Legislature(2011 - 2012)BARNES 124

03/16/2011 01:00 PM RESOURCES


Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Delayed to 1:15 pm Today --
+ HB 121 LOAN FUNDS:CHARTERS/MARICULTURE/MICROLOAN TELECONFERENCED
Moved CSHB 121(FSH) Out of Committee
+= HB 106 COASTAL MANAGEMENT PROGRAM TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= HJR 8 OPPOSE GENETICALLY ENGINEERED SALMON TELECONFERENCED
Moved CSHJR 8(RES) Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                         March 16, 2011                                                                                         
                           1:18 p.m.                                                                                            
                                                                                                                              
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Eric Feige, Co-Chair                                                                                             
Representative Paul Seaton, Co-Chair                                                                                            
Representative Peggy Wilson, Vice Chair                                                                                         
Representative Bob Herron                                                                                                       
Representative Cathy Engstrom Munoz                                                                                             
Representative Berta Gardner                                                                                                    
Representative Scott Kawasaki                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Alan Dick                                                                                                        
Representative Neal Foster                                                                                                      
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                                
Representative Alan Austerman                                                                                                   
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE JOINT RESOLUTION NO. 8                                                                                                    
Urging the United States Food  and Drug Administration to deny an                                                               
application to  sell genetically engineered salmon  in the United                                                               
States;  urging  compliance with  the  provision  of P.L.  110-85                                                               
(Food  and  Drug  Administration  Amendments Act  of  2007)  that                                                               
requires the Commissioner  of Food and Drugs to  consult with the                                                               
National  Marine Fisheries  Service of  the National  Oceanic and                                                               
Atmospheric  Administration regarding  a report  on environmental                                                               
risks  associated with  genetically engineered  seafood products;                                                               
and urging  that product labeling requirements  include the words                                                               
"Genetically Modified" prominently displayed  on the front of the                                                               
package if the application is  approved by the United States Food                                                               
and Drug Administration.                                                                                                        
                                                                                                                                
     - MOVED CSHJR 8(RES) OUT OF COMMITTEE                                                                                      
                                                                                                                                
HOUSE BILL NO. 121                                                                                                              
"An Act  establishing the commercial charter  fisheries revolving                                                               
loan fund,  the mariculture revolving  loan fund, and  the Alaska                                                               
microloan revolving  loan fund  and relating  to those  funds and                                                               
loans from those funds; and providing for an effective date."                                                                   
                                                                                                                                
     - MOVED CSHB 121(FSH) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE BILL NO. 106                                                                                                              
"An  Act extending  the termination  date of  the Alaska  coastal                                                               
management  program and  relating to  the extension;  relating to                                                               
the  review  of  activities  of  the  Alaska  coastal  management                                                               
program;  providing  for  an  effective   date  by  amending  the                                                               
effective date  of sec. 22, ch.  31, SLA 2005; and  providing for                                                               
an effective date."                                                                                                             
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HJR  8                                                                                                                  
SHORT TITLE: OPPOSE GENETICALLY ENGINEERED SALMON                                                                               
SPONSOR(s): REPRESENTATIVE(s) KAWASAKI                                                                                          
                                                                                                                                
01/18/11       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/18/11       (H)       FSH, RES                                                                                               
02/10/11       (H)       FSH AT 5:00 PM CAPITOL 120                                                                             
02/10/11       (H)       Moved CSHJR  8(FSH) Out of Committee                                                                   
02/10/11       (H)       MINUTE(FSH)                                                                                            
02/14/11       (H)       FSH RPT CS(FSH) NT 6DP                                                                                 
02/14/11       (H)       DP: HERRON, MILLER, PRUITT, JOHNSON,                                                                   
                         KAWASAKI, THOMPSON                                                                                     
03/11/11       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/11/11       (H)       Scheduled But Not Heard                                                                                
03/14/11       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/14/11       (H)       Heard & Held                                                                                           
03/14/11       (H)       MINUTE(RES)                                                                                            
03/16/11       (H)       RES AT 1:00 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 121                                                                                                                  
SHORT TITLE: LOAN FUNDS:CHARTERS/MARICULTURE/MICROLOAN                                                                          
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/24/11       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/24/11       (H)       FSH, RES, FIN                                                                                          
02/08/11       (H)       FSH AT 5:00 PM CAPITOL 120                                                                             
02/08/11       (H)       Heard & Held                                                                                           
02/08/11       (H)       MINUTE(FSH)                                                                                            
02/22/11       (H)       FSH AT 5:00 PM CAPITOL 120                                                                             
02/22/11       (H)       Heard & Held                                                                                           
02/22/11       (H)       MINUTE(FSH)                                                                                            
02/24/11       (H)       FSH AT 5:00 PM CAPITOL 120                                                                             
02/24/11       (H)       Moved CSHB 121(FSH) Out of Committee                                                                   
02/24/11       (H)       MINUTE(FSH)                                                                                            
02/25/11       (H)       FSH RPT CS(FSH) NT 4DP 1NR                                                                             
02/25/11       (H)       DP: MILLER, PRUITT, AUSTERMAN, THOMPSON                                                                
02/25/11       (H)       NR: JOHNSON                                                                                            
03/16/11       (H)       RES AT 1:00 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 106                                                                                                                  
SHORT TITLE: COASTAL MANAGEMENT PROGRAM                                                                                         
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/18/11       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/18/11       (H)       RES, FIN                                                                                               
03/07/11       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/07/11       (H)       Heard & Held                                                                                           
03/07/11       (H)       MINUTE(RES)                                                                                            
03/11/11       (H)       RES AT 1:00 PM BARNES 124                                                                              
03/11/11       (H)       Heard & Held                                                                                           
03/11/11       (H)       MINUTE(RES)                                                                                            
03/16/11       (H)       RES AT 1:00 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
CURTIS THAYER, Deputy Commissioner                                                                                              
Office of the Commissioner                                                                                                      
Department of Commerce, Community & Economic Development                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Presented HB 121 on behalf of the                                                                        
administration.                                                                                                                 
                                                                                                                                
WANETTA JO AYERS, Division Director                                                                                             
Division of Economic Development                                                                                                
Department of Commerce, Community & Economic Development                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  During the hearing on HB 121, answered                                                                   
questions.                                                                                                                      
                                                                                                                                
PAUL FUHS                                                                                                                       
Pack Alaska Sea Farms                                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 121.                                                                          
                                                                                                                                
SEAN RUDDY                                                                                                                      
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 121.                                                                          
                                                                                                                                
GERRY ANDREWS                                                                                                                   
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 121.                                                                          
                                                                                                                                
MEGHAN CLARK                                                                                                                    
Crabby Sisters                                                                                                                  
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 121.                                                                          
                                                                                                                                
TIM DILLON, City Manager                                                                                                        
City of Seldovia;                                                                                                               
Executive Director, Seldovia Holding Corporation                                                                                
Seldovia, Alaska                                                                                                                
POSITION STATEMENT:  Testified in support of HB 121.                                                                          
                                                                                                                                
ADAM GALINDO                                                                                                                    
Taco Loco                                                                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 121.                                                                          
                                                                                                                                
GLENN GRAY                                                                                                                      
Glenn Gray & Associates                                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   During  the hearing on  HB 106,  provided a                                                             
PowerPoint presentation  and answered questions about  the Alaska                                                               
Coastal Management  Program from the perspective  of a consultant                                                               
to some of the coastal districts.                                                                                               
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:18:33 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  PAUL   SEATON  called  the  House   Resources  Standing                                                             
Committee meeting to order at  1:18 p.m.  Representatives Seaton,                                                               
Feige, Kawasaki, P. Wilson, and  Gardner were present at the call                                                               
to  order.   Representatives  Herron  and  Munoz arrived  as  the                                                               
meeting  was  in progress.    Representative  Austerman was  also                                                               
present.                                                                                                                        
                                                                                                                                
          HJR  8-OPPOSE GENETICALLY ENGINEERED SALMON                                                                       
                                                                                                                                
1:18:48 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON  announced that  the first  order of  business is                                                               
HOUSE JOINT RESOLUTION  NO. 8, Urging the United  States Food and                                                               
Drug Administration  to deny an  application to  sell genetically                                                               
engineered salmon  in the United  States; urging  compliance with                                                               
the  provision  of  P.L. 110-85  (Food  and  Drug  Administration                                                               
Amendments Act  of 2007) that  requires the Commissioner  of Food                                                               
and Drugs to  consult with the National  Marine Fisheries Service                                                               
of the National Oceanic  and Atmospheric Administration regarding                                                               
a  report  on  environmental risks  associated  with  genetically                                                               
engineered  seafood products;  and urging  that product  labeling                                                               
requirements   include    the   words    "Genetically   Modified"                                                               
prominently  displayed  on  the  front  of  the  package  if  the                                                               
application  is  approved by  the  United  States Food  and  Drug                                                               
Administration.  [Before the committee was CSHJR 8(FSH).]                                                                       
                                                                                                                                
CO-CHAIR SEATON  opened public testimony  on the resolution.   He                                                               
then closed it after ascertaining that no one wished to testify.                                                                
                                                                                                                                
1:19:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON moved  to adopt  Amendment 1,  labeled 27-                                                               
LS0376\M.1, Kane, 3/9/11, which read:                                                                                           
                                                                                                                                
     Page 2, following line 13:                                                                                                 
          Insert a new clause to read:                                                                                          
          "WHEREAS the applicant has already bred and                                                                         
        produced transgenic salmon and shipped them for                                                                         
     commercial market tests; and"                                                                                              
                                                                                                                                
There being no objection, Amendment 1 was adopted.                                                                              
                                                                                                                                
1:20:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARDNER noted that Alaska  has so much invested in                                                               
its salmon,  as well  as its  image and  branding of  the state's                                                               
salmon as  being natural, sustainably  harvested, and  from clean                                                               
waters.   Any introduction of genetically  modified fish, whether                                                               
accidental or however, is terrifying,  she said.  She offered her                                                               
support for the resolution.                                                                                                     
                                                                                                                                
REPRESENTATIVE KAWASAKI,  in response to Co-Chair  Seaton, stated                                                               
that the bill before the committee is Version M [27-LS0376\M].                                                                  
                                                                                                                                
1:22:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KAWASAKI moved to  report CSHJR 8(FSH), as amended                                                               
out  of   committee  with  individual  recommendations   and  the                                                               
accompanying zero fiscal  note.  There being  no objection, CSHJR                                                               
8(RES) was reported from the House Resources Standing Committee.                                                                
                                                                                                                                
        HB 121-LOAN FUNDS:CHARTERS/MARICULTURE/MICROLOAN                                                                    
                                                                                                                                
1:23:04 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON announced  that the  next order  of business  is                                                               
HOUSE BILL NO.  121, "An Act establishing  the commercial charter                                                               
fisheries  revolving loan  fund, the  mariculture revolving  loan                                                               
fund, and the  Alaska microloan revolving loan  fund and relating                                                               
to those funds  and loans from those funds; and  providing for an                                                               
effective date."  [Before the committee was CSHB 121(FSH).]                                                                     
                                                                                                                                
