HOUSE SPECIAL COMMITTEE ON FISHERIES March 3, 1993 8:30 a.m. MEMBERS PRESENT Representative Carl E. Moses, Chairman Representative Harley Olberg, Vice Chairman Representative Irene Nicholia Representative Cliff Davidson MEMBERS ABSENT Representative Gail Phillips OTHER MEMBERS PRESENT Representative Fran Ulmer COMMITTEE CALENDAR HB 140 "An Act relating to the king salmon tag fee." HELD IN COMMITTEE FOR FURTHER CONSIDERATION HB 123 "An Act relating to loans for the purchase of individual fishery quota shares." MOVED OUT OF COMMITTEE AS A CS, WITH FISCAL NOTE WITNESS REGISTER Royce Weller, Legislative Aide to Representative Bill Hudson State Capitol, Room 108 Juneau, Alaska 99811-1182 Phone: 465-3744 Position Statement: Gave an overview of amendments to HB 140 Mike Millar Charter Boat Operator 4510 Prospect Way Juneau, Alaska 99801 Phone: 789-9345 Position Statement: Opposed $20 king salmon stamp Mike Dobson Charter Boat Operator P.O. Box 32563 Juneau, Alaska 99803 Phone: 780-4468 Position Statement: Commented on restrictive fishing regulations William Foster, President Sitka Charter Boat Operators Association 2810 Sawmill Creek Rd Sitka, Alaska 99835 Phone: 747-6711 Position Statement: Concerned with the non- resident king salmon fees Ann Chadwick, Executive Director Sitka Convention & Visitors Bureau Box 6112 Sitka, Alaska 99835 Phone: 747-5940 Position Statement: Proposed $20 tag fee too high for non- residents Merle Wolford, Representative Homer Charter Association South Peninsula Sportman's Association P.O. Box 813 Homer, Alaska 99603 Phone: 235-7427 Position Statement: Favored a king salmon stamp but not for anglers under 16 Tom Ramiskey, President Ketchikan Marine Charters Association No address available Ketchikan, Alaska Position Statement: Supported the concept of a graduated fee schedule Dan McQueen Ketchikan Charter Boat Operator 3222 Tide Ave. Ketchikan, Alaska 99901 Phone: 225-2731 Position Statement: Supported HB 140, if amended William Pattison Charter Boat Operator Rt. 1, Box 878 Ward Cove, Alaska 99928 Phone: 247-8489 Position Statement: Supported HB 140 Donald Westlund Charter Boat Operator P.O. Box 7883 Ketchikan, Alaska 99901 Phone: 225-9319 Position Statement: Favored salmon stamp concept Dennis Ketchum Ketchikan Resident 2343 2nd Avenue Ketchikan, Alaska 99901 Phone: 225-7774 Position Statement: Supported HB 130 Lee Putman, Representative Ketchikan Sports and Wildlife Club 6005 Roosevelt Drive Ketchikan, Alaska 99901 Phone: 225-7694 Position Statement: Commented that no increased fees were needed on King Salmon tags Drew Scalzi, Representative North Pacific Fisheries Association P.O. Box 1115 Homer, AK 99603-1115 Phone: 235-6359 Position Statement: Supported HB 123 Paul Seaton Palmer Fisherman 58360 Bruce Drive Homer, Alaska 99603 Phone: 235-6342 Position Statement: Opposed HB 123 Mako Haggerty Homer Fisherman P.O. Box 737 Homer, Alaska 99603 Phone: 235-6410 Position Statement: Opposed HB 123 Chris Moss, Representative North Pacific Fisheries Association P.O. Box 1115 Homer, AK 99603-1115 Phone: 235-8053 Position Statement: Supported HB 123 Anna Borland Ivy, Deckhand Homer Charter Boats P.O. Box 2219 Homer, Alaska 99603 Phone: 235-5955 Position Statement: Opposed HB 123 Bill Sullivan, Crewman Homer Fishing Boats No address available Homer, Alaska Position Statement: Opposed HB 123 Dan Falvey, Member Alaska Longline Fishermen's Association P.O. Box 8083 Sitka, Alaska 99835 Phone: 747-3400 Position Statement: Supported HB 123 Eric Jordan Commercial Salmon Troller 103 Gibson Plaza Sitka, Alaska 99835 Phone: 747-6743 Position Statement: Found problems with HB 123 Matt Donohoe P.O. Box 2993 Sitka, Alaska 99835 Phone: 747-6467 Position Statement: Stated there was not enough money allotted in HB 123 for the IFQ program Linda Kozak, Member Kodiak Longliners Association P.O. Box 135 Kodiak, Alaska 99615 Phone: 486-3781 Position Statement: Supported HB 123 Kris Norose, Director Petersburg Vessel Owners Association P.O. Box 232 Petersburg, Alaska 99833 Phone: 772-9323 Position Statement: Supported HB 123 Bill Hall Commercial Fishing and Agriculture Bank P.O. Box 92070 Anchorage, Alaska 99509 Phone: 276-2007 Position Statement: Suggested IFQ financing be more thoroughly looked into Chris Berns P.O. Box 26 Kodiak, Alaska 99615 Phone: 486-5091 Position Statement: Opposed