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HomeMy WebLinkAbout10052011 PACAB PacketSEWARD PORT AND COMMERCE ADVISORY BOARD Regular Meeting October 5.2011 12:OOPM Ron Long, Chair Board Member Term Expires 07/2013 Bruce Jaffa Board Member Tenn Expires 07/2012 Deborah Altermatt Board Member Term Expires 07/2013 Daniel Oliver Board Member Term Expires 07/2012 Daryl Schaefermeyer Board Member Term Expires 07/2012 Steve Fink Board Member Term Expires 07/2012 Bob Linville Board Member Term Expires 07/2012 City Manager Assistant City Manager Mack Funk Harbor Master Suzi Towsley Executive Liaison City of Seward, Alaska October S, 2011 COUNCIL CHAMBERS 1. CALL TO ORDER 2. PLEDGE OF ALLEGIANCE 3. ROLL CALL 4. SPECIAL ORDERS, PRESENTATIONS AND REPORTS A. AKRR Representative- Louis Bencardino B. Harbormaster Report Introduction — Norm Regis/ Mack Funk C. Chamber of Commerce Report- Cindy Clock 5. Citizens' comments on any subject except those items scheduled for public hearing. [Those who have signed in will be given the first opportunity to speak. Time is limited to 2 minutes per speaker and 30 minutes total time for this agenda item.] 6. Approval of agenda and consent agenda [Approval of Consent Agenda passes all routine items indicated by asterisk (*). Consent Agenda items are not considered separately unless a Board Member so requests. In the event of such a request, the item is returned to the Regular Agenda.] 1 PA CAB Agenda Page 1 7. INFOMATIONAL ITEMS, REPORTS AND PRESENTATIONS- 8. UNFINISHED BUSINESS 9. NEW BUSINESS * A. September 21, 2011 Minutes ..........................................................Page 3 B. 2012 PACAB budget..................................................................Page 5 1.0. CORRESPONDENCE, INFORMATIONAL ITEMS AND REPORTS (No action required) - A. ADN Article: Plan to move crab boats north starts allocation flap ............... Page 6 B. Invitation to R&M Consultants Review ........................................... Page 10 C. Congretional Letter.................................................................... Page 11 11. BOARD COMMENTS 12. CITIZEN COMMENTS [5 minutes per individual - Each individual has one opportunity to speak.] 13. BOARD AND ADMINSTRATIVE RESPONSE TO CITIZENS'COMMENTS 14. ADJOURNMENT City of Seward, Alaska PA CAB Agenda October 5, 2011 Page 2 City of Seward, Alaska Port and Commerce Advisory Board Minutes September 21, 2011 Volume, Page CALL TO ORDER The August 3, 2011 rescheduled regular meeting of the Port and Commerce Advisory Board was called to order at 12:07 p.m. by Ron Long, Chair. OPENING CEREMONY Chair Long led the pledge of allegiance to the flag. ROLL CALL There were present: Ron Long, presiding, and Deborah Altermatt Darryl Schaefermeyer Dan Oliver Steve Fink Bob Linville There were excused: Bruce Jaffa Comprising a full quorum of the Board; and Also present was: Michelle Weston, Assistant City Manager Norm Regis, Acting Harbor Master Suzi Towsley, Board Liaison SPECIAL ORDERS, PRESENTATIONS AND REPORTS l . Acting Harbor Master Report — Z float was near completion with a change order to process. The Travel lift had been busy with end of season Board members made clear that they want input on the Cities legislative priorities, both state and federal. Schaefermeyer joined the meeting. Administration Report — Michelle Weston Ms. Weston had resigned but would be working on some projects for the city. The board expressed their thanks for her work. CITIZENS' COMMENTS ON ANY SUBJECT EXCEPT THOSE ITEMS SCHEDULED FOR PUBLIC HEARING There were none. APPROVAL OF AGENDA AND CONSENT AGENDA City of Seward, Alaska Port and Commerce Advisory Board Minutes September 21, 2011 Volume Page Motion (Schaefermeyer/Oliver) Approval of Agenda Unanimous Consent Motion Passed Motion (S ch a efermeyer/O liver) Approve resolution 2011- 07 of the Port and Commerce Advisory Board, Recommending the City of Seward Amend the Port and Harbor Tariff regulations effective January 1, 2012 General discussion of the resolution and Harbor tariff: including timeline, the CPI and comparative rates from Homer, Cordova, and Kodiak. Motion to Amend (Schaefermeyer/Oliver) Adding Ithe word "estimated" to the Agenda Statement with the tariff to read: Continue to link Tenant/Slip holder moorage rates to the estimated CPI. Vote on amendment Amendment Passed Unanimously Vote on Main Motion Motion Passed unanimously The board agreed via unanimous consent and without vote to move their October 19`h work session to an evening time (approximately 7pm) to accommodate the engineering firm working on the CVRF/SMIC project. APPROVAL OF AUGUST 3, 2011 Minutes Motion (Oliver/Linville) Approval of minutes Unanimous Consent BOARD COMMENTS The Board again thanked Weston and wished her luck. CITIZENS' COMMENTS (none) BOARD AND ADMINISTRATIVE RESPONSE TO CITIZENS' COMMENTS (none) ADJOURNMENT The meeting was adjourned at 1:39 p.m. Suzi Towsley Executive Liaison Ron Long Chair City of Seward - General Fund (101) Department: Legislative - Boards & Commissions (1111) 2012/2013 Biennial Operating Budget Expenditure Detail by Department 2010 2011 2012 2011-12 2013 2012-13 Account Name Actual Budget Request --------- variance -------- e Chg ------ Request --------- °s Chg ------ ---------------- Personnel Services -------- -------- Salaries $ 25,115 18,138 17,857 (281) (1.5)a 18,145 1.6 a Leave Time 1,046 1,702 1,911 209 12.3 1,940 1.5 Retirement Benef 3,581 1,441 1,415 (26) (1.8) 1,388 (1.9) Health Insurance - 6,995 6,995 - - 6,995 - Workers' Comp 266 211 205 (6) (2.8) 209 