1:23:43 PM                                                                                                                    
                                                                                                                                
CURTIS THAYER,  Deputy Commissioner, Office of  the Commissioner,                                                               
Department   of  Commerce,   Community  &   Economic  Development                                                               
(DCCED), said HB 121 would create  a suite of three new revolving                                                               
loan  funds  that would  help  Alaska  entrepreneurs build  their                                                               
businesses  and contribute  to the  state's  economy.   Revolving                                                               
loan  funds have  a  proven track  record in  the  state and  are                                                               
administered within  the department's  financing section.   These                                                               
new revolving loan  funds would make it  easier for entrepreneurs                                                               
to invest  in business expansion, which  would stimulate economic                                                               
activity.   The  bill would  incentivize the  development of  the                                                               
shellfish mariculture  industry, assist Alaska  charter operators                                                               
in acquiring halibut permits to  transition to the new regulatory                                                               
and  management regime  instituted  by the  National Oceanic  and                                                               
Atmospheric    Administration    (NOAA);     and    would    seed                                                               
microenterprise development across the state.                                                                                   
                                                                                                                                
MR.  THAYER  explained  that  the  Commercial  Charter  Fisheries                                                               
Revolving Loan Fund would provide  access to capital for Alaskan-                                                               
owned  charters.   It would  repatriate permits  to Alaskans  and                                                               
would  increase economic  benefits  to  Alaska by  re-circulating                                                               
earnings from this sector into  Alaska.  He informed members that                                                               
an  interest rate  change  in a  previous  committee of  referral                                                               
could  conflict with  the  private sector  loan  program and  the                                                               
department  is  working  with  that  committee  to  rectify  this                                                               
conflict as the bill moves forward.                                                                                             
                                                                                                                                
1:25:22 PM                                                                                                                    
                                                                                                                                
MR.  THAYER  said  the  Mariculture  Revolving  Loan  Fund  would                                                               
provide  a spark  to  a growing  industry  with great  year-round                                                               
potential  for  coastal  Alaska  communities  and  entrepreneurs.                                                               
Currently, 67  farms are permitted in  the state, but only  25 of                                                               
them are producing  farms - 10 in Southeast,  15 in Southcentral.                                                               
Twenty years ago in British  Columbia, mariculture was a $500,000                                                               
industry;  today  it  is  a  $30  million  industry  because  the                                                               
province seeded  these mariculture  forms.   Alaska's mariculture                                                               
economy is  currently at  $473,000 and  this revolving  loan fund                                                               
would act to seed this industry.                                                                                                
                                                                                                                                
MR. THAYER stated  that the Alaska Microloan  Revolving Loan Fund                                                               
would help small businesses grow  by providing loans for start-up                                                               
costs,   working   capital,   inventory  expansion,   and   other                                                               
commercial purposes.   Alaska  is one of  a few  remaining states                                                               
without a microloan  program, which has a proven  track record in                                                               
other  states  and  through  the  Small  Business  Administration                                                               
(SBA).   He reminded members that  last year this very  same bill                                                               
passed the  House 40-0, and  said that  this year it  is packaged                                                               
with some other revolving loan funds.                                                                                           
                                                                                                                                
1:26:28 PM                                                                                                                    
                                                                                                                                
MR.  THAYER  noted  that  these  programs  would  complement  two                                                               
existing  small  business  loan   programs  administered  by  the                                                               
Division of  Economic Development  - the Small  Business Economic                                                               
Development  Revolving  Loan  Fund   and  the  Rural  Development                                                               
Initiative  Fund,  both  of which  are  geared  toward  long-term                                                               
financing.    Small businesses  are  the  number one  creator  of                                                               
private-sector  jobs,  so  HB  121 would  be  good  for  Alaska's                                                               
economy and  families because it would  spur sustainable economic                                                               
growth in the state.  The department  is on a mission to foster a                                                               
business climate in Alaska that  is conducive to job creation and                                                               
economic growth.  The department  is examining how it operates in                                                               
an effort  to be  more responsive  to the  needs of  the business                                                               
community and  deliver services that  are relevant and  useful to                                                               
the  private  sector.    Recent   realignment  of  resources  and                                                               
services  within   the  department  has  bolstered   the  state's                                                               
economic development toolbox and  is reasserting the state's role                                                               
in creating a business-friendly environment in Alaska.                                                                          
                                                                                                                                
MR. THAYER  added that  the department  has spent  a lot  of time                                                               
listening  to  the private  sector.    The commissioner  recently                                                               
formed  an economic  advisory task  force  comprised of  industry                                                               
leaders  that  has  been  instrumental in  reaching  out  to  the                                                               
private  sector.     This   was  done   through  non-governmental                                                               
organizations,  trade associations,  helping this  administration                                                               
plot a  productive course to economic  development. Additionally,                                                               
the    department   solicited    input   from    non-governmental                                                               
organizations,  trade associations,  Alaska Regional  Development                                                               
Organizations  (ARDORs),  Alaska  Native  Claims  Settlement  Act                                                               
(ANCSA) corporations,  and legislators.   A commonly  heard theme                                                               
has  been  to increase  financing  options  for small  businesses                                                               
because  access   to  critically   needed  capital  can   be  the                                                               
difference between simply  getting by, and thriving.   He said HB                                                               
121 is a step in the right direction and urged its passage.                                                                     
                                                                                                                                
1:28:03 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON  requested an explanation about  the relationship                                                               
of microloans in terms of HB 121 and ARDORS.                                                                                    
                                                                                                                                
MR. THAYER replied  that, currently, one of the  twelve ARDORS in                                                               
the state has a very successful  microloan program that is in the                                                               
Kenai  Borough.   In the  past  the department  and borough  have                                                               
discussed  working together  and having  the department  possibly                                                               
operate the  borough's fund.   The  department would  continue to                                                               
work  with  the ARDORS  individually  and  actually prefers  that                                                               
people work  with the  ARDORS first before  coming to  the state.                                                               
Since only this  one ARDOR is providing a  microloan program, the                                                               
majority of the state does not  have one.  In further response to                                                               
Co-Chair  Seaton,   Mr.  Thayer  confirmed  that   the  microloan                                                               
provision of HB  121 would not override or  necessarily replace a                                                               
microloan program from  an ARDOR, but if an ARDOR  wanted to work                                                               
with the department  in doing a microloan  program this provision                                                               
would enable it.                                                                                                                
                                                                                                                                
1:29:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P.  WILSON  asked  whether a  person  who  has  a                                                               
microloan from  an ARDOR would  also be  able to get  a microloan                                                               
from the state.                                                                                                                 
                                                                                                                                
MR. THAYER deferred  to the director of the  Division of Economic                                                               
Development for an answer.                                                                                                      
                                                                                                                                
WANETTA  JO  AYERS,  Division   Director,  Division  of  Economic                                                               
Development,  Department   of  Commerce,  Community   &  Economic                                                               
Development,  replied  it  is conceivable  that  there  could  be                                                               
circumstances  where that  would happen,  but the  borrower would                                                               
have to have the collateral in  place to make that possible.  The                                                               
circumstances of  that individual borrower, the  project, and the                                                               
kind  of collateral  that the  borrower can  bring forward  would                                                               
have to be looked at.                                                                                                           
                                                                                                                                
REPRESENTATIVE  P.   WILSON  observed  that  two   of  the  three                                                               
revolving loan  funds are water  related.  She presumed  that the                                                               
microloan  fund  would  be  available   for  any  other  kind  of                                                               
business.                                                                                                                       
                                                                                                                                
MS. AYERS responded that is correct.                                                                                            
                                                                                                                                
1:30:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON  understood  that   a  microloan  is  what                                                               
financial institutions call pre-bankable.                                                                                       
                                                                                                                                
MS. AYERS answered that in  terms of that specific definition she                                                               
would say that most of these  borrowers would have issues in that                                                               
by definition  they would  have been turned  down by  an existing                                                               
private lender, but  may be able to achieve  the circumstances of                                                               
the microloan fund in order to get to a credit decision.                                                                        
                                                                                                                                
REPRESENTATIVE HERRON  agreed, saying  his understanding  of this                                                               
proposed legislation  is that microloans are  for individuals who                                                               
have lack of collateral.   He asked whether a person's employment                                                               
and credit history are considered.                                                                                              
                                                                                                                                
MS. AYERS replied  that all of those factors  would be considered                                                               
by  a loan  officer prior  to being  taken to  a committee  for a                                                               
decision.                                                                                                                       
                                                                                                                                
1:32:06 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE asked whether these  loans would be made to people                                                               
who previously had not qualified for commercial loans.                                                                          
                                                                                                                                
MR. THAYER  responded yes,  there is a  turn-down provision  by a                                                               
commercial institution before a person goes to the state.                                                                       
                                                                                                                                
CO-CHAIR  FEIGE presumed  these loans  are inherently  more risky                                                               
than standard commercial loans.                                                                                                 
                                                                                                                                
MR. THAYER answered yes.                                                                                                        
                                                                                                                                
CO-CHAIR  FEIGE inquired  whether  the interest  rates should  be                                                               
higher than what  has been indicated in order to  account for the                                                               
risk.                                                                                                                           
                                                                                                                                
MS. AYERS replied  that characterizing these as  riskier loans is                                                               
correct; however,  that risk would  be mitigated  largely through                                                               
collateral requirements.   The interest  rates are what  would be                                                               
common with other comparable microloan  programs offered in other                                                               
states.                                                                                                                         
                                                                                                                                
CO-CHAIR FEIGE asked  what collateral would be  acceptable to the                                                               
commissioner.                                                                                                                   
                                                                                                                                
MS. AYERS  responded that  in the  past, collateral  has included                                                               
real property, fishing  vessels, gear and equipment,  and in some                                                               
cases inventory is considered.   Based on the risk and assessment                                                               
of the loan officer, a determination  will be made about how much                                                               
collateral  is required  for achieving  the loan.   The  national                                                               
average  microloan  value is  about  $12,000  to $13,000.    [The                                                               
division] is  requiring anything above  $35,000 to have  the turn                                                               
down and  expects it  will be  close to  or slightly  higher than                                                               
that number.                                                                                                                    
                                                                                                                                
1:34:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GARDNER said she is  very glad to see that someone                                                               
with past-due  child support obligations  cannot receive  a loan.                                                               
She inquired  how the department  would track whether  a borrower                                                               
had fulfilled  the requirements in  Section 1  of the bill.   She                                                               
further  inquired  whether  the  sponsor would  be  receptive  to                                                               
requiring a report to the legislature regarding repayments.                                                                     
                                                                                                                                
MS.  AYERS, regarding  Section 1,  explained that  the department                                                               
has  several  objective measurements  as  to  whether things  are                                                               
manufactured  in  the  state  of  Alaska,  including  the  Alaska                                                               
product  preference  statute and  the  Made  in Alaska  standard.                                                               
There  would  be  ways  for  borrowers  to  determine  whether  a                                                               
particular vendor  had achieved  those standards.   Additionally,                                                               
that is guidance for the loan officers as well.                                                                                 
                                                                                                                                
