Legislature(2001 - 2002)
04/02/2001 03:35 PM Senate RES
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* first hearing in first committee of referral
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ALASKA STATE LEGISLATURE
SENATE RESOURCES COMMITTEE
April 2, 2001
3:35 p.m.
MEMBERS PRESENT
Senator John Torgerson, Chair
Senator Drue Pearce, Vice Chair
Senator Pete Kelly
Senator Robin Taylor
Senator Kim Elton
Senator Georgianna Lincoln
MEMBERS ABSENT
Senator Rick Halford
COMMITTEE CALENDAR
SENATE BILL NO. 76
"An Act amending the permissible period of renewal of a lease
entered into under the Alaska Right-of-Way Leasing Act, and
providing for treatment of a pending application for lease renewal
as a lease continued under its existing terms until entry of the
final determination affecting the application for renewal; and
providing for an effective date."
MOVED SSSB 76 (RES) OUT OF COMMITTEE
SENATE BILL NO. 121
"An Act adding, for purposes of the Alaska Right-of-Way Leasing
Act, a definition of 'substantial change' as applied to an amended
right-of-way lease application; and providing for an effective
date."
MOVED CSSB 121 (RES) OUT OF COMMITTEE
SENATE BILL NO. 148
"An Act relating to remote water storage for fire departments."
MOVED SB 148 OUT OF COMMITTEE
SENATE BILL NO. 141
"An Act relating to aquatic farming of shellfish; and providing for
an effective date."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
SB 76 - No previous action to record.
SB 121 - See Resources minutes dated 3/16/01.
SB 141 - No previous action to record.
SB 148 - No previous action to record.
WITNESS REGISTER
Senator Therriault
State Capitol Bldg.
Juneau AK 99811
POSITION STATEMENT: Sponsor of SB 76.
Ms. Steve Jones
TAPS Right-of-way Manager
No address provided
POSITION STATEMENT: Supported SB 76.
Mr. Bill Britt, State Pipeline Coordinator
Department of Natural Resources
400 Willoughby Ave.
Juneau, AK 99801-1724
POSITION STATEMENT: Supported SB 76.
Ms. Annette Kreitzer
Staff to Senator Leman
State Capitol Bldg.
Juneau AK 99811
POSITION STATEMENT: Commented on SB 121 for sponsor.
Mr. Jim Eason
Foothills Pipe Lines Ltd.
3100 - 707 Eighth Ave. S.W.
Calgary Alberta T2P 3W8
POSITION STATEMENT: Commented on SB 121.
Mr. Darwin Peterson
Staff to Senator Torgerson
State Capitol Bldg.
Juneau AK 99811
POSITION STATEMENT: Commented on SB 148 and SB 141 for sponsor.
Mr. Joe Stam, Chief
Fire Program
Division of Forestry
Department of Natural Resources
550 West 7th Ave., Ste 1450
Anchorage AK 99501
POSITION STATEMENT: Supported SB 148.
Ms. Roberta Highland
Kachemak Bay Conservation Society
P.O. Box 846
Homer AK 99603
POSITION STATEMENT: Opposed SB 141.
Ms. Nina Faust
P.O. Box 2994
Homer AK 99603
POSITION STATEMENT: Opposed SB 141.
Mr. Scott Thomas
Alaska Trade Mark Shellfish
945 Lincoln St.
Ketchikan AK 99901
POSITION STATEMENT: Commented on SB 141.
Mr. Ron Long
Qutekcak Hatchery
Seward AK 99664
POSITION STATEMENT: Commented on SB 141.
Mr. John Agosti
Alaska Shellfish Growers Association
Seward AK 99664
POSITION STATEMENT: Commented on SB 141.
Ms. Janice Adair, Director
Division of Environmental Health
Department of Environmental Conservation
555 Cordova Street
Anchorage AK 99501
POSITION STATEMENT: Commented on SB 141.
