HOUSE SPECIAL COMMITTEE ON FISHERIES March 9, 1994 8:30 a.m. MEMBERS PRESENT Representative Carl E. Moses, Chair Representative Cliff Davidson Representative Gail Phillips Representative Harley Olberg, Vice Chair Representative Irene Nicholia MEMBERS ABSENT None OTHER LEGISLATORS PRESENT Senator Bert Sharp Senator Loren Leman COMMITTEE CALENDAR Overview Presentation from the Community Development Quota Groups. WITNESS REGISTER JOHN JEMEWOUK, Executive Director Norton Sound Economic Development Corporation Elim, Alaska 99739 MARK SNIGAROFF, Chairman Aleutian Pribilof Island Community Development Association 116 Gold Street Juneau, Alaska 99801 AGAFON KRUKOFF, Jr., President Central Bering Sea Fishermen's Association 1500 West 33rd, Suite 110 Anchorage, Alaska 99503 NELS ANDERSON, JR., Executive Director Bristol Bay Economic Development Corporation P.O. Box 1446 Dillingham, Alaska 99576 RAGNAR ALSTROM, Member Yukon Delta Fisheries Development Association P.O. Box 112 Alakanuk, Alaska 99554 FRED PHILLIP, Board Member Coastal Villages Fishing Cooperative 204 N. Franklin #1 Juneau, Alaska 99801 CARL OHLS Fisheries Development Specialist Bering Sea Fishermen's Association 725 Christensen Dr. Anchorage, Alaska 99501 ACTION NARRATIVE TAPE 94-13, SIDE A Number 001 CHAIRMAN CARL MOSES called the House Special Committee on Fisheries meeting to order at 8:40 a.m. He noted members in attendance. Chairman Moses announced that the committee would be hearing from individuals of the Community Development Quota (CDQ) groups. He noted Senators Sharp and Leman were also present. The first person to come before the committee was JOHN JEMEWOUK. He explained he is the chairman of the Western Alaska Fisheries Development Association which represents four CDQ groups in Western Alaska. He introduced members of other CDQ groups who also participated in the overview. Mr. Jemewouk said the different groups will explain the benefits of the CDQ Program and how they impact the villages in Western Alaska. The CDQ Program was started in 1992. The State of Alaska and the U.S. Department of Commerce developed joint regulations authorizing the program. Mr. Jemewouk noted that the program is run by the U.S. Department of Commerce and is managed by the North Pacific Fisheries Management Council. The program allocates a certain percentage (7.5 percent) of the total amount of polluck that is available from the Bering Sea. This relates to 100,000 tons of polluck. An application is made to the state, the state reviews it, and then makes recommendations as to the percentages which are given to each CDQ group. It is a competitive process, and out of the process some unique programs have been accomplished. Mr. Jemewouk said the program is authorized until December, 1995. He said they are doing some work to hopefully expand the program into other fisheries and to extend the program beyond 1995. MR. JEMEWOUK explained that there are two CDQ fishing seasons. The "A Season" is a roe fishery which is open to all of the fleets. This year the fishery started February 17. The "B Season" opens April 15 and goes until the end of the year. Number 146 The next person to come before the House Special Committee on Fisheries was MARK SNIGAROFF, Chairman, Aleutian Pribilof Island Community Development Association (APICDA). He said his company has been working on several projects in the Aleutian Islands. Mr. Snigaroff said they are currently moving forward with a Nelson Lagoon dock. He noted they are hoping to receive some money from the legislature for this project. MR. SNIGAROFF referred to a proposal for a major dock facility in Atka and said his association is holding back on it due to the fact that the cost is very high, in excess of $3 million. He noted they are still committed to the project pending additional funding sources to be identified. MR. SNIGAROFF explained a major purchase that APICDA has made is that they have purchased three 32' long line vessels which will be operated this summer in area "4 B," the Atka area. He said APICDA owns the vessels and members of the community of Atka will operate two of them, and one of the vessels will be operated by people from Nikolski. MR. SNIGAROFF said they are conducting a feasibility study in Nikolski, which is a market assessment for a tourist lodge. It is in conjunction with a tourist push by the City of Unalaska. MR. SNIGAROFF said the APICDA board is developing a joint venture business with St. George Traditional Council where they are investing into a multipurpose facility at Zapadni Bay where investments have been made to dredge the boat harbor. When that project is completed, they will be looking at servicing the fishing fleet with washers, dryers, recreational facilities, etc. MR. SNIGAROFF informed the committee members that APICDA has allocated money for a drug and alcohol abuse program within their region. They hope to have the program in place by the fall. The treatment for people will be paid for and when they are through, they will have a job waiting or them. MR. SNIGAROFF said their goal for employment for 1993 was forty jobs. To date, seventy-nine jobs have been created with gross wages totalling over $517 thousand. There is a training program in place where sixteen people have been trained for a cost of approximately $36 thousand. All sixteen people completed their training. He explained four people from False Pass were trained in emergency medical services. Twelve people were sent to California Maritime Academy for winch operating training. Four people