HOUSE BILL NO. 64 "An Act relating to regional fishery development associations; and relating to developing fishery management assessments." 2:05:41 PM Co-Chair Foster indicated there were several people available online for questions. 2:06:42 PM FATE PUTMAN, STAFF, REPRESENTATIVE STUTES, provided the committee with an overview of the bill. He explained that HB 64 established regional fisheries development associations to support commercial fishing management assessments in order to facilitate new or developing fisheries within a geographic region. The developing fisheries were perspective fisheries that were not currently regulated or controlled by the Alaska Commercial Fisheries Entry Commission (CFEC). The definition of a developing fishery was designated as an area where the optimum yield of the resource had not been reached or the sustained yield has not been estimated, and annual stock assessments were not conducted. He furthered that declining state funding hindered the Department of Fish and Games (DFG) ability to manage and establish new and developing fisheries. He delineated that DFG managed state fisheries by performing annual surveys and assessments of fisheries resources in order to identify the biomass and the sustainable yield of seafood as required by the states Constitution Article 8, Section 4 called the Sustained Yield Principle. In the case of new and developing fisheries the funding to perform assessment surveys and studies was lacking and prohibited the fisheries from opening. He shared that the Speaker's office had been contacted by a constituent in Prince Willian Sound that wanted to fish for Tanner Crab, which remained closed for 30 years due to lack of funding for current assessments. He indicated that annual surveys were currently being conducted and the stocks were adequate for a commercial fishery. The fishery was recently opened and anyone that wanted to fish could obtain an interim use permit from CFEC. He elucidated that HB 64 was designed to let developing fisheries open by providing a source of funding for the annual biomass survey. Currently, the constituent could fish for Tanner Crab in Prince William Sound, however; legislation was necessary for other developing or new fisheries. The bill created a fund that allowed for management of new and developing fisheries and allowed the creation of regional fisheries development associations, which were non-profit organizations representing the stakeholders. He conveyed that the associations may elect to levy an assessment that would fund the DFG studies. The fees called management assessments were collected at the time of sale so that the buyer would submit the assessments on a quarterly basis to the Department of Revenue (DOR) who would remit the funds back to the Regional Fishery Development Associations (RFDA). The RFDA would develop an annual operating plan in tandem with DFG in order to conduct the surveys. He noted a similar association with the dive fisheries in the state; the Southeast Alaska Regional Dive Fishery Association developed by statute had used the model since 1998 to manage geoduck, sea urchin, and sea cucumber fisheries. The bill was developed using the dive fisheries statute that granted the developing fisheries the mechanism to fund themselves in order to become an established fishery. He listed the benefits of commercial fisheries in the state and noted the job creation and revenue potential. Co-Chair Foster indicated there were no questions on the sectional analysis. Co-Chair Foster noted the committee had been joined by Representative Johnson. Representative Edgmon asked for an explanation of the difference between a regional seafood association and a regional fishery association. Mr. Putman deferred the answer. 2:14:01 PM FOREST BOWERS, DEPUTY DIRECTOR, COMMERCIAL FIAHERIES, DEPARTMENT OF FISH AND GAME (via teleconference), asked that the representative restate his question. Representative Edgmon complied. Mr. Bowers answered that the Regional Seafood Development Association (RSDA) was developed via statute through the legislature. He explained that the RSDA was developed to enhance the value of fisheries via the marketing aspect of commercial fishing and was housed in the Department of Commerce, Community and Economic Development (DCCED). The current bill was focused on stock assessment and biology and was more appropriately related to DFG. Representative Edgmon appreciated Mr. Bowers' response, but he was not convinced why two different entities were necessary. He wondered why it was not housed in the same shop. Mr. Putman was not familiar with the marketing portion of the industry. 2:16:23 PM JERRY MCCUNE, REPRESENTATIVE, UNITED FISHERMEN'S ASSOCIATION AND PRESIDENT, CORDOVA DISTRICT FISHERMEN UNITED, explained that the marketing association required members to be a permit holder of a specific gear type and operate a boat and pay fees to the association. The association had control over the assessments. He agreed with the previous testifier that the marketing associations operated differently than the regional associations would. He restated that the proposed association was concerned with stock assessment and biology. He furthered that the marketing association bylaws were limited and did not address the needs of the proposed RFDAs; they did not mesh. Representative Edgmon wanted to learn the distinction between the two associations. He guessed that they may have similar duties and suggested the state was in an era of consolidation and creating efficiencies. Representative Josephson wondered whether new fisheries alluded to a situation like Tanner Crab reopening after many years or if they were creating fisheries for new species that never had a commercial fishery. Mr. McCune replied that there were two developing fisheries that had never been open before in Prince William Sound: sea cucumbers and octopus. They were looking for species to keep the