HOUSE FINANCE COMMITTEE April 17, 1997 1:45 P.M. TAPE HFC 97-104, Side 1, #000 - end. TAPE HFC 97-104, Side 2, #000 - end. CALL TO ORDER Co-Chair Therriault called the House Finance Committee meeting to order at 1:45 p.m. PRESENT Co-Chair Hanley Representative Kelly Co-Chair Therriault Representative Kohring Representative Davies Representative Martin Representative Davis Representative Moses Representative Foster Representative Mulder Representative Grussendorf ALSO PRESENT Representative Alan Austerman; Dave Helmick, Petersburg Charter Boat Association; Stan Malcom, Petersburg Charter Boat Association; Willi Herff, Waterfall Resort, Ketchikan; Kirk Wilson, Glennallen; Bruce Dickerson, Glennallen; Mike Lanegan, Glennallen; Joe Macinko, Kodiak; Steven Daugherty, Assistant Attorney General, Department of Law; Bruce Knowles, Mat-Su; Kurt Wilson, Glennallen. SUMMARY HB 19 "An Act relating to licensing of sport fishing services operators and fishing guides; and providing for an effective date." HOUSE BILL NO. 19 "An Act relating to licensing of sport fishing services operators and fishing guides; and providing for an effective date." Representative Mulder provided members with Amendment 1 (copy on file). JOE MACKINKO, KODIAK testified via the teleconference network in support of HB 19. He stressed that no management or conservation is possible without good information. He spoke against adoption of Amendment 1. He stressed the need 1 for a level playing field. BRUCE DICKERSON, GLENNALLEN testified via the teleconference network. He does business in Unit 13. He noted that he has $5 to $7 thousand dollars invested in licenses fees, insurance and landing permits. He observed that many of the people operating in Unit 13 do not have licenses. He stressed that without enforcement of existing laws there is no incentive for these operators to acquire the proper permits and licenses. He maintained that commercial operators using private property without permission of the landowners is a common everyday business practice. He acknowledged that enforcement alone is not sufficient. He emphasized that there needs to be a penalty with some teeth to detour illegal activity. He noted that the local game warden receives little state support. He asserted that 140 game and fish violations were thrown out by the local district attorney. He maintained that enforcement is needed, not more rules and regulations. He asserted that requirements for service and guide license penalizes those that are already in compliance. He observed that they have lost 30 days of their salmon season and Tuesdays due to problems in the Kenai area. He stated that there is no evidence to support the closure. MIKE LANEGAN, GLENNALLEN testified via the teleconference network. He maintained that the legislation is unneeded. He emphasized the cost of required insurance, CPR courses, and other licenses. He stated that he already spends $1,500 hundred dollars annually in addition to the licenses required by HB 19. KURT WILSON, GLENNALLEN testified via the teleconference network. He agreed with comments by Mr. Dickerson. He emphasized that there is one game warden in the area. He stressed that the game warden cannot enforce the laws that already exist. DAVE HELMICK, PETERSBURG CHARTER BOAT ASSOCIATION testified via the teleconference network in support of HB 19. He stressed the need for fish guides to be accountable. STAN MALCOM, PETERSBURG CHARTER BOAT ASSOCIATION testified via the teleconference network in support of HB 19. He emphasized that there was unanimous support for HB 19 at the last Board of Fisheries' meeting, in Ketchikan, from active charter and lodge operators. He maintained that HB 19 is a reasonable vehicle for the Board of Fisheries to gather needed information and provide basic requirements to obtain a fishing services operator's or guide's license. WILLI HERFF, KETCHIKAN testified via the teleconference 2 network in opposition to HB 19. He emphasized that all fees are indirect taxes. He spoke against more taxes. He stated that he wants accountability and fairness. He stated that more enforcement is needed. He stated that the non-resident limit of four salmon should also apply to commercial non- resident fisherman. STEVE DAUGHERTY, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW stated that he represents the Board of Fisheries. He pointed out that the legislation contains a 3 to 1 difference between residents and non-residents fees. He observed that the State is in litigation over a 3 to 1 differential in the commercial fisheries. He stated that the Carlson v. State case is still under litigation, but that there have been two decisions by the Alaska Supreme Court. He stated that it is clear that the State is out of compliance with the Privileges and Immunities Clause of the United States Constitution. The Clause states that "the citizens of each state shall be entitled to all privileges and immunities of citizens of several states." He noted that the intent is to level the playing field between states so that a resident of one state is not discriminated