have been put through vocational education training. The maximum limit of funding is $2 thousand per student, and the criteria for funding is that the students have to maintain a 2.0 average or better. MR. SNIGAROFF explained that APICDA sends out a quarterly newsletter. He said their partners, Trident Seafoods and Starbonds, have done a very commendable job in keeping their by-catch rates very low. For the year, less than 300 Chinook Salmon were taken and less than 1,500 Chum. MR. SNIGAROFF noted that APICDA received a favorable ruling on their tax issue. MR. SNIGAROFF said they have developed grant programs for their schools. There are seven schools in their region and they are granted $6 thousand per year for fisheries related education. He continued to discuss the grant program. REPRESENTATIVE PHILLIPS referred to sending people out of state for winch training and asked if there was anywhere in Alaska where they could get the training. MR. SNIGAROFF said California was the cheapest place that they could find. Number 286 The next person to address the committee members was AGAFON KRUKOFF, JR., President, Central Bering Sea Fishermen's Association (CBSFA). Mr. Krukoff referred to St. Paul and said the state has given tremendous help in developing the boat harbor. About a year ago, one of the major shortfalls was there was a lack of space in the harbor. The state assisted with the dredging problem in which $1.8 million was appropriated. Mr. Krukoff explained that CBSFA is actively involved in trying to make themselves a self-sufficient organization that could survive beyond the CDQ Program. He informed the committee that his organization created a for-profit subsidiary which is currently involved in support services, such as marine repair for the industry. He said they are looking at a ship supply service to expand on the local grocery service. A car/truck rental service already exists. As of March 1, CBSFA became a 51 percent partner in a NAPA Auto Parts Store at Dutch Harbor and they plan to build another NAPA Auto Parts Store at St. Paul. Mr. Krukoff said they are currently building a 12,000 square foot retail store in St. Paul that will include that NAPA store as well as additional space for more retail services. MR. KRUKOFF said they have three plants in St. Paul for processing Opilio crab and other crab. It is an opportunity for people from other villages to come and work versus hiring people from California. MR. KRUKOFF urged that the committee and the legislature continue to support the state in administering the CDQ Program. Number 409 NELS ANDERSON, JR., Executive Director, Bristol Bay Economic Development Corporation (BBEDC), explained that his organization was formed in October 1992 and he has been the executive director since May 1993. Mr. Anderson said BBEDC is a fourteen member CDQ group and is a nonprofit corporation. He said there are two members who are staff, a secretary and himself. Since he has been working for the corporation, they have accomplished receiving their nonprofit status in June, and they have received a private letter ruling from the Internal Revenue Service stating that their initial funds from their first royalty payment are not subject to taxation. The BBEDC has established a vocational technical training program. In order to avoid duplication of effort they decided to contract with the local Bristol Bay Native Association so that the funds they have for vocational/technical training could be supplemented and, thereby, reduce the overhead that BBEDC would have incurred if they started their own programs. MR. ANDERSON said BBEDC has a scholarship program. In 1993, they issued two $10 thousand scholarships. He continued to discuss their scholarship program. Mr. Anderson explained their goal was to have sixty people hired. That goal was missed by eight. This year there will be a total of seventy-eight people working. People are trained on board the vessels and are given very intensive and processing training. Mr. Anderson said two significant changes have occurred from what there is now and what there was five years ago. Young people now have hope, as there is now work in the winter where there was none. Approximately $500 thousand have been earned in wages during the winter. The second change is that a lot of people had been testing positive on their drug tests, and now they are testing negative. MR. ANDERSON said last year they were in the process of developing the Alaska Seafood Investment Company. In November that company was incorporated. He said BBEDC is currently in the process of evaluating several joint ventures and they are hopeful that they will conclude an agreement soon. He explained they joined with three other groups and put together the Western Alaska Fisheries Development Association. MR. ANDERSON said there is a very serious "out migration" of Bristol Bay fishery permits. The Bristol Bay Native Association has established a blue ribbon commission to take a very close look at the permit association and what needs to be done. In addition, the Bristol Bay group has just established a Bristol Bay permit brokerage. The purpose is to get a handle on all the movement of all the permits within Bristol Bay, get them in the hand of the village and local residents, and to develop the financing and training so that the permits can stay within the region. MR. ANDERSON said their total by-catch of salmon was 470. There were 94 Chinook, 338 Chum, 28 Coho, and 10 unidentified salmon. He noted that the unidentified salmon means