Commentary

The preference

gillnet

A salmon heavy gillnet/Trout Unlimited

Almost 50 years have passed since Alaska voters approved an amendment to the state constitution that allowed those in power to manage the state’s common property resources “subject to preferences among beneficial uses.”

And the Alaska Board of Fisheries now faces a historic opportunity to use that preference to redefine the “beneficial uses” in the waterway at the doorstep of the state’s largest city to put Joe Alaskan at the head of the line.

Whether the Board will show the courage to stand up against some of the state’s most powerful political interests to do this remains to be seen.

As most Alaskans know, the constitutional amendment in question paved the way for limited entry in the state’s commercial fisheries, and commercial fishing has ever since been treated as the beneficial use despite the legal reference to the plural “uses.”

Over the decades that followed passage of the amendment, limited entry put hundreds of millions of dollars into the pockets of the 49th state’s 1.5 percent, and even more into the coffers of the collection of Seattle and foreign-based fish processors that control the commercial fishing industry.

The constitutional amendment was a great deal for all of them, and a bad deal for the majority of Alaskans.

Average Alaskans got little or nothing out of the deal, and sometimes less than nothing.  Select communities with fish processing plants benefitted from a raw fish tax split with the state, and up until the state eliminated the personal income tax in 1980, successful commercial fishermen helped pay the costs of the state managing the fish to prevent overfishing and maintain harvestable annual surpluses.

Once the income tax went away, however, the river started to flow the other way. Oil revenues belonging to all Alaskas were used to subsidize the costs of managing and policing the state’s commercial fisheries.

The Legislative Research Agency in fiscal year 1994 found that commercial fishing revenues covered only 70 percent of state expenditures on the fisheries. Eleven years later, a report by the University of Alaska Institute of Social and Economic Research (ISER) found the situation largely unchanged.

ISER that year estimated Alaskans were subsidizing the commercial fishing business to the tune of about $24 million per year.

Meanwhile, commercial fisheries dominated harvests – often impairing or in some cases eliminating opportunities for average Alaskans to catch fish and costing the tourism industry – one of Alaska’s few growth industries – millions of dollars.

A study conducted for the Matanuska-Susitna Borough by a respected economics consulting firm concluded the lack of fish in streams draining into Cook Inlet reduced the tourism from an $864.9 million industry in 2007 to a $716.5 million industry in 2017.

Though Southwick Associations did not calculate the total losses as the industry in the Anchorage metro area and on the Kenai Peninsula shrank from 2007 on, the losses would appear to be into the hundreds of millions of dollars.

Today, the Alaska Department of Fish and Game estimates commercial fishermen continue to lay claim to about 99 percent of the state’s fish harvest. Sportfishing by Alaskans and tourists combined accounts for less than 0.3 percent – three-tenths of one percent – despite the stories told by commercial fishermen of a mythical mountain of salmon-filled coolers tourists are said to lug with them to  Anchorage’s Ted Steven International Airport on their way back to the Lower 48 states.

Commercial fishing interests own Alaska, and yet the state’s commercial fishing propagandists, with help from their enablers in Alaska’s mainstream media, have somehow managed to paint themselves as an embattled minority threatened by the state’s growing population.

Fear

And there has never been a Board with the courage to truly stand up to the bullies who dominate the commercial fishing lobby. This Board might be different, and it has this year been handed a mechanism for change.

The Kenai River Sportfishing Association (KSRA) submitted to the Board a proposal to prioritize the “preferences among beneficial uses” in Cook Inlet. All the Board has to do is vote to approve it as presented or amended.

I freely admit to some issues with the KSRA list, which essentially makes personal-use dipnetting the primary use of Inlet salmon.

The list doesn’t use the words dipnet or dipnetting, but the personal-use fishery is the gear type that best fits the first priority of “providing residents with fish for personal and family consumption.”

Given that about the only fishing I do anymore is with a dipnet, I should be selfishly all for this, but the standard ignores the majority of Alaskans who don’t fish and don’t live in homes with fishermen.

What matters most to those people is a healthy Alaska economy, which should render the second-rank preference – “the importance of each fishery to the economy of the state” – number one.

To stop here and put the list in terms more easily understandable to the average reader, the Cook Inlet fishery with the most importance to the economy of the state would be the sport fishery, given that the waterways draining into the Inlet are the focus of most Alaska sport fishing.

Commercial fishing is at number three on the KSRA list – “the importance of each fishery to the local and regional economy” – although the sport and commercial fisheries could be viewed as dueling that one out on the Kenai Peninsula.