the IFQ loan program Eric Forrer Retired Setnetter P.O. Box 32563 Juneau, Alaska 99803 Phone: 789-2024 Position Statement: Supported the IFQ program Mary McBurney, Executive Director Cordova District Fishermen's United P.O. Box 939 Cordova, Alaska 99574-0939 Phone: 424-3447 Position Statement: Supported HB 123 Representative Fran Ulmer State Capitol Court Building, Room 601 Juneau, Alaska 99811-1182 Phone: 465-4947 Position Statement: Prime Sponsor, HB 123 Greg Winegar, Manager Juneau Lending Branch Division of Investments Alaska Department of Commerce and Economic Development P.O. Box 34159 Juneau, AK 99803-4159 Phone: 465-2510 Position Statement: Supported HB 123 Richard B. Lauber, Lobbyist Pacific Seafood Processors Association 321 Highland Juneau, AK 99801 Phone: 586-6366 Position Statement: Supported HB 123 PREVIOUS ACTION BILL: HB 140 SHORT TITLE: FEES FOR NONRESIDENT KING SALMON TAG BILL VERSION: SPONSOR(S): REPRESENTATIVE(S) HUDSON,Phillips TITLE: "An Act relating to the king salmon tag fee." JRN-DATE JRN-PG ACTION 02/08/93 254 (H) READ THE FIRST TIME/REFERRAL(S) 02/08/93 254 (H) FISHERIES, RESOURCES, FINANCE 02/22/93 (H) FSH AT 08:30 AM CAPITOL 17 02/22/93 (H) MINUTE(FSH) 03/03/93 (H) FSH AT 08:30 AM CAPITOL 17 BILL: HB 123 SHORT TITLE: LOANS FOR IFQ'S BILL VERSION: SPONSOR(S): REPRESENTATIVE(S) ULMER,Grussendorf,Navarre, Sitton,Mackie,Davies,Davidson,Brown TITLE: "An Act relating to loans for the purchase of individual fishery quota shares." JRN-DATE JRN-PG ACTION 02/03/93 215 (H) READ THE FIRST TIME/REFERRAL(S) 02/03/93 215 (H) FISHERIES, RESOURCES, L&C, FINANCE 02/05/93 241 (H) COSPONSOR(S): BROWN 02/19/93 (H) FSH AT 08:00 AM CAPITOL 17 02/19/93 (H) MINUTE(FSH) 03/03/93 (H) FSH AT 08:30 AM CAPITOL 17 ACTION NARRATIVE TAPE 93-9, SIDE A Number 000 HB 140: FEES FOR NONRESIDENT KING SALMON TAG CHAIRMAN CARL MOSES called the meeting to order at 8:40 a.m. He noted members in attendance, advised them that HB 140 and HB 123 were on the agenda and noted the meeting was being teleconferenced. He asked Royce Weller of Representative Bill Hudson's office to give an overview of HB 140, related to the king salmon tag fee. Number 037 ROYCE WELLER, LEGISLATIVE AIDE TO REPRESENTATIVE BILL HUDSON, PRIME SPONSOR of HB 140, noted four amendments proposed by the Alaska Department of Fish & Game (ADF&G) had been inserted into members' packets. He claimed the sponsor, Representative Hudson, had no objections to the amendments, the first of which changed the effective date to January 1, 1994. The second and third amendments distinguished between river and land-locked king salmon. The fourth amendment clarified the non-resident military king salmon tag would remain at $20. MR. WELLER stated the committee had discussed adopting a $5 or $10 fee for a one day tag, and the fiscal notes detailed the impact of those fees. The sponsor, Representative Hudson, had no objection to those fees, he added. MIKE MILLAR, CHARTER BOAT OPERATOR IN JUNEAU, testified in opposition to the $20 king salmon stamp. He exclaimed that he must have nine different licenses on board to operate his boat, including a radio station license, charter boat license, business license, life-skills license, transporter license and a Coast Guard license. He said there were one and three day licenses to attract tourists to go fishing which cost $10 and $15, respectively. He believed to increase these fees decreased the opportunity for non- residents to fish, and drove more and more people into British Columbia where the bag limit was four king salmon, whereas the limit in Alaska has been one, and might be two this year (1993). MR. MILLAR claimed 80% of his license sales were the one and three day licenses. Further, he claimed the state was planning to place $700,000 projected revenue into hiring more creel census-takers. He claimed there were enough creel census-takers in past years to count the 41,000 fish that got sport fishermen and commercial fishermen into disputes years ago. He did not have a problem with the enhancement of hatchery stocks because fishermen got more fish through the quota from the hatchery stocks; on the other hand, enhancement of wild stocks did no good, he believed. REPRESENTATIVE CLIFF DAVIDSON asked if more people were vying for more fish or if there was a market situation forcing Alaskan fishermen to