Legislature(2017 - 2018)GRUENBERG 120

03/07/2017 10:00 AM FISHERIES

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 76 MARICULTURE REVOLVING LOAN FUND TELECONFERENCED
Heard & Held
-- Public Testimony --
*+ HB 128 SHELLFISH ENHANCE. PROJECTS; HATCHERIES TELECONFERENCED
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
               HB 76-MARICULTURE REVOLVING LOAN FUND                                                                        
                                                                                                                                
10:03:55 AM                                                                                                                   
                                                                                                                                
CHAIR STUTES announced  that the first order of  business would be                                                              
HOUSE BILL NO.  76, "An Act relating to the  mariculture revolving                                                              
loan  fund  and  loans  from  the   fund;  and  providing  for  an                                                              
effective date."                                                                                                                
                                                                                                                                
10:04:32 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  FANSLER moved  to adopt  the committee  substitute                                                              
(CS),  for HB  76, Version  30-LS0343\R, Bullard,  3/6/17, as  the                                                              
working document.                                                                                                               
                                                                                                                                
10:04:45 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE EASTMAN objected for discussion.                                                                                 
                                                                                                                                
10:05:29 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE   DANIEL    ORTIZ,   Alaska   State    Legislature,                                                              
introduced the committee  substitute (CS) for HB  76 stressing the                                                              
need to  diversify the economic  drivers for Alaska's  economy and                                                              
underscoring  the opportunities  that  exist within  the realm  of                                                              
the  seafood  and  mariculture  industries.     He  described  the                                                              
proposed  legislation, paraphrasing  from  the sponsor  statement,                                                              
which read as follows [original punctuation provided]:                                                                          
                                                                                                                                
     This  bill   amends  the  existing  Alaska   Mariculture                                                                   
     Revolving  Loan Fund  to allow  up to  forty percent  of                                                                   
     the fund  to be  used for loans  to permitted  shellfish                                                                   
     hatcheries for planning, construction and operation.                                                                       
                                                                                                                                
     Alaska shellfish  farms currently  do not have  a stable                                                                   
     supply of  seed for the  propagation of oysters,  and no                                                                   
     regular, in-state  source of  seed for resident  aquatic                                                                   
     plants  and other shellfish.   A  stable supply of  seed                                                                   
     is one  of many  hurdles the  industry must overcome  to                                                                   
     grow and become a viable Alaskan industry.                                                                                 
                                                                                                                                
     This  bill will  amend the  program to  shift its  focus                                                                   
     and eligibility  from individual mariculture  farmers to                                                                   
     include  shellfish hatcheries  that  would market  stock                                                                   
     to local Alaskan mariculture farmers.                                                                                      
                                                                                                                                
     The  mariculture industry  in  Alaska is  not yet  fully                                                                   
     developed,   and  is   extremely  high   risk,  from   a                                                                   
     financial  standpoint.   These  obstacles  make  private                                                                   
     financing  difficult  to  obtain,  but  this  bill  will                                                                   
     enable Alaskans  to maintain  their businesses and  grow                                                                   
     Alaska's mariculture industry.                                                                                             
                                                                                                                                
10:10:09 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  NEUMAN  noted  the   substantial  increases  being                                                              
proposed  to the amount  that can  be loaned  and asked about  the                                                              
fund sustainability.                                                                                                            
                                                                                                                                
REPRESENTATIVE  ORTIZ deferred the  question of sustainability  to                                                              
the department, and  said projections indicate that  the fund will                                                              
remain  solid.   The  fund is  being  underutilized  and the  bill                                                              
expands the scope of its use.                                                                                                   
                                                                                                                                
10:13:43 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  EASTMAN asked  about the  underutilization of  the                                                              
fund.                                                                                                                           
                                                                                                                                
REPRESENTATIVE ORTIZ deferred.                                                                                                  
                                                                                                                                
The committee took an at-ease from 10:14 a.m. to 10:15 a.m.                                                                     
                                                                                                                                
10:15:14 AM                                                                                                                   
                                                                                                                                
ELIZABETH  BOLLING,  Staff, Representative  Daniel  Ortiz,  Alaska                                                              
State  Legislature,   provided  the  sectional  analysis   of  the                                                              
proposed committee  substitute (CS)  for HB 76, paraphrasing  from                                                              
a prepared document,  which read as follows  [original punctuation                                                              
provided]:                                                                                                                      
                                                                                                                                
     Section 1                                                                                                                  
                                                                                                                                
     Amends AS  16.10 to create  a Declaration of  Policy for                                                                   
     the program  and fund  uses. This  section was added  to                                                                   
     ensure  the fund  promotes mariculture  and gives  clear                                                                   
     direction   to  the  department.   The  declaration   is                                                                   
     similar  to  the Fisheries  Enhancement  Revolving  Loan                                                                   
     Fund  (AS 16.10.500).  This will make  clear the  intent                                                                   
     of the  program and  protect the  department from  risks                                                                   
     in a developing industry.                                                                                                  
                                                                                                                                
