Legislature(2001 - 2002)
04/02/2001 03:35 PM Senate RES
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 141-AQUATIC FARMS FOR SHELLFISH
CHAIRMAN TORGERSON announced SB 141 to be up for consideration.
MR. DARWIN PETERSON, staff to Senator Torgerson, sponsor, described
the bill as follows.
The Alaska Department of Fish and Game [ADF&G] recently
proposed new mariculture regulations that were met with
sharp criticism from the aquatic farming industry. The
industry feels that the proposed regulations impose such
restrictive and unreasonable operational procedures for
farmers that, if implemented, [they] would constitute a
regulatory ban on shellfish farming in Alaska. SB 141 is
a good faith effort to mitigate the unsatisfactory
relationship between the aquatic farming industry and the
department. This legislation is also intended to preserve
an industry that has been proven successful in
diversifying the economy of Alaska.
SB 141 requires the Department of Natural Resources [DNR]
to offer public leases on 60 suspended shellfish sites,
20 clam sites and 20 geoduck sites. These leases are in
addition to permits already issued. The leasing program
charges more money for sites rich in harvestable
shellfish and less money for barren sites. If shellfish
are located on the site, the farmer must abide by the
sustained yield principle of management when harvesting
the wild stock. When selecting the sites for lease, the
commissioner of DNR must solicit nominations from the
industry and select sites that don't interfere with
established commercial, subsistence, or personal use.
SB 141 is intended to maintain the existence and
prosperity of a viable Alaskan industry without
interfering with other user groups.
SENATOR TAYLOR asked how the value of a site is determined.
MR. PETERSON said he assumes the department has that information
when it is charged with finding the fair market value.
SENATOR TAYLOR said that part of his concern is that before one
could acquire a site, [ADF&G] would have to make a valuation of the
shellfish onsite. That might create a situation in which only
wealthy fishing organizations, perhaps from offshore, could bid on
them.
MR. PETERSON said that is correct, but the intent was not to deal
with the common property clause, which has been a very contentious
issue with the state and the industry. Leasing these sites and
having the industry pay the state for the stock is one idea in an
effort to get around the common property clause. He suggested,
"There may be a better way to do that."
SENATOR TAYLOR agreed saying that the common property clause is
probably one of the more difficult aspects to work with in this
area.
CHAIRMAN TORGERSON said they would continue to discuss the issue
until they get it figured out.
Number 2200
MS. ROBERTA HIGHLAND, Kachemak Bay Conservation Society (KBCS),
asked if this applies to residents only or whether it would allow
large corporations to come in.
CHAIRMAN TORGERSON said his intent was to take testimony on the
bill today [and not to take action on it].
MS. HIGHLAND responded that while the KBCS recognizes the
importance of supporting a sustainable industry like mariculture,
it is concerned about how the industry grows, where it is located
and how it is regulated. SB 141 and HB 208 mandate leasing 90 sites
statewide to different mariculture uses. The KBCS does not see the
need to mandate leases. As needs develop, the agriculturists find
suitable locations. Sites should be evaluated for suitability and
consistency with state laws.
She said that a disposal of this number of sites all at once would
overburden the fishery managers and not allow complete evaluation.
She also said that as mariculture expands into new areas, they have
to be certain that conflicts between user groups are resolved. She
said, "ADF&G does a good job in its analysis of available
information and public input. Literature about shellfish farming
indicates that we should continue vigilance in inspections of
shellfish farms to prevent introduction of diseases and exotic
species. East Coast oyster farming brought in exotic pests there.
In Chesapeake Bay a disease wiped out natural oysters…"
She suggested a ban on genetic alterations of shellfish and the use
of antibiotics and fertilizers on shellfish farms.
MS. NINA FAUST, a Homer resident, said she didn't see a need for
this bill because it will artificially speed the growth of this
industry faster than it can be monitored. She stated, "Natural
growth of this industry is preferable." She said if this bill
passes, she would like it to set a maximum number of sites rather
than a minimum.
TAPE 01-25, SIDE B
MS. FAUST asked if residents would be able to comment on the
nominated sites. She thought that would be an important part of the
process and asked, "Where is the public oversight to protect the
public interest?"
