Alaska Division of Legislative Audit
Audit Digest #11-30002-01

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PURPOSE OF THE REPORT

In accordance with Titles 24 of the Alaska Statutes and a special request of the Legislative Budget and Audit Committee, we conducted a review of the implementation of the state's Aquatic Farm Act. More specifically, we reviewed the process and the issues that grew out of the 1999 review process of aquatic farming permit applications.

This review process involves the Office of the Governor, Division of Governmental Coordination (DGC), the Department of Natural Resources (DNR), and the Department of Fish and Game (DFG). We focused our review on whether the agencies involved have implemented mariculture policies that are consistent with those set out under the statutes and/or regulations, and also the Aquatic Farm Act (AFA) of 1988.

After conducting our initial audit survey fieldwork, we determined the central issues of concern involved the oversight and permitting activities of DFG. Accordingly, the scope of our review primarily addresses DFG activities and excludes DGC and DNR operations and procedures from further review.

REPORT CONCLUSIONS

Although more than 40 aquatic farm sites operate under DNR and DFG permits, many of the proposed farm operations that sought permits in 1999 involved "on-bottom" farming rather than "suspension" farming as had previously been the case. These proposed on-bottom aquatic farm operations involved circumstances that were new issues to DFG reviewers. Permits for geoduck farms in Southeast (SE) Alaska and permits for Kachemak Bay littleneck clams both raised different, but unique, issues.

1. SE geoduck permits. For permits sought to commercially raise and harvest geoducks in Southeast Alaska waters, DFG reviewers were concerned about proposed operating provisions involving transfer of state common property resources to farm applicants.

   Alaska's constitution provides for equal access of citizens to the State's common property resources. The relevant constitutional clauses related to equal access to the State's resources are rather unique to Alaska. The constitutional requirements mandate state government observe certain principles when regulating how individuals and corporate entities access the common property resources that belong collectively to all citizens.

   DFG believes when the AFA was enacted the only aquatic farming contemplated was a "suspension" type operation, which involved little or no use of the common property resource. Even though DFG has relied on the AFA as a basis to transfer standing stock to "farmers" in the past, the department asserts the nature and scope of the geoduck operations are substantially different.

   In the absence of formal regulations, or documented legal advice, many of DFG actions that effectively denied the SE geoduck farming permit applications were inconsistent with various aspects of the AFA statute, historical precedent, and department policy regarding aquatic farming. Additionally, due to delay of a viable geoduck farming operation coming on line, the state-built Quetechak Hatchery in Seward, becomes less operationally feasible.

2. Permits sought for the Kachemak Bay area. Since on-bottom operations have more potential to adversely affect surrounding habitat, and the standards for habitat protection are particularly high for a legally designated critical habitat area such as Kachemak Bay, DFG rejected proposed permittees due to the impact the operations would have on the bay's habitat.

FINDINGS AND RECOMMENDATIONS

1. DFG should obtain formal legal advice from the Department of Law regarding allocation of common property resource under the AFA.

2. DFG should develop and adopt regulations to further define and clarify various provisions of the AFA that have had a substantial impact on the interpretation and application of the statute during the most recent permit review process.

3. DFG's commissioner should seek legislation amending the AFA to address utilization and transfer of the State's common property resource to prospective aquatic farming operators.

4. DFG should foster staff awareness of potential conflicts of interest.

5. DFG's commissioner should ensure the factual basis for findings relating to denial of aquatic farm applicant's permit is communicated to the applicant.

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