HOUSE SPECIAL COMMITTEE ON FISHERIES January 19, 1994 8:30 a.m. MEMBERS PRESENT Representative Carl E. Moses, Chair Representative Harley Olberg, Vice Chair Representative Gail Phillips Representative Irene Nicholia MEMBERS ABSENT Representative Cliff Davidson COMMITTEE CALENDAR HB 134: "An Act relating to temporary transfers of commercial fisheries entry permits." HEARD AND HELD OVER WITNESS REGISTER FRANK HOMAN, Commissioner Commercial Fisheries Entry Commission 8800 Glacier Hwy, Suite 109 Juneau, Alaska 99801-8079 Phone: 789-6160 Position Statement: Opposed HB 134 JERRY MCCUNE, President United Fishermen of Alaska 211 Fourth Street, Suite 112 Juneau, Alaska 99801 Phone: 586-2820 Position Statement: Opposed HB 134 PREVIOUS ACTION BILL: HB 134 SHORT TITLE: TEMP TRANSFER OF ENTRY PERMITS SPONSOR(S): REPRESENTATIVE(S) MOSES JRN-DATE JRN-PG ACTION 02/05/93 236 (H) READ THE FIRST TIME/REFERRAL(S) 02/05/93 236 (H) FISHERIES, RESOURCES, JUDICIARY, FINANCE 02/15/93 (H) MINUTE(JUD) 02/17/93 (H) FSH AT 09:00 AM CAPITOL 17 03/22/93 (H) FSH AT 08:30 AM CAPITOL 17 03/22/93 (H) MINUTE(FSH) 03/22/93 (H) MINUTE(FSH) 01/19/94 (H) FSH AT 08:30 AM CAPITOL 17 ACTION NARRATIVE TAPE 94-2, SIDE A (No tape available for first part of meeting.) CHAIRMAN CARL MOSES called the meeting to order at 8:35 a.m. He noted the members in attendance and asked that the discussion start with HB 134. HB 134 - TEMP TRANSFER OF ENTRY PERMITS REPRESENTATIVE PHILLIPS moved for adoption of the CSHB 134. Hearing no objection, it was so moved. FRANK HOMAN, COMMISSIONER OF THE COMMERCIAL FISHERIES ENTRY COMMISSION, ALASKA DEPARTMENT OF FISH AND GAME, outlined the rules of fishing permits. He said that the permits cannot be leased, and in the original development of the Limited Entry Act, the intention was for the permit holders to be active fishermen. He recognized that some emergency transfers are necessary and noted that the commission was unclear if the definition of "temporary" should cover year- to-year transfers. Number 000 REPRESENTATIVE G. PHILLIPS noted that the opinion from the Department of Law, commenting on the definition of "temporary," is dated 1980 and asked if there is an updated opinion. MR. HOMAN advised the committee that the Limited Entry Commission had not yet asked for an updated opinion. The emergency transfer provision in the program is designed to allow the commission to examine each request in a case by case basis, and to prevent leasing from occurring. If the permit owner does not agree with the decision, appeals to the court system are welcome. Equal protection clauses can be factored into the equation if continuous transfers are permitted by a group of people; another group can request the same treatment. MR. HOMAN further said that some things can be done to facilitate transfers among fishermen and families in rural areas. Permits sometimes migrate from rural areas and families lose their ability to fish. Permits are freely transferable; the permit holder can give or sell the permit to anyone they choose. The commission has seen medical cases where a one year transfer is not enough, and the transfer is extended. The commission has recently adopted a regulation that allows a second year transfer for the same reason if it's requested and documented. This regulation stretches the attorney general's advice as far as it can. MR. HOMAN said there is another category for transfers, called extraordinary circumstances, that helps people with extreme hardships transfer their permits. Another program within the Commercial Fisheries and Agricultural Bank (CFAB) is a "participating loan program" that allows the permit holder to sell the permit to anyone he chose, then participate in the loan with CFAB, since CFAB is one of two institutions that can hold a limited entry permit as collateral. MR. HOMAN said he appreciated the concept behind the bill, but he felt HB 134 could lead to a fundamental change in the program. A change could run the risk of opening the program up to a legal challenge that would expose the program to unrestricted leasing. The Commercial Fisheries Entry Commission (CFEC) cannot support the legislation at the moment, although there are possible avenues available for people who face special situations. The CFEC will continue to be sensitive when a hardship has occurred. CHAIRMAN MOSES asked how deaths are handled where the permit becomes part of the estate. MR. HOMAN said if there is no will, by statute the permit can be transferred to the surviving spouse. If there is a will that identifies a specific person, then the permit will be transferred. If there is no will and the permit goes into an estate, then until the settlement of the estate, we can allow the emergency transfer of the permit. CHAIRMAN MOSES suggested in this case that one is better off dead rather than having a terrible health problem. MR. HOMAN said the process allows the survivors some time to figure out the future of the permit. As long as there is no settlement, then the permit is held in limbo, but it can be transferred, as in an emergency, for the benefit of the survivors. CHAIRMAN MOSES clarified by suggesting that sometimes the illness goes on for years. MR. HOMAN advised that indeed that could happen if an estate went unsettled for years. Situations like this could be handled in a special manner. CHAIRMAN MOSES reminded members that he was in the legislature when this program was being put together, and it certainly wasn't the intent to have a problem where people with long term illnesses could not transfer their permits year after year. He concluded by noting that it is the duty of the legislature to find some way around the problem. He also brought up another issue - to what degree should someone be able to participate in the fishery? Fifty percent or two percent? Fishermen with arthritis are in danger to go on deck if they cannot hang onto the handrail. MR. HOMAN cited the statute which says that fishermen must be "actively participating" and there is no degree to which that is noted. CHAIRMAN MOSES suggested that there may need to be some clarification on the selling of permits, or a potential lawsuit could ensue. MR. HOMAN was unclear if leases or emergency transfers would work in an open market situation. Perhaps a bidding process would work. CHAIRMAN MOSES asked if there was any record of the number of permits held by people over 65 years of age. REPRESENTATIVE PHILLIPS replied that as of April 1992 there were 1,006 people over 65 years old that held permits. CHAIRMAN MOSES introduced the next person to testify. JERRY McCUNE, PRESIDENT OF THE UNITED FISHERMEN OF ALASKA, noted that although he was sympathetic to the concept of HB 134, he still had to oppose it because of the delicate balance now with limited entry. If someone is trying to sell a permit, the title to a house is sometimes needed as collateral. Perhaps CFAB should come to Juneau and talk about their programs; perhaps payments could be spread over six or seven years so the permit holder can collect a monthly income off the permit. Ownership would be maintained, but if the buyer doesn't make payments, then the permit holder can regain their permit and perhaps sell it to someone else later. Perhaps this idea could also be used for the state loan program. CHAIRMAN MOSES maintained that the issue could still be contested in court. MR. McCUNE further noted that the legislature should maintain the delicate balance with the Limited Entry Permit program as there are many cases in court currently. REPRESENTATIVE PHILLIPS inquired about items six and seven on page 2 of the committee substitute. The phrase "with low incomes" could present constitutional problems, and the phrase on line 10, "without restrictions," could raise a problem if a transferee of a permit is not a low income person and the permit holder was. This type of mandate could be challenged constitutionally. MR. HOMAN suggested that the Department of Law comment on that issue. REPRESENTATIVE PHILLIPS suggested a change to the bill to address the problem. She then asked if the definition on line 24 of "immediate family" was consistent with the definition already in law. ADJOURNMENT CHAIRMAN MOSES asked members and the public if there were further comments. Hearing none, he adjourned the meeting at 9:20 a.m.