Bert Stedman                                                                                                            
COMMITTEE CALENDAR                                                                                                            
CONFIRMATION HEARING(S):                                                                                                        
Commercial Fisheries Entry Commission (CFEC)                                                                                  
     Vance Fate Putnam                                                                                                          
     Dale Kelley                                                                                                                
     - CONFIRMATIONS ADVANCED                                                                                                   
PREVIOUS COMMITTEE ACTION                                                                                                     
No previous action to record                                                                                                    
WITNESS REGISTER                                                                                                              
VANCE FATE PUTNAM, Commissioner Designee                                                                                        
Commercial Fisheries Entry Commission (CFEC)                                                                                    
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified as CFEC commissioner designee.                                                                  
DALE KELLEY, Commissioner Designee                                                                                              
Commercial Fisheries Entry Commission (CFEC)                                                                                    
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified as CFEC commissioner designee.                                                                  
ACTION NARRATIVE                                                                                                              
3:30:03 PM                                                                                                                    
VICE  CHAIR JOHN  COGHILL called  the  Senate Resources  Standing                                                             
Committee meeting  to order at 3:30  p.m. Present at the  call to                                                               
order  were Senators  Bishop, Von  Imhof, Wielechowski,  and Vice                                                               
Chair  Coghill. Senator  Meyer joined  the  committee one  minute                                                               
^Confirmation Hearing(s): Commercial Fisheries Entry Commission                                                                 
                    CONFIRMATION HEARING(S):                                                                                
             Commercial Fisheries Entry Commission                                                                          
3:30:51 PM                                                                                                                    
VICE CHAIR COGHILL announced the  only order of business would be                                                               
the  Commercial Fisheries  Entry  Commission (CFEC)  confirmation                                                               
hearings.  He said  Alaska amended  its Constitution  in 1972  to                                                               
open the  door to limited  participation in its  common fisheries                                                               
for the  purposes of resource conservation  and Alaska's economy.                                                               
Due  to economic  distress among  fishermen  and those  dependent                                                               
upon  them  for  a  livelihood   and  to  promote  the  efficient                                                               
development  of aquaculture  in  Alaska,  the Alaska  Legislature                                                               
passed  a  Limited Entry  Act  to  implement  the tenets  of  the                                                               
Constitutional  Amendment.  It  was  managed  by  the  Commercial                                                               
Fisheries Entry Commission to which  the two appointees have been                                                               
asked to serve as commissioners.                                                                                                
VICE  CHAIR  COGHILL said  this  commission  is a  quasi-judicial                                                               
body, but  being an attorney  is not required. All  its decisions                                                               
are appealable to  the Superior Court. Current  law assigns three                                                               
seats to the commission with  a quorum consisting of two members.                                                               
Over  the past  three  years,  the Lawson  Report  and later  the                                                               
report  from the  Division of  Legislative Audit  highlighted the                                                               
staffing and meeting practices for review.                                                                                      
Once the appointees  are confirmed, they can only  be removed for                                                               
cause and  the commissioners meet regularly  throughout the year.                                                               
Their  compensation is  equal to  a range  27, the  equivalent of                                                               
$100,000/year, as  a base. The commission  operations are derived                                                               
wholly from  fees and  taxes assessed  through the  Limited Entry                                                               
Program, which will be part of the discussion today.                                                                            
VICE CHAIR COGHILL welcomed the  two appointees and asked them to                                                               
relate their backgrounds and tell  the committee why they want to                                                               
take this position.                                                                                                             
3:33:38 PM                                                                                                                    
VANCE FATE  PUTNAM, Commercial Fisheries Entry  Commission (CFEC)                                                               
Commissioner Designee, introduced himself.                                                                                      
3:33:50 PM                                                                                                                    
DALE  KELLEY,   Commercial  Fisheries  Entry   Commission  (CFEC)                                                               
Commissioner  Designee, Juneau,  Alaska,  introduced herself  and                                                               
read a prepared  statement. While she wasn't  fortunate enough to                                                               
be born  in Alaska,  her soul  was; she has  been here  more than                                                               