Mr. Mike Bangs
P.O. Box 1733
Petersburg AK 99833
POSITION STATEMENT: Opposed SB 141.
Mr. Rick Harness
P.O. Box RDO, Red Mountain
Homer AK 99603
POSITION STATEMENT: Opposed SB 141.
Mr. Ray Rowland, Aquaculture Specialist
University of Alaska Southeast
11120 Glacier Hwy.
Juneau AK 99801
POSITION STATEMENT: Supported SB 141.
Mr. Bob Hartley
Alaska Shellfish Growers Association
Homer AK 99603
POSITION STATEMENT: Supported SB 141.
Ms. Julie Decker, Executive Director
Southeast Alaska Regional Dive Fisheries Association (SARDFA)
P.O. Box 2138
Wrangell AK 99929
POSITION STATEMENT: Supported SB 141 with some changes.
Mr. Bob Loeffler, Director
Division of Mining, Land and Water
Department of Natural Resources
550 W 7th Ave, Ste 1070
Anchorage AK 99501
POSITION STATEMENT: Commented on SB 141.
Ms. Vi Jerra
Anchor Point AK
POSITION STATEMENT: Opposed SB 141.
Mr. Mako Haggerty
P.O. Box 2001
Homer AK 99603
POSITION STATEMENT: Opposed SB 141.
Mr. Don Fell
P.O. Box 615
Homer AK 99603
POSITION STATEMENT: Supported SB 141.
Ms. Nancy Hillstrand
P.O. Box 674
Homer AK 99603
POSITION STATEMENT: Opposed SB 141.
Mr. Doug Mecum, Director
Division of Commercial Fisheries
Department of Fish & Game
PO Box 25526
Juneau, AK 99802-5226
POSITION STATEMENT: Commented on SB 141.
Ms. Shannon O'Fallon, Assistant Attorney General
Department of Law
PO Box 110300
Juneau, AK 99811-0300
POSITION STATEMENT: Commented on SB 141.
Mr. Roger Painter
Alaska Shellfish Growers' Association
Juneau AK
POSITION STATEMENT: Supported SB 141 with changes.
ACTION NARRATIVE
TAPE 01-25, SIDE A
Number 001
SB 76-RIGHT-OF-WAY LEASING ACT
CHAIRMAN JOHN TORGERSON called the Senate Resources Committee
meeting to order at 3:35 p.m. and announced SB 76 to be up for
consideration.
SENATOR THERRIAULT, sponsor of SB 76, said since the bill's
introduction, the Administration has carried on negotiations with
officials at Alyeska regarding terms. All have agreed to the
language in the sponsor substitute. He explained the contents of
the bill as follows.
Section 1 modifies the length in which a lease for a pipeline
right-of-way can be granted from 10 years to 30 years. That would
conform to federal law. He thought it made sense to conform our law
to federal laws so that pipelines that cross both state and federal
lines would be assured they have a right-of-way to continue
operations.
Section 2 deals with the issue of how to deal with ongoing
negotiations that exceed the original lease length. The state does
not want to be subject to litigation just because negotiations are
ongoing.
Section 3 deals with reimbursements of the state's expense in
negotiating for a lease extension, language that was in the
Governor's original bill.
Section 4 deals with the definition of state land and rights-of-way
across it.
Section 5 deals with the 30 years applicable to leases that are
currently in existence.
SENATOR ELTON asked if there is a definition in statute of "timely
requested."
SENATOR THERRIAULT answered that there is no definition of that
term in statute but there is one in regulation that says two years.
He thought the committee might want to allow some flexibility in
regard to the TransAlaska pipeline.
SENATOR LINCOLN said the fiscal note indicates a potential savings
to the state that would begin to accrue in 2014. She asked if he
had any idea what the cost savings would be.
