Legislature(2001 - 2002)
02/25/2002 03:37 PM Senate RES
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
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SB 141-AQUATIC FARMS FOR SHELLFISH
CHAIRMAN JOHN TORGERSON called the Senate Resources Committee
meeting to order at 3:37 p.m. All members were present. Chairman
Torgerson announced SB 141 to be up for consideration and said he
thought that with the proposed committee substitute, the bill was
ready to go forward.
MR. DARWIN PETERSON, staff to Senator Torgerson, sponsor, said
last year the Alaska Department of Fish and Game (ADF&G) proposed
new mariculture regulations that were met with sharp criticism
from the aquatic farming industry, which felt the regs were too
restrictive and would constitute a regulatory ban on shellfish
farming in Alaska. SB 141 was introduced as an effort to preserve
an industry that has proven to be successful in the
diversification of Alaska's economy. The committee substitute
requires the Department of Natural Resources (DNR) to offer
public leases for 60 suspended shellfish sites, 20-clam sites and
10 geoduck sites. These leases are in addition to permits that
are already issued. Before offering the leases, the commissioner
must solicit nominations for sites from the aquatic farming
industry and the public and select sites that don't interfere
with established commercial, subsistence or personal use. That
requirement is intended to maintain the existence and prosperity
of a valuable Alaskan industry without interfering with other
user groups.
MR. PETERSON explained the changes made in the proposed committee
substitute (CS). Section 1 on page 1 was deleted in the CS
because in the original version, aquatic farmers would pay a
fisheries business tax of 3%, plus the price of the lease, which
is $250 for the first acre and $150 for each remaining acre and,
on top of that, at a predetermined value of the resource on the
site and the potential productivity of the site of shellfish.
That made sense because it skirted the public domain problem. DNR
has a policy that says before a lease is issued, aquatic farm
sites must be commercially fished out before the farmer can go in
and plant seed. With the new language, this is a moot point.
The second change is on page 1, line 12, where the date the
leases must be made available to the public is changed from July
1, 2002 to July 1, 2003 since this is the new year.
The third change is on page 1, line 15, and page 2, line 2, where
language is added requiring DNR to offer leases that were not
purchased at the public auction to be made available to the
public over the counter.
SENATOR WILKEN moved to adopt the proposed committee substitute
to SB 141, (Version L) as the working document before the
committee. There were no objections and it was so ordered.
SENATOR TAYLOR asked if the bill contains a definition of the
word "site."
CHAIRMAN TORGERSON said it doesn't, but he understood that it was
determined by DNR and depended on which area DNR was considering.
MR. ROGER PAINTER, Alaska Shellfish Growers Association,
supported CSSB 141(RES). He stated, "We think this version takes
care of all the problems and concerns we had with the original
legislation and it is a very good bill to be moving forward
with…"
He said he had a small concern in Section 1. The Shellfish
Growers have no problem in restoring sites to the original
population levels, which is part of existing regulations and
conditions on their permit right now, but sometimes the leases
are offered much in advance of when ADF&G makes the operational
permits effective. For instance, he received the lease on his
sites under the 1999 opening in early 2000, but he still doesn't
have control of all of them. He noted, "They are open for common
property harvest right now and my permits with ADF&G don't become
effective until those common property harvests are complete. So,
I don't know if any tinkering needs to be done with that
language…"
MR. PAINTER said the committee also might hear today that this
bill directs DNR to identify and offer for lease 90 sites. He
explained that DNR and ADF&G work together in making sites
available. He explained:
DNR needs to issue a lease and ADF&G offers a permit.
These go through the Coastal Zone Management [CZM]
process simultaneously. That process only responds to a
specific proposal. In offering these sites for lease,
the DNR will be just making some areas available.
People will come in and apply and propose a specific
farm plan, which will then go through the CZM process
and Fish and Game can respond to that specific plan. I
think the agencies really need to work together in this
process. Fish and Game needs to work with DNR in
identifying these sites and I don't think that Fish and
Game needs to go out to each site and do detailed site
assessment work. However, they should be involved to
the extent that they flag for DNR potential problems.
If they believe there is going to be some major
conflicts on those sites, those should be identified
before they are offered to the public and the public
gets caught in a catch-22. You can come in and put your
money down for a site, but you can't get your permit. I
think by directing Fish and Game to work with DNR in
identification of the sites, those problems can be
taken care of.
MR. PAINTER noted that the Alaska Trademark Shellfish Association
proposed another amendment, but his board hadn't had time to
discuss it.
SENATOR TORGERSON asked him if he knew the population level
before signing the lease, but didn't know how much common use
would be taken between the time the lease is signed and the time
it is turned over to him.