     Section 2                                                                                                                  
                                                                                                                                
     AS 16.10.900(a)  (b)  (3) and (c)  will incorporate  the                                                                   
     declaration  of policy,  to  ensure the  state  promotes                                                                   
     mariculture   through  the  fund,   and  links  to   new                                                                   
     definitions in AS 16.10.945.                                                                                               
                                                                                                                                
     Section 3                                                                                                                  
                                                                                                                                
     AS 16.10.905  (1) (a)  will incorporate the  declaration                                                                   
     of  policy, to  ensure  the state  promotes  mariculture                                                                   
     through  the fund, and  links to  new definitions in  AS                                                                   
     16.10.945.                                                                                                                 
                                                                                                                                
     AS  16.10.905(1)  (b)  ensures the  fund  covers  marine                                                                   
     aquatic plants rather than all aquatic plants.                                                                             
                                                                                                                                
     AS  16.10.905(1) (c)  This change  expands the  eligible                                                                   
     applicants  to include organizations  that are  actively                                                                   
     pursuing  shellfish  enhancement  projects.  Enhancement                                                                   
     refers  to the  enhancement  of resources,  rather  than                                                                   
     the enhancement of individual organisms.                                                                                   
                                                                                                                                
     16.10.905  (4) (b) will  incorporate the declaration  of                                                                   
     policy,  to   ensure  the  state  promotes   mariculture                                                                   
     through  the fund, and  links to  new definitions in  AS                                                                   
     16.10.945.                                                                                                                 
                                                                                                                                
     16.10.905  (7)  will  incorporate   the  declaration  of                                                                   
     policy,  to   ensure  the  state  promotes   mariculture                                                                   
     through  the fund, and  links to  new definitions in  AS                                                                   
     16.10.945.                                                                                                                 
                                                                                                                                
     AS  16.10.905(9) allows  the Department  to make  grants                                                                   
     only  to  nonprofit  organizations  eligible  for  loans                                                                   
     under   AS  16.10.910(a)(2)   for   organizational   and                                                                   
     planning purposes  that will provide for public  uses in                                                                   
     this developing industry                                                                                                   
                                                                                                                                
     Section 4                                                                                                                  
                                                                                                                                
     AS  16.10.910(a)  will incorporate  the  declaration  of                                                                   
     policy,  to   ensure  the  state  promotes   mariculture                                                                   
     through  the fund, and  links to  new definitions in  AS                                                                   
     16.10.945.                                                                                                                 
                                                                                                                                
     AS  16.10.910(a)  (2)  expands  eligible  applicants  to                                                                   
     include  a resident  of the  state  or entity  organized                                                                   
     under the laws  of this state that holds a  permit under                                                                   
     AS 16.40.100  to operate a  hatchery for the  purpose of                                                                   
     producing  aquatic plants  or shellfish  for sale or  is                                                                   
     authorized to operate shellfish enhancement project.                                                                       
                                                                                                                                
     Section 6                                                                                                                  
                                                                                                                                
     AS  16.10.915(a)  will incorporate  the  declaration  of                                                                   
     policy,  to   ensure  the  state  promotes   mariculture                                                                   
     through  the  fund,  and links  to  new  definitions  AS                                                                   
     16.10.945.                                                                                                                 
                                                                                                                                
     As 16.10.915  (2) (a)  and (b)  clarifies the  different                                                                   
     categories  of loan  applicants  and their  terms.  This                                                                   
     gives  an additional  length  of time  to eligible  loan                                                                   
     applicants  under category  2  for the  same purpose  of                                                                   
     public uses,  and these terms are consistent  with those                                                                   
     terms  under the  Fisheries Enhancement  Revolving  Loan                                                                   
     Fund.                                                                                                                      
                                                                                                                                
     AS  16.10.915  (4)  allows the  department  to  consider                                                                   
     additional   collateral  sources   including   voluntary                                                                   
     assessments which may be agreed to in AS 16 10.923.                                                                        
     Section 7                                                                                                                  
                                                                                                                                
     AS  16.10.915(b)  will incorporate  the  declaration  of                                                                   
     policy,  to   ensure  the  state  promotes   mariculture                                                                   
     through  the  fund,  and links  to  new  definitions  AS                                                                   
     16.10.945.                                                                                                                 
                                                                                                                                
     AS  16.10.915(b)  will incorporate  the  declaration  of                                                                   
     policy,  to   ensure  the  state  promotes   mariculture                                                                   
     through  the  fund,  and links  to  new  definitions  AS                                                                   
     16.10.945.                                                                                                                 
     Section 9                                                                                                                  
                                                                                                                                
     AS  16.10.915(d)  will incorporate  the  declaration  of                                                                   
     policy,  to   ensure  the  state  promotes   mariculture                                                                   
     through  the  fund,  and links  to  new  definitions  AS                                                                   
     16.10.945.                                                                                                                 
     Section 10                                                                                                                 
                                                                                                                                
     AS 16.10.915  (f) adds a new subsection to  clarify that                                                                   
     loans  to  a  hatchery  or  enhancement  project  should                                                                   
     contribute to  common property fishery or  otherwise the                                                                   
     public  interest so  the program  operates  in a  manner                                                                   
     beneficial to  the public interest  and be managed  in a                                                                   
     manner that protects the fund.                                                                                             
     Section 11                                                                                                                 
                                                                                                                                
