00 SENATE CS FOR CS FOR HOUSE BILL NO. 41(FIN) am S 01 "An Act relating to management of enhanced stocks of shellfish; authorizing certain 02 nonprofit organizations to engage in shellfish enhancement projects; relating to 03 application fees for salmon hatchery permits and shellfish enhancement project permits; 04 and providing for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. AS 16.05.730(c) is amended to read: 07 (c) The board may 08 (1) consider the need of enhancement projects authorized under 09 AS 16.10.400 and contractors who operate state-owned enhancement projects under 10 AS 16.10.480 to harvest and sell fish produced by the enhancement project that are not 11 needed for brood stock to obtain funds for the purposes allowed under AS 16.10.450 12 or 16.10.480(d); 13 (2) consider the need of projects authorized under AS 16.12.010 to 14 harvest and sell shellfish that are not needed for brood stock to obtain funds for 01 the purposes allowed under AS 16.12.080; 02 (3) [. THE BOARD MAY] exercise its authority under this title as it 03 considers necessary to direct the department to provide a reasonable harvest of fish, in 04 addition to the fish needed for brood stock, to an enhancement project to obtain funds 05 for the enhancement project if the harvest is consistent with sustained yield of wild 06 fish stocks; and 07 (4) [. THE BOARD MAY] adopt a fishery management plan to 08 provide fish to an enhancement project to obtain funds for the purposes allowed under 09 AS 16.10.450, [OR] 16.10.480(d), or AS 16.12.080. 10 * Sec. 2. AS 16.10.400(b) is amended to read: 11 (b) The application for a permit under this section shall be on a form 12 prescribed by the department and be accompanied by an application fee in the 13 amount determined under (h) of this section [$100]. The commissioner may waive 14 the submission of an application for a permit to operate a hatchery under 15 AS 16.10.480. 16 * Sec. 3. AS 16.10.400 is amended by adding a new subsection to read: 17 (h) The department shall establish by regulation an application fee under this 18 section in an amount that provides for the total amount of fees collected under (b) of 19 this section to approximately equal the department's actual costs of processing permit 20 applications under this chapter. The department shall annually review the fee level to 21 determine whether the department's costs of processing permit applications under this 22 chapter are approximately equal to the fees collected. If the review indicates that fees 23 collected and these costs are not approximately equal, the department shall adjust the 24 application fee by regulation. In January of each year, the department shall report the 25 fee level and any revision made for the previous year under this subsection to the 26 office of management and budget. 27 * Sec. 4. AS 16 is amended by adding a new chapter to read: 28 Chapter 12. Shellfish Enhancement Projects. 29 Sec. 16.12.010. Permits for shellfish enhancement projects. (a) Subject to 30 the restrictions imposed by statute or regulation under this chapter, the commissioner 31 may issue a permit to a nonprofit corporation organized under AS 10.20 for a project 01 to 02 (1) augment the yield and harvest of shellfish indigenous to state water 03 above naturally occurring levels by natural, artificial, or semiartificial production 04 systems; 05 (2) rehabilitate a shellfish stock that is indigenous to state water by 06 restoring it to its natural levels of productivity; or 07 (3) increase the area of productive natural shellfish habitat. 08 (b) Each applicant for a permit under this section shall apply in a format 09 prescribed by the department and pay an application fee in the amount determined 10 under (f) of this section. 11 (c) A permit issued under this section is nontransferable. If a permit holder 12 sells or leases a facility for which a permit has been issued under this section, the new 13 operator shall apply for a permit under this section. 14 (d) The commissioner shall consult with and solicit recommendations from 15 federal and state agencies and technical experts in the relevant area regarding permit 16 stipulations and issuance. 17 (e) The commissioner may not issue a permit under this section unless the 18 commissioner determines that the action would result in substantial public benefits and 19 would not jeopardize natural stocks. 