03/07/2017 10:00 AM House FISHERIES
| Audio | Topic |
|---|---|
| Start | |
| HB76 | |
| HB128 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 76 | TELECONFERENCED | |
| *+ | HB 128 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON FISHERIES
March 7, 2017
10:03 a.m.
MEMBERS PRESENT
Representative Louise Stutes, Chair
Representative Zach Fansler
Representative Jonathan Kreiss-Tomkins
Representative Geran Tarr
Representative Mike Chenault
Representative David Eastman
Representative Mark Neuman
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 76
"An Act relating to the mariculture revolving loan fund and
loans from the fund; and providing for an effective date."
- HEARD & HELD
HOUSE BILL NO. 128
"An Act relating to management of enhanced stocks of shellfish;
authorizing certain nonprofit organizations to engage in
shellfish enhancement projects; relating to application fees for
salmon hatchery permits; and providing for an effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 76
SHORT TITLE: MARICULTURE REVOLVING LOAN FUND
SPONSOR(s): REPRESENTATIVE(s) ORTIZ
01/25/17 (H) READ THE FIRST TIME - REFERRALS
01/25/17 (H) FSH, FIN
03/07/17 (H) FSH AT 10:00 AM GRUENBERG 120
BILL: HB 128
SHORT TITLE: SHELLFISH ENHANCE. PROJECTS; HATCHERIES
SPONSOR(s): REPRESENTATIVE(s) ORTIZ
02/15/17 (H) READ THE FIRST TIME - REFERRALS
02/15/17 (H) FSH, FIN
03/07/17 (H) FSH AT 10:00 AM GRUENBERG 120
WITNESS REGISTER
REPRESENTATIVE DANIEL ORTIZ
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 76 as prime sponsor.
ELIZABETH BOLLING, Staff
Representative Daniel Ortiz
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided the sectional analysis of the
proposed committee substitute (CS) for HB 76.
BRITTENY CIONI-HAYWOOD, Director
Division of Economic Development
Department of Commerce, Community & Economic Development (DCCED)
Juneau, Alaska
POSITION STATEMENT: Responded to questions during the hearing
on HB 76.
ALPHEUS BULLARD, Attorney
Legislative Legal Services
Legislative Affairs Agency
Juneau, Alaska
POSITION STATEMENT: Responded to questions during the hearing
on HB 76.
JULIE DECKER, Executive Director
Alaska Fisheries Development Foundation (AFDF)
Wrangell, Alaska
POSITION STATEMENT: Responded to questions during the hearing
of HB 76.
NANCY HILLSTRAND
Pioneer Alaskan Fisheries, Inc.
Homer, Alaska
POSITION STATEMENT: Testified with concern on the proposed
committee substitute (CS) for HB 76.
TONI MARSH
OceansAlaska
Ketchikan, Alaska
POSITION STATEMENT: Testified in support of HB 76.
JOHN KISER, Owner
Rocky Bay Oysters
Cordova, Alaska
POSITION STATEMENT: Testified during the hearing on HB 76.
ERIC WYATT, Owner
Blue Star Oyster Company
King Cove, Alaska
POSITION STATEMENT: Testified in support of HB 76.
ANGEL DROBNICA, Representative
Aleutian Pribilof Island Community Development Association (APICDA)
Community Development Quota (CDQ)
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 76.
JERRY MCCUNE
United Fishermen of Alaska (UFA)
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 76.
REPRESENTATIVE DANIEL ORTIZ
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced HB 128 as sponsor.
FORREST BOWERS, Deputy Director
Division of Commercial Fisheries
Alaska Department of Fish & Game (ADF&G)
Juneau, Alaska
POSITION STATEMENT: Testified during the hearing on HB 128.
HEATHER MCCARTY, Representative
Central Bering Sea Fisherman's Association (CBSFA)
Juneau, Alaska
POSITION STATEMENT: Testified during the hearing on HB 128.
GINNY ECKERT, PhD
Professor
University of Alaska Fairbanks (UAF)
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 128.
JULIE DECKER, Executive Director
Alaska Fisheries Development Foundation (AFDF)
Wrangell, Alaska
POSITION STATEMENT: Testified in support of HB 128.
NANCY HILLSTRAND
Pioneer Alaskan Fisheries Inc.
Homer, Alaska
POSITION STATEMENT: Testified with opposition to HB 128.
TONI MARSH, President
OceansAlaska
Ketchikan, Alaska
POSITION STATEMENT: Testified in support of HB 128.
JOHN KISER, Owner
Rocky Bay Oysters
Cordova, Alaska
POSITION STATEMENT: Testified in support of HB 128.
MILO ATKINSON, Professor
University of Alaska Fairbanks (UAF)
Fairbanks, Alaska
POSITION STATEMENT: Testified during the hearing on HB 128.
MARY HAKALA, Staff
Representative Dan Ortiz
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided the sectional analysis for HB 128.
ACTION NARRATIVE
10:03:00 AM
CHAIR LOUISE STUTES called the House Special Committee on
Fisheries meeting to order at 10:03 a.m. Representatives
Stutes, Fansler, Kreiss-Tomkins, and Neuman were present at the
call to order. Representatives Tarr, Eastman, and Chenault
arrived as the meeting was in progress.
HB 76-MARICULTURE REVOLVING LOAN FUND
10:03:55 AM
CHAIR STUTES announced that the first order of business would be
HOUSE BILL NO. 76, "An Act relating to the mariculture revolving
loan fund and loans from the fund; and providing for an
effective date."