The other criteria could be considered something of tiebreakers:

  • 4) The number of residents and non-residents who have, and who likely will, participate in each fishery
  • 5) The historic use of each fishery
  • 6) The importance of each fishery in providing recreational opportunities

Basically, in real-world terms, the list seeks to make dipnetting the prime preference with sportfishing number two and commercial fishing number three. I’d put sportfishing number one and entertain arguments on the positioning of the other two.

(For the record: I used to be a serious angler, but I didn’t wet a line last summer. The year before, I might have sport fished twice, Maybe. It could have been once.  Suffice to say, I have no dog in this fight other than that of the 80 percent of Alaskans who don’t bother to get a fishing license, and that interest is the economy.)

Where dipnetting and commercial fishing should fall is hard to tell, and it probably doesn’t make much difference.

Commercial fishermen are going to continue to catch the majority of Inlet salmon for years to come because all other user groups lack the harvest capacity to do so. Meanwhile, managing for a sportfish preference would automatically force managers to put more fish in-river which improves the dipnet fishery, which is admittedly a great Alaska bennie for those who love to eat salmon.

Being able to pick up a free permit to go dipnet a load of fish to fill the freezer for the winter helps a lot of people stretch their food dollars. From 20,000 to 30,000 Alaskans take advantage of this every summer, according to Fish and Game data.

On an individual level, it’s a great deal. How much it boosts the economy is hard to know. There isn’t a lot of economic data available on the spending of dipnetters.

My personal-use fish come very cheaply, which is not a big plus for others. A neighbor who is a former commercial fisherman contends, however, that the average dipnetter spends thousands of dollars per year on gear – nets, four-wheelers, boats, coolers, wader and more – to catch relatively few fish.

If that’s the case, the dipnet fishery might have a bigger economic footprint than it at first appears. The economic value of the commercial fishery is better documented.

Fish and Game, for instance, calculated the average Inlet sockeye was worth $8.50 to a commercial fishermen in the Inlet in 2018. Let’s consider this for a minute.

Some numbers

The state has a three percent tax on commercial fish landed at a shore-based processor. So each average sockeye delivered to a fish processor at the mouth of the Kenai River would have contributed 25.5 cents to state coffers in 2018.

Upstream on the Kenai River, tourists are not required to pay taxes on their catches, but they are required to buy licenses. A one-day, non-resident fishing license costs $25.

The average non-resident leaves the state with something like one and a half salmon, according to Fish and Game statistics. So the non-resident angler who buys a $25, one-day license pays an effective state tax of $16.66 per fish.

If she gets lucky and catches her limit of three Kenai sockeye, the effective tax falls to $8.33 per fish. About 44 percent of the licenses sold in Alaska last year were good for only one day, according to Fish and Game data.

Those 121,000 people paid a whopper of an effective tax rate even if they caught a limit. Anglers who bought three-day, $45; seven-day, $70;  14-day, $105; or season-long, $145, licenses could have driven down the cost of what they were paying the state for each fish if they caught a lot.

After the one-day license, the week-long license was the most popular. If that angler caught 21 sockeye – the standard three-fish limit on the  Kenai every day for a week – she would have paid the state an effective tax rate of $3.33 cents per fish or more than 13 times what a commercial fisherman – resident or nonresident – pays the state for each fish.

A 14-day license and a limit every day would result in an effective per fish tax of $2.50. That’s still about 10 times what a commercial fisherman – resident or nonresident – is paying the state.

For a nonresident angler to get his costs down to what a commercial fishermen pays the state for a fish, he’d have to buy a season-long license and catch 568.6 salmon. That’s three per day for 189.5 days. Even if the limit on the Kenai went to six fish per day, something which happens when runs are strong, this harvest goal is impossible.

Commercial fishermen in Alaska simply get a steal of a deal from the state. The numbers bring to mind the story an accountant new to the state tells of going to work on the books of a commercial fisherman. When he’s done adding up the costs and the revenues, he can’t help but ask the obvious question:

“Where’s the cost of your fish?”

The confused fisherman can only respond, “What cost for the fish?”

“The cost you pay the state for the resource you take from state water.”

To which the fisherman answers, “We don’t pay the state anything, but we do have to catch the damn fish.”

No other industry gets a deal like this. The oil industry would kill to be told it could get away with paying the state only 3 percent of what its resource is worth at the wellhead. It now pays far more than that just for the opportunity to go look for oil.