2.0 Medicare 54 278 273 (5) (1.8) ------ 277 --------- 1.5 ------ Personnel: -------- 30,063 -------- 28,765 --------- 28,656 -------- (109) (0.4) 28,954 1.0 Advertising - 850 - (850) (100.0) - - Subscriptions/Du 930 1,050 1,000 (50) (4.8) 1,000 - Travel/Subsisten 1,124 1,100 500 (600) (54.5) 500 - Education/Traini 358 1,700 500 (1,200) (70.6) 500 - Insurance 625 1,100 1,100 - - 700 (36.4) Operating Suppli 1 2,532 3,000 2,000 (11000) (33.3) 2,000 - Postage/Misc.Fxe - 500 - (500) (100.0) ------ - --------- - ------ Non-Personnel: -------- 5,568 -------- 9,300 --------- 5,100 -------- (4,200) (45.2) 4,700 (7.8) Total Expenditur $ -------- 35,631 -------- 36,065 --------- 33,756 -------- (4,309) - - --- (11.3)0 --------- 33,654 ------ (0.3)% 18 adn.com I Plan to move crab boats north starts allocation flap Page 1 of 4 adn.com Anchorage Daily News Print Pa L Close Window Plan to move crab boats north starts allocation flap By HAL BERNTON (10103111 18:01:40) For more than a quarter century, three Washington -based crab boats named Bering Sea, Arctic Sea and North Sea worked harvest grounds off Alaska, then sent profits south to their Puget Sound owners. The vessels, among the top -grossing crabbers in the North Pacific fleet, are still berthed in Seattle. But they are now owned by Coastal Villages Region Fund, one of six Alaska economic -development nonprofits that have invested hundreds of millions of dollars in the Northwest fleets that catch crab, pollock and other fish. These nonprofits represent 65 Alaska Native communities that have long struggled with high unemployment and poverty. They were launched by a federal fishery council, which vested them with valuable shares in the regulated seafood harvest to help generate seafood jobs and dollars for those communities. And their success is a source of pride in a state that for decades chafed at the domination of its fishing industry by outside fleets. But a proposal by one nonprofit to base some boats in Alaska as early as 2014 has sparked concern in Seattle, where fishing fleets directly sustain more than 5,000 jobs and spend hundreds of millions of dollars annually. "The fishing industry in Washington and Oregon has arrived at a fateful crossroads," declared a letter sent last month to the state's congressional delegation by four Washingtonians who have been involved in the industry or the fishery council. The letter complains of a "massive transfer of wealth" resulting from undue Alaska influence on federal fishery policy. "When you look at the advantages they have, they (the Alaska nonprofits) obviously are going to end up being king of the hill," said Kris Poulsen, a retired Washington crabber who signed the letter. "We need a more equal playing field." Poulsen and the others proposed that Congress boost Northwest representation on the regional council that helps set harvest rules. The letter has riled the Alaskans who lead the nonprofit groups. They say the Northwest fleets received most of the North Pacific harvest shares, and the federal policy that launched their groups helped prevent aboriginal communities from getting shut out of a fishing industry that has taken billions of dollars of seafood from the ocean off Alaska's shores. "I think this is revisionist history," said Larry Cotter, chief executive officer of the Aleutian Pribolof Island Community Development Association. "The letter seeks to recolonize Alaska, and I just think that -- finally -- we are beyond that." LURE OF SEWARD http://www. adn.coml2O l l / 10/03ly-printerl2 l O2O67/plans-to-move-crab-boats-to-alaska.html 10/4/2011 adn.com I Plan to move crab boats north starts allocation flap Page 2 of 4 If some of the Alaska vessels do leave Seattle, their most likely home port would be Seward, which sits at the end of an ice -free fjord on the Kenai Peninsula. "We spend approximately $20 million annually in Seattle for moorage, vendor support, and maintenance; and we spend approximately $2 million per year to fly crews to and from Alaska and Seattle," wrote John Mark, president of Coastal Villages in a February letter to Seward Mayor William Dunham. He called basing the ships in Alaska a "historic opportunity." Seward secured more than $400,000 in state funds to study port expansion to accommodate the Seattle fleets, and hopes to get more than $30 million in additional state or other funds to finance the work. According to the current schedule, Coastal Villages fleet could begin to move into new Seward berths by 2014. Morgen Crow, executive director of Coastal Villages, cautions that there is no final decision to move his group's fleet. Though Seward has a dry-dock facility, it lacks many of the support services, including many specialty crafts, that make Seattle the fleet's hub, where vessels can get repaired, refurbished and resupplied. Unlike Coastal Villages, other Alaska nonprofits haven't acquired a majority stake in most of their Washington vessels, so their partners likely would have to approve moving home ports to Alaska. CHANGE IN FLEETS The birth of the Alaska nonprofits dates back to the early 1990s, when the foreign fleets that once dominated the harvests had been replaced by U.S. fleets largely based in Washington and Oregon. To end a bitter fight over pollock, the North Pacific Fishery Management Council, which shapes harvest policies off Alaska, divided up the catch among rival fleets. Six of the 11 voting members are from Alaska, and the council in 1991 allocated 7.5 percent of the annual harvest to Bering Sea communities. In the years that