DATE: November 14, 2023
SUBJECT:
Title
DISTRICT'S BLUE ECONOMY INCUBATOR HYPERKELP PILOT PROJECT
A) ADOPT A RESOLUTION FINDING THE FOLLOWING BOARD ACTION EXEMPT UNDER THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA), INCLUDING BUT NOT LIMITED TO, CEQA GUIDELINES SECTIONS 15301, 15303, 15304, 15306, and 15311; AND
B) ADOPT A RESOLUTION AUTHORIZING AGREEMENT UNDER THE DISTRICT’S BLUE ECONOMY INCUBATOR WITH HYPERKELP INC. FOR A 2-YEAR PILOT PROJECT TO DEVELOP, TEST, AND VALIDATE A SMART BUOY PLATFORM TAILORED FOR VARIOUS PORT MONITORING APPLICATIONS FOR AN AMOUNT NOT TO EXCEED $250,000. FUNDING FOR THE PROPOSED PILOT PROJECT IS INCLUDED IN THE APPROVED FY 2024 ECONOMIC RECOVERY PROGRAM BUDGET
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EXECUTIVE SUMMARY:
The District’s Blue Economy Incubator (BEI) assists in the creation, development and scaling of new Blue Economy business ventures in and around San Diego Bay. The program acts as a launch pad for sustainable aquaculture and Port-related blue tech ventures by removing barriers to early-stage companies and providing key assets and support services focused on pilot project facilitation. BEI pilot project proposals are reviewed following a four-step cross-departmental due diligence process, culminating in a staff recommendation to the Board of Port Commissioners. The review and selection process balances each proposal’s potential social and environmental benefit, alignment with the District’s core mission and Public Trust obligation, as well as potential financial return on investment.
To date, the District has approved the launch of nine (9) pilot projects, and a reinvestment in seaweed aquaculture, with projects ranging from shellfish nursery operations; copper remediation technology; a drive-in Boatwash; a smart marina application; a marine debris removal vessel; seaweed aquaculture; bio-enhancing shoreline armoring; a new approach to soil remediation in marine environments, and a real-time field-testing sensor device for stormwater monitoring. Staff is now recommending the Board authorize a pilot project with HyperKelp Inc. to demonstrate a pilot to develop, test, and validate a smart buoy platform tailored for various port monitoring applications for a total amount not to exceed $250,000 for two years (Attachment A). In exchange for District’s funding and other assistance, HyperKelp will pay District a revenue share consisting of various percentages of gross revenue over time up to a maximum $1,750,000.
RECOMMENDATION:
Recommendation
A) Adopt a resolution finding the Board action exempt under the California Environmental Quality Act (CEQA), including but not limited to, CEQA Guidelines sections 15301, 15303, 15304, 15306, and 15311; and
B) Adopt a resolution authorizing an agreement under the Blue Economy Incubator with HyperKelp Incorporated for a 2-year pilot project to develop, test, and validate a smart buoy platform tailored for various Port monitoring applications for a total amount not to exceed $250,000.
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FISCAL IMPACT:
There is no fiscal impact caused by approval of this action. Funding for the proposed pilot project is included in the approved FY 2024 Economic Recovery Program (ERP) budget.
Compass Strategic Goals:
Advancing the Blue Economy directly aligns with the District’s core mission and with the Public Trust Doctrine and Port Act for the promotion of commerce, navigation, fisheries, recreation, and environmental stewardship. This agenda item supports the following Strategic Goal(s).
• A Port with a healthy and sustainable bay and its environment.
• A Port with a comprehensive vision for Port land and water uses integrated to regional plans.
• A Port that is a safe place to visit, work and play.
• A financially sustainable Port that drives job creation and regional economic vitality.
DISCUSSION:
Blue Economy Incubator
In 2015, the District established the Aquaculture and Blue Technology Program to conduct studies, planning, and pre-development work to support and inform aquaculture and blue tech opportunities in and around San Diego Bay. Under this Program, in 2016, the District established a Blue Economy Incubator (BEI) to assist in the creation, early development, and initial scaling of new Blue Economy business ventures in and around San Diego Bay, focusing on sustainable aquaculture and Port-related blue technology. The BEI program provides early-stage companies with pilot project facilitation services including funding, key assets, permitting and entitlement assistance.
Through its BEI, the District is seeking innovative aquaculture and blue technology proposals to inform present and future Port challenges and opportunities, from environmental compliance and remediation to coastal resilience and security. By funding pilot projects, the BEI is creating synergies with and is informing other environmental programs from sea-level rise adaptation to copper remediation, marine debris removal management, and evaluating shellfish and seaweed aquaculture as a tool for bioremediation and restoration.
Ultimately, the goal of the program is to build a portfolio of new Blue Economy businesses and partnerships that can deliver multiple social, environmental, and economic co-benefits to the District and the region. As the state-legislated trustee of tidelands and submerged waters in and around San Diego Bay, developing sustainable domestic aquaculture and supporting Port-related blue technology assists in fulfilling the Port’s public trust responsibility to promote fisheries and commerce, as well as aligning with its mission to enhance and protect the environment.