MR. THAYER pointed  out that both of  the aforementioned programs                                                               
are run by DCCED.                                                                                                               
                                                                                                                                
MS.  AYERS,  regarding the  reporting  standard,  noted that  the                                                               
department  does provide  an annual  report  that indicates  loan                                                               
origination  and servicing  activities,  as  well as  performance                                                               
standards such as defaults and delinquencies.                                                                                   
                                                                                                                                
1:37:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HERRON asked  what the prediction is  for the rate                                                               
of successful microloan repayment.                                                                                              
                                                                                                                                
MS. AYERS answered  that [the department] believes it  will be in                                                               
the range of 90-95 percent.   While there is no definitive source                                                               
that  provides  a  national  average,  the  MicroCapital  Monitor                                                               
estimates  that the  average  default rate  is  about 5  percent,                                                               
which  tracks fairly  well with  the department's  Small Business                                                               
Economic Development Revolving Loan Fund.                                                                                       
                                                                                                                                
1:37:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P. WILSON inquired as  to what the default rate is                                                               
for the Commercial Fishing Revolving Loan Fund.                                                                                 
                                                                                                                                
MS. AYERS replied that she does  not have that specific number on                                                               
the top  of her head,  but in general  for last year  the default                                                               
rate was less than 1 percent for the entire portfolio.                                                                          
                                                                                                                                
1:38:24 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON opened public testimony.                                                                                        
                                                                                                                                
PAUL FUHS, Pack Alaska Sea Farms,  said he first went to work for                                                               
Pack Alaska  Sea Farms  to help  untangle some  extremely complex                                                               
regulatory  issues,  but he  came  to  believe  so much  in  this                                                               
industry and its potential that he  became a part-owner of one of                                                               
these farms,  primarily focusing  on geoducks.   The  farms began                                                               
putting in  seed about eight  years ago and the  first successful                                                               
harvest of geoducks  was just this last month.   An adult geoduck                                                               
ideal for the Chinese and  Japanese markets weighs about one-and-                                                               
a-half to two pounds.                                                                                                           
                                                                                                                                
MR. FUHS  said the timing  of this  loan program is  good because                                                               
the  technology has  now  been proven.    People mortgaged  their                                                               
houses and drained their bank accounts  to get to this point.  It                                                               
takes six to  seven years for a geoduck to  reach market size, so                                                               
the fairly  long loan  repayment terms in  the bill  are balanced                                                               
with  the lifecycle  of  these animals.    Justification for  the                                                               
state to establish this program is that  it is hard for a bank to                                                               
give a  loan when the  person cannot  show any revenue  coming in                                                               
for six or  seven years.  Additionally, there  are lease expenses                                                               
to the  Department of Natural  Resources (DNR); for  example, his                                                               
farm pays an annual lease to DNR of about $10,000.                                                                              
                                                                                                                                
1:40:33 PM                                                                                                                    
                                                                                                                                
MR. FUHS  said economic development  is another reason  for doing                                                               
this.   In  addition to  the farmer,  there is  quite a  chain of                                                               
people involved  in the product.   Behind the numbers  of overall                                                               
harvest is  the boat  that is hired  for planting,  the mechanics                                                               
who work on the boat, the  people the fuel is purchased from, the                                                               
processing  of  the geoducks  which  is  done during  the  salmon                                                               
offseason thereby  allowing processing staff to  work longer, the                                                               
purchase of seed from the  Seward hatchery, the transportation of                                                               
the seed,  and the shipping of  the product.  During  his time as                                                               
the  commissioner  of the  Department  of  Commerce, Community  &                                                               
Economic Development  quite a few  years back, the  loan programs                                                               
for fisheries were  very successful with a very  low default rate                                                               
and therefore he expects the same with this.                                                                                    
                                                                                                                                
1:41:52 PM                                                                                                                    
                                                                                                                                
SEAN RUDDY stated that he has  an oyster farm in Kachemak Bay and                                                               
is  part of  the Kachemak  Shellfish Mariculture  Association and                                                               
the  Kachemak  Shellfish Growers  Co-op.    He has  been  farming                                                               
oysters  for  about  eight  years   and  this  would  be  a  very                                                               
beneficial fund,  especially for new  farmers.  In  this business                                                               
it  takes a  long time  to  become profitable.   Furthermore,  it                                                               
takes many  resources, including  money, to make  it happen.   He                                                               
had to buy his own boat,  build his own boat, customize gear, get                                                               
gear to hold  the oysters on the  farm, pay his DNR  fees as well                                                               
as  Department of  Environmental Conservation  (DEC) fees,  along                                                               
with the  labor of working on  the farm.  He  urged the committee                                                               
to approve the loan fund.                                                                                                       
                                                                                                                                
1:43:26 PM                                                                                                                    
                                                                                                                                
GERRY ANDREWS  offered his  agreement with  all of  the testimony                                                               
provided by  Mr. Thayer.   He  said he has  owned Icy  Bay Oyster                                                               
Company  since 2005  as a  startup.   He  has yet  to produce  an                                                               
oyster, but  that is not because  he didn't try.   One big hurdle                                                               
for an  individual like himself  coming into the industry  is the                                                               
financing and not having that  legacy of production, and this has                                                               
slowed down getting into production.   As a result he has changed                                                               
his business  plan and  is now  looking at  purchasing a  farm in                                                               
Kachemak Bay and becoming a  member of the Kachemak Bay Shellfish                                                               
Mariculture  Association and  also the  greater community  of the                                                               
[Alaska Shellfish  Growers Association].  He  urged the committee                                                               
to move HB 121 forward.                                                                                                         
                                                                                                                                
1:45:19 PM                                                                                                                    
                                                                                                                                
MEGHAN CLARK, Crabby Sisters,  testified that her Anchorage-based                                                               
seafood company  brought its product  of gluten-free  Alaska king                                                               
crab cakes to market this past  January.  Over the last two years                                                               
her company  has developed a  strong relationship with  its local                                                               
small business  development center and  have taken over  40 hours                                                               
of  group trainings  and seminars.   Additionally,  she [and  her                                                               
business partner]  routinely meet  with their  business advisors,                                                               
specifically  focusing  on  the development  of  their  company's                                                               
current  financial   analysis  and   future  projections.     Her                                                               
company's market research and  development and current production                                                               
numbers  demonstrate a  high consumer  and commercial  demand for                                                               
its  product, and  this demand  means growth  and expansion.   To                                                               
achieve this growth her small,  local manufacturing business will                                                               
need a loan  to meet its cash flow needs.   Unfortunately, it has                                                               
been her experience that despite  her ability to demonstrate good                                                               
character, capacity  to repay,  favorable market  conditions, and                                                               
previous  small  business  experience,   her  company  is  simply                                                               
categorized as  a startup lacking  marketing history, which  is a                                                               
red flag for financial institutions.   This microloan legislation                                                               
would  assist  in breaking  down  this  barrier to  expansion  by                                                               
providing sufficient cash  flow to grow her Alaska  business at a                                                               
healthy and steady pace.                                                                                                        
                                                                                                                                
1:47:25 PM                                                                                                                    
                                                                                                                                
TIM DILLON,  City Manager, City of  Seldovia; Executive Director,                                                               
Seldovia  Holding Corporation,  said the  community of  Seldovia,                                                               
like  many  small  coastal  communities  in  Alaska,  has  had  a                                                               
struggling economy for years.   "Things are starting to come back                                                               
and this kind of an opportunity,  this kind of a loan fund, would                                                               
be a huge  shot in the arm for a  small community like Seldovia."                                                               
He encouraged the committee to move HB 121 forward.                                                                             
                                                                                                                                
1:48:29 PM                                                                                                                    
                                                                                                                                
ADAM  GALINDO, Taco  Loco, stated  that he  is representing  Taco                                                               
Loco products.   He is a strong  supporter of HB 121.   Taco Loco                                                               
is an established  business that is one of  Alaska's largest food                                                               
manufacturers, but it  is having a hard time  securing capital to                                                               
grow  its business  and  create  jobs without  having  to pay  12                                                               
percent interest  and put 35 percent  down to the banks  that the                                                               
business has dealt  with for many years.  The  current economy is                                                               
putting   a  crunch   on   a  lot   of   Alaska  businesses   and                                                               
manufacturers.  He urged that HB 121 be passed from committee.                                                                  
                                                                                                                                
CO-CHAIR  SEATON   closed  public  testimony  on   HB  121  after                                                               
ascertaining that no one else wished to testify.                                                                                
                                                                                                                                
1:50:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P. WILSON  inquired whether  the startup  funding                                                               
for  the provisions  of HB  121 would  come from  the "Commercial                                                               
Fishing Revolving Loan".                                                                                                        
                                                                                                                                
MS. AYERS replied  no, that is not part of  the proceeds from the                                                               
Commercial Fishing Revolving  Loan Fund.  In  response to further                                                               
questions  from  Representative  P. Wilson,  she  confirmed  that                                                               
under the  current fiscal  note the funding  would come  from the                                                               
general  fund.    Currently,  capitalization  for  the  Microloan                                                               
Revolving  Loan  Fund would  be  $3.5  million, for  the  halibut                                                               
commercial charters revolving  loan fund it would  be $5 million,                                                               
and for the [Alaska] Mariculture  Revolving Loan Fund it would be                                                               
$3 million.   She said there  would also be a  separate operating                                                               
cost but she does not have that amount in front of her.                                                                         
                                                                                                                                
CO-CHAIR  SEATON  interjected that  fiscal  note  number 1  would                                                               
provide $169,000 for  operating expenses in Fiscal  Year 2012 and                                                               
it would be approximately the same amount for subsequent years.                                                                 
                                                                                                                                
1:52:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MUNOZ  asked  whether   current  loan  funds  are                                                               
accessible  to business  people  involved in  mariculture or  the                                                               
commercial charter fisheries.                                                                                                   
                                                                                                                                
MS. AYERS  responded that there  is not currently  something that                                                               
is  designated for  these specific  activities of  mariculture or                                                               
sport fish.  With regard to  microloans, there are two funds more                                                               
designed for  long-term financing:   the Small  Business Economic                                                               
Development  Loan  and  the Rural  Development  Initiative  Fund.                                                               
However,  both   of  those   funds  have   certain  restrictions,                                                               
geographic restrictions,  and other complications due  to federal                                                               
requirements  that  make it  difficult  to  lend on  a  statewide                                                               
basis.                                                                                                                          
                                                                                                                                
1:54:02 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE  allowed that  it sounds  from the  testimony like                                                               
there  is  a  fair  amount  of  difficulty  in  getting  standard                                                               
financing  through normal  commercial channels.   However,  he is                                                               
loathe to put  the state in the position of  being a bank because                                                               
the  state would  then be  competing  with banking  institutions,                                                               
although he recognizes  that in this case it does  have a certain                                                               
degree of  merit.  He  inquired of  the committee and  Mr. Thayer                                                               
whether it  would be  wise to  put a sunset  on this,  keeping in                                                               
mind that while economic times  may be tough currently they could                                                               
be rosy in 10 years.                                                                                                            
                                                                                                                                
