Legislature(2021 - 2022)ADAMS 519
04/21/2021 01:30 PM House FINANCE
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HOUSE BILL NO. 41 "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 shellfish enhancement project permits; allowing the Alaska Seafood Marketing Institute to market aquatic farm products; and providing for an effective date." 1:37:45 PM REPRESENTATIVE DAN ORTIZ, SPONSOR, reported that the bill was familiar because it was heard in the prior year and voted out of committee. He believed that HB 41 was important because it served to jump start Alaska's economy and expand the fishing industry. He read the sponsor statement: 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 House Bill 41 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 the 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 allows the Department of Fish & Game to set the application fee for a shellfish enhancement project permit and grants the similar authority over the application fee for a salmon enhancement project permit. This bill also amends the statutes governing the Alaska Seafood Marketing Institute to allow ASMI to market aquatic farm products including oysters and kelp. House Bill 41 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 and responsible manner. LIZ HARPHOLD, STAFF, REPRESENTATIVE ORTIZ, relayed that the bill provided the legal framework for the Department of Fish and Game (DFG) to permit and regulate shellfish hatcheries. The bill was mirrored off salmon hatchery statutes that were established decades ago. She shared that industry stakeholders brought the idea to the sponsors attention. She indicated that Julie Decker [Chair, Alaska Fisheries Development Foundation; Member, Alaska Mariculture Task Force] had been a big proponent of the bill but was unable to testify. She detailed that mariculture included farming (i.e., oysters and kelp) and was a private industry. Statutes allowing mariculture were already in existence and the bill did not change that except to allow the Alaska Seafood Marketing Institute (ASMI) to market aquatic farm products. The bill primarily pertained to the enhancement and restoration of shellfish stocks. She noted that certain shellfish stocks were depleted in some areas of the state like king crab in Western Alaska. A few groups were researching how to restore and enhance depleted stocks. The bill provided the framework to regulate and permit the groups. 1:43:56 PM Ms. Harphold read the sectional analysis: 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: Grants the Department of Fish and Game the authority to set the fee for new private nonprofit salmon hatcheries based on regulatory costs. Sec. 3: Conforming language consistent with other fee structures set and adjusted by regulation, requiring fees to approximately reflect the cost of administering the application process, and to be reviewed and adjusted periodically. Sec. 4: Adds a new Chapter 12 to Title 16, "Shellfish Stock Enhancement Projects." AS 16.12.010: Provides direction to the commissioner of the Department of Fish and Game on issuance of permits for private nonprofit shellfish fishery enhancement projects and grants the department the authority to set the permit application fee. States the permit fee will be accounted for separately as non-general fund program receipts. This section directs the commissioner to consult with technical experts in the relevant areas before permit issuance; AS 16.12.020: Provides for a hearing and public notification and input process prior to issuance of a permit; AS 16.12.030 Describes terms and conditions for permit holders to conduct their work, including cost recovery fisheries, harvest, sale, and release of enhancement project produced shellfish, and selection of brood stock sources; AS 16.12.040: Describes the revocation process should a permit holder fail to comply with the terms and conditions of the permit; AS 16.12.050: Specifies that shellfish produced under an approved enhancement project are a common property resource, with provision for special harvest areas by permit holders. This section also specifies the Board of Fisheries to establish regulations relating to this chapter; AS 16.12.060: Directs the department to advise and assist permit holders in their planning, operations, and construction of facilities to a reasonable and appropriate extent; AS 16.12.070 provides department authority to approve source and number of shellfish taken for use as brood stock. AS 16.12.080 places restrictions on how monies received from sale of shellfish may be used only for operating costs associated with their facilities; AS 16.12.090 Relates to Cost Recovery Fisheries and provides a means by which a shellfish hatchery may contract to either harvest and sell shellfish, or to implement a self-assessment from amongst its membership, for purposes of recovering operational costs associated with the hatchery. AS 