03/19/2021 01:00 PM House RESOURCES

         HB 115-AQUATIC FARMING & HATCHERY SITE LEASES                                                                      
                                                                                                                                
1:05:31 PM                                                                                                                    
                                                                                                                                
CHAIR PATKOTAK announced  that the first 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."                                                                          
                                                                                                                                
1:05:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ANDI STORY,  Alaska State  Legislature, as  prime                                                               
sponsor, presented the  sponsor statement for HB  115, 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.                                                                                                                     
                                                                                                                                
REPRESENTATIVE  STORY noted  that this  legislation was  heard in                                                               
the  Thirty-First  Alaska State  Legislature,  and  while in  the                                                               
Senate Finance Committee, a few  changes had been made which have                                                               
been incorporated in HB 115.                                                                                                    
                                                                                                                                
1:10:15 PM                                                                                                                    
                                                                                                                                
GREG  SMITH,  Staff,  Representative  Andi  Story,  Alaska  State                                                               
Legislature,  on behalf  of  Representative  Story, detailed  the                                                               
Sectional Analysis  on HB  115, 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 procedure;                                                                               
          ?   (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 of, 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.                                                                                     
                                                                                                                                
1:13:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   FIELDS   thanked    Representative   Story   for                                                               
introducing  the   bill  and  noted   that  he  has   heard  from                                                               
acquaintances regarding problems with  the 10-year lease renewal.                                                               
He asked why  the bill is written to  implement expedited renewal                                                               
processes instead of changing to 25-year leases.                                                                                
                                                                                                                                
REPRESENTATIVE STORY  answered that it  would be helpful  to hear                                                               
from the department staff who would be testifying.                                                                              
                                                                                                                                
REPRESENTATIVE FIELDS responded that he  would also like to learn                                                               
about  what happens  in the  case of  something going  wrong mid-                                                               
lease.                                                                                                                          
                                                                                                                                
1:14:46 PM                                                                                                                    
                                                                                                                                
CHRISTY COLLES,  Division Operations Manager, Division  of Mining                                                               
Land and  Water, Department of Natural  Resources, explained that                                                               
currently the regulation is for  a 10-year authorization, and any                                                               
term longer than  10 years requires a survey for  leases, and, in                                                               
many  cases, the  lessees don't  want to  spend the  money for  a                                                               
survey and appraisal.   She said it would be  possible to move to                                                               
a  longer  authorization, but  the  statute  affects all  of  the                                                               
leases.                                                                                                                         
                                                                                                                                
REPRESENTATIVE FIELDS  followed up  to ask whether  it's feasible                                                               
to  extend  the term  of  only  the  leases in  question  without                                                               
harming the other 10-year leases, and  to require the survey at a                                                               
later date instead of at the  beginning of the lease, so that the                                                               
lessee can  spread out the  costs and make more  money throughout                                                               
the lease term.                                                                                                                 
                                                                                                                                
MS.  COLLES  responded that  she  thinks  it  is possible.    She                                                               
explained  that  the  benefit of  this  proposed  legislation  is                                                               
allowing  the farmers  to have  the certainty  of a  longer lease                                                               
without having to  go through the full  process of preliminaries,                                                               
public notice,  and final  notice.  She  noted that  lessees have                                                               
expressed that  they would like  the option  of having a  term of                                                               
longer than 10 years.                                                                                                           
                                                                                                                                
REPRESENTATIVE  FIELDS  said  that  he  would  be  interested  in                                                               
introducing an  amendment to lengthen  the initial lease  term to                                                               
15 or 20 years, perhaps requiring a  survey at year 10.  He noted                                                               
that these  facilities are very  capital-intensive and  that it's                                                               
reasonable to have a longer period to recoup the investment.                                                                    
                                                                                                                                
1:17:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HANNAN  said that Alaska has  had many mariculture                                                               
leases, largely for shellfish, and  the further north the area is                                                               
the slower the  shellfish grow, so it may be  years before a farm                                                               
has a commercially viable crop.   She said that the new growth in                                                               
the  mariculture  industry  involves  faster-growing  crops  like                                                               
kelp, and that the department  found that it couldn't process the                                                               
new leases  into commercial operation because  it felt obligation                                                               
to  renew the  leases of  the existing  operators; new  operators                                                               
couldn't enter  the segment that's  flourishing in  the industry.                                                               
She  said  that new  operators  could  potentially conflict  with                                                               
other  leases, in  that allowing  lease renewals  is much  easier                                                               
than processing new leases.                                                                                                     
                                                                                                                                
REPRESENTATIVE  STORY  noted  that  when  an  operator  is  going                                                               
through a lease renewal their  application is queued with all the                                                               
others, lengthening the process.                                                                                                
                                                                                                                                
1:20:21 PM                                                                                                                    
                                                                                                                                
CHAIR PATKOTAK observed  that HB 115 would  bring the mariculture                                                               
industry to  the same level  playing field  with the rest  of the                                                               
agricultural industry in Alaska.                                                                                                
                                                                                                                                
1:21:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  HOPKINS said  that  even in  Fairbanks there  are                                                               
many Alaska-grown  mariculture products  and that  he appreciates                                                               
the proposed bill.                                                                                                              
                                                                                                                                