20 (f) The department shall establish by regulation an application fee under this 21 section in an amount that provides for the total amount of fees collected under (b) of 22 this section to approximately equal the department's actual costs of processing permit 23 applications under this chapter. The department shall annually review the fee level to 24 determine whether the department's costs of processing permit applications under this 25 chapter are approximately equal to the fees collected. If the review indicates that fees 26 collected and these costs are not approximately equal, the department shall adjust the 27 application fee by regulation. In January of each year, the department shall report the 28 fee level and any revision made for the previous year under this subsection to the 29 office of management and budget. 30 Sec. 16.12.020. Hearings before permit issuance. (a) At least 30 days before 31 the issuance of a permit under AS 16.12.010, the department shall hold a public 01 hearing in a central location in the vicinity of the proposed release of shellfish. 02 (b) Notice of the hearing shall be published in a newspaper of general 03 circulation once a week for three consecutive weeks, with completion of the notice at 04 least five days before the hearing. 05 (c) The department shall conduct the hearing. The applicant shall present a 06 plan for the proposed project describing the capacity of the facility and other relevant 07 facts that may be of interest to the department or to the public. The department shall 08 give interested members of the public an opportunity to be heard. 09 (d) The department shall record and consider objections and recommendations 10 offered by the public at the hearing conducted under this section. The department shall 11 respond in writing, not later than 30 days after the hearing is held, to a specific 12 objection offered by a member of the public at the hearing. 13 Sec. 16.12.030. Conditions of a permit. The department shall require, in a 14 permit issued under this chapter, that the permit holder 15 (1) procure shellfish from the department or a source approved by the 16 department; 17 (2) place shellfish only in water of the state specifically designated in 18 the permit; 19 (3) not procure genetically modified shellfish or place genetically 20 modified shellfish into the water of the state; 21 (4) not resell or transfer shellfish sold to a permit holder by the state or 22 by another party approved by the department; 23 (5) not release shellfish before approval by the department, and, for 24 purposes of pathological examination and approval, that the permit holder notify the 25 department at least 15 days before the date of the proposed release of shellfish; 26 (6) destroy diseased shellfish in a specific manner and location 27 designated by the department; 28 (7) harvest shellfish only at specific locations and under specific 29 conditions as designated by the department; 30 (8) make surplus shellfish available for sale first to the department and 31 then, after inspection and approval by the department, to other permit holders 01 operating under this chapter; 02 (9) provide a copy of the sales transaction to the department if surplus 03 shellfish are sold by a permit holder to another permit holder; 04 (10) release shellfish in an area where the shellfish will be available to 05 traditional fisheries, subject to the provisions of this chapter and regulations adopted 06 under this chapter. 07 Sec. 16.12.040. Alteration, suspension, or revocation of permit. (a) If a 08 permit holder fails to comply with the conditions and terms of the permit issued under 09 AS 16.12.010 within a reasonable period after notification by the department of 10 noncompliance, the permit may be suspended or revoked, in the discretion of the 11 commissioner. 12 (b) If the commissioner finds that the operation of the permitted activity is not 13 in the best interests of the public, the commissioner may alter the conditions of the 14 permit to mitigate the adverse effects of the operation or, if the adverse effects are 15 irreversible and cannot be mitigated sufficiently, initiate a termination of the operation 16 under the permit over a reasonable period under the circumstances, not to exceed four 17 years. During the period that the operation is being terminated, the permit holder may 18 harvest shellfish under the terms of the permit but may not release additional shellfish. 19 Sec. 16.12.050. Regulations relating to released shellfish. (a) Shellfish 20 released into the natural water of the state by a permit holder under this chapter are 21 available to the people for common use and are subject to regulation under applicable 22 law in the same way as shellfish occurring in their natural state except when they are 23 in a special location designated by the department for harvest by a permit holder. 