Legislature(2017 - 2018)SENATE FINANCE 532
04/03/2018 01:30 PM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB198 | |
| HB76 | |
| HB128 | |
| SB142 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 286 | TELECONFERENCED | |
| += | SB 142 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 76 | TELECONFERENCED | |
| += | HB 128 | TELECONFERENCED | |
| += | SB 198 | TELECONFERENCED | |
CS FOR HOUSE BILL NO. 76(FSH)
"An Act relating to the mariculture revolving loan
fund and loans and grants from the fund; and providing
for an effective date."
1:42:12 PM
REPRESENTATIVE DAN ORTIZ, SPONSOR, introduced himself.
LIZ HARPOLD, STAFF, REPRESENTATIVE DAN ORTIZ, introduced
herself.
Representative Ortiz explained the bill. He stated that the
bill amends the existing Alaska Mariculture Revolving Fund
to allow for up to 40 percent to be used for loans to
permitted shellfish hatcheries for planning, construction,
and operation. He stated that Alaska shellfish farms did
not currently have a stable supply of seed.
1:44:36 PM
Ms. Harpold discussed the Sectional Analysis (copy on
file):
Section 1. Adds a declaration of policy for the
state's Mariculture Revolving Loan Fund.
Section 2. Amends a spanned statutory citation in AS
6.10.900 to conform with the provision added by
section 1 of the bill.
Section 3. Require 40 percent of the money
appropriated to the fund be used for (1) making loans
to state residents and Alaskan organizations and
businesses that operate hatcheries or aquatic farms of
the purpose of producing aquatic plants or shellfish
or conduct shellfish enhancement projects or (2)
making grants to certain nonprofits. Requires the
remaining 60 percent of the funds appropriated to the
fund to be used for other loans from the fund.
Section 4. Authorizes the Department of Commerce,
Community and Economic Development to make loans to an
eligible applicant for the planning, construction, an
operation of a (1) hatcher that artificially
propagates marine aquatic plants or shellfish or (2)
shellfish enhancement project. Permits the department
to make one-time grants for organizational and
planning purposes to certain nonprofit organizations.
Amends spanned statutory citations to conform with the
provision added by sex. 1 of the bill.
Section 5. Limits the amount other department may make
in grants to nonprofits for organizational and
planning purposes.
Section 6. Expands the classes of person eligible for
a loan from the fund to include state residents or
entities organized under state law that (1) hold a
permit to operate a hatchery or aquatic farm for the
purposes of producing aquatic plants or shellfish or
(2) conduct shellfish enhancement projects.
Section 7. Conforms the residency requirements for
fund loan applicants to reflect that entities
organized under state law are also eligible for loans
from the fund.
Section 8. Establishes ne loan terms for loans from
the fund.
Section 9. Provided that a subsequent loan may not be
made to a resident of the state or entity organized
under the laws of thousand state that holds a permit
to 9operate a hatchery or aquatic farm for the purpose
of producing aquatic plants or shellfish or that
conducts shellfish enhancement projects if the
person's outstanding balance exceeds $,000,000.
Section 10. Allows a loan to be made from the fund for
the purchase of boats or vessels determined to be
integral to the operation of a hatcher.
Section 11. Amends a spanned statutory citation in AS
16.10.915(d) to conform with the provision added by
section 1 of the bill.
Section 12. Adds a new subsection to AS 16.10.915.
Prohibits the department from making certain loans
from the fund unless the department determines that
(1) a loan applicant's hatchery or enhancement project
will be managed in a manner reasonably expected to
result in repayment of the loan and (2) conduct
shellfish enhancement projects.
Section 14. Provides authority for certain
associations of limited entry permit holders o levy
and collect an assessment from its members to secure
or repay a loan from the fund. Allows the department
to rely on certain assessments in deciding whether to
make a loan from the fund.
Section 15. Amends a spanned statutory citation in AS
16.10.935 to conform with the provision added by
section 1 of the bill
Section 16. Adds new definitions for AS 16.10890 -
16.10.945.
Section 17. Clarifies that changes made by the bill to
loan terms from the fund do not apply to loans made
before the bill's effective date.
Section 18. Provides the bill with an immediate
effective date.
1:49:58 PM
AT EASE
1:51:35 PM
RECONVENED
Co-Chair MacKinnon queried clarity about how long a person
could defer payments on the loan.
1:53:09 PM
BRITTENY CIONI-HAYWOOD, DEPARTMENT OF COMMERCE, COMMUNITY,
AND ECONOMIC DEVELOPMENT, ANCHORAGE (via teleconference),
replied that it would be six years for a farm, or eleven
years for a hatchery.
Co-Chair MacKinnon queried the reason for deferring payment
of interest and principal for that period of time. Ms.
Cioni-Haywood replied that it took time to develop the
projects, therefore the loan went into the deferral period.