The 3 percent tax is basically a resource giveaway.

And in rural parts of the state where fish are about the only thing available to support a local economy, basically giving the fish away makes sense. It doesn’t make sense around Cook Inlet where the state makes far more money on the effective taxes tourists pay, and local governments, if the Mat-Su Borough study is to be believed, make more money on sales and property taxes imposed on anglers than they do on fish taxes.

One could almost argue that the way things are run now borders on illegal in a state where the constitution calls for the “utilization, development, and conservation of all natural resources belonging to the State, including land and waters, for the maximum benefit of its people.”

The people at this time aren’t getting the maximum benefit. And despite what drift gillnetter Dave Martin told the Board, they definitely won’t get the maximum benefit from putting fewer fish in the Kenai River to appease the rantings of commercial fishermen who contend the river is now being managed for something other than “maximum sustained yield (MSY).”

Martin also told the Board that MSY is a constitutional requirement. It’s not.

What the constitution says is this: “Fish, forests, wildlife, grasslands, and all other replenishable resources belonging to the State shall be utilized, developed, and maintained on the sustained yield principle, subject to preferences among beneficial uses.”

“Sustained yield” comes in a whole bunch of varieties of which MSY is but one. If one reads the constitution, it is clear the founding fathers weren’t that concerned about which variation was used. What they were most concerned about was the use of state resources “for the maximum benefit of its people.”

Cook Inlet has too long been managed for the maximum benefit of about 1,300 commercial fishermen. Some day some Fish Board will step up and do its duty to put the interests of the state’s people above the interest of that entitled user group.

The only question is whether it will be this Board.

 

 

 

 

13 replies »

  1. I just cannot understand people who state things as absolutes cannot fathom being wrong. For instance most in the fish wars on the sport and PU side things the State owns the salmon and the constitution language favors their position. So lets examine that. First the Mag/Stevens Act clearly states that salmon are owned by the federal government and the Feds have management authority. Most do not know that this extends through out the entire range of salmon. Next in UCI the State has been managing under a fishery management plan of the Federal Gov for decades. The 9th circuit jusy reaffirmed this ruling and the Supreme Court let it stand. The Feds are updating the FMP this year and it is due in December by court order. Dave Martin when he testified it was law to manage for MSY was mostly correct. It is Federal law. Next the State PU fishery is illegal as Mag/Stevens says there can be no resident only fishery. There is a court case filed this past year asking for that fishery to be enjoined. Also Craig you should know this but allocation under Mag/Stevens has different criteria. So as these court cases unfold the management of UCI salmon can change dramatically. Just for the record the State lawyers lose often.

    • the federal standard is OY, and they certainly have authority once a salmon run is listed as an endangered species and while the fish are in the ECZ.

      beyond that, it gets complicated. a strong case can be made for their authority over fish moving between states. the Constitutional provision giving the federal government control over interstate commerce is a lever there. thus no one opposed federal action in the Alaska Chinook troll fishery, which primarily catches Canadian and PNW fish.

      who has management authority in Alaska state waters has never been adjudicated. legally, authority over resident fish and wildlife has rested with the states barring ESA rulings. it would make an interesting case.

      does federal authority over Alaska salmon in the ECZ extend federal power into state waters?

      the feds have pretty judicially avoided grabbing that tar baby not only in Alaska but in all the Western states. i’d guess they’d all end up in the scrum if the feds tried to claim authority over salmon throughout their entire range, as you put it.

      here’s the FWS view. remember the reference to “tar baby” when you read it: https://www.fws.gov/salmonofthewest/charge.htm

      and you might want to note that a.) the 9th Circuit is undergoing a rather radical transition; what it decided in the past might not be what it decides in the future; and b.) the Magnuson-Stevens standard is not just OY but OY for “each fishery.”

      https://www.law.cornell.edu/cfr/text/50/600.310

      a good lawyer could probably shut the whole Inlet commercial fishery down for years with a lawsuit requiring the feds abide by that standard. under Magnuson, the state scheme of a handful of index streams to determine the adequacy of escapements doesn’t cut it. you need OY for “each fishery.” the Talkeetna has Chinook and coho fisheries, what is the OY on those?

      i do, however, have to thank you for the Dave Martin line. it gave me a good laugh. have you become a Trumpster or would that be a Martinster. Dave believes it so it must be the truth. here is what the law itself says:

      Ҥ 600.310 National Standard 1 РOptimum Yield.
      (a) Standard 1. Conservation and management measures shall prevent overfishing while achieving, on a continuing basis, the optimum yield (OY) from each fishery for the U.S. fishing industry.

