HOUSE RESOURCES STANDING COMMITTEE April 14, 1999 1:09 p.m. MEMBERS PRESENT Representative Scott Ogan, Co-Chair Representative Jerry Sanders, Co-Chair Representative Beverly Masek, Vice Chair Representative John Harris Representative Carl Morgan Representative Ramona Barnes Representative Jim Whitaker Representative Reggie Joule Representative Mary Kapsner MEMBERS ABSENT All members present COMMITTEE CALENDAR HOUSE BILL NO. 104 "An Act revising the procedures and authority of the Alaska Commercial Fisheries Entry Commission, the Board of Fisheries, and the Department of Fish and Game to establish a moratorium on participants or vessels, or both, participating in certain fisheries; and providing for an effective date." - HEARD AND HELD * HOUSE BILL NO. 116 "An Act relating to the Board of Agriculture and Conservation, to the agricultural revolving loan fund, to the disposal of state agricultural land, and to the Alaska Natural Resource Conservation and Development Board; and providing for an effective date." - HEARD AND HELD SENATE JOINT RESOLUTION NO. 20 Relating to the removal of beaver from Washington, D.C. - [PENDING REFERRAL] SCHEDULED BUT NOT HEARD (* First public hearing) PREVIOUS ACTION BILL: HB 104 SHORT TITLE: ENTRY MORATORIA ON PARTICIPANTS/VESSELS SPONSOR(S): REPRESENTATIVES(S) HUDSON, Austerman Jrn-Date Jrn-Page Action 2/19/99 260 (H) READ THE FIRST TIME - REFERRAL(S) 2/19/99 260 (H) FSH, RES 3/08/99 (H) FSH AT 5:00 PM CAPITOL 124 3/08/99 (H) MOVED CSHB 104(FSH) 3/08/99 (H) MINUTE(FSH) 3/10/99 408 (H) FSH RPT CS(FSH) NT 4DP 3/10/99 408 (H) DP: KAPSNER, MORGAN, WHITAKER, HUDSON 3/10/99 408 (H) ZERO FISCAL NOTE (F&G) 3/10/99 408 (H) REFERRED TO RES 4/14/99 (H) RES AT 1:00 PM CAPITOL 124 BILL: HB 116 SHORT TITLE: BOARD OF AGRICULTURE AND CONSERVATION SPONSOR(S): REPRESENTATIVES(S) JAMES, Harris Jrn-Date Jrn-Page Action 2/26/99 324 (H) READ THE FIRST TIME - REFERRAL(S) 2/26/99 324 (H) RESOURCES, FINANCE 3/10/99 418 (H) COSPONSOR(S): HARRIS 4/14/99 (H) RES AT 1:00 PM CAPITOL 124 WITNESS REGISTER REPRESENTATIVE BILL HUDSON Alaska State Legislature Capitol Building, Room 108 Juneau, Alaska 99801 Telephone: (907) 465-3744 POSITION STATEMENT: Testified as sponsor of HB 104. MARY McDOWELL, Commissioner Commercial Fisheries Entry Commission Alaska Department of Fish and Game 8800 Glacier Highway, Suite 109 Juneau, Alaska 99801-8079 Telephone: (907) 789-6160 POSITION STATEMENT: Answered questions on HB 104. AMY DAUGHERTY, Lobbyist for Pacific Associates and Alliance Fisheries 327 West 11th Street, Number 2 Juneau, Alaska 99801 Telephone: (907) 463-2568 POSITION STATEMENT: Testified in support of HB 104. RAYMOND CAMPBELL P.O. Box 23216 Ketchikan, Alaska 99901-8216 Telephone: (907) 247-3626 POSITION STATEMENT: Testified on HB 104. GERON BRUCE, Legislative Liaison Office of the Commissioner Alaska Department of Fish and Game P.O. Box 25526 Juneau, Alaska 99802-5526 Telephone: (907) 465-6143 POSITION STATEMENT: Testified in support of HB 104. REPRESENTATIVE JEANNETTE JAMES Alaska State Legislature Capitol Building, Room 102 Juneau, Alaska 99801 Telephone: (907) 465-3743 POSITION STATEMENT: Testified as sponsor of HB 11. DAVID ROGERS, Chair Alaska Natural Resource Conservation and Development Board POSITION STATEMENT: Opposed HB 116 as currently drafted. MARCIA WARD Ward Farms PO Box 1087 Delta Junction, Alaska 99737 Telephone: (907) 895-5415 POSITION STATEMENT: Supported HB 116. ROBERT FRANKLIN, State President Alaska Farm Bureau PO Box 75184 Fairbanks, Alaska 99707 Telephone: (907) 488-7738 POSITION STATEMENT: Supported HB 116. STEVE GIBSON, Director Homer Soil and Water Conservation District 1622 Highland Drive Homer, Alaska 99603 Telephone: (907) 235-6487 POSITION STATEMENT: Expressed concerns with HB 116. JACKIE BECKER, Active Member and Officer Kenai Farm Bureau PO Box 2832 Soldotna, Alaska 99669 Telephone: (907) 262-7013 POSITION STATEMENT: Supported HB 116. SIG RESTAD Northland Pioneer Grange H03 Box 9571 Palmer, Alaska 99645 Telephone: (907) 745-3165 POSITION STATEMENT: Opposed HB 116 as currently written. JIM ELLISON, Publisher Alaska Farmer Magazine PO Box 55590 North Pole, Alaska 9705 Telephone: (907) 488-1970 POSITION STATEMENT: "The Alaska Farmer Magazine supports it, maybe not quite just like it's written, but as what we see is going to be the finished product." BRUCE WILLARD, Rancher 40520 Waterman Road Homer, Alaska 99603 Telephone: (907) 235-8830 POSITION STATEMENT: Expressed the need for continued work on HB 116. DOUG WITTE, Program Coordinator Alaska Association of Conservation Districts 351 West Parks Highway, Suite 101 Wasilla, Alaska 99654 Telephone: (907) 373-7923 POSITION STATEMENT: Pledged full support of future legislative efforts to encourage agricultural development. K. KIRK Plweger Farms PO Box 261 Delta Junction, Alaska 99737 Telephone: (907) 895-6248 POSITION STATEMENT: Fully supported this program. ROB WELLS, Director Division of Agriculture 1800 Glenn Highway, Suite 12 Palmer, Alaska 99645 Telephone: (907) 745-7200 POSITION STATEMENT: Expressed concerns with HB 116. SCOTT MILLER Misty Mountain Farms HC 60 Box 4140 Delta Junction, Alaska 99737 Telephone: (907) 895-6208 POSITION STATEMENT: Supported HB 116. WAYNE BOUWENS, 65 year Alaskan resident Chairman, Palmer Soil and Water Conservation District Box 1274 Palmer, Alaska 99645 Telephone: (907) 745-3687 POSITION STATEMENT: Expressed the need to do more work on HB 116. DICK ZOBEL, Member AKNRCDB and the Wasilla Soil and Water Conservation District Wasilla, Alaska 99687 Telephone: (907) 376-5640 POSITION STATEMENT: Testified that the bill that would include two people would not do the job. BARBARA COTTING, Legislative Assistant to Representative James Alaska State Legislature Capitol Building, Room 102 Juneau, Alaska 99801 Telephone: (907) 465-3743 POSITION STATEMENT: Responded to questions. PETE FELLMAN, Delta Dairy Farmer No address provided. Telephone: (907) 465-4359 POSITION STATEMENT: Testified on HB 116. ACTION NARRATIVE TAPE 99-25, SIDE A Number 0001 CO-CHAIR SCOTT OGAN called the House Resources Standing Committee meeting to order at 1:09 p.m. [date stated on record as April 13]. Members present at the call to order were Representatives Ogan, Sanders, Masek, Harris, Morgan, Barnes and Whitaker. Representative Joule arrived just after the call to order, and Representative Kapsner arrived at 1:20 p.m. HB 104 - ENTRY MORATORIA ON PARTICIPANTS/VESSELS Number 0101 CO-CHAIR OGAN announced that the first item of business would be House Bill No. 104, "An Act revising the procedures and authority of the Alaska Commercial Fisheries Entry Commission, the Board of Fisheries, and the Department of Fish