HOUSE SPECIAL COMMITTEE ON FISHERIES March 1, 1995 5:03 p.m. MEMBERS PRESENT Representative Alan Austerman, Chairman Representative Carl Moses, Vice Chairman Representative Gary Davis Representative Kim Elton Representative Scott Ogan MEMBERS ABSENT None COMMITTEE CALENDAR Western Alaska Community Development Quota Program Presentation * HJR 25: Relating to a ban on trawling in the eastern Gulf of Alaska east of 140 degrees west longitude. PASSED OUT OF COMMITTEE * HB 165: "An Act relating to membership on the Board of Fisheries." HEARD AND HELD (* First public hearing) WITNESS REGISTER KARL OHLS, Executive Director Western Alaska Fisheries Development Association 725 Christensen Drive, Suite 5 Anchorage, Alaska 99501 Telephone: 279-6519 POSITION STATEMENT: Provided information regarding the CDQ program NELS ANDERSON, JR., Executive Director Bristol Bay Economic Development Corporation Post Office Box 1464 Dillingham, Alaska 99576 Telephone: 842-4370 POSITION STATEMENT: Provided information regarding the CDQ program JUSTINE GUNDERSEN, Secretary-Treasurer Aleutian Pribilof Island Community Development Association 234 Gold Street Juneau, Alaska 99801 Telephone: 586-3107 POSITION STATEMENT: Provided information regarding the CDQ program AGAFON KRUKOFF, President Central Bering Sea Fishermen's Association 730 I Street, Suite 211 Anchorage, Alaska 99501 Telephone: 279-6566 POSITION STATEMENT: Provided information regarding the CDQ program FRED PHILLIP, Board Member Coastal Villages Fishing Cooperative Post Office Box 6 Kwigillingok, Alaska 99622 Telephone: 588-8320 POSITION STATEMENT: Provided information regarding the CDQ program EUGENE ASICKSIK, Acting Executive Director Norton Sound Economic Development Corporation Post Office Box 24 Shaktoolik, Alaska 99771 Telephone: 955-2341 POSITION STATEMENT: Provided information regarding the CDQ program RAGNAR ALSTROM, Board Member Yukon Delta Fisheries Development Association Post Office Box 112 Alakanuk, Alaska 99554 Telephone: 238-3117 POSITION STATEMENT: Provided information regarding the CDQ program REPRESENTATIVE BEN GRUSSENDORF Alaska State Legislature State Capitol Building, Room 415 Juneau, Alaska 99801 Telephone: 465-3824 POSITION STATEMENT: Prime Sponsor of HJR 25 MARK KANDIANIS 326 Center Street, Suite 205 Kodiak, Alaska 99615 Telephone: 486-3309 POSITION STATEMENT: Concerns about HJR 25 PAGE ELSE 2219 Sawmill Creek Road Sitka, Alaska 99835 Telephone: 747-7448 POSITION STATEMENT: Supported HJR 25 LINDA BEHNKEN 403 Lincoln Street Sitka, Alaska 99835 Telephone: 747-3400 POSITION STATEMENT: Supported HJR 25 CLAIRE JOHNSON Post Office Box 6384 Sitka, Alaska 99835 Telephone: 747-6384 POSITION STATEMENT: Supported HJR 25 DAN FALVEY Post Office Box 6083 Sitka, Alaska 99835 Telephone: 747-8710 POSITION STATEMENT: Supported HJR 25 BETSY KNUTSON 2039 Halibut Point Road Sitka, Alaska 99835 Telephone: 747-5691 POSITION STATEMENT: Supported HJR 25 CAROLYN NICHOLS 305 Islander Drive Sitka, Alaska 99835 Telephone: 747-3146 POSITION STATEMENT: Supported HJR 25 STEVE FISH Post Office Box 6448 Sitka, Alaska 99835 Telephone: 747-6042 POSITION STATEMENT: Supported HJR 25 MIM ROBINSON, Chairman Port Alexander Fish and Game Advisory Committee Post Office 8045 Sitka, Alaska 99835 Telephone: 568-2236 POSITION STATEMENT: Supported HJR 25 and Opposed HB 165 REPRESENTATIVE PETE KELLY Alaska State Legislature State Capitol Building, Room 513 Juneau, Alaska 99801-1182 Telephone: 465-2327 POSITION STATEMENT: Prime Sponsor of HB 165 DALE BONDURANT HC 1, Box 1197 Soldotna, Alaska 99669 Telephone: 262-0818 POSITION STATEMENT: Opposed HB 165 BRUCE SCHACTLER Post Office Box 2254 Kodiak, Alaska 99615 Telephone: 486-4686 POSITION STATEMENT: Opposed HB 165 PREVIOUS ACTION BILL: HJR 25 SHORT TITLE: BAN TRAWLING IN EASTERN GULF OF ALASKA SPONSOR(S): REPRESENTATIVE(S) GRUSSENDORF JRN-DATE JRN-PG ACTION 01/25/95 130 (H) READ THE FIRST TIME - REFERRAL(S) 01/25/95 130 (H) FSH, RES 02/20/95 418 (H) SPONSOR SUBSTITUTE INTRODUCED-REFERRALS 02/20/95 418 (H) READ THE FIRST TIME - REFERRAL(S) 02/20/95 418 (H) FSH, RESOURCES 03/01/95 (H) FSH AT 05:00 PM CAPITOL 124 BILL: HB 165 SHORT TITLE: QUALIFICATIONS FOR BOARD OF FISH MEMBERS SPONSOR(S): REPRESENTATIVE(S) KELLY,Toohey JRN-DATE JRN-PG ACTION 02/08/95 272 (H) READ THE FIRST TIME - REFERRAL(S) 02/08/95 273 (H) FSH, RES 03/01/95 (H) FSH AT 05:00 PM CAPITOL 124 ACTION NARRATIVE TAPE 95-13, SIDE A Number 000 The House Special Committee on Fisheries was called to order by Chairman Alan Austerman at 5:03 p.m. Members present at the call to order were Representatives Davis, Elton and Moses.  