04/08/2024 01:00 PM House RESOURCES

            HB 329-AQUATIC FARM AND HATCHERY LEASES                                                                         
                                                                                                                                
1:59:14 PM                                                                                                                    
                                                                                                                                
CHAIR MCKAY  announced that the  next order of business  would be                                                               
CS  FOR  HOUSE  BILL  NO.  329(FSH) "An  Act  relating  to  state                                                               
tideland  leases;   relating  to  geoduck  seed   transfers;  and                                                               
relating to  aquatic farming or  related hatchery  operation site                                                               
leases."                                                                                                                        
                                                                                                                                
1:59:41 PM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 1:59 p.m. to 2:03 p.m.                                                                       
                                                                                                                                
2:03:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SARAH  VANCE, Alaska  State Legislature,  as prime                                                               
sponsor,  presented  CSHB 329(FSH).    She  paraphrased from  the                                                               
sponsor statement [copy included  in the committee packet], which                                                               
read as follows [original punctuation provided]:                                                                                
                                                                                                                                
     House Bill 329 promises  to provide a significant boost                                                                    
     to   Alaska's  aquatic   farming  industry,   known  as                                                                    
     mariculture.  This  legislation  has the  potential  to                                                                    
     bolster   the  state's   economy,  help   preserve  its                                                                    
     environment,  and  enrich  its coastal  communities  by                                                                    
     streamlining the  tideland lease process  and extending                                                                    
     lease durations to up to 25 years.                                                                                         
                                                                                                                                
     Mariculture,  the cultivation  of marine  shellfish and                                                                    
     aquatic  plants,  stands  as a  beacon  of  sustainable                                                                    
     economic  growth  for   Alaska.  Mariculture  not  only                                                                    
     generates   employment  opportunities   across  various                                                                    
     sectors   but  also   injects  vitality   into  coastal                                                                    
     communities.  The   industry  fosters   commerce,  both                                                                    
     domestically  and  internationally, while  nurturing  a                                                                    
     vibrant ecosystem in Alaska's pristine waters.                                                                             
                                                                                                                                
     One   of  the   key   features  of   HB   329  is   the                                                                    
     simplification  of   the  lease   acquisition  process.                                                                    
     Currently, prospective mariculturists  endure a lengthy                                                                    
     multi-agency  application  and   review  process  which                                                                    
     generally  takes years  to complete.  This bureaucratic                                                                    
     hurdle  often deters  potential  farmers from  entering                                                                    
     the  industry. HB  329 aims  to lessen  this burden  by                                                                    
     enabling quicker access  to tidelands, enabling farmers                                                                    
     to concentrate more on farming and less on paperwork.                                                                      
                                                                                                                                
     Moreover,  the extension  of the  lease duration  to 25                                                                    
     years    provides   for    long-term   stability    for                                                                    
     mariculturists and  encourages sustained  investment in                                                                    
     the  industry.  This  stability   is  crucial  for  the                                                                    
     development  of  robust mariculture  operations,  which                                                                    
     contribute    significantly   to    Alaska's   economic                                                                    
     diversification.                                                                                                           
                                                                                                                                
     The  environmental  benefits  of mariculture  are  also                                                                    
     noteworthy. Shellfish and seaweed  play a vital role in                                                                    
     maintaining water  quality by filtering  out pollutants                                                                    
     and  excess nutrients.  They provide  essential habitat                                                                    
     for  diverse  marine  life   and  help  mitigate  ocean                                                                    
     acidificationa pressing concern.                                                                                           
                                                                                                                                
     Furthermore,  mariculture  aligns  with  Alaska's  rich                                                                    
     cultural  heritage,  complementing existing  traditions                                                                    
     and customs  in coastal  communities. By  promoting the                                                                    
     sustainable    utilization    of   marine    resources,                                                                    
     mariculture strengthens  the bond between  Alaskans and                                                                    
     their natural surroundings.                                                                                                
                                                                                                                                
