HB 198 - DIVE FISHERY MANAGEMENT ASSN. & ASSESSMENT  Number 040 CHAIRMAN AUSTERMAN announced the first order of business is HB 198, "An Act relating to regional dive fishery development associations and to dive fishery management assessments; and providing for an effective date." He asked Representative Williams to introduce the bill. REPRESENTATIVE BILL WILLIAMS read the sponsor statement into the record: "Southeast Alaska dive fishermen have been attempting for the past decade to establish orderly, consistent and stable fisheries capable of providing dependable economic opportunities for themselves, their families and the communities of Southeast. The urgency to create an economically viable fishery is highlighted by the recent closure of the regions largest employer and other related negative economic effects on the economy of Southeast Alaska. "Substantial untapped dive fishery resources have been identified through diver and Alaska Department of Fish and Game (ADF&G) underwater activities for over a decade. Many of the Southeast communities have placed the development of the fisheries as a priority item in economic development documents and locally developed legislative budget priorities. The dive fishery resources appear to be abundant and diverse throughout the region. The small sea cucumber and geoduck fisheries in Southeast have a combined annual ex-vessel value of $2.0 million to $2.5 million. In California, the urchin fishery has ranged in ex-vessel value from $16 million to $39 million from 1990 through 1996. Geoducks range in price from $6 a pound, live to $3.50 a pound, processed. Alaskan waters contain abundant amounts of these fishery resources plus many others not currently harvested. This legislation would encourage the identification and development of these resources. The potential for the future jobs for harvesters, processors and support industries, is considerable. "The commitment to work together is evidenced in the red sea urchin fishery. In 1996, the department, after a test fishery, was unable to open the red sea urchin fishery because of lack of funding. Based on positive results in the test fishery and a vision to diversify and develop their local economy, the Ketchikan Gateway Borough provided funding for the department to conduct bioassessment surveys needed to open the fisheries. The Borough continued in its involvement by facilitating and participating in a local task force comprised of Borough personnel, divers, processors and the department. The resulting plan was for processors to "forward fund" the management costs of the fishery with agreements to recoup their funding through a $.05 assessment on divers. Thus, in January 1997, a red sea urchin fishery opened in districts 1 through 4 in the Ketchikan and Craig areas. "This temporary fishery opening is based on a one time source of funding that will expire June 30, 1997. In order to continue the fisheries, and develop the other fisheries resources, a stable source of funding is necessary. "The August 1996 red sea urchin management plan states: 'Developing a long-term program to fund the costs of stock assessment, research and management remains an outstanding issue. If sufficient funds are not provided to the department each year, the fishery will not open.' This is the dilemma divers face and HB 198 provides a creative and progressive vehicle to move towards a solution. "House Bill 198 does not mandate but allows the creation of regional dive fishery development associations for the purpose of developing dive fisheries and creating a working relationship between the divers and the department to develop annual operating plans. The legislation is permissive and once a regional association is formed, divers can hold a ballot election of all interim permit holders to answer two questions: 1) shall we assess ourselves, and 2) at what rate shall we assess ourselves. "If approved by election, divers would be assessed, the state would collect, and the legislature may appropriate the assessment back to the department. The appropriation will be based on the mutually developed annual operating budget and plan. ADF&G would then fund the specific purposes outlined in the legislation for the regional dive fishery development association and the department. "All the appropriate checks and balances are in place and all parties are held accountable. In addition, all other fisheries business taxes are collected and deposited into the general fund. "House Bill 198 is a positive step forward by the private sector to support economic development and diversification without seeking a general fund appropriation. Time is of the essence. I would appreciate your support of this legislation for passage this session to keep the economic development for Southeast moving forward." Number 496 REPRESENTATIVE WILLIAMS stated that there are letters in the packet from the cities of Craig, Wrangell, the city and borough of Sitka, Sitka Chamber of Commerce, Sitka Tribal Enterprises, Sitka Sound Seafoods, Wrangel Fisheries Incorporated, Norquest Seafoods, Seafood Producers Cooperative and members of the Alaska Harvest Divers Association, Sitka Chapter and Southeast Alaska Harvest Divers Association, Ketchikan Chapter. Number 549 CHAIRMAN AUSTERMAN stated that there is a committee substitute for HB 198 and asked Representative Williams if CSHB 198 version T, 4/09/97, is the version he would like the committee to be working off of. REPRESENTATIVE WILLIAMS replied yes. Number 591 REPRESENTATIVE MARK