HB 300: "An Act relating to management of enhanced stocks of fish; authorizing the operation of nonprofit shellfish hatcheries; relating to application fees for salmon and shellfish hatchery permits; and providing for an effective date."

00 HOUSE BILL NO. 300 01 "An Act relating to management of enhanced stocks of fish; authorizing the operation of 02 nonprofit shellfish hatcheries; relating to application fees for salmon and shellfish 03 hatchery permits; and providing for an effective date." 04 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 05 * Section 1. AS 16.05.730(c) is amended to read: 06 (c) The board may consider the need of enhancement projects authorized 07 under AS 16.10.400 and contractors who operate state-owned enhancement projects 08 under AS 16.10.480 to harvest and sell fish produced by the enhancement project that 09 are not needed for brood stock to obtain funds for the purposes allowed under 10 AS 16.10.450 or 16.10.480(d). The board may consider the need of enhancement 11 projects authorized under AS 16.12.010 to harvest and sell shellfish that are not 12 needed for brood stock to obtain funds for the purposes allowed under 13 AS 16.12.080. The board may exercise its authority under this title as it considers 14 necessary to direct the department to provide a reasonable harvest of fish, in addition

01 to the fish needed for brood stock, to an enhancement project to obtain funds for the 02 enhancement project if the harvest is consistent with sustained yield of wild fish 03 stocks. The board may adopt a fishery plan to provide fish to an enhancement project 04 to obtain funds for the purposes allowed under AS 16.10.450, [OR] 16.10.480(d), or 05 AS 16.12.080. 06 * Sec. 2. AS 16.10.400(b) is amended to read: 07 (b) The application for a permit under this section shall be on a form 08 prescribed by the department and be accompanied by an application fee of $1,000 09 [$100]. The commissioner may waive the submission of an application for a permit to 10 operate a hatchery under AS 16.10.480. 11 * Sec. 3. AS 16 is amended by adding a new chapter to read: 12 Chapter 12. Shellfish Hatcheries. 13 Sec. 16.12.010. Permits for shellfish hatcheries. (a) The commissioner or a 14 designee may issue a permit, subject to the restrictions imposed by statute or 15 regulation under AS 16.12.010 - 16.12.199, to a nonprofit corporation organized under 16 AS 10.20, for the construction and operation of a shellfish hatchery. 17 (b) Each application for a permit under this section must be in a format 18 prescribed by the department and be accompanied by an application fee of $1,000. 19 (c) A hatchery permit is nontransferable. If a permit holder sells or leases a 20 hatchery for which a permit is issued under this section, the new operator shall apply 21 for a new permit under this section. 22 (d) The commissioner shall consult with and solicit recommendations from 23 federal and state agencies and technical experts in the relevant area regarding permit 24 stipulations and issuance. 25 (e) A permit may not be issued under this section unless the commissioner 26 determines that the action would result in substantial public benefits and would not 27 jeopardize natural stocks. 28 Sec. 16.12.020. Hearings before permit issuance. (a) At least 30 days before 29 the issuance of a permit under AS 16.12.010, the department shall hold a public 30 hearing in a central location in the vicinity of the proposed release. 31 (b) Notice of the hearing shall be published in a newspaper of general

01 circulation once a week for three consecutive weeks, with completion of the notice at 02 least five days before the hearing. 03 (c) The hearing shall be conducted by the department. The applicant shall 04 present a plan for the proposed hatchery describing the capacity of the hatchery and 05 other relevant facts that may be of interest to the department or the public. Interested 06 members of the public shall be given an opportunity to be heard. 07 (d) The department shall record and consider objections and recommendations 08 offered by the public at the hearing conducted under this section. The department shall 09 respond in writing, not later than 30 days after the hearing is held, to a specific 10 objection offered by a member of the public at the hearing. 11 Sec. 16.12.030. Conditions of a permit. The department shall require, in a 12 permit issued to a hatchery operator, that 13 (1) shellfish procured by the permit holder must be from the 14 department or a source approved by the department; 15 (2) shellfish may not be placed in water of the state other than those 16 specifically designated in the permit; 17 (3) shellfish sold to a permit holder by the state or by another party 18 approved by the department may not be resold or otherwise transferred to another 19 person; 20 (4) shellfish may not be released by the permit holder before 21 department approval, and, for purposes of pathological examination and approval, the 22 department shall be notified of the proposed release at least 15 days before the date of 23 their proposed release by the hatchery; 24 (5) diseased shellfish be destroyed in a specific manner and place 25 designated by the department; 26 (6) shellfish be harvested by the permit holder only at specific 27 locations and under specific conditions as designated by the department; 28 (7) surplus shellfish be made available for sale first to the department 29 and then, after inspection and approval by the department, to operators of other 30 hatcheries authorized by permit to operate under AS 16.12.010 - 16.12.199; 31 (8) if surplus shellfish are sold by a permit holder to another permit