and Game to establish a moratorium on participants or vessels, or both, participating in certain fisheries; and providing for an effective date." Before the committee was CSHB 104(FSH). Number 0154 REPRESENTATIVE BILL HUDSON, Alaska State Legislature, sponsor, noted that Mary McDowell of the Commercial Fisheries Entry Commission (CFEC) could answer technical questions. He explained that HB 104 amends existing moratorium law to provide for a streamlined and more effective process, in order to better manage Alaska's fisheries resources. The current moratorium statute, which Ms. McDowell could address, has proven cumbersome and unworkable. That, in turn, prevents quick response - not only by the CFEC, but also by other agencies - to fisheries that are growing too rapidly to ensure effective management. As a result, both the resource and the economic livelihoods of the participants could be jeopardized. REPRESENTATIVE HUDSON pointed out that a new element is allowing petitioners to request a moratorium directly from the CFEC. The moratorium would be established if the CFEC found that it was necessary to promote the conservation and sustained yield management of the resource, and the economic health and stability of commercial fishing in the state. The bill also authorizes the CFEC to implement a moratorium on entry of new vessels, as well as participants, providing an additional management tool when a number of different skippers are used on one vessel, as occurs in some offshore fisheries. REPRESENTATIVE HUDSON informed members that HB 104 allows the state to extend its moratorium authority to offshore fisheries adjacent to state waters, when it is consistent with federal law. The state's fisheries go out three miles, and the territorial sea goes out twelve miles. However, there are fisheries that move in and out of both state and federal waters. Wherever there is a consistency, the CFEC would be able to apply this moratorium, to take care of the health of the fisheries there. REPRESENTATIVE HUDSON advised the committee that the bill also authorizes the CFEC to extend the current moratorium on the Bering Sea Korean hair crab and the weathervane scallop fisheries for an additional two years. "We gave, by law, a few years back, the authority or the ability for them to create a four-year moratorium," he noted, "and this would give them an additional two years." He indicated that Ms. McDowell could explain why that is needed, then reminded members that a similar bill had passed the House during the Twentieth Alaska State Legislature, with overwhelming support. Number 0490 REPRESENTATIVE BARNES brought attention to two letters from Ray Campbell, which discussed the belief that amendments made to HB 204 the previous year had greatly improved the bill, but were not included in the present legislation. She asked why Representative Hudson had chosen not to introduce the final version from the previous legislature. REPRESENTATIVE HUDSON answered that it was primarily at the recommendation of the CFEC. He deferred to Ms. McDowell. Number 0632 MARY McDOWELL, Commissioner, Commercial Fisheries Entry Commission (CFEC), Alaska Department of Fish and Game (ADF&G), explained that this bill incorporates everything adopted by the House last year, but is missing one amendment made in the Senate Resources Committee; that amendment had jumped into the next phase, saying that any fishery that came under a moratorium under these provisions could not later go under a limited entry program with a transferable permit. Other changes have been made to address concerns expressed as the previous bill went through. In particular, Co-Chairman Ogan had expressed concern about making sure that the Board of Fisheries continued to have involvement in the process; that has been incorporated in several places in the bill. Number 0734 REPRESENTATIVE BARNES asked why the Senate Resources Committee amendment was not incorporated. She also requested that Ms. McDowell address the fact that once a limited entry permit exists, it becomes a thing of value that can be sold or transferred. MS. McDOWELL noted that transferability is controversial, in that it creates value for permits when they are transferred for money. However, that feature has kept the limited entry program as Alaskan as it is today. It is a constitutional way for permits to change hands, from a parent to a child, for example, and still not be considered a closed class under the federal constitution and interstate commerce. Without transferability, if the permits came back to the state, to be handed back out, the list of those who would receive them would have to include nonresidents and everyone else. A parent could no longer transfer a permit to his or her child, to keep it in the family. Number 0836 REPRESENTATIVE BARNES said she doesn't believe that is a good argument. She asked whether it is not a fact that permit owners sell their permits outside of their families, "for big bucks." MS. McDOWELL agreed they can be sold, although many permits change hands as a gift, inheritance or survivorship to the spouse at the death of the permit holder. Restating that transferability has always been controversial, she reported that 77 percent of all permits are in the hands of Alaskans, and the system has been upheld as constitutional. The legislature, in adopting limited entry, had felt that transferability was a feature of the program that would help make that happen, she added, which seems to have proven true over the years. Number 0943 REPRESENTATIVE BARNES responded that although limited entry was approved by a constitutional amendment, that doesn't make it right. She said the resources belong to all the people of this state, adding, "I don't believe that 77 percent of the permits are still held by Alaskan residents, because people from Washington, Oregon, North Carolina and all over own those permits and come up here and fish every year, when Alaskan people can't fish." Number 1021 CO-CHAIR OGAN asked Ms. McDowell to specifically address Section 1, as well as the remainder of the bill. MS. McDOWELL explained that the bill essentially fine-tunes and updates this one aspect of the limited entry law. The intent is to meet the needs of the evolving Alaska fisheries. Although current law has a moratorium provision for the CFEC, it is not a useful tool because it requires a long, cumbersome process. Fishermen who recognize the need for some kind of cap on their fishery would have to petition the commissioner of the ADF&G, who would then go to the Board of Fisheries; the board would schedule it on their agenda, then decide whether to give the commissioner of the ADF&G