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2006-10-17 Joint Work SessionCITY COUNCIL — BOROUGH ASSEMBLY JOINT WORK SESSION AGENDA October 17, 2006 Assembly Chambers 7:30 p.m. (City Chairing) Joint work sessions are informal meetings of the City Council and Borough Assembly where elected officials discuss issues that affect both City and Borough governments and residents. Although additional items not listed on the joint work session agenda are sometimes discussed when introduced by elected officials, staff, or members of the public, no formal action is taken at joint work sessions and items that require formal action are placed on a regular City Council and /or Borough Assembly meeting agenda. Public comments at work sessions are NOT considered part of the official record. Public comments intended for the `official record "should be made at a regular City Council or Borough Assembly meeting. 1. Public Comments (limited to 2 minutes each) 2. Report From the Joint Gulf of Alaska Rationalization Task Force (Norm Wooten - Facilitator) 1 3. Fishery Issues — Council/Assembly Discussion No Backup Report to the Kodiak Island Borough/City of Kodiak from the Gulf Alaska Groundfish Task Force October 9, 2006 1. The Task Force acknowledges that following the election of a new Governor, the State of Alaska is likely to request that the North Pacific Fishery Management Council (NPFMC) suspend action on Gulf of Alaska groundfish rationalization for an indefinite period of time. The Task Force is not taking a position on whether the NPFMC should do so. 2. The Task Force recommends that the City and Borough extend the Task Force's duration, and charge the Task Force with continuing its consensus - building discussions regarding Gulf of Alaska groundfish rationalization issues and alternatives. 3. The Task Force recommends that the City of Kodiak and the Kodiak Island Borough request the NPFMC take the following Gulf of Alaska groundfish management actions as soon as possible, even if the NPFMC suspends consideration of Gulf of Alaska groundfish rationalization: a. Initiate an allocation of Gulf of Alaska Pacific cod among gear groups. b. Initiate a phase -out of the offshore sector in the Gulf of Alaska. c. Initiate a discussion paper on identifying and removing latent licenses from the Gulf of Alaska groundfish sectors that are subject to the License Limitation Program. SESSION ADDRESS: Alaska State Capitol Juneau, Alaska 99801 -1182 (907) 465-4925 Fax: (907) 465 -3517 Toll Free: 1-800-821-4925 October 2. 2006 The Honorable Frank H. Murkowski, Governor P.O. Box 110001 Juneau, AK 99811 -001 Dear Governor Murkowski, Sincerely. ' r Senatok /Gary Wevens cc: Linda Freed, Manager, City of Kodiak Senator Gary Stevens Alaska State Legislature As Senator for District R, I represent the legislative interests of numerous coastal communities and constituents that will be impacted by changes proposed in the reauthorization of the Magnsuon- Stevens Fisheries Act (MSA). Of particular concern to this area are provisions involving rationalization of the Gulf of Alaska in federal fisheries. As you witnessed during your August visit to Kodiak, MSA reauthorization has become an extremely divisive issue in the Gulf of Alaska. I share the concerns of Kodiak area fishermen, local government leaders and other constituents' about enactment of new fisheries policies. It is critical that new fisheries policies not adversely impact our fishermen and fisheries, nor the health and vitality of the communities in this region. I know that a great deal of time and effort has already been spent on this issue at the federal, state and local level, as well as in the deliberations of the North Pacific Fisheries Management Council, but given the enormous ramifications of MSA, I believe it makes sense to delay its reauthorization. Even a gain of a few months will allow the stakeholders and fisheries managers the opportunity to address their differences and work toward compromise language on this issues. I urge you, in your capacity as Governor, to contact Alaska's Congressional Delegation and ask for a postponement of MSA reauthorization until next year at the earliest. I believe this delay will be time well spent. Thank you for your consideration of this letter. Please contact me with any questions you may have. Senate District R Senator _Gary_Stevens @legis.state.ak. us INTERIM ADDRESS: 112 Mill Bay Road Kodiak, Alaska 99615 (907) 486-4925 Fax: (907) 486 -5264 4 OCf 2406 Receive° 5.ecutIve Depart City 01 Kodlak Quotes from the North Pacific Fishery Management Council Analysis (Regulatory Impact Review, Environmental Assessment, and Initial Regulatory Flexibility Analysis) - ALL DATA IS BASED ON OFFICIAL STATE OF ALASKA FISH TICKET INFORMATION AND CONCLUSION DRAWN BY THE NPFMC SENIOR STAFF ECONOMIST MARK FINA Entry Level Fishery Entry level fishery allocations totaling 5 percent of the TAC of CGOA rockfish (approximately 750 metric tons or 1,635,000 pounds at current TACs) will be made to trawl and non -trawl catcher vessel sectors. The non -trawl sector will be allocated 2.5 percent of the TAC of CGOA rockfish in the aggregate. The allocation of rockfish under this program will be approximately 375 metric tons or 827,000 pounds. The non -trawl sector entry level fishery would be conducted on a limited entry basis, which would result in the management of that fishery in a manner similar to current management. The season for the non -trawl sector will open January lat and remain open until the TAC is fully harvested. The ability of the non -trawl sector to harvest the