become more competitive because there were fewer fish. He also asked if the lower prices of fish in Canada was an advantage to people who fished there. Further, he asked how many king salmon Mr. Millar's operation took and what amount of money was paid to the state for the privilege of getting those salmon for his customers. MR. MILLAR advised that fishermen were going to British Columbia (BC) because the limit there was four sport king salmon. Through the International Treaty, Alaska got 260,000 king salmon while BC got 880,000 king salmon. In parts of BC, like the west side of Vancouver Island, sport- caught king salmon were not charged against their quota. The ADF&G has calculated that a sport-caught king salmon is worth well over $900. MR. MILLAR said he paid nothing to the state except for the licenses; the revenue he generated helped hotels, gift shops, bed & breakfasts and other tourist attractions, he added. Number 240 MIKE DOBSON, CHARTER BOAT OPERATOR IN JUNEAU, stated that 78% of his clientele were nonresidents and the price was really becoming prohibitive. A maximum catch of one to two king salmon per day was not as attractive as the limit in BC. The $20 fee was also to count the king salmon, of which one million to 1.2 million were projected per year. One- half million of that was to hire 14 census takers. The state boasted the ADF&G had an extremely accurate count of how many king salmon were caught. When the Board of Fisheries mandated 17%, or 41,000 kings had been caught, the ADF&G then admitted they did not know how to count the fish. MR. DOBSON alleged the ADF&G then claimed 14 additional census takers; the other half million was to go into salmon enhancement. If the money went into a hatchery, fishermen could not catch the salmon because it was not counted against the treaty. If the money went into re-stocking streams, then it went against the International Treaty, which does fishermen no good. The other argument was that re-stocking gave fishermen another issue to negotiate with the Canadians to increase the treaty. MR. DOBSON continued by commenting that the Canadians were not going to let Alaskans catch more fish. In his view, the money going into hatcheries was doing Alaskan fishermen no good anymore. Therefore, to help the Alaskan fishermen, the tag price for the one and three day fishermen should be reduced, he concluded. Number 296 REPRESENTATIVE DAVIDSON claimed the committee should come up with some ideas and more information that would be fair to all user groups. WILLIAM FOSTER, PRESIDENT OF A 40 MEMBER GROUP OF SITKA CHARTER BOAT OPERATORS, testified via teleconference. He expressed his concern with the non-resident salmon tag fee since last fall. The $20 non-resident fee was excessive for a short-term angler and he felt there was no public input to the legislature prior to passage of the bill that set the fees. MR. FOSTER preferred the fee structure in HB 140, and felt the committee should address non-resident anglers, under 16 years of age, who currently required no license, but needed a tag at the cost of $20. He noted over 50% of the clients were not rich and were charged by the cruise ships for fishing trips. These fees charged by the cruise ships were out of the control of fishermen, he added. ANN CHADWICK, EXECUTIVE DIRECTOR OF THE SITKA CONVENTION & VISITORS BUREAU, testified via teleconference that the originally proposed $20 tag fee was too high for short-term, nonresident anglers. A study by the McDowell Group showed a southeast Alaska visitor profile which documented that one in five visitors fished while in Alaska. These visitors have moderate household incomes and cannot afford higher fees, she declared, and added that the Sitka Visitors Bureau supported HB 130, with the $5, $10, and $20 graduated fee schedule. MERLE WOLFORD, REPRESENTATIVE OF HOMER CHARTER ASSOCIATION AND THE SOUTH PENINSULA SPORTSMAN'S ASSOCIATION, testified from Homer that his groups favored a king salmon stamp, but not for anglers under 16 years old. Further, he said the state should not try to gouge those visitors who come to Alaska and spend their money here. TOM RAMISKEY, PRESIDENT, KETCHIKAN MARINE CHARTERS ASSOCIATION, testified via teleconference from Ketchikan, in support of the concept of a graduated fee schedule for a nonresident king salmon tag, and in