HFSH - 03/01/95 WESTERN ALASKA CDQ PROGRAM PRESENTATION Number 020 KARL OHLS, Executive Director, Western Alaska Fisheries Development Association, gave a brief overview of the Community Development Quota Program (CDQ). He stated, "The CDQ program started in 1992, when the federal government allocated a small percentage of the pollack in the Bering Sea." He went on to say that 7 l/2 percent, which is approximately 100,000 metric tons, go to the 56 villages that are within 50 miles of the Bering Sea coast. The communities were given this pollack for a limited basis, as the program expires at the end of this year. The allocation is to be used for job creation and economic development. MR. OHLS explained, "At the end of 1993, the program accounted for 8 percent of the economy of the Western Alaska CDQ region and 18 percent of the entire private sector economy. There are about 1600 jobs that have been created for people in Western Alaska and approximately $40 million has been generated for investment in development projects. These jobs and revenues did not exist for these communities, 2 1/2 years ago." He further stated that all the groups have two observers on board the boats when fishing, to volumetrically measure their catches. This is done to not only document their catch, but to report their catches on a daily basis. A great emphasis has been placed onto catching only pollack and reduce the bycatch in this trawl fishery. MR. OHLS specified, "There are six CDQ groups, ranging from the Aleutians all the way up to the Norton Sound. Each region has adopted a slightly different economic development strategy. The state and federal governments set the goals for the program and then leave it to the communities to decide how they're going to achieve these goals." He further commented that if a region is unsuccessful, the state will take away their quota and give it to another group that is successful. Number 136 CHAIRMAN AUSTERMAN noted that Representative Ogan arrived at 5:10 p.m. NELS ANDERSON, JR., Executive Director, Bristol Bay Economic Development Corporation, summarized the CDQ program in his group. He related, "Bristol Bay has had 194 people working on 3 factory trawlers. These jobs occur during the winter, which is unprecedented in Bristol Bay. They've earned approximately a half million dollars in wages." He recounted how young people are cleaning up their act, as there is a zero tolerance in effect on these vessels. The vocational and technical training program is geared towards moving people into the marine fishing industry. In 1993, they issued $40,000 in academic scholarships. In 1994, $50,000 were awarded and $60,000 will be given out in 1995. A permit brokerage has been established to track the Bristol Bay permits. A permit revolving loan fund is still needed to allow young people without a credit history, to move into the salmon fishery. Number 207 REPRESENTATIVE SCOTT OGAN asked Mr. Anderson in regards to that last statement, if the Alaska Commercial Fishing and Agriculture Bank (CFAB) was involved. MR. ANDERSON responded that CFAB does have programs, but there are limitations. He said, "They need to have at least a $10,000 amount, before they can move ahead with the CFAB program." REPRESENTATIVE OGAN followed up by asking about the $10,000 amount they have to have. MR. ANDERSON replied that it was connected to the down payment they have to have for CFAB. He concluded his remarks by saying, "We hope to do something about making a dent in the welfare system in Alaska." CHAIRMAN AUSTERMAN thanked the speaker and asked if the corporation was getting involved in the purchase of boats to fish the CDQs or are they still leasing them out. MR. ANDERSON indicated that they were leasing out their CDQ to an ocean trawler partner. He further stated, "We are now in the process of finishing up a Request for Proposal (RFP) program, and we are making a slight change in how we're going to be addressing that. We are going to propose to the state that we take a portion of our CDQ allocation and use that to help fund and to operate a vessel of our own." He also remarked that they are hesitating to do so, because of the crab industry being in a state of flux. There is a moratorium on vessels and that is going to decrease the value of these vessels. They have the funds necessary and the plans in place to operate a vessel of their own, but they are waiting for the situation in this fishery to stabilize. CHAIRMAN AUSTERMAN expressed a complaint that he has heard, "That there is only one Alaska vessel that is involved in fishing the CDQs. The Alaska industry was not necessarily invited in to participation in the CDQs. The original concept behind the CDQs is to get those fish in that industry ashore and those dollars ashore." He asked that the speakers address this concern. Number 242 MR. ANDERSON asserted that they had gone through a RFP process. Recently, they only had two onshore operators to put in a bid. Western in Unalaska is one of