CS FOR SENATE BILL NO. 347(RES) "An Act relating to moratoria on entry of new participants or vessels into a commercial fishery; relating to vessel permits for, and the establishment of a moratorium on entry of new vessels into, state Gulf of Alaska groundfish fisheries; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. Co-Chair Wilken explained that this legislation "would establish a moratorium in the Gulf of Alaska State waters groundfish fisheries." Senator B. Stevens stated that he is sponsoring this bill at the request of the North Pacific Fishery Management Council (NPFMC), the Department of Fish and Game, and the Alaska Board of Fisheries. He noted that components of Sections 2 through 8 would amend "existing provisions in the Limited Entry Commission to establish temporary moratoriums on the entrance of new participants into a fishery." He characterized the change "as a technical correction and modification to those provisions" as the Board currently has this authority. He reminded the Committee that while the Commission is allowed to consider the development of a moratorium to protect a fishery, they are prohibited from implementing one without Legislative authorization. Senator B. Stevens continued that the bill would also establish a specific moratorium on the Gulf of Alaska groundfish fisheries, as suggested by the Board of Fisheries and as outlined in Sec. 9, page seven of the bill. He also noted that the Department of Fish and Game, the Board of Fisheries, and the Limited Fisheries Entry Commission have been cooperatively involved in an extensive two- year task force to align State programs with programs proposed by the federal fisheries for the areas they manage. He reminded the Committee that the State has the authority to manage fisheries up to three miles from shoreline and that the federal government manages the fisheries between three and 200 miles from shore. He reiterated that this legislation is an effort to align Alaska's same stock species management with the federal fisheries management proposals. Senator B. Stevens stressed that were the State's moratorium plan not established at the same time as the federal quota management plan, there would be a migration to the State's area as it would be the "last open fishery." He clarified that were a quota plan developed for the federal three to 200 mile area, and no plan developed for the State's zero to three mile area, then there would be "a massive influx into the zero/three fishery which would result in increased pressure on the stock, increased pressure on the managers," and a decrease in the historical participants' catch. Therefore, he stated, this legislation would serve to provide a check and balance between what is occurring in the management that is "changing for the positive in the long run" for the sustainability for the participants, the communities that depend on the industry, and the resources. Co-Chair Wilken asked whether a three to 200-mile federal moratorium is currently in effect for the fisheries identified in Sec. 9 of this bill. Senator B. Stevens responded that a federal Licensed Limitation Program (LLP) moratorium, in which the numbers of participants in certain fisheries are fixed, has been in effect since 1991. Co-Chair Wilken asked whether the twenty fisheries identified in this legislation are included in the federal LLP. Senator B. Stevens responded that the federal LLP does not pertain to the bill's fisheries. He stated that this legislation applies to the groundfish fisheries that are managed by the State, and which, he clarified, are currently open to new participants. He reiterated that the purpose of this legislation is "to prevent an influx during this period of development." He exampled that the halibut/sablefish quota management plans development process took ten years, from 1985 through 1995, to finalize. He informed that in 1985 there were, on a statewide basis, 2,700 vessels fishing halibut and 370 vessels fishing the black cod/sablefish market as depicted on the spreadsheet he distributed titled "Number of Unique Vessels - All Areas" (copy on file) that reflects the number of vessels fishing halibut and sablefish in the State from 1980 through 1999. Continuing, he shared that the number of halibut vessels increased from the 1985 level to a high of 4,400 in 1991 and the number of sablefish vessels increased to a high of 1,100 in 1994. He voiced that he "wholeheartedly" endorses this legislation in order to prevent an influx of participants, which could create "instability." He defined instability as a time when the catch rates of historical participants declines, the communities dependent on the industry are negatively affected, and the third and "most important challenge of adequately managing the biomass, is increased dramatically when there is an influx in the fishery." Co-Chair Wilken asked how this legislation would affect the Prince William Sound longline fishery that is specified in the list. Senator B. Stevens noted that the Prince William Sound longline groundfish fishery would include such things as Pacific cod and rockfish, but not halibut. He stressed that the vessels having a permit for those fisheries would continue to be able to fish, but that no new entrants would be allowed during the three-year moratorium. He stressed the fact that the moratorium implemented by this legislation would be limited to a three-year period, and were a long-term or allocation plan developed, it must be ratified by the Legislature as specified in Sec. 9, subsection (k), page nine, line 29 through page ten, line three that reads as follows. (k) During the moratorium established under (d) of this section, the commission shall, in cooperation with the Department of Fish and Game and the Board of Fisheries, conduct investigations to determine appropriate alternatives for management of entry into Gulf of Alaska groundfish fisheries in the state. The commission shall submit proposals to the legislature for legislation or constitutional amendments necessary to implement the recommendations of the commission. Co-Chair Wilken understood therefore, that those who currently hold permits in the twenty identified fisheries in the bill would be able to continue to fish, and that no new entrants would be allowed for the next three years. Co-Chair Wilken asked the definition of "non-pelagic" and "pelagic," which are terms used in the list of twenty fisheries. SUE