MS. FAUST said she has concerns about restocking natural stocks
with farmed stocks because many of the places where mariculture has
proliferated have problems with introduced species and genetic
disorders. She also thought this bill would overburden the budgets
of the Department of Environmental Conservation (DEC) and ADF&G and
they wouldn't be able to do a good job for the state. She had a
concern with public auctions, especially if they're not restricted
to state residents. They could perhaps bring in outside interests
that may outbid local residents. The bill also says that sites must
be included in areas where mariculture is already occurring and she
is concerned with the numbers in Kachemak Bay (23 leases).
MS. FAUST also submitted written testimony from Ann Weiland, who
opposed the bill.
MR. SCOTT THOMAS, Alaska Trade Mark Shellfish, said his
organization is currently involved in a lawsuit with the state and
hasn't had a chance to take a position on the legislation. He
stated, "At first glance, the bill is a start and you have to start
somewhere. I think it forces the department to at least do
something here."
MR. THOMAS said he thought the first section, which directs the
department to establish fair market value, will be cumbersome. The
second section, which requires the sites to be restocked, is one of
the conditions his organization proposed to the department earlier.
It proposed a performance bond on every animal to be held in escrow
as a replant. He said, "We are already being taxed on this
industry. For example, our company last year, when we acquired our
leases, we had to put up $20,000 in bonding to DNR." In addition,
they had to pay $6,000 in lease fees and will pay a raw fish tax on
the stock they harvest. He thought the bill should concentrate more
on propagation and perpetuation of the species, not just the
standing stock and its value.
MR. RON LONG, Qutekcak Hatchery, Seward, stated support for the
idea behind the bill. He said the way to determine fair market
value was in statute, but he is concerned that the term "potential
productivity" is unclear. He thought, "They could do a better job
of returning appropriate value to the state for the resource in a
back-end loaded solution rather than a front-end loaded solution,
something in the form of a royalty based on what's extracted. If
the productivity is null, we can only guess on what productivity
will be until we try it."
MR. LONG suggested including a provision in Section 3 that would,
in addition to charging the commissioner with identifying sites and
zones, engage the stake holders in a planning effort that would get
them past the perceived conflicts as they arise.
MR. LONG told members that no exotic species are being introduced
in Alaska. The department has a very strict genetics policy that
does not allow genetic modification to the native species. He is
not aware of any farms in Alaska that use fertilizers on their
sites. Some have commented that this would stimulate big outside
interests to come to Alaska and he believes this would be precisely
the kind of investment that would be needed to reach critical mass
in the industry. He suggested if all other resources are limited to
in-state only bidders, that resource industry will be lost. He
remarked "That may be okay with some, but it's not okay with me."
In reference to comments that there are already too many farm sites
and development is happening too fast, he said no new permits have
been issued in the last six years.
MR. JOHN AGOSTI, Alaska Shellfish Growers Association, said he has
problems with the definition of "essential productivity of a site"
in section 1. There are too many natural and human factors to
realistically and fairly determine potential productivity.
Additionally, he would like to see the Department of Community and
Economic Development (DCED) involved in the list of agencies in
section 3. DCED could play an essential role in selecting sites
with community wide planning and a hearing type process. On line 13
he suggested replacing the word "identify" with "planning and
select".
MS. JANICE ADAIR, Director, Division of Environmental Health,
Department of Environmental Conservation (DEC), said she would
answer questions.
CHAIRMAN TORGERSON asked if she was trying to balance her budget on
the one fiscal note.
MS. ADAIR responded, "There are some requirements we have to follow
under the National Shellfish Sanitation Program and we really
didn't know what 'suitable' meant. If 'suitable' was defined as
sites that were already in areas certified by DEC, then our fiscal
note would be zero.
MR. MICHAEL BANGS, a Petersburg resident, said it might be a
suitable bill to help aquatic farms, but he is concerned about
geoducks. He is on the board of directors for the Southeast
Regional Dive Fisheries Association, although he is not
representing it today. Their mission is to develop, expand and
enhance the dive fisheries in Southeast Alaska. He told members,
"When you entered geoducks in this Act, you created a situation
where we're mandated by the state to develop the fishery and when
you have geoducks being farmed on a site that has existing stocks,
it creates conflicts."
