HB 365-FISH PROCESSOR FEES, LICENSES, RECORDS  11:05:44 AM CHAIR EDGMON announced that the final order of business would be HOUSE BILL NO. 365, "An Act relating to sharing records regarding fish purchased by fish processors with certain federal agencies, to requirements to obtain and maintain a fisheries business license, and to payment of industry fees required of fish processors; and providing for an effective date." 11:05:44 AM REPRESENTATIVE MILLETT informed the committee HB 365 is a continuation of a fishery capacity reduction program enacted by the legislature in 2002, commonly known as the "buyback" program. She read from a letter submitted by the Commercial Fisheries Entry Commission (CFEC) dated 3/2/10, a copy of which was provided in the committee packet [original punctuation provided]: HB 365 is simply an accounting procedure modification to make the program operate more efficiently and allow the lender to monitor the capacity of the reduction loan repayment. It does not change the program established in 2002 in any way.... HB 365 will allow the National Marine Fisheries Service (NMFS) access to confidential state records and reports through an exception to AS 16.05.815(a). This is not an unusual request since a dozen other exceptions have been granted in statute, including NMFS but for purposes of fishery management and enforcement. This legislation is necessary since it is the State of Alaska that maintains the fish ticket harvest data and fish processor annual reports. This exception will provide assurance to NMFS that they are receiving the proper repayment of their loan.... The original legislation in 2002 was supported by the Alaska fishing community and had overwhelming legislative support in both the House and Senate, as did the 2006 modification. This support stemmed from the fact that the program was initiated by fishermen for fishermen, it is a voluntary program (no one will be forced to sell their limited entry permit), the program requires a majority vote of all the fishermen to implement the loan agreement, the fishery association will have access to federal funds of $21 million through the Magnuson-Stevens Fishery Conservation and Management Act, there is little State expense or administration, the State maintains all its responsibility to manage its fisheries in the future should conservation or economic conditions change, and the program has had a history of legislative support. REPRESENTATIVE MILLETT asked the committee to consider the bill in order to continue to sustain a healthy and vibrant fishery in Southeast. 11:08:02 AM FRANK HOMAN, Chairman/Commissioner, Commercial Fisheries Entry Commission (CFEC), Alaska Department of Fish & Game (ADF&G), explained the program is available to any fishery throughout the state; thus, Southeast seiners developed an association to seek federal funding for a buyback loan that will be repaid by the fishermen. He stressed that this is a voluntary program, and only works in regions where the fishermen "come together and want to do this." In the last decade, the seiners in Southeast have only been fishing about one-half of their permits because of high costs and low prices for fish. He opined the program gives the remaining fishermen an opportunity to "take the chance with the future and to buy out the permits not fished which would enable them, those remaining, to improve their economic condition in the future." 11:10:54 AM REPRESENTATIVE JOHNSON asked about the permanence of the program, given market changes and state constitutional issues. 11:11:40 AM MR. HOMAN advised that one of the features allows the state to maintain its responsibility to the fishery; in fact, the Limited Entry Act states that if changes occur, the state has the opportunity to analyze a fishery through an "optimum number study." Furthermore, if a fishery becomes too exclusive, the state may issue more permits into that fishery. As a protection for the fishermen, modification legislation enacted in 2006 directed that the proceeds from the new permits would be used to pay off any loan balance. 11:13:51 AM REPRESENTATIVE JOHNSON pointed out that the 2006 legislation does not "trump the constitution, which says that ... we have rights to the resources that are owned by the people..." Although in support of the buyback program, he cautioned that only a state constitutional amendment will guarantee the permanence of the program. However, passage of a constitutional amendment may create "privileged groups," in fact, some fisheries are close to this situation already, and opening the fishery may cause a "false economy," subject to lawsuits. Representative Johnson warned that the state may be caught in the middle, and he asked that the record reflect his intention to protect the resource by the guarantee of limited entry, although "the courts are going to end up deciding, probably." 