HB 115-AQUATIC FARMING & HATCHERY SITE LEASES  11:38:04 AM CHAIR TARR announced that the final order of business would be HOUSE BILL NO. 115, "An Act relating to aquatic farming and hatchery site leases; and requiring the director of the division of lands to provide the legislature with an annual report relating to aquatic farming and hatchery site leases." 11:38:18 AM REPRESENTATIVE ANDI STORY, Alaska State Legislature, provided introductory remarks on HB 115 as prime sponsor. She paraphrased the sponsor's statement [included in the committee packet], which read as follows [original punctuation provided]: House Bill 115 simplifies the Department of Natural Resources (DNR) lease renewal process for aquatic farms to support Alaska's aquaculture sector while reducing administrative overhead. Examples of aquatic farm products include oysters, kelp, and other shellfish. HB115 makes the aquatic farm lease renewal process consistent with the renewal process for other DNR leases such as agricultural grazing, cabins and lodges, fish processing docks, and hydroelectric facilities. HB 115 does not affect salmon hatchery leases. If enacted, HB115 would expedite the lease renewal process lowering the risk for businesses investment and reducing the workload of an overstretched state agency. Current statute requires DNR to approve both initial and renewal aquatic farm leases using the same process, called a "945 authorization" (referring to the adjudication process found in AS 38.05.945), which takes around 200 days. HB115 would allow aquatic farm or hatchery renewals to be renewed in the same manner as most DNR leases like those listed above. This optional process allows the Director of the Division of Mining, Land and Water to renew a lease for a business in good standing and takes around 90 days. Applied to aquatic businesses, this option significantly shortens the renewal process while continuing appropriate regulatory oversight and public engagement. HB115 also requires DNR to submit an initial report on the backlog of pending aquatic farm and hatchery site lease applications, estimate economic impacts of pending leases, and provide recommendations for streamlining the lease approval process. Subsequent annual reports would detail the application backlog and list the number of leases renewals that underwent the time-intensive lease renewal process. This bill makes clear ecotourism and educational use of sites is allowed, and explicitly prohibits DNR from charging additional fees for persons using, or traversing, land leased for aquatic farms and hatchery sites. I respectfully ask for your support in the passage of HB115. 11:42:34 AM GREG SMITH, Staff, Representative Andi Story, Alaska State Legislature, on behalf of Representative Story, prime sponsor provided a sectional analysis of HB 115 as provided in the committee packet, which read as follows [original punctuation provided]: Section 1: Amends AS 38.05.035(a) to require the Director of the Division of Mining, Land, and Water to submit an annual report to the legislature, primarily detailing aquatic farm and hatchery site leases pending with the department. Section 2: Amends AS 38.05.070(e) by adding AS 38.05.083 (aquatic farm leasing statute) to the general leasing renewal section of law. This change allows the director to renew an aquatic farm lease under general lease renewal procedure. ? A technical amendment on lines 20-21 specifies which types of leases may be renewed under this procedure. Section 3: Amends AS 38.050.083(a) by deleting the term "or renew" from this section of statute. This removes the requirement that the renewal procedure for an aquatic farm or hatchery undergo the more detailed AS 38.05.945 adjudication process. Section 4: Amends AS 38.050.083(b) by deleting the term "or renewal" from this section of statute. This removes the renewal procedure from the aquatic farm leasing statute. Section 5: Adds new subsections to AS 38.050.083, including: ? (g): stating the Commissioner of the Department of Natural Resources may renew an aquatic farm lease under the general leasing renewal; ? (h): explicitly states ecotourism and educational purposes are allowable uses for aquatic farming and hatchery sites; and ? (i): explicitly prohibits the charging of an additional fee to aquatic farming and hatchery sites for the use or, or passage, across these sites. Section 6: Adds a new section to uncodified law to require Director of the Division of Mining, Land, and Water to submit an initial report to the legislature detailing aquatic farm and hatchery site leases pending with the department, estimates of economic impact if all the leases were granted, and recommendations by DNR and other state agencies to streamline the lease approval process. 11:45:12 AM HEATHER MCCARTY, Chair, Mariculture Task Force, provided background on the Mariculture Task Force, established in 2016, including its goal of creating a $ 100 million industry over 20 years by developing the new industry in Alaska. She added that this process included identifying regulatory, statutory, economic, educational, and environmental as some of the industry's barriers and hurdles, among others. She stated that the task force developed a strategic plan and, in 2019, it began implementation plans to establish priorities among the barriers identified. She stated that one of the barriers identified by the task force was the primary permitting and renewals, for which there existed a large backlog. She added that the task force in cooperation with the Alaska executive branch helped to identify areas in statute that could improve the processes and work towards eliminating the backlogs. She lauded HB 115 as a step in the direction of better rules and better laws, and she said it would remove barriers to new and current participants in the industry. She added that the task force also supports the inclusion of ecotourism in the bill. 11:48:08 AM REPRESENTATIVE VANCE asked Ms. McCarty to speak in more detail about the hurdles identified by the task force in the renewal process that included public testimony, and the reason for removing public testimony in the renewal process. MS. MCCARTY answered that the biggest hurdle is the time [required for renewal] consisting of a year-and-a-half, compounded by the increases in new and renewed [leases]. She added that the public [input] process had occurred during the initial permitting and added that it is her understanding that there does not exist any intent to remove the public from the process. 11:49:56 AM ERIC WYATT shared that he is a third-generation fisherman from Southeast and had diversified into aquatic farming 16 to 17 years ago, now with a focus on oyster farming. He stated his reasons for choosing to participate in the aquaculture industry were economic and environmental. He stated that his investment in aquaculture is substantial, and he attributed higher revenues as a [contributing factor to the cost of doing business]. He recalled his experience in renewal and the uncertainty of remaining in business for a period of over 18 months. He added that a farmer in good standing may experience an abbreviated process; however, the renewal processing is intimidating, as is the process for transferring permitting. He stated his hope for continued growth despite the barriers. He added that he viewed ecotourism as a positive addition to the bill and that there exists consumer interest in the "green" industry. 11:54:56 AM CHAIR TARR opened public testimony on HB 115. 11:55:02 AM TREVOR SANDE, Marble Seafoods, stated that he had been following legislation pertaining to aquaculture closely and had applied for his business permit in 2010. He suggested that the committee consider extending the period between renewals from 10 to as much as 20 years due to the length of time required to establish and develop his business. He added that some of the financing he had obtained had been granted over a 20-year term, and a lease renewal timeline could more closely align with available funding vehicles to result in more surety on the part of investors. He added that the public has avenues to voice displeasure or claims of negligent behavior on the part of farmers through Alaska Department of Fish & Game and suggested that he was ambivalent to the public comment component of the renewal process. He added that he is currently due for renewal. He added that he had amended [his lease permit] three times since starting his business, and that each one had taken in excess of 24 months to complete, which he characterized as onerous. He supported adding ecotourism and education in the language of the bill since he had been required to hold two leases to both farm and bring visitors to the farm. CHAIR TARR commended the value of Mr. Sande's testimony to the committee to aid in its understanding of the experience of the farmers. 12:00:25 PM MARKOS SCHEER, President, Premium Aquatics, testified in support of HB 115 in his role as a kelp farmer in Ketchikan. He explained that he has spent approximately six years engaged in the development of the business. He stated that creditors are quick to ask for the term of the lease, which may not align with the length credit note available. [HB 115 was held over.]