ASPELUND, Federal Management Research Coordinator, Office of the Commissioner, Department of Fish and Game, explained that the term pelagic refers to fish "that swim up in the water column and non-pelagic are those fish that live on the bottom." Senator Hoffman understood that this legislation would allow vessels owners who have never fished to be granted fishing rights, and he asked why this would be good policy. Ms. Aspelund clarified this is a vessel-based moratorium rather than an individual-based moratorium. She explained that a vessel- based moratorium was determined to be a more effective avenue to contain growth during the three-year moratorium period. She stressed that this temporary moratorium program would "freeze" the fisheries at this point in time to allow for a rights-based system to be developed by the Board of Fisheries, the Commission, and the Department of Fish and Game. Senator Hoffman asked whether it is the intent of the Department in the future to invest the fishing rights with the skipper and the crew rather than with the vessel. Ms. Aspelund replied that the rights of skippers and crew would be part of the deliberations. However, she stressed that until further analysis is conducted, it is uncertain as to whether that would be the final determination. Senator Hoffman asked the expected timeframe for this determination. Ms. Aspelund anticipated that the earliest federal and State determination date would be prior to the 2006 season; however, she reminded that the halibut/sablefish plan took ten years to develop. Senator Hoffman opined that transitioning fishing rights from the multi-vessel owners to the skippers "and potentially the crew" might be difficult. Therefore, he asked the Department's opinion on the matter. Ms. Aspelund responded that it is too early to make a determination as the processes are in the initial stages. She reiterated that skipper and crew rights are a component of the NPFMC analysis that is currently being conducted. In addition, she noted that the Board of Fisheries process in also in the early stages, and therefore, she declared that it would be "premature" to comment. She assured the Committee that a goal of this restructuring endeavor is to provide maximum benefits to the fisheries, to residents and local communities, and to the State. ED DERSHAM, Chairman, Alaska Board of Fisheries, testified via teleconference from Homer and noted that while the final plan is as of yet undetermined, the work group does support a vessel-based moratorium at this time in order to provide time to address the issues. He stated that without this moratorium, the State's ability to address the issue would be difficult, as the State's shoreline to three-mile fishery would be overburdened as a result of the federal "rationalization" plan. Overburdening, he attested would result in serious economic issues and would require conservation methods to be applied to such fisheries as the Pacific cod. Senator B. Stevens stressed that contrary to the argument that is being raised, this bill does "not allocate future rights." He declared that the Legislature has no desire to enter into the discussion of future rights allocations as that, he declared, is the responsibility of the managers of the fisheries such as the Board of Fisheries and the North Pacific Fishery Management Council. Continuing, he stressed that there is a process in place and when a plan is developed, it would be presented to the Legislature for further action. He avowed that this bill would provide fisheries managers with a three-year window in which to address how to protect the resource from an onslaught of participants into fisheries that are currently sustainable and to protect the economics of the current participants. Senator Hoffman agreed that protection of the resource should be "the driving concern;" however, he worried that utilizing vessel- rights, as proposed, might provide multi-vessel owners with "the upper hand," as they could argue that they have the rights. This, he commented, is his primary concern because it is the crewmen and the skippers working in this dangerous industry who are risking their lives rather than the multi-vessel owners who potentially might never be on any of the vessels. Therefore, he continued, while vessel-rights might be the mechanism with which to address the issue initially, the multi-vessel owners should not be provided an edge "in the hierarchy" when the determination is being made regarding who should be granted the rights." Mr. Dersham informed that specifying the vessel-rights approach for the three-year moratorium period was a decision of the work group consisting of the DF&G, the Board of Fisheries and the NPFMC. He stated that this approach was determined to be "the fairest and only effective way to get our arms around the participants;" however, he assured that Senator Hoffman's concerns would be addressed as the process develops. Senator Dyson, voicing appreciation for Senator Hoffman's concerns, commented that there is no intention to grandfather in any component for the future. He commented that it is very difficult for resource managers to manage a resource if there are a huge number of very efficient, large vessels harvesting the resource. Therefore, he agreed that limiting that component would provide a very effective job of managing the resource. He attested to the validity of the bill's goal to integrate the State's management practices of its shoreline to three-mile limit with those of the federal government's management three to 200 mile area practices. Continuing, he reiterated that another valid concern is that the State should maximize the participation of Alaskan fishermen, as he noted that a great number of the individuals in the fleets are from outside of the State. However, he allowed that there are US Constitutional constraints in this regard. Finally, he stated that the financial interests of individual business people, is an area that government does not handle very well. He voiced respect for the NPFMC and that he would support this legislation as he recognizes three of the legislation's goals to be valid. Senator Olson asked whether the number of multi-vessel owners is a significant number to matter in the issue. Ms. Aspelund replied that one of the real problems with furthering the analyses is the difficulty in gathering and integrating federal and State data. However, she noted that preliminary numbers