03/04/2021 11:00 AM House FISHERIES

         HB 115-AQUATIC FARMING & HATCHERY SITE LEASES                                                                      
                                                                                                                                
                                                                                                                                
11:38:04 AM                                                                                                                   
CHAIR TARR  announced that the  final order of business  would be                                                               
HOUSE BILL NO. 115,                                                                                                             
 "An Act  relating to aquatic  farming and hatchery  site leases;                                                               
and requiring  the director of  the division of lands  to provide                                                               
the  legislature  with  an  annual  report  relating  to  aquatic                                                               
farming and hatchery site leases."                                                                                              
                                                                                                                                
11:38:18 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  ANDI STORY,  Alaska  State Legislature,  provided                                                               
introductory  remarks   on  HB  115   as  prime  sponsor.     She                                                               
paraphrased the  sponsor's statement  [included in  the committee                                                               
packet], which read as follows [original punctuation provided]:                                                                 
                                                                                                                                
     House  Bill 115  simplifies the  Department of  Natural                                                                    
     Resources  (DNR)  lease  renewal  process  for  aquatic                                                                    
     farms  to  support  Alaska's aquaculture  sector  while                                                                    
     reducing administrative  overhead. Examples  of aquatic                                                                    
     farm   products  include   oysters,  kelp,   and  other                                                                    
     shellfish. HB115  makes the aquatic farm  lease renewal                                                                    
     process consistent  with the renewal process  for other                                                                    
     DNR  leases such  as agricultural  grazing, cabins  and                                                                    
     lodges,  fish   processing  docks,   and  hydroelectric                                                                    
     facilities.  HB 115  does  not  affect salmon  hatchery                                                                    
     leases.                                                                                                                    
                                                                                                                                
     If  enacted, HB115  would  expedite  the lease  renewal                                                                    
     process  lowering the  risk  for businesses  investment                                                                    
     and  reducing the  workload of  an overstretched  state                                                                    
     agency.                                                                                                                    
                                                                                                                                
     Current statute  requires DNR  to approve  both initial                                                                    
     and  renewal   aquatic  farm  leases  using   the  same                                                                    
     process,  called a  "945  authorization" (referring  to                                                                    
     the adjudication process found  in AS 38.05.945), which                                                                    
     takes around  200 days. HB115 would  allow aquatic farm                                                                    
     or hatchery renewals  to be renewed in  the same manner                                                                    
     as  most  DNR  leases  like those  listed  above.  This                                                                    
     optional process  allows the  Director of  the Division                                                                    
     of  Mining, Land  and  Water  to renew  a  lease for  a                                                                    
     business  in good  standing and  takes around  90 days.                                                                    
     Applied    to   aquatic    businesses,   this    option                                                                    
     significantly  shortens   the  renewal   process  while                                                                    
     continuing appropriate regulatory  oversight and public                                                                    
     engagement.                                                                                                                
                                                                                                                                
     HB115 also requires DNR to  submit an initial report on                                                                    
     the backlog  of pending aquatic farm  and hatchery site                                                                    
     lease  applications,   estimate  economic   impacts  of                                                                    
     pending   leases,  and   provide  recommendations   for                                                                    
     streamlining  the  lease approval  process.  Subsequent                                                                    
     annual  reports would  detail  the application  backlog                                                                    
     and list  the number of leases  renewals that underwent                                                                    
     the time-intensive lease renewal process.                                                                                  
                                                                                                                                
     This bill  makes clear  ecotourism and  educational use                                                                    
     of sites is allowed,  and explicitly prohibits DNR from                                                                    
     charging   additional  fees   for  persons   using,  or                                                                    
     traversing, land leased for  aquatic farms and hatchery                                                                    
     sites.                                                                                                                     
                                                                                                                                
     I respectfully ask  for your support in  the passage of                                                                    
     HB115.                                                                                                                     
                                                                                                                                
11:42:34 AM                                                                                                                   
                                                                                                                                
GREG  SMITH,  Staff,  Representative  Andi  Story,  Alaska  State                                                               
Legislature,  on behalf  of Representative  Story, prime  sponsor                                                               
provided  a sectional  analysis  of  HB 115  as  provided in  the                                                               
committee packet, which read as follows [original punctuation                                                                   
provided]:                                                                                                                      
                                                                                                                                