01 holder, a copy of the sales transaction must be provided to the department; 02 (9) a release be located in an area where released shellfish will be 03 available to traditional fisheries, subject to the provisions of this chapter and 04 regulations adopted under this chapter. 05 Sec. 16.12.040. Alteration, suspension, or revocation of permit. (a) If a 06 permit holder fails to comply with the conditions and terms of the permit issued under 07 AS 16.12.010 within a reasonable period after notification of noncompliance by the 08 department, the permit may be suspended or revoked, in the discretion of the 09 commissioner. 10 (b) If the commissioner finds that the operation of the permitted activity is not 11 in the best interests of the public, the commissioner may alter the conditions of the 12 permit to mitigate the adverse effects of the operation, or, if the adverse effects are 13 irreversible and cannot be mitigated sufficiently, initiate a termination of the operation 14 under the permit over a reasonable period of time under the circumstances, not to 15 exceed four years. During the period of time that the operation is being terminated, the 16 permit holder may harvest shellfish under the terms of the permit but may not release 17 additional shellfish. 18 Sec. 16.12.050. Regulations relating to released shellfish. (a) Shellfish 19 released into the natural water of the state by a hatchery operated under AS 16.12.010 20 - 16.12.199 are available to the people for common use and are subject to regulation 21 under applicable law in the same way as shellfish occurring in their natural state 22 except when they are in a special location designated by the department for harvest by 23 the hatchery operator. 24 (b) The Board of Fisheries may, after the issuance of a permit by the 25 commissioner, amend by regulation adopted in accordance with AS 44.62 26 (Administrative Procedure Act), the terms of the permit relating to the source of brood 27 stock, the harvest of shellfish by hatchery operators, and the specific locations 28 designated by the department for harvest. The Board of Fisheries may not adopt a 29 regulation or take an action regarding the issuance or denial of a permit required in 30 AS 16.12.010 -16.12.199. 31 Sec. 16.12.060. Department assistance and cooperation. (a) Before and after

01 permit issuance under AS 16.12.010, the department shall make reasonable efforts, 02 within the limits of time and resources, to advise and assist applicants or permit 03 holders, as appropriate, in the planning, construction, or operation of shellfish 04 hatcheries. 05 (b) Nothing in this section exempts an applicant or permit holder from 06 compliance with AS 16.12.010 - 16.12.199 or from compliance with the regulations or 07 restrictions adopted under AS 16.12.010 - 16.12.199. 08 Sec. 16.12.070. Brood stock sources. (a) The department shall approve the 09 source and number of shellfish taken for use as brood stock under AS 16.12.010 - 10 16.12.199. 11 (b) Where feasible, shellfish taken by a hatchery operator shall first be taken 12 from stocks native to the area in which the shellfish will be released, and then, upon 13 department approval, from other areas, as necessary. 14 Sec. 16.12.080. Sale of shellfish; use of proceeds; quality and price. (a) A 15 shellfish hatchery operator that sells shellfish harvested from the natural water of the 16 state, or sells shellfish to another hatchery operating under a permit issued under 17 AS 16.12.010 - 16.12.199, shall use the funds only for reasonable operating costs, 18 including debt retirement, expanding its facilities, shellfish rehabilitation projects, 19 shellfish research, or the department's costs of managing the affected fisheries for the 20 area in which the shellfish release is located. 21 (b) Shellfish harvested by a permit holder and sold for human consumption 22 must be of comparable quality to shellfish harvested by commercial fisheries in the 23 area and must be sold at prices commensurate with the current market. 24 Sec. 16.12.090. Cost recovery fisheries. (a) A hatchery permit holder may 25 harvest shellfish for a facility in 26 (1) a special harvest area through agents or employees of or persons 27 under contract with the permit holder as provided under a permit from the department 28 or regulations of the Board of Fisheries; or 29 (2) a special harvest area through the common property fishery under 30 this section. 31 (b) A hatchery permit holder may, by a majority vote of the membership of