     AS  16.10.920  (a)  and (b)  mirrors  the  initial  loan                                                                   
     period  from the  Fisheries Enhancement  Revolving  Loan                                                                   
     Fund. This also  allows flexibility for farmers  in this                                                                   
     developing industry.                                                                                                       
     Section 12                                                                                                                 
                                                                                                                                
     AS  16.10.923  (a)  creates a  mechanism  through  which                                                                   
     organizations comprising  more than one  stakeholder can                                                                   
     arrange   to  pay   their  loan   through  a   voluntary                                                                   
     assessment,  similar to  that of  the current  Southeast                                                                   
     Alaska  Regional  Dive  Fisheries  Association  and  the                                                                   
     salmon enhancement program.                                                                                                
                                                                                                                                
     AS  16.10.923 (b)  protects the  department by  ensuring                                                                   
     only  organizations   with  a  plan  and   agreement  to                                                                   
     collect  an assessment  to pay  the loan  may receive  a                                                                   
     loan.                                                                                                                      
     Section 13                                                                                                                 
                                                                                                                                
     AS  16.10.935  to allow  the  department to  dispose  of                                                                   
     property acquired after default.                                                                                           
                                                                                                                                
10:20:59 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE EASTMAN asked about the change included in Sec.                                                                  
14.                                                                                                                             
                                                                                                                                
MS. BOLLING responded that it provides a definition of shellfish                                                                
enhancement project, and referring to the proposed CS, page 6,                                                                  
lines 21-26, read:                                                                                                              
                                                                                                                                
     (5) "shellfish enhancement project" means a project to                                                                     
               (A)   augment   the   yield  or   harvest   of                                                                   
     shellfish  above  naturally  occurring  levels  using  a                                                                   
     natural,   artificial,  or   semiartificial   production                                                                   
     system; or                                                                                                                 
               (B)   rehabilitate   a  shellfish   stock   by                                                                   
     restoring  it  to  its  naturally  occurring  levels  of                                                                   
     productivity.                                                                                                              
                                                                                                                                
10:21:49 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE NEUMAN requested a further review of Sec. 12 and                                                                 
Sec. 13, to elaborate on the terms for a loan and the repayment                                                                 
schedule.                                                                                                                       
                                                                                                                                
MS. BOLLING deferred to the department.                                                                                         
                                                                                                                                
10:23:15 AM                                                                                                                   
                                                                                                                                
BRITTENY   CIONI-HAYWOOD,    Director,   Division    of   Economic                                                              
Development,   Department  of  Commerce,   Community  &   Economic                                                              
Development (DCCED), asked to have the question restated.                                                                       
                                                                                                                                
REPRESENTATIVE  NEUMAN  pointed out  that  loan repayment  may  be                                                              
deferred until  sometime following  6 and  11 years of  inception.                                                              
He  asked  whether  associations may  collect  payments  prior  to                                                              
start of state payments.                                                                                                        
                                                                                                                                
MS.  CIONI-HAYWOOD   clarified  that  the  question   regards  the                                                              
voluntary  fee assessments  that  an  organization  can impose  on                                                              
stakeholders  prior to  beginning  loan repayments  to the  state,                                                              
and deferred to legal counsel.                                                                                                  
                                                                                                                                
10:25:38 AM                                                                                                                   
                                                                                                                                
ALPHEUS   BULLARD,    Attorney,   Legislative    Legal   Services,                                                              
Legislative  Affairs Agency, referred  to the  bill, Sec.  12, and                                                              
said there  are no  time limitations  on when  an association  can                                                              
begin to  collect assessments for  the purpose of  either securing                                                              
or repaying a loan.                                                                                                             
                                                                                                                                
REPRESENTATIVE  NEUMAN surmised  that an  association can  collect                                                              
fees and the  proposed legislation doesn't provide  a schedule for                                                              
fee activities.                                                                                                                 
                                                                                                                                
MS.  BOLLING concurred,  and  offered  that an  association  could                                                              
decide to begin  loan repayment earlier than scheduled.   Further,                                                              
if an association  imposed fees but  didn't use the funds  for the                                                              
loan  purposes established,  it  could  be considered  an  illegal                                                              
collection.                                                                                                                     
                                                                                                                                
REPRESENTATIVE NEUMAN  conjectured that a loophole  might be found                                                              
by  an association  collecting  fees,  and suggested  the  section                                                              
language be given further scrutiny.                                                                                             
                                                                                                                                
10:27:55 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE EASTMAN  said it appears  that an assessment  could                                                              
be collected prior to a loan being secured.                                                                                     
                                                                                                                                
MR.  BULLARD responded  that the  assessments  are voluntary  from                                                              
association members.                                                                                                            
                                                                                                                                
10:29:08 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  NEUMAN asked  whether the association  owner  of a                                                              
permit could own  permits in other states as well,  and if so will                                                              
there  be   assurance  that  Alaskan   based  companies   will  be                                                              
prioritized.                                                                                                                    
                                                                                                                                