half  her life.  She  grew  up surfing,  riding  rodeo, and  rock                                                               
climbing  in  California.  Her   academic  training  ranges  from                                                               
fisheries  science to  aquaculture to  pharmacy to  paramedicine.                                                               
She worked  as a pharmacy technician  in three states and  one of                                                               
her  most unique  responsibilities was  preparing drug  packs for                                                               
the space  shuttle. She  worked in surgery  and on  ambulances in                                                               
downtown Houston, which  probably helped toughen her  up for life                                                               
as a commercial fishing deckhand.                                                                                               
MS.   KELLEY  said she  had lived  in the  Bush and  been a  fish                                                               
culturist in  Prince William Sound  and Southeast and  had helped                                                               
rebuild  steam turbines  in Haines  and Fairbanks.  Whenever time                                                               
allows, she enjoys fishing on a  troller out of Craig. She has no                                                               
financial interest  in a fishing  business and holds  no permits.                                                               
For the past  three decades she has been executive  director of a                                                               
commercial fishing  organization representing fishermen  who fish                                                               
in  state  and federal  waters  for  salmon, halibut,  and  other                                                               
species. As a result, she  has acquired extensive knowledge about                                                               
fisheries and  habitat conservation,  resource management,  and a                                                               
wide  array  of  state,  federal,  and  international  regulatory                                                               
policies and  laws. She  supports all forms  of fishing  and have                                                               
worked on behalf of all fishermen for her entire career.                                                                        
She served for 12 years as  an Alaska commissioner on the Pacific                                                               
States  Marine Fisheries  Commission,  a five-state  organization                                                               
whose  mission  is conservation  and  sound  utilization of  West                                                               
Coast fisheries resources. She is  a member of the Pacific Salmon                                                               
Commission, which  implements the U.S. Canada  Salmon Treaty, and                                                               
chairs the  U.S. Advisors  of the  North Pacific  Anadromous Fish                                                               
Commission,   a  five-country   commission  working   to  protect                                                               
anadromous fish  stocks through research and  enforcement of high                                                               
seas illegal fishing.                                                                                                           
Over  the years,  she has  helped start  and manage  a number  of                                                               
blended  state  and  national   industry  groups  and  coalitions                                                               
working on  issues of mutual  concern. She has been  fortunate to                                                               
serve  on   various  other   industry  boards   and  legislative,                                                               
gubernatorial,   and  congressional   advisory  panels.   She  is                                                               
familiar with  the scope  of work that  CFEC does  and throughout                                                               
her  career   she  has  both   consulted  and  worked   with  the                                                               
commissioners and staff at CFEC.                                                                                                
MS.  KELLEY   said  she  believes   it  is  important   that  the                                                               
commissioners  have  a  solid  understanding  of  the  challenges                                                               
confronting the  seafood industry  in general and  the harvesting                                                               
sector, in  particular. She  welcomes the  new challenge  and the                                                               
opportunities  for learning  that a  CFEC appointment  offers and                                                               
hopes that her  knowledge and experience will be an  asset to the                                                               
commission  and the  state's fishing  communities. Together,  she                                                               
and Mr. Putnam  bring a complimentary set of skills  to the table                                                               
and could be  a good team for assessing the  condition of CFEC as                                                               
a mature  organization heading into  the future  and implementing                                                               
any needed  change and  charting a course  for that  future. They                                                               
agree on many of the new  objectives and are working to develop a                                                               
plan  to institute  more following  along  the lines  of the  two                                                               
reports, the Lawson Report and the legislative audit.                                                                           
3:37:57 PM                                                                                                                    
MR. PUTNAM said  he is a designee for the  CFEC and was appointed                                                               
December 1 to replace Ben Brown  who resigned to take a different                                                               
job.  He  didn't  realize  that Chairman  Twomley  was  going  to                                                               
retire, too, after  37 years, but he is  learning something every                                                               
day about this commission.                                                                                                      
MR. PUTNAM started  with his personal history saying  he was born                                                               
in Fairbanks.  His mother was  a city planner  and his dad  was a                                                               
plumber/pipefitter. His mom  went off every day  with a briefcase                                                               
and his dad went off wearing  a toolbelt. They moved to Anchorage                                                               