SENATOR THERRIAULT replied, "The expense of the permitting process
will get rolled into the tariff that is paid for shipping the
product down the line. That impacts on the state treasury, because
it reduces the wellhead value. It doesn't start accruing until
then, because right now if existing law continued, it would be back
before us in 10 years…"
MR. STEVE JONES, TransAlaska Pipeline System right-of-way renewal
project manager, stated support for SB 76 and pointed out that they
had spent the last month and a half working on language that
everyone would be happy with.
MR. BILL BRITT, State Pipeline Coordinator, stated support for SB
76. Regarding Senator Elton's question about the term, "timely
requested," the Right-of-way Leasing Act only applies to large
common carrier oil and gas pipelines and does not apply to the
smaller gathering lines.
CHAIRMAN TORGERSON asked what his intentions are for the renewal,
which says up to 30 years.
MR. BRITT answered they would first have to receive an application
and the applicant would request the term of renewal. He presumes it
will be 30 years. He said they are in the process of cooperating
with Alyeska to do a reliability center maintenance study, which
will give them the exact physical condition of what they consider
to be the critical systems on the TransAlaska Pipeline. He also
pointed out that five other pipeline right-of-way leases on the
North Slope expire on the same day as the TransAlaska Pipeline's
right-of-way lease. DNR will have to deal with those five pipelines
at the same time.
CHAIRMAN TORGERSON asked what DNR will do if they are found to be
out of compliance with the lease and they have signed a 30-year
lease.
MR. BRITT said he presumed Senator Torgerson meant they had a 30
year lease and encountered a problem after the renewal. He
explained the lease has a number of tools so that, "We can issue
orders directing Alyeska to take specific actions." They have done
this a number of times and Alyeska has responded to every one of
those.
MR. BRITT explained, "Should that fail, we have the ability to go
perform the work ourselves and bill the operator for doing the
work. Should the operator not respond, we have the ability to go to
court and a whole series of tools we can use to affect whatever
change we think is necessary."
SENATOR LINCOLN asked how many times the state has utilized the
"recourse" he is talking about.
MR. BRITT said he has been employed in this position for the last
four years and prior to that some actions were taken. During his
term, he has issued about 10 directives instructing Alyeska to take
specific actions. No further steps needed to be taken.
SENATOR ELTON asked if he supports the legislation.
MR. BRITT responded that he does support it.
SENATOR ELTON asked his definition of "timely requested."
MR. BRITT stated that DNR has recently promulgated regulations that
ask that applications be submitted two years prior to the
expiration of the lease and that would be his definition. The
regulations allow the commissioner to waive that period should
circumstances warrant a waiver. He reiterated for the purpose of
this bill, he is only talking about the big pipelines.
SENATOR ELTON asked how he would define a feeder line off the
pipeline, like the feeder line to Williams.
MR. BRITT told members DNR does not have a separate lease for that
line; it is covered by the TAPS right-of-way lease.
Number 1000
SENATOR PEARCE moved to pass SSSB 76 from committee with its zero
fiscal note and individual recommendations. There were no
objections and it was so ordered.
SB 121-RIGHT-OF-WAY LEASING ACT
CHAIRMAN TORGERSON announced SB 121 to be up for consideration.
MS. ANNETTE KREITZER, staff to Senator Leman, sponsor of SB 121,
said:
During the last hearing there were three concerns brought
to the committee's attention concerning this bill. One
was changes in the routing of a pipeline, another was
changes from above ground to below ground pipeline and a
third was a change in the diameter of a pipeline. The
department has dealt administratively with the diameter
and changing from above ground to below ground issues. So
we think the only remaining issue is the routing issue.
MS. KREITZER indicated there was an amendment to clarify that
language on page 2, lines 5 - 7.
MS. KREITZER said:
I want to put Senator Leman's intention on the record. He
intends that the amendment addressing routing makes clear
that routing changes would not be considered substantial
changes, which trigger all the provisions of the Pipeline
Right-of-way Leasing Act. Specifically, his intention is
not to prohibit a pipeline from being built on one side
of a creek or the other. This type of deviation from the
pipeline would not be considered a substantial change.