     With  HB  329 paving  the  way  for a  more  supportive                                                                    
     regulatory framework, Alaska's  mariculture industry is                                                                    
     poised   to   flourish,  creating   jobs,   stimulating                                                                    
     commerce, and safeguarding  the state's precious marine                                                                    
     ecosystems.   As   stakeholders   rally   behind   this                                                                    
     initiative, Alaska's coastal  communities stand to reap                                                                    
     the benefits of a thriving and sustainable mariculture                                                                     
     sector for generations to come.                                                                                            
                                                                                                                                
2:06:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  VANCE pointed  out  that  the Alaska  Mariculture                                                               
Alliance is an organization of  growers, and the organization has                                                               
requested  that   the  proposed   legislation  provide   a  first                                                               
preference  for growers  to obtain  leases.   She explained  that                                                               
currently  leases are  made for  10 years,  but it  takes several                                                               
years for farmers  to see a harvest; therefore,  this would allow                                                               
farmers first preference  after their leases are  up, giving them                                                               
the assurance that sites would not  be lost.  It would also allow                                                               
new  leases  to be  up  to  20 years,  as  this  would allow  for                                                               
longevity  of the  farms.   She added  that having  longer leases                                                               
would help these farmers to obtain loans.                                                                                       
                                                                                                                                
REPRESENTATIVE VANCE referenced the  amendments that were adopted                                                               
in  the  House  Special  Committee   on  Fisheries,  including  a                                                               
provision  to allow  for the  transfer of  geoduck seeds  between                                                               
hatcheries and aquatic farms.   She added that the amendment also                                                               
includes the Aleutian Islands in  the proposed legislation, as it                                                               
had been left  out of the original law.   She added that geoducks                                                               
thrive in this  area.  She noted that another  amendment that was                                                               
adopted  would eliminate  the need  for  property appraisals,  as                                                               
this  would  simplify the  process  for  the commissioner.    She                                                               
discussed  how  this  would  also  consolidate  language  in  the                                                               
statute.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  VANCE  directed attention  to  Section  4 of  the                                                               
proposed  legislation,   which  deals  with  leases   for  carbon                                                               
management purposes.   She stated that aquatic  farm growers have                                                               
the concern  that outside companies  looking to invest  in carbon                                                               
sequestration  would  lease  tidelands for  an  extended  period,                                                               
leaving  the  growers without  the  opportunity  to access  these                                                               
areas.   She suggested that an  amendment could be made  to limit                                                               
the  amount of  tidelands  these outside  investors could  lease.                                                               
She  expressed  the  understanding  that  there  is  interest  in                                                               
growing kelp for  carbon sequestration, so there could  be a dual                                                               
purpose,  as part  of this  could  be for  food.   She posed  the                                                               
question to  the committee on how  this area of statute  could be                                                               
shaped  going forward,  so Alaskan  mariculture farmers  would be                                                               
allowed to have a priority to  tidelands to grow food and sustain                                                               
the coastal communities.  She  also asked what areas of tidelands                                                               
could be used solely for carbon  sequestration.  She noted that a                                                               
prospective amendment  has been  used as  a placeholder  for this                                                               
committee to  discuss, as  the committee deals  with leases  on a                                                               
more regular basis.                                                                                                             
                                                                                                                                
2:12:22 PM                                                                                                                    
                                                                                                                                
PAUL  FUHS,  President,  Alaska  Shellfish  Growers  Association,                                                               
expressed support for the proposed  legislation, on behalf of the                                                               
association.  He  stated that the bill would  clean up unforeseen                                                               
issues in statute,  as mariculture is a  relatively new industry.                                                               
He discussed the long maturation  rate for geoducks, as a 10-year                                                               
lease would  be too short  for this process.   He noted  that the                                                               
current lease process creates an unstable industry.                                                                             
                                                                                                                                
2:13:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MEARS  requested  an  explanation  of  a  geoduck                                                               
operation.                                                                                                                      
                                                                                                                                
MR. FUHS  explained that geoduck  farming is  minimally invasive.                                                               
He stated that the maximum lease  is for 10 acres in the subtidal                                                               
zone, so the farms are unseen.   He stated that all other fishing                                                               
activities could  take place on  and around  the farm.   He noted                                                               
that  carbon sequestration  farms are  much larger  and can  take                                                               
over the area  around the sites.  He  expressed the understanding                                                               
that these operations would exclude  local populations from using                                                               
these sites.   He suggested  that only allowing  these operations                                                               
in remote areas could be a fix to this potential problem.                                                                       
                                                                                                                                