REPRESENTATIVE  P.  WILSON  commented that  for  the  "commercial                                                               
fishermen's  revolving loan"  the fisherman's  boat or  permit is                                                               
the  collateral so  that person  will do  everything possible  to                                                               
keep from  losing his or  her boat  because that is  the person's                                                               
only livelihood.   She asked what the collateral would  be in the                                                               
case  of a  shellfish farmer  who might  have another  livelihood                                                               
besides  the shellfish  farm or  is retired  and undertaking  the                                                               
farm as an investment.                                                                                                          
                                                                                                                                
1:56:55 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON  pointed out that  many times the  collateral for                                                               
the loan also  includes the person's house or  other real estate,                                                               
not just  the boat.   Oftentimes a  boat does not  matter because                                                               
the borrower  needs to  have other collateral  for backup  on the                                                               
loan.  He  cautioned that since this is a  revolving loan fund, a                                                               
term on  it would create  uncertainty for  prospective borrowers.                                                               
People  would  be unable  to  make  business decisions  when  the                                                               
sunset date is approaching.   He pointed out that the legislature                                                               
does have  the ability to make  adjustments in the future  to the                                                               
revolving loan funds if it is found that they are necessary.                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON noted  that  Ms.  Ayers earlier  confirmed                                                               
that this is  a pre-bankable model.  Had Ms.  Ayers said that the                                                               
repayment rates might  fall below 90 percent, then  he would have                                                               
been concerned.   But  a 95-97 percent  repayment rate  should be                                                               
looked  at  in  a  positive  way and  not  be  looked  at  overly                                                               
critically because the  important part in this  repayment plan is                                                               
the borrowers.   He  said he  thinks it  is an  important finance                                                               
method that the state should deploy.                                                                                            
                                                                                                                                
1:59:45 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE  questioned whether  DCCED would support  a sunset                                                               
provision in the bill.                                                                                                          
                                                                                                                                
MR. THAYER  answered that if it  is the will of  the legislature,                                                               
then  the department  would support  a sunset  provision for  the                                                               
success of  the loan program  moving forward.  However,  while HB                                                               
121 was being  drafted the department worked  with the Commercial                                                               
Fishing and  Agriculture Bank (C-FAB)  and the  banking community                                                               
to be very  careful not to compete with the  private sector.  The                                                               
department would like to see this bill pass.                                                                                    
                                                                                                                                
2:01:37 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 2:01 p.m. to 2:05 p.m.                                                                       
                                                                                                                                
2:05:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MUNOZ said  she likes HB 121  because it addresses                                                               
the  funding problems  that certain  industries  in Alaska  have.                                                               
She understood  that the first  years for a new  shellfish grower                                                               
are very cost intensive and it  takes seven to eight years before                                                               
any income  is derived.   She  asked whether  the loans  that are                                                               
specifically  for  mariculture  farmers   would  take  that  into                                                               
account.                                                                                                                        
                                                                                                                                
MR. THAYER  replied that  it does  and a  borrower may  defer the                                                               
interest for up to six years,  subject to an arrangement with the                                                               
Division  of  Economic  Development   loan  officer.    This  was                                                               
addressed by the prior committee,  the House Special Committee on                                                               
Fisheries, he noted.                                                                                                            
                                                                                                                                
2:07:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MUNOZ  inquired whether the $169,000  in operating                                                               
costs during the first years would  come from the general fund or                                                               
the revolving loan fund.                                                                                                        
                                                                                                                                
MR. THAYER  responded that  those costs  would be  funded through                                                               
the  fund  itself.    In  further  response,  he  confirmed  that                                                               
interest  payback/revenue generation  would  occur  in 2012,  the                                                               
first year of operation, and in 2013.                                                                                           
                                                                                                                                
2:08:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MUNOZ  moved  to  report  CSHB  121(FSH)  out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal  notes.   There  being  no  objection, CSHB  121(FSH)  was                                                               
reported from the House Resources Standing Committee.                                                                           
                                                                                                                                
               HB 106-COASTAL MANAGEMENT PROGRAM                                                                            
                                                                                                                                
2:08:54 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON announced  that the  next order  of business  is                                                               
HOUSE BILL  NO. 106,  "An Act extending  the termination  date of                                                               
the  Alaska  coastal  management  program  and  relating  to  the                                                               
extension; relating  to the  review of  activities of  the Alaska                                                               
coastal management  program; providing  for an effective  date by                                                               
amending the  effective date of  sec. 22,  ch. 31, SLA  2005; and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
CO-CHAIR  SEATON noted  that the  committee had  previously asked                                                               
questions about how the Alaska  Coastal Management Program works,                                                               
and Mr. Gray, a consultant to  some of the coastal districts, was                                                               
asked to provide information from a consultant's perspective.                                                                   
                                                                                                                                
2:10:11 PM                                                                                                                    
                                                                                                                                
GLENN  GRAY, Glenn  Gray &  Associates, noted  that he  worked 11                                                               
years in  the Division of Governmental  Coordination coordinating                                                               
oil and gas reviews, primarily  mineral reviews, and for the past                                                               
7  years  he has  worked  for  coastal districts  throughout  the                                                               
state.   In response  to several  questions from  Co-Chair Feige,                                                               
Mr. Gray confirmed  that he worked for 11 years  for the Division                                                               
of Governmental  Coordination, which at  that time was  where the                                                               
Alaska Coastal Management Program (ACMP)  was located, but now he                                                               
is working as a private individual.                                                                                             
                                                                                                                                
MR. GRAY began  by pointing out that the ACMP  is now, and always                                                               
has been,  a development program.   It is a way  to make projects                                                               
better;  very few  projects have  ever been  stopped through  the                                                               
program.  It  is a one-size-fits-all process, so  a large project                                                               
such as  a huge mine or  oil and gas development  will follow the                                                               
same process  as is  outlined on  slide 2.   A  good part  of the                                                               
program is  the pre-application  services that the  Department of                                                               
Natural Resources  (DNR) gives when  requested by  the applicant.                                                               
This service gets  everyone around the table at a  meeting to try                                                               
and fix any problems before  the applications are even submitted.                                                               
Once  there is  a  complete packet,  which  includes all  permits                                                               
except  for   Department  of  Environmental   Conservation  (DEC)                                                               
permits  since they  are carved  out of  the program,  the review                                                               
begins on  what is called  "Day 1".   All reviews will  either go                                                               
through a  30-day review or  a 50-day  review, which is  a little                                                               
misleading because the  reviews can be extended up to  90 days or                                                               
longer for some types of reviews.                                                                                               
                                                                                                                                
2:12:48 PM                                                                                                                    
                                                                                                                                
MR.  GRAY said  the first  milestone  is on  day 13  of a  30-day                                                               
review  or day  25 of  a  50-day review  when one  of the  review                                                               
participants  can request  additional information.   Next  is the                                                               
comment deadline  on day  17 or  day 30,  which is  the timeframe                                                               
applicable to all state and  federal agencies, coastal districts,                                                               
and the  applicant.  [By  day 24  or day 44]  DNR, or one  of the                                                               
other departments if  it is a single agency  review, will develop                                                               
a proposed consistency determination.                                                                                           
                                                                                                                                
MR.  GRAY  said  "consistency"  means  that  this  review  is  to                                                               
determine whether  that project is consistent  with the statewide                                                               
standards  of  the  ACMP and  the  coastal  district  enforceable                                                               
policies.  He pointed out that  very few projects are elevated to                                                               
the level of the DNR commissioner.   Prior to 2003, it would have                                                               
been  the divisions  of the  three resource  agencies first,  and                                                               
then the  commissioners.  Now, under  the new program, it  is the                                                               
DNR  commissioner.   If  there  are  no elevation  requests,  the                                                               
review will  go directly to  the final  consistency determination                                                               
on day 30 or day 50.                                                                                                            
                                                                                                                                
2:14:13 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE  inquired  whether   projects  are  not  elevated                                                               
because  of the  pre-application process,  or because  things are                                                               
clearer than they  were prior to 2003, or because  someone in the                                                               
Division of Coastal  and Ocean Management (DCOM)  is choosing not                                                               
to elevate it.                                                                                                                  
                                                                                                                                
MR. GRAY replied  that the review participants  decide whether to                                                               
elevate that  proposed decision.   He understood that  both today                                                               
and  before  2003, less  than  1  percent  of the  projects  were                                                               
elevated or  appealed in any way.   This number is  small because                                                               
this review  process is designed  to identify the  problems early                                                               
on  and  resolve  them,  even if  there  are  no  pre-application                                                               
meetings.                                                                                                                       
                                                                                                                                
2:15:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P.  WILSON asked  whether "one  size fits  all" is                                                               
good or bad.                                                                                                                    
                                                                                                                                
MR.  GRAY responded  that, in  his opinion,  a process  for large                                                               
projects  would solve  a lot  of  the problems  with the  program                                                               
because 95 percent of the  projects are not controversial.  Those                                                               
5  percent  that are  [controversial]  are  sometimes the  larger                                                               
projects and  it is  hard to  do a  "cookie-cutter" process.   In                                                               
further response  to Representative  P. Wilson, Mr.  Gray related                                                               
his  belief that  two different  processes would  be better.   He                                                               
noted that British Columbia does such.                                                                                          
                                                                                                                                
2:15:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P. WILSON inquired as to what causes elevation.                                                                  
                                                                                                                                
MR.  GRAY  explained that  the  opportunity  for elevation  could                                                               
occur when someone believes there  are greater impacts to coastal                                                               
uses  and  resources  and  the  alternative  measures  would  not                                                               
mitigate the impacts.                                                                                                           
                                                                                                                                
REPRESENTATIVE P. WILSON  asked if there is a  specific amount of                                                               
time  with  which  the  DNR  commission  has  to  deal  with  the                                                               
[elevation].                                                                                                                    
                                                                                                                                
MR. GRAY replied  yes.  In further response  to Representative P.                                                               
Wilson, Mr. Gray explained that  the 50- or 30-day timeline stops                                                               
the  day the  elevation  begins.   There is  a  timeline for  the                                                               
elevation  process.    He   confirmed  that  sometimes,  although                                                               
rarely, the project is stopped at this point.                                                                                   
                                                                                                                                
2:17:20 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE recalled that less  than 1 percent of the entities                                                               
face elevation  after making it through  the application process.                                                               
He recalled  that prior to 2003  a small number of  entities were                                                               
elevated.                                                                                                                       
                                                                                                                                
MR. GRAY responded that's correct.  In further response to Co-                                                                  
Chair  Feige, Mr.  Gray  recalled  that prior  to  2003 very  few                                                               
applications were withdrawn from the  process.  He mentioned that                                                               
he  used to  coordinate some  of  the elevations  and could  only                                                               
recall a couple of those he coordinated that were withdrawn.                                                                    
                                                                                                                                