01 the hatchery permit holder's board, elect to harvest shellfish in a special harvest area 02 established for that facility through the common property fishery. At the request of the 03 permit holder and if the commissioner determines that there are no allocative issues 04 involved, and after reasonable consultation with affected commercial fishermen, the 05 commissioner may adopt regulations governing the harvest of shellfish in a special 06 harvest area through a common property fishery. The regulations must specify the 07 terms, conditions, and rules under which the common property fishery in the special 08 harvest area shall be conducted, including requirements for holding inspections and 09 reporting of harvests and sales of shellfish taken in the special harvest area. Following 10 adoption of regulations by the department, before January 15 of each year, the permit 11 holder's board of directors, by a majority vote of the board's membership, may 12 determine whether the hatchery will operate under the regulations adopted under this 13 subsection during the current calendar year and shall notify the department if the 14 hatchery intends to operate under the regulations adopted under this subsection. The 15 Board of Fisheries may adopt regulations under AS 16.05.251 regarding a fisheries 16 management plan governing operations under this subsection in a special harvest area, 17 including allocation plans. Participation in the fishery must be open to all interim-use 18 permit and entry permit holders who hold permits to operate a type of gear that may be 19 used in the fishing district in which the special harvest area is located if that type of 20 gear is authorized by regulation to be used in the special harvest area. An interim-use 21 permit holder or an entry permit holder who takes shellfish in a common property 22 fishery in a special harvest area may sell the shellfish to a fish buyer or processor who 23 is licensed to do business in the state. 24 (c) As a condition of participation in a common property shellfish fishery in a 25 special harvest area under this section, a fisherman who participates in the fishery is 26 subject to the payment of the assessment levied under (d) of this section on the 27 projected value of the shellfish or on the pounds of shellfish harvested. The 28 assessment is levied on the shellfish that the fisherman takes in the special harvest area 29 and sells to a licensed buyer. The buyer of the shellfish must be licensed under 30 AS 43.75, and the buyer shall collect the assessment on shellfish taken in a special 31 harvest area at the time of purchase and remit the assessment to the Department of

01 Revenue in accordance with regulations adopted by the Department of Revenue. 02 (d) The Department of Revenue may, by regulation, annually, by March 1 of 03 each year, set the assessment levied on shellfish taken in a special harvest area in 04 consultation with the Department of Commerce, Community, and Economic 05 Development, the hatchery permit holder, and representatives of affected commercial 06 fishermen. The assessment shall provide sufficient revenue to cover debt service, 07 reasonable operating expenses, reasonable maintenance expenses, and development or 08 maintenance of a reserve fund up to 100 percent of annual operating costs of the 09 shellfish hatchery. In setting the assessment, the department shall consider the 10 estimated harvest of shellfish in the special harvest area, the projected price to be paid 11 for shellfish in the region, the amount of the existing reserve held by the permit holder, 12 and the amount by which the assessment collected in previous years exceeded or fell 13 short of the amount anticipated to be collected. The assessment may not exceed 50 14 percent of the value of the shellfish. The department may levy the assessment as a 15 percentage of the projected value of the shellfish harvested in the special harvest area 16 or as a flat rate on each pound of shellfish harvested in the area, to the nearest whole 17 cent. 18 (e) The Department of Revenue shall deposit the assessments collected under 19 this section in the general fund. The legislature may appropriate the funds collected 20 under this section to the hatchery permit holder who operates a facility in the special 21 harvest area in which the assessment was levied. A hatchery permit holder shall use 22 funds appropriated under this subsection for the purposes set out under 23 AS 16.12.080(a). The legislature may also appropriate funds collected under this 24 section to the Department of Revenue for costs incurred by the department under this 25 section. 26 (f) A person who violates a regulation adopted under (b) of this section is 27 guilty of a violation under AS 16.05.722 or a misdemeanor under AS 16.05.723. A 28 person who violates a regulation adopted by the Department of Revenue under (c) of 29 this section is guilty of a class A misdemeanor. 30 (g) In this section, 31 (1) "facility" means a hatchery or shellfish rehabilitation project for