those two and are still being considered. CHAIRMAN AUSTERMAN asked further as to how their RFP process worked. MR. ANDERSON answered that a criteria was established that had the best interests of Bristol Bay in mind. They issued letters of interest to people who had indicated an interest. They sent letters of the RFP out and after a review process, the final decision will be made on March 16 and 17, 1995. CHAIRMAN AUSTERMAN asked if the RFPs were advertised statewide. MR. ANDERSON responded that they are advertised all over the country. Number 307 JUSTINE GUNDERSEN, Secretary-Treasurer, Aleutian Pribilof Island Community Development Association (APICDA), specified which communities are represented by her association. She responded in regard to Chairman Austerman's earlier question about the lack of Alaska vessels engaged in fishing the CDQs. She stated, "Our partners are Trident, who is American owned and Starbound, who is American owned. Trident owns the onshore and Starbound is the offshore." MS. GUNDERSEN went on to detail the APICDA program. They have joint ventures with each community in their association. She went on to expand on numerous local infrastructure projects funded by APIDCA during 1993 and 1994. Additionally they have a comprehensive training, employment and education program. On an annual basis, they allocate $300,000 for these projects. CHAIRMAN AUSTERMAN asked Ms. Gundersen what other parameters are used to determine where the CDQ funds can be spent. MS. GUNDERSEN replied, "We give a certain amount of money to the schools each year, for programs for the children, primarily for fishering at this point." She further stated the guidelines they use have been identified to the subject of fishing. CHAIRMAN AUSTERMAN wanted to know if the community needed a new water supply or sewer system, could the money be use for that project. MS. GUNDERSEN replied, "In False Pass it was used for electrification for their dock and water." Number 435 AGAFON KRUKOFF, President, Central Bering Sea Fishermen's Association, also responded to Chairman Austerman's concerns. He recounted that one of the ways that they first spent any money was on infrastructure development. They spent $750,000 plus $1.3 million from the state to dredge their harbor. They matched $250,000 of a Housing Urban Development program to develop a small boat mooring facility for a local halibut fisherman. He went on to explain the different ways they are managing and expending money from the CDQ program. CHAIRMAN AUSTERMAN asked Mr. Krukoff is they have a shore side plant. MR. KRUKOFF indicated that there was one built by an American/Japanese company, recently bought by Trident. There are also two floating processors in the harbor. He further stated that they are not active participants of any of those three processing companies. CHAIRMAN AUSTERMAN asked how many employees did they anticipate the new shore side plant would have generated. MR. KRUKOFF digressed somewhat, but finally replied that before Trident came in, over 50 people had been hired to keep that plant open. Number 545 REPRESENTATIVE GARY DAVIS referred to dredging the St. Paul Harbor and wanted to know if that was construction or maintenance dredging. MR. KRUKOFF replied that it was construction dredging. But he did indicate there would be a need for maintenance dredging. REPRESENTATIVE DAVIS wanted to know how long before maintenance dredging was necessary. MR. KRUKOFF commented that he really didn't know, but probably every five years, because there is a sandy bottom. REPRESENTATIVE DAVIS suggested that they keep a maintenance budget. FRED PHILLIP, Board Member, Coastal Villages Fishing Cooperative, reported on how the cooperative creates employment opportunities, developing local fishery infrastructure and participation in the fisheries. In conclusion he stated, "Successful participation will be measured by profitability, numbers of jobs created, numbers of individuals gaining advancement or learning specialized skills and sustainability over a long period of time." Number 665 REPRESENTATIVE DAVIS commented that the cooperative covered quite an area. He asked if there was a headquarters for the cooperative. MR. PHILLIP responded that they have offices in Bethel and one in Juneau. They also work with their partners in Seattle. Number 680 EUGENE ASICKSIK, Acting Executive Director, Norton Sound Economic Development Corporation, informed the committee that they had 15 communities in their CDQ group. They also had sent out RFPs and stipulated that anybody who wanted their pollack would have to work with them in the herring markets. In the salmon fishery, the awarded company would also have to develop a market for pink salmon. TAPE 95-13, SIDE B Number 000 MR. ASICKSIK declared that most of their