10:04:32 AM
REPRESENTATIVE FANSLER moved to adopt the committee substitute
(CS), for HB 76, Version 30-LS0343\R, Bullard, 3/6/17, as the
working document.
10:04:45 AM
REPRESENTATIVE EASTMAN objected for discussion.
10:05:29 AM
REPRESENTATIVE DANIEL ORTIZ, Alaska State Legislature,
introduced the committee substitute (CS) for HB 76 stressing the
need to diversify the economic drivers for Alaska's economy and
underscoring the opportunities that exist within the realm of
the seafood and mariculture industries. He described the
proposed legislation, paraphrasing from the sponsor statement,
which read as follows [original punctuation provided]:
This bill amends the existing Alaska Mariculture
Revolving Loan Fund to allow up to forty percent of
the fund to be used for loans to permitted shellfish
hatcheries for planning, construction and operation.
Alaska shellfish farms currently do not have a stable
supply of seed for the propagation of oysters, and no
regular, in-state source of seed for resident aquatic
plants and other shellfish. A stable supply of seed
is one of many hurdles the industry must overcome to
grow and become a viable Alaskan industry.
This bill will amend the program to shift its focus
and eligibility from individual mariculture farmers to
include shellfish hatcheries that would market stock
to local Alaskan mariculture farmers.
The mariculture industry in Alaska is not yet fully
developed, and is extremely high risk, from a
financial standpoint. These obstacles make private
financing difficult to obtain, but this bill will
enable Alaskans to maintain their businesses and grow
Alaska's mariculture industry.
10:10:09 AM
REPRESENTATIVE NEUMAN noted the substantial increases being
proposed to the amount that can be loaned and asked about the
fund sustainability.
REPRESENTATIVE ORTIZ deferred the question of sustainability to
the department, and said projections indicate that the fund will
remain solid. The fund is being underutilized and the bill
expands the scope of its use.
10:13:43 AM
REPRESENTATIVE EASTMAN asked about the underutilization of the
fund.
REPRESENTATIVE ORTIZ deferred.
The committee took an at-ease from 10:14 a.m. to 10:15 a.m.
10:15:14 AM
ELIZABETH BOLLING, Staff, Representative Daniel Ortiz, Alaska
State Legislature, provided the sectional analysis of the
proposed committee substitute (CS) for HB 76, paraphrasing from
a prepared document, which read as follows [original punctuation
provided]:
Section 1
Amends AS 16.10 to create a Declaration of Policy for
the program and fund uses. This section was added to
ensure the fund promotes mariculture and gives clear
direction to the department. The declaration is
similar to the Fisheries Enhancement Revolving Loan
Fund (AS 16.10.500). This will make clear the intent
of the program and protect the department from risks
in a developing industry.
Section 2
AS 16.10.900(a) (b) (3) and (c) will incorporate the
declaration of policy, to ensure the state promotes
mariculture through the fund, and links to new
definitions in AS 16.10.945.
Section 3
AS 16.10.905 (1) (a) will incorporate the declaration
of policy, to ensure the state promotes mariculture
through the fund, and links to new definitions in AS
16.10.945.
AS 16.10.905(1) (b) ensures the fund covers marine
aquatic plants rather than all aquatic plants.
AS 16.10.905(1) (c) This change expands the eligible
applicants to include organizations that are actively
pursuing shellfish enhancement projects. Enhancement
refers to the enhancement of resources, rather than
the enhancement of individual organisms.
16.10.905 (4) (b) will incorporate the declaration of
policy, to ensure the state promotes mariculture
through the fund, and links to new definitions in AS
16.10.945.
16.10.905 (7) will incorporate the declaration of
policy, to ensure the state promotes mariculture
through the fund, and links to new definitions in AS
16.10.945.
AS 16.10.905(9) allows the Department to make grants
only to nonprofit organizations eligible for loans
under AS 16.10.910(a)(2) for organizational and
planning purposes that will provide for public uses in
this developing industry
Section 4
AS 16.10.910(a) will incorporate the declaration of
policy, to ensure the state promotes mariculture
through the fund, and links to new definitions in AS
16.10.945.
AS 16.10.910(a) (2) expands eligible applicants to
include a resident of the state or entity organized
under the laws of this state that holds a permit under
AS 16.40.100 to operate a hatchery for the purpose of
producing aquatic plants or shellfish for sale or is
authorized to operate shellfish enhancement project.
Section 6
AS 16.10.915(a) will incorporate the declaration of
policy, to ensure the state promotes mariculture
through the fund, and links to new definitions AS
16.10.945.
As 16.10.915 (2) (a) and (b) clarifies the different
categories of loan applicants and their terms. This
gives an additional length of time to eligible loan
applicants under category 2 for the same purpose of
public uses, and these terms are consistent with those
terms under the Fisheries Enhancement Revolving Loan
Fund.
AS 16.10.915 (4) allows the department to consider
additional collateral sources including voluntary
assessments which may be agreed to in AS 16 10.923.
Section 7
AS 16.10.915(b) will incorporate the declaration of
policy, to ensure the state promotes mariculture
through the fund, and links to new definitions AS
16.10.945.
AS 16.10.915(b) will incorporate the declaration of
policy, to ensure the state promotes mariculture
through the fund, and links to new definitions AS
16.10.945.