in  1965 after  the earthquake.  His  mom worked  for the  Alaska                                                               
State  Housing Authority  (ASHA) reconditioning  communities that                                                               
had been destroyed in the  tsunami after the earthquake including                                                               
Valdez  and  Seward  and  then  she  became  a  city  planner  in                                                               
Anchorage and  worked on bike  trails and  was known as  the Bike                                                               
Trail  Lady of  Anchorage. He  learned about  eminent domain  and                                                               
things like that when he was a  little kid because his mom had to                                                               
go  to court  to  "grab  property" to  make  the contiguous  bike                                                               
MR.  PUTNAM said  he  was one  of  the first  students  to go  to                                                               
Stellar High  School in  Anchorage and  graduated from  West High                                                               
School  in 1976.  After that,  he attended  Lynnfield College  in                                                               
McMinnville,  Oregon   and  ended  up  graduating   from  Western                                                               
Washington  University. His  first legislative  job was  39 years                                                               
ago  as an  intern.  He worked  for Senator  Pat  Rodey, who  was                                                               
Judiciary  Chair.  In  that  job   he  learned  about  "Christmas                                                               
treeing," when you find a title  broad enough to put something in                                                               
including the  student internship program, which  they managed to                                                               
wedge in. That internship program is still in existence today.                                                                  
He  returned  during  law  school   and  worked  at  the  Natural                                                               
Resources Section  of the Attorney  General's Office in  1983. He                                                               
worked on  natural resources like  Dinkum Sands,  navigable water                                                               
ways, Mental Health Trust lands,  and salmon hatcheries; CFEC was                                                               
one of their topics of interest, also.                                                                                          
MR. PUTNAM  said he served as  a manager of a  commission before,                                                               
on  the Future  of the  Permanent  Fund's Staff  working for  Red                                                               
Boucher  who was  chair of  the State  Affairs Committee  then in                                                               
1989.  He flew  all over  the  state taking  testimony about  the                                                               
Permanent  Fund  with Hugh  Malone,  former  commissioner of  the                                                               
Permanent  Fund  and  former  legislator,   Steve  Frank  out  of                                                               
Fairbanks, and Mark Langland of Northrim Bank.                                                                                  
He was appointed  to the Anchorage Municipal  Planning and Zoning                                                               
Commission  in  1993 by  then  Mayor  Tom  Fink and  enjoyed  his                                                               
service  there (his  mother's history  in city  planning prepared                                                               
him   for   that).  After   that,   he   worked  as   the   legal                                                               
counsel/political director/lobbyist/assistant  executive director                                                               
for a large public employee union  for about 20 years. He retired                                                               
from that in 2015 and became  a contract lobbyist for a couple of                                                               
years. He is no longer a  lobbyist and has now changed directions                                                               
to serve on this commission that is a full-time job.                                                                            
3:41:53 PM                                                                                                                    
MR. PUTNAM next  related his fishing history and  that he started                                                               
working with  his dad as a  longliner for halibut in  the 70s and                                                               
80s and  deck handed  for halibut  in the winter  of 1984  out of                                                               
Homer. In 1979 he was a salmon  hand troller. He was a cash buyer                                                               
for his brother's  fish company back in 1981. From  there he went                                                               
on to  law school. After  law school and  since then, he  and his                                                               
family have  maintained a fish camp  at the mouth of  the Kasilof                                                               
River and  for the last  20 years they  fish from June  15-25. He                                                               
encouraged every  Alaskan to do  that as it is  their opportunity                                                               
to catch 25 fish for their freezer.                                                                                             
He has never held a captain's  license or a limited entry permit,                                                               
although he  has been a deck  hand. Stopping there, he  asked for                                                               
VICE  CHAIR COGHILL  thanked him  and said  this is  one resource                                                               
they want to do well at. He  is surprised at the volume of permit                                                               
exchanges that happen every year.  He asked what commission level                                                               
duties he has to do that staff can't do.                                                                                        
MR. PUTNAM  said the essential  function of the  commissioners is                                                               
to  act as  an  appellate  court, like  a  divorce or  bankruptcy                                                               
court,  because  the people  who  work  for them  adjudicate  the                                                               
hearings and questions that licensing  staff can't answer or deny                                                               
because of  the strict interpretation  of regulations,  but those                                                               
regulations  are  variable depending  on  the  conditions of  the                                                               