MR. PAINTER replied that when they apply for a site, they are
required to provide the agencies with some estimates of the
standing stocks that are available at those sites. Then ADF&G,
after it goes through the process, will open those sites for a
common property harvest. After that harvest, the lessee does an
assessment of the standing stocks according to ADF&G protocols
for site assessments. At this point they determine the amount of
standing stocks that have to be restored when the lease is
terminated. He wants to make sure the restoration is to the
levels that exist when the lessees get control of that site and
those stocks, which is after the common property harvest.
CHAIRMAN TORGERSON asked if they could add, "...when the common
property harvest rights were satisfied."
MR. PAINTER suggested, "...when Fish and Game operating permits
become effective."
SENATOR ELTON said he had assumed that DNR would work with the
aquaculture community to try and identify sites, but it sounds
like Mr. Painter is suggesting instead a dynamic between DNR and
ADF&G.
MR. PAINTER replied that he hoped that local communities and
industry would send nominations to DNR and then DNR and ADF&G
would respond to those. He would like to see the agencies work
together to identify at least major problems within an area
before they are offered for lease to the public.
3:52 p.m.
SENATOR ELTON asked if it is realistic to expect that 90 sites
would be ready for lease by July 1, 2003.
MR. PAINTER responded that this gets back to Senator Taylor's
question of site definition. Currently, farms are 1 - 10 acres
and each farmer has different requirements for their specific
operation. He is working on an aquaculture development plan for
Prince of Wales Island and has done some reconnaissance work and
would be prepared to offer a number of locations in this area
that range in size from 50 - 100 acres to 10 acres. In each of
the developable locations, it might be possible for DNR to offer
five sites. He believed Sea Otter Sound could support as many as
40 or 50 farms.
The identification of sites may be a large number, but it might
not be as difficult to find them as one would imagine - geoducks
for example. A number of sites were applied for in 1999, some of
which had no geoducks and some had a few. There might not be very
many geoducks, but the site might still meet the department's
present criteria. It's their intention to work real hard if this
legislation is adopted to identify sites and do site assessment
work and provide the department a considerable amount of
information on those sites.
SENATOR TAYLOR asked if the lessee is held to the second
assessment after the common property harvest for restocking to a
sustained yield level.
MR. PAINTER replied yes, they are held to numbers identified in
the second assessment.
SENATOR TAYLOR asked if that was after the harvest had already
occurred.
MR. PAINTER indicated that I
s correct.
SENATOR TAYLOR asked why they would restock to the original
level.
MR. PAINTER clarified:
The standing stocks that are there before the common
property harvest - let's take a geoduck site as an
example. If there was a site leased out and they did a
common property harvest, all the divers would show up
or as many that were interested and harvest those
stocks. The applicant may not be taking part in those
harvests at all; it would be the commercial fishing
fleet. And the farmers shouldn't be held liable to
restore them to the original level before the common
property harvest, because they are open to all citizens
of the state, unless it's a limited entry fishery…
CHAIRMAN TORGERSON reiterated that the bill currently does that.
He asked Mr. Painter to focus on the bill.
MR. PAINTER responded that when he got his leases from the 1999
openings for clam sites, they were made effective immediately,
but DNR did not understand that ADF&G was not issuing the
operating permit until the common property harvest had been
completed. DNR discovered that when he started complaining about
having to pay lease fees when he didn't have access to the sites
to conduct aquatic farming. Now they are in the process of
revising their leases so they become effective when the operating
permit becomes effective, which would be after the common
property harvest.
4:02 p.m.
MR. PAUL FUHS, Alaska Trademark Shellfish Assoc. (ATSA), said
ATSA is the subject of the lawsuit. The issues are that ATSA went
through CZM and was consistent with that process. ATSA then got a
best interest finding from DNR and people participated all along.
That took a year and a half. When it came time to get the permits
from ADF&G, ATSA was rejected because there were substantial
amounts of standing stock on some of the sites. Although, the
department's policy now is to let a fishery occur there and then
open it to aquaculture, that's only true in the case of those
fisheries that are not limited entry. He added:
Although I hate to disagree with my good friend, Roger
Painter, this is not a new idea. This is exactly what
we do in the common property fishery. This would extend
the same practice to limited entry fisheries. The issue
is there when the constitutional amendment went into
our Constitution, it says, 'No exclusive right or
special privilege of fishery shall be created in the
natural waters of the state except for limited entry
and to promote the efficient development of aquaculture
in the state.'