24 (b) The Board of Fisheries may, after the issuance of a permit by the 25 commissioner, amend by regulation adopted in accordance with AS 44.62 26 (Administrative Procedure Act) the terms of the permit relating to the source of wild 27 brood stock, the harvest of shellfish by permit holders, and the specific locations 28 designated by the department for harvest. The Board of Fisheries may not adopt a 29 regulation or take an action regarding the issuance or denial of a permit required in 30 this chapter. 31 Sec. 16.12.060. Department assistance and cooperation. (a) Before and after 01 permit issuance under AS 16.12.010, the department shall make reasonable efforts, 02 within the limits of time and resources, to advise and assist applicants or permit 03 holders, as appropriate, as to projects under AS 16.12.010, including the planning, 04 construction, and operation of facilities. 05 (b) Nothing in this section exempts an applicant or permit holder from 06 compliance with this chapter or from compliance with the regulations or restrictions 07 adopted under this chapter. 08 Sec. 16.12.070. Brood stock sources. (a) The department shall approve the 09 source and number of shellfish taken for use as brood stock under this chapter. 10 (b) Where feasible, a permit holder shall first take shellfish from stocks native 11 to the area in which the shellfish will be released. 12 Sec. 16.12.080. Sale of shellfish; use of proceeds; quality and price. (a) A 13 permit holder that sells shellfish harvested from the natural water of the state, or sells 14 shellfish to another permit holder under this chapter, shall use the funds only for 15 reasonable operating costs, including debt retirement, expanding its facilities, a project 16 permitted under AS 16.12.010, shellfish research, or to assist in meeting the 17 department's costs of managing the affected fisheries for the area in which the 18 shellfish release is located. 19 (b) A permit holder shall ensure that shellfish harvested and sold for human 20 consumption are of comparable quality to shellfish harvested by commercial fisheries 21 in the area and are sold at prices commensurate with the current market. 22 Sec. 16.12.090. Cost recovery fisheries. (a) A permit holder may harvest 23 shellfish for a project under AS 16.12.010 in a special harvest area through 24 (1) agents or employees of or persons under contract with the permit 25 holder as provided under a permit from the department or regulations of the Board of 26 Fisheries; or 27 (2) the common property fishery under this section. 28 (b) A permit holder may, by a majority vote of the membership of the permit 29 holder's board of directors, elect to harvest shellfish in a special harvest area 30 established for a project under AS 16.12.010 through the common property fishery. A 31 permit holder seeking to harvest shellfish in a special harvest area through a common 01 property fishery shall notify the Department of Revenue by July 1 of the year 02 preceding the year for which the harvest is sought. At the request of the permit holder 03 and if the commissioner determines that there are no allocative issues involved, and 04 after reasonable consultation with affected commercial fishermen, the commissioner 05 may adopt regulations governing the harvest of shellfish in a special harvest area 06 through a common property fishery. The regulations must specify the terms, 07 conditions, and rules under which the common property fishery in the special harvest 08 area shall be conducted, including requirements for holding inspections and reporting 09 of harvests and sales of shellfish taken in the special harvest area. Following adoption 10 of regulations by the department, before January 15 of each year, the permit holder's 11 board, by a majority vote of the board's membership, may determine whether the 12 permit holder will operate under the regulations adopted under this subsection during 13 the current calendar year and shall notify the department if the permit holder intends to 14 operate under the regulations adopted under this subsection. The Board of Fisheries 15 may adopt regulations under AS 16.05.251 regarding a fisheries management plan 16 governing operations under this subsection in a special harvest area, including 17 allocation plans. Participation in the fishery must be open to all interim-use permit and 18 entry permit holders who hold permits to operate a type of gear that may be used in the 19 fishing district in which the special harvest area is located if that type of gear is 20 authorized by regulation to be used in the special harvest area. An interim-use permit 21 holder or an entry permit holder who takes shellfish in a common property fishery in a 22 special harvest area may sell the shellfish to a fish buyer or processor who is licensed 23 to do business in the state. 