16.12.100 Gives the department authority to inspect facilities at any time while the facility is in operation; AS 16.12.110 Requires a permit holder to submit an annual report to the department; AS 16.12.199 provides definitions for "facility," "genetically modified shellfish," and "shellfish;" Sec. 5: Provides the Commercial Fisheries Entry Commission authority to issue special harvest area entry permits to holders of private nonprofit enhancement project permits. Sec. 6: Defines legal fishing gear for special harvest area entry permit holders. Sec. 7: adds marketing and promotion of aquatic farm products to the powers and duties of the Alaska Seafood Marketing Institute (ASMI). Sec. 8: Conforming amendment, prohibiting ASMI from promoting aquatic farm products not from Alaska, a specific region of Alaska, or by a specific brand name. Sec. 9: Conforming amendment regarding the definition of "seafood." Sec. 10: Utilizes the existing definition of "aquatic farm products" in AS 16.40.199 Sec. 11: Exempts shellfish raised in a private nonprofit shellfish project from the definition of "farmed fish." Sec. 12 Makes application fee revenues received by the Department of Fish and Game from the salmon hatchery and shellfish hatchery programs be accounted for separately. Appropriations from those program receipts are not made from the unrestricted general revenue fund. Sec. 13: Establish state corporate income tax exemption for a nonprofit corporation holding a shellfish fishery enhancement permit. Sec. 14: A technical conforming amendment required by prior session law and has no impact on the policies being set in this bill. Sec. 15: Exempts shellfish harvested under a special harvest area entry permit from seafood development taxes. Sec. 16: Establishes an effective date for the salmon hatchery permit application fee described in section 2 of this bill. Sec. 17: Authorizes the Department of Fish and Game to adopt implementing regulations. Sec. 18: Establishes an immediate effective date for section 17 of this bill pursuant to AS 01.10.070(c). Sec. 19: Establishes an effective date for section 14 of this bill concomitant with sec. 2, Chapter 55, SLA 2013 and has no effect on the policy set forth in this bill. 1:50:12 PM Co-Chair Merrick indicated that the committee would hear invited testimony. 1:50:33 PM SAM RABUNG, DIRECTOR, DIVISION OF COMMERCIAL FISHERIES, DEPARTMENT OF FISH AND GAME (via teleconference), introduced himself. He reported that he was appointed to the governor's Mariculture Task Force by Governor Bill Walker and remained a member since its establishment in 2016. He delineated that the DFG mission statement was to protect maintain, and improve the fish, game, and aquatic plant resources of the state and manage their use and development in the best interest of the economy and the wellbeing of the people of the state consistent with the sustained yield principle. He cited AS 16.05.092 (2) (3): (2) encourage the investment by private enterprise in the technological development and economic utilization of the fisheries resources; (3) through rehabilitation, enhancement, and development programs do all things necessary to ensure perpetual and increasing production and use of the food resources of state waters and continental shelf areas; Mr. Rabung continued that the work described in the statute was previously under the purview of the Division of Fisheries Rehabilitation Enhancement and Development (FRED) until 1994 when the division was merged with the Division of Commercial Fisheries (DCF). The division no longer carried out fisheries restoration, rehabilitation, or enhancement projects. The Division of Commercial Fisheries still operated the pathology, gene conservation, mark and tag, and age labs and contracted out prior FRED hatcheries to private non-profit aquaculture associations. The Statewide Aquaculture Planning and Permitting Section provided salmon hatchery permitting and oversight. The section was responsible for the salmon hatchery program, aquatic farming program, and permitting research and educational projects statewide. He explained the significant differences between aquatic farming and fishery enhancement. He expounded that currently the state limited mariculture to aquatic farming. He defined aquatic farming as a facility the grows farms or cultivates aquatic farm products in captivity or under positive control. 