there was probably an observer who had no training. REPRESENTATIVE NICHOLIA commended the BBEDC for setting up the blue ribbon committee and said they are setting a precedence for the rest of the coastal communities. Number 514 RAGNAR ALSTROM, Member, Yukon Delta Fisheries Development Association, explained the area he represents has no timber and there are no known mineral reserves. He noted that even if there were mineral reserves, they are in the middle of one of the largest wildlife preserves in the United States. The only resource is the fish in the Yukon River and off the coast. Mr. Alstrom explained that the unemployment rate is 70 to 80 percent, contrary to what the Department of Labor says. He explained that his association is providing training for people who want to work on factory trawlers. In 1993, the people that already had been trained and worked on factory boats brought in about $500 thousand in wages to four villages. Mr. Alstrom noted that his association is working with other CDQ groups in placing people on their boats. MR. ALSTROM explained that his group believes that what they need is jobs in their area, so the heart of the program is to develop the shore fisheries off of the Yukon Delta. He informed the committee that they are in the process of building a fleet of small combination catcher vessels. Six boats are being built in Seattle and a couple are being built at the Seward Skills Center. He noted they got a very good price for the aluminum boats that are being built in Seattle and the Seattle Company has agreed to train a number of people in the aluminum welding process. The Yukon Delta Association wants the boats to be individually owned. Mr. Alstrom said they are currently working with the Emmonk Fishermen's Co-op in processing halibut, cod, etc. His association is also working with the Emmonk Traditional Council to build a value added plant. Number 569 REPRESENTATIVE PHILLIPS said she thinks the CDQ Program is going in a good direction in developing the on-shore jobs. She also noted her objection in building the boats in Seattle when there are aluminum boat builders in the state. TAPE 94-13, SIDE B Number 001 MR. ALSTROM explained that they did check with boat builders in Alaska and the price was so different. He said they are one of the smaller CDQ Groups and they had to make an economic decision. CHAIRMAN MOSES said the mode of transportation in getting boats to their area is a major factor. He said it is probably easier to have them sent from Seattle rather than Homer. Mr. Alstrom said the boats will be shipped to Dutch Harbor. Number 020 The next person to come before the committee members was FRED PHILLIP, Board Member, Coastal Villages Fishing Cooperative. He explained that his cooperative is a for-profit organization. Mr. Phillip informed the committee that the cooperative is in partnership with Browns Point Joint Venture, which is a factory trawler. The reason they are in partnership is to become an equitable participant in the Bering Sea ground fisheries, to become an industry participant, and to provide opportunities for employment and advancement into management positions on the vessel and in the industry. He explained that they have halibut and coastal initiatives which looks at ways to help coastal fishermen to participate in near-shore fishing for halibut and other ground fish. Part of the program assists fishermen in applying for the halibut IFQ and to provide loans for purchasing to buy suitable vessels to participate in the program. Mr. Phillip explained that the local operations will provide employment and local markets for the products. MR. PHILLIP referred to the scholarship program and said that monies from the polluck fisheries, approximately five percent, is set aside for that program. Two scholarships have been awarded in marketing and sociology. He noted there are also scholarships for vocational training programs. Mr. Phillip continued to discuss other programs his company provides. MR. PHILLIP referred to the area of employment and said they targeted fifty to seventy jobs, but have only met one-third of that goal because many people don't want to spend time out on the water. He concluded that many programs have really been positive for his region. Number 102 JOHN JEMEWOUK, Executive Director, Norton Sound Economic Development Corporation, discussed a brochure which he had given committee members which explains their CDQ program. He said his corporation formed a partnership with Glacier Fish Company and explained how they arrived at the decision to choose Glacier Fish Company. MR. JEMEWOUK said they established an employment training office in September 1992. He noted they utilize the Seward Skill Center and are looking at possibly doing some training in the region. Close to 100 people have already been trained for the fishing industry. MR. JEMEWOUK explained that another program is a herring project. This year they went in joint partnership with Glacier Fish Company and Trident Seafoods. The reason Trident Seafoods was chosen to participate was because of their experience in marketing herring in Japan. A custom processing contract has been arranged with them. Mr. Jemewouk said the program reaches out to about 170 local fishermen. All the nets, etc., are provided to the fishermen. MR. JEMEWOUK said Glacier Fish Company was in the Norton Sound area last year and targeted pink salmon. The reason the pink population was targeted was because there is a healthy pink population and there has never been a market