MR. BANGS explained the reason that many of these areas aren't open
for harvest to geoduck divers is because they haven't had the
funding from the legislature to expand into the areas. They are in
the process of expanding through self-taxation. He said, "If there
would have been a little bit more communication, I think they would
have found that as a regional dive association, one of the original
protocols for developing the geoducks fishery was to reseed the
population as we harvest them and do a lot of farming techniques
that the farm applicants plan on doing as individuals. We are
planning virtually the same thing on a regional basis. All of a
sudden, we have a wall in front of us and that really bothers me."
He thought in terms of common property law, the legislature is
contradicting itself in helping the fishery.
MR. RICK HARNESS, a Homer resident, opposed SB 141 and said his
area of Kachemak Bay is a critical habitat area that has too much
development already. This proposal would cripple the ecosystem even
more. He said they have already lost indigenous species, such as
crabs and shrimp. Now they are concerned about shellfish being
diminished because of the biomass. He noted, "We need to study what
we have so we can better manage it."
MR. RAY ROWLAND, Aquaculture Specialist, University of Alaska,
supported the committee's efforts to resolve the issue and the
general contents behind the bill. He said there is a tremendous
amount of ignorance about how this industry runs and the impact it
has on the environment. He expressed concern about the productivity
issue in Section 1 and said, "The potential productivity of a site
is often determined by the farmers themselves. You could have a
highly productive area with a farmer that's not doing a very good
job."
He said that productivity is also quite variable from one year to
the next. He also expressed concern about the up-front public
auction. He said they had talked about placing some kind of
assessment on harvested stock as payback to the State of Alaska as
the farmer operates that facility.
MR. BOB HARTLEY, Alaska Shellfish Association, said he is an oyster
farmer in Kachemak Bay. Generally, the bill tries to accomplish a
number of things. He sees a couple of problems in Section 1 and the
requirement that the value of the lease is to be appraised every
five years. He wanted to know what the value would be based on and
questioned whether it would be the value of the improved beaches in
the area. He thought "productivity" needed clarification. He
thought Section 3 gave them a good date to shoot for, but suggested
DCED should be involved in the process since new farms would help
develop a community. He thought it made sense to get community
involvement on an area wide basis rather than statewide.
On line 19, he thought the word "interfere" should be changed to
"significantly alter" since that is the term used in regulation and
the present state mariculture law.
MS. JULIE DECKER, Southeast Alaska Regional Dive Fisheries
Association (SARDFA), thanked the committee for taking up this
issue.
SARDFA foresees several problems with offering leases of
wild resources to the highest bidder. First, allowing the
resource to go to the highest bidder often sets up a
system that is beneficial to large corporations and
precludes the smaller, independent business person.
Second, this form of leasing of wild stocks seems to be
following the direction of the state of Washington.
Please allow me to give you some information regarding
commercial diving and aquatic farming of geoducks in
Washington. For its commercial dive fishery, Washington
leases tracts of its wild geoducks on sub tidal lands to
the highest bidder through its Department of Natural
Resources. This system does several things:
· It brings in approximately $30 million per year to
WA DNR (or 80% of the ex-vessel value).
· It yields approximately $.50/per pound to the diver
(or approximately 10% ex-vessel value).
· It yields approximately $0.50/per pound to the
leaseholder (or approximately 10% ex-vessel value).
· It allows large Chinese-owned, Canadian companies
to dominate the leases and control the geoducks
markets.
· It precludes management by the WA Fish & wildlife
Service and does not allow the commercial industry
to employ other management techniques or begin
enhancement strategies.
· It has encouraged highgrading of geoducks, which
may lead to problems with sustainability.
SARDFA members believe this is exactly the opposite direction
Alaska should be taking to protect the long-term sustainability of
the geoducks resource. In the words of a SARDFA member, "Some of
the dirtiest words a geoducker can hear are DNR, highest bidder and
lease."