against in business enterprises in another state. The Alaska Supreme Court has stated that: "The appropriate inquiry is whether all fees and taxes which must be paid to the state by a nonresident to enjoy the state-provided benefit are substantially equal to those which must be paid by similarly situated residents; when the resident's pro rata shares of state revenues, to which nonresidents make no contribution, are taken into account." He stated that there is no evidence that residents are paying more than their fair share for sport or guided sport support. He observed that the majority of funding for sport fisheries is federal. Mr. Daugherty noted that the Board of Fisheries's authority is over guided sport fishermen, not over the guide. There is some limited ability to affect the guide as is reasonably necessary to implement restrictions on the guided sport fisherman. He observed that the State would prevail against claims that existing authority was being taken away. Mr. Daugherty referred to the expansion of the Board's authority over guided sport fishing time and area closures to include the ability to prohibit registered guides or registered guide vessels from fishing. He observed that the Board of Fisheries currently has time and area closures for guided sport fishing. He maintained that a guide can continue to fish with someone on his boat and the State cannot get a conviction because it cannot prove that the person on the boat is paying the guide. Mr. Daugherty observed that the legislation contains 3 statewide reporting requirements. He noted that the Board also needs the authority to require reporting on an area by area basis. Mr. Daugherty noted that the Board has a number of regulations restricting fishing and retention by guides while they have clients on board their vessel. He maintained that the current language would give the Board statutory authority for these restrictions. Mr. Daugherty commented on requests for more enforcement. He pointed out that there is not sufficient funding for enforcement. He emphasized that most fishing violations are minor penalties. Taking an excess of king salmon or taking a king salmon on a day that is closed to fishing is a $100 hundred dollar violation. The bill will provide an enforcement tool. Guides can lose their licenses under some provisions of the bill. More substantial fines will be available against guides that are guiding without a license than are currently available. In response to a question by Co-Chair Therriault, Mr. Daugherty clarified that under the statutes of commercial fishing, anyone who is involved in the taking of fish is liable for a commercial fishing violation. Both the skipper and crew would be liable for any violations. Charter boat operators would not be liable since they are not actively engaged in fishing. Co-Chair Therriault observed that it is a fine line. Mr. Daugherty pointed out that any ambiguity is made by the court in favor of the defendant. In response to comments by Representative Mulder, Mr. Daugherty clarified that the Privileges and Immunities Clause only applies to commercial activities. Some fee differentials can be justifiable based on the contributions made by residents through general fund revenues. He added that he does not have information that would support any fee differential in this situation. Representative Mulder maintained that fees for out-of-state guides on the Kenai River are three times as great as the fee for in-state guides. Mr. Daugherty did not know of any challenge to that regulation. He acknowledged that it is possible that this regulation is unconstitutional. He observed that there are general funds that go into the parks budget. He stated that a fact specific analysis would be necessary to determine if it is unconstitutional. He reiterated that there is no support for a fee differential. He observed that language could be added to allow the Department to adopt, by regulation, a fee differential to the maximum extent allowable by law. This would allow a differential at sometime in the future as changes in funding 4 occur. Representative Mulder asked what happens if the current fee structure is maintained. Mr. Daugherty stated that the worst analysis would be that the State would have to refund the money that has been paid in excess of what residents pay. The State would also have to pay legal fees. REPRESENTATIVE ALAN AUSTERMAN observed that no studies have been done to demonstrate that there is not a difference. He expressed reluctance to change the fee structure. He pointed out that the studies would have to be done if litigation occurs. The State would have to prove what constitutes the amount of money spent by the State. In response to a question by Representative Davis, Mr. Daugherty clarified that sport fishing guides are not included under the definition of commercial fishing. He noted that any type of commercial activity would be covered by the Clause. Representative Davies questioned if general fund dollars for the management and regulation support of fish and game would count as state