permission to then petition the CFEC. This process could take months or years. MS. McDOWELL pointed out that the lengthy process could actually worsen the situation by causing a rush into that fishery by speculators. "As soon as you notify people that we're considering having a lid put on this fishery, and then give them a year or two to rush in, participate and get grandfathered in, you actually aggravate the problem," she explained, adding that no one has ever petitioned for a moratorium under the current statute, because it is so cumbersome and counterproductive. MS. McDOWELL noted that the situation that gives rise to the need for a more effective moratorium process didn't exist when the Limited Entry Act was passed in 1973, when people could primarily make a living in one fishery. Now fisheries are diversifying, she said. New fisheries are springing up, for under-utilized species and gear types, for example. This is good economic development and diversification for the state, and it creates job opportunities. However, these new fisheries tend to come into existence and expand very rapidly, and they can quickly create a resource conservation or overcapitalization problem. That is why a more efficient moratorium process is more important than ever now. Ms. McDowell advised members: Currently, ... the only tool we have for getting a quick handle on an expanding fishery is limited entry. So, this bill could actually avoid the need to go straight to a limited entry permit program in a fishery. If a fishery is mushrooming, a moratorium would give us a tool for putting a temporary lid on that fishery, and give us four years to assess the resource, look over the fishery, go the Board of [Fisheries] and see if they have an alternative way of getting a handle on that fishery - gear restrictions or whatever. So, it's possible that this moratorium tool would actually prevent the need to go into limited entry in some of these fisheries, because it buys you some time to get a lid on something that's getting out of control and figure out what the next step should be. During that four years, we could assess the situation, determine whether we need to propose limited entry and, if so, how to best structure it to conserve the resource and take care of the orderly development of that fishery, and to look for alternatives to limited entry for that fishery. So, we believe that the ability to administratively enact a moratorium like this is a very important management tool, ... and helps keep our options open for the future. And the whole bill is structured to make this process so that the fishermen could petition the entry commission. There'd be an open public process, then, for public comment and so on, ... while that moratorium is in place, and just avoids this need to go through this convoluted process of going to the commissioner, who goes to the board, who goes back to the commissioner, who comes to the commission. And we believe this process is a sound one. Number 1304 MS. McDOWELL advised members that Representative Hudson had asked her to address the issue of extending moratoriums. She reported that the moratoriums enacted by the legislature in the last two years - on dive fisheries, scallops and hair crab - have all been for four years. This bill allows for those moratoriums, or any enacted in the future under this statute, if necessary, to be extended for up to two more years. She stated: We would hope to not have to use that tool in any fishery, because people need some certainty, and there should, ... in most cases, be time to resolve the question in four years. If there is an instance where you can't resolve it in four years, we believe the ability to extend is an important thing to have. For example, if the Board of [Fisheries] is planning to take action and get a lid on things some other way, this would buy time for doing that. In the case of the scallop fishery and the Korean hair crab fishery, the legislature put those under a moratorium based on the vessels, not on the individuals. We don't have a vessel limited entry program. Right now, we don't really have a tool in place to limit those fisheries before those moratoriums expire. We've drafted legislation to do that, but until that's passed, we don't really have a tool for limiting those fisheries. If we didn't have the ability to extend this, and the moratorium would expire on those fisheries, it gets thrown wide-open to open access again, and probably would create a rush of nonresidents into the fisheries. So, that provision for extending the moratorium is one we would hope to not have to use, but believe is an important tool to have in place, in case it ever is needed. Number 1409 CO-CHAIR OGAN referred to Ms. McDowell's comments about creating a rush into a fishery. He noted that interstate commerce laws prohibit discrimination against nonresidents. MS. McDOWELL explained that in the case of the fisheries under moratorium now, if the moratorium expired and there were no limitation in place, it would go back to open access and anyone could get back in. In the case of a couple of the fisheries in the Exclusive Economic Zone (EEZ), the concern is that several other fisheries have been closed; license limitation has been put in place in federal waters, and "there are boats looking for things to do, many of those nonresident vessels that could move into the fisheries." If there were a lag time between when a moratorium was proposed and its implementation, there potentially would be a rush of speculators who weren't already active participants, who may jump in to see whether they can be grandfathered in. Number 1499 CO-CHAIR OGAN asked whether, if this moratorium legislation isn't passed, the ADF&G, through the board, could limit seasons or take a total poundage limit, for example. MS. McDOWELL affirmed that, noting that those are tools the board has all of the time. The moratorium wouldn't even be proposed in a fishery if tools were already in place to keep a lid on that fishery, she explained. A moratorium could get a handle on a fishery that is mushrooming and hold it at its present level while the Board of Fisheries has time to act. If the board had tools and met in the meantime, and if it found a way to get a handle on that fishery, then the need to limit it, at the end of the moratorium, would go away. Number 1544 REPRESENTATIVE BARNES recalled that the last moratorium, for the dive fishery, was for four years. Noting the request to provide authorization to extend that two years, she asked, "In four years, you mean to tell me, the board of fish and game has not addressed the problem in that dive fishery?" MS. McDOWELL