indicate that during the three-year moratorium period, the participation calculations are that 1,475 vessels and 1,655 persons have participated. She estimated that 80 percent of the participants are State residents. Senator Olson asked regarding the owners of those vessels. Ms. Aspelund responded that the Department does not know who the owners of the vessels are. Ms. Aspelund corrected, for the record, that as a result of a technical amendment to align Sec. 9 with other Legislative moratoriums and general sections of the bill, the committee substitute before the Committee specifies there to be a four-year moratorium. Therefore, she clarified that the moratorium would be in effect from January 1, 2005 through December 31, 2008. Co-Chair Wilken asked regarding the duration of the federal moratorium. Senator B. Stevens clarified that rather than establishing a moratorium, the federal management plan incorporates an LLP, which specifies that no more vessel licenses would be issued. Thus, he continued, the number of licenses is set and licenses could only be transferred where there is a disaster or a replacement scenario. SFC 04 # 34, Side B 09:51 AM BRUCE SCHACTLER, testified via teleconference from on offnet site, and stated that this is "a convoluted" issue. He disclosed that he has no involvement in groundfish fisheries and is participating solely because of personal interest in the matter. He declared that the participants are "the guys running the boats and catching the fishing." Historically, he attested, there has not been one management regulatory regime that has "actually given the crewmen" or the permit holder "any consideration" beyond "the lip service" conducted in the analysis stage of the issue. He further opined that while crewmen rights are discussed and researched; the politics of the decision makers and the interests that those people have "in the people who put them there" override the fact that the people who actually produce the product are "cut out of the deal." While understanding the reasoning behind establishing a moratorium, he stated that it would be a temporary rather than permanent fix. He asserted that the federal fisheries management problem and "their inability to fix it," is the driving force that has resulted in the federal government asking the State to address the issue in a similar manner. He declared, "that people have bought off on that" and are, therefore, moving this legislation forward. Mr. Schactler suggested that the State disallow letting fishermen with federal LLP licenses to fish in State waters. Were this to occur, he continued, Alaskans who wish to fish in State waters would be able to do so instead of being prevented from doing so for four years as proposed in this legislation. He voiced that there are other options available to protect the biomass as opposed to "shutting the fishery off" as this legislation does. Mr. Schactler declared that this bill would not fix the problem, as there are 2000 LLP license holders who could fish in the State's waters. He stated that, were this legislation to move forward, some system must be in place to ensure that State residents would be provided the ability to fish upon the conclusion of the moratorium and "the fix" of the federal problem. He stated that this moratorium does not need to become a permanent thing, although he declared that every moratorium previously entertained became permanent. He stressed that the State such not continue to let its fisheries be run by the federal fisheries and their "failure to deal with their problem." He urged the Legislature to take care of the State's fishermen and the State's fisheries, and he stressed that other solutions to the issue are available. He stated this rather than correcting the issue, this course of action would not fix the fishery or provide for State residents, but would instead allow absentee owners to continue to be involved in it. He noted that rather than allowing the Department and the Commission to effectively deal with the issue, this legislation would allow the Legislature to dictate action. In conclusion, he urged the Committee to support actions that benefit Alaskan residents and to not allow this temporary moratorium to become permanent. Senator B. Stevens pointed out that, rather than being federally driven, this legislation was brought forward at the request of the managers of the Department, the Commission, and the NPFMC. MARY MCDOWELL, Commissioner, Commercial Fisheries Entry Commission, Department of Fish and Game, stated that the Commission does not have the statutory authority to mandate a permanent limitation program upon the termination of the moratorium. She disclosed that the Legislature had previously authorized the Commission to implement a vessel-based moratorium in the scallop and herring crab fisheries; however, she pointed out; however, that no statutory authority exists for any other fishery. She stressed that it was not the Commission's decision to implement a vessel-based moratorium as no analysis has been conducted in this regard; however, she noted that the Commission does have the authority to implement a person-based permit moratorium. She communicated that the Commission would work with the Department to develop a plan for future limitations, and she stated that were it determined that the fisheries would be better served by a method other than the current limited entry permit program, that plan would be presented in the form of legislation to the Legislature for consideration. Ms. Aspelund clarified that jig fisheries are exempt from this moratorium in order to provide entry-level access to that Gulf groundfish fishery. Mr. Dersham stated, in response to Mr. Schactler's comments, that the Board is very mindful of the need to protect its authority over State's waters and to determine the best solution for the State and the economies of the region. He stated that the Commission is cooperating with the other entities to the point at which its authority continues to be maintained. He noted that the option of denying LLP license holders the ability to fish in State waters might not work as almost every Alaskan fisherman also holds an LLP license. Senator B. Stevens moved to report the bill from Committee with individual recommendations. There being no objection, CS SB 347(RES) was REPORTED from Committee with fiscal note #1 in the amount of $40,800 from the Department of Fish and Game.