MS. KREITZER used a map to illustrate his point.
SENATOR PEARCE said as long as the route roughly parallels the
Alaska Highway that would not be a substantial change, even though
it might move a little bit.
MS. KRIETZER responded that the intent is to allow those decisions
to be made onsite.
CHAIRMAN TORGERSON asked if it would still have to meet the test of
a net increase of 10 percent in subsection (1).
MS. KRIETZER replied that was correct.
SENATOR PEARCE moved to adopt Amendment 1.
SENATOR ELTON asked for further clarification and said, "For
instance, if you take an elbow out to save two miles and it goes
through a neighborhood, would the sponsor of this amendment
consider that a substantial change?"
MS. KRIETZER said that she would defer to Mr. Britt's answer on
that, but she didn't think a deviation of two miles would show up
on her map.
MR. BRITT responded that he thought Senator Elton was discussing
the situation on a case-by-case basis. He remarked, "The wording I
have in front of me is a fundamental change proposed by the
applicant and the general route as set out in the original
application."
CHAIRMAN TORGERSON said that is correct.
MR. BRITT said depending on the length of the pipeline, a deviation
of less than two miles with generally the same origin and the same
end points would probably not be considered to be a fundamental
change.
CHAIRMAN TORGERSON asked if he favored the amendment and the bill
as amended.
MR. BRITT replied that he could administer the bill in front of him
but they are seeking clarification of the undefined term.
SENATOR ELTON said:
It seems to me that what we've had put on the record is
we held up a map that's 18 x 24 inches that has a green
line running down through it with the only geographical
demarcation being Fairbanks, and it seems to me that what
the maker of the amendment proposes is that, if you can
see a change in that line across the room, then that's a
substantial change. To me that seems to be an unworkable
definition of 'substantial change.'
CHAIRMAN TORGERSON said, "I did clarify that it had to meet the
rest of page 1, 10 percent. You have the same test regardless of
what she was pointing at on the map."
SENATOR ELTON responded, "Absolutely, Mr. Chair, but I think we
established through the discussion on this bill previously that you
could completely change the route and still not have a problem with
the 10 percent threshold. You'd just be exchanging some state land
for other state property."
CHAIRMAN TORGERSON said, "That isn't the way I read it." He asked
Mr. Britt if that was the way he read it.
MR. BRITT replied it is.
MR. JIM EASON, Foothills Pipe Lines, attempted to clarify the
situation by saying:
I think there may be some misunderstanding about what
happens in a circumstance where the hypothetical that has
been proposed by Senator Elton might occur. My
understanding is, and our belief in supporting this bill
is, that there are provisions, which Mr. Britt will
administer to have public notice and to have a
commissioner's best interest finding about changes that
occur in a proposed application.
The issue that we're trying to address and, hopefully,
this bill will address is whether all the provisions of
the Pipeline Right-of-Way Act are implicated any time you
have a substantial change and how you define substantial
change. So the intent is not to do something that would
not have notice, in the case that Senator Elton has
proposed or provided as a hypothetical, but with the
amendment that is under consideration here, you're
defining a third standard with the first two being the
option of proposing the use of 10 percent or more
additional state acreage that was originally proposed in
an application.
Secondly, if you propose to substitute less effective and
environmental protection or technology, once you've
submitted an application; and thirdly, if you proposed a
fundamental change in the general route. The reason for
the selection of those words is important because, as all
of us would agree, changes in a route are gradational and
they are in the eye of the beholder. We think it is
fundamentally unfair and probably not a good idea for the
state or an applicant to leave open the question of
whether minimal changes where they are proposed by the
applicant or by the agencies in order to accommodate
routing selection criteria that the agency develops or to
avoid communities or to do whatever an applicant has to
do after he has submitted a requested proposed route,
those things should not be the triggers for all the
provisions in the chapter. In other words, if you're down
a year or so into an application and it's determined
that, to use the example of the map, that you have to
cross a creek for whatever reason from a different angle,
we think that is entirely appropriate, if that's what the
agencies decide or if they decide based upon public
comment that some accommodation of the route is needed
but there's a difference between having full public
comment and agency review of those kinds of decisions,
and the thing we're hoping we can all agree on that we
need to avoid. That is retriggering all the provisions of
Title 38.35, which would include going back and refiling
an application and going through every procedure that's
outlined in that statute.