TAC cannot be predicted. Entry by non -trawl participants depends on whether participants in that sector are able to realize significant returns for harvests. Potential for success of non -trawl entrants is not apparent, given the historical participation of these vessels. Between 1996 and 2002, 22 vessels collectively harvested less than 17 metric tons (35,500 pounds) of over 16,000 metric tons harvested from the pelagic shelf rockfish fishery. Only one non -trawl vessel participated in the northern rockfish fishery, so no information on catch can be released. No non -trawl vessels participated in the Pacific Ocean perch fishery. Whether future non -trawl participants will be able to succeed in the fishery cannot be determined. Kodiak Community Benefits Implementing the pilot program alternative is likely to have impacts on fishing communities. The pilot program alternatives, however, should have primarily positive impacts on communities. Presently, benefits to communities from the fisheries are decreased because of inefficiencies of the race to fish under the current management. Quality of landings and products from the fisheries are decreased as participants in both sectors race to maximize shares of the catch. The pilot program alternatives are intended to address these inefficiencies, which could result in more total profits generated from the fishery. Community participation in the fisheries is unlikely to change under the pilot program alternatives. Kodiak has historically been home to processors that have processed almost all of the rockfish landings. Under the pilot program alternatives, this should continue. Harvester / Processor Benefits Overall production efficiency should improve substantially under the catcher vessel pilot program alternatives. Quality of rockfish landings should improve as the race for fish is ended. Processors should also be able to better handle landings producing higher quality and higher valued products. Both sectors should realize some gains in efficiency through better scheduling of their activities. Costs should be reduced as participants in both sectors are able to determine inputs to reduce costs of production without concern over losing their share in the fishery, if production is slowed. C1 act, bon U.S. consumer Benefits Substantial changes are likely to occur in the production of catcher vessel harvests to the benefit of consumers. Catcher vessel landings are likely to be of higher quality under both of the catcher vessel pilot program alternatives. Processors are also likely to slow lines allowing them to produce fillets, instead of the less processed whole and head and gut products currently produced. This should limit the amount of reprocessing of products abroad for importation to U.S. markets. Some processors are likely to attempt to serve domestic fresh markets, which would also benefit U.S. consumers. Most of the benefits of production improvements in the fisheries are likely to be realized by U.S. consumers. Fleet Consolation Under the pilot program alternatives, some consolidation of fishing activity could occur in the rockfish fisheries. This consolidation could affect income for participants on vessels that no longer participate in the rockfish fishery. This consolidation is unlikely w result in the removal of vessels from all fisheries and could lead to some of the vessels that leave the rockfish fisheries increasing their activities in other fisheries (to the extent permitted by sideboard limitations and cooperative agreements). As a result, the impacts to vessel owners and crewmembers may not be negative, even if rockfish fishing activity decreases. Processing Worker Benefits Shore -based processing employment should change some under the pilot program alternatives. Harvests from the rockfish fishery are likely to be distributed over a longer period of time to improve quality and to produce higher valued, more processed products. Landings are likely to be scheduled to serve particular markets, but also to facilitate the scheduling of crews. Although the rockfish fishery is a relatively small portion of the processing of participating qualified processors, the pilot program alternatives are likely to contribute to stability in processing employment, if landings are distributed across periods when plants are less utilized. This increased stability could lead to fewer processing jobs at peak times, but the remaining jobs should provide more stable and consistent employment. The relative stability should contribute to the processors' ability to maintain stable resident crews that are common in Kodiak processors. Who is included in the pilot program? Kodiak residents dominate the catcher vessel sector in the fishery. All qual wing processors are based in Kodiak. Six Kodiak processors would qualify for processing licenses. Rockfish Demonstration Program Section 802 of the FY 2004 Department of Commerce, Justice, and State Appropriations Act (as contained in the FY 04 Omnibus Appropriations Bill), requires the North Pacific Fishery Management Council and the Secretary of Commerce to establish a pilot program for pacific ocean perch, northern rockfish, and pelagic shelf rockfish harvested in the Gulf of Alaska. The intent of the program is to stabilize employment for fishermen and processing workers in these fisheries, so that the full value of the fishery and dependent jobs can be realized. The impact of this program is to increase employment, not reduce workforce jobs. This can only be accomplished by spreading fishery out over longer periods of time to allow the vessels