MS. DECKER told members:
However, in Washington, geoducks are being successfully
farmed on private, intertidal areas, where very few, if
any, wild stocks grow. This example demonstrates that
wild geoducks are not needed for biological or financial
reasons in order to farm geoducks. The two most
important factors in successful geoduck farming are
having the proper substrate and having access to seed.
Although SARDFA understands the necessity to make
suggestions of changes, which will remedy this situation
to our satisfaction, SARDFA does not currently see a
clear solution to this problem.
The next problem SAFDFA sees in this bill is continuing
conflicts between existing users in the the geoducks
fishery. SARDFA suggests three possible solutions for
this problem that could be inserted into these bills:
· Require that on-bottom farming sites be
intertidal.
· Require that on-bottom farming sites have
little stocks, for example, setting density
levels above which the site would not be
suitable.
· Require that geoduck farming sites have no
wild stocks.
In 1997, the divers and municipalities in Southeast
recognized that with budget reductions, there was little
hope of money being appropriated to develop the dive
fisheries. Thus, the divers and the municipalities
stepped forward to develop a program in which the divers
would tax themselves and work in a partnership with ADF&G
and ADEC to develop the fishery in an orderly and
economically beneficial manner. SARDFA is glad to report
that we are moving forward in a coordinated and
productive mode.
Senator Torgerson, you were a supporter of our
legislation and it is something you should be pleased to
have had a part in. SARDFA hopes the aquatic farming
industry will be one that is mutually beneficial to the
dive industry; not destructive to it.
MR. BOB LOEFFLER, Director, Division of Mining, Land and Water,
DNR, thanked the committee for taking up this issue but told
members DNR has a number of concerns with the bill. He said he
believes DNR's program works; a vast majority of applications get
approved. SB 141 would make a one-time separate procedure for
cultures and the program's real problem is the difference between
common property resources with respect to on-bottom culture. His
concern is that this bill will not solve that problem but just
establishes a new procedure.
MR. LOEFFLER said DNR received 45 applications in 1999 and that was
after it hadn't had an opening for a number of years. DNR expects
to receive an average of 15 - 20 applications for most openings. He
noted, "This is a much bigger program; it returns about $48,000 of
income to the state in terms of beach rentals."
MR. LOEFFLER said DNR is concerned that the requirements for the
state to identify locations means it must gather expensive site
specific environmental information that's typically gathered by the
private sector, such as stock density, water quality, water
flushing out and other site specific information. Those are the
major costs in DNR's fiscal note.
MS. VI JERRA, an Anchor Point resident, opposed SB 141. She said
they want the public access and beaches to be kept for public use
and not restricted to private uses. She thought private use might
be unconstitutional.
MR. MAKO HAGGERTY, a Homer resident, opposed SB 141 for several
reasons, one being the use of public property for private use. His
second concern is restricting the habits of everything that eats
the clams, like ducks and fish. His greatest concern is that this
is an end run around ADF&G in terms of regulation and it's
dangerous territory for the legislature to be micromanaging the
fisheries.
MR. DON FELL, a Homer resident, stated support for SB 141. He
believes it is a good idea to establish mariculture. He thought the
farmers should have the first option and can best decide where the
site should be, not ADF&G. He thought the language on line 19 was a
bit vague. He said that some of his neighbors are concerned with
lost species and stated, "Kachemak Bay has been pretty well drained
of everything that I've seen here since I came and it is time to
replace some of these species rather than to continually take them
out. Seabirds have been depleted, not because of mariculture or
oyster farms; but because of eagles, which are being fed off the
spit…"
MR. FELL said if clam farming were given a chance, his colleagues'
concerns would be alleviated as, "The oyster farms in this
community have added a permanent resource to the community. This is
the only seafood that comes out of our bay year-round and we've
brought in over $100,000 worth of products into Homer. The end
product for local restaurants could easily be tripled."
MR. FELL said that taking public beaches is the equivalent of
limited entry. The beaches are a public resource that can be used
for all the public's good in terms of jobs.