1:53:18 PM Mr. Rabung continued that aquatic farm product was considered private property. He elaborated that in contrast, the other form of mariculture was fishery enhancement, which entailed the restoration, rehabilitation, or enhancement of natural production and benefitted the common property fisheries where the organisms were harvested for personal, sport, or commercial use. The bill would allow mariculture for fishery enhancement. He noted that restoration and rehabilitation projects ceased once its targets were achieved. Enhancement boosted naturally producing stock above what it could produce in nature to provide harvestable surplus. If the project ceased, the supplemental harvest was eliminated and reverted to natural harvest levels. Mr. Rabung provided an example of a mariculture enhancement project; the Alaska King Crab Research, Rehabilitation, and Biology Program (AKCRRB). He elucidated that the program planted juvenile king crab from nearby stocks into locations that had previously supported larger stocks. Fishing closures was the only tool the department had to try to restore overfished stocks. The bill allowed for enhancement projects as another tool to try to rebound depleted stocks. He offered an example of a mariculture rehabilitation project that was collecting adult razor clams from the east side of Cook Inlet inducing them to spawn in a hatchery and replanting them on the same beach. He mentioned that the same method could work for hard shell clams in Kachemak Bay or for collecting and aggregating abalone in Southeast Alaska. Mr. Rabung highlighted mariculture enhancement projects. He elucidated that back stocking sea cucumber juveniles immediately following a dive fishery that occurred on a three year rotation was a prime example of enhancement and could allow for a quicker rotation. He added that the enhancement example could be done with other species, i.e., geoduck or king crab to increase the numbers available for harvest. He indicated that targeting enhanced stocks could allow for the rebounding of other natural stocks by reducing their harvest pressure. The passage of a law that would allow for restoration, rehabilitation, or enhancement of shellfish stocks was one of the priorities identified in the Alaska Mariculture Taskforces Mariculture Development Plan. He shared that if HB 41 passed, the work would be subject to oversight by DFG. The state was known for the most stringent aquaculture guidance in the world. He was confident the department had the ability to carry out the provisions of HB 41. 1:58:09 PM JEREMY WOODROW, EXECUTIVE DIRECTOR PRESIDENT, ALASKA SEAFOOD MARKETING INSTITUTE, JUNEAU (via teleconference), read from a prepared statement: Alaska Seafood Marketing Institute (ASMI) fosters economic development of Alaska's seafood resources. It plays a key role in positioning Alaska's seafood industry as a competitive market-driven food production industry and functions as a brand manager of the Alaska Seafood family of brands. Recognizing mariculture is an emerging maritime industry with tremendous opportunity for Alaska's coastal economies, ASMI supports HB 41. Mariculture involves cultivating marine organisms in the ocean for food and other products such as oysters, mussels, abalone, or geoducks, as well as seaweeds, such as kelp. The practice does not require feed, fertilizers, insecticides, herbicides, or antibiotics, making it sustainable and inexpensive. Because of its economic and environmental promise, the Alaska Mariculture Task Force has identified the goal to build Alaska's mariculture production into a $100 million per year industry in 20 years. In order to increase jobs and economic opportunity for fishermen and Alaskan businesses, the ASMI Board of Directors unanimously supports HB 41 and legislative action to allow for the marketing of mariculture products or "aquatic farm products" as defined in Alaska Statute 16.40.199, which it is currently prohibited from doing. It is joined in support of this bill by the Alaska seafood industry, the Alaska Mariculture Task Force, and the Alaska Shellfish Growers' Association, as well as many new Alaskan- owned and operated businesses. Not only does mariculture present a significant economic opportunity for Alaska, it offers the ability for seafood companies to diversify their existing product portfolios. With the support and efforts of the Mariculture Task Force, small family businesses have already proven products to be commercially viable by selling boutique products while offering fishermen opportunities to utilize their vessels and skills on shoulder seasons. If passed, ASMI plans to include mariculture products in its effective and lucrative consumer, retail, foodservice, and food aid outreach, in domestic and targeted foreign markets. In efforts to ramp up this burgeoning industry, ASMI will lend the same expertise in outreach to this industry as it has to Alaska's seafood industry for 40 years. Thank you for recognizing the value of Alaska's maritime economy and for your consideration of meaningful legislation to aid economic development across Alaska's coastal communities. 