HOUSE BILL NO. 79 "An Act relating to salt water sport fishing operators and salt water sport fishing guides; and providing for an effective date." 1:47:03 PM Co-Chair Merrick indicated that Amendment 1 was adopted during the prior hearing on April 20, 2021. Representative Wool MOVED to ADOPT Amendment 2 (copy on file): Page 1, line 5: Delete "a new paragraph" Insert "new paragraphs" Page 1, line 6: Delete "Fishing" Insert "Resident fishing" Page 1, line 7: Delete "Sport" Insert "Resident sport" Page 1, line 8: Delete "Sport" Insert "Resident sport" Page 1, line 9: Delete "Sport" Insert "Resident sport" Page 1, following line 9: Insert a new paragraph to read: (29) Nonresident fishing services licenses (A) Nonresident sport fishing operator license ........ 400 (B) Nonresident sport fishing guide license .......... 200 (C) Nonresident sport fishing operator and guide combined license .......400." Page 3, line 26, following "(C)": Insert "or 16.05.340(a)(29)(B) or (C)" Page 4, line 2, following "(C)": Insert "or 16.05.340(a)(29)(A) or (C)" Page 4, line 3, following "(C)": Insert "or 16.05.340(a)(29)(A) or (C)" Representative Rasmussen OBJECTED for discussion. Representative Wool explained the amendment. He offered that the amendment doubled the fee for an out of state guide, guide operator, or operator for fishing. He delineated that the amendment paralleled AS 08.01.065 relating to big game hunting that allowed for the state to charge out of state big game guides double the amount of an Alaska resident. He had consulted with Legislative Legal Services regarding a constitutional challenge and shared that it determined that the provision could be challenged but so far, the big game fees had not been challenged in court. 1:48:40 PM Representative Rasmussen relayed her objection. Representative Rasmussen MOVED to ADOPT Conceptual Amendment 1 to Amendment 2 (copy on file): Page 2, line 6, following "AS 16.05.340(a)": Insert "and the nonresident surcharge, if applicable, under AS 16.40.274" Page 3, line 7, following "AS 16.05.340(a)": Insert "and the nonresident surcharge, if applicable, under AS 16.40.274" Page 3, line 13, following "AS 16.05.340(a)": Insert "and the nonresident surcharge, if applicable, under AS 16.40.274" Page 4, following line 11: Insert a new section to read: "Sec. 16.40.274. Nonresident surcharge. In addition to the annual base fee required for a sport fishing guide license, sport fishing operator license, or sport fishing operator and guide combined license under AS 16.05.340(a)(28), a nonresident shall pay an annual nonresident surcharge for the issuance or renewal of a license under AS 16.40.262 or 16.40.272. The department shall establish the annual nonresident surcharge by regulation at an amount that is as close as is practicable to the maximum allowed by law." Representative Rasmussen explained the amendment. She voiced that during the previous hearing some concerns were raised regarding the legality of the amendment and the definition of resident and non-resident. She shared that she had consulted the Legislative Legal Services and the Department of Law (DOL). She was offering her amendment to clear up some of the issues that were raised. Co-Chair Merrick OBJECTED for discussion. Representative Rasmussen furthered that the new language replaced Amendment 2 and allowed for the department to implement a non-resident surcharge as necessary for sport fishing licenses. She noted that legislative legal and DOL did not find any constitutional issue with Conceptual Amendment 1. The language was similar to the language in AS 16.43.160 regarding commercial fishing license fees. She reiterated that the amendment allowed for a non-resident surcharge by regulation and used existing Department of Fish and Game (DFG) language for the residency requirement and definition. Representative Wool appreciated the conceptual amendment. He was unclear whether the conceptual amendment amended the amendment or the bill. He deemed that Conceptual Amendment 1 was amending the bill and not the amendment. Representative Rasmussen asked for an at ease. 1:50:43 PM AT EASE 1:52:32 PM RECONVENED Representative Rasmussen explained that the conceptual amendment was lacking a first line that deleted the material from Amendment 2 and inserted the amended version. Representative Wool did not care which amendment was used. He was only concerned that the fees were doubled for non- residents, which was the maximum allowed by statute. He read the following from the conceptual amendment: The department shall establish the annual nonresident surcharge by regulation at an amount that is as close as is practicable to the maximum allowed by law." Representative Wool wondered if use of the word shall made it something the department could do in regulation. 