fisheries open in the winter. He noted that the bill encompassed the entire state and was not exclusively for Prince William Sound. Representative Josephson asked if there was a point in time in the process where a non- commercial user could speak against the development of a new fishery. Mr. Putman responded that the appropriate venue to address the issue would be during a Board of Fish hearing. Representative Carpenter cited the regional dive fishery association. He inquired whether General Funds (GF) were ever necessary to support the dive fisheries and if he expected that the RDFAs would need state support at some point. He expressed concerns regarding whether GF would be necessary. He hoped the program was an economic stimulus and created opportunity. Mr. Putnam responded that the general idea of a RFDA was to use the funds associated with the collection of fees from the fishermen to pay for assessments to keep the fishery open in the future. 2:21:28 PM PHIL DOHERTY, EXECUTIVE DIRECTOR, SOUTHEAST ALASKA REGIONAL DIVE ASSOCIATION (SARDA)(via teleconference), he shared that prior to his directorship he was an area management biologist for commercial fisheries in the Ketchikan area. He addressed Representative Carpenters question and answered in the negative. He explained that the dive association continued to tax themselves; three different species were taxed at different rates: sea urchins, geoduck clams, and sea cucumbers. The tax was paid at the time of delivery and was added to the fishers fish ticket and sent to DOR who remitted it back to the association. The association met every year with DFG and submitted an operating plan and transferred funding for stock assessments and fishery management. He maintained that GF was never used in the process. 2:23:30 PM Representative Edgmon favored the bill and thought it was necessary. He understood that developing fisheries had to have commercial value and in order to be commercialized to the point of paying an assessment fees other things had to happen to form the association. He commented on the zero fiscal impact note. He wondered whether he was missing something. Mr. Putman replied that the concept was to allow the fisheries to initially operate under a commissioners permit, which allowed a new or developing fishery to occur. At that point, it was not an open fishery yet, it was a test fishery. The fish were brought to a buyer and a fee was assessed, eventually the fees would build up enough to develop into a full fishery. Once developed into a full fishery the fishers operated under an Interim Use Permit (IUP), the fees were collected, and the stock assessments would happen on an annual basis to keep the fishery open. Vice-Chair Ortiz spoke in support of the bill. He noted the benefits of the development associations such as creating economic opportunity and more jobs. He remarked that the resource was renewable, if managed correctly. Co-Chair Foster thanked Mr. Putman and moved to invited testimony. 2:26:47 PM MAKENA O'TOOLE, SHELLFISH DIVISION REPRESENTATIVE, CORDOVA DISTRICT FISHERMEN UNITED, spoke in favor of the bill. He shared that he had spent many years trying to revive defunct and underutilized fisheries. He used the commissioners license process for sea cucumbers, squid, green sea urchin, skates, etc. He elucidated that DFG was unable to engage with the fishers due to budgetary constraints and lack of a funding mechanism. A few years ago, some local fishers formed a fisheries development committee and ascertained that they could contribute funds for the stock assessments for fisheries they believed were viable. They discovered that a legal avenue was necessary, and SARDA was a model. He elaborated that he had participated in the Southeast Alaska dive fisheries for over a decade. He characterized the relationship between industry and management through SARDA as very functional. He thanked Speaker Stutes for assisting with the bill. He addressed questions from the hearing discussions. He highlighted defunct versus new fisheries and elaborated that there were many defunct fisheries that would benefit from the passage of the bill because DFG simply did not have the funding to perform assessments. Some of the defunct species included herring ,Tanner crab, Dungeness crab, Red, Blue, and Brown King crab, and razor clams. The legislation also covered new fisheries such as Norton Sound salmon fisheries, hooligan, California Market squid, green sea urchins, octopus, skates, dog sharks, black rock fish, etc. There were many underutilized resources in the state. He opined that while the state was investing in mariculture, the state also needed to discover what it already had for development. Representative Edgmon thanked the testifier and believed that he outlined the distinction between RSDAs and RSFAs. 2:31:01 PM RONALD BLAKE, SOUTHEAST ALASKA REGIONAL DIVE ASSOCIATION, CORDOVA (via teleconference), related that he participated in the Southeast dive fisheries since 1990. He echoed Mr. O'Toole's testimony regarding the relationship between SARDA and DFG. He offered that while working with the department on developing a sea cucumber fishery [in Prince William Sound] it asked the fishers to establish a dive association and they discovered it could not legally be done. House Bill 64 became the mechanism that allowed the fishers to comply with the DFGs request. 