CO-CHAIR  FEIGE mentioned  that  the committee  saw some  numbers                                                               
from   DCOM  that   showed  a   fairly   significant  amount   of                                                               
applications that had been withdrawn.                                                                                           
                                                                                                                                
MR.  GRAY suggested  that  the committee  would  want to  utilize                                                               
DCOM's  figures because  he  was basing  his  information on  his                                                               
experience seven years ago.                                                                                                     
                                                                                                                                
2:18:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MUNOZ inquired as to  the difference between a 30-                                                               
day and a 50-day review.                                                                                                        
                                                                                                                                
MR. GRAY explained  that each permit that  triggers a consistency                                                               
review will either  have a 30-day or 50-day timeline.   An entity                                                               
that has three  permits of which one has a  50-day review and two                                                               
have 30-day  reviews, will  follow the  50-day review  since it's                                                               
the lowest common denominator.                                                                                                  
                                                                                                                                
CO-CHAIR FEIGE asked if that's from the A and B list.                                                                           
                                                                                                                                
MR. GRAY  clarified that  the projects  on the A  and B  list are                                                               
those that have minimal impact  and are already found consistent.                                                               
Therefore, activities that are on the  A and B list wouldn't even                                                               
necessitate  a consistency  review  because it  has already  been                                                               
performed.                                                                                                                      
                                                                                                                                
2:19:31 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON characterized  the aforementioned  as a  general                                                               
permit.   He surmised  that those  activities falling  within the                                                               
same scope and  listed within the A and B  list because there are                                                               
not  impacts outside  the enforceable  policies or  the statewide                                                               
standards would not go through the [consistency review] process.                                                                
                                                                                                                                
MR. GRAY responded  that is correct, and  added his understanding                                                               
that general permits are automatically placed on the B list.                                                                    
                                                                                                                                
2:20:29 PM                                                                                                                    
                                                                                                                                
MR. GRAY,  in further response to  Representative Munoz's earlier                                                               
question, clarified  that there  is a list  of permits  that will                                                               
trigger consistency  reviews; not  every project is  reviewed for                                                               
consistency.  The list specifies  whether it's a 30-day or 50-day                                                               
review permit, and thus determines the process that's followed.                                                                 
                                                                                                                                
2:20:49 PM                                                                                                                    
                                                                                                                                
MR. GRAY,  continuing his  presentation, opined  that one  of the                                                               
primary benefits of the ACMP  is that the Coastal Zone Management                                                               
Act   (CZMA)  provides   states  more   rights  than   any  other                                                               
environmental law.   The ability  to influence  federal decisions                                                               
far  surpasses any  he can  recall.   Another primary  benefit is                                                               
that the  Act gets everyone  around the table.   Currently, every                                                               
state  and  federal  agency  has  its  own  permit  process  that                                                               
generally  operates in  isolation.   The  case is  the same  with                                                               
local governments  that have a  Title 29 permit.   Therefore, the                                                               
potential  with ACMP  is to  bring everyone  around the  table to                                                               
identify and  solve the  issues.   Furthermore, once  everyone is                                                               
around  the table,  folks  may discover  that  they have  similar                                                               
permit stipulations and thus there's  the opportunity to work out                                                               
the issue and  have a common requirement for  the industry rather                                                               
than slightly  different solutions.   Mr. Gray noted  that review                                                               
participants  have  slightly  different  status  since  they  can                                                               
request  information  specified  on  the  previous  slide.    The                                                               
[review  participants] include  the  affected coastal  districts,                                                               
three  resource  agencies, and  any  state  resource agency  that                                                               
requests  participation.   Although  the process  is designed  to                                                               
include DEC,  he related  his understanding  that DEC  usually is                                                               
not  part of  the  process.   He  noted  that  the applicant  has                                                               
special status since the applicant drives the process.                                                                          
                                                                                                                                
2:22:37 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE inquired as to the advantages for the applicant.                                                                 
                                                                                                                                
MR. GRAY related his understanding  that although some applicants                                                               
prefer  to  go  to  each  agency  individually,  having  everyone                                                               
together at once is beneficial to  many applicants.  He said that                                                               
he  could   recall  some   reviews  that   did  not   require  an                                                               
environmental impact statement (EIS).   Federal agencies would be                                                               
present  at these  meetings because  it was  their only  venue to                                                               
discuss the  project with  other state  and federal  agencies, he                                                               
noted.                                                                                                                          
                                                                                                                                
CO-CHAIR FEIGE opined that one  of the primary advantages for the                                                               
applicant  is  the timeline,  which  encourages  completion in  a                                                               
timely manner.   Therefore,  the timeline  can be  planned within                                                               
the process and the economics of the project.                                                                                   
                                                                                                                                
MR. GRAY  agreed that would  be a benefit  to the applicant.   He                                                               
then related that although under  this system the agencies cannot                                                               
issue a  permit until  the review  is completed,  the legislature                                                               
established   a   90-day   timeline  to   develop   a   solution.                                                               
Furthermore, under  most circumstances state agencies  must issue                                                               
their permits within  five or so days unless there  is a disposal                                                               
of  state land  interests  or  something similar.    "It also  is                                                               
coordinated   with  the   permit  process,   although  it   isn't                                                               
necessarily coordinating the permits themselves," he stated.                                                                    
                                                                                                                                
2:24:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P. WILSON asked whether  the current process, with                                                               
the DEC carveout, is faster than when DEC was included.                                                                         
                                                                                                                                
MR.  GRAY responded  that he  did  not know  whether the  current                                                               
process is faster or not.   However, he related his understanding                                                               
that  the  DEC process  is  independent  [of  the ACMP]  for  the                                                               
permits.   In further response  to Representative P.  Wilson, Mr.                                                               
Gray said that the DEC process  would generally be after the ACMP                                                               
process.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  P. WILSON  surmised  then that  the DEC  carveout                                                               
would result in the entire process being longer.                                                                                
                                                                                                                                
MR.  GRAY deferred  to  industry, but  offered  his opinion  that                                                               
generally it would be shorter if there was coordination.                                                                        
                                                                                                                                
2:26:04 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MUNOZ inquired  as to what happens  once a project                                                               
is through  the 30- or  50-day process and  it is found  that the                                                               
project has  an aspect  that is  not consistent  with one  of the                                                               
departmental requirements.                                                                                                      
                                                                                                                                
MR.  GRAY answered  that usually  the applicant  will voluntarily                                                               
ask to  have the clock stopped.   If it is  something that cannot                                                               
be  worked out,  the project  would  either be  withdrawn or  the                                                               
agency would find  that aspect inconsistent.   However, usually a                                                               
measure  can  be included  in  the  project  to make  the  aspect                                                               
consistent.      Drawing   from   his   experience   coordinating                                                               
elevations, he recalled that most  of the withdrawn projects were                                                               
along the Kenai River because  they could not be found consistent                                                               
since they destroyed king salmon habitat.                                                                                       
                                                                                                                                
2:27:04 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE  inquired  as  to what  occurs  during  the  pre-                                                               
application meetings.   He  mentioned the  complete packet  and a                                                               
lengthy online questionnaire.                                                                                                   
                                                                                                                                
MR. GRAY clarified  that the questionnaire is  mostly a checklist                                                               
to  determine what  permits might  be needed.   There  is also  a                                                               
certification  page  that is  signed  to  relate the  project  is                                                               
consistent.  Most  applicants are required to  have a consistency                                                               
analysis, although sometimes a simple checklist is completed.                                                                   
                                                                                                                                
2:27:54 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE  surmised that there  is contact between  DCOM and                                                               
the applicant while the applicant is completing the packet.                                                                     
                                                                                                                                
MR.  GRAY answered  that  it  depends on  the  complexity of  the                                                               
project.   For some  projects there is  no [contact],  rather the                                                               
applicant's  coastal  zone   questionnaire  and  the  application                                                               
packet are submitted and the  review starts.  The larger projects                                                               
normally have a  pre-application, which is voluntary  on the part                                                               
of the applicant.  He  noted that the pre-application process can                                                               
last up  to a year  or longer.   In further response  to Co-Chair                                                               
Feige, Mr. Gray confirmed that  once the application is complete,                                                               
the clock  starts.   Although theoretically  DCOM would  have all                                                               
the information it requires at the  start, there can be a request                                                               
for additional information if something develops later.                                                                         
                                                                                                                                
2:29:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON related  his  understanding  that the  DEC                                                               
permit process is  supposed to be concurrent  with DNR's process.                                                               
He  then requested  that "the  record" of  the aforementioned  be                                                               
provided to the  committee.  With regard to the  DEC carveout, he                                                               
asked  if  the  air  quality  permits,  save  the  prevention  of                                                               
significant   deterioration   air   quality  permit,   would   be                                                               
appropriate to be included in  the consistency review rather than                                                               
be outside of it.                                                                                                               
                                                                                                                                
MR. GRAY,  drawing from his  experience prior to 2003,  said [the                                                               
prevention of  significant deterioration air quality  permit] was                                                               
the  problem  for  some  major  oil and  gas  developments.    He                                                               
recalled that  the application actually  had to have  drawings of                                                               
the  facilities.    The  aforementioned,   he  opined,  could  be                                                               
addressed easily  by having regulations  that specify  the review                                                               
can  begin   prior  to  having  the   prevention  of  significant                                                               
deterioration  air quality  permit.   The issues  related to  the                                                               
application  could still  be reviewed  without having  a complete                                                               
application.     Mr.  Gray   recalled  that   the  aforementioned                                                               
application was the only one for which this problem occurred.                                                                   
                                                                                                                                
2:30:51 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON related  his  understanding that  Representative                                                               
Herron's  question was  whether  the DEC  permit,  even with  the                                                               
carveout,  occurs   concurrently  with  the   consistency  review                                                               
process.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  HERRON clarified  that  his request  was for  the                                                               
track record of the aforementioned requirement.                                                                                 
                                                                                                                                
2:31:27 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P.   WILSON  surmised  then  that   it  would  be                                                               
appropriate to add  DEC for all the permits,  save the prevention                                                               
of  significant   deterioration  air   quality  permit,   to  the                                                               
coordinating agency that meets with the applicant.                                                                              
                                                                                                                                
2:32:01 PM                                                                                                                    
                                                                                                                                
MR. GRAY, returning to his  presentation, referred to slide 4 and                                                               
the four types  of review and timelines.  There  are reviews that                                                               
only have  state authorizations.   An authorization,  he offered,                                                               
can be thought  of as a permit,  although it may not  be a permit                                                               
but  rather  something  that  an applicant  has  to  have  before                                                               
proceeding.  When  there is a federal  authorization, the federal                                                               
regulations for  the CZMA will  be in  place.  There  are federal                                                               
activities for which  there is no applicant.   Federal activities                                                               
include oil  and gas  lease sales, U.S.  Army Corps  of Engineers                                                               
dredging, and general permits.   Outer Continental Shelf Projects                                                               
are  treated a  bit differently  because the  permit applications                                                               
are not reviewed, rather the  exploration plan or the development                                                               
and  production  plan  is  reviewed.   Mr.  Gray  clarified  that                                                               
although the process  is the same, some different  factors may be                                                               
in the mix.                                                                                                                     
                                                                                                                                