24 (c) As a condition of participation in a common property shellfish fishery in a 25 special harvest area under this section, a commercial fisherman who participates in the 26 fishery is subject to the payment of the assessment levied under (d) of this section on 27 the projected value of the shellfish or on the pounds of shellfish harvested. The 28 assessment is levied on the shellfish that the commercial fisherman takes in the special 29 harvest area and sells to a licensed buyer. The buyer of the shellfish must be licensed 30 under AS 43.75, and the buyer shall collect the assessment on shellfish taken in a 31 special harvest area at the time of purchase and remit the assessment to the 01 Department of Revenue in accordance with regulations adopted by the Department of 02 Revenue. 03 (d) The Department of Revenue may, by regulation, set the assessment levied 04 on shellfish taken in a special harvest area on an annual basis in consultation with the 05 Department of Commerce, Community, and Economic Development, the permit 06 holder, and representatives of affected commercial fishermen. The Department of 07 Revenue shall set an annual assessment under this section not later than January 1 of 08 that year. The assessment must provide sufficient revenue to cover debt service, 09 reasonable operating expenses, reasonable maintenance expenses, and development or 10 maintenance of a reserve fund up to 100 percent of annual operating costs of the 11 permit holder's project under AS 16.12.010. In setting the assessment, the Department 12 of Revenue shall consider the estimated harvest of shellfish in the special harvest area, 13 the projected price to be paid for shellfish in the region, the amount of the existing 14 reserve held by the permit holder, and the amount by which the assessment collected 15 in previous years exceeded or fell short of the amount anticipated to be collected. The 16 assessment may not exceed 50 percent of the value of the shellfish. The Department of 17 Revenue may levy the assessment as a percentage of the projected value of the 18 shellfish harvested in the special harvest area or as a flat rate on each pound of 19 shellfish harvested in the area, to the nearest whole cent. 20 (e) The Department of Revenue shall deposit the assessments collected under 21 this section in the general fund. The legislature may appropriate the funds collected 22 under this section to the permit holder who is carrying out a project under 23 AS 16.12.010, including the operation of a facility, in the special harvest area in which 24 the assessment was levied. A permit holder shall use funds appropriated under this 25 subsection for the purposes set out under AS 16.12.080(a). The legislature may also 26 appropriate funds collected under this section to the Department of Revenue for costs 27 incurred by the Department of Revenue under this section. 28 (f) A person who violates a regulation adopted under (b) of this section is 29 guilty of a violation under AS 16.05.722 or a misdemeanor under AS 16.05.723. A 30 person who violates a regulation adopted by the Department of Revenue under (c) of 31 this section is guilty of a class A misdemeanor. 01 (g) In this section, 02 (1) "special harvest area" means an area designated by the 03 commissioner or the Board of Fisheries where shellfish may be harvested by permit 04 holders under this chapter and by the common property fishery; 05 (2) "value" has the meaning given in AS 43.75.290. 06 Sec. 16.12.100. Inspection by the department. (a) A permit holder shall 07 allow the department to inspect the permit holder's facility for a project under 08 AS 16.12.010 at any time the facility is in operation. The department shall conduct the 09 inspection in a reasonable manner. 10 (b) The department shall bear the cost of an inspection performed under this 11 section. 12 Sec. 16.12.110. Annual report. A person who holds a permit under this 13 chapter shall submit an annual report not later than December 15 to the department. 14 The report must be made on a form prescribed by the department and contain 15 information pertaining to 16 (1) species; 17 (2) the brood stock source; 18 (3) the number, age, gender, and size of spawners; 19 (4) the number of eggs collected and juveniles produced; and 20 (5) the number, age, gender, and size of harvested shellfish attributable 21 to releases by the permit holder. 