2:32:33 PM MIKE MICKELSON, PRESIDENT, CORDOVA FISHERMEN'S UNITED (via teleconference), supported the legislation. He remarked that he did not have anything to add to the prior testimony. He had worked with the biologists and discovered that there was enough biomass to support some of the fisheries, which he felt was the key factor. The fish were available, and the bill facilitated the start of new fisheries. Co-Chair Foster asked Mr. Bowers to review the fiscal notes from DFG. Mr. Bowers explained that the published fiscal note from DFG for Commercial Fisheries (FN4 (DFG))had zero fiscal impact involving very little staff time. He conveyed that the department's overall role in the creation and management of these associations would be minimal. The associations would qualify under the provisions of the bill and would engage with the Commercial Fisheries Division to formulate a cooperative agreement which described how any revenue generated from the tax would be used for stock assessment. The revenue was indeterminate due to the inability to predict the amount of revenue the bill would generate. Co-Chair Foster moved to the next fiscal note. Mr. Haghayeghi spoke to the published DFG zero fiscal note for the CFEC (FN3 (DFG)). The commission did not anticipate any additional fiscal impact from passage of the legislation. 2:36:41 PM NICOLE REYNOLDS, DEPUTY DIRECTOR TAX DIVISION, DEPARTMENT OF REVENUE (via teleconference), relayed that the published DOR fiscal note (FN5 (REV)) was indeterminate in terms of the revenue impact. The revenue impact of this bill was not able to be determined at this time. The department would absorb the costs of the small additional administrative burden to implement the program with existing resources. Representative Carpenter asked if any personal use fisheries would be impacted if a new commercial fishery was developed. He deduced that his question may be premature. Mr. Putman responded that there was often little relation between personal use and commercial fishing because the Board of Fish allocated the resources. He noted that all salmon fisheries were limited and that did impact personal use. He did not know if he could directly answer without knowing the specific fishery. He thought the decision would be up to the department to decide if a new fishery would impact personal use. Representative Carpenter remarked that his question was premature but important. He felt assured knowing that there was a process for making the determination at a later stage. 2:39:52 PM Vice-Chair Ortiz asked that with the establishment of an association who decided on the membership. He wondered if there would eventually be too much membership demand to sustain the fishery. Mr. Putman indicate that Vice-Chair Ortiz's question was a good one. He clarified the question was how to sustain the fishery if there was too much fishing pressure. He replied that one of the functions of the limited entry commission was to determine where the pressure was applied and whether there was enough resource for both commercial and personal use. They were difficult questions to answer. He deferred to DFG who might have a better answer. Vice-Chair Ortiz clarified his question. He inquired if all of the fishers who formed an association would be able to participate in the fishery. Mr. Putman replied that anyone was able to be part of the association and they would vote on how to assess the fishery; not all members were commercial fishers. He noted that formation of the association was loosely defined in the bill. There were outstanding issues with the workings of the committee that needed to be addressed, but the sponsor wanted to keep it flexible so that anyone who wanted to be a part of the association could participate and vote on how to move forward. 2:43:19 PM Vice-Chair Ortiz asked how SARDFA worked. He asked if the membership was open and how it was controlled. Mr. Doherty answered that if someone was a permit holder through CFEC, whether interim use or permanent, they were a part of the association. The dive association membership did not include any non-permit holders. The membership duty was to pay the landing tax. He restated that as soon as someone purchased the limited entry permit, they automatically became part of the association and paid the tax. Representative Wool referenced the associations assessment fee. He asked how the assessment rate was determined. Mr. Putman replied that the bill specified the amounts of assessments the associations members could vote for. He pointed out that it began at 2.5 percent up to 30 percent of the value of the fish. He reiterated that the money was housed in DOR and given to DFG for stock biomass assessments to determine if the fishery was viable. Representative Wool wondered what happened if the amount voted on was insufficient to perform the biomass studies. He asked how the department handled the situation. Mr. Putman responded that if funds were insufficient there would be no fishery and it incentivized choosing a higher tax rate. The commissioner had to approve the ballot and if the commissioner decided the amount was not enough to perform the assessment the vote could be rejected. 2:47:46 PM Representative Wool provided a scenario and asked how the commissioner ascertained how much was necessary to perform the study or what happened if the funding proved to be insufficient to complete the assessment. Mr. Putman answered that DFG had a good handle on the cost of assessments. He deemed that if the association was small and the tax amount was too low, the commissioner would likely reject the vote and ask for a higher fee. The process would make certain the amount was functional and could move forward with an assessment. Representative Wool inquired whether an association could keep repeating the experimental opening process if it lacked enough money for an assessment. He deduced that it was not possible to establish a new fishery without an adequate assessment. Mr. Putman answered in the affirmative. He restated that lacking a sustainable yield would violate the constitution. He relayed that DFG was vigilant regarding not allowing commercial fishing without a biomass study. 2:49:51 PM Mr. Putman provided closing remarks. He referenced the aging of the commercial fishing fleet and believed that the bill presented an effort to open new fisheries and younger fishers could start without purchasing a limited entry permit. HB 64 was HEARD and HELD in committee for further consideration.