fishermen and  their circumstances. Fishermen are  always allowed                                                               
the opportunity  to appeal  a decision  to the  judicial officers                                                               
who then make a recommendation  to the commission. The commission                                                               
reviews  the rulings  and makes  a final  determination based  on                                                               
regulations  and   the  recommendations  from   the  adjudication                                                               
section. From there, these cases  can be appealed to the Superior                                                               
Court. Hundreds  of cases have  gone from this commission  to the                                                               
Superior  Court and  70  cases  have gone  to  the State  Supreme                                                               
Court. A  huge body of  law is associated  with this area  of the                                                               
fishing industry.                                                                                                               
He thinks  the reason  limited entry  was so  controversial inthe                                                               
beginning  was that  the  commission decided  whether  you got  a                                                               
permanent  transferable  permit  or  a  non-transferable  permit,                                                               
because the transferable permit is  worth a lot more money. Those                                                               
controversies have  been worked  through and  about 13  cases are                                                               
still  pending before  the  commission. Some  of  them have  fact                                                               
patterns  from 1975  that  have  not been  resolved.  He and  Ms.                                                               
Kelley have  the opportunity  to go through  those 13  cases over                                                               
the next  years to see if  they can be resolved.  Their intent is                                                               
to work them through the system.                                                                                                
Since he  has been  there, 18  cases have  been resolved,  two of                                                               
which  were remands  from the  Superior Court  back to  the CFEC.                                                               
Those two cases  have been settled and their  interim use permits                                                               
ended.  He  explained  that  an   interim  use  permit  allows  a                                                               
fisherman to  continue fishing  while a  case is  being appealed.                                                               
Some interim  use permits  have been fished  for years.  They are                                                               
going  to do  their best  to resolve  these appeals  so that  the                                                               
optimum number of fishers in a fishing area can be resolved.                                                                    
3:47:07 PM                                                                                                                    
MS. KELLEY  said that Mr.  Putnam gave him an  extensive overview                                                               
of what commissioners  do, and she heard his  question to include                                                               
how they interact with staff. She  is new, and she wanders around                                                               
trying to figure  out what her job  is. So, on a  daily basis she                                                               
has been picking a number staff  and finding out what they do and                                                               
learning it  and finding out  what they  perceive her job  to be.                                                               
She has received a variety of  responses to that, but one is that                                                               
some  questions  about  implementing   regulations  that  need  a                                                               
ruling.  As Mr.  Putnam has  pointed out,  the CFEC  law is  very                                                               
intricate and  staff could unwittingly  unravel it like  a thread                                                               
in a  sweater. So, oversight  of regulation implementation  is an                                                               
important part of what they do with staff.                                                                                      
3:49:38 PM                                                                                                                    
SENATOR VON IMHOF thanked them  both for their introductions. She                                                               
sees  three at-large  positions  on the  commission  and two  are                                                               
filled. Considering the  amount of work they  have described, she                                                               
asked their  thoughts on  keeping that other  seat vacant  and if                                                               
they have anyone in mind for the position.                                                                                      
MR. PUTNAM said  they decided to try running  the commission with                                                               
just two  commissioners rather than  three, because  they haven't                                                               
limited any fishery since 2004.  Staff has been downsized so that                                                               
there   is  no   longer  an   executive  director,   leaving  the                                                               
commissioners to act as executive directors.                                                                                    
MS.  KELLEY said  her perspective  is  that there  was wisdom  in                                                               
setting up the Limited Entry  Commission with three commissioners                                                               
just  for the  decision-making process.  Three significant  cases                                                               
are  pending now,  and it  will be  interesting to  see how  that                                                               
works over  time. One advantage of  having the three is  just the                                                               
option for  the commissioners not  to gridlock on  something that                                                               
protects the public and the state  from having to go court, which                                                               
saves time  and money. She  considers having two  commissioners a                                                               
"grand experiment" that is too early to tell how it will go.                                                                    
VICE CHAIR  COGHILL remarked  that in  2015, staff  issued 18,147                                                               