22 Sec. 16.12.199. Definitions. In this chapter, 23 (1) "facility" means a hatchery as defined in AS 16.40.199, a facility 24 for the release of shellfish into natural water of the state, or a facility for a project 25 under AS 16.12.010; 26 (2) "genetically modified shellfish" means shellfish whose genetic 27 structure has been altered at the molecular level by recombinant DNA and RNA 28 techniques, cell fusion, gene deletion or doubling, introduction of exogenous genetic 29 material, alteration of the position of a gene, or other similar procedure using artificial 30 processes; 31 (3) "shellfish" has the meaning given in AS 16.40.199. 01 * Sec. 5. AS 16.43.400(a) is amended to read: 02 (a) In addition to entry permits, interim-use permits, and educational permits, 03 the commission may issue special harvest area entry permits to 04 (1) holders of private, nonprofit hatchery permits issued by the 05 Department of Fish and Game under AS 16.10.400 - 16.10.475 for salmon; and 06 (2) nonprofit organizations holding a permit under AS 16.12 for a 07 shellfish enhancement project. 08 * Sec. 6. AS 16.43.430 is amended to read: 09 Sec. 16.43.430. Authorized gear. For the purposes of harvesting salmon or 10 shellfish, a special harvest area entry permit holder may employ any fishing gear 11 designated as legal gear in the applicable special harvest area by the Board of 12 Fisheries. 13 * Sec. 7. AS 17.20.049(b)(1) is amended to read: 14 (1) "farmed fish" means fish that is propagated, farmed, or cultivated 15 in a facility that grows, farms, or cultivates the fish in captivity or under positive 16 control but that is not a salmon hatchery that is owned by the state or that holds a 17 salmon hatchery permit under AS 16.10.400 or a shellfish facility that is permitted 18 under AS 16.12.010; in this paragraph, "positive control" has the meaning given in 19 AS 16.40.199; 20 * Sec. 8. AS 37.05.146(c) is amended by adding new paragraphs to read: 21 (80) fees collected by the Department of Fish and Game under 22 AS 16.10.400; 23 (81) fees collected by the Department of Fish and Game under 24 AS 16.12.010. 25 * Sec. 9. AS 43.20.012(a) is amended to read: 26 (a) The tax imposed by this chapter does not 27 (1) apply to an individual; 28 (2) apply to a fiduciary; 29 (3) for a tax year beginning after December 31, 2012, apply to an 30 Alaska corporation that is a qualified small business and that meets the active business 31 requirement in 26 U.S.C. 1202(e) as that subsection read on January 1, 2012; [OR] 01 (4) for a tax year beginning after June 30, 2007, apply to the income 02 received by a regional association qualified under AS 16.10.380 or nonprofit 03 corporation holding a hatchery permit under AS 16.10.400 from the sale of salmon or 04 salmon eggs under AS 16.10.450 or from a cost recovery fishery under AS 16.10.455; 05 or 06 (5) apply to income received by a nonprofit corporation holding a 07 permit under AS 16.12.010 from the sale of shellfish under AS 16.12.080 or from 08 a cost recovery fishery under AS 16.12.090. 09 * Sec. 10. AS 43.20.012(a), as repealed and reenacted by sec. 2, ch. 55, SLA 2013, is 10 amended to read: 11 (a) The tax imposed by this chapter does not apply to 12 (1) an individual; 13 (2) a fiduciary; [OR] 14 (3) the income received by a regional association qualified under 15 AS 16.10.380 or nonprofit corporation holding a hatchery permit under AS 16.10.400 16 from the sale of salmon or salmon eggs under AS 16.10.450 or from a cost recovery 17 fishery under AS 16.10.455; or 18 (4) the income received by a nonprofit corporation holding a 19 permit under AS 16.12.010 from the sale of shellfish under AS 16.12.080 or from 20 a cost recovery fishery under AS 16.12.090. 21 * Sec. 11. AS 43.76.390 is amended to read: 22 Sec. 43.76.390. Exemption. AS 43.76.350 - 43.76.399 do not apply to salmon 23 or shellfish harvested under a special harvest area entry permit issued under 24 AS 16.43.400. 25 * Sec. 12. The uncodified law of the State of Alaska is amended by adding a new section to 26 read: 27 APPLICABILITY. AS 16.10.400(b), as amended by sec. 2 of this Act, applies to 28 salmon hatchery permits applied for on or after the effective date of sec. 2 of this Act. 29 * Sec. 13. The uncodified law of the State of Alaska is amended by adding a new section to 30 read: 31 TRANSITION: REGULATIONS. The Department of Fish and Game may adopt 01 regulations necessary to implement this Act. The regulations take effect under AS 44.62 02 (Administrative Procedure Act), but not before the effective date of the law implemented by 03 the regulation. 04 * Sec. 14. Section 13 of this Act takes effect immediately under AS 01.10.070(c). 05 * Sec. 15. Section 10 of this Act takes effect on the effective date of sec. 2, ch. 55, SLA 06 2013.