for them. With the experience from the Glacier Fish Company, all the product was sold in Europe last year. MR. JEMEWOUK said a loan program was established for the local fishermen in the region. He explained that they have a contract with National Bank of Alaska regarding this program. MR. JEMEWOUK referred to their scholarship program and said over the last couple of years they have given sixty $1 thousand scholarships to people in the region. The scholarships are given to students going to school in Denver, California, Anchorage, Fairbanks, Seward and some of the smaller community colleges. MR. JEMEWOUK said the Norton Sound Crab Company was formed this year. Frank Johnson was hired to operate the program and is still working on establishing the infrastructure. He explained they leased the Nome Eskimo Freezer Plant for the crab company. Mr. Jemewouk referred to the winter crab fishery and said the total allowable catch of Norton Sound red king crab is divided into two areas: the winter crab fishery which is about 340 thousand pounds, and the summer fishery which is about the same amount. Mr. Jemewouk said there are a lot of regulations that affect fishermen in Norton Sound and his organization tries to stay involved to make sure the opportunity is there for the local fishermen. He explained they approached the Board of Fish and proposed a super exclusive status for the Norton Sound area, which means if you fish there, you can't fish anywhere else. MR. JEMEWOUK said they have worked with the International Halibut Commission in establishing a small fishery at Saint Lawrence Island. There is a 35,000 pound limit for halibut that can be caught. MR. JEMEWOUK discussed a permanent endowment fund which is put into a permanent fund. By 1996 or 1997 there will be revenues to continue the educational opportunities for helping the student population in developing their skills in the fishing industry. MR. JEMEWOUK said when they gave their application to the state, one of the big projects they outlined was to invest in a major seafood processor with Glacier Fish Company. The proposal was to process crab, herring and salmon. He thanked the committee for listening to his presentation. Number 288 CHAIRMAN MOSES informed the committee that the Senate Rules Committee introduced HJR 61, which requests the North Pacific Fisheries Council to seriously consider community development quotas on crab and groundfish. Number 300 REPRESENTATIVE PHILLIPS commented on how good the Opilio crab is. She said it would be a very good thing for the Norton Sound Economic Development Council to market across the state. Number 360 CARL OHLS, Fisheries Development Specialist, Bering Sea Fishermen's Association, was next to address the House Special Committee on Fisheries. He informed the committee members that he has a part-time job as the Executive Director of the Western Alaska Fisheries Development Association. He said that organization was organized by CDQ groups to coordinate their efforts in support of the CDQ Program. He said there was a need to do this as there has been opposition to the CDQ Program. Mr. Ohls said they attend all the council meetings and most commonly there would be somebody complaining about how much they resent the fact that their fish are being used for a welfare program in Western Alaska. He said it is not a welfare program, it is an economic development program and is possibly the most effective economic development program that the federal government has ever created in Western Alaska. The second response is that the fish are the nation's fish and are to be allocated by the council in a way that meets the nation's best interest. Mr. Ohls said the success of the projects is what is going to determine the fate of the CDQ Program. MR. OHLS said the council is currently working on a process where they are trying to come up with a comprehensive allocation scheme for all the fisheries under the management of polluck, crab, perch and cod. He said it is the feeling of the CDQ groups that CDQs should be a part of that final package. MR. OHLS explained that the biggest potential threat to the CDQ Program right now is a lawsuit that has been filed by a group called the Alliance Against IFQs. A key part of the lawsuit is a challenge against the CDQ Program. Mr. Ohls said he has been told that they have nothing against CDQs, but CDQs are part of the halibut and sable fish IFQ package, and if they can knock the CDQ portion out, then the whole thing will collapse. If they get the ruling that they want, there is no way the council could continue the CDQ Program for any other species. Mr. Ohls said, in response to that, the Western Alaska Fisheries Development Association retained an attorney and filed for intervention status in that case which was granted. Two motions have been filed. One is to challenge the standing of the alliance to tap the CDQ Program. In their complaint they are not asking for any relief or asking to participate. What they are asking is that the program be destroyed for everybody. Mr. Ohls said they have also filed a motion that it be put aside until the IFQ question is resolved. MR. OHLS explained that three trips to Washington, D.C., were organized to brief members of Congress and the Administration on the CDQ Program. There was a very positive reception on those trips. He thanked the committee for listening to him. Number 440 There being no further business to come before the House Special Committee on Fisheries, Chairman Moses adjourned the meeting at 10:05 a.m.