opposition to specific fees as provided for in HB 140. He recommended a 14 day tag at a cost of no more than $20 and a $50 annual tag. DAN MCQUEEN a KETCHIKAN CHARTER BOAT OPERATOR, speaking from Ketchikan, stated he would support HB 140, if amended to make the 14 day tag $20 and the one year tag $50. Nonresident children, 16 years and under should not be included, he believed, and added that these amendments should be adopted immediately rather than in 1994. WILLIAM PATTISON, a KETCHIKAN RESIDENT AND CHARTER BOAT OPERATOR, testified via teleconference. He supported HB 140 but suggested the three day, $15 dollar tag be increased to four days. Additionally, the 14 day, $30 fee should only cost $20 and an annual fee should be $50, he said. DONALD WESTLUND, a KETCHIKAN RESIDENT AND CHARTER BOAT OPERATOR testified from Ketchikan. He favored the salmon stamp concept, but liked HB 130 better than HB 140. The nonresident child should not have to buy a stamp, he believed. DENNIS KETCHUM, a KETCHIKAN RESIDENT speaking from Ketchikan, advised of his support for HB 130 and the graduated fee schedule. LEE PUTMAN, REPRESENTATIVE OF THE KETCHIKAN SPORTS & WILDLIFE CLUB spoke to the committee from Ketchikan. He felt any salmon stamp was unnecessary, however if a fee was passed, they should be lower. CHAIRMAN MOSES asked if anyone else wanted to testify, in person or via teleconference on HB 140. He then clarified resident anglers under age 16 were exempt. HB 140 WAS HELD IN COMMITTEE AWAITING FURTHER AMENDMENTS FROM REPRESENTATIVE HUDSON. HB 123: LOANS FOR IFQ'S Number 450 REPRESENTATIVE FRAN ULMER, PRIME SPONSOR of HB 123, requested teleconference witnesses be allowed to testify first. DREW SCALZI, REPRESENTATIVE OF THE NORTH PACIFIC FISHERIES ASSOCIATION testified from Palmer that his group endorsed HB 123 and was very encouraged by the bill. He admitted the IFQ (individual fishing quota) plan had been very controversial and felt it would behoove the state to research the issue before making the loan applications available when the IFQ's came up for sale. PAUL SEATON, a PALMER FISHERMAN, stated HB 123 was premature as the IFQ plan was not finalized. Additionally, the loan program might have problems because it might be unconstitutional to harvest any of the IFQ fish within natural waters of the state. He exclaimed that the program was creating a situation where salmon harvesting would be unconstitutional within Alaskan waters. The 1972 amendment, known as the limited entry amendment allowed for a permit restriction, limiting access to a public resource, not privatization of a public resource. The amount of capitalization required should also be addressed, he believed. MAKO HAGGERTY, A HOMER FISHERMAN, testified from Homer in opposition to HB 123 for several reasons. He felt the bill was poorly researched as he had been a crewman and a skipper, and under the IFQ program, he stood to get no quota shares. He stated that if he wanted to start a business with no quota shares and go to the state to borrow money to buy quota shares, paying $10 per share, he would never be able to pay it off. It would take at least 20 years to pay off a $100,000 loan on 10,000 shares with interest. Although the intentions were good, he believed HB 123 made little practical sense and the numbers did not add up. The people who will benefit are those large operations that already have initial IFQs, and those who were economically dependent on commercial fishing for their livelihood would not benefit, he added. CHAIRMAN MOSES assured Mr. Haggerty there were proposed amendments which would perhaps address some of his concerns. Number 541 CHRIS MOSS, REPRESENTATIVE OF THE NORTH PACIFIC FISHERIES ASSOCIATION, testified from Homer. He supported HB 123 and its companion bill, SB 96 as those bills gave assets and loans to those in the industry who were least able to afford them. He believed this would allow people with residency and experience, but with few assets, to acquire an initial allocation. Number 550 ANNA BORLAND-IVY, A DECKHAND ON A HOMER CHARTER BOAT, testified from Homer. She opposed HB 123 as initial IFQ owners would benefit and the smaller operations who needed the loans would not. Number 550 BILL SULLIVAN, A CREWMAN ON A HOMER FISHING BOAT, testified from Homer in opposition to HB 123. As a crewman, he would