(a) The commission shall issue entry permits, for each fishery, first to all qualified applicants in the priority classifications designated under AS 16.43.250(b) and then to qualified applicants in order of descending priority classification, until the number of entry permits issued equals the maximum number of entry permits established under AS 16.43.230 and 16.43.240 for each fishery, except that a person within a priority classification specified under AS 16.43.250(b) may not be denied an entry permit.

(b) If, within the lowest priority classification of qualified applicants to which some entry permits may be issued, there are more applicants than there are entry permits to be issued, then the allocation of entry permits within that priority classification shall be by lottery. However, the commission shall issue entry permits to all qualified applicants in that priority classification if the total number of permits issued for the fishery does not exceed the maximum number of entry permits established under AS 16.43.240 for that fishery by more than five percent or 10 permits, whichever is greater.

(c) If, at the time entry permits are issued, some applicants are still appealing the findings of an administrative adjudication under AS 16.43.260, a sufficient number of permits shall be reserved out of the permits to be issued to protect the rights of those applicants, assuming all the appeals will be resolved in favor of the applicants. In the event that all appeals are not resolved in favor of the applicants, the remaining entry permits shall be allocated to the next most qualified applicants as provided in (a) and (b) of this section.

(d) The commission may restrict the fishing capacity employed under an entry permit if, before the initial issuance of entry permits for a fishery, the commission determines that the fishing capacity in the fishery must be limited to achieve the purposes of this chapter, establishes criteria for determining the fishing capacity that is allowed under an entry permit, and establishes how fishing capacity will be measured. The maximum fishing capacity allowed under an entry permit must be based upon past participation in the fishery by the initial recipient of the entry permit during a period, specified by the commission, preceding the qualification date established under AS 16.43.260. The commission may define fishing capacity in terms of quantity of fishing gear, a proportion of the maximum amount of gear that can be utilized in the fishery under regulations of the Board of Fisheries, fishing vessel size or other characteristics, or other factors determined by the commission to affect the amount of fishing effort in the fishery. The recipient or transferee of an entry permit issued subject to this subsection may not exceed the fishing capacity allowed under the entry permit.