answered that the moratorium is in place now, in the dive fishery, and they hope it will be resolved by the end of the four years; a number of species are under that one moratorium. This bill would not extend that moratorium, but it would provide the ability to do that. Ms. McDowell pointed out that there are several proposals floating around, about combined fisheries or endorsements, for example, where one permit would be handed out for all the dive fisheries, but there would be endorsements for individual species. She stated: We don't have the ability to do that now. But if the legislature decided that you were interested in providing that tool, there might be a reason to hold off on finalizing the action on limitation until we knew whether that tool was going to be provided. ... We would always try to finish making a decision in four years, because people need certainty, they need to get on their lives. And if it's going to be opened up, it needs to be opened up; if it's going to be limited, it needs to be limited. So, our goal would always be [to] resolve it in four years. We're primarily concerned about hair crab and scallops right now, where it's a vessel moratorium. We don't have a vessel limitation program. We don't have a way to limit those right now, ... unless given the tools to do a vessel limitation. Number 1675 CO-CHAIR OGAN noted that he had provided members with copies of the section of Title 16 that is repealed by Section 1 of the bill. Number 1705 AMY DAUGHERTY, Lobbyist for Pacific Associates and Alliance Fisheries, came forward, clarifying that she was speaking on behalf of hair crabbers and scallop vessel owners. She read her written testimony into the record, with comments, as follows: I'm here to speak in support of this legislation. In my four-year tenure with the Fisheries Committee, I assisted in putting through two statutory moratoriums, for the hair crab and scallop fisheries. In both cases, the harvesting effort was beginning to exceed what those small fisheries could endure, so we contained them legislatively. We were fortunate that these situations were dealt with so expediently in a political setting, but that was before most of the legislature's attention was on budget concerns and subsistence. Of particular importance in this bill are Sections 2 and 8, which would allow CFEC to extend the current moratoriums up to two years. The hair crabbers and scallopers, who I now represent, are in support of extending their current moratoriums, especially if a more long-term solution cannot be attained. It is critical that we not let these fisheries open up again. In both cases, open access would open a floodgate of effort, to the extent where these small fisheries ... would be difficult or impossible to manage .... Particularly in the hair crab fisheries, now that AFA [American Fisheries Act] has passed and pollock is essentially co-oped, there's a lot of flexibility, so that they can assign their pollock quota. And this, I believe, is the only fishery that's open in the EEZ, which is just a red flag for people to rush into. ... I hope the legislature will enable the state with this management tool. Both of these fisheries reside primarily offshore in federal waters yet have been delegated to the state for management. Both have a higher percentage of Alaskan involvement than most offshore fisheries. If the state effectively "drops the ball" or neglects to show interest, it increases the likelihood that these fisheries will return to federal management. It's in Alaska's best interest to have its fishery management tools in place. My partner, Joe Kyle, is an Alaskan designate on the North Pacific Fishery Management Council, and he couldn't be with us today. But he stated on numerous occasions that Alaska needs to show its capability in fisheries management, in order to retain control of these fisheries, and also to keep our state's best interest prevailing in the offshore fisheries. He has indicated that restoring a license limitation program under a federal regime would most probably decrease Alaska's involvement in these fisheries. It's just a matter of numbers out there. Why should you care? These fisheries add to Alaska's economy. They pay landing tax or business tax and fuel, and, I believe, $1,000 annual license fees. Some Alaskans participate in these fisheries. Some have direct employment, and some have indirect. They can't help but add to the Alaskan economy when they sell to processors onshore or the product is shipped through Anchorage after charter planes pick up the produce from the grounds. They buy fuel and groceries from Alaskans. They strengthen our state's infrastructure. This legislation will enable CFEC to more effectively do their job, limiting participation when fishing effort exceeds a level of sustainability - resource and economic sustainability. I urge your support for HB 104. Number 1989 RAYMOND CAMPBELL testified via teleconference from Ketchikan. A former commercial fisherman, he told members he was put out of business on a moratorium. It seems that public access is being described as a convoluted procedure, he said. "We're talking about very valuable resources here, and to have a small group of people go in and petition the CFEC, to put a moratorium on a fishery, and then have the CFEC just do it, it seems to be taking a lot of the public process out of it," he stated. MR. CAMPBELL said he understands that there have been more than ten requests to place other fisheries under a moratorium. If this bill goes through, the CFEC could shut down those fisheries through a moratorium, putting people out of work. Furthermore, he suggested, removal of transferability and getting rid of the money incentive may keep speculators from getting into the fisheries. If this bill goes through, he wants to see it amended as HB 204 was amended in the last session. "And I think the whole issue of limited entry won't be an issue anymore, if we take the transferability and the money incentive out of it," he concluded. Number 2115 CO-CHAIR OGAN asked Mr. Campbell about his letter dated March 11, 1999, which says in the fourth paragraph that there have been transfers of moratorium permits, which puts a value on them. He asked Mr. Campbell if he could cite specific examples of what the transfers have been. MR. CAMPBELL answered, "There have been transfers of the moratorium permits in the dive fisheries; there have been medical transfers. ... One of the things that the dive moratorium did was it gave permits to people who never participated in the urchin fishery, and maybe Miss [McDowell] can give us numbers on how many medical transfers there's been