Tuesday, June 1, 2010

Lawmakers Limit Reduction in Seiners’ Buyback Program

Bob Tkacz

Responding to concerns from salmon processors that harvesting capacity could be reduced too much, an Alaska Senate committee has conditioned passage of a bill, critical to a federally financed buyback program, with a limit on the number of Southeast seine permits that can be eliminated from the fishery.
A letter of intent attached to the bill says at least 260 permits must remain in the fishery.
Adopted by the Senate Resources Committee, March 31, the letter declares that SB 255 is being passed “with the understanding, and the assurance of the Southeast Revitalization Association, that... this bill will not reduce the number of permits in that fishery to less than 260.”
Through April 4, 379 permits have been renewed for 2010, including 187 held by Alaska residents and 192 owned by Outsiders, according to the Commercial Fisheries Entry Commission.
“Everybody seemed comfortable that 260 would be a number that would reduce the number of permits in the fishery substantially, still provide fleets to fill these markets that have developed and comply with the requirement that the fishery not become too exclusive,” said Mary McDowell, vice president of the Pacific Seafood Processors Association.
The Southeast Revitalization Assoc. was formed by the Southeast Alaska Seiners Association to implement the buyback program using a $21 million federal loan. The loan is to be repaid by a self-imposed tax on remaining permit holders. With passage of the bill, permit voters will vote to authorize the program and what is expected to be a three percent ex-vessel tax.
SB 255 allows the release of individual harvester fish tickets to the National Marine Fisheries Service, which will manage the buyback repayment and needs the information the assure seiners are paying the harvest tax.
McDowell said improved harvesting technology and growing markets for chum and pink salmon during the eight years the buyback project has been in development led to concerns that the Southeast seine fleet might be too small to meet the raw material demand.
“Now processors are looking to increase their fleets and looking at the history of the buyback plan over the years the talk has been about removing about 200 permits... It just seemed like that was a really good, responsible thing to add to this bill,” McDowell said of the letter of intent.
An intent letter has no force of law and imposes no legally enforceable limit on the number of permits that can be retired. The overall “fishing capacity reduction plan” is intended to “permanently” retire the repurchased permits. The CFEC has noted in testimony that it would be required to offer new permits for sale if the seine fishery became too exclusive. That determination could be made through a court suite or completion of a so-called optimum number study, either of which would likely take several years to be initiated and more to be concluded.
The bill requires revenues from any new permit sales to go toward retirement of the loan.
Although CFEC lists 379 permits as active, its records from the 2008 fishery showed only 212 also recorded landings.
Following a 2008 pilot project that repurchased 35 permits using a $2.8 million federal grant, a spokesman for the project suggested almost half of those remaining could be eliminated. “We’re thinking, maximum, maybe we can buy 160 to 170 permits,” said Rob Zuanich, in a 2008 interview. Zuanich is executive director of the Seattle-based Purse Seine Vessel Owners Association and registered agent of the Southeast Revitalization Association.
The larger buyback program will be conducted through a reverse auction in which permit holders offer a price purchase. The 35 permits in the 2008 buyback sold for $55,000 to $94,950, according to the SRA. If the maximum of 119 permits allowed under the letter of intent were repurchased with the $21 million fund, each seller could potentially get $176,000.
The CFEC’s online estimate of permit values shows $70,500 as the average for the Southeast salmon seine fishery for February 2010.

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