HODGINS made a motion to adopt CSHB 198, Version T, 4/09/97, as a work draft. Number 606 CHAIRMAN AUSTERMAN asked if there was an objection, Hearing none, it was so ordered. Number 643 REPRESENTATIVE HODGINS asked if Chairman Austerman planned to move the bill out tonight. Number 652 CHAIRMAN AUSTERMAN stated that it is his hope that it would be moved out this evening. Number 667 EDWARD GREY, testified via teleconference from Sitka, that he supports this bill and he is a diver in the Sitka area. He stated that since 1989 closure, divers have met with the ADF&G and had a large number of unsuccessful bids to open up some of these areas. What they have experienced since that time has been closure of areas and quota reductions while there is large areas of unharvested product. He stated that he is not here to bash ADF&G but it has been a long time coming and the only feasible step is to form this association. He stated his committment to the association concept. The groups in the Southeast have been able to work very well together in the past to do some good. He stated that this bill is the most important and promising thing that has happened to the dive fisheries in the ten years that he has been involved. He stated that it is key to have sustainable fisheries in the future to do the work that we need to do. Number 874 LARRY TRANI, Representative, Alaska Harvest Divers, Sitka, testified via teleconference from Sitka, that the statement he is about to give is based on the unanimous vote of the membership. He stated that for the past decade they have consistently tried to expand existing fisheries and develop fisheries that aren't opened. He stated that it has not happened due to budget constraints and now as the oil well dries up, ADF&G is faced with more and more decreased revenues and the fisheries are not going to be expanded fisheries without some mechanism by which to do that. He stated that due to this reality the divers have put forth this bill. He stated that this is the only real way we can go about expanding existing fisheries and develop new fisheries. He encouraged the committee to pass the bill. Number 956 HARLEY ETHELBAH, Representative, Southeast Alaska Dive Harvester, Petersburg Chapter, testified via teleconference from Petersburg, that this bill, if passed, gives the chance to expand the dive fishery as wanted for a long time. He stated that without this bill it would take a long time to get things done through ADF&G, since they are not able to come up with the funding that is always needed. The bill will allow things to get done at a faster rate, expand new fisheries rather than watching them slide. Number 1047 CHUCK THOMPSON, Owner, F/V Darkstar, testified via teleconference from Kodiak, that he represents, in the dive community, 30 to 40 percent of the product that is delivered in Kodiak. He stated that they have been managing the fishery with ADF&G through production yearly, without the department or the fisherman having to put out any funds, for any kind of association. The department has been sucessful with each area continuing to produce the poundage and the amount of product that they have wanted to come out of the area. He stated that he is against the bill and feels that there is too much undercurrent where he may be forced to have some kind of assessment to perform the fishery. He felt that he has been very sucessful in the fishery as it stands and the money and time that would be needed to put man hours on the bottom of the ocean would take a major amount of funds away from the divers. Most of the major producers in Kodiak do not have the time to put in which would result in bringing outsiders in to learn the grounds. There is too much that can happen to the fishery when it can be controlled by outside forces. He stated that there could be a hidden agenda by outside financing, by canneries that would like to gain some control over this fishery. He stated that they sometimes sail two days to an area to get the production that they need to get. He stated that he does not think there needs to be any more state laws made to control the fishery or effect the production. Number 1239 VICTOR BUCHANAN, testified via teleconference from Kodiak, that he tried to get an urchin fishery going for Southeast Alaska four years ago. The department denied him the chance even though he offered to put up $150,000 because they did not have a management plan. He said, "they seem to feel, that now somebody else with maybe some higher power, or higher dollars, decided that there is a valuable urchin resource down in Southeast and I want to know why we are not included in it." He stated that he makes half his income off of the dive fishery, and at his expense he surveyed from Kodiak Island to Cape Douglas to False Pass. He stated that they want to shut them out of the Southeast fishery and he does not understand why they should be controlled when ADF&G wouldn't help them when they asked for help. Number 1420 STERLING SLITER, Representative, Alaska Harvest Divers Association, Ketchikan Chapter, testified via teleconference from Ketchikan, that the association is opposed to the bill because they believe that the state should fund dive fisheries the same way it funds all other fisheries in the state. He stated that the he has heard that the Senate will propose language to delete the word cooperative from the phrase cooperative management, which is used over 50 times in the original bill. If that version of the bill is passed, it will mean that divers