followed, federal actions increased the western Alaska pollock share to 10 percent, and also awarded shares of crab, cod, halibut, flatfish and other seafood harvests. Early on, the six nonprofits that control these harvest shares teamed up with Seattle -based companies that had the vessels to catch this seafood. The oldest surviving partnership, forged in 1992, pairs Norton Sound Economic Development Corp., which represents 15 villages in northwest Alaska, with Seattle -based Glacier Fish. Today Norton Sound, though still a minority owner, is the largest single investor in Glacier's three factory trawlers. John Bundy, Glacier Fish president, said the relationship has given his company access to seafood resources. For Norton Sound, it has generated earnings, some of which have been reinvested in Glacier, and some spent to improve salmon runs, pay fuel bills and fund other efforts to benefit the native villages. "Our partnership has withstood the test of time, and is based on mutual respect," Bundy said. "I think that at one time or another, I have visited every one of those villages and ... every year we provide work for anyone who wants it, and is qualified to work on our boats." The nonprofits have lots of allies in Washington state, and many in the industry wanted nothing to do with the letter to the state's congressional delegation. http://www.adn.coml20ll/10/03/v-printerl2102O67/plans-to-move-crab-boats-to-alaska.htmi 10/4/2011 adn.com I Plan to move crab boats north starts allocation flap Page 3 of 4 "This is a very sensitive issue and there are plenty of people who have benefited from these groups," said Bob Alverson, executive director of the Seattle -based Fishing Vessel Owners Association. He helped draft the letter, and is asking the association's 80-plus owners of halibut longline vessels for approval to sign it. There also have been some strains in the relationship between Alaska and Washington partners. Last year, Coastal Villages opted out of its investment in Seattle -based American Seafoods. Instead, Coastal took control of one of the Seattle -based company's factory trawlers, and three longline vessels and additional harvest shares. Poulsen sold the Bering Sea, Arctic Sea and North Sea vessels and their harvest rights to Coastal Villages for more than $30 million in 2006. "I said why not buy half -- but they said it was either all, or nothing," Poulsen said. Poulsen was frustrated when, three years later, the group terminated a management contract with his family. And he decided to sign the Washington letter that seeks to bolster the state's representation on the council. "I wasn't aware of any hard feelings or heartburn," said Crow, Coastal's executive director, who said he was surprised to see Poulsen's signature on the letter. "We have a lot of good relationships with people all over the crab industry, and we are here to stay." POWERFUL PAIR Alaska's dominance on the federal fishery council reflects a deal struck by Washington Democrat Sen. Warren Magnuson and Alaska Republican Sen. Ted Stevens as they crafted landmark 1976 legislation that claimed all fishery resources within 200-mile limits of U.S. shores as a federal resource. Though deemed a federal resource, the seafood lay off Alaska's coasts; that state got the majority of council members and is the site of most of the council meetings. The letter to the Washington congressional delegation, in making the case for more Northwest representation, alleges that the council has sometimes discriminated against Washington and Northwest residents, which is contrary to federal fishery regulations. In addition to Poulsen, the letter was signed by Lee Alverson, a Seattle fishing -industry consultant; Vince O'Halloran, a Seattle representative of the Sailors' Union of the Pacific; and David Fluharty, a University of Washington professor and former member of the federal fishery council. Their letter called for creating additional council seats for Washington and Oregon to equal Alaska's representation. The city council of Newport, an Oregon fishing port, last month passed a resolution that called for increasing Oregon's voting membership on the council. So far, the Northwest delegation has opted not to pick a fight with Alaska to try to change the council. But Sen. Maria Cantwell, D-Wash., who serves on a Senate subcommittee that handles fishery issues, expects the issue to be debated as the Magnuson -Stevens act comes up for reauthorization in 2013. A spokesman said she's committed to ensuring "Washington state fishermen are not undercut or http://www.adn.coml20l l /10/03/v-printerl2l O2O67/plans-to-move-crab-boats-to-alaska.html 10/4/2011 adn.com I Plan to move crab boats north starts allocation flap Page 4 of 4 undermined" when that happens. If the Northwest delegation does try to change the council, Alaska Sen. Mark Begich, a Democrat who chairs the fishery subcommittee, vows that such a bill "will never see the light of day," according to Julie Hasquet, Begich's spokeswoman. The Alaska nonprofits are permanently vested with their harvest shares. So in the years ahead, they will likely increase their investments in the North Pacific fishing fleets, and make more of the decisions on where those ships should be based. "We own and control these assets, and if we decide to move them that's our decision," said Crow, Coastal Villages executive director. Print Page Close Window Copyright ® Tue Oct 4 13:49:40 UTC-0800 20111900 The Anchorage Daily News (www.adn.com) http://www.adn.coml20l l /l 0/03ly-printerl2l 