CHAIR STUTES said  an upcoming presentation would  cover this line                                                              
of questioning.                                                                                                                 
                                                                                                                                
10:30:02 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  EASTMAN noted  the new  subsection being  proposed                                                              
in Sec.  10, and  questioned  if it was  in the  original bill  or                                                              
crafted specifically for the CS.                                                                                                
                                                                                                                                
MS. BOLLING explained  that the subsection in question  was in the                                                              
original bill.                                                                                                                  
                                                                                                                                
REPRESENTATIVE EASTMAN  removed his objection and  without further                                                              
objection, Version R was before the committee.                                                                                  
                                                                                                                                
10:31:44 AM                                                                                                                   
                                                                                                                                
MS.  BOLLING said  the  intent of  the  legislation  is to  assist                                                              
Alaska's  developing  mariculture  industry.   A  bottleneck,  and                                                              
impediment  currently  exists,  due  to the  unavailability  of  a                                                              
source  for year-a-round  shellfish  seed.   Alaska Department  of                                                              
Fish  & Game  (ADF&G)  regulations  allow for  oyster  seed to  be                                                              
brought into  the state, but  all other seed  must be  produced in                                                              
Alaskan  waters.   The bill  is intended  to  ease the  situation,                                                              
include   compatible  terms   that   align   with  the   Fisheries                                                              
Enhancement  Loan  Fund,  and to  further  define  relatively  new                                                              
concepts such as shellfish enhancement projects.                                                                                
                                                                                                                                
10:32:57 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  NEUMAN  pointed  out  the proposed  raise  in  the                                                              
application fee,  $100,000 to $1 million  [CS page 4,  lines 2-5],                                                              
to note  that this represents a  significant change and  asked how                                                              
it is expected to work.                                                                                                         
                                                                                                                                
MS.  BOLLING said  the  terms presented  are  consistent with  the                                                              
terms of the Fisheries  Enhancement Revolving Loan Fund.   It also                                                              
provides a time  extension to eligible applicants  that come under                                                              
category  two; public  use  and benefit  purposes.   She  deferred                                                              
further response.                                                                                                               
                                                                                                                                
10:34:59 AM                                                                                                                   
                                                                                                                                
JULIA  DECKER, Executive  Director,  Alaska Fisheries  Development                                                              
Foundation  (AFDF), said the  bill is  intended to provide  access                                                              
to  funding for  individuals with  aquatic  farms, as  well as  to                                                              
organizations,     such     as     those     hosting     shellfish                                                              
hatchery/enhancement   programs.     The  monetary   need  of   an                                                              
organization would  be greater than  an individual  farmer seeking                                                              
to  enter the  mariculture  industry.   It  is expected  that  the                                                              
number of organizations making application will be few.                                                                         
                                                                                                                                
REPRESENTATIVE NEUMAN  expressed concern that,  if the bill  is to                                                              
help  small organizations  and individuals,  coming up  with a  $1                                                              
million application fee seems daunting.                                                                                         
                                                                                                                                
MS.  DECKER said  collateral would  be necessary,  but the  amount                                                              
represents the  total amount  for which they  could apply.   It is                                                              
necessary  to  make   a  high  amount  available   for  an  entity                                                              
developing a  hatchery, and these  are critical facilities  to the                                                              
industry to provide  a secure source of seed.  She  suggested that                                                              
hatcheries currently  producing king crab may want  to expand into                                                              
shellfish and this fund would be beneficial to that effort.                                                                     
                                                                                                                                
10:37:46 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE EASTMAN  asked for an  estimate of the size  of the                                                              
mariculture industry.                                                                                                           
                                                                                                                                
MS. DECKER responded  that the vision is to grow  a billion dollar                                                              
industry  in 30  years,  and assets  are  available  to meet  that                                                              
goal.    The  mariculture  task  force  considers  this  to  be  a                                                              
reasonable aim and sound course of action.                                                                                      
                                                                                                                                
REPRESENTATIVE EASTMAN  noted that the target is  a billion dollar                                                              
industry in 30 years, and asked, "Where were we at last year?"                                                                  
                                                                                                                                
MS. DECKER responded $1 million.                                                                                                
                                                                                                                                
10:39:49 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE NEUMAN  asked how much is in the  current fund, and                                                              
how has it been performing.                                                                                                     
                                                                                                                                
MS. CIONI-HAYWOOD  responded that  the current, available  balance                                                              
is about $4.5 million.   It's a new fund that will  take some time                                                              
to build, she said.   Five loans of about $500,000  each have been                                                              
made, and  no applications received  have been denied.   Thus far,                                                              
only individual farmers have benefited.                                                                                         
                                                                                                                                
REPRESENTATIVE  NEUMAN questioned how  the department  manages the                                                              
fund, and  whether the available loan  assets are invested  by the                                                              
state.                                                                                                                          
                                                                                                                                
MS. CIONI-HAYWOOD  responded that the  balance on hand  is managed                                                              
by the  Treasury Division  of the  department, providing  interest                                                              
for  deposit to  the general  fund,  as well  as  retention.   All                                                              
interest and fees  acquired from active loans remain  in the fund,                                                              
making it self-sustaining.   To a follow-up question  she said the                                                              
original fund balance was $5 million.                                                                                           
                                                                                                                                