SENATOR ELTON said he understands that, but they have just heard
testimony from Mr. Britt that his hypothetical scenario does, in
fact, preclude him from defining that as a substantial change and
that bothers him [Senator Elton]. He thought that provision
essentially says: "The pipeline, if you take away 1,000 state acres
here and you add 1,080 state acres there, that is precluded as a
substantial change. "
MR. BRITT commented, "While that's correct, what Mr. Eason was
indicating is, in fact, correct as well. Many of the safeguards to
the public process would occur after such a change - by which I
mean that we promulgate a commissioner's analysis on a proposed
lease and we've public noticed those vehicles in and around
potentially affected areas. If there is sufficient public interest,
we hold a public hearing prior to making a decision. So the
commissioner's analysis would ultimately have to reflect whatever
piece of ground it is we finally are talking about."
SENATOR PEARCE tried to clarify the situation and said in the
beginning someone has to come up with a route and if a community
wanted to change it from north of town to south of town, the
company would have to start the application process from the
beginning as opposed to being able to move forward with a change
that everyone wants. She asked if that's what the bill does.
MR. BRITT replied, "It depends. We make those decisions on a case
by case basis based on what we have in front of us." He thought the
example the committee was using was outside of the realm of any
process. It would be up to the department to decide if that was a
substantial change and that decision would be open to litigation
potentially.
CHAIRMAN TORGERSON announced an at-ease from 4:10 to 4:25 p.m. He
asked if there was any further discussion on Amendment 1. There
were no further questions and it was adopted.
SENATOR PEARCE moved to pass CSSB 121(RES) from committee with
individual recommendations and its zero fiscal note. There were no
objections and it was so ordered.
SB 148-REMOTE WATER STORAGE FOR FIRE DEPARTMENTS
CHAIRMAN TORGERSON announced SB 148 to be up for consideration.
MR. DARWIN PETERSON, staff to Senator Torgerson, sponsor, described
the measure as follows.
SB 148 instructs the Department of Natural Resources
[DNR] to construct remote water storage sites for fire
protection. These sites will consist of 10,000-gallon
underground storage tanks with a pump and a hydrant. DNR
will solicit applications for these remote storage tanks
from all the organized fire service areas statewide. Then
the Department will rank the applications and based upon
appropriations available construct as many as they can
afford. The applications will be ranked by the following
factors:
· distance from an adequate water supply;
· number of buildings to be protected;
· extent of spruce bark beetle infestation;
· ability of the fire service to provide matching funds; and
· ability to maintain and operate the remote water storage
site.
The need for remote water storage sites is evident in many areas of
the state, especially in the areas where beetle infested timber
greatly increases the risk of catastrophic wildfire. This
legislation will help protect the lives of those people living on
the fringe of fire service areas. It will also reduce property loss
and possibly lower ISO rates for our residents.
SENATOR TAYLOR asked if the spruce bark beetle infestation areas
are considered in the bill.
MR. PETERSON said the bill is not supposed to eliminate those
areas.
CHAIRMAN TORGERSON said an applicant might actually get more points
if the site is in a spruce bark beetle infested area. It's for fire
protection in general, not just wildfire and oil well fires.
MR. JOE STAM, Chief, Fire Program, DNR, said initially he was
neutral on the bill but he talked to some fire departments across
the state that are interested in this and he would be glad to help
facilitate it.
SENATOR TAYLOR moved SB 148 from committee with individual
recommendations and the accompanying fiscal note. There were no
objections and it was so ordered.
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.
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