Section 9
AS 16.10.915(d) will incorporate the declaration of
policy, to ensure the state promotes mariculture
through the fund, and links to new definitions AS
16.10.945.
Section 10
AS 16.10.915 (f) adds a new subsection to clarify that
loans to a hatchery or enhancement project should
contribute to common property fishery or otherwise the
public interest so the program operates in a manner
beneficial to the public interest and be managed in a
manner that protects the fund.
Section 11
AS 16.10.920 (a) and (b) mirrors the initial loan
period from the Fisheries Enhancement Revolving Loan
Fund. This also allows flexibility for farmers in this
developing industry.
Section 12
AS 16.10.923 (a) creates a mechanism through which
organizations comprising more than one stakeholder can
arrange to pay their loan through a voluntary
assessment, similar to that of the current Southeast
Alaska Regional Dive Fisheries Association and the
salmon enhancement program.
AS 16.10.923 (b) protects the department by ensuring
only organizations with a plan and agreement to
collect an assessment to pay the loan may receive a
loan.
Section 13
AS 16.10.935 to allow the department to dispose of
property acquired after default.
10:20:59 AM
REPRESENTATIVE EASTMAN asked about the change included in Sec.
14.
MS. BOLLING responded that it provides a definition of shellfish
enhancement project, and referring to the proposed CS, page 6,
lines 21-26, read:
(5) "shellfish enhancement project" means a project to
(A) augment the yield or harvest of
shellfish above naturally occurring levels using a
natural, artificial, or semiartificial production
system; or
(B) rehabilitate a shellfish stock by
restoring it to its naturally occurring levels of
productivity.
10:21:49 AM
REPRESENTATIVE NEUMAN requested a further review of Sec. 12 and
Sec. 13, to elaborate on the terms for a loan and the repayment
schedule.
MS. BOLLING deferred to the department.
10:23:15 AM
BRITTENY CIONI-HAYWOOD, Director, Division of Economic
Development, Department of Commerce, Community & Economic
Development (DCCED), asked to have the question restated.
REPRESENTATIVE NEUMAN pointed out that loan repayment may be
deferred until sometime following 6 and 11 years of inception.
He asked whether associations may collect payments prior to
start of state payments.
MS. CIONI-HAYWOOD clarified that the question regards the
voluntary fee assessments that an organization can impose on
stakeholders prior to beginning loan repayments to the state,
and deferred to legal counsel.
10:25:38 AM
ALPHEUS BULLARD, Attorney, Legislative Legal Services,
Legislative Affairs Agency, referred to the bill, Sec. 12, and
said there are no time limitations on when an association can
begin to collect assessments for the purpose of either securing
or repaying a loan.
REPRESENTATIVE NEUMAN surmised that an association can collect
fees and the proposed legislation doesn't provide a schedule for
fee activities.
MS. BOLLING concurred, and offered that an association could
decide to begin loan repayment earlier than scheduled. Further,
if an association imposed fees but didn't use the funds for the
loan purposes established, it could be considered an illegal
collection.
REPRESENTATIVE NEUMAN conjectured that a loophole might be found
by an association collecting fees, and suggested the section
language be given further scrutiny.
10:27:55 AM
REPRESENTATIVE EASTMAN said it appears that an assessment could
be collected prior to a loan being secured.
MR. BULLARD responded that the assessments are voluntary from
association members.
10:29:08 AM
REPRESENTATIVE NEUMAN asked whether the association owner of a
permit could own permits in other states as well, and if so will
there be assurance that Alaskan based companies will be
prioritized.
CHAIR STUTES said an upcoming presentation would cover this line
of questioning.
10:30:02 AM
REPRESENTATIVE EASTMAN noted the new subsection being proposed
in Sec. 10, and questioned if it was in the original bill or
crafted specifically for the CS.
MS. BOLLING explained that the subsection in question was in the
original bill.
REPRESENTATIVE EASTMAN removed his objection and without further
objection, Version R was before the committee.
10:31:44 AM
MS. BOLLING said the intent of the legislation is to assist
Alaska's developing mariculture industry. A bottleneck, and
impediment currently exists, due to the unavailability of a
source for year-a-round shellfish seed. Alaska Department of
Fish & Game (ADF&G) regulations allow for oyster seed to be
brought into the state, but all other seed must be produced in
Alaskan waters. The bill is intended to ease the situation,
include compatible terms that align with the Fisheries
Enhancement Loan Fund, and to further define relatively new
concepts such as shellfish enhancement projects.
10:32:57 AM
REPRESENTATIVE NEUMAN pointed out the proposed raise in the
application fee, $100,000 to $1 million [CS page 4, lines 2-5],
to note that this represents a significant change and asked how
it is expected to work.
MS. BOLLING said the terms presented are consistent with the
terms of the Fisheries Enhancement Revolving Loan Fund. It also
provides a time extension to eligible applicants that come under
category two; public use and benefit purposes. She deferred
further response.
10:34:59 AM
JULIA DECKER, Executive Director, Alaska Fisheries Development
Foundation (AFDF), said the bill is intended to provide access
to funding for individuals with aquatic farms, as well as to
organizations, such as those hosting shellfish
hatchery/enhancement programs. The monetary need of an
organization would be greater than an individual farmer seeking
to enter the mariculture industry. It is expected that the
number of organizations making application will be few.
REPRESENTATIVE NEUMAN expressed concern that, if the bill is to
help small organizations and individuals, coming up with a $1
million application fee seems daunting.