10:42:58 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE CHENAULT  referred to the changes proposed  in Sec.                                                              
11, to ask  about the current loan  rate, and the 6  year interest                                                              
deferral provision; proposed for extension to 11 years.                                                                         
                                                                                                                                
The committee took a brief at-ease at 10:44 a.m.                                                                                
                                                                                                                                
10:44:11 AM                                                                                                                   
                                                                                                                                
MS.  CIONI-HAYWOOD  responded  that  current  statute  allows  the                                                              
interest to  be deferred, and no  interest or payments are  due in                                                              
the first six years.                                                                                                            
                                                                                                                                
REPRESENTATIVE  CHENAULT questioned  how hatcheries  will be  able                                                              
to repay loans  if assessments are collected on  a voluntary basis                                                              
rather than being made mandatory.                                                                                               
                                                                                                                                
MS. CIONI-HAYWOOD deferred response.                                                                                            
                                                                                                                                
10:46:15 AM                                                                                                                   
                                                                                                                                
MS. DECKER  explained that  the components  being proposed  in the                                                              
CS are similar  to the repayment structure that  exists for salmon                                                              
hatcheries.   The hatcheries have  been successful,  and, although                                                              
differences  exist  between mariculture  and  finfish  facilities,                                                              
financial flexibility is needed by both undertakings.                                                                           
                                                                                                                                
REPRESENTATIVE CHENAULT  asked how  long the mariculture  fund has                                                              
been in  existence,  and whether any  of the  original loans  have                                                              
been satisfied.                                                                                                                 
                                                                                                                                
MS.  CIONI-HAYWOOD  said  it  was established  in  2012,  and  all                                                              
original loans are still in the deferment period.                                                                               
                                                                                                                                
10:49:55 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE EASTMAN  referred to the CS, Sec.  10, [subsection]                                                              
(e), to paraphrase the language which read:                                                                                     
                                                                                                                                
     The  total of  balances  outstanding  on loans  made  to                                                                   
     borrowers  under AS  16.10.910(a)(2) may  not exceed  40                                                                   
     percent of  the principal  of the mariculture  revolving                                                                   
     loan fund.                                                                                                                 
                                                                                                                                
REPRESENTATIVE EASTMAN  asked if the  principal being  referred to                                                              
is the initial $5 million fund balance.                                                                                         
                                                                                                                                
MS.  CIONI-HAYWOOD confirmed  that  it refers  to  the initial  $5                                                              
million balance,  and to a follow-up  question responded  that, if                                                              
the borrowers held  maximum loan amounts, only two  loans could be                                                              
allowed, under the 40 percent rule.                                                                                             
                                                                                                                                
REPRESENTATIVE  EASTMAN  directed  attention  to the  CS  page  3,                                                              
lines 22-27, regarding  residency requirements and  asked if there                                                              
is a  time period  being assumed  for someone  to qualify  for the                                                              
program.                                                                                                                        
                                                                                                                                
CHAIR STUTES  pointed out the  residency qualifiers  are contained                                                              
in the language,  which stipulates:  "may not have"  [page 3, line                                                              
25].                                                                                                                            
                                                                                                                                
REPRESENTATIVE  EASTMAN   questioned  whether  someone   could  be                                                              
denied  based  on  residency  previously  established  in  another                                                              
state, perhaps ten years ago; would that be a disqualifier.                                                                     
                                                                                                                                
10:52:29 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  FANSLER suggested  that  the "and"  [page 3,  line                                                              
24], satisfies the  concern, as it conjoins to the  24 consecutive                                                              
months  that are stipulated  [page  3, line 23].   He  paraphrased                                                              
the language, which read:                                                                                                       
                                                                                                                                
      (1) shall physically reside in this state and maintain                                                                    
        a domicile in this state during the 24 consecutive                                                                      
     months preceding the date of application for the                                                                           
     program; and                                                                                                               
     (2) may not have                                                                                                           
          (A) declared or established residency in another                                                                      
     state; or                                                                                                                  
          (B) received residency or a benefit based on                                                                          
     residency from another state.                                                                                              
                                                                                                                                
MR. BULLARD confirmed Representative Fansler's understanding.                                                                   
                                                                                                                                
CHAIR STUTES opened public testimony.                                                                                           
                                                                                                                                
10:55:24 AM                                                                                                                   
                                                                                                                                
NANCY  HILLSTRAND,  Pioneer Alaskan  Fisheries,  Inc.,  emphasized                                                              
the need to  delineate mariculture from shellfish,  and to include                                                              
clear definitions  for each.  She  said the salmon  revolving loan                                                              
fund should  be reviewed  prior to extending  it in the  direction                                                              
of shellfish.   Further,  natural stocks  and the reasons  causing                                                              
depletion  should be addressed  prior to  supporting farming,  she                                                              
cautioned.                                                                                                                      
                                                                                                                                