     Section  1:  Amends  AS  38.05.035(a)  to  require  the                                                                  
     Director of the Division of  Mining, Land, and Water to                                                                    
     submit an  annual report to the  legislature, primarily                                                                    
     detailing  aquatic   farm  and  hatchery   site  leases                                                                    
     pending with the department.                                                                                               
                                                                                                                                
     Section  2:   Amends  AS  38.05.070(e)  by   adding  AS                                                                  
     38.05.083  (aquatic   farm  leasing  statute)   to  the                                                                    
     general  leasing renewal  section of  law. This  change                                                                    
     allows  the director  to renew  an  aquatic farm  lease                                                                    
     under general  lease renewal  procedure. ?  A technical                                                                    
     amendment  on  lines  20-21 specifies  which  types  of                                                                    
     leases may be renewed under this procedure.                                                                                
                                                                                                                                
     Section  3: Amends  AS  38.050.083(a)  by deleting  the                                                                  
     term  "or renew"  from this  section  of statute.  This                                                                    
     removes the requirement that  the renewal procedure for                                                                    
     an aquatic  farm or hatchery undergo  the more detailed                                                                    
     AS 38.05.945 adjudication process.                                                                                         
     Section  4: Amends  AS  38.050.083(b)  by deleting  the                                                                    
     term "or  renewal" from this  section of  statute. This                                                                    
     removes  the renewal  procedure from  the aquatic  farm                                                                    
     leasing statute.                                                                                                           
                                                                                                                                
     Section  5:  Adds  new subsections  to  AS  38.050.083,                                                                  
     including:                                                                                                                 
     ? (g):  stating the  Commissioner of the  Department of                                                                    
     Natural  Resources  may  renew an  aquatic  farm  lease                                                                    
     under the general leasing renewal;                                                                                         
     ?  (h): explicitly  states  ecotourism and  educational                                                                    
     purposes  are allowable  uses for  aquatic farming  and                                                                    
     hatchery sites; and                                                                                                        
     ?  (i):   explicitly  prohibits  the  charging   of  an                                                                    
     additional fee  to aquatic  farming and  hatchery sites                                                                    
     for the use or, or passage, across these sites.                                                                            
                                                                                                                                
     Section  6: Adds  a new  section to  uncodified law  to                                                                  
     require Director  of the Division of  Mining, Land, and                                                                    
     Water to  submit an initial  report to  the legislature                                                                    
     detailing  aquatic   farm  and  hatchery   site  leases                                                                    
     pending  with  the  department, estimates  of  economic                                                                    
     impact   if   all   the  leases   were   granted,   and                                                                    
     recommendations  by DNR  and  other  state agencies  to                                                                    
     streamline the lease approval process.                                                                                     
                                                                                                                                
11:45:12 AM                                                                                                                   
                                                                                                                                
HEATHER   MCCARTY,  Chair,   Mariculture  Task   Force,  provided                                                               
background on  the Mariculture Task  Force, established  in 2016,                                                               
including its goal  of creating a $ 100 million  industry over 20                                                               
years by developing  the new industry in Alaska.   She added that                                                               
this   process   included  identifying   regulatory,   statutory,                                                               
economic,  educational,   and  environmental   as  some   of  the                                                               
industry's barriers and  hurdles, among others.   She stated that                                                               
the task force developed a strategic  plan and, in 2019, it began                                                               
implementation plans  to establish priorities among  the barriers                                                               
identified.   She stated that  one of the barriers  identified by                                                               
the  task force  was  the primary  permitting  and renewals,  for                                                               
which there  existed a large  backlog.   She added that  the task                                                               
force in cooperation  with the Alaska executive  branch helped to                                                               
identify areas  in statute that  could improve the  processes and                                                               
work towards  eliminating the backlogs.   She lauded HB 115  as a                                                               
step in  the direction of better  rules and better laws,  and she                                                               
said it would remove barriers  to new and current participants in                                                               
the industry.   She added that  the task force also  supports the                                                               
inclusion of ecotourism in the bill.                                                                                            
                                                                                                                                