02067/plans-to-move-crab-boats-to-alaska.html 10/4/2011 MEMORANDUM Date: 10-05-11 From: Suzi Towsley, Executive Liaison To: Port and Commerce Advisory Board Members of Seward's Port and Commerce Advisory Board are cordially invited to attend a discussion with R&M Consultant's technical wave specialist who will be discussing Harbor/SMIC Development on Friday October 7 at 11am in the Seward Fire Hall training room. PACAB will also host the first public meeting at their work -session Wednesday October 19 at 7prn in Seward Council Chambers. City of Seward Alaska City of Seward 1%3 1965 2005 Py P.O. Box 167byervi Seward, Alaska 99664-0167co All -America City Main Office (907) 224-4050 Facsimile (907) 224-4038 *COPY— Letters were sent individually to each Alaska Legislator COP September 23, 2011 The Honorable Mark Begich 111 Russell Senate Office Building United States Senate Washington, D.C. 20510 The Honorable Don Young 2314 Rayburn House Office Building U.S. House of Representatives Washington, D.C. 20515 The Honorable Lisa Murkowski 709 Hart Senate Building United States Senate Washington, D.C. 20510 Dear Senator Begich, Senator Murkowski, and Representative Young: It has come to my attention that a group of prominent former fishing industry leaders and former Washington State officials have co-authored a paper entitled "Appeal to the Washington and Oregon Congressional Delegations, Governors and State Legislators: Level the Fisheries Playing Field With Alaska." In the paper, these gentlemen are proposing that the make-up of the North Pacific Fishery Management Council be altered to add additional representation for the States of Washington and Oregon. They argue that the current Council make-up is triggering the flow of economic activity from the Pacific Northwest ports and fishermen in the South to Alaskan ports and fishermen in the North. We normally do not become involved in federal fishery management actions at the local level here in Seward. I feel compelled as Mayor of Seward, however, to comment on the paper because it uses our community as a recent example to justify the proposed changes in federal law. Specifically, the authors cite the discussions between the City of Seward and the Coastal Villages Region Fund (CVRF) to homeport its fishing fleet in our community. CVRF currently owns eight deep draft fishing vessels ranging in length from 113 feet to 341 feet, and ten other tenders, long liners, and a tug. CVRF has recently partnered with the Norton Sound Economic Development Corporation to purchase a crab vessel and 5 Pollock trawlers. CVRF wants to move this fleet to Seward, provided that the following requirements can be met: • a deep water year-round ice -free port; • sufficient space and depth of water to construct a half -mile of dock for mooring, loading, and servicing deep draft and other marine vessels; • sufficient acreage of uplands to construct warehouse and offices; • existing ship repair and maritime support facilities; • existing maritime training and licensing facilities; 0 road, rail, and air access. In examining ports across Alaska, only the City of Seward meets all of these requirements. It is a deep water year-round ice -free port. It has the space on the water and upland to construct the half -mile of dockage to meet current needs, and room to expand in the future. It is the home of AVTEC, a State of Alaska vocational school, which offers students the training, licensing, and certification of maritime skills. Seward has a major ship repair facility, Seward Ship's Dry Dock, which has the capability of lifting and repairing the largest CVRF fishing vessel. The facility also has a 250-ton travel lift and upland storage and maintenance space for smaller vessels at the Seward Marine Industrial Center. Seward has an existing maritime and fishing industry, as well as access to road, rail, and air transportation. We have both the industrial capacity to service the Alaska ground fish industry and the geographic advantage of being close to the fishing grounds. The authors are suggesting that political factors are driving the decision of CVRF to shift its vessel operations to Alaska. The reality is that the changes in the economic climate make the move a good business decision. The rapid rise in the cost of fuel and transportation has made it cost prohibitive for Alaskan companies to homeport in Seattle. This economic advantage has nothing to do with the current composition of the North Pacific Fishery Management Council. Similarly, the current regulatory process does not require Washington State and Oregon pollock and crab fishermen to sell their right to engage in these fisheries to Alaskan companies. The shift in business activity in large part is simply a reflection of the fact the people of the South are selling out and the people of the North are buying in. The reason Alaskans are buying the fishery quotas is that these fisheries mean more to us in the long run. The fisheries occur off our shores and our residents want to be part of the industry. We don't have the luxury of an economy bolstered by Microsoft and Boeing. For our small community, economic activity is driven by our little port. We are seeking to out -compete Seattle by providing a business climate for such entities as CVRF. We have not relied upon the actions of the North Pacific Council in the marketing of our port and our businesses. The North Pacific Council has been held out by NOAA as its shining star in the conservation and management of federal fisheries resources. The hard working people