10:57:45 AM                                                                                                                   
                                                                                                                                
TONI  MARSH, OceansAlaska,  predicted  that the  bill  will be  as                                                              
good of an  assist to mariculture  farmers as it has been  to fish                                                              
hatcheries.   The allowance for  deferred payment is  necessary in                                                              
this type of industry,  which has a lengthy incubation  period and                                                              
maturity  process,  she  said and  reviewed  the  seed  maturation                                                              
timeline.                                                                                                                       
                                                                                                                                
REPRESENTATIVE NEUMAN asked about her affiliation.                                                                              
                                                                                                                                
MS.  MARSH  responded   that  she  is  the  board   president  for                                                              
OceansAlaska,   a  non-profit   shellfish   hatchery  located   in                                                              
Ketchikan.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  NEUMAN  asked  whether  the  non-profit  shellfish                                                              
hatchery she represents  expects to apply for this  funding should                                                              
it become available, and, if so, for how much.                                                                                  
                                                                                                                                
MS. MARSH responded  that the organization is  anticipating making                                                              
application in the amount of about $200,000.                                                                                    
                                                                                                                                
11:01:17 AM                                                                                                                   
                                                                                                                                
JOHN KISER,  Owner, Rocky  Bay Oysters,  underscored the  need for                                                              
farmers to  have access  to seed and  encouraged the committee  to                                                              
support a line  of funding to the mariculture industry.   However,                                                              
with access  to public  funds comes the  possibility of  waste, he                                                              
cautioned, and  said the loans should  be performance based.   The                                                              
oyster operation that  he owns has been idle for  eight years, and                                                              
he's been working with someone in Cordova to grow seed.                                                                         
                                                                                                                                
REPRESENTATIVE  NEUMAN noted  that the available  loan balance  is                                                              
$1.5 million,  and asked  whether small  operators, like  himself,                                                              
will be able  to benefit from what  is being proposed or  will the                                                              
larger  organizations   be  the   primary  beneficiaries   of  the                                                              
legislation.                                                                                                                    
                                                                                                                                
MR. KISER  replied  that the  fund began  as a good  idea but  not                                                              
many small  farmers were able  to take advantage  of it  given the                                                              
collateral  requirements.     Many   of  the  farmers,   including                                                              
himself, took out  small farm loans as an alternative.   If larger                                                              
entities  use this fund  it shouldn't  be a  problem, he  said, as                                                              
the  small  farmers  stand  to  benefit  from  the  production  of                                                              
shellfish seed.                                                                                                                 
                                                                                                                                
11:04:47 AM                                                                                                                   
                                                                                                                                
ERIC WYATT,  Owner, Blue Star  Oyster Company, stated  support for                                                              
HB  76  and said  the  company  maintains  an  oyster farm  and  a                                                              
nursery.    The  nursery  supplies  other  farmers;  however,  the                                                              
business  has been  dwindling due  to the  difficulty in  sourcing                                                              
the seed.   The fund should  prove helpful to hatcheries  and make                                                              
it  possible for  them to  expand in  a number  of ways.   If  the                                                              
hatcheries  have   an  opportunity   to  diversify,  it   will  be                                                              
beneficial to  the mariculture farmers,  he finished, and  said it                                                              
will allow for a variety of potential.                                                                                          
                                                                                                                                
11:06:29 AM                                                                                                                   
                                                                                                                                
ANGEL   DROBNICA,   Representative,   Aleutian   Pribilof   Island                                                              
Community Development  Association (APICDA) Community  Development                                                              
Quota  (CDQ),  stated  support for  the  CS  for  HB 76  and  said                                                              
creating stable fisheries  and local economies is the  goal of the                                                              
organizations with  which she is  affiliated.  Diversification  is                                                              
helpful  and economic  support  is  necessary.   As  chair of  the                                                              
investment  and  advisory  committee  for  APICDA,  she  said  the                                                              
investment   portfolios   are  affected   by   the  seasonal   and                                                              
fluctuating  characteristics of  the fisheries,  and the  addition                                                              
of  mariculture could  provide  a stabilizing  force,  as well  as                                                              
diversify the  investment profile.   The support for the  CS comes                                                              
from  a rural  community  development perspective.    The bill  is                                                              
important as  it will provide funding  for the advancement  of the                                                              
mariculture  industry.    Finding  funding  for  hatcheries  is  a                                                              
challenge,  and  the  ability  to produce  seed  is  essential  to                                                              
farming  operations.   The legislation  is  timely and  necessary,                                                              
she finished.                                                                                                                   
                                                                                                                                
REPRESENTATIVE  EASTMAN asked for  a cost estimate  to get  a seed                                                              
hatchery operational.                                                                                                           
                                                                                                                                
MS.  DROBNICA said  that the  size  and scope  of the  undertaking                                                              
makes the cost highly variable, and deferred further response.                                                                  
                                                                                                                                
11:10:16 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS asked  about  the amount  available                                                              
in the fund for disbursement.                                                                                                   
                                                                                                                                
MS. DROBNICA estimated the loan availability to be $4.5 million.                                                                
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS acknowledged  that the  fund has  a                                                              
balance  of  $4.5  million;  however,   as  mentioned  in  earlier                                                              
testimony,  only  $1.5  is effectively  available  for  loan,  and                                                              
asked Ms. Drobnica to speak to that situation.                                                                                  
                                                                                                                                