receive no initial allocation to a quota share, and he felt Alaskans should not have to take out loans to capture fish that already belonged to Alaskans. DAN FALVEY, A MEMBER OF THE ALASKA LONGLINE FISHERMEN'S ASSOCIATION, testified from Sitka. He expressed his support for HB 123 as state involvement might help keep prices under control. He felt the start-up limit of $5 million was not enough money. With a new program like IfQs, he thought the turnover rate would be sufficiently high at first. Additionally, he hoped to see the IFQ program funded as well as the state's salmon limited entry permit program. He also would like to see a second parallel loan program to provide Native groups, municipalities and the like with low interest loans. ERIC JORDAN, A SITKA FISHERMAN, speaking from Sitka, thanked Representative Ulmer for her work on HB 123, but noted a few problems. He said the $5 million total was not enough to start the program - perhaps $100 million would suffice. He then said there might be problems with constitutionality and the state might need new laws to complement the federal IFQ regulations. He also felt the state needed to invest in an Alaska IFQ acquisition program. MATT DONOHOE, A SITKA RESIDENT, testified from Sitka. He said the IFQ program was a major economic disaster for coastal communities in Alaska, and agreed the $5 million was not sufficient funding for the program. TAPE 93-9, SIDE B Number 000 MR. DONOHOE added that before such a loan program could begin, goals for the program should be organized. He also said there must be some way to protect the small fishermen within the program. Number 040 LINDA KOZAK, A MEMBER OF THE KODIAK LONGLINERS ASSOCIATION spoke to the committee from Kodiak. She endorsed HB 123 as IFQs were good for the future of Alaskan fishermen, if the program was designed to benefit Alaskans, specifically. She felt vessel owners should be able to go to a lending institution and acquire quota shares to develop markets for their product. She opposed the section of HB 123 which provided that individuals would not be eligible for alternative sources of financing to purchase quota shares. Lastly, she noted her concern for the low amount of initial financing of the program. Number 090 KRIS NOROSE, DIRECTOR OF THE PETERSBURG VESSEL OWNERS ASSOCIATION testified from Petersburg and said she endorsed HB 123. Now that the IFQ program has been adopted, the state should allow for the public purchase of these quotas. The current limited entry permit loan program has been a great success in allowing Alaskans to participate in the fisheries along the coast. This was also an opportunity for non-initial IFQ receivers to enter into the program, she believed. BILL HALL, representing the COMMERCIAL FISHING AND AGRICULTURE BANK, spoke to the committee from Anchorage. He had been asked by Representative Ulmer to comment on a proposed letter of intent regarding SeaFad's letter of intent regarding its role in financing IFQs. He suggested the committee look into IFQs more thoroughly, but advised that he had no objection to the letter of intent. CHRIS BERNS, A KODIAK RESIDENT, testified from Kodiak in opposition to the loan program because of the lack of research in the price per quota share. Number 209 ERIC FORRER, A RETIRED SETNETTER FROM THE YUKON RIVER, commented on the difficulty for young fishermen to get into the business in Alaska based on hard work. The IFQ program was important and must be put in place and supported, and halibut quotas must stay in the state, he stressed. Number 265 MARY MCBURNEY, EXECUTIVE DIRECTOR, CORDOVA DISTRICT FISHERMEN UNITED, testified from Cordova. She endorsed HB 123 and felt the IFQ was a logical program to allow people to buy into IFQ fisheries and promote local ownership. REPRESENTATIVE ULMER responded to some of the points raised from the testimonials. She said the timing of the applicability of the federal regulations and the allocations were rather unclear. If the legislature waited to see when the regulations would be in place, then Alaskan fishermen would be out of luck, she believed. REPRESENTATIVE ULMER commented on the community allocations and that a program to mirror the Commercial Development Quota (CDQ) program was a good idea. She noted some new language for CSHB 123, on page 2, line 29, that would read "are