will not have a say in the management of their dive fishery, which they were led to believe that this tax will allow for. He stated that they will be taxing themselves to fund a fishery that should be funded by the state of Alaska through the Department of Fish and Game budget's process. He stated that the House budget included $171,000 for the management of the sea urchin fishery for the next season. The House passed the budget last week and it was sent to the Senate. He stated that they have line itemed $91,600 of the Senate budget to manage the sea urchin fishery for the next season. He stated that these budgets have not been passed but it looks like they will be funding the fishery for the next year. He stated that once the legislature and the governor realizes the economic boost this multi-million dollar fishery will bring to the state of Alaska, the commissioner of fish and game will move the urchin fishery from a emerging fishery to an established fishery in the next year. He stated that we need the help of all divers to show a unified front by getting behind the need for state funding, not state taxing. He asked for letters or faxes to be sent to the Representatives, Senators and the Governor, letting them know that over 530 divers and the hundreds of jobs that they create is economically good for Southeast Alaska. He stated that the jobs are important with the closing of the mills in Sitka, Wrangell and Ketchikan. He stated that these jobs do not need to be created, they are here and only lack the appropriate funding, which should come from the state of Alaska not by the divers. He stated it would be unconstitutional since no other fishery pays a management tax. Number 1542 MELINDA WEST, Harvest Diver, testified via teleconference from Ketchikan, that she and her husband, also a diver, are against the bill. She stated that they have collected over 40 signatures of the working divers who also oppose the bill, she stated that a lot of them are diving and can not testify. She stated they are opposed to the bill, on the grounds that the bill is unconstitutional and discriminatory against one user group. She stated that she has calculated the numbers on current quotas allocated to the dive fisheries. A tax amounting to 14 percent would be required to manage and enforce the dive fishery and support the dive association that is attached to the bill. She stated that this is the makings of a special interest money, possibly bribery and racketeering. In order to make this a fair playing field, this tax should be across the board, to the salmon, halibut, crab and other fisheries. She stated that there will always be the quotient that who ever has the most money gets the attention of ADF&G. She believes that this is why the state has always funded ADF&G through the raw fish tax, not special interest, and should be continued to be funded by this method. She stated that the dive fisheries will be paying a 3 percent raw fish tax next year, which means that they will be paying for the management of the fishery twice. She stated that if these dive fisheries were to expand and stabilize the three percent raw fish tax would generate more than enough revenue to be self sustaining. If the bill does go through she would like the following to be done: The user paid tax be implemented across the board to all fisheries; cooperative management remain in the bill; delete the ability to use the tax for the dive association management funding; delete the 90 days on the purchase of permits prior to voting because we do not feel there will be a large enough group voting on this self tax. She stated that she would like to ear mark this tax so that the divers do not need to retain a lobbyist to get the tax back, which is an added expense. She stated that if the divers pay the cost for management then the divers are paying the price to be the boss, therefore, we would like to see the competitive bids for management of the dive fisheries. She stated that no consideration should be given to any kind of unproven method of self tax, that singles out a certain user group to fund the management of this fishery. Number 1710 RAY CAMPBELL, Harvest Diver, testified via teleconference from Ketchikan, that he got cut out of most of the dive fisheries due to the moratorium last year, the reason being that the dive fisheries could not develop without an moratorium to take an assessment. He stated that since he was in one dive fishery he is going to have to pay for the development of a fishery that he is not involved in. He stated that he opposes the bill. He stated that he does not like to see four fisheries lumped under one heading, they should be managed individually. Number 1775 SCOTT THOMAS, Member, Southeast Alaska Harvest Divers Association, testified via teleconference from Ketchikan, in support of the bill. He stated that it would not be his first choice but it is clear from the test fishery last year that there was no money to manage and develop these fisheries. He stated that this is really the only viable way that the dive fisheries are going to be able to assess, manage and develop these fisheries. He stated it is contingent on getting good, active people in the association that want to dedicate there time to develop these fisheries. Number 1899 RODNEY LINTON, Harvest Diver, testified via teleconference from Ketchikan, in support of the bill. He stated that it is really imperative that we have proper funding to keep the fishery viable and alive. He stated that it would enable