MS. DROBNICA deferred.                                                                                                          
                                                                                                                                
MS. CIONI-HAYWOOD explained  that the fund has a  balance of about                                                              
$4.5 million,  with  $500,000 currently  on loan.   She said  that                                                              
the  balance  is  available  for   lending,  outside  of  a  small                                                              
foreclosure  reserve  that  must  be  retained.    The  loans  are                                                              
expected to be  appropriately collateralized to avoid  the risk of                                                              
foreclosure.    About  $2  million   is  available  for  potential                                                              
hatchery  loans, leaving about  $2.2 million  available for  loans                                                              
to other entities.                                                                                                              
                                                                                                                                
11:13:18 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE NEUMAN  directed attention to the CS  page 5, lines                                                              
5-8, which read:                                                                                                                
                                                                                                                                
     Sec. 10. AS 16.10.915 is amended by adding new                                                                             
     subsection to read:                                                                                                        
          (e)  The total  of  balances outstanding  on  loans                                                                   
     made  to  borrowers  under AS  16.10.910(a)(2)  may  not                                                                   
     exceed 40  percent of the  principal of the  mariculture                                                                   
     revolving loan fund.                                                                                                       
                                                                                                                                
REPRESENTATIVE   NEUMAN    questioned   the   mathematics    being                                                              
presented.                                                                                                                      
                                                                                                                                
MS. CIONI-HAYWOOD  acknowledged the  difference, and said  that up                                                              
to 40 percent,  or $2 million for  hatchery loans, was to  be made                                                              
available,  and  deferred  to  the  sponsor's  staff  for  further                                                              
response.                                                                                                                       
                                                                                                                                
MS.  BOLLING  said, "That  is  correct."    In response  to  Chair                                                              
Stutes  request for  clarification  on which  statement should  be                                                              
considered correct, she deferred comment to Ms. Decker.                                                                         
                                                                                                                                
REPRESENTATIVE  NEUMAN noted  that  generally when  funds of  this                                                              
nature  are created  a  charter is  filed,  and  suggested a  copy                                                              
might be helpful.                                                                                                               
                                                                                                                                
MS.  DECKER said  the  reference to  40  percent  was intended  to                                                              
relate to  the initial $5 million  principal, thus there  would be                                                              
up to $2 million available for these types of new applicants.                                                                   
                                                                                                                                
REPRESENTATIVE NEUMAN  said the intent  is not clear in  the bill,                                                              
and expressed consternation  at not receiving a response  from the                                                              
director,  but rather  someone who  will  be an  applicant to  the                                                              
fund and benefit of the proposed legislation.                                                                                   
                                                                                                                                
11:16:23 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  EASTMAN referred  to  the CS  page 2,  Sec. 3,  to                                                              
note that  it indicates  eligible applicants  may be developing  a                                                              
mariculture business  or a hatchery, and asked whether  a hatchery                                                              
could be considered  a mariculture business or are  these mutually                                                              
exclusive terms.                                                                                                                
                                                                                                                                
MS. DECKER  responded that  the key term  is business  versus non-                                                              
profit.   The hatchery  and shellfish  enhancement entities  would                                                              
be non-profit organizations, she opined.                                                                                        
                                                                                                                                
11:17:12 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE FANSLER  referred to Sec.  10(e) [CS page  5, lines                                                              
5-8]  to  state agreement  with  Representative  Neuman's  concern                                                              
regarding  the need  to  clarify the  language  regarding how  the                                                              
available loan amount  is being determined, and offered  to submit                                                              
a friendly amendment.                                                                                                           
                                                                                                                                
MS. BOLLING  said the  sponsor would be  amenable to receiving  an                                                              
amendment.                                                                                                                      
                                                                                                                                
11:19:22 AM                                                                                                                   
                                                                                                                                
JERRY MCCUNE,  United Fishermen  of Alaska  (UFA), stated  support                                                              
for HB  76 and recalled  that similar  doubts were expressed  when                                                              
funding  for  hatchery  development  was  first  introduced.    He                                                              
expressed optimism  for a  good outcome  and said the  mariculture                                                              
industry  deserves to have  similar state  sanctioned support  and                                                              
opportunity to help it develop.                                                                                                 
                                                                                                                                
11:20:44 AM                                                                                                                   
                                                                                                                                
CHAIR STUTES  closed public  testimony and  announced the  bill as                                                              
held.                                                                                                                           
                                                                                                                                
The committee took an at-ease from 11:20 a.m. to 11:26 a.m.                                                                     
                                                                                                                                