1:54:09 PM DOUGLAS VINCENT-LANG, COMMISSIONER, DEPARTMENT OF FISH AND GAME (via teleconference), read the language from a portion of the conceptual amendment to Amendment 2 as follows: In addition to the annual base fee required for a sport fishing guide license, sport fishing operator license, or sport fishing operator and guide combined license under AS 16.05.340(a)(28), a nonresident shall pay an annual nonresident surcharge for the issuance or renewal of a license under AS 16.40.262 or 16.40.272. The department shall establish the annual nonresident surcharge by regulation at an amount that is as close as is practicable to the maximum allowed by law." Commissioner Vincent-Lang surmised that the surcharge could be set by regulation. Representative Wool related that he was not party to the drafting of the conceptual amendment. He wondered if it was something that the department could accomplish easily and quickly. Commissioner Vincent-Lang indicated that the change would go through the Administrative Procedures Act process, and anyone could comment on the proposed regulatory change. Representative Wool asked if the issue was debatable with the word "shall." Commissioner Vincent-Lang understood that he shall do it, but the change had to go through the established regulatory process. He indicated that the outcome of the regulatory process was dependent on the public comments. He ascertained that his mandate would be to establish a regulation as close as is practicable to the maximum allowed by law. He would need to define the maximum allowed by law and be as close of possible to the amount. Representative Wool asked if someone from Legislative Legal Services was online. 1:57:09 PM Alpheus Bullard, Legislative Counsel, Legislative Legal Services introduced himself and asked Representative Wool to repeat the question. Representative Wool reiterated that the conceptual amendment changed the bill rather than his amendment. He commented that the conceptual amendment provision was regulatory and not statutory. He reread the last portion of the amendment and understood that the maximum was twice the amount of a residents fee. He was not sure that the commission could guarantee the outcome due to the regulatory process. He asked whether establishing the increased fees was in question if the proposal went through the regulatory process. Mr. Bullard indicated that the amendment put the onus on the department to determine what extra burden non-resident sport fishing guides and sport fishing operators could contribute. He voiced that the determination was the legal amount established by the Alaska Supreme Court. Representative Wool wanted to double the fees. He referred to AS 08.01.065 that doubled the fee for non-resident big game guide licenses. His amendment was paralleling the statute. He was aware that his amendment could be challenged and doubted anyone would initiate a lawsuit to save $100 or $200 dollars. He was willing to accept the risk and go with his amendment rather than the conceptual amendment. He felt that the amount determined through the regulatory process would be negligible. He voiced that the big game statutes simply implemented the increase through statute. He discerned that the number of guides was small, and he would rather stick to his amendment seeing that a statute existed for big game guides. Co-Chair Merrick reported that the committee had been joined by Representative Edgmon. She asked Mr. Bullard for comment. Mr. Bullard responded that in terms of the legal analysis it was irrelevant what else existed in statute, it was the appraisal of what the court would do if the statute was challenged that mattered. The language that was used in the conceptual amendment was the same as the language used for non-resident commercial fishing guides. The language was the result of previous legal challenges. He concluded that the language in the conceptual amendment had a greater chance of being upheld in court rather than a statute that simply stated the fee was doubled. Commissioner Vincent-Lang was concerned with the language stating the department shall establish the non-resident surcharged annually. He thought it would require an annual review process. Mr. Bullard responded that the fee would be an annual surcharge. He thought that if the department believed that nothing had changed regarding the cost posed by non- residents there was no reason the department would have to change it. He could not speak to the burden the process placed on the department. Representative Rasmussen thought that the burden placed on the department was being exaggerated. She believed that it was relatively simple for the department to establish the fee and mirror the process for the commercial fishing license fees. She was not comfortable supporting an amendment that might draw a lawsuit. 2:04:39 PM Representative Josephson deduced that when the department established the surcharge as required in AS 16.43. 160, the test the commissioner would apply would be the Carlson test from a prior case. He wondered if he was correct. Mr. Bullard responded affirmatively. Representative Josephson surmised that DFG needed funding to administer the logbook program that was obligated under treaties. He asked if the bill, as amended, provided the amount of funding necessary to carry out the logbook program. Commissioner Vincent-Lang replied that it did not entirely. However, the department had secured federal grants from the Halibut Commission to make up the difference. He was uncertain whether the funding was sufficient if freshwater fishing was added to the program. He was not familiar with how the Commercial Fisheries Entry Commission (CFEC) set its fees for non- residents. 2:07:15 PM Representative Wool asked about the case challenge that Representative Josephson was referring to. He wondered if the case had to do with non-resident fees for licenses. Mr. Bullard responded that there were three cases regarding non-resident fees for commercial fishing entry permits and interim use entry permits. Representative Wool understood that there were different fees non-resident commercial fishers established under the CFEC. He deduced that it was somehow determined that it cost more to administer licenses to non-residents. He found himself in a quandary, he did not want to jeopardize the bill, but the big game guide statute had not been challenged. He believed that ultimately, every law was subject to potential lawsuits. 