MS. DECKER said collateral would be necessary, but the amount
represents the total amount for which they could apply. It is
necessary to make a high amount available for an entity
developing a hatchery, and these are critical facilities to the
industry to provide a secure source of seed. She suggested that
hatcheries currently producing king crab may want to expand into
shellfish and this fund would be beneficial to that effort.
10:37:46 AM
REPRESENTATIVE EASTMAN asked for an estimate of the size of the
mariculture industry.
MS. DECKER responded that the vision is to grow a billion dollar
industry in 30 years, and assets are available to meet that
goal. The mariculture task force considers this to be a
reasonable aim and sound course of action.
REPRESENTATIVE EASTMAN noted that the target is a billion dollar
industry in 30 years, and asked, "Where were we at last year?"
MS. DECKER responded $1 million.
10:39:49 AM
REPRESENTATIVE NEUMAN asked how much is in the current fund, and
how has it been performing.
MS. CIONI-HAYWOOD responded that the current, available balance
is about $4.5 million. It's a new fund that will take some time
to build, she said. Five loans of about $500,000 each have been
made, and no applications received have been denied. Thus far,
only individual farmers have benefited.
REPRESENTATIVE NEUMAN questioned how the department manages the
fund, and whether the available loan assets are invested by the
state.
MS. CIONI-HAYWOOD responded that the balance on hand is managed
by the Treasury Division of the department, providing interest
for deposit to the general fund, as well as retention. All
interest and fees acquired from active loans remain in the fund,
making it self-sustaining. To a follow-up question she said the
original fund balance was $5 million.
10:42:58 AM
REPRESENTATIVE CHENAULT referred to the changes proposed in Sec.
11, to ask about the current loan rate, and the 6 year interest
deferral provision; proposed for extension to 11 years.
The committee took a brief at-ease at 10:44 a.m.
10:44:11 AM
MS. CIONI-HAYWOOD responded that current statute allows the
interest to be deferred, and no interest or payments are due in
the first six years.
REPRESENTATIVE CHENAULT questioned how hatcheries will be able
to repay loans if assessments are collected on a voluntary basis
rather than being made mandatory.
MS. CIONI-HAYWOOD deferred response.
10:46:15 AM
MS. DECKER explained that the components being proposed in the
CS are similar to the repayment structure that exists for salmon
hatcheries. The hatcheries have been successful, and, although
differences exist between mariculture and finfish facilities,
financial flexibility is needed by both undertakings.
REPRESENTATIVE CHENAULT asked how long the mariculture fund has
been in existence, and whether any of the original loans have
been satisfied.
MS. CIONI-HAYWOOD said it was established in 2012, and all
original loans are still in the deferment period.
10:49:55 AM
REPRESENTATIVE EASTMAN referred to the CS, Sec. 10, [subsection]
(e), to paraphrase the language which read:
The total of balances outstanding on loans made to
borrowers under AS 16.10.910(a)(2) may not exceed 40
percent of the principal of the mariculture revolving
loan fund.
REPRESENTATIVE EASTMAN asked if the principal being referred to
is the initial $5 million fund balance.
MS. CIONI-HAYWOOD confirmed that it refers to the initial $5
million balance, and to a follow-up question responded that, if
the borrowers held maximum loan amounts, only two loans could be
allowed, under the 40 percent rule.
REPRESENTATIVE EASTMAN directed attention to the CS page 3,
lines 22-27, regarding residency requirements and asked if there
is a time period being assumed for someone to qualify for the
program.
CHAIR STUTES pointed out the residency qualifiers are contained
in the language, which stipulates: "may not have" [page 3, line
25].
REPRESENTATIVE EASTMAN questioned whether someone could be
denied based on residency previously established in another
state, perhaps ten years ago; would that be a disqualifier.
10:52:29 AM
REPRESENTATIVE FANSLER suggested that the "and" [page 3, line
24], satisfies the concern, as it conjoins to the 24 consecutive
months that are stipulated [page 3, line 23]. He paraphrased
the language, which read:
(1) shall physically reside in this state and maintain
a domicile in this state during the 24 consecutive
months preceding the date of application for the
program; and
(2) may not have
(A) declared or established residency in another
state; or
(B) received residency or a benefit based on
residency from another state.
MR. BULLARD confirmed Representative Fansler's understanding.
CHAIR STUTES opened public testimony.
10:55:24 AM
NANCY HILLSTRAND, Pioneer Alaskan Fisheries, Inc., emphasized
the need to delineate mariculture from shellfish, and to include
clear definitions for each. She said the salmon revolving loan
fund should be reviewed prior to extending it in the direction
of shellfish. Further, natural stocks and the reasons causing
depletion should be addressed prior to supporting farming, she
cautioned.
10:57:45 AM
TONI MARSH, OceansAlaska, predicted that the bill will be as
good of an assist to mariculture farmers as it has been to fish
hatcheries. The allowance for deferred payment is necessary in
this type of industry, which has a lengthy incubation period and
maturity process, she said and reviewed the seed maturation
timeline.
REPRESENTATIVE NEUMAN asked about her affiliation.
MS. MARSH responded that she is the board president for
OceansAlaska, a non-profit shellfish hatchery located in
Ketchikan.
REPRESENTATIVE NEUMAN asked whether the non-profit shellfish
hatchery she represents expects to apply for this funding should
it become available, and, if so, for how much.
MS. MARSH responded that the organization is anticipating making
application in the amount of about $200,000.