expansion into the new fisheries that do not exist. He stated that he is concerned about the cooperative management clause being taken out of the bill and would not support that. Number 1942 LANCE PHILMAN, Member, Southeast Alaska Harvest Divers Association, testified via teleconference from Ketchikan, in support of the bill. Number 1960 RYAN MORIN, Member, Southeast Alaska Harvest Divers Association, testified via teleconference from Ketchikan, in support of the bill. Number 1990 MICHAEL BANGS, President, Harvest Association, Petersburg Chapter, testified via teleconference from Craig, that the association voted unanimously in support of the bill. He stated that in future it can be cancelled by a vote of all the permit holders if the assessment is not needed. He stated that when ADF&G does the surveys to develop a dive fishery it is a lot more expensive than it is for salmon or any other fishery because of having to dive. He stated that an increase in budget would still not cover the cost and that is why the divers need to play an active part in the co- operative management plan. He stated that there is no other option. Number 2081 JIM DENNIS, Harvest Diver, testified via teleconference from Craig, that he has been diving since 1982. He stated that he is in support of the bill because the state does not have the money, it is the only option. Number 2123 BRENT BAXTER, Harvest Diver, testified via teleconference from Craig, in support of the bill. Number 2134 DENNIS WATSON, Mayor, City of Craig, testified via teleconference from Craig, in support of the bill. He stated that there are a lot of economic benefits from the jobs in the dive fishery. Number 2182 GIG DECKER, Representative, Wrangell Divers Association, stated that the two people in Kodiak who testified that the bill had discriminatory wording are taking over half of the resource. Three of the people from Ketchikan that testified were involved in the test fishery that took over 3 million pounds, there was only one company buying, of which he was excluded from. He stated that he has been a full time commercial fisherman in Alaska for 25 years and a commercial diver for nine years. He stated that he totally supports the legislation. Number 2239 STEPHEN LACROIX, Norquest Seafood, stated that they have bought and processed over 450,000 pounds of urchins. He stated that to demonstrate the support of the divers they currently have a 5 cent a pound voluntary assessment, and so far they have collected $23,000, the indication is strong diver support. He stated that this resource allows the company to turn 70 people from being seasonal help to being full time employees and members of the community. He stated for every diver on the water there are between five or six workers in the plant. Number 2320 PETER METCALFE, Representative, Kake Travel Corporation, which owns Kake Fisheries and Pelican Seafoods and employs hundreds of people in seafood processing as well as, processes millions of pounds of seafood a year. He stated that last winter the corporation employed over 45 villagers processing sea urchins. He stated that the corporation supports the intent of the bill, as understood to create a funding mechanism for emerging fisheries. He stated that the corporation sees a lot of potential in the fisheries and a lot of potential employment opportunities for rural and urban residents, especially in the winter months. He stated that the corporation has a strong problem with the dive fishery association being 100 percent divers. He stated that there should be broader representation on the association and processors have a lot to add to this, it is a cooperative association with divers, as they are in charge of the dive program. He stated that other gear types should be represented on this association because these emerging fisheries are not necessarily dive fisheries. He stated that there is the possibility of different harvesting techniques in sea urchins alone and there is the possibility of the pot fishery. He stated that their position is one of support in the intent of the bill which is to find a funding mechanism. He stated that the bill would be very much strengthened if the association were opened up to a broader representation than just permitted to dive fishermen. He stated that to his knowledge there are no commercial divers in Kake and feel that this small community would not be heard in such an association. Number 2439 CHAIRMAN AUSTERMAN asked if his understanding was correct he was suggesting that the processing industry have representation in the association. Number 2442 MR. METCALFE replied that the corporation would be supportive of this bill if it was non-exclusive and open to processors. He stated that Representative Williams expressed the concern that such an association understand the challenges and dangers of the dive fishery. If the corporation were to nominate anyone to serve on that dive fishery he would be certain it would be someone who understood dive fisheries. He felt that they offer a perspective that it is not represented on the proposed association. TAPE 97-17, SIDE B Number 001 CLAY BEZENEK, Southeast Alaska Harvest Divers Association, stated that he has been fishing in Alaska for fifteen years. He stated that he is in full support of the bill. The bill gives divers a reliable funding source for all developing fisheries it also gives a direct link for a co-operative working relationship with ADF&G. He stated that the dive fisheries are unique in that the gear used is a