1:21:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FIELDS  asked  whether   10  years  is  the  best                                                               
timeframe  or  if  extending  the  lease  term  would  have  more                                                               
benefits.                                                                                                                       
                                                                                                                                
MS.  COLLES replied  that agricultural  leases  can go  up to  55                                                               
years, but aquatic farms are at  10 years based on regulations in                                                               
place.   She said  that regulations  can be  changed, and  if the                                                               
department  could  find  a  statutory  change  that  would  allow                                                               
consideration of  a longer-term lease,  they might allow  a lease                                                               
term beyond 10 years.                                                                                                           
                                                                                                                                
1:23:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GILLHAM  followed  up on  Representative  Fields'                                                               
question and  said that by the  time an oyster crop  is grown and                                                               
ready for market it could be 8  to 10 years, then they would need                                                               
to start all over.   He said that for seaweed  a 10-year lease is                                                               
appropriate, but for shellfish, it's too short.                                                                                 
                                                                                                                                
1:24:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FIELDS  said that he had  heard, anecdotally, that                                                               
growing seaweed and oysters  side-by-side benefits water quality,                                                               
and asked why that wouldn't be wanted.                                                                                          
                                                                                                                                
REPRESENTATIVE STORY said that she  would defer to the department                                                               
for that question.                                                                                                              
                                                                                                                                
MS.  COLLES responded  that the  question would  be appropriately                                                               
directed to the  Department of Fish and Game, but  that she is of                                                               
the same understanding as Representative Fields.                                                                                
                                                                                                                                
1:25:57 PM                                                                                                                    
                                                                                                                                
HEATHER  MCCARTY, Chair,  Mariculture  Task  Force, testified  in                                                               
support of HB 115.   She gave a brief overview  of the purpose of                                                               
the Mariculture  Task Force, noting  that it was created  in 2016                                                               
to  represent  several  entities  with  interest  in  mariculture                                                               
development; one of the task  force's first tasks was to identify                                                               
priorities  which  would  move mariculture  development  forward.                                                               
She said  that the task  force focused on  identifying regulatory                                                               
areas which  needed to  be addressed;  the Department  of Natural                                                               
Resources'  (DNR's)  lease  process  is  one  area  which  needed                                                               
improvement.   She said  that she believes  there was  a two-year                                                               
backlog  of   requests,  which  has  gotten   better;  the  issue                                                               
addressed in  this bill  was also identified  by the  task force.                                                               
She said  that the renewal process  doesn't need to take  as long                                                               
as the  initial lease.   She then said, regarding  the ecotourism                                                               
sites, that  allowing that  activity would  significantly benefit                                                               
those operators.                                                                                                                
                                                                                                                                
1:29:36 PM                                                                                                                    
                                                                                                                                
ERIC  WYATT,  President,  Alaska Shellfish  Growers  Association,                                                               
testified in  support of  HB 115.   He  identified himself  as an                                                               
active  farmer of  more than  10 years  and said  that it's  very                                                               
encouraging  to   hear  the  comments  that   are  supportive  of                                                               
mariculture.  He said that he  likes simple solutions to move the                                                               
industry  forward,   and  that   the  Alaska   Shellfish  Growers                                                               
Association  approves of  this proposed  bill, and  he personally                                                               
approves  of it  as  well.   He emphasized  his  approval of  the                                                               
ecotourism portion of HB 115.                                                                                                   
                                                                                                                                
1:31:34 PM                                                                                                                    
                                                                                                                                
CHAIR  PATKOTAK  opened  public  testimony  on  HB  115.    After                                                               
ascertaining  that no  one wished  to testify,  he closed  public                                                               
testimony.                                                                                                                      
                                                                                                                                
1:32:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  STORY remarked  that  she believes  HB 115  would                                                               
have  great  potential  for  helping   businesses  and  that  she                                                               
appreciates the support of the testifiers.                                                                                      
                                                                                                                                
REPRESENTATIVE GILLHAM  asked for a definition  of maritourism or                                                               
aquatourism.                                                                                                                    
                                                                                                                                
MR. SMITH answered  that maritourism is commonly  the practice of                                                               
people visiting the  shellfish farm, seeing the  floats or docks,                                                               
tasting the products, and learning about the process.                                                                           
                                                                                                                                
REPRESENTATIVE  GILLHAM  described  his  experience  visiting  an                                                               
oyster  farm  in  Prince  William Sound,  and  he  expressed  his                                                               
appreciation of HB 115.                                                                                                         
                                                                                                                                
REPRESENTATIVE    HANNAN   described    her   appreciation    for                                                               
mariculture, and  she noted  that there is  a growing  segment of                                                               
travelers that  want to  be educated  instead of  just purchasing                                                               
the product.                                                                                                                    
                                                                                                                                
1:36:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   HOPKINS  related   a   personal  experience   of                                                               
ecotourism.                                                                                                                     
                                                                                                                                
REPRESENTATIVE  CRONK noted  that he  supports the  proposed bill                                                               
and stated his support for helping private businesses.                                                                          
                                                                                                                                
REPRESENTATIVE  STORY agreed  that  supporting  this industry  is                                                               
important and thanked committee members for their comments.                                                                     
                                                                                                                                
1:38:09 PM                                                                                                                    
                                                                                                                                
CHAIR PATKOTAK announced that HB 115 was held over.