11:01:17 AM
JOHN KISER, Owner, Rocky Bay Oysters, underscored the need for
farmers to have access to seed and encouraged the committee to
support a line of funding to the mariculture industry. However,
with access to public funds comes the possibility of waste, he
cautioned, and said the loans should be performance based. The
oyster operation that he owns has been idle for eight years, and
he's been working with someone in Cordova to grow seed.
REPRESENTATIVE NEUMAN noted that the available loan balance is
$1.5 million, and asked whether small operators, like himself,
will be able to benefit from what is being proposed or will the
larger organizations be the primary beneficiaries of the
legislation.
MR. KISER replied that the fund began as a good idea but not
many small farmers were able to take advantage of it given the
collateral requirements. Many of the farmers, including
himself, took out small farm loans as an alternative. If larger
entities use this fund it shouldn't be a problem, he said, as
the small farmers stand to benefit from the production of
shellfish seed.
11:04:47 AM
ERIC WYATT, Owner, Blue Star Oyster Company, stated support for
HB 76 and said the company maintains an oyster farm and a
nursery. The nursery supplies other farmers; however, the
business has been dwindling due to the difficulty in sourcing
the seed. The fund should prove helpful to hatcheries and make
it possible for them to expand in a number of ways. If the
hatcheries have an opportunity to diversify, it will be
beneficial to the mariculture farmers, he finished, and said it
will allow for a variety of potential.
11:06:29 AM
ANGEL DROBNICA, Representative, Aleutian Pribilof Island
Community Development Association (APICDA) Community Development
Quota (CDQ), stated support for the CS for HB 76 and said
creating stable fisheries and local economies is the goal of the
organizations with which she is affiliated. Diversification is
helpful and economic support is necessary. As chair of the
investment and advisory committee for APICDA, she said the
investment portfolios are affected by the seasonal and
fluctuating characteristics of the fisheries, and the addition
of mariculture could provide a stabilizing force, as well as
diversify the investment profile. The support for the CS comes
from a rural community development perspective. The bill is
important as it will provide funding for the advancement of the
mariculture industry. Finding funding for hatcheries is a
challenge, and the ability to produce seed is essential to
farming operations. The legislation is timely and necessary,
she finished.
REPRESENTATIVE EASTMAN asked for a cost estimate to get a seed
hatchery operational.
MS. DROBNICA said that the size and scope of the undertaking
makes the cost highly variable, and deferred further response.
11:10:16 AM
REPRESENTATIVE KREISS-TOMKINS asked about the amount available
in the fund for disbursement.
MS. DROBNICA estimated the loan availability to be $4.5 million.
REPRESENTATIVE KREISS-TOMKINS acknowledged that the fund has a
balance of $4.5 million; however, as mentioned in earlier
testimony, only $1.5 is effectively available for loan, and
asked Ms. Drobnica to speak to that situation.
MS. DROBNICA deferred.
MS. CIONI-HAYWOOD explained that the fund has a balance of about
$4.5 million, with $500,000 currently on loan. She said that
the balance is available for lending, outside of a small
foreclosure reserve that must be retained. The loans are
expected to be appropriately collateralized to avoid the risk of
foreclosure. About $2 million is available for potential
hatchery loans, leaving about $2.2 million available for loans
to other entities.
11:13:18 AM
REPRESENTATIVE NEUMAN directed attention to the CS page 5, lines
5-8, which read:
Sec. 10. AS 16.10.915 is amended by adding new
subsection to read:
(e) The total of balances outstanding on loans
made to borrowers under AS 16.10.910(a)(2) may not
exceed 40 percent of the principal of the mariculture
revolving loan fund.
REPRESENTATIVE NEUMAN questioned the mathematics being
presented.
MS. CIONI-HAYWOOD acknowledged the difference, and said that up
to 40 percent, or $2 million for hatchery loans, was to be made
available, and deferred to the sponsor's staff for further
response.
MS. BOLLING said, "That is correct." In response to Chair
Stutes request for clarification on which statement should be
considered correct, she deferred comment to Ms. Decker.
REPRESENTATIVE NEUMAN noted that generally when funds of this
nature are created a charter is filed, and suggested a copy
might be helpful.
MS. DECKER said the reference to 40 percent was intended to
relate to the initial $5 million principal, thus there would be
up to $2 million available for these types of new applicants.
REPRESENTATIVE NEUMAN said the intent is not clear in the bill,
and expressed consternation at not receiving a response from the
director, but rather someone who will be an applicant to the
fund and benefit of the proposed legislation.
11:16:23 AM
REPRESENTATIVE EASTMAN referred to the CS page 2, Sec. 3, to
note that it indicates eligible applicants may be developing a
mariculture business or a hatchery, and asked whether a hatchery
could be considered a mariculture business or are these mutually
exclusive terms.
MS. DECKER responded that the key term is business versus non-
profit. The hatchery and shellfish enhancement entities would
be non-profit organizations, she opined.
11:17:12 AM
REPRESENTATIVE FANSLER referred to Sec. 10(e) [CS page 5, lines
5-8] to state agreement with Representative Neuman's concern
regarding the need to clarify the language regarding how the
available loan amount is being determined, and offered to submit
a friendly amendment.
MS. BOLLING said the sponsor would be amenable to receiving an
amendment.