serving on the Council and its various advisory bodies deserve great credit, whether they are residents of Alaska, Washington, or Oregon. The current proposal will not improve upon the conservation of our fisheries, nor will it prevent Washington State fishermen from cashing in their chips and selling to Alaskans when the price is right. The give and take of quota sales I believe works equally for both sides. As Mayor of Seward, I urge you to oppose any effort to change the make- up of the North Pacific Fishery Management Council. In this week's headlines, Senator Cantwell declared her involvement into the planning and permitting of the Pebble project. In my mind, this sets a poor example of just this type of thing. Alaskan resource development should be our purview, and not how it might affect their development or industries, as they are the primary source of the allocation. Thank you very much for all you do for Alaska, and the City of Seward looks forward to working with you in the future on Alaska issues. Sincerely, //W-illar E. Dunham Mayor, City of Seward Appeal to the Washington and Oregon Congressional Delegations, Governors and State Legislators: Level the Fisheries Playing Field with Alaska Summary The fishing industry in Washington and Oregon has arrived at a fateful crossroads. Unless its elected Members of Congress secure reform of the North Pacific Fishery Management Council, to counteract the automatic voting majority for Alaska, and unless they and the Washington and Oregon Governors and State Legislatures provide financial incentives and other support programs approximating those provided by the State of Alaska, major sectors of the industry will leave its traditional homeports in the south, forever. In the absence of decisive action, thousands of jobs will be lost in Washington and Oregon, as assets and new investments continue to flow to Alaska. While Washington and Oregon have stood idly by, Alaskan politicians, at the State, local, and national levels have been enormously effective. Alaskans will fight hard to preserve and extend their gains. Elected representatives of Washington and Oregon will have to show real political courage and determination, in confronting this challenge. The Nature and Scope of the Problem Accordingly to a report in 2011 by Dr. Hans Radtke, a prominent economist and former Chairman of the Pacific Fishery management Council, local and distant water fisheries fleets based at the Port of Seattle's Fishermen's Terminal, Maritime Industrial Center, and Pier 91 account for $814 million in annual local spending and 14,972 jobs, and a total multiplier economic contribution of $3.48 billion, all of which are at risk of being lost. Washington and Oregon already are suffering from dramatic economic losses from exiting by heavy industries. When Washington's Senator Warren Magnuson led the way to enactment of the Magnuson -Stevens Fishery Conservation and Management Act, his objective was to ensure conservation of the federal fishery resources within the 200-mile zone, for the benefit of the American fishing industry, coastal communities, and the national economy. When he agreed to the Alaskan majority on the North Pacific Council, he certainly did not anticipate a strategic campaign to deprive his State of the very industry he sought to promote. Discrimination against Washington and Oregon on the federal Council would have seemed impossible under the United States Constitution 2 and the mandatory National Standards of management in the Act. Indeed, all the coastal states including Alaska agreed to a national standard on non- discrimination of fishermen from different states. This has been ignored by the North Pacific Fishery Management Council. The last foreign fleets departed the U.S. 200-mile zone, in 1988. During the following two decades, Alaskans on the Council, with the strong support of their representatives in Congress, their Governor and State Legislature, and the Board of Fisheries and the Alaska Department of Fish and Game, methodically employed the federal fishery management system to effect massive transfers of wealth from Washington and Oregon. This was accomplished through onerous conditions and restrictions imposed on vessels home ported in Washington and Oregon, and through unique fishing - related privileges bestowed upon Alaskan communities, and was supplemented by generous State support programs. These actions have intensified in the most recent several years. Fishermen's News, the most widely circulated fishing trade publication on the West Coast, reported the following, in May 2011: The largest seafood company based in Alaska is planning to shift the homeport for its 24-vessel fleet from Seattle to the City of Seward on the Kenai Peninsula. Permanent relocation of the Coastal Villages Region Fund fleet, which now spends upward of $25 million annually for mooring and maintenance in Seattle, could begin moving as soon 3 as 2014, city and CVRF officials told the House Community & Regional Affairs Committee, March 31 (Juneau). Seward is asking the legislature for $500,000 to pay for preconstruction work for port and support infrastructure expansion needed to accommodate the move. The Alaska House was preparing to adopt a resolution supporting the funding request. CVRF is one of six community development quota (CDQ) organizations created by the North Pacific Fishery Management Council in 1992 to promote economic development in Bering Sea coastal communities. Each of the CDQ groups received a share of the annual quota of