CS FOR HOUSE BILL NO. 218(FIN) "An Act relating to cost recovery fisheries for private nonprofit hatchery facilities." 11:00:10 AM This was the first hearing for this bill in the Senate Finance Committee. IAN FISK, Staff to Representative Bill Thomas, stated that this bill would address the method through which private non-profit hatcheries in the State recover their operational expenses. Representative Thomas, who was instrumental in the development of a hatchery in Juneau, has been a long time supporter of the hatchery system. Historically, these hatcheries have contracted with a single processor and typically "only a couple of vessels actually harvest" the fish. This operation typically would occur in the area in front of the hatchery. "The rate of the total run that is actually harvested by hatcheries varies greatly around the State." The alternate cost recovery method being proposed in this legislation would allow a hatchery to elect to have a variable rate assessment imposed on fishermen were it "to open up their process". He emphasized that the proposal would be optional; a hatchery could impose it were it deemed to be in their best interest. Mr. Fisk stated that were a hatchery to elect to implement this proposal, it would "work with representatives of the commercial fishing fleets to develop a process by which they could do this." 11:01:54 AM Senator Stedman asked whether there is "unanimous support" for this proposal. 11:02:03 AM Mr. Fisk voiced that fishermen's support for this bill would be "about as close to unanimous support as you would get on any fishing industry bill." The lone opposition that has been received to this bill has been from the Board of the Northern Southeast Regional Aquacultural Association (NSRAA). He noted that "some findings" language was removed from the bill is response to some concerns that had been raised by the Valdez Hatchery. Senator Stedman understood that the impetus behind this bill was the cost recovery needs of the Hidden Falls Hatchery. Mr. Fisk affirmed. The Hidden Falls Hatchery, which is a member of NSRAA, "is one of the most successful hatchery programs in the State". It was anticipated that that hatchery would be one of the first that would elect to impose the cost recovery option being proposed in this bill because "they actually don't take that much for their cost recovery." In other words, because they had paid their debt down, they were in a better position to take this risk than other hatcheries. The risk involved would be that this hatchery would allow "their cost recovery to be collected through an assessment and not by simply hiring a couple of boats." Senator Stedman ascertained therefore that the Hidden Falls Hatchery is in support of this legislation. Mr. Fisk clarified that the Hidden Falls Hatchery is not in support of this bill. Mr. Fisk stated that substantial effort was made to work with the director of NSRAA throughout the development of this bill. Numerous changes were made in response to his suggestions, including the adjustment of the ceiling on the rate and the removal of certain findings. The process "is indicative of the general lay of the land here in this hatchery cost recovery issue. That even if we were presenting them with an option, I think part of the concern is that they are afraid that it's not going to be optional in the long run" as something would change that would make this a mandatory bill. He assured "that that is absolutely not the intent." Co-Chair Green intoned being unfamiliar with fisheries issues. Continuing, she voiced concern as to whether additional legislation might occur that could evolve this relatively "benign" program to becoming more active or "be the start of something bad or different." 11:05:42 AM Mr. Fisk characterized this legislation as being "the start of something good." It would be "the first step" in providing fishermen the ability "to access more fish". "Hatcheries were created during times of low abundance to enhance our runs of fish for the benefit of the common property users." There was no intent for the hatchery to be the primary harvesters of the fish. However, as the result of the need to recover costs, the Department of Fish and Game allowed hatcheries "to harvest fish under the current method". This legislation would widen Statute to include this optional cost recovery method. It would not be deemed proper to require this method to be implemented due to the fact that hatcheries "have different financial situations and different species of fish". 11:06:44 AM Senator Stedman recognized that fact that numerous fishermen, and probably fish processors, support the concept being proposed in this legislation. However, it should be noted that NSRAA does not support the legislation. To that point, he asked for further information regarding the makeup of the NSRAA Board. 11:07:31 AM Co-Chair Green interjected to say that, due to time constraints, the bill would be HELD in Committee. Further discussion of the bill would occur when the Committee reconvened. [NOTE: This bill was readdressed later in the meeting. See Time Stamp 4:46:24 PM.] RECESS TO CALL OF THE CHAIR: 11:08:15 AM / 4:37:15 PM CS FOR HOUSE BILL NO. 218(FIN) "An Act relating to cost recovery fisheries for private nonprofit hatchery facilities." This bill was again before the Committee. 