permits and 9,646 vessel licenses.                                                                                              
MS. KELLEY responded that they have a great licensing staff.                                                                    
MR.  PUTNAM  added that  there  are  open fisheries  and  limited                                                               
fisheries in  Alaska. Their  authority goes  out to  the 200-mile                                                               
limit  for  federal fisheries  and  three  miles for  the  state.                                                               
Everyone  in  a  limited  fishery  receives  a  permit  from  the                                                               
commission.  Everyone in  an unlimited  fishery  also receives  a                                                               
permit to fish. Every fisherman who  is in the 200 miles offshore                                                               
fishery  is  permitted.  They  also   watch  optimum  numbers  to                                                               
determine where there is stress on a fishery.                                                                                   
He  said   the  Board  of  Fisheries   cycles  through  different                                                               
fisheries, fin  fish for example,  about once every  three years.                                                               
The commissioner  of Alaska Department  of Fish and  Game (ADF&G)                                                               
can do an  emergency closure on a fishery for  stress issues - if                                                               
the  biomass  isn't there  or  if  the  research isn't  there  to                                                               
determine the  presence of  sustainable yields.  The commission's                                                               
research  section watches  how those  two  things interface  with                                                               
each  other  and tracks  the  decisions  and  may at  some  point                                                               
determine  there is  enough stress  on  an open  fishery that  it                                                               
needs to be closed. That will  be the point at which the caseload                                                               
will go up  and determinations will be made on  who has a history                                                               
of and  a dependency on a  fishery. Those are the  parameters for                                                               
deciding  who gets  a transferable  permit or  a non-transferable                                                               
permit. Those decisions are what  become controversial and end up                                                               
in court.                                                                                                                       
3:53:57 PM                                                                                                                    
SENATOR BISHOP thanked  them for their service and  asked how the                                                               
appeal process works at the commissioner level.                                                                                 
MR. PUTNAM  responded that  trials are  held by  the adjudication                                                               
section. At  one time, this  section had seven attorneys  and two                                                               
or  three  paralegals  to  do   some  background  work.  So,  the                                                               
commission had  46 members. Now it  is down to 13  employees. The                                                               
way it  works is  if a trial  happens, the  adjudication officers                                                               
take evidence,  put people under  subpoena, and  get confidential                                                               
information, including  tax returns  and other  information. They                                                               
make  a  recommendation to  the  commission;  the final  decision                                                               
rests  with the  commissioners  who are  trying  to handle  these                                                               
things on a consensus basis.                                                                                                    
He said  the House has  a piece  of legislation dealing  with the                                                               
point of having just two  commissioners; it allows in the absence                                                               
of one  of those two  commissioners, for the commission  to still                                                               
function.  Right now,  there is  a two-member  quorum requirement                                                               
and  if  one commissioner  isn't  there,  the commission  doesn't                                                               
exist anymore.                                                                                                                  
They  are  trying  to  change that  to  a  two-member  commission                                                               
situation and  if in the future,  if a fishery has  to be limited                                                               
they may come to the legislature  and ask to hire an expert, like                                                               
Mr. Twomley,  who knows the  subject well. All decisions  made by                                                               
the commissioners can be appealed  to the Superior Court and then                                                               
to the Supreme Court.                                                                                                           
SENATOR BISHOP  observed that  the two  commissioners have  to be                                                               
100 percent together and asked how that will work.                                                                              
MR. PUTNAM  replied that their intent  is to agree all  the time,                                                               
but if  they don't agree,  the ruling  of the hearing  officer in                                                               
the adjudication  section becomes  the ruling of  the commission.                                                               
And that is what the fishermen would appeal to Superior Court.                                                                  
3:56:38 PM                                                                                                                    
VICE CHAIR  COGHILL said  he is  reluctant to  agree with  a two-                                                               
member commission.  But he will  watch closely how it  plays out.                                                               
He noticed two  things the commission had done:  first, he didn't                                                               
know this  was a significant  part of the Fishermen's  Fund. What                                                               
proportion is that?                                                                                                             