2:01:06 PM HEATHER MCCARTY, CHAIR, MARICULTURE TASK FORCE (via teleconference) introduced herself. She relayed that she was also the Co-Chair of the AKCRRB program. She also worked for the Central Bering Sea Fishermens Association (CBSFA) located on the Priblof Islands. She reiterated the history of HB 41. She offered that the mariculture taskforce had two priority recommendations contained in HB 41: • Allow for shellfish fishery enhancement and restoration. • Amend the ASMI statutes to allow marketing of aquatic farm products. Ms. McCarty continued that the CBSFA had a great deal of interest in shellfish mariculture. She explained that until 40 years ago a viable blue crab fishery existed around the Priblof Islands. So far, the only tool to restore the fishery has been to close the fishery. She described a similar situation with the depletion of red king crab near Kodiak that collapsed at the same time. She related that citizens from Kodiak and the Priblofs formed the AKCRRB program with the hope of rehabilitating crab stocks. The program was in existence for 15 years and undertook research to understand the crab lifecycle. The program was successful in rearing crab in captivity and the next step was to produce more crab stock and release it into the wild. The crab rearing technology was transferable to other crab species. She described the strong support for the bill, especially for the rehabilitation of crab stocks. She spoke to the marketing portion of the bill and felt that it was also extremely important. 2:06:15 PM GINNY ECKERT, CO-CHAIR, STEERING COMMITTEE, ALASKA KING CRAB RESEARCH, REHABILITATION, AND BIOLOGY PROGRAM (via teleconference), shared that she was also a fisheries professor at the University of Alaska Fairbanks and Director of Alaska Sea Grant. She also served as the Science Director for the AKCRRB program. She had worked in many shellfish fisheries. She spoke to the need for the rehabilitation of shellfish. She related that many of the shellfish had declined in abundance and were important fishery resources. She elaborated that the king crab fishery crashed in the early 1980s due to overfishing in the 1960s and 1970s. The populations depressed so low that they were not able to recover on their own. Over the last decade many scientists had studied king crab and published papers regarding their lifecycle. Enough is now known to move king crab rehabilitation forward in a responsible manner. She illuminated that the research revealed the population was bottlenecked and struggling to recover on its own. They performed a test model of planting crabs in the wild and were able to recover planted animals one year later. She reported that genetic concerns accompanied the type of rehabilitation, but genetic studies were undertaken. The scientists understood the genetics of the wild population so they could appropriately culture the planted stock to minimize impacts on the wild stocks. Ms. Eckert along with colleagues also surveyed 17 traditional abalone sites and found abalone in only 4 sites; Abalone was also overfished. She emphasized that there was potential for restoration in Alaska based on efforts in Washington state. The bill was needed to move forward with any of the restoration projects. 2:10:48 PM Co-Chair Merrick OPENED Public Testimony. 2:11:08 PM Co-Chair Merrick CLOSED Public Testimony. Co-Chair Merrick asked Mr. Woodrow to review published Zero Fiscal Note 1 from the Department of Commerce, Community and Economic Development [FN 1 CED] appropriated to ASMI. Mr. Woodrow indicated that ASMI did not anticipate any fiscal impact if HB 41 was adopted. 2:11:50 PM Co-Chair Merrick invited Mr. Rabung to review Fiscal Note 2 [FN 2 DFG] and Fiscal Note 3 [FN 3 DFG] from DFG that were both zero and were appropriated to the Division of Commercial Fisheries. Mr. Rabung shared that the division would utilize existing staff in its aquaculture section to administer the program. The department would absorb any costs related to the bill. 2:12:45 PM Co-Chair Merrick requested a review of the Special Appropriations published Fiscal Note 4 appropriated to Shared Taxes. KYLE SCHERRER, PROGRAM BUDGET ANALYST, OFFICE OF MANAGEMENT AND BUDGET (via teleconference), reported that the fiscal note was indeterminate. He furthered that because the Department of Revenues (DOR) revenue estimate was indeterminate the appropriation to the hatchery permit holder is also indeterminate. Co-Chair Merrick asked DOR to review published Fiscal Note 5 from DOR [FN 5 DOR] appropriated to Taxation and Treasury. 2:13:37 PM CHRIS BECKER, AUDITOR, TAX DIVISION, DEPARTMENT OF REVENUE (via teleconference), reported that Fiscal Note 5 was indeterminant. He expounded that it was not currently possible to determine the revenue impact because the number of fishers and hatcheries that would participate was unknown. He added that implementation costs were zero. 2:14:16 PM Representative Thompson asked if the committee would be moving out the bill today. Co-Chair Merrick responded in the affirmative. Representative Thompson indicated he had an amendment currently being drafted. Co-Chair Merrick set the bill aside. HB 41 was HEARD and HELD in committee for further consideration.