      “(b) General.

      “(1) The guidelines set forth in this section describe fishery management approaches to meet the objectives of National Standard 1 (NS1), and include guidance on:

      “(i) Specifying maximum sustainable yield (MSY) and OY;”

      oy, oy, oy.

  2. Ak like the entire divided U.S. is run by the Banksters and Oil Oligarchs.
    These two groups can care less who gets the fish, timber or any extracted resource for that matter.
    To the Banksters, they are just happy that AK drew so many comm fisherman into recurring debt.
    This debt is the leash that brings them back to the fisheries year after year.
    The Oil Industry is satisfied by the consumption of the refined Oil that is pumped into their boats every time they leave the dock.
    At nearly 600 boats swarming the Inlet each season, this is a fair amount of petrol consumed by this user group.
    Until the state ends its commercial lending program then nothing will change.
    The feds are neutered by Trump and any attempt at “conservation” of resources will get you a one way ticket out of a job.
    Do not expect anything to drastically change in the Cook Inlet until Hilcorp blows a well head and the entire body of water is full of oil and dead.

  3. Craig, when you were analyzing the sale/value of a non resident sport fishing license. You forgot to deduct the cost the state/department pays for credit/debit card purchases. I am guessing 3-5% on the total purchased.
    The department is all in on purchasing online/electronic licenses and has been paying the credit agency their fees for this collection service.
    On a side note, why is no one questioning these online/electronic purchases? What is the overall cost to the department to provide/mandating these type of sales?

    • Al,
      I’m guessing the thinking there is that making it easier for nonresidents to purchase licenses encourages more nonresidents to purchase licenses, and thus the state gets back more revenue than it loses on the fees.

      It would be interesting to see if anyone has actually examined such a premise.

    • Either the Dingell-Johnson Act or the Pittman-Robertson Act sees to it that license fees paid for fishing activities in each state are matched two to three times over by the federal government for the state it was purchased in through taxes paid on fishing equipment and fuel by the end users. While it is a “cost” to the state, the supposed 3-5% is just a cost of doing business and easily offset by the matching funds, if it’s not already built into the cost of the license which I’m sure it is.

      • Steve-O, it was not build into the license fee structure. Though it is true and i already knew that the state can receive DJ and PR money on the cost of every license sold, gross not net.
        FYI, the 2019 non-resident total gross sales of fishing licenses is $18,720,872. Using the 3-5% fees, that accounts for right off the top $579,437 – $965,728 loss profit to the state. Then take the paid vendors(those who sell licenses) which were paid $593,705. that is a million dollars, or a little more of loss revenue in just the non-resident fishing licenses sold. Seams a little spendy to justify it as “cost of doing business”. I would think $500,000 – $900,000(credit fees paid) would pay for something that DJ does not allow a match.

      • AL,

        You are assuming that all nonresident licenses are being purchased online, but then you say that paid vendors who sell licenses were paid $593,705 all that money wasn’t paid out for resident licenses purchased at a point of sale and not online…you can’t count both, it doesn’t work that way.

        When the bean counters figured out the price of getting a license I’m sure they accounted for the administrative cost associated with purchasing a license. Now I’m a guy who will often assume the worst when it comes to the abilities of state workers, but they know that they were going to have to account for the $593,705 paid to vendors who sell license, so they surely built the online cost of purchasing a license into the cost of the license. When was the last time a state worker let a dollar walk out the door without it being accounting for it? This isn’t lost revenue and it doesn’t “cost” the state anything, it’s a pass through cost to the purchaser or at worst the cost of doing business and revenue the state doesn’t realize. The horror of it all is that this “cost” is one that gets matching funds so it pays for itself and then some, and then some more.

        All that being said, if your sole bone to pick is that it “costs” a million dollars to get $18,720,872 that is then doubled to $37,441,744 or even tripled to $56,162,616 then by all means pick that bone clean. I sure wish we had more government programs that “cost” $1,000,000 but returned $37-$56 million dollars!