MR. PUTNAM  replied that  the Fishermen's  Fund was  started pre-                                                               
statehood and  was designed  as a  type of  worker's compensation                                                               
for  injured  fishermen,  because  a lot  of  fishermen  couldn't                                                               
afford insurance and  got injured on the job. Ms.  Kelley has the                                                               
exact figures as  she has been involved with the  CFEC for a long                                                               
time on  the Governor's  task force to  restructure it,  he said.                                                               
The  Fishermen's Fund  receives an  average of  $400,000 annually                                                               
that all  comes from  fishermen. A  fishing captain's  license is                                                               
needed  at the  beginning  of the  fishing season  as  well as  a                                                               
vessel license. Those  all come from CFEC, for  which they charge                                                               
a small fee. At the end  of a fishery, they charge four-tenths of                                                               
1  percent of  whatever money  one makes  based on  fish tickets,                                                               
which are  confidential and held  by CFEC  for 45 years.  That is                                                               
for an open fishery. For a  closed fishery, it's four-tenths of 1                                                               
percent of  the value  of one's  permits. Their  economists watch                                                               
the values  of permits that go  up and down based  on sale prices                                                               
and that is how  the fees are based at the back  end. Of this pot                                                               
of money,  about $8  million, 40  percent by  law, goes  into the                                                               
Fishermen's  Fund and  about $5  million goes  to the  ADF&G, and                                                               
about $3.5 million is used by the commission to function.                                                                       
3:59:47 PM                                                                                                                    
VICE CHAIR  COGHILL said  it is  a pleasant  surprise to  see how                                                               
much money has been returned to ADF&G.                                                                                          
MS. KELLEY  said she  just got  an update  today. Since  FY 2012,                                                               
about $23  million went  to ADF&G;  last year  it was  about $5.6                                                               
million.  She  has  noticed  over the  years,  sometimes  to  the                                                               
detriment of the  commission, whenever times are  tough, that the                                                               
ADF&G budget  is restricted, but  she stated that  the department                                                               
needs enough money to be dynamic to  be able to ebb and flow with                                                               
whatever work is in front of it.                                                                                                
4:01:10 PM                                                                                                                    
MR. PUTNAM highlighted the Carlson  case for which the state paid                                                               
$37 million plus interest to  out-of-state fishermen who sued the                                                               
state of Alaska because of the  3:1 margin that was being charged                                                               
to out-of-state  permit holders  versus in-state  permit holders.                                                               
The Carlson  case went to the  Supreme Court that said  the state                                                               
couldn't charge  3:1, but  they could charge  a little  bit more.                                                               
So, every three years, they  calculated the Carlson number, which                                                               
is over and  above what in-state fishermen are  charged for their                                                               
permits,   and  that   money  is   used   to  support   fisheries                                                               
enhancement. Because  when there are no  in-field biomass studies                                                               
on a  fishery resource,  the ADF&G commissioner  will err  on the                                                               
side  of caution  for sustainable  yield and  not open  a fishery                                                               
because the science isn't there to  back up the opening. So, they                                                               
need  funds  from  both  the  CFEC  collection  and  out-of-state                                                               
fishermen to pay for that science.                                                                                              
VICE CHAIR  COGHILL asked if CFEC  has a research arm  within the                                                               
commission plus  whatever they can  help ADF&G  or is it  one and                                                               
the same.                                                                                                                       
MR.  PUTNAM  replied  that  ADF&G  has  field  researchers.  CFEC                                                               
doesn't go out  in the field; it uses information  it collects to                                                               
tell them what is going on in a fishery.                                                                                        
4:03:24 PM                                                                                                                    
MS. KELLEY added  that one of their statutory  charges is optimum                                                               
numbers.  When  limited  entry  first  occurred,  the  number  of                                                               
permits  was maximized  to make  sure that  folks who  were truly                                                               
dependent  weren't left  out and  the initial  legislation wanted                                                               
that number reeled back in  so that resources weren't harmed down                                                               
the  road.  Whether  optimum numbers  are  needed  on  everything                                                               
remains to  be seen, but  if they  are to start  clicking through                                                               
the  fisheries  and  doing optimum  number  studies,  legislators                                                               
should be  aware that research  has only two people.  One optimum                                                               