pollock and later other Groundfish and crab stocks. The groups at first leased their quotas to Seattle fishing companies but have been using their growing revenues to buy and build ships, processing companies and for other seafood industry investments. The six groups invested more that $118 million in various projects in 2009. `It is inevitable that our recently acquired fleet will gravitate north to its owner for the same reason that many of the vessels still go south to their Seattle owners and for the same reason that, before the Americanization of our fisheries/ wrote John Marks, CVRF president, in Feb. 7 letter to Seward Mayor Willard Dunham. `It is conceivable that the move of CVRF to Alaska would encourage the other five CDQ groups to relocate their home ports to Alaska as well," Marks added in his letter. If the other groups follow CVRFs lead, more than 200 blue water vessels could relocate from Seattle and other Pacific Northwest ports to Alaska. CVRF may be the most successful CDQ group. A report on 2009 operations released last month by the CDQ association showed $12.79 million in wages and fisheries payments and projected seafood sales of $100 million in 2012. The Magnuson -Stevens Fishery Conservation and Management Act ('MSA") provides for 11 Council members on the North Pacific Fishery Management Council ("Council"). There are six Alaskan at -large seats, including the Director of Fisheries from Alaska, plus the Regional Director of the National EA I Marine Fisheries Service ("NMFS"), who is based in Juneau. There are three voting representatives from Washington and one from Oregon. In the early years, this unbalanced voting structure presented no risk of Alaska using its power to win industry away from Washington and Oregon, because removing the foreign fleets was a common goal for all three States. However, as the foreigners were phased out, and as most fish stocks were restored to sustainable levels, it became clear that further, major growth in the Alaskan fishing could only be achieved by moving industry from the South to the North. Sometimes won over by Alaska's pleas for help in improving economic conditions in remote coastal villages, other times compelled by Alaska's political giants, Washington and Oregon agreed to many of the federal statutory and regulatory machinations that would prove so costly to the South. Community Development Quotas ("CDQs") were established by the Council in 1992, to stimulate fishery opportunities in certain Alaskan coastal areas, and were subsequently enshrined and extended in the MSA. This seemed, at the times that the Council and the Congress acted, to do no more than address disadvantages that impeded greater enjoyment of federal fisheries resources by Alaskans, particularly in rural communities that were economically and socially hard-pressed. After all, so the argument went, the economic benefits of individual fishing quotas ("IFQs") and fishing 5 cooperatives were overwhelmingly enjoyed by the industry in Washington and Oregon. At the outset, and for some time, thereafter, this was true. However, as the Alaskans exercised their power in Congress and on the Council, with the aggressive support of the State Government, the economic benefits of federal fisheries flowed away from the South, to the North. In 1992, the Council set up a quota share program for halibut and sablefish, with harvest rights valued, then and now, at approximately $1.5 billion. In 1998, Congress established pollock cooperatives, the functional equivalent of quotas, valued at about $6 billion. CDQs were applied, and remain, at 10 percent in those several fisheries. The Council established programs for cod and flounder in the Bering Sea valued at $1.4 billion in fishing rights, again subject to ten percent CDQs. Congress and the Council developed individual fishing and processing quotas for King crab and tanner crab, valued at $1.4 billion. There, again, ten percent of the resources were committed to selected Alaskan communities, As had formerly been the case, all crab landings had to be made in Alaska. The family history that pioneered the federal fishery resources in Bering Sea was over 90% from Washington and Oregon. The cost to them of receiving individual quotas and coops was a perpetual 10% allocation of all Bering Sea species to coastal Alaska. CDQs for communities outside Alaska were not 6 allowed, and these quotas were a minimum reserve, not a cap on what Alaska community groups could acquire later. The Council and Congress set up CDQs with the intent that the residents would be able to learn the operation of fishing vessels. However, instead, CDQs have evolved into quota share holding companies that lease back fishing opportunities, with little direct fishing involvement by communities and large management fees for a select few individuals based in Alaska. CDQs were set up as tax-exempt corporations, and the effect of this status was, over time, to allow the CDQs to establish huge financial war chests for expansion of control over vast federal fisheries resources. Of course, tax exempt status was not enjoyed by other participants in the fisheries, resulting in a tremendous competitive disadvantage. Due to conservation -based limits on fishing, the allocation of economic benefits became essentially a zero -sum game. What the North won, the South lost. CDQs now own and control 40-45% of the pollock factory trawl fleet moored in Seattle, much of the Pacific cod freezer longline fleet, and increasing amounts of Bering Sea crab quotas. A CDQ group