MS. NANCY HILLSTRAND said she has worked for 20 years in the
Division of Fisheries Rehabilitation and Enhancement on depleted
stocks of salmon. She said they instituted hatcheries, but the
enhancement that started out as something good has turned into
something that is quite bad. It's created problems with production,
disease, predatory control, and crash prices for commercial
fisheries. She noted, "It's just the nature of the beast that we
need to have a handle on these things." Right now they have a
processing plant, an oyster bar, a gift shop, a retail outlet and a
mail order seafood business in Homer. Even though clams could help
their business, she thought open access taking of the clams would
be better than mariculture.
MS. HILLSTRAND thought this process should go before the Board of
Fisheries as a developing fisheries proposal, which would then go
to the local Fish and Game Advisory committees and through the
public process. She noted, "Commercial fisheries, if managed
wisely, can be regulated with bag limits, season limits and open
access. On-bottom intertidal dredging is something there is no
handle on. There can't be, as I saw for 20 years in the hatchery.
There were many policies in place, but still disease was allowed to
continue and the problems were tremendous."
MS. HILLSTRAND concluded by saying if the state does not follow its
three-point constitutional mandate of utilization, development, and
conservation, it's going to be in trouble.
MR. MARK DONAHUE, a Homer resident, said he supports SB 141 with
reservations. He questions the bid process and having the
department determine values. He wished the state had started with
shellfish hatcheries before fish hatcheries.
MR. DOUG MECUM, Director, Division of Commercial Fisheries, ADF&G,
said ADF&G has looked at previous versions of this bill and does
not believe the exclusive right of fishery and common use issues
have been solved with the current language. He said Section 1
requires DNR to include the value of harvestable resources on the
site in determining the fair market value.
TAPE 01-26, SIDE A
MR. MECUM said:
We have similar concerns with Section 2 in that it
implies that a farmer has somehow obtained a right to
harvest these wild resources on the site. We do support
the idea in Section 3(b) that sites for on-bottom farming
be chosen in areas where wild stocks do not exist.
Subsection (c), however, conflicts with that and allows a
farmer to apply for a site they've chosen with no such
restriction on the presence of the wild stock.
One sort of a housekeeping issue is defining what
constitutes an established commercial, subsistence or
personal use fishery. That might be something that could
be included in the bill.
ADF&G's part of it isn't so much in the site selection.
One of the things we would suggest for consideration
would be something we have talked to various people about
and talked to the industry about and that is setting up a
system in areas where there essentially are no wild
stocks present. There's clearly no common use issue, no
constitutional roadblock. In areas where there are lots
of these resources, highly abundant geoduck clams, for
example, and perhaps that area would be the kind of area
that would be established as a commercial fishing area,
personal use and subsistence. In this gray zone or in-
between zone where there's some, but not very many,
perhaps not supporting a commercial fishery, some sort of
a mechanism could be established to harvest those
resources and put them into some sort of program receipt
account or something along those lines to prepare the
site for farming. I would also say that we would
certainly support your efforts to try to jumpstart the
process. We'd like to work with you on suggestions to the
bill.
CHAIRMAN TORGERSON asked where the suggestions were that he asked
for two months ago.
MR. MECUM said that they responded with some suggestions, which are
also in a letter to the committee.
CHAIRMAN TORGERSON asked what happened to the list of things the
department had agreed to do.
MR. MECUM said he thought they had responded to a lot of those
concerns and he would go through the list with him point by point.
CHAIRMAN TORGERSON said, "It's a waste of my time." He was
convinced that the department did not want to go forward with it.
SENATOR TAYLOR asked what impact this legislation would have on the
regulations they are in the process of submitting.
MR. MECUM replied that he didn't think it would have a lot of
impact. They have had two public workshops and extended the public
comment deadline on those regulations. He thought they would come
up with very acceptable regulations when the process was done.
SENATOR TAYLOR asked what affect he thought the regulations would
have upon the pending litigation with the shellfish mariculture
group.
MS. SHANNON O'FALLON, Department of Law, responded that they don't
have a ruling from the Superior Court judge yet. She didn't think
the regulations would have any impact on it, but the judge's
decision could have an impact on the regulations in regard to
access to common property resources on a farm site. She explained
if the judge were to find that the department's interpretation of
the constitution is inconsistent and would find that the statutes
do allow a farmer to access common property resources, they would
have to look at changing the regulations or, "More than likely, we
would ask for a stay of the Superior Court decision pending appeal
to the Supreme Court while we take this issue up."