He said that's never been tested or defined and that's before the
Supreme Court right now. They hope to resolve the problem with
their amendment, which reads, "In an area where there is no
existing fishery." He stated:
And that is the case with all the sites that have been
applied for. No one else is using the resource now. If
there's a standing stock there, there will be an open
period for the divers to come in and take the resource
and even take beyond what would be normal sustainable
yield. I mean it's going to be an aquaculture site.
Usually you take 2% per year, but they could go in and
harvest at even a higher level, which is also what's
done at the clam sites now with the proviso in the end
the stock will be restored to the original level.
For us, in the limited entry fisheries, we are willing
to restore to the original level so this is not a
violation of either the sustained yield concept in our
Constitution or of the common property law provisions
of our Constitution. That's why it's written that way.
We make it a little bit different for intertidal
species, which are like clams. You have to dig those at
low tide and sometimes there's only a couple of days a
month you can do that.
For the dive fisheries, you can get right in and take
care of it. This would make that clear. I do also want
to make it clear that what ADF&G said - that you can
have a permit if there aren't substantial stocks there.
They have never defined what substantial is and a farm
is looking for an area that has a lot of animals,
because obviously that's a good place for them to grow.
That's why they are there. These are broadcast
spawners; they broadcast their eggs in the water. They
float around everywhere and they settle in the places
where you can make a living. So, it's a little bit of a
disconnect of the science, common sense and our
Constitution - is the solution that we're looking for
here. My clients have said if we can resolve this,
they'll drop the lawsuit and we can all forget about
suing each other and the cost to the State of Alaska
and we can all go to work.
MR. FUHS said that he has discussed this with ADF&G, the
Attorney General's Office and the Dive Association and,
while he didn't think any of them were ready to take an
official position now, everyone liked the general concept
but wanted to see the details of the periods of public
notice and harvest and how it would be set up. He felt that
everyone wanted to resolve this issue.
SENATOR TAYLOR asked if his group is willing to restore to the
original level.
MR. FUHS replied:
The difference is that when you harvest like the little
neck clams, you only harvest to a size of maybe an inch
and a half and everything smaller than that is still
left there. That's why you're just making up that
difference. When you harvest geoducks, it's much more
digging up the ground to get them and it's more
disruptive. That's why I think it's more realistic for
us to say we'd replace it to 100%, plus we're trying to
deal with the constitutional issues of sustainable
yield and common property access.
SENATOR ELTON said it seems that his proposed language makes it
almost impossible to do 90 different leases by July 1, 2003.
MR. FUHS replied:
This is really separate. What Roger is talking about is
pre-identifying sites. There's a lot of sites out
there. Private industry is out and they're doing the
research to find the sites they think they can make a
farm at.
He thought the intent of this bill is to make the two departments
pre-identify sites so it's easier to get the leasing.
SENATOR ELTON said he might misunderstand, but he thought a lot
of the sites Mr. Fuhs is interested in would be sites that a
potential leaseholder would be interested in because of the
already existing stocks. Given that, it seems that he wants to
create an additional five-month period for a lot of potential
sites that could be made available to a leaseholder.
MR. FUHS replied that he didn't know how long the common property
had to stay open to fish clams. His amendment calls for a three-
month period for intertidal species - two months for notice and a
three-month harvest period. He thought the period might be even
longer now before one can have positive control of a site. His
amendment just extends it to limited entry fisheries.
SENATOR STEVENS asked if the common property fishery only allows
a 2% annual harvest rate that could go on forever.
MR. FUHS replied:
You would allow them to go in and fish above what would
normally be a sustainable level. In fact, they could
potentially come in and take 100%, because the farmer
is going to replace 100%.
SENATOR STEVENS asked if under his recommendation, the lessee
would replace back to the original assessment.
MR. FUHS said that was correct even if 100% of the animals were
taken. He added:
So the divers could possibly fish 50 years worth of
diving in a month, because you know this is going to be
replanted. The hatcheries can do this. They've got the
geoduck spat right now. We just can't get the permits
to farm."
He said that DNR requires bonding from the hatchery in Seward to
make sure the resource is replaced. That is what the lawsuit is
about.
SENATOR STEVENS asked who makes the determination of when the
common property is harvested.
MR. FUHS replied under this proposal ADF&G would give them 60
days notice that this site is going to be open for 30 days to
take all they can and then after that it's going to be an
aquaculture site. At the end of the 10-year lease for
aquaculture, it will be restored to the full population.
SENATOR STEVENS asked him to contrast that to Mr. Painter's
proposal.
MR. FUHS replied that Mr. Painter wants to modify it a little bit
for clams to say they will restore it to the point after the
common property harvest.
SENATOR STEVENS said he wanted to know who made that
determination.