2:33:17 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE  pointed out  the note on  slide 4  that specifies                                                               
the  following:    "The  Alaska  statutory  90-day  timeline  for                                                               
reviews overrides the federal timelines."                                                                                       
                                                                                                                                
MR.  GRAY  responded  yes,  unless  it's  regarding  one  of  the                                                               
exemptions  such  as the  disposal  for  land  use.   In  further                                                               
response to Co-Chair Feige, Mr.  Gray confirmed that the timeline                                                               
begins when the application is determined to be complete.                                                                       
                                                                                                                                
2:33:58 PM                                                                                                                    
                                                                                                                                
MR. GRAY, continuing his presentation,  stated the entire gist of                                                               
the  consistency  review process  is  the  following:   "It's  to                                                               
determine  whether or  not  the project  is  consistent with  the                                                               
statewide standards, which  are in regulation at 11  AAC 112, and                                                               
the coastal  district enforceable policies."   At the  same time,                                                               
the agencies  coordinate their permit reviews.   Technically, the                                                               
consistency  review   is  only   about  consistency   with  these                                                               
enforceable  polices and  statewide standards.   After  2003 when                                                               
DNR implement the  new regulations, there was  a requirement that                                                               
the enforceable  policies "flow from"  only one of  the statewide                                                               
ACMP standards or the designated areas listed on slide 5.                                                                       
                                                                                                                                
2:35:09 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE asked if there is a topic that is missing.                                                                       
                                                                                                                                
MR.  GRAY  said that  the  topic  of  minerals  is missing.    He                                                               
explained that  the mineral statewide  standard was changed  to a                                                               
sand and gravel extraction standard  that only applies to coastal                                                               
areas near the  salt water.  He pointed out  that the legislative                                                               
objectives specified  in AS 45.40.020  are much broader  than the                                                               
objectives [listed  on slide  5], and  therefore there  is likely                                                               
quite a bit missing.                                                                                                            
                                                                                                                                
REPRESENTATIVE  GARDNER asked  then  if  the regulations  limited                                                               
what the legislation permitted.                                                                                                 
                                                                                                                                
MR. GRAY replied,  "That would be what I would  assert."  He then                                                               
relayed, "DNR  has said that  the regulations are  more stringent                                                               
than  what the  legislature intended  and I'm  not sure  that has                                                               
ever been clarified, but at  least in my understanding this would                                                               
be  one of  the  reasons  why it's  more  stringent."   Directing                                                               
attention to  the yellow paper  in the committee  packet entitled                                                               
"Alaska  Coastal  Management  Program Approved  Coastal  District                                                               
Enforceable Policies, March 16,  2011," Mr. Gray highlighted that                                                               
the two topics of recreation  and coastal development account for                                                               
63  percent of  the total  percentage of  topics for  enforceable                                                               
policies.  However,  there are very few  enforceable policies for                                                               
some of the  topics, such as important  habitat, natural hazards,                                                               
and subsistence, which  are of the biggest  concern for residents                                                               
throughout the state.                                                                                                           
                                                                                                                                
2:37:15 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE, referring  to the  yellow paper's  notation that                                                               
[an enforceable policy] can't be  written for mining, related his                                                               
understanding that mining is very  heavily regulated at the state                                                               
and federal levels.                                                                                                             
                                                                                                                                
MR. GRAY clarified  that he did not mean to  imply that mining is                                                               
not regulated, rather through the  ACMP a coastal district is not                                                               
able to develop a policy specific  to mining for a local concern.                                                               
He  acknowledged  that  other   agencies  have  regulations,  but                                                               
pointed out  that the  regulations or  statutes that  would apply                                                               
depend upon who  the landowner is.  "It's  not anything uniform,"                                                               
he remarked.                                                                                                                    
                                                                                                                                
CO-CHAIR   FEIGE  interjected   his  understanding   that  mining                                                               
regulations are uniform across the state.                                                                                       
                                                                                                                                
MR. GRAY  related his  understanding that it  depends on  who the                                                               
landowner,  the state  or the  federal government,  is as  to the                                                               
regulations followed.   Some  state permits,  he noted,  apply to                                                               
federal land and some do not.                                                                                                   
                                                                                                                                
2:38:30 PM                                                                                                                    
                                                                                                                                
MR. GRAY, moving on to slide  6 of his presentation, reviewed the                                                               
statutory   requirements   for    enforceable   policies.      He                                                               
characterized  the statutory  requirement to  be prescriptive  as                                                               
problematic.      For   example,  he   recalled   the   following                                                               
prescriptive  enforceable  policy  that specified  that  floating                                                               
facilities  must be  moored  in a  minimum of  12  feet of  water                                                               
during mean low or low water or  0.0 tide stage.  Although such a                                                               
policy  may work,  sometimes  industry prefers  performance-based                                                               
policies, such as  that floating facilities shall  be designed so                                                               
that  they do  not ground  in  tidal areas.   The  aforementioned                                                               
achieves the objective.  Mr.  Gray suggested that the idea behind                                                               
the performance-based policy is  that sometimes industry may have                                                               
a  better  way of  reaching  the  objective than  a  prescriptive                                                               
policy.   He reiterated that  the statutory requirement  that the                                                               
enforceable policy  must be prescriptive  is problematic,  but he                                                               
added  that  the  other  statutory   requirements  would  not  be                                                               
problematic  if  they  were  implemented  with  a  simple  common                                                               
interpretation of the statute.                                                                                                  
                                                                                                                                
2:39:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MUNOZ,  returning to  the topic of  mining, stated                                                               
that  mining projects  go  through the  ACMP  process, but  local                                                               
coastal   districts   cannot   establish   enforceable   policies                                                               
pertaining to those projects.                                                                                                   
                                                                                                                                
MR. GRAY clarified that coastal  districts can establish a policy                                                               
that  specifically  addresses impacts  from  mining.   A  coastal                                                               
district might have  a policy on subsistence, if  allowed, or one                                                               
of the other  matters and that would apply to  the mining project                                                               
if those activities fit the enforceable policy.                                                                                 
                                                                                                                                
2:40:28 PM                                                                                                                    
                                                                                                                                
MR. GRAY returned  to his presentation and  directed attention to                                                               
the  statutory  requirement  that   an  enforceable  policy  must                                                               
address  a local  concern that  is sensitive  to development,  of                                                               
unique  concern  to  the coastal  district,  and  not  adequately                                                               
addressed  by state  or federal  law.   The problem  has been  in                                                               
regard  to the  interpretation  of the  language "not  adequately                                                               
addressed by  state or federal law."   He said he  understood DNR                                                               
is  interpreting   the  aforementioned  language  to   mean  that                                                               
policies cannot address  a matter that a state  or federal agency                                                               
could address, regardless  of whether there is  a regulation that                                                               
addresses  it.   The  audit  of the  ACMP  said  the same  thing.                                                               
However,  the  2005  ACMP program  description  approved  by  the                                                               
federal  government  specified  that [enforceable]  policies  can                                                               
address a matter as long as  it's not addressed specifically in a                                                               
regulation.    In  fact,  a 2004  memorandum  from  the  attorney                                                               
general basically says the same,  specifically regarding DNR area                                                               
plans.    The  aforementioned  memorandum  says  that  a  coastal                                                               
district can address the same matter  in the area plan so long as                                                               
the area plan is not incorporated  into regulation.  "If it's not                                                               
enforceable,  then  a  district  can have  a  policy,"  he  said.                                                               
Therefore, he  opined that  there's confusion  and misinformation                                                               
regarding this statutory requirement.                                                                                           
                                                                                                                                
2:42:07 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE  posed a  scenario in which  an agency  is already                                                               
regulating  a particular  activity statewide,  and surmised  that                                                               
under  the ACMP  subdivisions of  the state  cannot "step  on the                                                               
toes"  of  the  state  agency  already  regulating  a  particular                                                               
activity.   He referred  to the  note at the  bottom of  slide 7,                                                               
which in  part says:   "... districts may establish  policies for                                                               
matters not addressed in a regulation."                                                                                         
                                                                                                                                
MR. GRAY  said the "hinge"  would be  the definition of  the term                                                               
"matter."  He  then reiterated his interpretation  of the program                                                               
description to  be that the regulation  must specifically address                                                               
that [matter], not merely that it  could address it.  "And unless                                                               
it's preempted  by federal or  state law, I believe  according to                                                               
what the  statute says  and even the  regulation that  a district                                                               
would  be able  to address  that as  long as  they met  the other                                                               
district plan criteria," he offered.                                                                                            
                                                                                                                                
2:43:21 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE asked if it is  in an agency's authority to decide                                                               
not to regulate something.                                                                                                      
                                                                                                                                
MR. GRAY agreed that it is  within the agency's authority, but he                                                               
understood the  law to say  the district  would still be  able to                                                               
address the matter  unless the district was  preempted from doing                                                               
so  for  some other  reason.    He  then provided  the  following                                                               
example in  which it is not  within a coastal districts  power to                                                               
set game limits for fish and  game as that's the purview of ADF&G                                                               
and  thus   the  coastal  districts   would  be   preempted  from                                                               
addressing such a matter.                                                                                                       
                                                                                                                                
2:44:10 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE clarified  that the discussion is  in reference to                                                               
municipalities and  coastal districts trying to  regulate matters                                                               
that are under the authority of another agency.                                                                                 
                                                                                                                                
MR.  GRAY agreed  and added  that his  example was  to illustrate                                                               
that a coastal district could not  have a policy on fish and game                                                               
take  because  it is  preempted  from  doing  so.   However,  for                                                               
matters such as  impacts to habitat, which he  opined the coastal                                                               
districts and  municipalities are not preempted  from addressing,                                                               
a coastal district would be  able to have [an enforceable] policy                                                               
on fish  habitat, for  example.   He pointed  out that  there are                                                               
only two statutes  regarding fish habitat, unless  it's a special                                                               
area, and they  are limited statutes that don't  address the fish                                                               
habitat.  Therefore,  he opined that it would be  allowable for a                                                               
coastal district  to have an  [enforceable] policy so long  as it                                                               
did not conflict with a state or federal law.                                                                                   
                                                                                                                                
2:45:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P. WILSON,  referring to  slide 5,  asked if  the                                                               
areas listed are the only subjects that can be covered.                                                                         
                                                                                                                                
MR. GRAY responded yes, through  a district enforceable policy or                                                               
the  consistency  review, although  there  are  a few  additional                                                               
standards  that aren't  listed in  the  statewide ACMP  standards                                                               
column.     The  statewide  ACMP   standards  and   the  district                                                               
enforceable  policies  are  the   parameters  for  what  can  [be                                                               
addressed] in a consistency review.                                                                                             
                                                                                                                                