programs are geared towards getting the local fishermen back into the business of fishing. They have jointly purchased a 135-foot longliner which is currently fishing for cod. But it will also be used to fish sablefish and during the summer it will be used to process salmon. They also have similar loan and education programs as the other groups. Number 111 RAGNAR ALSTROM, Board Member, Yukon Delta Fisheries Development Association, announced that his group is made up of four villages on the mouth of the Yukon River. The major goal of their association is an aggressive job training and placement program. By the end of this month, they will have ten vessels in their small boat fleet, all being crewed by members of the villages. Number 239 REPRESENTATIVE DAVIS wanted to know if there was a program to maintain the engines and electronics associated with owning and operating a boat. MR. ALSTROM specified that they had sent people through an electronics program. He further assured the committee that there are people out in the villages that there are capable of working on diesel engines. Number 256 REPRESENTATIVE KIM ELTON referred to what the last witness said about the importance of moving part of the industry ashore to provide jobs in the local area. He asked, "How much of the allocation is done offshore and how much is onshore and subject to various fish taxes and business taxes that the state collects." MR. ALSTROM stipulated that the pollack allocation is done by a factory trawler, that is completely offshore. He believed that they pay a fish tax, when it is landed in Dutch Harbor. The sable and halibut fish quota will all be delivered onshore to Dutch Harbor. REPRESENTATIVE ELTON followed up with a comment about moving onshore is good public policy. He questioned specifically, "Do people who bid on the RFPs, do they have a certain advantage over onshore people, because they're not paying various fisheries taxes and the business taxes? It would seem to me that an offshore trawler may be able to respond better to an RFP if they're not paying taxes that onshore people have." Number 290 MR. OHLS responded to the question of inshore/offshore facilities. He observed, "The offshore boats do have certain efficiencies in their operation, besides taxes, being able to process on board, to go to where the fish are." REPRESENTATIVE ELTON emphasized, "There's not quite a level playing field here. At the same time, they have the ability to move where the biomass is and where it's being caught. They also have a certain advantage that they're not paying as much as an onshore based company. At the same time they're in court, fighting the transfer tax, imposed by the last legislature." MR. OHLS wrapped up his remarks by saying, "The idea behind the CDQ program originally was that you had the Bering Sea, with the world's richest fishery resource. And right next to it, a section of Alaska that had high unemployment and some very truly atrocious social problems. Years ago, some of the leaders in Western Alaska wondered if there was some way that the wealth of that resource could be used to alleviate some of the problems." He reiterated that was the concept of the CDQ program. Number 364 CHAIRMAN AUSTERMAN called for a two-minute recess. HFSH - 03/01/95 HJR 25 - BAN TRAWLING IN EASTERN GULF OF ALASKA Number 376 REPRESENTATIVE BEN GRUSSENDORF gave the committee a brief outline on a similar resolution passed a few years ago, to encourage the North Pacific Fisheries Management Council to consider the uniqueness of the area of 140 degrees, East, from Yakutat on down. He further explained what would happen if we continue to allow trawling in this area. He indicated that he had submitted a sponsor substitute that clarifies the rockfish issue itself. Number 437 REPRESENTATIVE ELTON moved to place the sponsor substitute before the committee. CHAIRMAN AUSTERMAN, hearing no objection, indicated that the sponsor substitute for HJR 25 is before the committee. Number 448 MARK KANDIANIS testified via teleconference from Kodiak, indicating that there was some merit in protecting that area for the longliners. There have been impacts of heavy trawl fishing in that area according to Mr. Kandianis. CHAIRMAN AUSTERMAN noted that the resolution, if passed, will go on to the House Resources Committee. He suggested that Mr. Kandianis contact Representative Grussendorf's office with any further concerns. MR. KANDIANIS thanked the committee and indicated a willingness to follow this resolution. Number 489 PAGE ELSE testified via teleconference from Sitka, in support of HJR 25 to protect the habitat and resources of the prescribed area. Number 507 LINDA BEHNKEN testified via teleconference from Sitka, on behalf of the Alaska Longline Fishermen's Association in support of HJR 25. Number 