01 which a permit is issued under AS 16.12.010 - 16.12.199; 02 (2) "special harvest area" means an area designated by the 03 commissioner or the Board of Fisheries where shellfish may be harvested by the 04 hatchery operators and by the common property fishery; 05 (3) "value" has the meaning given in AS 43.75.290. 06 Sec. 16.12.100. Inspection of hatchery. (a) As a condition of and in 07 consideration for a permit to operate a hatchery under AS 16.12.010 - 16.12.199, an 08 inspection of the hatchery facility by department inspectors shall be permitted by the 09 permit holder at any time the hatchery is operating. The inspection shall be conducted 10 in a reasonable manner. 11 (b) The cost of an inspection performed by the department under this section 12 shall be borne by the department. 13 Sec. 16.12.110. Annual report. (a) A person who holds a permit for the 14 operation of an shellfish hatchery under AS 16.12.010 - 16.12.199 shall submit an 15 annual report no later than December 15 to the department to include information 16 pertaining to species; brood stock source; number, age, gender, and size of spawners; 17 number of eggs collected and juveniles produced; and the number, age, gender, and 18 size of harvested shellfish attributable to hatchery releases, on a form to be provided 19 by the department. 20 Sec. 16.12.199. Definitions. In AS 16.12.010 - 16.12.199, 21 (1) "hatchery" means a facility for the artificial propagation of stock, 22 including rearing of shellfish and release of shellfish into the natural water of the state; 23 (2) "shellfish" means a species of crustacean, mollusk, or other 24 invertebrate, in any stage of its life cycle, that is indigenous to state water or that is 25 authorized to be imported into the state under a permit issued by the commissioner. 26 * Sec. 4. AS 16.43.400(a) is amended to read: 27 (a) In addition to entry permits, interim-use permits, and educational permits, 28 the commission may issue special harvest area entry permits to holders of private, 29 nonprofit hatchery permits issued by the Department of Fish and Game under 30 AS 16.10.400 - 16.10.475 for salmon or AS 16.12.010 - 16.12.199 for shellfish. 31 * Sec. 5. AS 16.43.430 is amended to read:

01 Sec. 16.43.430. Authorized gear. For the purposes of harvesting salmon or 02 shellfish, a special harvest area entry permit holder may employ any fishing gear 03 designated as legal gear in the applicable special harvest area by the Board of 04 Fisheries. 05 * Sec. 6. AS 17.20.049(b)(1) is amended to read. 06 (1) "farmed fish" means fish that is propagated, farmed, or cultivated 07 in a facility that grows, farms, or cultivates the fish in captivity or under positive 08 control but that is not a salmon hatchery that is owned by the state or that holds a 09 salmon hatchery permit under AS 16.10.400, or a shellfish hatchery that holds a 10 permit under AS 16.12.010 in this paragraph, "positive control" has the meaning 11 given in AS 16.40.199; 12 * Sec. 7. AS 17.20.345(c) is amended to read. 13 (c) A person who donates to a food bank salmon from a hatchery that operates 14 under a permit issued under AS 16.10.400 - 16.10.470 or shellfish from a hatchery 15 that operates under a permit issued under AS 16.12.010 - 16.12.199 is immune 16 from liability as provided in this section if the salmon or shellfish are [IS] apparently 17 fit for human consumption at the time of its donation, even if the hatchery does not 18 have a permit issued by the Department of Environmental Conservation under this 19 chapter or other statute to process fisheries products for human consumption. 20 * Sec. 8. AS 43.20.012(a) is amended to read: 21 (a) The tax imposed by this chapter does not 22 (1) apply to an individual; 23 (2) apply to a fiduciary; 24 (3) for a tax year beginning after December 31, 2012, apply to an 25 Alaska corporation that is a qualified small business and that meets the active business 26 requirement in 26 U.S.C. 1202(e) as that subsection read on January 1, 2012; [OR] 27 (4) for a tax year beginning after June 30, 2007, apply to the income 28 received by a regional association qualified under AS 16.10.380 or nonprofit 29 corporation holding a hatchery permit under AS 16.10.400 from the sale of salmon or 30 salmon eggs under AS 16.10.450 or from a cost recovery fishery under AS 16.10.455; 31 or

01 (5) apply to income received by a nonprofit corporation holding a 02 hatchery permit under AS 16.12.010 from the sale of shellfish under AS 16.12.080 03 or from a cost recovery fishery under AS 16.12.090. 04 * Sec. 9. AS 43.76.390 is amended to read: 05 Sec. 43.76.390. Exemption. AS 43.76.350 - 43.76.399 do not apply to salmon 06 or shellfish harvested under a special harvest area entry permit issued under 07 AS 16.43.400. 08 * Sec. 10. The uncodified law of the State of Alaska is amended by adding a new section to 09 read: 10 APPLICABILITY. AS 16.10.400(b), as amended by sec. 2 of this Act, applies to 11 salmon hatchery permits applied for on or after the effective date of this Act. 12 * Sec. 11. The uncodified law of the State of Alaska is amended by adding a new section to 13 read: 14 TRANSITION: REGULATIONS. The Department of Fish and Game may proceed to 15 adopt regulations necessary to implement this Act. The regulations take effect under AS 44.62 16 (Administrative Procedure Act), but not before the effective date of this Act. 17 * Sec. 12. Section 11 of this Act takes effect immediately under AS 01.10.070(c).