SENATOR TAYLOR said that was what he thought and he was concerned
that the department "fast tracked" the regulations with the
litigation pending, especially with some of the allegations within
the litigation of coercion on the part of the department. He
thought that maybe they should defer to the judiciary to resolve
the initial problems, "before we attempt through either the
legislature or the department to come in with a back door solution
that may very well preclude the findings of the judiciary."
MS. O'FALLON responded:
There are a number of issues in the litigation, apart
from the common property resource and exclusive right to
fishery issues. One of the allegations was the department
applied policies that weren't in regulation and,
therefore, the application of those policies is invalid.
So the promulgation of regulations that more fully
implement the Aquatic Farm Act is a good idea. One of the
things the department argued to the court was to the
extent you find that we improperly applied policies
because they weren't in regulation, the proper remedy is
not to just grant the applications. The proper remedy is
to remand the applications back to the department for
consideration under the new regulations. There are also
some issues with concerns with statutory interpretation
over conflicts with different fisheries, traditional
fisheries, etc. I think that in the next round of
applications these regulations will get the department a
long way towards having a smoother application process.
CHAIRMAN TOGERSON asked where the department's fiscal note was.
MR. MECUM responded that DNR submitted the fiscal note and it had
an RSA for a quarter of a million dollars going back to ADF&G,
which is roughly the equivalent to what they requested last year
for a similar thing.
MR. ROGER PAINTER, Alaska Shellfish Growers Association,
complimented the chairman on his attempt to address some of these
troubling issues. He said he is glad that the chairman said this is
a work in progress, because he has some concerns with two sections.
In section 1 the phrase, "potential productivity," is a very
difficult concept to define. Professor Weiland said that natural
productivity varies significantly with environmental conditions.
It's really inadvertent, but the new language would result in much
higher lease fees for all farmers, whether or not there's standing
stocks on the site. He said that he would get suggested language in
the near future on that issue.
MR. PAINTER pointed out that Alaska already has the highest lease
fees for aquatic farm sites in the country and section 1 would add
to those already high costs. He added that he was glad the chairman
clarified that the special process wouldn't supplant the existing
application process in section 3(c), but he was concerned with the
last clause on line 27 "leases for aquatic farming sites that are
issued after the effective date of this Act on the basis of lease
applications filed with the department before the effective date of
the Act may be counted toward the satisfaction of the requirement
established by (a) of this section." He thought that it could mean
if he came in with applications for another acre to add to his
farm, that he would be put in the position of a competitive auction
on that particular site. He wasn't sure that was the intent.
MR. PAINTER said that Professor Weiland had commented earlier on
aquaculture development zones and they are very interested in this
concept and have been trying to work with local communities,
governments and state agencies on furthering it. He thought it
could be embodied in this bill as it gets toward the legislation's
objective.
MR. PAINTER said he differed with Mr. Mecum in that the Alaskan
Shellfish Grower's Association is not real pleased with the
regulations. He said they were pleased with the progress in
changing them, "That's much different than being pleased with the
final product." He explained that the regulations started out "95%
bad" and they have probably corrected 75% so far.
SENATOR TAYLOR asked what he thought about using a royalty on the
product coming off of the ground instead of a bidding process for
leases.
MR. PAINTER answered that that concept is already in effect since
they do pay a fisheries business tax that is equal to what the
commercial fishermen pay that is based on the value of their
production. In addition to the lease fees they pay, they are paying
a value on the production on the site.
SENATOR TAYLOR asked if that wasn't just a flat 3 percent. He was
talking about a royalty that would include the lease.
MR. PAINTER answered if it were a royalty instead of a lease fee,
they would be very interested in pursuing it further. Mr. Thomas
pointed out earlier that they are paying lease fees on sites they
are not able to farm right now. It is a problem to get sites late
in the year that they are not able to use for that particular
growing season and having to pay lease fees on them. They are
paying lease fees on a site that won't see profits for three or
four years.
There being no further questions or discussion, CHAIRMAN TORGERSON
adjourned the meeting at 5:45 pm.
| Document Name | Date/Time | Subjects |
|---|