      • Steve
        You are correct, that it is only “million”. But the total $18 million is not all used for DJ match.
        When the legislature increased fishing licenses about 3 years ago online sales was only in its spawning stages, and no one discussed the transactions service fees (i was deeply involved in that bill). What was and has been build in for the sales of licenses was AS 16.05.390 Fees and Compensation For Issuance of Licenses.
        This law allows the Commissioner to compensate privet vendors. This is the column on the spread sheet denoted as vendors when looking at the revenue for licensing. What is not on the spread sheet is the cost paid to credit/debt card services.
        How does it work today. Most all urban vendors, some larger rural vendors and ADF&G offices that sell licenses. All use the internet ADF&G electronic license sales site. The other vendors use the traditional method.
        1. All vendors get paid according to AS 16.05.390.(this is the debt column on spread sheet)
        2.Credit/debt collect their fees off the total of sales for their services.( not included or shown as a cost on the spread sheet)
        3. Also vendors that use the transitional method, most allow requester to pay with a credit/debit card. Again the card service fees are not shown on spread sheet.

        What i don’t know yet,is, who is paying the service fee?
        What pool of money is it coming out of? State of Alaska, Fish and Game Fund, General Fund?

        Yes it is only a “million”. But should it not be transparent on the spread sheets of revenue collected? (cost of doing business)

        On a side note

        Should the State be looking into becoming it’s own card collection/transaction service?
        I would assume all State licensing, permits, and other fees collected are done by credit/debit cards today. Is it safe to say the State collects hundreds of millions of dollars though licensing, permits and fees state wide all departments with the use of credit/debit cards?
        Could cutting out the middle man (card services) be profitable to the State instead of a loss, for doing business?

      • Al,

        Thanks for the inside information on this subject, apparently my new found faith in the abilities of state workers was misplaced. There should be a column for credit/debit card fees without a doubt, it’s simple accounting. In the license statistics for 2019, found here https://www.adfg.alaska.gov/index.cfm?adfg=license.statistics I come up with a total nonresident fishing license ($16,120,938) amount including king stamps ($3,193,640) of $19,314,578 and an expense of $593,705 for a net total of $18,720,873. Certainly all nonresident didn’t use the online method, and those who purchased at a vendor and paid with a credit/debit card the vendor would have paid that transaction fee and presumably passed that cost along to the state in what would be the expense column, no? It sounds like there is some amount of expense related to the transaction fee that isn’t being accounted for and it should be, but I don’t think it’s in the neighborhood of $579,437 – $965,728.

        I would suspect that these online license purchases are an overwhelming percentage of all credit/debit card transactions that the state deals with, it would be hard to imagine there being any permitting or state fees that amount to more than the 400,000 fishing licenses that were issued, but it certainly is possible.

  4. Craig,

    In fairness, there were a few days last year and I believe the year before when the limit was raised to 12 on the Russian and/or in Seward, so it is possible that a small number of nonresidents with a day license could have caught the limit of 12 salmon which would have lowered their effective tax rate to $2.08 per salmon. All of that of course doesn’t account for the fishing gear they may have purchased, the processing of the fish they might have paid for, the rental car and lodging, the food consumed, and the general support of the local economy.

  5. No doubt about it the commercial salmon fisheries industry are on the “ropes” in the Northern District of Cook Inlet.

    Like a losing prizefighter in the ring they are in the corner swinging wildly trying to defend themselves. From their comments before the AK Board of Fisheries (BOF) the lack of salmon in the Northern District is not their fault. It’s a combination of; northern Pike eating salmon fry, hot water, lack of shade trees, ATVs crossing rivers, road culverts, inriver anglers standing in the streams, catch/release anglers killing salmon, killer whales, or something happening out in the Pacific Ocean. None of those bunches will turn the fight around and save them. It’s just a matter of who will throw the final bunch that knocks them out, will it be the state or the Feds?

    The BOF will have to answer to an unlimited growth in the number of inriver fish gathers in the Cook Inlet drainages and restrict commercial salmon harvest in the Inlet. The law requires that they do so.

    Regardless of whether the BOF takes action to reduce commercial harvest of salmon headed to the Northern District to accommodate inriver fish gatherers or not the Feds could shut down the fishery. Northern Cook Inlet was designated a critical habitat for beluga whales back in 2011 by the National Marine Fisheries Service (NMFS). The state fought the listing in court and lost. Beluga’s main food source is salmon and for whatever reasons their population in Cook Inlet continues to decline. Other than shutting down all oil and gas development in the Inlet the only other thing NMFS’s has authority to do is shut down fishing to protect their food source.

    All 1300 Commercial fisheries folks in Cook Inlet have a long history of being tough fighters, they won’t go down without a fight. They are in the ring this week at the Egan Center before the Alaska Board of Fisheries. The public is welcome to come watch.

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