on moratorium permits in the dive fishery. And that is driven by money, too. ... On a medical transfer, there's money traded." Number 2261 GERON BRUCE, Legislative Liaison, Office of the Commissioner, Alaska Department of Fish and Game (ADF&G), came forward, specifying that the ADF&G supports this legislation. He said he would focus on biological issues relating to why a moratorium is helpful in maintaining the health of the resources. He told members: As both the sponsor and Ms. McDowell indicated, there's increased interest in Alaska in developing the new fisheries on species that are currently under-utilized or not utilized at all. ... In nearly all cases involving these species, the department knows very little about their life history, the distribution, how productive they are, how they will respond to commercial harvest. ... And so, we are very cautious in approaching new fisheries, and there have been cases where new fisheries have been started - abalone is probably the instance I'd like to use the best in Southeast Alaska, where an abalone fishery started off at a very low level at first, interest in it expanded, harvest rapidly expanded, beyond what the resource could support, the fishery collapsed, and we no longer have an abalone fishery. And while there are mechanisms that we can put on - using seasons, quotas or trip limits, other kinds of things - you don't always know which of those tools are appropriate. And you have to remember, always, that we're starting, with these new fisheries, with very, very limited information about the size of the resource, its productivity, and its ability to respond to intensive harvest. So, ... we often need some time to begin to develop some information, because in some cases, the fishery may actually be the only way we have of collecting information. We're not getting increased funding for supporting new fisheries, so there's very limited funds. We basically have to borrow from the staff that's dedicated to existing fisheries to try to begin to collect this information. And so, sometimes the fishery itself is a very important data collection tool. However, being a fishery, it ... doesn't operate the same way that a scientific survey would. And that's part of the reason why you need to be cautious, and why a moratorium like this would be very helpful. It helps the department be able to ensure that while we may not have exact data about the size of the resource and its productivity, we can do our best to hold the harvest at a conservative level, until we get enough information that we can then increase the harvest or allow the harvest to conform to what the resource ... can sustain. So, for those reasons, Mr. Chairman, we are in support of this legislation and urge you to pass it. Number 2437 REPRESENTATIVE MASEK asked whether the number of permits is a factor in establishing a quota. MR. BRUCE replied that it wouldn't be a factor in establishing the quota, which would be based on the size of the resource, its productivity, its distribution, and the harvest that it could maintain on a sustained basis. Number 2494 CO-CHAIR OGAN asked whether anyone else wished to testify, then announced that he wouldn't close public testimony at this time. [HB 104 was held over.] HB 116 - BOARD OF AGRICULTURE AND CONSERVATION Number 2520 CO-CHAIR OGAN announced that the next item of business would be House Bill No. 116, "An Act relating to the Board of Agriculture and Conservation, to the agricultural revolving loan fund, to the disposal of state agricultural land, and to the Alaska Natural Resource Conservation and Development Board; and providing for an effective date." Co-Chair Ogan informed listeners that he didn't intend to move the bill today, but was trying to arrange an informal hearing in his own district on Saturday, April 17, 1999, as this affects his own district greatly. Number 2546 REPRESENTATIVE JEANNETTE JAMES, Alaska State Legislature, sponsor, explained that HB 116 would establish some continuity in the agricultural activities of the state as well as consolidate some activities by making three boards into one. The Board of Agriculture is set up to be the operative of the Division of Agriculture and the current director would be hired as the Executive Director by the board. Personally, Representative James believed that agriculture is best directed by those involved in agriculture. She pointed out that the board would be the Board of Agriculture and Conservation and would consist of nine members. As mentioned the current director of the Division of Agriculture would be the Executive Director, one member would be the commissioner of the Department of Natural Resources (DNR), two members would be from Alaska Soil & Water Conservation, and four from different enterprises involved in the commercial production of agriculture. Of those four, one would be from a statewide agricultural promotion organization and one with business or financial expertise. This would be a three year, rotating board. Representative James commented that this is a work in progress and there is no intent to make a decision on this legislation this year. REPRESENTATIVE HARRIS moved to adopt the proposed committee substitute (CS), version LS0407\N, Cook, 4/8/99, as the working document before the committee. There being no objection, it was so ordered. REPRESENTATIVE JAMES pointed out that the legislation does not currently have a fiscal note because a fiscal note cannot be prepared until the process with the legislation is completed. CO-CHAIR OGAN commented that at first glance, HB 116 looks as if it would save money. REPRESENTATIVE JAMES said that is the goal. CO-CHAIR OGAN turned to the public testimony. Number 2788 DAVID ROGERS, Chair, Alaska Natural Resource Conservation and Development Board (AKNRCDB), pointed out that AKNRCDB is one of the boards that is proposed to be merged with the new Agriculture and Conservation Board. He noted that most folks have never heard of AKNRCDB or understand soil and water conservation districts, but due to time constraints he said he would not go into the detail on that. Mr. Rogers informed the committee that AKNRCDB is a governor appointed, five member board which represents all of the regions of the state. The board works closely with the 11 soil and water conservation districts. The board is a link between the districts and the government, in particular the Department of Environmental Conservation (DEC) and the Department of Natural Resources (DNR). The board provides administrative support and money pass through and can also advise the commissioner with regard to agricultural grazing and timber issues. Furthermore, the