not eligible for financing to purchase quota shares from other recognized, commercial lending institutions." She believed this change should address the concerns about loan sharks from the folks in Sitka. She also noted additional language in the proposed CSHB 123 that clarified the program was aimed at helping small fishermen the most. Lastly, she asked that the committee adopt the CS with the proposed changes on page 2, as well as the proposed letter of intent. Number 342 GREG WINEGAR, LOAN MANAGER, JUNEAU LENDING BRANCH, ALASKA DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT (DCED), noted the DCED's support for HB 123. The overall purpose of the bill was consistent with the goals in the commercial fishing program; that being to promote a resident fishery, he noted. REPRESENTATIVE DAVIDSON asked Mr. Winegar if he saw any problems with HB 123 or if the bill could work against Alaskan interests. He also asked about the collection process for loans if a borrower suffered from deflated halibut prices years after taking out a loan. MR. WINEGAR addressed one of the concerns from the teleconference regarding debt service and if fishermen could afford to get loans through this program. He also said the DCED looked closely at the debt service of the borrower, and historically there had been a low default rate. He advised the committee of a soft collection program and of work with fishermen through an extension process. RICHARD LAUBER, LOBBYIST FOR PACIFIC SEAFOOD PROCESSORS ASSOCIATION, offered to answer questions as he had spoken at the last meeting. REPRESENTATIVE DAVIDSON asked Mr. Lauber if he could note any problems with the program, to be analyzed in the next committee of referral. MR. LAUBER stated HB 123 was designed to stop the migration of quota shares to outside interests. However, non- residents or residents with these shares might decide to go south with their product. The more shares a person had, the more likely they were to go south with their product, yet the smaller operations would probably sell locally so the funds go through the local community, he said. MR. LAUBER continued by noting that if fish were caught off- shore and went south, Alaska collected no tax. If caught offshore and taken to Petersburg, for example, then the state received the tax. The state wished to encourage participation onshore for tax purposes, but also wanted participation onshore so local economies and employment did not suffer. Number 430 REPRESENTATIVE ULMER noted she had done research about the landing issue and discovered that enforcement personnel logged landings at 16 primary ports, while other ports were spot checked by officers randomly. Boats were supposed to radio in after a catch, at least six hours before delivery, with estimated arrival time and catch weight. At delivery, the catch would be logged and recorded against the IFQ. REPRESENTATIVE ULMER pointed out any product destined for a non-Alaskan port must be checked through one of the 16 primary ports in Alaska. Shipments outside Alaska would be sealed by enforcement officers as Alaskan products and checked for regulatory compliance. All shipments of frozen fish must be through a primary port. Further, she noted these proposed regulations solved the problems of outside shipments. MR. LAUBER commented that boats might be hesitant to check into one of the ports as they would be taxed for the product. The check-in was merely an in-transit federal rule for enforcement purposes, to ensure no sale was taking place. To tax the product might be a violation of the interstate commerce clause to pose a tax, if the boats were selling their product elsewhere. He further noted the proposed legislation from years ago, which dealt with a landing tax for processed products and boats that actually sold their products in Alaska. He then differentiated that the current issue was that the product would not actually be landed in Alaska, but would merely have to come to port for enforcement purposes, and then be transported elsewhere. REPRESENTATIVE HARLEY OLBERG MOVED to ADOPT CSHB 123, as amended, with the letter of intent and fiscal note, and MOVE from the committee with individual recommendations. ADJOURNMENT CHAIRMAN MOSES asked members and the public if there were further comments. Hearing none, he adjourned the meeting at 10:00 a.m.