2:45:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P.   WILSON,  recalling  the  example   Mr.  Gray                                                               
provided  with regard  to important  habitat, asked  if important                                                               
habitat could be put under that subject area.                                                                                   
                                                                                                                                
MR. GRAY  answered yes,  if one could  get the  important habitat                                                               
areas  approved.   He related  his  understanding that  statewide                                                               
only three  districts, Juneau, Craig,  and Thorne Bay,  have very                                                               
small [important habitat] areas.   Juneau has perhaps the largest                                                               
of these  areas with  11 [enforceable]  policies while  Craig and                                                               
Thorne Bay  have one each.    The aforementioned is  all there is                                                               
for important habitat  in the state in so far  as what a district                                                               
has  been  approved  to  designate.     In  further  response  to                                                               
Representative P.  Wilson, Mr. Gray recalled  that the designated                                                               
area  in Craig  is  around  eel grass  beds,  in  Thorne Bay  the                                                               
designated area  is a buffer  around five  or six rivers,  and in                                                               
Juneau  the  designated  area  is part  of  the  Juneau  Wetlands                                                               
Management Plan  and some of  the wetlands type is  considered an                                                               
important habitat area.                                                                                                         
                                                                                                                                
2:47:02 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P. WILSON  surmised that the reason  Juneau has an                                                               
important  habitat  area  designated  is  because  Juneau  has  a                                                               
general permit for the wetlands.                                                                                                
                                                                                                                                
MR.  GRAY  added  that  Juneau, through  this  ACMP  review,  has                                                               
important habitat designated and 11  of the 13 policies have been                                                               
approved for important habitat.   Therefore, if it goes through a                                                               
review,  it   would  be  reviewed  for   consistency  with  those                                                               
policies.                                                                                                                       
                                                                                                                                
2:47:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P.  WILSON  asked  if the  communities  with  the                                                               
designated areas received those early  in the state's history and                                                               
that  in  more  recent  times  designated  areas  have  not  been                                                               
approved.                                                                                                                       
                                                                                                                                
MR.  GRAY  related his  understanding  that  the Juneau  wetlands                                                               
management plan is  fairly old and predates the  changes to 2003.                                                               
Therefore,  the objective  was to  make  the wetlands  management                                                               
plan part of the ACMP.  Although  it did not quite fit and it was                                                               
originally  disapproved, through  mediation there  was agreement.                                                               
In  further  response  to  Representative  P.  Wilson,  Mr.  Gray                                                               
explained that there are very  few important habitat designations                                                               
in the state  because DNR made a ruling that  the other areas did                                                               
not   meet  DNR's   requirements   for   the  important   habitat                                                               
designation and thus they were disapproved.                                                                                     
                                                                                                                                
2:49:13 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  SEATON reminded  the  committee  that 490  [enforceable                                                               
policies] were developed  under the guidelines of  which 210 were                                                               
approved.  He  said that the committee would obtain  a listing of                                                               
those  disallowed  [enforceable  policies]   and  why  they  were                                                               
disallowed.                                                                                                                     
                                                                                                                                
2:49:50 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE surmised  that the agencies with  the authority to                                                               
manage these particular matters  are staffed with individuals who                                                               
have  expertise,  history,  and   academic  credentials  to  make                                                               
decisions.  He asked if the  coastal districts have the same kind                                                               
of staff with the expertise to address these matters.                                                                           
                                                                                                                                
MR. GRAY  answered that  it depends upon  the municipality.   For                                                               
instance, the  North Slope Borough  has one of the  best wildlife                                                               
departments  in   the  world  and  thus   would  have  expertise.                                                               
However,  small communities  with Coastal  Resource Service  Area                                                               
(CRSAs)  may not  have staff  with the  [expertise, history,  and                                                               
academic credentials], although they would have local knowledge.                                                                
                                                                                                                                
2:51:16 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE noted his appreciation  for the coastal district's                                                               
local knowledge for  which there is an opportunity  to provide to                                                               
the ACMP.   However, he questioned  why they should be  given the                                                               
authority to  write policies when they  do not have the  staff to                                                               
fully evaluate those in the coastal districts.                                                                                  
                                                                                                                                
MR. GRAY said  that is a question for the  legislature to answer,                                                               
although  current   law  does  provide  coastal   districts  that                                                               
ability.    However,  there  are many  restrictions  and  if  the                                                               
coastal district  misses any  one of these,  the [plan]  would be                                                               
disapproved.  Prior to the approval  of a plan, it passes through                                                               
many layers of review and  one cannot arbitrarily or unreasonably                                                               
restrict  a  use  of  state  concern,  for  example.    Mr.  Gray                                                               
emphasized  that  it has  to  be  a  local  concern prior  to  an                                                               
[enforceable] policy being approved.                                                                                            
                                                                                                                                
2:53:05 PM                                                                                                                    
                                                                                                                                
MR. GRAY, continuing  his presentation, moved on to slide  8.  He                                                               
then highlighted the stringent requirement  that in order to have                                                               
some  policies a  coastal district  must  establish a  designated                                                               
area  and  many of  the  coastal  districts have  had  difficulty                                                               
getting those  areas approved.   With  regard to  the subsistence                                                               
areas, Mr.  Gray pointed out  that of the total  coastal district                                                               
acreage the  three largest  are 52 percent  of that  coastal area                                                               
and there hasn't been one  subsistence use area approved in those                                                               
areas.  The  aforementioned coastal district is  located from the                                                               
Yukon Kuskokwim  area north, which  are areas  heavily interested                                                               
in subsistence.   Since the  subsistence areas  weren't approved,                                                               
these areas  are not able  to bring  forth an issue  regarding an                                                               
impact or  potential impact  to a subsistence  use area  during a                                                               
review.  Again, this is a case  in which Mr. Gray opined that the                                                               
regulations  are more  stringent than  the legislature  intended.                                                               
Mr. Gray clarified further that  when the review begins a coastal                                                               
area without  an approved  designated area  cannot even  submit a                                                               
comment regarding potential impacts to subsistence.                                                                             
                                                                                                                                
2:54:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  P.  WILSON  related her  understanding  that  the                                                               
aforementioned  three districts  were denied  a subsistence  area                                                               
designation while  all the other  districts have received  such a                                                               
designation.                                                                                                                    
                                                                                                                                
MR.  GRAY  pointed   out  that  not  every   district  asked  for                                                               
subsistence either because the district  doesn't have concerns or                                                               
gave up early on.  Four  of the largest coastal districts have no                                                               
[designated]  subsistence   areas.     In  further   response  to                                                               
Representative  P. Wilson,  Mr.  Gray confirmed  that during  the                                                               
pre-application  phase [the  designated  areas]  are approved  or                                                               
disapproved.   If the [designated  area request]  is disapproved,                                                               
it cannot be  mentioned.  Although a subsistence use  area can be                                                               
designated during  a [consistency]  review, it has  occurred very                                                               
few times.  In fact, some  of those subsistence use area requests                                                               
have been denied during the [consistency] review.                                                                               
                                                                                                                                
2:55:39 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE noted  that  slide 8  specifies  that only  three                                                               
subsistence policies have  been approved.  He inquired  as to the                                                               
location of those three areas.                                                                                                  
                                                                                                                                
MR. GRAY  responded that  there is a  special management  area in                                                               
the  Kenai  and  an  area  in the  Lake  and  Peninsula  Borough.                                                               
However, he could not recall the third area.                                                                                    
                                                                                                                                
2:56:13 PM                                                                                                                    
                                                                                                                                
CO-CHAIR FEIGE highlighted that  there are subsistence areas that                                                               
have been approved, and thus areas  have been able to rise to the                                                               
requirements of the ACMP.  He  then inquired as to the areas that                                                               
have been denied [a subsistence use designation].                                                                               
                                                                                                                                
MR. GRAY specified that the areas  that have been denied are some                                                               
of the largest  coastal districts.  For example,  the North Slope                                                               
district,  which  is the  size  of  the  state of  Minnesota,  is                                                               
required to identify  every type of subsistence  and the location                                                               
that it  occurs.   He mentioned  that he  will delve  deeper into                                                               
this matter later in the presentation.                                                                                          
                                                                                                                                
2:56:53 PM                                                                                                                    
                                                                                                                                
MR. GRAY, returning to slide  8 of his presentation, related that                                                               
the audit found that the  designated areas reduced the ability of                                                               
the state  to influence federal decisions  because the designated                                                               
areas only apply to nonfederal  land.  Without a designated area,                                                               
the  [CZMA]  allows  the  state to  discuss  impacts  to  coastal                                                               
resources and  uses even when  on federal  lands or waters.   The                                                               
designated area  requirement reduces  the state's  rights because                                                               
it limits the consideration of impacts to nonfederal land.                                                                      
                                                                                                                                
2:57:30 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  FEIGE   emphasized  that  what  bothers   him  is  that                                                               
subsistence areas  have been approved,  so there does  not appear                                                               
to be anything  wrong with the system.  The  three areas Mr. Gray                                                               
is discussing are the Northwest  Arctic Borough, the North Slope,                                                               
and the Bering Straits.                                                                                                         
                                                                                                                                
MR. GRAY related that the  largest coastal district is the Yukon-                                                               
Kuskokwim River.  In response  to Co-Chair Feige, Mr. Gray opined                                                               
that  those  areas haven't  been  able  to  get a  plan  approved                                                               
because the  restrictions are too  onerous.  He  recalled working                                                               
on the Bering  Straits plan when ADF&G said it  did not even have                                                               
the information that  was being required of the  district to gain                                                               
approval.                                                                                                                       
                                                                                                                                
CO-CHAIR  FEIGE  asked if  there  is  an  effort to  obtain  that                                                               
information for the coastal districts.                                                                                          
                                                                                                                                
MR. GRAY  replied that  Bering Straits  has requested  funding to                                                               
[obtain  the necessary  information],  but has  been denied  each                                                               
time.   He  offered  his  belief that  since  the Bering  Straits                                                               
program just got up and running, it might request funding again.                                                                
                                                                                                                                
2:58:38 PM                                                                                                                    
                                                                                                                                
MR.  GRAY, continuing  with slide  8, pointed  out that  the 2008                                                               
federal   ACMP   evaluation   recommended  DNR   reevaluate   the                                                               
designated area requirement.   The 2011 legislative  audit did as                                                               
well.   Furthermore, DNR's  own draft  regulations in  2008 would                                                               
have  eliminated that  designated area  requirement.   Therefore,                                                               
there seems  to be general  recognition that the  designated area                                                               
requirement is not working.                                                                                                     
                                                                                                                                