11:15:36 AM MR. HOMAN agreed that issues over limited entry may be determined by the courts; however, he did not anticipate that the changes in the fishery that would cause this to happen are coming. He opined that if the statutes were changed, and new permits were not allowed, the court would "see that as an overreaching limitation." 11:16:49 AM REPRESENTATIVE JOHNSON applauded the association in Southeast that has brought this legislation forward; however, a law must work throughout the state, and he asked, "If you took this model and put it in Bristol Bay, or ... put it in Cook Inlet, what would it look like?" 11:17:46 AM MR. HOMAN explained that the program is available to other regions if they form a fishery association, under state statute, and seek a comprehensive group of fishermen to work with the federal government. In addition, there are other methods available, such as assessing themselves upfront and collecting money to buy permits back. He assured the committee the program is available now to other regions, if there are unused permits, as an opportunity to reduce the fleet. 11:19:19 AM REPRESENTATIVE JOHNSON restated his support of the program; however, he would like to see further assurance of permanence. 11:20:35 AM CHAIR EDGMON opened public testimony. 11:20:49 AM BRAD HANES, commercial fisherman, informed the committee he was a fourth generation purse seiner, beginning his fishing career when he was 18 years old. He spoke in support of the bill, even though it meant "putting a tax on myself." 11:21:59 AM BRYAN BENKMAN, commercial fisherman; member, Southeast Alaska Seiners Association (SEAS), informed the committee he has been fishing in Southeast since 1973. He recalled that the fishery was overcapitalized in the '80s and '90s, but in the last decade the number of fisherman has dropped, making this a good time to pursue the buyback. He supported the opportunity to stabilize the fishery. 11:23:44 AM SETH WYMAN, commercial fisherman; board member, SEAS, stated he and his organization support HB 365, and that members of the association are willing to tax themselves to make the fishery stable and more beneficial to the industry. 11:24:56 AM SVEN STROUSE(ph), commercial fisherman; board member, SEAS, also stated support for HB 365 on behalf of the association, saying that the legislation will maintain the economic viability of the fishery for the future. 11:25:53 AM RANDY STEWART, Vice President, SEAS, said he was representing himself and the association. He assured the committee that the bill will not cause the cost of permits to rise, or restrict access to the fishery; in fact, in 1977, when he began fishing, a newcomer still needed help with financing to enter the fishery. Mr. Stewart recalled that the implementation of limited entry provided stability to the fishery. The value of the permit is a small portion of the cost to enter a fishery, as the cost of becoming a commercial fisherman is too high for any young person on his/her own. Potential investors will look at the stability of the industry prior to making an investment or loan, and the possibility of 170-200 returning permits is a destabilizing factor. Mr. Stewart expressed his personal interest in an industry that is not exclusive, but is profitable and would attract buyers to purchase permits that come on the market. He concluded that the bill will provide a stabilizing influence. 11:29:12 AM DAN CASTLE, President, SEAS; board member, Southeast Revitalization Association (SRA), stated he was representing himself, SEAS, and SRA. He related that SRA was tasked with building this program 10 years ago by securing money and extinguishing latent permits. He described the development of the program, and opined HB 365 simply provides a collection vehicle to collect the money from the fishermen and repay the loan. Mr. Castle urged the committee to move the bill. 11:31:36 AM BOB THORSTENSON, Executive Director, SEAS, stated that he was speaking on behalf of himself and his constituents. He stressed the importance of the bill and that it was written over an entire decade. Regarding the permanence issue, he cautioned that the bill addresses this in the best way possible without "a series of optimum number studies." He shared Representative Johnson's desire to deal with the optimum number of permits in a different manner; however, this risk will be taken by the fishermen, as the language in the 2006 legislation says the state "may" use the resulting funds from reissued permits to reimburse the association. Mr. Thorstenson recalled that the first round to purchase permits retired 35 permits with a percentage of non-resident permit holders at about 80 percent. He predicted that after consolidation, Petersburg will hold about 22 percent of the permits. He pointed out the state legislature began this process in 2002, and the association has worked for eight and one-half years to secure the twenty-one million dollar loan. 11:34:34 AM REPRESENTATIVE MUNOZ asked whether the processors supported the buyback program in 2002. 