538 CLAIRE JOHNSON testified via teleconference from Sitka, indicating that 25 members of the Friends of Southeast Future voted in favor of supporting HJR 25. Number 550 DAN FALVEY testified via teleconference from Sitka, in support of HJR 25. Number 582 BETSY KNUTSON testified via teleconference from Sitka, in support of HJR 25. She asserted, "A few factory trawlers have the potential of destroying our livelihood, damaging the economics of the coastal communities and the destruction of a unique way of life in Southeast Alaska." Number 592 CAROLYN NICHOLS testified via teleconference from Sitka, in support of HJR 25. She indicated that the open line fishery has been closed in the past because of the trawler bycatch exceeding its limit. Number 609 STEVE FISH testified via teleconference from Sitka, in support of HJR 25. Number 625 MIM ROBINSON, Chairman, Port Alexander Fish and Game Advisory Committee (PAF&GAC), testified via teleconference from Port Alexander, in support of HJR 25. Number 640 REPRESENTATIVE ELTON motioned to move SSHJR 25 out of committee with individual recommendations. CHAIRMAN AUSTERMAN, upon hearing no objections, moved SSHJR 25 out of the House Special Committee on Fisheries, with individual recommendations. HFSH - 03/01/95 HB 165 - QUALIFICATIONS FOR BOARD OF FISH MEMBERS Number 648 CHAIRMAN AUSTERMAN suggested a working group be established for the number of bills that are similar to HB 165. He further stated tha this bill would be heard, but not moved out of committee. Number 655 REPRESENTATIVE PETE KELLY, Sponsor of HB 165, testified, "The bill essentially provides for demographic representation on the Board of Fish. It calls for at least one, but not more than two persons who reside in each of the following areas: Southeast, Southcentral, Western, Interior and Arctic; one person, but not more than two from each of the following groups: Commercial, subsistence, personal and sport fishing; one person, but not more than three who are public members, who do not have a vested economic interest in the utilization of the fishery resources in the state." He emphasized, "It is not necessarily a representative board that we're putting here together, but we're just trying to prevent the exclusion of entire areas and interest in this state. CHAIRMAN AUSTERMAN questioned Representative Kelly about the number of people that would serve on the Board of Fish. REPRESENTATIVE KELLY responded that a member could be commercial, but also be from the Southeast region, and fill both recommendations with one person. Number 697 REPRESENTATIVE OGAN observed, that the structure of this bill looked similar to the Big Game Services Board. TAPE 95-14, SIDE A Number 000 DALE BONDURANT testified via teleconference from Soldotna, against HB 165 because it appeared to be convoluted as to its makeup. He indicated that it gets even more complicated when it gets down to the section on public members. He closed with these comments, "I would like to see one person, one vote type of thing." Number 067 MS. ROBINSON testified via teleconference from Port Alexander, that the PAF&GAC opposes HB 165. She declared, "The suggested membership composition does not solve the board problems, because not all gear groups and regions can be adequately represented on a seven member board." Number 103 BRUCE SCHACTLER testified via teleconference from Kodiak, in opposition to HB 165. He believed that this bill would continue to polarize into special interests, the entire Board of Fish. Number 166 REPRESENTATIVE KELLY asked Chairman Austerman if he would like him to come back and participate in the working group. CHAIRMAN AUSTERMAN indicated that it was up to him. Number 175 REPRESENTATIVE DAVIS asked if Representative Kelly could give a short synopsis for those still on teleconference. REPRESENTATIVE KELLY responded in regard to HB 165. He stated, "What it's designed to do is guarantee that the commercial fishermen are represented. So that the same thing doesn't happen say to the commercial fishermen, that might have happened to the Interior." He further stated, "Where people get confused with this, and rightfully so, is that there are more categories here, than there are board seats." He explained, "It gives the Governor, the special interests, whoever, some latitude in letting the users of the resource be represented, maybe in greater numbers." He went on to list all the various cities that recent appointees to the board are from, since 1990. Number 255 CHAIRMAN AUSTERMAN suggested that the teleconference participants direct specific questions on how the bill is being drafted, to Representative Kelly in written form. He further indicated that HB 165 would be held as previously indicated.  ADJOURNMENT CHAIRMAN AUSTERMAN adjourned the meeting at 6:51 p.m.