SB 258-SET NET SITES/ SHORE FISHERIES DEVELOPMENT CHAIRMAN HALFORD announced SB 258 to be up for consideration. MR. RICK THOMPSON, Department of Natural Resources (DNR), said that the current set net leasing program is a long-standing program that allows limited entry gill-net permit holders to obtain leases for their fishing sites. However, it does not require one to fish in that spot. MR. THOMPSON explained that a lease gives fishermen control over the locations where they habitually fish. A lease holder may use the location for set net fishing to the exclusion of others. In FY 00, the legislature reduced the funding in the program by about two-thirds and reallocated the program receipts to other programs. MR. THOMPSON said DNR cannot manage the program as it stands with the finances left so it is proposing to restructure the program. The registration system would not result in the customary lease, but it would give fishermen the right to fish their sites in a manner similar to the existing lease program. A statute change is required to implement the registration system. At the present time, DNR is not accepting any applications for leases and, without modification to the statute and with the resources DNR has left, it cannot continue to manage the program as it exists. CHAIRMAN HALFORD asked how much income was generated from the program receipts for the existing lease program. MR. THOMPSON answered that the total income from program receipts was $360,000 and, prior to FY00, $300,000 of that was allocated to the program. CHAIRMAN HALFORD asked if DNR is asking to repeal a program that was making a $60,000 profit. MR. THOMPSON explained that DNR lost two-thirds of the resources it had to run the program. DNR has 1,200 outstanding leases, which require lease management, and the program cannot be run by one person. He was asked to come up with a way to continue the registration program with one person and this is his best shot. CHAIRMAN HALFORD asked if the registration would cost as much as the lease program, in terms of what the people pay. MR. THOMPSON replied that the fee would stay the same. CHAIRMAN HALFORD asked if the lessees were paying $360,000 to get $300,000 worth of work in the past and under this bill they will pay $360,000 to get $50,000 worth of work. MR. THOMPSON responded the lessees will pay the same amount of money to get less services from DNR. CHAIRMAN HALFORD asked where the program receipts went. MR. THOMPSON replied they were redirected by the legislature and he isn't sure where they went. MS. CAROL CARROLL, DNR, explained that DNR received a reduction in its authority to expend the program receipts and her understanding is that they are now deposited into the general fund. The program receipts were not redirected within DNR. SENATOR MACKIE commented that this might be a Finance Committee question. He asked if anyone from OMB explained this to the Finance Committee members so they could give DNR enough program receipts to manage the program. Number 1900 MS. CARROLL answered when they went through budget reductions last year, the subcommittee knew it was redirecting program receipts. CHAIRMAN HALFORD asked what the difference is between the registration program and the lease program from the user's perspective. MR. THOMPSON explained that users get the exclusive use of the beach for that site, but applicants have to locate the site and fill out a form with DNR to register it. That registration information will be a matter of public record. Applicants have to provide the coordinates for that location. CHAIRMAN HALFORD asked what's different and what they get with a lease that they didn't get with registration. MS. CARROLL explained that DNR used to adjudicate any controversy but will no longer do that if the bill passes. Any controversy will be decided through arbitration, mediation, or the court. CHAIRMAN HALFORD asked if DNR would accept multiple registrations for the same site. MR. THOMPSON answered yes; a system would be set up so that if someone registers for a site and someone else comes along and claims it, there's a conflict resolution system the parties can go through but DNR wouldn't handle it. CHAIRMAN HALFORD said so he is not guaranteeing a lessee the exclusive right to use a specific piece of beach. MR. THOMPSON replied that the lessee has to be able to prove he or she is the superior fisherman on that site. SENATOR MACKIE asked who would do the conflict resolution in that situation. MR. THOMPSON replied that it would be an arbitrator. SENATOR MACKIE asked if it would be up to the fisherman who's been fishing the same site for 20 years to find an arbitrator. MR. THOMPSON answered if a person has an existing lease, it would be converted and no one will be able to challenge it. He was referring to the way it would work for a new site. CHAIRMAN HALFORD said he thought DNR isn't accepting leases this year. MR. THOMPSON responded DNR isn't accepting any leases but if it switches over to the registration program, the leases will be allowed to go through the normal cycle. When they expire, they could convert. CHAIRMAN HALFORD asked what would happen if a lease expires this year. Number 2100 MR. THOMPSON replied they will renew a license that just expired in the interim to protect people's ability to maintain their exclusivity on the site. MR. DAVID RANG, Cook Inlet fisherman of 48 years, said he sees this as a divestiture of interest. When you put a municipality's interest ahead of fishermen's, the process of eminent domain should take