human being, resulting in special considerations, which the bill addresses. It gives the assurance of a funding source for years to come. He stated that as a commercial salmon fisherman he is completely satisfied with the job our aquaculture associations are doing with their assessment. Number 052 AARON CUMMINGS, Representative, Southeast Alaska Harvest Divers Association, Petersburg Chapter, stated that the chapter of 25 divers is unanimously in support of the bill. He stated that every time he has left and returned from participating in various other fisheries as far as the International Dateline, not even 10-15 miles away from his home town, he was crossing volumes of product there for harvesting, which has been so undeveloped it has impossible for him to make a living entirely in that region. This bill would expand the fishery to a point where it would be profitable so he would not have to go to waters outside Alaska to fish. Number 128 STEVEN DAUGHERTY, Assistant Attorney General, Natural Resources Section, Department of Law, stated that he is not testifying because they are any legal problems with the bill but because he was requested to testify on a possible proposed amendment. He stated that there was some impetus for a provision in the bill that would provide an incentive for instate processing. He stated that there are some constitutional problems with that. There is a U.S. Supreme Court case based on an Alaskan processing requirement for timber, that was found to be in violation of the Commerce Clause of the United States. He stated that there was also a case dating back to 1947, in which South Carolina attempted to require fisherman to dock at a South Carolina Port, unload, pack and stamp their catch, before transporting it out of state, which was also found to be unconstitutional in violation of the Commerce Clause. Number 214 GERON BRUCE, Legislative Liaison, Office of the Commissioner, Department of Fish and Game, stated that Alaska underutilized species like the urchins, offer the opportunity to create new fisheries the right way, avoiding some of the problems that have plagued the traditional fisheries in their historic development. He stated that the timing of this new opportunity coincides with a time of reduced funding for fisheries management and development. This is what prompted the introduction of this legislation to try an provide a creative mechanism to fund the development of new fisheries. He stated that there are no new general fund dollars which are the dollars which fund commercial fisheries that are being added to the budget, in fact the House budget proposes to reduce the Department's funding by about $1 million, the Senate a $2.4 million reduction, $1.7 million of that is specifically targeted at the Commercial Fisheries Management and Development Division. He stated that this has been going on for five or six years, the money has not been provided by the legislature to manage new fisheries. He stated that the department does applaud the efforts involved in the bill, however, the bill is narrow in its focus and is directed specifically at the funding issue and does not address the broader policy issues that need to be addressed if these new fisheries are to be sucessful. He stated that when a fishery is developed it will be a fishery that Alaskans will be the primary beneficiaries of and is sustainable. Number 266 MR. BRUCE felt that just the funding issues can not just be focused on, if it is going to be successful in developing these new fisheries. He stated that the concerns are that the bill takes a piece meal approach to the new developing fisheries. He stated that there are a number of species that could be developed, and the mechanism proposed in the bill does not necessary lend itself to the broad range. He stated that the impetus is coming from the Southeast fishermen but what they develop here to solve their problems could become a precedent for other parts of the state since it is statewide legislation. Number 422 CHAIRMAN AUSTERMAN stated that there has to be a starting point. He stated that it can be expanded if there are other emergency fisheries that we want to add into the concept. He asked if the legislature waited for the each fishery to emerge in order to put the whole package together where would we be. Number 445 MR. BRUCE replied that it is a good point, buy the legislature should look at a means of developing these fisheries that could be applied in a wide variety of circumstances. He stated that he is not making the point that we should wait until the fishery comes along in order to develop it. He stated the point he is making is that we do not want to be so specific and focused that it is not broad enough or flexible enough to deal with other situations. Number 473 MR. BRUCE continued that his comments should be taken as constructive criticism as the department is trying to look at it from a policy standpoint to make sure it is going in the right direction. He stated that in the urchin fishery there is the characteristic that a lot of the product is being processed out of state. There may be incentives that can be created to keep the industry in Alaska. Number 558 MR. BRUCE stated that it was the department's view that all of the stake holders effected by this fishery should be in this association, not just the divers. He stated that the sponsor has included a representative of the processing sector and a representative of the local government, which has resolved that concern. He stated