AKNRCDB is the board of supervisors for the Alaska District which is the twelfth conservation district, all the area outside of the 11 organized soil and water conservation districts. Mr. Rogers reviewed the location of the districts which may be the first public-private partnership. MR. ROGERS announced that he supported the concept of an agriculture policy board, but he was concerned with giving the board land management authority. With regard to merging the Agricultural Revolving Loan Fund (ARLf) and the Dairy Board, he was neutral. Mr. Rogers strongly opposed merger of AKNRCDB with the new board. The AKNRCDB is not just an agricultural board, but a board that also concerns itself with conservation issues in general. The fear is that absorption into a new board with many duties... TAPE 99-25, SIDE B MR. ROGERS appreciated the efforts to bring the commissioner and two members into the mix, but concern remains. Therefore, he opposed HB 116 as currently drafted. CO-CHAIR OGAN inquired as to why the chairman of the AKNRCDB resides in Juneau. MR. ROGERS informed the committee that he is a representative of Southeast Alaska as well as an oyster farmer. Therefore, he qualified as an cooperator. He offered his help to the committee. Number 2878 MARCIA WARD, Ward Farms, testified via teleconference from Delta Junction. Ms. Ward supported HB 116 as it is currently drafted. She did not understand the opposition of Mr. Rogers and others in conservation. Ms. Ward believed that AKNRCDB would become a stronger board with seven conservation members. She guessed that the four farmer representatives on the new board would be cooperators and members of the local and state soil and water conservation districts. She also suspected that one statewide agricultural promotion organization would have a cooperator as a representative. Therefore, conservation would benefit from this proposal. MS. WARD stressed that agriculture needs to be represented and farmers in the business of farming need to sit on the new board. Furthermore, consolidation must occur in the interest of money. She commented that it has been quite some time since an appropriation has been received from the legislature to support agriculture. Yet, the National Resource Conservation Service (NRCS) board takes money from ARLf to fund their board and executive director with no return to the ARLf. She noted that she and her husband have used the ARLf in the past. For new farmers, the gap is tightening. She emphasized the need for low interest money to support new developing farmers and the need for control of agricultural lands. "The Division of Lands clings to agricultural lands as though they were a goldmine of their own." In conclusion, Ms. Ward urged the committee to consider HB 116 as currently drafted. Number 2711 ROBERT FRANKLIN, State President, Alaska Farm Bureau, testified next via teleconference from Fairbanks. He noted that HB 116 was discussed at length during the Spring board meeting. Furthermore, the construction and support of a Board of Agriculture has been on the resolution board for years. He commented that the Farm Bureau will continue to work with legislators on this issue. Mr. Franklin supported HB 116. STEVE GIBSON, Director, Homer Soil and Water Conservation District, testified via teleconference from Homer. He noted that first he would speak for the district. The Homer district has determined that reorganization may or may not be a good choice, but the inclusion of the district would be a loss of representation. He identified the narrowing focus as the main reason for "not coming on board with the proposed statute." The conservation concerns for miners, the timber industry, et cetera would not be recognized as agriculture. Furthermore, there may be geographical problems with regard to some areas being more represented than others. MR. GIBSON then spoke as an individual. He believed that there will be a considerable long-term fiscal impact with HB 116. This legislation would place many state resources into the ARLf and discounts many of those assets based upon the nine member board. That should be reviewed. Additionally, the board is exempted from the public meeting which may be problematic, especially since the board is empowered to own its own members' money. Number 2500 CO-CHAIR OGAN stated that he had received the Association of Soil and Water Conservation letter dated April 5, 1999, from Omar Stratman. Co-Chair Ogan asked if Mr. Gibson had seen the letter. MR. GIBSON said it was brought to his attention this morning. He commented that the Homer district would second the comments in the letter. JACKIE BECKER, Active Member and Officer, Kenai Farm Bureau, testified via teleconference from Kenai. She informed the committee that she and her husband were currently planning and working toward owning their own farm. Ms. Becker supported HB 116 and believed the new board would help save money through consolidation. Furthermore, the life of the ARLf would be extended which is important for the next generation of farmers, her son. Currently, that does not look to be the case. She did not believe this consolidation would harm the other boards as much as they think. There is no intent to destroy any other boards. Additionally, it is important to have active agricultural community members as part of the board. Number 2344 SIG RESTAD, Northland Pioneer Grange, testified next via teleconference from the Mat-Su Valley. Upon the agricultural committee's review, it is opposed to the current draft of HB 116. He recognized that all of state government, including the Division of Agriculture, has room for improvement. However, there is no reason to "reinvent the wheel." He stated, "A board of seven that is kind of a quasi unit, away from the regular governmental procedures does not sound like a way to build up communications with administration and work with the administration." He questioned how employees would respond under the proposed arrangement. With regard to the language referring to the notion that "land sales and management income may be appropriated," Mr. Restad did not believe one could be assured such would be appropriated to the board. He pointed out that there is legislation from territorial days which utilizes the language "appropriations shall be made to operate this legislation" and that is not the case. Furthermore, there are fiscal additions that are not necessary. He shared some of the concerns of soil and water conservation with regard to their ability to maintain their work with only two members. Over many years, the Grange has taken the stand that the Division of Agriculture has an agricultural responsibility, a