Document Name Date/Time Subjects
HB076 Sponsor Statement 01.26.17.pdf HFSH 3/7/2017 10:00:00 AM
HB 76
HB076 Sectional Analysis 01.26.17.pdf HFSH 3/7/2017 10:00:00 AM
HB 76
HB076 ver D.PDF HFSH 3/7/2017 10:00:00 AM
HB 76
HB076 Fiscal Note DCCED-INV-03-03-17.pdf HFSH 3/7/2017 10:00:00 AM
HB 76
HB076 Fiscal Note DFG-CO-03-03-2017.pdf HFSH 3/7/2017 10:00:00 AM
HB 76
HB076 Supporting Document - AFDF 2017-03-01.pdf HFSH 3/7/2017 10:00:00 AM
HB 76
HB076 Supporting Document - Alaska Shellfish Growers Letter 03.03.17.pdf HFSH 3/7/2017 10:00:00 AM
HB 76
HB076 Supporting Document - CB Wrangell.pdf HFSH 3/7/2017 10:00:00 AM
HB 76
HB076 Supporting Document - Mariculture Task Force Letter 03.03.17.pdf HFSH 3/7/2017 10:00:00 AM
HB 76
HB076 Supporting Document - MSS Seafood & Ocean Products Industry.pdf HFSH 3/7/2017 10:00:00 AM
HB 76
HB076 Supporting Document - Oceans Alaska.pdf HFSH 3/7/2017 10:00:00 AM
HB 76
HB076 Supporting Document - Shelly Wright Letter 03.02.17.pdf HFSH 3/7/2017 10:00:00 AM
HB 76
HB076 Supporting Document - Southeast Conference Resolution 03.02.17.pdf HFSH 3/7/2017 10:00:00 AM
HB 76
HB076 Supporting Document - UFA.pdf HFSH 3/7/2017 10:00:00 AM
HB 76
HB076 Supporting Document-Alaska Municipal League 01.26.17.pdf HFSH 3/7/2017 10:00:00 AM
HB 76
HB076 Supporting Document-City and Borough of Wrangell 01.26.17.pdf HFSH 3/7/2017 10:00:00 AM
HB 76
HB076 Supporting Document-Ketchikan Gateway Borough 01.26.17.pdf HFSH 3/7/2017 10:00:00 AM
HB 76
HB076 Supporting Document-Southeast Conference 01.26.17.pdf HFSH 3/7/2017 10:00:00 AM
HB 76
HB128 Sponsor Statement 2.6.17.pdf HFSH 3/7/2017 10:00:00 AM
HB 128
HB128 Sectional Analysis 2.6.17.pdf HFSH 3/7/2017 10:00:00 AM
HB 128
HB128 ver D.PDF HFSH 3/7/2017 10:00:00 AM
HB 128
HB128 Fiscal Note DFG-DCF-02-24-17.pdf HFSH 3/7/2017 10:00:00 AM
HB 128
HB128 Fiscal Note DFG-CFEC-03-03-17.pdf HFSH 3/7/2017 10:00:00 AM
HB 128
HB128 Supporting Document-AK Mariculture Task Force 2.6.17.pdf HFSH 3/7/2017 10:00:00 AM
HB 128
HB128 Supporting Document - ASGA.pdf HFSH 3/7/2017 10:00:00 AM
HB 128
HB128 Supporting Document - AFDF 2017-03-01.pdf HFSH 3/7/2017 10:00:00 AM
HB 128
HB128 Supporting Document - CB Wrangell.pdf HFSH 3/7/2017 10:00:00 AM
HB 128
HB128 Supporting Document - MSS Seafood & Ocean Products Industry.pdf HFSH 3/7/2017 10:00:00 AM
HB 128
HB128 Supporting Document - MTF.pdf HFSH 3/7/2017 10:00:00 AM
HB 128
HB128 Supporting Document - Oceans Alaska.pdf HFSH 3/7/2017 10:00:00 AM
HB 128
HB128 Supporting Document - SEC.pdf HFSH 3/7/2017 10:00:00 AM
HB 128
HB128 Supporting Document - UFA.pdf HFSH 3/7/2017 10:00:00 AM
HB 128
HB076 Supporting Document - APICDA.pdf HFSH 3/7/2017 10:00:00 AM
HB 76
HB076 Supporting Document - SARDFA.pdf HFSH 3/7/2017 10:00:00 AM
HB 76
HB128 Opposing Document - Hillstrand 2.6.17.pdf HFSH 3/7/2017 10:00:00 AM
HB 128
HB076 Sectional ver R.pdf HFSH 3/7/2017 10:00:00 AM
HB 76
HB076 ver R FSH CS.pdf HFSH 3/7/2017 10:00:00 AM
HB 76
HB076 Explanation of Changes D to R.pdf HFSH 3/7/2017 10:00:00 AM
HB 76
HB128 Supporting Document - APICDA.pdf HFSH 3/7/2017 10:00:00 AM
HB 128
HB128 Supporting Document - SARDFA.pdf HFSH 3/7/2017 10:00:00 AM
HB 128
HB128 Supportintg Document-SWAMC.pdf HFSH 3/7/2017 10:00:00 AM
HB 128
HB128 Supporting document - AKCRRAB.pdf HFSH 3/7/2017 10:00:00 AM
HB 128
HB128 Opposing Document - Adkison Comments.pdf HFSH 3/7/2017 10:00:00 AM
HB 128
HB128 Opposing Document - Hillstrand 2.6.17.pdf HFSH 3/7/2017 10:00:00 AM
HB 128