that the private sector should not manage the public resource itself and it is best done through dialogue between the two groups but when, where, how large quota is, should be made by people who don't have a vested interest in the industry. He stated that this change was also made and that the sponsor is willing to work on the other issues in the next committee. Number 661 MR. BRUCE stated that the department is committed to sound development of the state's fisheries resources that provide a maximum benefit to Alaskans and is going to launch a major effort to work with all involved to lay out various options that could be used to develop the underutilized species in a way that considers the board range of policy issues that we think are important. He stated that they are committed to maintaining the urchin fishery and seeing that the fishery goes on and has some level of operational funds to support its management. Number 748 MR. BRUCE stated that even though this is a self assessment tax that fisherman are placing on themselves, it will go into the pot of money and the legislature will determine whether or not that money comes back into the department. He stated that there is no guarantee, outside of the appropriation process, that the department will ever see a dime of the money. He stated that if the general fund for the department is capped or decreases, the general fund includes program receipts which would be this category of money. He stated that if there is $250,000 in general fund program receipts associated with the urchin fishery, paid by the fisherman, and the legislation places a cap, the department would have to find $250,000 worth of cuts in order to stay within the cap. Therefore other fisheries would receive reduced funding in order to fund the other option. He stated that a solution would be the Governor's bill which would create a new category of funding called a designated program receipt, which would be made up of money contributed for specific programs in government and would not be considered as part of the general fund appropriation. He stated that if the legislature decided to cut the department's general fund it leaves the designated program receipt category to rise and would allow it to fund the programs. He stated he would like to encourage the supporters of this legislation to get behind the bill, to enable the funds to go to the fisheries that it was intended to manage. He stated that if over time this is proven to not be the best way to manage the fishery, the issue can be revisited. Number 933 MR. BRUCE stated that both the legislative research agency and the Department of Fish and Game have conducted studies looking at the revenues and expenditures that come to the state's treasury from fish and wildlife users and the expenditures made by state government on fish wild life activities, whether it is management, law enforcement or development activities. It was found that the seafood industry contributes more money to the state treasury than what is spent by the state government on the seafood industry which has been especially true with the addition of the landing tax. He stated that in 1996 the fisheries business tax was about $40 million, the other contributions made by the industry totaled about $60 million, the fishery management general fund expenditures made to the Department of Fish and Game was $20 million. He stated that there is money being contributed by the seafood industry to pay for the management of the state fisheries, the problem is that the money is not appropriated to do the job, it is going to other places. Number 1063 GEORGE ELIASON, testified via teleconference from Sitka, that he is here representing himself, two other divers and his two sons. He stated that they all in are support of the bill. He stated that they do not see another means to create the development of the dive fisheries being that there are no funds available. He stated that the dive seasons have been extremely short. He stated that passage of the bill will create a long term viable and orderly dive fishery for today's divers and for future generations. Number 1128 NANCY HILLSTRAND, Owner, Pioneer Alaskan Fisheries and Coal Point Trading Company, testified via teleconference from Homer, that she supports the bill. She stated that the Department of Fish and Game does not have the money to gather data on new and emerging fisheries and without this data, management is lacking deeply. She gave the example of the sea cucumber fishery in Kachemak Bay that was opened with very little information to do so and the species is closed from over harvest. Securing funding to gather information is of the utmost importance and will protect the sustained yield principle on these species by understanding these species more fully. She felt that it might need to be amended to a broader representation to assure all the user groups are included in the fishery, not just the divers. Number 1195 UNIDENTIFIED MALE SPEAKER, testifying via teleconference from Craig, stated that there are six individuals who did not want to testify, but did want to add their support to the bill. Number 1229 REPRESENTATIVE HODGINS made a motion to move CSHB 198(FSH), 0- LS0415, Version T, with individual recommendations and the attached fiscal note. Number 1238 CHAIRMAN AUSTERMAN asked if there were any objections. Hearing none CSHB 198(FSH), Version T was moved out of the House Special Committee on Fisheries. Number 1276 CHAIRMAN AUSTERMAN called for a brief at ease at 6:21.