CHAIRMAN TORGERSON said ADF&G does.
SENATOR LINCOLN asked how long the lawsuit would continue.
MR. FUHS replied that the appeal has been filed and he didn't
know when the Supreme Court would issue a determination. It took
the Superior Court eight months to issue the court ruling on July
19, 2001.
CHAIRMAN TORGERSON asked what the verdict of the lawsuit was.
MR. FUHS replied that the court said ADF&G's regulations were
completely wrong and that an open dive fishery and aquaculture
was unworkable. They said the proponents had violated the common
property clause because there were substantial amounts of stock
there, which was subject to a limited entry fishery. Trademark
Fisheries is the appellant.
MR. JOHN AGOSTI said he was representing a shellfish hatchery and
the Alaska Shellfish Growers today and thanked Senator Torgerson
for introducing this bill.
SENATOR TAYLOR asked if he felt confident that his facility would
have enough spat for the replanting.
MR. AGOSTI replied yes. His organization didn't envision an
avalanche of companies failing and requiring a mass amount of
seed. The most likely scenario is a few failures over time and
they could accommodate that.
MR. RON LONG, Qutekcak Shellfish Hatchery, supported SB 141. He
thought the industry had to do its own research to identify sites
that are reasonably free of conflicting uses and offer those as
their nominations. He liked the concept of a prefarming fishery.
On the conceptual language for a substitute he needed a little
more time to think about it, but if the sponsor and the dive
fishery supported it, he would go for it. On reseeding to the
initial biomass levels and the prefarming harvest, he liked it
from a purely economic point of view because it provided more
seed for him to sell.
MS. JULIE DECKER, Executive Director, Regional Dive Association,
supported SB 141, but requested that they hold the bill until her
board can see it and give its support on March 8. She also would
like to provide the board's comments on Mr. Fuhs' proposal.
CHAIRMAN TORGERSON replied that he hadn't planned on passing the
bill out today because it needed more work. He said the fiscal
note was for $800,000, but that a new one would be needed.
MS. JANICE ADAIR, Director, Division of Environmental Health,
Department of Environmental Conservation (DEC), said she was
available to answer questions.
SENATOR TAYLOR said it was shocking to him that DEC submitted a
$354,000 fiscal note to go out and look at 10 different sites to
test the water.
MS. ADAIR responded that they have to follow a National Shellfish
Sanitation Program in order to classify areas for shellfish
harvesting. Some presumptions about locations are made and a set
number of samples have to be taken over a set number of times.
DEC doesn't have options. If the areas are more remote than
urban, their fiscal note would go down; if there are more urban
areas than remote, the amount would go up. DEC estimated at 50/50
since they didn't know.
SENATOR ELTON said she was assuming that 10 new growing areas
will need to be certified and asked if she didn't need to certify
unless a lease is actually offered and accepted by someone in the
aquaculture industry.
MS. ADAIR said that is right and added that they have many sites
within a growing area. They certify the growing area and this
helps reduce the cost.
MR. BOB LOEFFLER, Director, Division of Mining, Land and Water,
DNR, said that his division does the leasing under this bill. He
had two areas of concern. He respected Mr. Painter's comments,
but this is really a DNR/ADF&G proposal. Without ADF&G's
preapproval of the sites, they run the risk of offering sites
that can't be permitted. His division does not manage the
resource and there are two places in the bill that put resource
issues in DNR's purview - on page 2, lines 12 and 16. He
explained:
The consequence of putting Section 1 in DNR statutes
rather than Fish and Games' is that Fish and Game has
regulations, which address this question and, in fact,
are parallel to this…. A law under Title 38 and a
regulation under ADF&G's Title 16 can both be valid.
This means that a site would have to go through two
hoops to address a single situation. If someone didn't
like their determination, they would appeal it to DNR,
but it really has to go to ADF&G because it's their
issue.
TAPE 02-2, SIDE B
CHAIRMAN TORGERSON asked if other agencies didn't have to deal
with cross-jurisdictions.
MR. LOEFFLER replied if the legal jurisdiction is confused, that
confusion always works against the applicant.
CHAIRMAN TORGERSON said he didn't think so and asked if there
were any other comments.
MR. LOEFFLER added that it would be very difficult for them to
complete this process by July 1, 2003. They have written their
fiscal note for a two-year process with the dives occurring in
the summer. That would mean July 1, 2004. Also, if they reduce
the number of sites to offer, they would not run the likelihood
of overwhelming the industry and they could reduce the fiscal
note.
CHAIRMAN TORGERSON replied that's why he made it over-the-counter
sales.