care of that. The people at DNR forced a utility outfit to tempt him to buy out his fishing interests for the season. The other thing he does not like about SB 258 is that it addresses several issues to be handled by one claim. He didn't think registering would work very well for the fishermen and would work to someone else's advantage. He also asked that this bill be translated into lay language. He is opposed to SB 258. MR. MARV EBNET, Bristol Bay set netter, said, "If something ain't broke, don't fix it, and this ain't broke." There are two things lessees pay for with the shore lease program - long term security and conflict resolution without the risk of injury or loss of income. Take that away, and there will be no incentive for the set netters to participate in the program and the program will die. He said there is a history of people dying while trying to protect set net sites. He also said that GPS isn't accurate enough to nail down site locations. Everyone out there has already made a substantial investment in existing survey data. That shouldn't change; there's nothing wrong with that data. If this fishery becomes disorderly through violence, the Department of Fish and Game will shut down the fishery. That will have a serious impact on fishermen and the State. He is opposed to SB 258 and would like to see this program have dedicated funds similar to the guide program. MR. AL BAUMAN, Bristol Bay fisherman, testified that in October, 1992, a letter from Ron Swanson said if the program was not self supporting, it might be eliminated. Fees were then increased from $150 to $300. At the time there were four full-time employees, which accounted for about 90 percent of the just over $200,000 cost of the program. The program's viability was to be reviewed in 1997. In February of 1998, they received a letter from Cathy Doogan, Bethel Resource Officer, saying that costs had not increased so no fee increase was necessary, and that the next review would be in 2002. At that time, there were three employees; one was cut due to DNR budget cutting. At present, the program as he knew it no longer exists. One person is employed part-time on shore fishery issues. TAPE 00-11, SIDE B MR. BAUMAN continued. Under the proposed registration program, which is partially operating now, no new diagrams are accepted. No amending diagrams are allowable, conflicts are not resolved, and public notices have been eliminated. From time to time, it's necessary to adjust shore fishery diagrams because of shore erosion or the voluntary elimination of an existing site to increase "fishability." The ability to change a diagram is essential. At present, most arguments have already been settled. Public notice of new lease and lease changes is a tool to avoid conflicts and is paid for directly by the fishermen. Three hundred dollar fees are still required. The fee is not the issue; the issue is that the participant-funded receipt program is accepting funding and not performing services. They would like to see the section pertaining to shore fishery leases in SB 258 be stricken and the former program reinstated. The best way to stop what has become an annual fight to save the program would be to declare fees from the shore fishery program as non-general fund monies. It appears that DNR is using the shore fishery program as a cash cow. Last year, it had one employee and he can't see how DNR spent $300,000 on this program. MR. KIM RICE, Egegik set netter, said he is opposed to SB 258. He wants to save the program because it brings stability to the fishery. He said the Governor should have discussed this bill with them to see what they could do to help before submitting it to the legislature. The lease program as it exists works fine; changing it to a yearly lease as opposed to a 10-year lease (as it is now) will disrupt the fishery and create a Smith and Wesson mentality. The program was enacted to add stability to the mostly Alaskan fishery (90 percent). Set netters are paying $360,000 for the program and he would like to see that money dedicated. That would end the conflict. MR. RICE agreed that GPS is not accurate enough to use for set net location as sites are 300 ft. apart in Bristol Bay. They have already spent millions on surveyors statewide to locate and dedicate these sites to their leases. They need the 10 years so that they can plan their seasons. They are willing to pay the money for the system as long as they get it. CHAIRMAN HALFORD asked if the $300 fee is for the 10 year period or whether it is annual. MR. RICE replied they pay an annual fee for a 10-year lease. MR. TOM CHURCH, Prince William Sound set netter, clarified that the fee is $300 per year per lease site. In his district, they are entitled to have three lease sites for a total of $900 per year. He supported the previous shore fishery lease program. Historically, it has proven to be successful and provided an efficient, valuable, and stable means of managing that fishery. The facts show that the annual fees have been increased to the point where the program provides a surplus to the State. It's been successful so why fix something if it's not broken. MR. JIM PAHL, Prince William Sound set netter, said he is opposed to SB 258. He pays $600 per year for his plots and it cost him $1,000 last year to have an amendment to it. He is concerned that something like this could happen without his knowledge. MR. DAN CHALUP, Kachemak Bay Salmon Co-op, opposed SB 258 for the reasons already stated. He would like to see the fees dedicated to the