03/16/2011 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| HJR8 | |
| HB121 | |
| HB106 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 121 | TELECONFERENCED | |
| += | HB 106 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HJR 8 | TELECONFERENCED | |
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 |