Senator von Imhof wondered whether there was a biological
reason a farm or a hatchery would need so many years of
deferral. She asked whether it was a construction,
permitting, or biological issue related to the significant
delay in payment. Ms. Cioni-Haywood deferred to the
Department of Fish and Game (DFG).
Ms. Cioni-Haywood stated that geoducks had a nine to ten
year grow out, oysters were in the five year range.
1:55:42 PM
AT EASE
1:58:27 PM
RECONVENED
1:58:43 PM
SAM RABUNG, DEPARTMENT OF FISH AND GAME, JUNEAU, stated
that the bill was modeled after the salmon fishery
enhancement revolving loan fund, with a deferral period
based on the biological life cycle of the organisms.
Senator von Imhof remarked that it took approximately 5 or
6 years for a geoduck to become fully mature, and oyster
maturation was slightly longer. She felt that there would
be a large balloon payment on year 7, because there was no
interest paid during that time. She wondered whether the
principal would be amortized over ten or twelve years. Mr.
Rabung deferred to the Department of Commerce, Community
and Economic Development. He asserted that it was probably
amortized into the annual payment.
2:00:36 PM
Senator Stevens wondered whether seaweed production was in
the Department of Fish and Game purview. Mr. Rabung replied
in the affirmative.
Senator Stevens queried the success of other states'
seaweed production. He felt that other states had been
successful. Mr. Rabung replied that it was a growth
industry, with success on both coasts. He felt that the
time was right for seaweed production.
Vice-Chair Bishop queried the process of an oyster
hatchery. Mr. Rabung replied that adult oysters would be
collected from a farm site, and taken to a hatchery to
induce to spawn with temperature manipulation. The larvae
would set and grow as juveniles. The spat would then be
distributed to nurseries and farms for further grow out to
market size. The process took approximately three years.
Vice-Chair Bishop wondered whether the hatchery was shore
based, or whether the hatchery needed to lease land from
the state. Mr. Rabung replied that either was possible.
Vice-Chair Bishop asked where the stock was sourced. Mr.
Rabung replied that oysters did not reproduce or occur
naturally in the state, so they were all sourced through
approved sources on the west coast out of state. He stated
that oysters were a farmed product.
Co-Chair MacKinnon wondered why oysters were not considered
an invasive species. Mr. Rabung replied that oysters could
not reproduce in Alaska, because of the cold temperature.
Senator von Imhof wondered whether the shellfish hatcheries
included crab and shrimp. Mr. Rabung replied in the
affirmative. He stated that there were no hatcheries,
because those organisms did not fair well in Alaska while
in captivity.
2:04:21 PM
AT EASE
2:05:07 PM
RECONVENED
Co-Chair MacKinnon stated that there were multiple
questions regarding the mariculture loan fund. She wanted
an accounting and short history of the fund. There was a
desire to know the number of current loans and the deferral
rate. She queried the remaining balance to loan against,
and other financial specifics of the revolving loan fund.
Co-Chair MacKinnon OPENED public testimony.
Co-Chair MacKinnon queried comments on the legislation. Ms.
Cioni-Haywood stated that she could answer the questions
related to balloon payments. She stated that on the initial
period there was no payments or interest that would accrue.
She shared that the payments would start after that initial
period.
Co-Chair MacKinnon surmised that the first six years saw no
interest, because the state loaned money principal and
received no money in return. Ms. Cioni-Haywood agreed. She
explained that the payments began after the initial period
for farmers or after the initial period for hatcheries
within the changes in the bill.
Co-Chair MacKinnon wondered whether that was similar to the
salmon enhancement or the other funds. Ms. Cioni-Haywood
replied in the affirmative. She explained that it was
similar to the Fisheries Enhancement Revolving Load Fund.
Co-Chair MacKinnon asked whether it was similar conditions
to the farming operations in the ocean. Ms. Cioni-Haywood
replied that she may not understand the question. She
announced that the fisheries enhancement would be through
the regional aquaculture associations through the hatchery
system.
2:10:02 PM
Co-Chair MacKinnon looked at page 5, Section 10, line 3,
which said that a loan under 16.10.910 attempted to add
hatcheries to be able to purchase a boat under the hatchery
program. Ms. Cioni-Haywood replied that it allowed the
hatcheries to purchase a boat, if that boat would be used
for the hatchery business. She stated that the farmers
could already purchase a vessel under the current loan
fund.
Co-Chair MacKinnon looked at line 5, which said that it may
not be deferred for a period more than six years of the
loan. She noted that another statute outlined eight years.
She wondered whether there was different efforts for
farming and hatcheries, and if so, she queried the reason
for that distinction. Ms. Cioni-Haywood agreed that there
was a difference between farmers and hatchers. She
understood that the language taken for the hatcheries was
based on the fisheries enhancement statutes that outlined
the fisheries enhancement revolving loan fund. She stated
that those statutes had it at ten years. She furthered that
the farmers would be six years.
Co-Chair MacKinnon queried additional comments on the
overall structure of the bill. She asked whether the
administration was supportive of the bill. Ms. Cioni-
Haywood replied that the administration was supportive of
the bill, and she had no additional comments on the
structure of the bill.