2:15:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER  referred to  Sections  3  and 4  of  the                                                               
proposed   legislation   on    carbon   management   and   carbon                                                               
sequestration.    He  questioned the  distinction  between  these                                                               
terms.                                                                                                                          
                                                                                                                                
MR. FUHS  expressed uncertainty.  He  expressed the understanding                                                               
that these terms have the same definition.                                                                                      
                                                                                                                                
REPRESENTATIVE  SADDLER   deferred  the  question  to   the  bill                                                               
sponsor.                                                                                                                        
                                                                                                                                
REPRESENTATIVE  VANCE  stated  that this  is  drafting  language.                                                               
Considering  the  other  carbon legislation,  she  expressed  the                                                               
intent in this bill to make  sure the leases for growers would be                                                               
secured.    She  stated  that  the  drafter  of  the  legislation                                                               
determined the language.                                                                                                        
                                                                                                                                
2:16:53 PM                                                                                                                    
                                                                                                                                
JAKE  ALMEIDA, Staff,  Representative Sarah  Vance, Alaska  State                                                               
Legislature, on behalf of Representative  Vance, prime sponsor of                                                               
HB  329,  responded  that "carbon  sequestration"  would  be  the                                                               
politically  correct  term,  while  "carbon  management"  is  the                                                               
legalese.                                                                                                                       
                                                                                                                                
REPRESENTATIVE SADDLER remarked on the  consistency in the use of                                                               
the terms in the proposed bill.                                                                                                 
                                                                                                                                
2:17:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  BAKER asked  the number  of current  leaseholders                                                               
and businesses  this would impact.   He commented  that regarding                                                               
other industries, a 20-year lease would be out of the norm.                                                                     
                                                                                                                                
MR. FUHS responded  that, in general, tideland  leases are longer                                                               
for other businesses, as  they can be up to 55  years.  He stated                                                               
that the  short leases do  not fit the  biology of geoducks.   He                                                               
stated that lease  extension options would also  ensure the farms                                                               
are operating properly.                                                                                                         
                                                                                                                                
2:19:26 PM                                                                                                                    
                                                                                                                                
KATE  DUFAULT, Program  Manager, Aquatic  Farms Leasing  Program,                                                               
Division  of  Mining,  Land, and  Water,  Department  of  Natural                                                               
Resources, responded that the  program has currently administered                                                               
around 78  aquatic farm-site leases,  with 50 percent  located in                                                               
Southeast Alaska  and 30 percent located  in Southcentral Alaska.                                                               
She added that the remainder are  in Kodiak Island and the Alaska                                                               
Peninsula.  In response to  a follow-up question, she stated that                                                               
the leases  range in size  from under 1 acre  to 180 acres.   She                                                               
stated that on average these leases are for 15 to 25 acres.                                                                     
                                                                                                                                
2:21:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SADDLER  asked  whether a  shellfish  mariculture                                                               
lease  or carbon  sequestration lease  would generate  more state                                                               
revenue and associated economic activity.                                                                                       
                                                                                                                                
MS. DUFAULT  stated that  there are some  rough numbers  from the                                                               
2022 annual  sales, but currently  she does  not have them.   She                                                               
added that  the sales  from shellfish accounted  for the  bulk of                                                               
annual sales.   She estimated  that shellfish account  for around                                                               
$1.6 million,  while kelp accounted  for $270,000 in sales.   She                                                               
stated that the numbers for 2023 are not yet compiled.                                                                          
                                                                                                                                
REPRESENTATIVE SADDLER questioned the fiscal note.                                                                              
                                                                                                                                
MS. DUFAULT  said the  fiscal note expresses  the numbers  in the                                                               
thousands,  not  the  millions.    In  response  to  a  follow-up                                                               
question,  she stated  that the  staff  time on  the fiscal  note                                                               
would represent the total cost, not the cost per hour.                                                                          
                                                                                                                                
2:24:04 PM                                                                                                                    
                                                                                                                                
CHAIR MCKAY announced that HB 329 was held over.