has acquired 50% of Ocean Beauty Seafoods, a company representing $500,000,000 in annual 7 sales, with concomitant economic benefits flowing to Alaskans. With the advantage of their tax-exempt status, CDQ organizations have become predatory in acquiring fishing opportunities and segments of the industry. The CDQ groups have also exploited the structural features of fisheries management. For example, fifteen percent of the sablefish program is set up as at -sea processor quota, called "A" shares. These can be used by all vessel size categories and are available to all investors, The CDQs have used their tax-exempt status to push prices of "A" share sablefish beyond the reach of tax -paying fishing families. Fishing families must pay both sides of Social Security taxes, withholding taxes, Alaskan state landing fees (called Bureau Taxes) of 3%, and the federal 3% IFQ use fee. Originally, by design aimed at preserving the historical character of the fishery, eighty-five percent of the fishing privileges in the Bering Sea went to fishing families in Washington. The tax-exempt CDQ corporations are picking off those fishing rights and the employment that goes with them. At risk, according to Paul Sommers, Ph.D., Seattle University, is more than $1.1 billion. Predatory purchasing of Bering Sea crab has also taken place. The Council set a 1% ownership cap on the American crab fishing families. By contrast, each CDQ community can purchase up to 5% of the crab quota. When crab 8 quotas were established, 80% were earned by non -Alaskan fishing families, mostly from Washington and Oregon. American fishing families, mostly non - Alaskans, developed the federal crab fishery, pushing the foreign fleets out, but have been subordinated to the tax exempt CDQ groups designed by Alaska to shift the ownership to the North. Recently, the Council voted to take steps so that the private holders of crab quota would readjust their quota lease fees, so crews would get more of the revenues. A similar approach to CDQs was not made, yet they charge as much as 70% lease fees to catch their red king crab harvest quotas. This will leave CDQ groups with a larger profit margin than that of the private family holders, most of whom are in the South, further enabling a shift of economic benefits to the North. The current advantage of CDQ groups is shifting 30% to 40% of privately owned crab quota to the Alaskan CDQ holding companies, which lease it back and charge excessive rates, harming both vessel owners and crews. Another economic advantage given to Alaskan crab CDQs is that they are exempt from paying back the Bering Sea crab vessel "buyback" loan made by the Federal Government. This federal loan of $100,000,000 to the Bering Sea crab fleet helped buy down the fleet size, so all participants that remained benefited. The CDQs benefited proportionately to everyone else, 9 but do not have to pay back any of the loan. American fishing families, mostly non -Alaskans, are left with the burden of repayment, while Alaskan CDQ groups, not so burdened benefit from increased competitiveness. In order to provide an additional advantage to Alaskan communities in the Gulf of Alaska, under the Halibut/Sablefish IFQ Program, the Council established Community Quota Entities (CQEs), which are non-profit organizations incorporated under the laws of the State, or tribal regulations in the case of one of the communities, to represent eligible communities. These tax exempt organizations acquire and lease quota to fishery participants, gaining economic benefits for Alaska. Initially there were forty- two CQEs, but there are now 45. Non -Alaskan CQEs are not permitted. In order to participate as a fisherman in an Alaskan CQE, a person must: (1) Be a citizen of the United States; (2) Maintain a domicile in a rural community listed in Table 21 (all of which are Alaskan communities) to this part for the 12 consecutive months immediately preceding the time when the assertion of residence is made, and who is not claiming residency in another community, state, territory, or country, except that residents of the Village of Seldovia shall be considered to be eligible community residents of the City of Seldovia for the purposes of eligibility to lease IFQ from a CQE; and (3) Is an IFQ crew member. [Federal Register.] 10 The Council voted to allow Alaskan tax exempt CQEs to purchase up to 20% of all the halibut and sablefish quota shares in the Gulf of Alaska and lease it back to fishing families. The Council also voted to restrict initial recipients of halibut/sablefish quota shares from buying any more, unless the quota is put in an inclividual's name and that person fishes on the vessel. Many original quota share recipients were family -operated partnerships and/or corporations. CQEs are not similarly restricted. This change has been made ostensibly to provide more purchasing opportunities for the crews and new entrant fishermen. The theory offered is that, if the original quota share recipients are removed from the marketplace, they will not out -compete crews. The reality is the crews will not be able to outbid tax-exempt CQE corporations, which the Alaska State Legislature is planning to strengthen, by providing $1,000,000 in interest -free loans for the purchase of halibut/sablefish quota shares. This change is intended to divert quota into Alaskan CQEs, which are designed to provide exclusively Alaskans fishing access of federal resources, while denying original fishing families the ability to bid for quota shares. In addition, when