contribution. Mr. Daugherty responded that the state general fund contribution could be counted if it could be broken out. He stressed difficulty of identifying state support. He noted that State support is small compared to the federal contribution to sport fishing. He added that only the pro rata share of the individuals involved can be considered. Co-Chair Hanley asked if a severability clause should be included. Mr. Daugherty observed that statutes are considered severable without a severability clause. The court would probably invalidate that portion of the fee that is in excess of what residents pay. The Department of Fish and Game may decide not to enforce the fee if so advised by the Department of Law. Co-Chair Therriault noted that the legislative intent would be that the fee be collected from nonresidents. He suggested that the Court would not eliminate the fee completely. Representative Mulder MOVED to Divide Amendment 1 between lines 6 and 7. He explained that the first half of the amendment refers to the "broad brush" regulatory authority that the Board would be given. The remainder of the legislation pertains to occupational licensing regulation as it pertains to sport fish operators and guides. There being NO OBJECTION, Amendment 1 was divided. 5 Representative Mulder MOVED to adopt Amendment 1B (copy on file). He noted that the amendment would delete the language in subsection (4) on page 4 and subsection (6) on page 5, "satisfies additional requirements adopted by the Board of Fisheries that the Board finds necessary for the conservation, development, utilization of the fishery resources of the state, the safety of clients of the sport fishing services industry, or the protection of the integrity of the sport fishing services industry." He maintained that the Board would have occupational licensing powers. He asserted that the requirements should be turned over to the Board of Occupational Licensing. Representative Grussendorf noted that there is a sport fish representative on the Board of Fisheries. He observed that the amendment would make it difficult for the Board of Fisheries to regulate an industry "that has basically gotten out of control." He noted that, in Sitka, guided fishermen are catching more than resident sport fishermen. Representative Mulder expressed fear that the bill can be used as a weapon by commercial fishermen against sport fisherman, through the Board of Fisheries. He acknowledged respect for the current Board. He maintained that commercial fishermen believe that sport fishermen are catching too much fish. He asserted that commercial fishermen want to diminish sport fish opportunities. Representative Grussendorf reiterated concerns that resident sport fishermen in Alaska are concerned about the guided sport fisheries that are dealing with nonresidents. He stressed that conservation of the resource should be considered. Representative Davis observed that the legislation would require a report. He noted that the Board would not be able to react to recommendations by the report. He stressed that any changes would have to be made in statute. Representative Mulder stated that the amendment only pertains to licensure. He asked if there are additional requirements that should be included. He stressed that the Board would have "broad brush" authority to restrict licensure. Co-Chair Hanley pointed out that if Amendment 1A does not pass the Board would still have authority. He referred to page 3, lines 14 and 15. He noted that the Board would be able to "regulate the sport fishing services industry as need for the conservation, development, and utilization of fishery resources. 6 Mr. Daugherty noted that the Board's authority with Amendment 1A would not be as broad as it would be with the inclusion of Amendment 1B. He clarified that Amendment 1B applies to the actual issuance of the license. Amendment 1A applies to the general regulation of fisheries. (Tape Change, HFC 97-104, Side 2) Mr. Daugherty explained that if someone had a lot of violations, such as not turning in their reports to the Board, they would be unable to get a license. Amendment 1B would take away the authority of the Board of set general licensing guidelines. The Board could not require that guides know how to safely release a fish, identify fish, or require experience in an area if they determined it was necessary for conservation. The Board's ability to adopt general regulations regarding gear would remain if Amendment 1A is not adopted. Representative Kohring spoke in support of Amendment 1B. He maintained that the Department of Fish and Game has not managed fish stocks well. He added that the Board of Fisheries has not been responsive. Representative Austerman noted that the amendment pertains to the guide not the overall industry. In response to a question by Representative Grussendorf, Mr. Daugherty clarified that some members of the Board would like to impose substantive requirements that would encourage respect for the resource and to set a basic standard of knowledge. The Board has not discussed any specific revisions. The