study  that  was  done  on  a  Bristol  Bay  fishery  took  three                                                               
researches  four  years  and  cost  thousands  and  thousands  of                                                               
dollars. So,  if those studies  are needed, enough of  both money                                                               
and personnel resources will be needed to do the job properly.                                                                  
VICE CHAIR COGHILL  said something else he did not  know was that                                                               
there are 68 unique fisheries.                                                                                                  
MS. KELLEY  said those  are just the  limited fisheries,  not the                                                               
ones that may ultimately be limited.                                                                                            
MS.  PUTNAM explained  that when  a fishery  is an  open fishery,                                                               
anyone can fish it from Alaska  or out of state. Equal protection                                                               
applies to all Americans. So, anybody  can be in any fishery they                                                               
want if  it's open. When  the commission decides a  fishery needs                                                               
to be  closed, they  are trying  to award  permits to  people who                                                               
have  a history  in that  fishery. That  may not  be the  optimum                                                               
number of  permits; that study  comes later. But everyone  gets a                                                               
permit  in  that  fishery,  so   they  can  continue  to  make  a                                                               
livelihood in  that fishery. As  a fishery becomes  more stressed                                                               
and there  is less fish for  the fishermen, the season  has to be                                                               
closed more.  It is a  very difficult  business and they  have to                                                               
make enough  money in order to  stay out there. If  there are too                                                               
many fishermen in the fishery,  then all the fishermen suffer. An                                                               
optimum number  study may bring  the number of permits  down that                                                               
allow for each  fisherman to make a living, so  they can stay out                                                               
He  explained  that  an  optimum study  would  create  a  buyback                                                               
program. For  the last one,  Alaska got  a $65 million  loan from                                                               
the  federal government  that fishermen  taxed themselves  to pay                                                               
back and voluntarily  decided to get out of the  fishery and sell                                                               
their permit  back to the  CFEC. Then they just  extinguished the                                                               
permits down to the optimum numbers.                                                                                            
SENATOR MEYER asked if most  permit holders are Alaska residents.                                                               
What would be the ratio?                                                                                                        
MR.  PUTNAM  replied  the  current  ratio  is  about  77  percent                                                               
Alaskan. When you have transferable  permits that are saleable on                                                               
the open  market, there is no  limitation on who that  person can                                                               
sell it to. There  is no way to stop that  from happening. But at                                                               
the initial outset their goal was  to design the permit system to                                                               
benefit the people  who depend on the fishery the  most and don't                                                               
have outside sources  of income, like a teacher.  People who live                                                               
in a  small town in  Alaska where fishing  is the main  source of                                                               
income are the people who  get the valuable transferable permits.                                                               
The  intent  of the  legislature  at  that  time was  that  those                                                               
permits would  be retained in  the village, and about  50 percent                                                               
of permits are actually transferred  without cost to other people                                                               
through gifting. About 50 percent are  sold and often that is how                                                               
the out-migration can happen to Lower 48 people.                                                                                
4:09:19 PM                                                                                                                    
SENATOR MEYER asked how much permits go for.                                                                                    
MR.  PUTNAM   replied  that   their  economists   calculate  this                                                               
regularly, because their fees are  based on the price of permits.                                                               
They know  how much each  permit is  worth in each  fishery; it's                                                               
all posted  on their  website. Just  for an  idea, a  Bristol Bay                                                               
drift permit  is worth  about $220,000 and  about 1,600  exist. A                                                               
set net permit on  the east side of Cook Inlet,  which is also in                                                               
a piece of legislation, is worth around $25,000.                                                                                
MS. KELLEY added that there are  so many permits in the state and                                                               
every month the permit value changes.                                                                                           
VICE  CHAIR COGHILL  asked Ms.  Kelley if  she is  on the  United                                                               
Fishermen of Alaska (UFA) board and  asked if she has to let that                                                               
MS.  KELLEY replied  that she  was the  longest-seated UFA  board                                                               
member until March 1. She has  told them she would only deal with                                                               
policies  before  the commission  but  has  asked for  an  ethics                                                               
determination  on  whether she  can  stay  on the  North  Pacific                                                               