land conservation and development responsibility, and a consumer responsibility. The division should continue to be funded through appropriated funds. On the other hand, ARLf was established to make agricultural related loans and funds generated were to be used to operate the fund and revolve for the benefit of future farmers with agricultural loans. He stressed the need to maintain that intent. There are other ways than HB 116 that could better accomplish this. CO-CHAIR OGAN requested that any written testimony should be provided to the committee. Number 2131 ART GRISWOLD, End of the Alaska Highway Grange, testified via teleconference from Delta Junction. Mr. Griswold supported HB 116. In response to Co-Chair Ogan, Mr. Griswold explained that a grange is a farmer's paternal organization dating back to the Civil War. The grange began to help farmers organize and deal with politics. For example, the National Grange has paid lobbyists to advocate for legislation and support of agriculture. Currently, there are four active granges in Alaska. MR. GRISWOLD commented that he believed Representative James has an answer to a potential problem. There need to be continuing funds to develop agriculture. He recognized that the state will not be able to continue to fund agriculture and therefore, it needs to become self-sustaining. Mr. Griswold said that he would rather pay five percent interest to Alaska's fund rather than the federal five percent. Number 1920 JIM ELLISON, Publisher, Alaska Farmer Magazine, testified via teleconference from Fairbanks. Mr. Ellison informed the committee that he farms stock and fowl. He commented that one must remember that this is about agriculture. There is no question that a board can better represent farmers and land conservation. Mr. Ellison noted that he has farmed and ranched in Alaska for 30 years and has never had to use state funds. If the desire is for agriculture to grow in Alaska, there must be people in positions with agricultural experience. He believed this to be a good start. "The Alaska Farmer Magazine supports it, maybe not quite just like it's written, but as what we see is going to be the finished product." BRUCE WILLARD, Rancher, testified via teleconference from Homer. He noted that he has been a rancher since 1959. Mr. Willard supported the Board of Agriculture having people on the board that are in agriculture. Other than that, more work on the legislation is necessary. He believed that the folks from the soil and water conservation boards have some "qualified reasons" for opposition. Number 1698 DOUG WITTE, Program Coordinator, Alaska Association of Conservation Districts, testified via teleconference from the Mat-Su Valley. The aforementioned reference to the letter dated April 5, 1999, was sent to each member of the House Resources Committee. He explained that the Alaska Association of Conservation Districts is a 501(c)(3) nonprofit organization which supports the efforts of all 13 Alaskan soil and water conservation districts. These 13 districts represent 65 locally elected supervisors and more than 850 private land owners. At the convention in March, the association supported the concept of the Board of Agriculture. However, the association opposes the consolidation of the AKNRCDB and any of the authorities under AS 41.10 as outlined by Mr. Rogers. The association supports the appointment of a member of the Alaska Conservation District movement to one of the nine member boards. Furthermore, the association does not recognize any cost savings as a result of the proposed consolidation under HB 116. He expressed interest in being involved in the fiscal note process. MR. WITTE commented, "Although a number of out supervisors and/or cooperators with the districts have a whole-hearted concern and interest in issues such as the operation management of Matanuska Maid, Mt. McKinley meats, and ... other assets within the [indisc.] portfolio; they also have an interest in the day-to-day responsibilities, marketing and inspection unit within the Division of Agriculture and they probably have ... an interest in the policies and procedures that guide ARLf operating, development, and processing loans." Mr. Witte informed the committee that the main mission of the association is "to guide the development of lands classified for agriculture following proven soil and water conservation methods and that the integrity of the farm and ranch resources are protected over time." Under AS 38.05.321 a farm development plan was required as part of a agriculture land sale contract until two years ago. The farm development plan outlined the location of the farmsteaders and real property improvements as well as areas to be managed for commercial timber. These are obviously tied to the physical features of the farm tract and easily expressed on a map and referred to as the conservation plan. That is the document the soil and water conservation districts are expected to provide the land contract holder. Currently, this is on a voluntary basis per 11 AC 67.180. Although the farm development plan under AS 39.05.321 was repealed by SB 109, the conservation planning requirement remains. Whether land and resource concerns are agriculture, it is critical to recognize the physical and environmental limitations. This type of planning is done to support and offer the type of science and natural resource management assistance which is practically unavailable to the average private landowner. Mr. Witte pledged support of future legislative industry development of agriculture in Alaska. Number 1295 K. KIRK, Plweger Farms, indicated that HB 116 was a great piece of legislation. For the first time, people in agriculture will be making decisions on agriculture. Overall, HB 116 is written well. He commented, "Fort the first time, since we started this agriculture program, ... it is meeting the requirements of the farmer." He recalled the clearing requirements when this program first began. The farmers received the farms with the trees on the farms in October. The farmers were told that the first payment had to be received the next October. This meant that a farm had to be clear, put into production, and make a profit on the farm within the first year. The man that made that decision did not know what farmers had to do. That caused problems and ultimately led to the state giving a moratorium for a year. Mr. Kirk fully supported this program. ROB WELLS, Director, Division of Agriculture, testified via teleconference from the Mat-Su Valley. Mr. Wells noted that the division has some concerns, but the division's current position is neutral. He discussed the meeting schedule