11:19:22 AM
JERRY MCCUNE, United Fishermen of Alaska (UFA), stated support
for HB 76 and recalled that similar doubts were expressed when
funding for hatchery development was first introduced. He
expressed optimism for a good outcome and said the mariculture
industry deserves to have similar state sanctioned support and
opportunity to help it develop.
11:20:44 AM
CHAIR STUTES closed public testimony and announced the bill as
held.
The committee took an at-ease from 11:20 a.m. to 11:26 a.m.
HB 128-SHELLFISH ENHANCE. PROJECTS; HATCHERIES
11:26:37 AM
CHAIR STUTES announced that the final order of business would be
HOUSE BILL NO. 128, "An Act relating to management of enhanced
stocks of shellfish; authorizing certain nonprofit organizations
to engage in shellfish enhancement projects; relating to
application fees for salmon hatchery permits; and providing for
an effective date."
11:27:10 AM
REPRESENTATIVE DANIEL ORTIZ, Alaska State Legislature, presented
HB 128, paraphrasing from the sponsor statement, which read as
follows [original punctuation provided]:
Enhancement of Alaska's shellfish industry holds the
potential of expanded economic opportunities in
Alaska's coastal communities and increased resilience
of the State's fisheries portfolio.
To tap this potential HB 128 allows qualified non-
profits to pursue enhancement and/or restoration
projects involving shellfish species including red and
blue king crab, sea cucumber, abalone, and razor
clams.
The bill creates a regulatory framework with which
Alaska Department of Fish & Game can manage shellfish
enhancement projects and outlines criteria for
issuance of permits. It sets out stringent safety
standards to ensure sustainability and health of
existing natural stocks. The Commissioner of ADF&G
must also make a determination of substantial public
benefit before a project can proceed.
In addition, the bill sets the application fee for a
shellfish enhancement project at $1,000 and amends the
application fee for a salmon hatchery permit,
increasing the fee from $100 to $1,000.
HB 128 plays an important role in the development of
mariculture in Alaska by providing a method to
increase the available harvest of shellfish for public
use in an environmentally safe manner.
11:31:04 AM
CHAIR STUTES opened public testimony.
11:31:32 AM
FORREST BOWERS, Deputy Director, Division of Commercial
Fisheries, Alaska Department of Fish & Game (ADF&G), explained
the difference between mariculture and shellfish fishery
enhancement projects. The later refers to wild stock
enhancement for common property fisheries. The mariculture
projects are related to existing shellfish spawn programs.
Overlap is inherent in certain aspects of the two projects.
11:32:41 AM
REPRESENTATIVE KREISS-TOMKINS asked about the genetic dynamics
of shellfish enhancement and the management that the department
would anticipate; similar to the consideration given wild salmon
enhancement.
MR. BOWERS responded that a policy is in place and requires that
baseline work be performed to gain an understanding of the local
stocks, genetic make-up and distribution, as well as the drift
zone distribution that the shellfish, as broadcast spawners,
would effect. Genetic concerns would also need to be addressed.
11:34:49 AM
REPRESENTATIVE FANSLER asked if there is a strict definition
that the department follows to identify enhancement versus
rehabilitation of stocks.
MR. BOWERS acknowledged that the terms are often discussed in a
seemingly interchangeable manner. However, when referring to
rehabilitation the effort being made is to rebuild a wild stock
to its natural reproductive potential. Enhancement means to
identify a stock that is already at healthy levels and increase
its production significantly beyond what would otherwise occur
in the wild, thus, providing additional harvest opportunity.
11:37:18 AM
HEATHER MCCARTY, Representative, Central Bering Sea Fisherman's
Association (CBSFA), said, located on St. Paul Island, CBSFA is
the smallest of the six community development quota (CDQ)
program groups in the western region of Alaska. The mission of
the CDQ program is to support economic development in coastal
communities, particularly in the area of fisheries. As such,
CBSFA, holds a considerable quota in the federal crab program in
the Bering Sea, and has been a participant in the Alaska King
Crab Research, Rehabilitation and Biology (AKCRRAB) program
since its inception in 2006, which has a mission to rehabilitate
the stocks of the Gulf of Alaska red king crab and the Bering
Sea/Pribilof Island blue king crab. The program has depended on
hatchery production of juvenile crab, produced under a research
permit, and no other type of permit is currently available to
allow the production of larger amounts of enhancement stocks for
a fishery that has dwindled to the point of being unfishable for
the last 25 years. She stressed the need for passage of HB 128
in order to take the next step in the CBSFA mission;
rehabilitate of king crab stocks. Without the legislation,
there is no means for facilities to produce juvenile crab to
serve the purposes of that mission.
GINNY ECKERT, PhD, Professor, University of Alaska Fairbanks
(UAF), stated support for HB 128, paraphrasing from a prepared
statement, which read as follows [original punctuation
provided]:
The Steering Committee of the Alaska King Crab
Research, Rehabilitation and Biology (AKCRRAB) program
would like to express appreciation and support for
House Bill 128.
The AKCRRAB program is a coalition of university,
federal and stakeholder groups, formed in 2006 with
the goals of adding to the scientific understanding of
crab life history and ecology, as well as the eventual
rehabilitation of depressed king crab stocks in
Alaska. AKCRRAB is developing scientifically sound
strategies for hatching, rearing and outplanting king
crab in Alaska, in order to help restore populations
to self-sustainable levels.
In phase one, from 2006 to 2011, AKCRRAB researchers
made significant accomplishments in developing and
improving methods of hatchery rearing of larval and
juvenile king crab from wild-caught brood stock, to
the point where large-scale production is feasible.