Anadromous Fish Commission.  It is light duty work and  has a lot                                                               
of personal meaning to her. However,  if they say it's a problem,                                                               
she will resign.                                                                                                                
VICE CHAIR  COGHILL said there is  no doubt that she  has had her                                                               
hand  in  many  fisheries  and   Alaskan  fisheries  have  unique                                                               
challenges  but also  a good  reputation. He  would like  to keep                                                               
that going.                                                                                                                     
4:11:53 PM                                                                                                                    
MS. KELLEY  said she also  cares a lot about  it and is  proud of                                                               
Alaska's system.                                                                                                                
VICE CHAIR  COGHILL asked if  their rulings set precedent  or are                                                               
they for just one time, because they are so unique.                                                                             
MR.  PUTNAM replied  that  all 70  cases that  have  gone to  the                                                               
Supreme Court and  the hundreds that have gone  to Superior Court                                                               
set  precedent for  the commission.  The 13  cases still  pending                                                               
before the commission -  for 20, 30, and 40 years  - are the most                                                               
difficult  that if  they don't  get exactly  right may  bring the                                                               
whole  system down,  like a  sweater  coming apart  by pulling  a                                                               
The  two remanded  cases were  appealed  to Superior  Court by  a                                                               
fisherman who convinced the court  that a mistake was made. Those                                                               
two got a  second review by the CFEC and  the same decisions were                                                               
sent  back  to  the  court  where  they  were  settled  based  on                                                               
The  Attorney General's  office is  who their  real lawyers  are;                                                               
they know  all the  cases. You  don't have to  be an  attorney to                                                               
serve on this commission, he  said, although it helps, and before                                                               
he and Ms. Kelley make their  decisions they want to know all the                                                               
cases, too.                                                                                                                     
He noted that  the annual report will be very  different than any                                                               
reports in  the past. It's only  5 pages long and  compared to up                                                               
to 70  pages in the  past. The backside  of the report  will have                                                               
appendixes. He offered to come back  and give them an overview of                                                               
that annual report in the future.                                                                                               
MR.  PUTNAM  said  there  are  two things  to  think  about;  the                                                               
legislature  gave them  two  mandates back  in  1975 in  enabling                                                               
statute. One  of them is  to regulate fisheries and  to determine                                                               
how many  permits are  in a  fishery, but  also what  the optimum                                                               
number  is.  The   other  is  to  make   recommendations  to  the                                                               
legislature for  future legislation to improve  the regulation of                                                               
commercial  fishing  in  Alaska.   That  is  something  they  are                                                               
studying right now  and will have some  recommendations when they                                                               
finish their annual report.                                                                                                     
VICE CHAIR COGHILL thanked him and  said he would look forward to                                                               
the report.  Finding no  further questions and  no one  signed up                                                               
for  public  testimony, he  stated  that  in accordance  with  AS                                                               
39.05.080,  the Resources  Committee reviewed  the following  and                                                               
recommends the appointments  be forwarded to a  joint session for                                                               
consideration: Dale Kelley  and Vance Fate Putnam.  This does not                                                               
reflect an  intent by any of  the members to vote  for or against                                                               
the confirmation of the individuals during any further sessions.                                                                
4:17:59 PM                                                                                                                    
At ease                                                                                                                         
4:18:20 PM                                                                                                                    
VICE  CHAIR  COGHILL  called  the   meeting  back  to  order  and                                                               
adjourned  the Senate  Resources  Standing  Committee meeting  at                                                               
4:18 p.m.                                                                                                                       

Document Name Date/Time Subjects
Appointments - Fact Sheet - Commercial Fisheries Entry Commission.pdf SRES 3/14/2018 3:30:00 PM
Appointments - Resume - Kelley to CFEC - 3 - 14 - 2018.pdf SRES 3/14/2018 3:30:00 PM
Appointments - Resume - Putman to CFEC - 3 - 14 - 2018.pdf SRES 3/14/2018 3:30:00 PM
Appointments - Support for Kelley from UFA - 3 - 6 - 2018.pdf SRES 3/14/2018 3:30:00 PM
Appointments - Supports for Putman from UFA - 3 - 6 - 2018.pdf SRES 3/14/2018 3:30:00 PM
Appointments - Support for Kelley - Letter from Brian Lynch - 3 - 10 - 18.pdf SRES 3/14/2018 3:30:00 PM
Appointments - Support for Kelley - G Freitag.pdf SRES 3/14/2018 3:30:00 PM
Appointments - Support for Kelley - J Garner.pdf SRES 3/14/2018 3:30:00 PM
Appointements- Support for Kelley from SEAFA - 3 - 14 - 18.pdf SRES 3/14/2018 3:30:00 PM
Appointments - Support for Kelley from ATA - 3 - 19 - 18 .pdf SRES 3/14/2018 3:30:00 PM