Board has some regulations regarding how the resource is handled once it is caught. These regulations do not apply just to guides. The Board has expressed concern with guiding operations that are processing fish. Representative Mulder spoke in support of Amendment 1B. He spoke against allowing the Board broad authority. Representative Davis noted that different types of fisheries need to be addressed differently. He maintained that the industry will be regulated. He stated that if the Board cannot regulate guides on the Kenai River then there will be shorter days or days closed. Representative Davies observed that the legislation would not generate additional paperwork. He emphasized that the Board is not being given broad powers. He pointed out that the Board must find that the additional requirements are necessary for the conservation, development, and utilization of the fishery resources. 7 Representative Moses spoke against the amendment. Co-Chair Hanley asked if the Board could limit the number of licenses. Mr. Daugherty clarified that the legislation would not allow the Board to adopt regulations that would limit entry. He noted that a constitutional amendment may be needed before the Board could limit the number of guides. A roll call vote was taken on the MOTION Amendment 1B. IN FAVOR: Davis, Foster, Kelly, Kohring, Martin, Mulder, Therriault, Hanley OPPOSED: Davies Grussendorf, Moses The MOTION PASSED (8-3). Representative Mulder MOVED to adopt Amendment 1A (copy on file). Co-Chair Therriault OBJECTED. Representative Mulder stressed that the guides are not the problem. He maintained that the Board already has the power. He asserted that the Board is allowing a wedge between the user groups. He referred to regulations that would limit guide activity. He maintained that regulations reduce sport fish angular effort. He asserted that sport fish has taken a subservient role in relation to commercial fishing. He stressed that Alaskan residents hire guides. He stated that guides are not commercial fishermen. He concluded that it is inappropriate to give the Board of Fisheries authority to reduce sport fish angular effort. Co-Chair Hanley spoke against Amendment 1A. He stressed that there is a difference between someone who makes their money taking others fishing versus someone who fishes on their own. He stated that the Board should be able to regulate for the conservation, development and utilization of the fishery. Representative Davies emphasized that guides are involved in a commercial activity. He noted that there is a distinction in statute between commercial and sport fishing. Representative Grussendorf observed that resident sport fishermen in his district are concerned about the activities of guided fishing. He stated sport fishermen recognize the problem and are concerned with their reputation. He stressed that 90 percent of the clientele of guided fisheries are nonresidents. He noted that the number of sport fish caught by nonresidents exceed, the amount caught by residents in some communities. Representative Davis recognized sport fish guiding as a 8 commercial activity. He maintained that management has benefited the Kenai salmon run. He spoke in opposition to Amendment 1A. Representative Austerman spoke in opposition to Amendment 1A. He stressed that the Board needs to have the authority to regulate the guided sport fish industry. He proposed that section 17 on page 3, lines 13 - 15 be moved into section 12 on page 3, line 22. He stressed the issue of equity. He stated that as long as one industry is making money off of a resource then the second industry should fall within the overall guidelines of how the resource is used and conserved. He noted that commercial fishermen are told how many days and hours they can fish, and how many fish can be caught. He stressed that there should be the ability to control the whole system. Representative Mulder expressed frustration with the issue. He stated that he would not oppose a Commercial Services Fish Guiding Board. He reiterated that he fears the unknown of the Board of Fisheries. A roll call vote was taken on the MOTION to adopt Amendment 1A. IN FAVOR: Kelly, Kohring, Martin, Mulder, Foster OPPOSED: Grussendorf, Moses, Davies, Davis, Therriault, Hanley The MOTION FAILED (5-6). Co-Chair Therriault MOVED to adopt Amendment 2 (copy on file). Amendment 2 moves section 17 on page 3, lines 13 - 15 into section 12 on page 3, line 22. There being NO OBJECTION, it was so ordered. Co-Chair Therriault MOVED to adopt Amendment 3 (copy on file). He noted that Amendment 3 deletes page 8, lines 17 - 28. This section was inadvertently left in the legislation. There being NO OBJECTION, it was so ordered. Co-Chair Therriault referred to the fiscal note. He suggested that if the nonresident fee was found to be invalid that it would be lowered to the resident rate. Representative Davis MOVED to report CSHB 19 (FIN) out of Committee with individual recommendations and with the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. ADJOURNMENT 9 The meeting adjourned at 3:20 p.m. 10