of the ARLf board and the Creamery Corporation. The Creamery Corporation was purposefully set up an arm's length from ARLf in order that it was not subject to state procurement rules. This allowed them to run similar to a private enterprise. That procedure has been successful to date. He expected that the new Board of Agriculture under HB 116, due to the board's new responsibilities, would have more meetings. Therefore, there are concerns regarding the perceived savings through consolidation of these boards. The current ARLf board has demonstrated that it is fiscally conservative as evidenced by the Division of Legislative Audit who viewed ARLf loan procedures and approval in 1997 to be approaching what is expected in the private lending sector. MR. WELLS expressed concern with the CS in regard to the independent authority of this Board of Agriculture and whether it is not part of the executive branch. If it is part of the executive branch, this board would be subject to the Executive Ethics Act. He noted that the Division of Lands has significant concerns with the Title 38 land disposal responsibilities in HB 116. Mr. Wells announced that he had pledged to work with Representative James over the interim to develop solutions. Number 0592 SCOTT MILLER, Misty Mountain Farms, testified via teleconference from Delta Junction. He informed the committee that he was the local Delta Chapter, Farm Bureau President. Mr. Miller supported HB 116 for three reasons. Firstly, HB 116 brings the current ARLf interest rates more in line with other lending institutions which is necessary to support agricultural development. Secondly, there is no meaningful assistance for the drought situation in Delta Junction. He indicated it to be in the state's interest to have a restructuring program for farmers. Thirdly, Mr. Miller supported the concept of the Board of Agriculture as well as having farmers directing quality and development. This legislation makes good sense and would help Alaskan agriculture develop and build its agricultural industry. WAYNE BOUWENS, 65 year Alaskan resident; Chairman, Palmer Soil and Water Conservation District, testified next via teleconference from the Mat-Su Valley. He noted that he has been involved in agriculture for most of those 65 years. Mr. Bouwens said that he would like to see a Division of Agriculture. He commented that the soil and water conservation movement will suffer under the proposed new board. In conclusion, Mr. Bouwens said HB 116 needs more work. Number 0206 CO-CHAIR OGAN announced that he planned to meet with those interested in this issue in his district individually after the town meeting scheduled for Saturday, April 17, 1999. DICK ZOBEL, Member, AKNRCDB, testified via teleconference from the Mat-Su Valley. He believed Mr. Rogers had outlined the AKNRCDB's position. He noted that he has been involved with the conservation districts since 1976 and is therefore, a member of the Wasilla Soil and Water Conservation District which is a member of the Alaska Association of Soil and Water Conservation Districts. He recalled the use of the word "power" during the hearing. TAPE 99-26, SIDE A MR. ZOBEL stressed that the conservation districts are not power organizations. These districts are made up of volunteers. Anyone that enters the local conservation district is sent by the state or is a private landowner requesting help. Mr. Zobel commented that the conservation districts do not want power. The comment that HB 116 is an agricultural bill makes the conservation districts, the state association, and the state board apprehensive because they have a broader vision than just agriculture. Mr. Zobel turned to the issue of funding and stressed that there were years that no funding was received and creative measures were taken to provide the service. In closing, the bill that would include two people (from the soil and water conservation districts) would not do the job. Number 0244 CO-CHAIR OGAN stated that if anyone wanted to add further comments, he would allow that at this time. MR. FRANKLIN requested that Representative James address the conservation issue. He did not see anything in HB 116 that affects the districts. BARBARA COTTING, Legislative Assistant to Representative James, Alaska State Legislature, responded that there is no intention to take anything away from the districts. The idea is to consolidate several boards who are not effective standing alone in order to strengthen the functions of all the boards. How that is accomplished probably does need work. Therefore, everything is open for negotiation. Ms. Cotting agreed with Mr. Franklin that the language in HB 116, as currently written, does not affect the conservation districts. MR. FRANKLIN pointed out that there are two different entities, 13 soil and water conservation districts and the state soil and water conservation board. PETE FELLMAN, Delta Dairy Farmer, informed the committee that he has been actively farming for 20 years and has been involved with soil and water conservation for that time as well. He noted that he was testifying on his own behalf, although he is staff to Representative Harris. Mr. Fellman turned to the makeup of the board. One of the members must be of a general business background which could be in mining, logging, fishing, et cetera. Two of the members will be actively involved with soil and water conservation districts. One of the members would be the commissioner of DNR, who would have statewide interest. Therefore, four members would be farmers or from farmer groups. Currently, there are 13 conservation districts while only four districts are represented by people living in that district. The number proposed under HB 116 would have eight people from the 13 districts who could be on the conservation board. Therefore, these groups will become more valid and more fully represent the state. Mr. Fellman emphasized that this will not affect most of the money that comes to soil and water conservation which comes through a federal division, NRCS. He indicated that there is no controversy surrounding the ARLf and the need to move the interest in line with the Farm Service Agency (FSA) which can help farmers during such situations as droughts. He referred to the letter from Omar Stratman(ph); this will not affect the districts. CO-CHAIR OGAN acknowledged that this is a major change in the way business is done in agriculture. He noted his support of agriculture due to its importance in everyone's life. HB 116 was held in committee. ADJOURNMENT There being no further business before the committee, the House Resources Standing Committee meeting was adjourned at 2:57 p.m.