11:48:08 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE VANCE  asked Ms. McCarty  to speak in  more detail                                                               
about the  hurdles identified  by the task  force in  the renewal                                                               
process  that  included  public testimony,  and  the  reason  for                                                               
removing public testimony in the renewal process.                                                                               
                                                                                                                                
MS.  MCCARTY  answered  that  the  biggest  hurdle  is  the  time                                                               
[required   for  renewal]   consisting   of  a   year-and-a-half,                                                               
compounded by  the increases  in new and  renewed [leases].   She                                                               
added that  the public  [input] process  had occurred  during the                                                               
initial permitting  and added that  it is her  understanding that                                                               
there does  not exist any  intent to  remove the public  from the                                                               
process.                                                                                                                        
                                                                                                                                
11:49:56 AM                                                                                                                   
                                                                                                                                
ERIC WYATT  shared that he  is a third-generation  fisherman from                                                               
Southeast  and had  diversified  into aquatic  farming  16 to  17                                                               
years ago,  now with a  focus on oyster  farming.  He  stated his                                                               
reasons for  choosing to participate in  the aquaculture industry                                                               
were economic and  environmental.  He stated  that his investment                                                               
in aquaculture is substantial, and  he attributed higher revenues                                                               
as a  [contributing factor to  the cost  of doing business].   He                                                               
recalled  his  experience  in  renewal  and  the  uncertainty  of                                                               
remaining in business  for a period of over 18  months.  He added                                                               
that  a farmer  in good  standing may  experience an  abbreviated                                                               
process; however,  the renewal processing is  intimidating, as is                                                               
the process for transferring permitting.   He stated his hope for                                                               
continued growth despite  the barriers.  He added  that he viewed                                                               
ecotourism  as a  positive addition  to the  bill and  that there                                                               
exists consumer interest in the "green" industry.                                                                               
                                                                                                                                
11:54:56 AM                                                                                                                   
                                                                                                                                
CHAIR TARR opened public testimony on HB 115.                                                                                   
                                                                                                                                
11:55:02 AM                                                                                                                   
                                                                                                                                
TREVOR SANDE, Marble Seafoods, stated  that he had been following                                                               
legislation  pertaining to  aquaculture closely  and had  applied                                                               
for  his  business  permit  in  2010.    He  suggested  that  the                                                               
committee consider extending the  period between renewals from 10                                                               
to as  much as  20 years due  to the length  of time  required to                                                               
establish and  develop his business.   He added that some  of the                                                               
financing he had  obtained had been granted over  a 20-year term,                                                               
and  a  lease renewal  timeline  could  more closely  align  with                                                               
available funding vehicles  to result in more surety  on the part                                                               
of investors.   He  added that  the public  has avenues  to voice                                                               
displeasure  or  claims of  negligent  behavior  on the  part  of                                                               
farmers through  Alaska Department of  Fish & Game  and suggested                                                               
that he  was ambivalent  to the public  comment component  of the                                                               
renewal process.  He added that  he is currently due for renewal.                                                               
He  added that  he had  amended  [his lease  permit] three  times                                                               
since  starting his  business, and  that  each one  had taken  in                                                               
excess  of  24 months  to  complete,  which he  characterized  as                                                               
onerous.   He supported  adding ecotourism  and education  in the                                                               
language  of the  bill since  he had  been required  to hold  two                                                               
leases to both farm and bring visitors to the farm.                                                                             
                                                                                                                                
CHAIR TARR  commended the value  of Mr. Sande's testimony  to the                                                               
committee to  aid in its  understanding of the experience  of the                                                               
farmers.                                                                                                                        
                                                                                                                                
12:00:25 PM                                                                                                                   
                                                                                                                                
MARKOS SCHEER, President, Premium  Aquatics, testified in support                                                               
of  HB 115  in  his role  as  a  kelp farmer  in  Ketchikan.   He                                                               
explained that  he has spent  approximately six years  engaged in                                                               
the development  of the business.   He stated that  creditors are                                                               
quick to ask for the term of the lease, which may not align with                                                                
the length credit note available.                                                                                               
                                                                                                                                
[HB 115 was held over.]