MR. DOUG MEEKUM, Director, Division of Commercial Fisheries,
ADF&G, supported Ms. Decker's testimony in support of SB 141. The
CS removes the section identifying the sites for auction and
their common property concern. He thought that Mr. Painter was on
the right track and that this regulation is more restrictive than
current statute.
CHAIRMAN TORGERSON asked if it would help to delete "lease" and
add "operating permit".
MR. MEEKUM replied that is one possibility and another would be
to refer to the authority of the department to issue a permit,
whichever comes first.
CHAIRMAN TORGERSON asked if he had a chance to review the
Trademark Shellfish language.
MR. MEEKUM said he hadn't had a chance to.
SENATOR ELTON asked if ADF&G could realistically have leases for
90 different sites done by July 1, 2003.
MR. MEEKUM replied that would be difficult. He thought the
suspended culture sites would be easier, but there are only 20
sites identified for clams and 10 for geoducks, which would be
the primary thing they would be looking at in their site surveys.
Last year they suggested that ADF&G's costs would be about
$200,000 in the first year. He noted, "I guess we'd try and do
our best to get it done. It's going to be difficult. I wouldn't
say it's necessarily impossible."
CHAIRMAN TORGERSON asked what happened to the $250,000 that the
legislature gave them a couple of years ago.
MR. MEEKUM replied that two or three years ago the department
requested a CIT project that's very similar in terms of its
intent to what they are trying to do here. They actually received
only $100,000 from the legislature, but that particular set of
CITs was funded out of CFEC receipt services, which went down by
$1 million that year. He stated, "So, that money doesn't exist
because the receipts never came in."
CHAIRMAN TORGERSON said:
I want these to pick up fiscal notes, because I believe
the state should pay for this. This is a good industry.
It's a clean industry and we've been messing around
with it so long that it's the only way that I see we're
going to turn it around. I wasn't expecting $800,000
fiscal notes, but I guess that's life in the fast lane.
It was my hope today to do our work and amend it so
that it is functionally okay and then send it up to
Finance and let them argue with you up there.
SENATOR TAYLOR said:
My frustration is we know that we've got a salmon
industry that's in trouble and I can't find a faster
way to put the dive fishery in trouble than to have
ongoing litigation up to the Supreme Court and we all
sit around holding our hands and wringing them waiting
and hoping something will happen out of the Supreme…
MR. MEEKUM reiterated that he supports the bill.
CHAIRMAN TORGERSON instructed the participants to read the
suggestions.
SENATOR WILKEN moved on page 1, line 8 to delete "lease" and
insert "operating permits" and on page 1, line 12, to delete
"2003" and insert "2004" [Amendment 1].
SENATOR TAYLOR said he didn't object to the first part of the
amendment, but wanted to know more about the second part. He
added, "I understand their reluctance and concerns, but I
guarantee if their jobs depended on it, those permits would be
out in a couple of months."
SENATOR ELTON said his concern is if the date is too soon, the
pressure may be on to identify sites to meet the time deadline
and not the requirements of the industry.
SENATOR TAYLOR said he had been involved in this for 17 years and
he thought that someone in ADF&G could start moving on this
program.
SENATOR TAYLOR moved to divide the question.
CHAIRMAN TORGERSON explained that they would call the first part
Amendment 1(a) to delete "lease" and insert "operating permit".
He asked if there was any objection. There were no objections and
it was adopted.
CHAIRMAN TORGERSON explained that Amendment 1(b) deletes "2003"
and inserts "2004". He agreed with Senator Taylor that if ADF&G
didn't have the backlog, all the work that's been done on sites,
permits almost issued and work that's been done by the growers,
one year would be pretty tough. But that's not the case. There
are 50 - 60 sites in Sitka that will probably be nominated for
this. He noted would not support this amendment.
SENATOR LINCOLN said the committee heard testimony saying that
2003 might be a stretch, but the language says it should be
offered to the public "before," and she hoped that if they could
do it earlier, they should do everything possible to get it done.
She supported 2004 and hoped that the department expedites it.
SENATOR ELTON said he assumed if this amendment failed, work
would have to be done on the fiscal notes since they are
predicated on a two-year process.
CHAIRMAN TORGERSON asked for the roll to be called. SENATORS
ELTON, LINCOLN, and HALFORD voted yea; SENATORS TAYLOR, WILKEN,
STEVENS and TORGERSON voted nay. By a 3 to 4 vote, Amendment 1(b)
failed.
SENATOR TAYLOR moved to pass CSSB 141(RES) to pass from committee
with individual recommendations and accompanying fiscal notes.
There were no objections and it was so ordered.
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