the halibut charter limited entry program was developed, the Council granted each of the 21 CQEs in Southeast Alaska four charter licensing endorsements for six angler endorsements. Similarly, the 21 western Gulf of Alaska CQEs were awarded 7 permits each, each with 6 11 angler endorsements. The CQEs did not have to meet any performance conditions that charter boat fishing families had to meet. These permits are effectively subsidized by the working fishing families. In short, CQEs and CDQs are becoming for -profit quota and fishing rights lease holding companies. There is very little that resembles a not -for -profit operation. Notably, public documents indicate their CEOs are paid $500,000 to $800,000 (Council reports). It is all about charging maximum use fees off the backs of fishing families and guaranteeing Alaskans fishing opportunities otherwise enjoyed by non -Alaskans. Alaskan politicians do not mind their own fishing families being out -bid by CQEs or CDQs, as long as the quota migrates to Alaska. Washington and Oregon elected officials need to recognize that the income opportunities for non -Alaskans are being marginalized. According to Deckboss.com, Alaska Senators Murkowski and Begich have proposed federal legislation that would make business purchases by the CDQs exempt from federal taxes. If CDQs were to buy a for -profit company, the profits of the new acquisition would be tax-exempt, as well. No family or for -profit corporation in Alaska or outside Alaska could compete in such an environment. The Joint Committee on Taxation estimates the Federal Government would lose $92 million-$124 million, through 2019, if such a bill 12 were enacted. The advantage won by Alaska would be at the cost of increasing the negative side of the federal budgetary ledger, at a time when the federal deficit and the national debt must, as a top priority, be dramatically reduced. The pattern is clear. The CDQ groups are winning economic benefits that non -Alaskan fishing participants do not enjoy, while at the same time, those groups are spared economic costs imposed on non -Alaskans. National Standard 4 of the MSA, states, "Conservation and management measures shall not discriminate between residents of different states." It is impossible to reconcile the intent of this provision with actions of the Council that impose economic burdens on fishermen from the South, while providing advantages to communities in the North. The National Marine Fisheries Service, which no doubt has to worry about the powerful Alaska Congressional Delegation, when it comes to annual budgets and program authorizations, has been completely absent with regard to protecting the rights of fishing families from Washington and Oregon. The Obama Administration be encouraged by the Washington and Oregon Congressional Delegations and Governors to take decisive steps to address this situation. The Solution 13 Amend the MSA to Reform the Council # Add two at -large votes for Washington and an additional vote for Oregon, thereby providing those States equal voting with Alaska. • Alternatively, when developing an amendment for quota shares or other limited entry programs, require a super majority vote of 8 out of 11, and require all three state fisheries directors to vote affirmatively. Mobilize Financial Incentives in Washington and Oregon * In Washington, where a new Governor and a Senator will be up for reelection, in 2012, elevate the discriminatory and damaging treatment of the State's fishing industry to the status of a major political issue. * Establish Governors' task forces and conduct public hearings in the Washington and Oregon Legislatures, as the basis for legislation aimed at stopping the flow North of fishing jobs and investments and preventing the further the loss of fisheries -related infrastructure. • Based on the findings of the task forces and legislative hearings, establish incentives for Washington and Oregon fishing families and companies to remain in those States. • Expand tax-exempt CDQs and CQE opportunities to Washington and Oregon. Limit the time CQEs and CDQs may operate as tax-exempt corporations. Support Industry -Initiated Litigation 14 * The Governors of Washington and Oregon should provide support for litigation undertaken by their industry residents to defeat discriminatory and damaging Council actions. Dr. QaytoTT7L Alverson First SSC Chairman, NPFMC Retired, Marine Biologist Kris E. Poulsen Retired, Bering Sea Crabber Z� b . �2 Dr. David Fluharty Former Coun'Ii[ Memben, NPFMC 15 �Ance 0+alloran President, Puget Sound Ports Council AFL -CIS Dennis Petersen Past President, NPFVOA National Fisherman Highliner 1995 NPFVOA Safety Program Founder October 2011 October 2011 November 2011 SuMo TuWe Th Fr Sa SuMo TuWe Th Fr Sa 1 1 2 3 4 5 2 3 4 5 6 7 8 6 7 8 9 10 11 12 9 10 11 12 13 14 15 13 14 15 16 17 18 19 16 17 18 19 20 21 22 20 21 22 23 24 25 26 23 24 25 26 27 28 29 27 28 29 30 30 31 Monday Tuesday Wednesday Thursday Friday Oct 3 4 5 6 7 6:00pm Special CC Mt( City Election 12:00pm Canvas Board 11:00am PACAB Invitati 7:30pm P&Z Meeting n, V O 10 11 12 13 14 5:00pm Seward Ships I 6:00pm Budget Directi 6:30pm HP Meeting 11:30am Seward Comm 7:00pm City Council M v 0 v O 17 18 19 20 21 5:00pm DOT Open Ho Alaska Day; Office's Clc 12:00pm PACAB Work 5 9:00am Social Security N 7:30pm Coastal Village 6:30pm P&Z Work Ses n rl iJ O 24 25 26 27 28 7:00pm City Council M KPB Runoff Election? 9:00am Social Security 7:00pm Fish & Game 00 N N V 0 31 Nov 1 2 3 4 c 0 Z m v O Nand Richey 1 10/5/2011 8:49 AM