and processing companies to target these species during periods of low bycatch or times when other fisheries are not being prosecuted. A prolonged fishery will also allow partnerships between fishermen and processors to enhance fishery values and prices by allowing for experimentation in alternative product forms (e.g. fresh market products). The North Pacific Council has recommended a pilot program which recognizes historic participants, yet allows for new entrants into the fisheries. The program is currently under review by the Secretary of Commerce. Section 802 includes a provision which sunsets the Rockfish Pilot Program two years from date of implementation. The Council has developed its recommendation with the idea that the program would be implemented in 2007. Under existing law, therefore, the program would expire in 2009. The rockfish industry has requested that the sunset period be extended to five years. The North Pacific Council will need at least two years of hard data on the effectiveness of the Pilot Program before it can make an informed decision about whether to roll the program over or modify it. Under the current two year sunset period, the fishery will revert back to open access for one to two years while the Council and the Secretary work through the administrative process to renew or modify the program. The better approach is to extend the sunset period for additional years to allow the Council time to extend or modify the program as part of a normal fishery management plan cycle. An Example of the Anticipated Benefits of a Rationalized vs. Unrationalized Gulf of Alaska Groundfish Fishery: Gulf of Alaska Rockfish Kodiak sought and was granted by Congress legislation authorizing development of a rationalized Gulf of Alaska rockfish pilot program in an effort to: o substantially increase the economic value of the rockfish fishery to the community of Kodiak; o develop a fresh, value -added rockfish fishery using new markets and marketing techniques; o improve and promote employment stability in the Kodiak fish harvesting and processing sectors; o establish a marketing model that can be used to increase economic value and diversity in other fisheries; o spread the rockfish fishery over the year to remove processing conflicts with salmon; and o use rationalization as a management tool for mitigation of fishing impacts on essential fish habitat; Due to low quotas and a fisheries management structure that promotes a race for fish, Kodiak's processing days have been dramatically reduced from a height of year -round processing in the 1990s to current levels of only seven months per year. What has been a predominantly resident workforce is moving toward a transient workforce as individuals leave the island due to the current economic instability of the industry. This instability has ripple effects throughout the Kodiak economy: declines have been experienced in the quality of processing worker jobs, jobs in the service sector, fishermen's income, and of student enrollment in Kodiak schools. The nature of the management structure for Gulf rockfish encourages a race for fish. Vessels and processors are, of necessity, focused on moving a quantity of high volume product instead of on quality and a diversity of products. The competitive disadvantage that this places industry participants in fosters continued instability; "last man standing" economic attrition resulting in unplanned processor and fleet consolidation; and continued production -driven vs. market -driven harvesting and processing. An example of the expected economic benefits from a rationalized Gulf rockfish fishery is demonstrated by examination of what's possible. In 2002, the average ex- vessel price for rockfish in Kodiak was $.511b. That same year, 62% of the rockfish was sold whole, H &G or processed into surimi —the lower value product forms —while only 38% was processed into fillets, the more valuable product form. Ex- vessel price on the West Coast for similar rockfish species averaged $.45/lb. that same year, demonstrating the huge potential gains in economic value possible under a different management structure that allowed for greater investment in value -added and fresh product forms. While West Coast prices may never be met in Kodiak, the comparison still demonstrates huge potential gains in product values that could be distributed amongst fishermen, processing workers, processors, support businesses, the community, and both state and local tax bases given a rationalized management structure. Finally, the rockfish fishery takes places in July in direct competition for processing capacity with Kodiak's pink salmon fishery. In today's salmon market, salmon typically are a lower priority than rockfish. Given that both are volume fisheries, in most plants, both cannot happen at the same time. The salmon industry could benefit as a result of a rationalized groundfish fishery that allowed a shift in rockfish harvest timing. In conclusion, a rationalized rockfish program would provide the opportunity for development of a fresh, year -round value -added fishery that would increase economic opportunities for fishermen and processors alike; expanded employment for processing workers and support businesses; a more permanent resident work force with its attendant social and economic benefits; an increased tax base as ex- vessel values rise; removes processing conflicts between groundfish and salmon; and provides effective management tools to address issues such as essential fish habitat, bycatch reduction, localized depletion, and regulatory discards.