2:12:17 PM
JULIE DECKER, CHAIR, MARICULTURE TASK FORCE, shared that in
2016, Governor Walker created the Mariculture Task Force
with eleven members from broad backgrounds. She shared that
one of the top five priorities in the plan was this bill.
She felt that the bill was a component in moving the
industry forward. She stated that the goal of the task
force was to grow a $100 million in 20 years. She noted
that the original focus was for a $1 billion industry in 30
years. She shared that work with economic advisor groups
encouraged the reduction of the timeline with a realistic
goal. She stated that the goal was focused on six species:
pacific oysters, which was the only nonnative species in
the state, because they did not reproduce; geoduck; sea
cucumbers; blue mussels; and several species of seaweed.
She remarked that there was a plan to develop the industry.
She clarified that mariculture did not mean finfish
farming, because it was not legal in the state. She shared
that it included aquatic farming.
Vice-Chair Bishop recalled that there was one time when the
shellfish industry had $30 million revenue to the state. He
wondered whether there was a problem in obtaining tidelands
or leases from the Department of Natural Resources (DNR) to
expand the business. Ms. Decker replied that it was one of
the hurdles, because there was a public process. She
remarked that there was a balance of potential for public
use versus a private use of the area was always
challenging. She hoped some of the applications for farms
would be permitted.
2:20:11 PM
Senator Stevens requested comment on the seaweed industry.
Ms. Decker replied that seaweed was a large worldwide
industry at $6 billion to $10 billion. She remarked that
the seaweed industry was barely in Alaska. She stressed
that it worked well with the existing seafood industry,
because it was planted in the fall and harvested in the
spring. She remarked that there were many excess fishing
vessels and process at capacity those time periods. She
felt that it would be a nice fit for Alaska.
Co-Chair MacKinnon asked about sea otters. Ms. Decker
encouraged people to purchase sea otter products. She
stated that sea otters were a serious challenge in the
mariculture industry. She felt that it would require some
federal partnership and impetus.
Co-Chair MacKinnon stressed that a business to survive in
Alaskan waters might be destroyed, because it was difficult
to control the predators that may destroy the crops. Ms.
Decker replied that oysters were contained in cages, so
that was positive for otter predation. She added that
otters did not eat seaweed.
2:23:36 PM
TOMMY SHERIDAN, DIRECTOR GOVERNMENT AFFAIRS, SILVER BAY
SEAFOODS, ANCHORAGE (via teleconference), spoke in support
of the legislation. He stated that altering the mariculture
revolving loan fund to make it accessible hatchery
operators would help to provide better security for the
state's mariculture industry.
Senator Stevens noted that there was a letter that asserted
that development of shellfish and seaweed could help to
mitigate ocean acidification. He requested more information
on that issue. Mr. Sheridan stated that his experience in
the issue was limited. He noted that there were large scale
experiments with kelp that might potentially offset the
impacts of ocean acidification.
2:27:22 PM
TOMI MARSH, PRESIDENT, VOLUNTEER BOARD, OCEANS ALASKA,
KETCHIKAN (via teleconference), supported the legislation.
She stated that bill would allow for shellfish and seaweed
hatcheries to access loan funds for operation cost of seed.
She stated that it would also allow the mariculture
industry to grow, because industry growth required a
consistent and healthy seed source. She shared that the
bill would put shellfish and seaweed hatcheries on a path
to financial stability.
2:28:56 PM
MARKOS SCHEER, MANAGER, PREMIUM AQUATICS, SEATTLE (via
teleconference), spoke in support of the bill. He
anticipated that the first phase of his operation would
employ as many as 50 people year round. He felt that it
would be a significant impact to the economy, and asserted
that the bill was a vital part of that development.
2:31:56 PM
TREVOR SANDY, ALASKA SHELLFISH GROWERS ASSOCIATION,
KETCHIKAN (via teleconference), spoke in support of the
bill. He shared his personal experiences about why the bill
was personally important. He stated that he became
interested in farming, because of the potential for growth
in the industry.
2:35:50 PM
TAMSEN PEEPLES, ALASKA MARICULTURE MANAGER BLUE EVOLUTION,
KODIAK (via teleconference), spoke in support of the bill.
She stated that she had built and designed hatcheries. She
shared that one of those hatcheries was able to produce
over 70,000 seeded line with kelp seedlings, and worked
below half capacity in the last season. She shared that the
design and installation of the hatcheries was the first
major hurdle in investment in the state. She shared that a
major challenge was the cost of shipping and installing
large materials. She remarked that the ability to work in
cooperation with the National Oceanic and Atmospheric
Administration (NOAA) lab was helpful in fulfilling the
project. She supported responsible mariculture in the
state.
Co-Chair MacKinnon CLOSED public testimony.
Vice-Chair Bishop addressed the fiscal notes.
CSHB 76(FSH) was HEARD and HELD in committee for further
consideration.