2:59:04 PM                                                                                                                    
                                                                                                                                
MR. GRAY then directed attention to  slide 9, which is an example                                                               
of how  the rules for  subsistence areas have changed  over time.                                                               
In 2005,  it was very clear  that an entire coastal  district may                                                               
be designated  as a subsistence  area.  Although  the regulations                                                               
did  not  change,  at  some  point  the  interpretation  of  that                                                               
regulation  changed and  thus the  rules changed  such that  each                                                               
type of  subsistence use  had to  be designated.   He  noted that                                                               
most of this information isn't  written anywhere and one would be                                                               
lucky to obtain it in an email.   At this point it was clear that                                                               
the  coastal district  could determine  the types  of subsistence                                                               
use to  designate.  However,  as time passed  DNR said it  had to                                                               
approve  the subsistence  types, although  there was  no list  of                                                               
subsistence types.   Coastal  districts had to  submit a  list of                                                               
subsistence  types  and  the  types of  areas  must  reflect  the                                                               
species' "life  history," and then  DNR would determine  what was                                                               
approvable.  He  remarked that to this day he  does not what this                                                               
means.   There was  the ability to  map the area  so long  as the                                                               
scale  was 1:250,000.   Therefore,  the Northwest  Arctic Borough                                                               
would  require 68  maps.   Later, DNR  determined there  were too                                                               
many  different types  of subsistence  uses on  one map  and then                                                               
required  four  maps  per  quadrangle.     Just  last  year,  DNR                                                               
developed  a new  rule, without  consulting  the districts,  such                                                               
that the  new map  scale would  be 1:63,360.   The new  map scale                                                               
would  require the  Northwest Arctic  Borough to  have 2,108  new                                                               
maps.   He related that  the last time  he checked it  cost about                                                               
$40  a  map to  merely  print  a map.    Therefore,  the cost  is                                                               
astronomical  and unreasonable.   Mr.  Gray opined  that this  is                                                               
merely  one  thing  that  has changed  over  time,  although  the                                                               
regulations remain the same.                                                                                                    
                                                                                                                                
3:01:20 PM                                                                                                                    
                                                                                                                                
MR.  GRAY, moving  on  to  slide 10,  stated  that the  statewide                                                               
standards  were weakened  in  both  the scope  of  what could  be                                                               
covered and  the geographic coverage.   For example,  with regard                                                               
to  the  habitat for  offshore  areas  as currently  written  the                                                               
impacts to habitat can't be  discussed, only impacts to competing                                                               
uses, such as subsistence fishing  and commercial fishing, can be                                                               
discussed.   He noted that the  mining standard was changed  to a                                                               
sand and  gravel standard in the  saltwater area.  Mr.  Gray then                                                               
directed attention to the diagrams on  slide 11.  He informed the                                                               
committee  that  prior to  2003  habitat  impacts throughout  the                                                               
coastal  zone could  be addressed.   However,  through regulation                                                               
changes the  habitat standard results  in a much smaller  area in                                                               
which habitat impacts  can be considered.  The area  that can now                                                               
be considered  is along the  coast where wetlands  drain directly                                                               
to salt  water and a  100 foot buffer on  the upper rivers  and a                                                               
500 foot buffer  in the delta.  Mr. Gray  opined, "This is pretty                                                               
dramatic."  Only  areas with important habitat  areas can address                                                               
impacts to  habitat inland of  the aforementioned areas.   Again,                                                               
only three districts have very small areas approved.                                                                            
                                                                                                                                
3:03:07 PM                                                                                                                    
                                                                                                                                
MR. GRAY  continued on to  slide 12, regarding the  DEC carveout.                                                               
He related that some coastal  districts would say that everything                                                               
is related to  air and water quality.  The  DEC carveout has made                                                               
this confusing to  everyone.  He then posed an  example of an oil                                                               
and  gas  offshore project  in  which  coastal districts  may  be                                                               
interested in  the impacts of  an oil  spill on subsistence.   To                                                               
his knowledge,  there are  no laws  about the  aforementioned and                                                               
thus through the  DEC review [the coastal district]  would not be                                                               
able to  address that.   Moreover, [the coastal  districts] would                                                               
not be  able to  address it at  all during the  ACMP review.   He                                                               
then directed  attention to slide  13, which reviews  the summary                                                               
of  effects.    He  highlighted that  now  there  is  centralized                                                               
decision-making such  that one person  in DNR makes  the ultimate                                                               
decisions.   The audit found the  aforementioned to be a  lack of                                                               
consensus building  during the  reviews.  Moving  on to  slide 14                                                               
regarding  possible   statutory  changes,  he  opined   that  the                                                               
criteria  could  be  clarified  in  statute.   In  terms  of  the                                                               
possible checks and  balances, there has been  some suggestion of                                                               
establishing a coastal  policy board, moving the  agency, or with                                                               
elevations have all three resource  agency commissioners make the                                                               
decision rather than just DNR's  commissioner.  He then addressed                                                               
the DEC carveout and related that  when this was explained to the                                                               
legislature  in  2003,  the administration  clearly  stated  that                                                               
coastal districts could  have policies to fill the  gaps in DEC's                                                               
regulations  and statutes.   In  fact, he  recalled the  language                                                               
"for those  purposes" was added  for the  aforementioned purpose.                                                               
However,  no air  or water  quality policies  have been  approved                                                               
regardless of whether there is a  DEC regulation.  With regard to                                                               
the  90-day timeline,  Mr. Gray  opined that  although it  is not                                                               
workable for  very large  projects, it  is probably  workable for                                                               
most of the other projects.                                                                                                     
                                                                                                                                
3:05:08 PM                                                                                                                    
                                                                                                                                
MR.  GRAY   referred  to  slide   15,  which   provides  possible                                                               
regulatory changes.   While these  changes could be  done through                                                               
regulation, he said  he hasn't heard any political will  to do so                                                               
other  than to  revise the  ABC list  and change  the consistency                                                               
review regulations.                                                                                                             
                                                                                                                                
3:05:28 PM                                                                                                                    
                                                                                                                                
CO-CHAIR SEATON moved that the  proposed committee substitute for                                                               
HB  106,   Version  27-GH1965\B,  Bullock/Bullard,   3/16/11,  be                                                               
adopted as the work draft.                                                                                                      
                                                                                                                                
REPRESENTATIVE P. WILSON objected for discussion purposes.                                                                      
                                                                                                                                
CO-CHAIR SEATON explained that the proposed work draft will be                                                                  
taken up at a later meeting and thus folks will have time to                                                                    
study it.                                                                                                                       
                                                                                                                                
3:06:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE P. WILSON requested that the [Department of                                                                      
Natural Resources] address the committee about Version B [at a                                                                  
subsequent hearing].                                                                                                            
                                                                                                                                
CO-CHAIR SEATON confirmed that is the intention.  He then held                                                                  
over HB 106.                                                                                                                    
                                                                                                                                
3:07:41 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Resources Standing Committee meeting was adjourned at 3:07 p.m.                                                                 

Document Name Date/Time Subjects
HRES 3.7.11 HB 106 Coastal Management Program.PDF HRES 3/7/2011 1:00:00 PM
HRES 3/16/2011 1:00:00 PM
HRES 3/18/2011 1:00:00 PM
HRES 3/28/2011 1:00:00 PM
HRES 3/30/2011 1:00:00 PM
HB 106
CSHB 121 Sectional Analysis.pdf HRES 3/16/2011 1:00:00 PM
HB 121
House Bill 121 Hearing Request RES.pdf HRES 3/16/2011 1:00:00 PM
HB 121
HB121 Version D.pdf HRES 3/16/2011 1:00:00 PM
HB 121
HB 121 (FSH) Explanation of Changes.docx HRES 3/16/2011 1:00:00 PM
HB 121 - Treasures of the Tidelands - WA.pdf HFIN 4/4/2011 1:30:00 PM
HRES 3/16/2011 1:00:00 PM
HB 121
NCSL Revolving Loan briefing paper.pdf HFIN 4/4/2011 1:30:00 PM
HRES 3/16/2011 1:00:00 PM
HB 121
HB 121 - Alaskan Shellfish Grower's Association - Support.pdf HRES 3/16/2011 1:00:00 PM
HB 121
HB 121 - CCED - Letter of support - SWAMC.pdf HFIN 4/4/2011 1:30:00 PM
HRES 3/16/2011 1:00:00 PM
HB 121
HB 121 - Shellfish Production Stats - West Coast.pdf HFIN 4/4/2011 1:30:00 PM
HRES 3/16/2011 1:00:00 PM
HB 121
AEDC Letter of Support HB 121.pdf HRES 3/16/2011 1:00:00 PM
HB 121
ACMP Coastal District Comments I.pdf HRES 3/16/2011 1:00:00 PM
ACMP Coastal District Comment II.pdf HRES 3/16/2011 1:00:00 PM
Summary of ACMP Coastal District Concerns.pdf HRES 3/16/2011 1:00:00 PM
AMCP_Powerpoint_3-11 (2).pdf HRES 3/16/2011 1:00:00 PM
HJR8-TroutUnltd.pdf HRES 3/16/2011 1:00:00 PM
HJR8-ConstituantLtrs.pdf HRES 3/16/2011 1:00:00 PM
HJR8-Bill.Larry.GMO.LTR.PDF HRES 3/16/2011 1:00:00 PM
HJR8-Interior.Del.Ltr.PDF HRES 3/16/2011 1:00:00 PM
HJR8-FDA.Health&HumanSvc.response.PDF HRES 3/16/2011 1:00:00 PM
HJR8-NOAA opinion.PDF HRES 3/16/2011 1:00:00 PM
AKDISPATCH.ARTICLE.PDF HRES 3/16/2011 1:00:00 PM
Washington Post Article.PDF HRES 3/16/2011 1:00:00 PM
Bloomberg Article.PDF HRES 3/16/2011 1:00:00 PM
HJR8-Frankenfish.top50.PDF HRES 3/16/2011 1:00:00 PM
Begich-Time Response.PDF HRES 3/16/2011 1:00:00 PM
HJR8 Resources Request.doc HRES 3/16/2011 1:00:00 PM
Sponsor Statement HJR8.doc HRES 3/16/2011 1:00:00 PM
HJR 8 - Fiscal Note.pdf HRES 3/16/2011 1:00:00 PM
HJR 8 - Congressional Delegation Letter of Support - All Members.pdf HRES 3/16/2011 1:00:00 PM
HJR8-UFA Support.PDF HRES 3/16/2011 1:00:00 PM
HJR8-ATA.Ltr.pdf HRES 3/16/2011 1:00:00 PM
HJR8-SAFA.Ltr.pdf HRES 3/16/2011 1:00:00 PM
HJR8-CenterFoodSafety.pdf HRES 3/16/2011 1:00:00 PM
HB 121 Power Point Presentation.pptx HRES 3/16/2011 1:00:00 PM
CS HB 106 Workdraft Version B.pdf HRES 3/16/2011 1:00:00 PM
HRES 3/18/2011 1:00:00 PM
HRES 3/30/2011 1:00:00 PM
HB 106
Legislative Audit Memorandum and response.pdf HRES 3/16/2011 1:00:00 PM
ACMP Approved Coastal District Enforceable Policies.pdf HRES 3/16/2011 1:00:00 PM