2:09:01 PM Representative Carpenter asked how many out of state guides were licensed in 2019 or 2021. He deemed that the information would help determine the amount of potential revenue raised by increased fees. Commissioner Vincent-Lang reported that in 2020 the number of resident licenses by businesses was 90, the combination was 904, and the guides amounted to 922. He specified that for the same year for non-residents there were 29 businesses, 133 combinations and 726 guides. The average over 5 years was 103 resident businesses, 950 combination and guides were 1,153. In terms of non-resident licenses, there were 33 businesses, 150 combinations, and 976 guides. 2:10:58 PM AT EASE 2:14:45 PM RECONVENED Representative Carpenter referred to a document provided by Commissioner Vincent-Lang [copy of an email to the commissioner (copy on file)] and pointed to the chart titled Non-Resident Licenses/Registrations Issued by Type and Year, 2016 - 2020 and noted the total revenue amount of $268,240 thousand. He calculated that the increase would be 50 percent because it reflected the $400 fee contained in the bill. Representative Rasmussen WITHDREW Conceptual Amendment 1 to Amendment 2. 2:15:44 PM Representative Edgmon determined that the committee could not determine what the legal risk could be, even if more legal entities were consulted. He thought that Alaska would not be the only state that has a resident versus non- resident differential. He voiced that he was willing to take the risk of adopting Amendment 2. He asked whether the commissioner could comment on other states having a resident versus non-resident licensing structure. Commissioner Vincent-Lang responded that other states had differential rates. He guessed that if the law was challenged that the non-resident portion would be repealed. Representative Edgmon recalled that the Carlson case required the state to reimburse the licensees. 2:17:57 PM Representative Wool cited the document distributed by the commissioner and asked whether the charts were accurate or if it was a projection of what it would be under the legislation. Commissioner Vincent-Lang responded that it reflected what the amount would be under the legislation at a 2 to 1 ratio. Representative Wool deduced that the difference was $60 thousand and as high as calculated in the prior discussion. He indicated that the Carlson Case denied a three times higher non-resident surcharge, not a twice higher surcharge. He wanted to offer his amendment since it asked for a doubling of the resident fee. Co-Chair Merrick WITHDREW her OBJECTION. Representative Rasmussen thought that her amendment was more appropriate, and the committee should consider the legality of the statute and avoid any risk of a lawsuit. Representative Wool appreciated the comments made by Representative Rasmussen. He worried that it was unknown how the department would justify the surcharge and that it could be less than 50 percent. He believed that it was simpler to double the fee and that there was precedent for his proposal. Representative LeBon asked the commissioner whether he had stated that there were sufficient revenues to administer the program without a fee increase. Commissioner Vincent- Lang answered that he stated there would be insufficient revenue without any surcharge and if the differential was eliminated, he would need to make up the difference with federal funding sources. 2:21:58 PM Representative LeBon surmised that the commissioner had federal funding to fall back on and guessed that the need for the additional revenue included in the amendments was not compelling. Commissioner Vincent-Lang agreed only if it applied to the saltwater program. The authority to add a surcharge for a freshwater logbook program was contained in the bill. Representative LeBon wanted guidance from the commissioner and asked if the commissioner wanted the amendment. Commissioner Vincent-Lang responded that it was entirely the legislatures decision. He refused to provide a definitive answer. Representative Wool commented that he was surprised to learn that there were almost equal numbers of resident and non-resident guides. In addition, the amendment would authorize a surcharge for a freshwater logbook program, therefore both reasons compelled him to offer his amendment. Representative Edgmon asked about the impacts of non- resident participation with the passage of the amendment. Commissioner Vincent-Lang replied that when the licensing fees were raised for sportfishermen, licenses declined by 5 to 10 percent. He thought that the impact to the guide license would be negligible, since it was a profession, and the licenses were paid for by their service fees. Representative Carpenter asked how close Amendment 1 came to fully funding the logbook program for non-residents. Commissioner Vincent-Lang replied that it got the department much closer; almost fully funded. Representative Rasmussen WITHDREW her OBJECTION. There being NO OBJECTION, it was so ordered. Amendment 2 was adopted. Representative Rasmussen WITHDREW Amendment 3. 2:26:28 PM Co-Chair Foster MOVED to report CSHB 79 (FIN) out of Committee with individual recommendations and the accompanying fiscal note. Representative Johnson OBJECTED. A roll call vote was taken on the motion. IN FAVOR: Foster, Merrick, Ortiz, Carpenter, Edgmon, Josephson, Rasmussen, Wool, LeBon, Thompson OPPOSED: Johnson The MOTION PASSED (10/1). CSHB 79 (FIN) was REPORTED out of committee with a "do pass" recommendation and with one new fiscal impact note by the Department of Fish and Game. 2:29:54 PM AT EASE 2:33:40 PM RECONVENED