4:46:27 PM IAN FISK, Staff to Representative Bill Thomas, the bill's sponsor, responded to Senator Stedman's earlier question regarding which entities were represented on the Board of the Northern Southeast Regional Aquaculture Association (ASRAA). The Board is comprised of 15 commercial fishermen who represent equal components of the "three predominate gear groups": trollers, seiners, and gillnetters. Senator Stedman acknowledged. 4:47:51 PM PETE ESQUIRO, General Manager, NSRAA, testified via teleconference from Sitka in opposition to the bill. He noted that the organization testified at each hearing of the bill and had worked with the bill's sponsor in an effort to improve the bill by providing "some more reason for any hatchery operator to elect to use the assessment option" proposed in this bill. However, NSRAA has determined that discussions must continue in regards to other major issues such as whether "the assessment would be enforceable"; its affect on the net value of the fishery resource as compared to now; how the program would be implemented, where the money to support the first year of operation would be derived, or where funding might come from in years when assessments provided lower income than required. In addition, such things as whether the effects of the program would be equal on all fishermen, and how this assessment program would affect other gear groups outside of the seine fishery should be considered. Mr. Esquiro continued that the NSRAA Board currently has a formula that it applies to cost recovery. This formula would allow for those times when one of the programs might not harvest the anticipated amount of fish; in that case, one of the other cost recovery programs could assist in providing the required compensation. Removal of one program from the overall program would have an impact on the total program. Other concerns would include the unintended harvesting of other species of fish. These are examples of the many important issues that must be discussed. 4:51:41 PM Mr. Esquiro opposed the inclusion of another level of bureaucracy in the hatchery program as being proposed in Section 1(d) on page two line 30 through page three line 11. The determination of such things as the reasonableness of maintenance expenses should be made the hatchery corporation's board of directors rather than the Department of Community and Economic Development or the Department of Revenue. A hatchery's board of directors has the complete judiciary responsible for the hatchery corporation. Years of successful hatchery operations are testament to the NSRAA Board of Directors' ability in this regard. 4:52:33 PM Mr. Esquiro stated that, due to the fact that this bill is permissive, there might be a question as to reason that the NSRAA Board would oppose it. While few options have been developed through which to address hatchery cost recovery needs, the fact that numerous issues are yet to be resolved is the reason for the opposition. Mr. Esquiro declared that it was apparent from the onset that the reason for this bill was an endeavor to manage the Hidden Falls chum salmon fishery. There are numerous views among seine fishermen in regards to how openings should occur. There are continuing variables and moving targets. "Nothing is guaranteed" when managing a fishery; the endeavor would be to manage a fishery as well as possible. "The paramount goal" of NSCRAA would be to continue "to provide as many fish as we possibly can to the common property fisheries." 4:53:54 PM Senator Stedman and Co-Chair Green thanked Mr. Esquiro for this testimony. Mr. Fisk pointed out that many details are included in the proposed plan in order to allow each hatchery to develop its own plan. Those details should be developed outside of this legislative body. Each hatchery has its own unique situation. 4:54:52 PM Mr. Fisk stated that fishermen throughout Southeast Alaska have expressed interest in changing the cost recovery system. The seine fishery group in Southeast Alaska was the first group to forward such an attempt. However, the bill was developed to allow hatcheries in other areas of the State to implement the proposed process. Mr. Fish noted that Mr. Esquiro would be able to develop plans that would work in the hatcheries he was involved with. He noted that the bill would not change the judiciary responsibly of a hatchery's board. Senator Stedman pointed out that this Committee is the only committee of referral for this bill. Noting that the legislation was not time dependent and determining that NSRAA did not desire the cost recovery system to occur at this time, he requested that the bill receive a referral to the Senate Resources Committee. That committee could address the concerns of the hatcheries and the stakeholders. AT EASE 4:56:21 PM / 4:57:52 PM Senator Stedman moved to report the bill from Committee with the recommendation that it be referred to the Senate Resources Committee for additional review. Co-Chair Green clarified that the Committee's recommendation would be that the bill be referred to the Senate Resources Committee. Senator Hoffman objected and suggested that the bill should instead be sent to the Senate Rules Committee. AT EASE 4:58:48 PM / 4:59:48 PM Senator Hoffman removed his objection. Co-Chair Green stated that the intent of the Committee was to return the bill to the Senate with the recommendation that the Senate President add a Senate Resources Committee referral to it. There being no further objection, the CS HB 218(FIN) was RETURNED to the Senate with a Memorandum from Senator Green to Senate President Ben Stevens, dated May 6, 2005, [copy on file] requesting that a Senate Resources Committee referral be added to the bill. AT EASE 5:00:21 PM / 5:09:51 PM