Parallel field and laboratory studies of crab ecology
and population genetics were also conducted during
this time.
In the second and current phase, hatchery studies have
been complemented by studies essential to
understanding optimal release strategies, appropriate
habitat, and potential impact on existing ecosystems.
This research is providing the science necessary for
informing the responsible release of hatchery-reared
animals. Increased knowledge will allow scientists and
managers to assess the feasibility of ecologically
sound rehabilitation of depressed stocks, with
potentially substantial benefits to Alaska.
In the third and final phase, AKCRRAB intends to
evolve from the current, research-oriented coalition,
to a formal entity focused on transitioning hatchery
techniques and outplanting technologies to communities
and industry as part of statewide efforts to help
rehabilitate depleted king crab stocks. As phase three
develops, the program will require support and
guidance from the State of Alaska, as the transition
from feasibility to implementation will need to be
guided with a new regulatory structure.
House Bill 128, similar to last year's House Bill 300,
is a response to the need for new regulations for
shellfish culture. The AKCRRAB Steering Committee is
pleased that the Legislature is addressing this need.
We intend to participate fully in further discussions
and hearings on this important legislation. The
AKCRRAB Steering Committee stands ready to interact
with Committee members and staff as needed. Please let
us know how we can be of help.
11:42:17 AM
REPRESENTATIVE KREISS-TOMKINS inquired about successful case
studies of shellfish enhancement occurring elsewhere in the
world.
DR. ECKERT said that the enhancement of European lobster in
Norway has proven successful.
REPRESENTATIVE KREISS-TOMKINS queried whether there are examples
specific to king crab.
DR. ECKERT responded that the Russians introduced king crab into
the Barents Sea and created a vibrant fishery.
REPRESENTATIVE KREISS-TOMKINS noted that the Barents Sea program
represented an introduction of a species to an area versus
restoration or enhancement of an existing stock. He asked
whether there are any biologic, genetic, or other scientific
concerns around shellfish species propagation that the committee
should be made aware of, in consideration of the proposed
legislation.
DR. ECKERT answered that genetics are always a consideration in
a hatchery, and every effort is made to expand the genetic
diversity of the pool of animals being reared. It is an
essential step that Alaska Department of Fish & Game (ADF&G)
regulates. The bill stipulates that the adult/parent brood
stock will be taken from the area to which they are native, in
order to not disrupt the local gene pool.
MS. MCCARTY added that genetics is a focus and concern in the
development of the king crab enhancement project being conducted
by AKCRRAB, and the department has been integral to the effort.
An entire research section has been dedicated to that purpose
alone.
REPRESENTATIVE KREISS-TOMKINS commented that the report on the
scope of the work being conducted speaks loudly to the diligence
that is being brought to the subject at hand, and he stated
support for the bill.
11:47:39 AM
JULIE DECKER, Executive Director, Alaska Fisheries Development
Foundation (AFDF), states support for HB 128, paraphrasing from
a prepared statement, which read, in part, as follows [original
punctuation provided]:
AFDF is the Client for seafood sustainability
certification programs such as the Marine Stewardship
Council (MSC) and the Alaska Responsible Fisheries
Management (RFM) program. As the Client and
facilitator for these certification programs, AFDF has
a unique viewpoint on this issue. As a part of these
certifications, the Alaska Department of Fish & Game's
(ADF&G) management of the salmon fishery (including
salmon enhancement) is reviewed every year by
independent third-party experts to determine whether
it meets internationally accepted standards for
sustainably managed fisheries. Alaska salmon maintains
the Alaska RFM certification, because ADF&G's
management incorporates a precautionary approach that
prioritizes wild fish and minimizes adverse impacts to
wild stocks. ADF&G has extensive enhancement policies
which protect wild stocks (e.g. genetics, marking, and
disease). Given these policies, AFDF and independent
third-parties experts have confidence that ADF&G is
fulfilling its constitutional mandate to manage the
State's fishery resources for sustainability. AFDF is
confident that ADF&G would manage shellfish
enhancement with the same priority to wild stocks,
therefore, AFDF support HB 128 which will give ADF&G
the authority and regulatory framework to manage
shellfish enhancement.
11:49:44 AM
REPRESENTATIVE KREISS-TOMKINS asked where the primary
perspective shellfish enhancement activity in Alaska might take
place, and with which species.
MS. DECKER answered that the two groups furthest along on the
research side for enhancement are the programs undertaken by the
AKCRRAB, on king crab, and the Southeast Alaska Regional Dive
Fisheries Association, for sea cucumber.
11:50:53 AM
NANCY HILLSTRAND, Pioneer Alaskan Fisheries Inc., stated
opposition to HB 128, paraphrasing from a prepared statement,
which read as follows [original punctuation provided]:
Please be very cautious with this bill so all facts
and figures are on the table. Present salmon
legislation is 42 years old. These multiple statutes
and regulations are obsolete in many ways because they
do not reflect what we have learned over these 4
decades of time.
In the 1976 ADFG Annual Report, the then Commissioner
admitted that we had been over harvesting crab and
shrimp. The harvest levels take populations over the
thresholds of sustainability to withstand other
mortality factors like predation, female male size
restraints, etc.
Another danger especially with our budget as it is.
Monitoring is scanty and there is no money to perform
sustainably. All oversight rests on one man...the ADFG
commissioner. There needs to be an unbiased oversight
Board that can see all angles of this biological
introduction into our ecosystems.