shore lease fisheries program instead of the general fund. MS. SANDY UMLAUF, President, Ugashik Set Net Association, opposed SB 258. The old program was self sustaining, offered stability for shore fishery leases and provided a means for conflict resolution. There was general satisfaction with the program from the fishermen. The resulting chaos of abandoning this program might cause the set net fishermen to abandon the program and lose that state revenue. Set net sites are frequently hotly contested and very controversial. SENATOR TAYLOR asked Ms. Carroll if anyone supports this bill. MS. CARROLL responded that DNR came forward with this bill because its budget was cut last year. It is an attempt to handle the program and still give the people who have a shore fishery lease a registration program. Right now there is a moratorium on the lease program because DNR cannot run it the way it used to. SENATOR TAYLOR said it wasn't actually a budget reduction. He asked if the money went some place else within DNR. MS. CARROLL replied that it was a reduction in their authority to expend program receipts. The money did not go anywhere else. It was not allocated anywhere else in DNR's budget. It resides in the general fund if people are still paying; and they are. The people testifying today are saying that they totally fund this program; but DNR does not have the authority to spend that money like it did in previous years. SENATOR TAYLOR asked if DNR doesn't believe it still has a mission to provide the same service. MS. CARROLL replied that DNR cannot provide the same services if it doesn't have the staff to do that. Statutorily, DNR is required to do a lease program, but it doesn't have the authority to expend the money. Without the legislature's permission, it is unable to run the program like it used to. SB 258 is a fix. SENATOR TAYLOR asked if the Senate and House Finance Committees actually cut DNR's budget by $200,000 last year. MS. CARROLL said that is correct - directly to the shore fishery program. SENATOR TAYLOR said DNR should have just asked for program receipt authority again, which doesn't take a bill. It just takes the Finance Committee to reinsert it that way. MS. CARROLL said that DNR recognizes that the State doesn't have the money it used to and that the legislature is reducing the overall State budget. DNR has been participating in those budget cuts. SENATOR TAYLOR said DNR would be much wiser to discuss this with the Finance Committees. Number 1512 MR. KARL KIRCHER, Kenai Peninsula Fishermen's Association, submitted documents to the committee: an October 29, 1992 letter from DNR to set netters outlining the need for an increase in the yearly rental fees for shore fishery leases and an October 5, 1992 letter from DNR detailing how the increased fees would be used to ensure that the adequate program receipts would cover administrative costs. AS 38.05.082 gives authority to the director to administer the program. This program brought a great deal of stability to the program. They should look closely at the circumstances surrounding the original cut to the fund. He agreed with Senator Taylor that this should be dealt with in the Finance Committee. He thought they should ask DNR if there are specific areas of the shore lease program that are administratively or financially problematic. Mr. Kircher said this is a bad bill but, if it is killed, it would still leave the moratorium in place. At a minimum, DNR should continue to issue renewals so as not to harm those whose leases have expired. DNR should be given the authority to spend the program receipts as they came from the industry. MR. BRENT JOHNSON, Vice President, Kenai Peninsula Fishermen's Association, said he had been surveying shore fishery leases for many years and he didn't see how this new program would work in Cook Inlet. In this area, nets are sometimes a mile and a half off shore. The only time they can possibly be surveyed is at slack tide when the buoy lines are pulled absolutely tight so you can locate the anchors which lay at the bottom of the ocean. He didn't think it could be done with GPS. MR. ROGER KUCHENBECKER said that Senator Taylor had suggested the solution to the problem. He said he fished in the Ugashik River district for 13 years and is opposed to SB 258. The current program works and has taken 15 years to implement. He said that "peacefully" was one of the important catch words here. One of his main concerns would be the GPS location as mentioned by previous speakers. CHAIRMAN HALFORD said it is his understanding that the highest percentage of Alaska resident ownership and the highest percentage of local area resident ownership of a fishery is in set net sites. The State shouldn't be dismantling something that works. If DNR can come back with something that provides the same kind of service that the existing system provides, it can make its case. Short of that, this bill isn't destined to be a fast mover. SENATOR MACKIE said the problem is that DNR isn't going to manage the lease program any more and it needs to fix the program receipt question in the budget so that the funds collected for that purpose can be used for that purpose. CHAIRMAN HALFORD said this may be one of those cases in which something happened to the program receipts in the prior year and because something wasn't done correctly, the program receipts were reduced further. SENATOR MACKIE repeated that whatever the cause of the problem is, the funds collected for that purpose should be allocated to manage that program.