11:34:42 AM MR. THORSTENSON said yes. In fact, in 2003, letters of support were received from every major processor. He understood the concern of the processing sector about the recent price fluctuations; however, those are cyclical swings. He expressed his belief that a larger fleet does not mean more fish will be caught. He advised that there was full support to pursue this program recently. 11:36:38 AM REPRESENTATIVE MUNOZ further asked whether the buyback program will have any effect on existing active permits. MR. THORSTENSON said no active permits will be removed in Southeast unless they are offered for sale. The legislation also pertains to other regions. 11:38:10 AM NIK NEBL, commercial fisherman; member, SEAS, said he was representing himself and the association. He observed that the state, through the commercial fishing loan fund, provided access to the fishing industry for those with a desire to be fishermen. Mr. Nebl obtained a commercial loan from 1984-1994, through the "ups and downs" of the industry, until he became a permit holder. He expressed his hope that this legislation will stabilize the industry for newcomers, and help families keep fishing. 11:39:54 AM BRUCE WALLACE, commercial fisherman, stated he has been a fisherman since 1970, and he purchased a limited entry permit at the inception of the program in 1976. His experience in the industry is broad, and he has found that most aspects of a fishery cannot have certainty. Fish products can be enhanced and well-managed, but these factors do not control the biology of a fishery. On the other hand, there is some ability to control the market. Mr. Wallace advised that the bill closes a promise that was made in the limited entry law over a decade ago, before the target goal of 300 permits in Southeast was artificially inflated by legal action. After a decade of effort, the fleet "stayed with it" and has reached closure. He asked for the committee's support of the bill. 11:43:02 AM GARY HAYNES, commercial fisherman, said that he is a lifelong resident of Ketchikan. Mr. Haynes recalled lobbying for the Limited Entry Act in 1974, which he thought was a stabilizing measure for the industry then. He has been running his boat since 1976, and feels strongly that HB 365 is another great tool for stabilization, as was limited entry. 11:44:18 AM SCOTT MCALLISTER, commercial fishermen, agreed with Mr. Wallace that this legislation "closes a deal that was kind of, was implied in the original Limited Entry Act." His understanding was that the act provided for optimum and maximum numbers of permits. This left open the possibility for buyback; however, the bill preserves the commerce in commercial fishing, which is in competition with all of the other elements and aspects of fishing in the state. He concluded that the bill ensures the balance and stability of commercial fishing in the future, with the possibility of achieving the optimum number of permits within a fishery "and hav[ing] a future, stable, commercial future for the participants in that fishery." 11:46:35 AM JERRY MCCUNE, representative, United Fisherman of Alaska (UFA), stated UFA supports the bill. In his role on the restructuring panel on the Board of Fisheries, and working on the legislation in 2000, he heard from fishermen that they supported the bill because it is voluntary. No one can be forced out of the fishery; therefore, UFA supports the action by SEAS and the vote of the fishermen. He expressed his hope that the program is successful. REPRESENTATIVE MUNOZ asked what length of time is used to determine that a permit is latent. MR. MCCUNE advised that a permit must be renewed every two years, and a permit holder who has not fished in four years would be considered latent. CHAIR EDGMON observed the chairman of the CFEC is indicating his agreement with Mr. McCune's answer. 11:49:23 AM MITCH EIDE, commercial fisherman; board member, SEAS, said he was a lifelong Petersburg resident representing himself and the association. He stated that the younger fishermen are willing to pay a tax for 25 years because this legislation is important for the future stability of the fishery. Mr. Eide urged the committee to pass the bill. 11:50:12 AM CHAIR EDGMON closed public testimony, and stated that the bill would be held [HB 365 was held over.]