Before we "just add fish"...Preliminary information is
required. We first need information on all interacting
limiting mortality factors of wild shellfish in their
nursery grounds. For instance
? what are the predators in these near shore
nurseries?
? have we identified and mapped the critical shellfish
nurseries in Alaska?
? are there introduced magnitudes of hatchery pink
salmon in these nurseries?
? do the introduced magnitudes of hatchery fish draw
in or cause a "swamping" of additional depredation
creating a predator pit on shellfish larvae and mega
lops?
There has been concern in California that hatchery
coho held some responsibility in the crash of their
Dungeness crab fishery in San Francisco.
The Barents Sea had an introduction of King Crab that
created competition with traditional fisheries.
11:53:19 AM
TONI MARSH, President, OceansAlaska, stated support for HB 128,
paraphrasing from a prepared statement, which read as follows
[original punctuation provided]:
HB 128 creates a regulatory framework with which ADF&G
can manage shellfish fishery enhancement, restoration
and shellfish hatcheries. This will allow interested
stakeholders to either continue or begin enhancement
and/or restoration of certain species. OceansAlaska
supports HB 128 as it will diversify economic
development, sustain cultural legacy and increase
environmental stewardship through:
1. Enhancement of traditional and economically
important shellfish species.
2. Enhancement of shellfish species integral to marine
ecosystems and habitat restoration.
3. Enhancement of shellfish species that are vital to
climate change and pollution mitigation.
Thank you for your support of HB 128 and the
mariculture industry.
11:54:27 AM
JOHN KISER, Owner, Rocky Bay Oysters, stated support for HB 128
with reserved concern regarding the private mariculture
operations as opposed to the state run hatcheries. Cost
recovery operations should not come into conflict with the
individual farming businesses, which can be accomplished via
regulation of the species allowed to be grown.
11:55:53 AM
MILO ATKINSON, Professor, University of Alaska Fairbanks (UAF),
encouraged the committee to focus on maintaining oversight and
protection of wild stocks, by reinforcing the need for diligence
with ADF&G. He reiterated the need to be clear about the
difference between enhancement and mariculture. As previously
noted, the potential exists for negative effects to occur
regarding interbreeding of hatchery reared and wild stocks, as
well as possible overharvest of wild stocks when reared stocks
are taken. Unlike salmon, the potential for damage is much
higher, he opined, and said strong oversight will need to be
practiced by the department.
CHAIR STUTES closed public testimony.
11:58:53 AM
MARY HAKALA, Staff, Representative Dan Ortiz, Alaska State
Legislature, provided the sectional analysis, paraphrasing from
a prepared statement, which read as follows [original
punctuation provided]:
Sec. 1
Provides the Alaska Board of Fisheries authority to
direct the department to manage production of enhanced
shellfish stocks, beyond brood stock needs, for cost
recovery harvest.
Sec. 2
Increases the permit application fee for new private
nonprofit salmon hatcheries from $100 to $1,000.
Sec. 3
Adds a new Chapter 12 to Title 16, "Shellfish Stock
Enhancement Projects". Provides direction to the
commissioner of the Department of Fish and Game on
issuance of permits for private nonprofit shellfish
fishery enhancement projects and establishes a $1,000
permit application fee. This section directs the
commissioner to consult with technical experts in the
relevant areas before permit issuance. This section
provides for a hearing prior to issuance of a permit
and describes certain permit terms including cost
recovery fisheries, harvest, sale, and release of
enhancement project produced shellfish, and selection
of brood stock sources. This section describes
reporting requirements and terms for modification or
revocation of a permit. It specifies that shellfish
produced under an approved enhancement project are a
common property resource, with provision for special
harvest areas by permit holders.
Sec. 4
Provides Commercial Fisheries Entry Commission
authority to issue special harvest area entry permits
to holders of private nonprofit shellfish
rehabilitation, or enhancement project permits.
Sec. 5
Defines legal fishing gear for special harvest area
entry permit holders.
Sec. 6
Exempts shellfish raised in a private nonprofit
shellfish project from the farmed fish definition.
Sec. 7 and 8
Establish state corporate income tax exemption for a
nonprofit corporation holding a shellfish fishery
enhancement permit.
Sec. 9
Exempts shellfish harvested under a special harvest
area entry permit from seafood development taxes.
Sec. 10
Establishes an effective date for the salmon hatchery
permit application fee described in sec. 2.
Sec. 11
Authorizes the Department of Fish and Game to adopt
implementing regulations.
Sec. 12
Establishes an immediate effective date for sec. 11
pursuant to AS 01.10.070(c).
Sec. 13
Establishes an effective date for sec. 8 concomitant
with sec. 2, Chapter 55, SLA 2013
12:01:38 PM
MS. HAKALA referred to the bill, page 2, Subsection (e), lines
28-30, and the language which reads:
The commissioner may not issue a permit under this
section unless the commissioner determines that the
action would result in substantial public benefits and
would not jeopardize natural stocks.
MS. HAKALA pointed out that additional language [page 4, lines
13-19] establishes a course of action for permit termination
should the commissioner find that an operation is not proceeding
in the best public interest. Thus, the bill ensures that the
department has teeth to maintain accountability among permit
holders, she stressed.
CHAIR STUTES announced HB 128 as held.
12:02:56 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Fisheries meeting was adjourned at 12:03
p.m.