The BEI invites early stage and market-ready ventures that align with the BEI’s objectives to submit business and pilot project proposals. BEI proposals are reviewed following a four-step cross-departmental due diligence process culminating in a staff recommendation to the Board of Port Commissioners. The selection process balances each proposal’s potential social and environmental benefit, alignment with the District’s core mission and Public Trust obligation, as well as the potential financial return on investment. All companies that apply to the BEI are vetted through the formal four-step competitive review process and any of the selected proposals are required to undergo California Environmental Quality Act review, and coastal review where applicable, and obtain all necessary permits.
To date, the District has approved the launch of nine (9) pilot projects, and one reinvestment:
• On June 20, 2017, by Resolution No. 2017-085, the Board authorized four agreements to initiate pilot projects as part of the incubator first round of proposals. The first round included pilot projects for shellfish aquaculture nursery operations, copper remediation applications, a drive-in Boatwash technology, and a smart marina software application.
• As part of the incubator second round of proposals, on January 9, 2018, by Resolution No. 2017-0628, the Board authorized one agreement to initiate a pilot project to demonstrate a custom-made vessel and skimming technology to remove marine debris in San Diego Bay.
• On July 17, 2018, by Resolution No. 2018-0304, as part of the incubator third round of proposals, the Board authorized a pilot project to demonstrate feasibility of seaweed aquaculture in San Diego Bay.
• On June 18, 2019, by resolution No. 2019-0116, as part of the incubator fourth round of proposals, the Board authorized a pilot project to demonstrate in-situ technology to extract contaminants from marine sediment.
• On July 24, 2019, by resolution 2019-0228, the Board authorized a pilot project to demonstrate a bio-enhancing concrete solution for marine infrastructure.
• On December 8th, 2020, by resolution 2020-0391, the Board authorized a pilot project to develop a portable five-in-one field-testing sensor device to provide real-time metals analysis for stormwater monitoring.
• On November 8th, 2022, by resolution 2022-0358 the Board authorized a re-investment in Sunken Seaweed to expand their land-based macro algae cultivation operations in Humboldt Bay, with plans to sell product to the San Diego market.
The fourth edition of the BEI Highlights Report (Attachment B) outlines the Portfolio performance based on measurable environmental, social, and financial benefits delivered by the Portfolio companies, from pilot project to commercial success.
Staff is now recommending the Board authorize a pilot project to develop, test, and validate a smart buoy platform tailored for various port monitoring applications.
Recommended Pilot Project Proposal
HyperKelp Incorporated. / Smart buoy platform.
HyperKelp Incorporated (HyperKelp) is an early-stage company combining ocean engineering and machine learning expertise. The company specializes in custom development of a sensor agnostic smart buoy platform, with the capabilities to collect and aggregate ocean data through a real-time online dashboard. The company believes that their fleet of smart buoys persistently gathering data is needed to allow for more reliable environmental and defense predictions.
The core technology of HyperKelp is their smart buoy technology platform including hardware (Kelp Smart Buoy (KSB)) and software (Ocean Data as a Service (ODaaS) dashboard) which can be tailored for various applications to collect, process, and transmit ocean data in near real-time. HyperKelp’s first product line is the Kelp Smart Buoy (KSB) which is built to host any sensor payload at sea, and guarantee data delivery from any point on the Earth’s surface. HyperKelp’s online Ocean Data as a Service (ODaaS) Dashboard allows customers to visualize data from their smart buoy platform and download it from any device with a browser and an internet connection. HyperKelp has already tested the ODaaS dashboards with the delivery and storage of over 4.2 million measurements from its deployed fleet of smart buoys.
The HyperKelp pilot project is to develop, test, and validate a smart buoy platform tailored for various port monitoring applications. Specifically, the aim of this pilot project is to develop, validate, and deploy custom sensor data payloads that enable real time and remote monitoring of a target set of parameters important for Port monitoring activities. These include but are not limited to: dissolved copper concentrations, underwater noise levels, atmospheric carbon dioxide concentrations, and water quality parameters (e.g., dissolved oxygen (DO), Chlorophyll A, Turbidity, pH, water temperature and salinity). Upon successful customization and integration, the smart buoy platform will be field validated at five (5) deployment sites located throughout the District to support various ongoing monitoring efforts. HyperKelp will work with the relevant District subject matter experts to establish the sensors and accuracy requirements of the sensing payloads and monitoring parameters and define desired customizations to the online interface.
The proposed smart buoy platform to be developed for this pilot will require minimum maintenance which will be carried out by the HyperKelp team. Results from the two-year pilot project will allow for case study development to support commercialization of Port environmental monitoring applications.
The Incubator Committee offered the following comments in support of the proposal including:
o Proposal supports innovation that provides strategic mission alignment with various District Departments to enhance ocean data collection for several Port monitoring applications;
o Proposal is complementary to District’s environmental stewardship mission and need to protect coastal-dependent assets;
o Proposer’s principals are well-qualified and experienced, and the company has validated product technology for various industries; and
o Proposal’s financial return is favorable based on the company market traction.
Conclusion
Staff recommends the Board authorize an agreement with HyperKelp Incorporated. for a two-year pilot project to develop, test, and validate a smart buoy platform tailored for various Port monitoring applications for a total amount not to exceed $250,000. In exchange for District’s funding and other assistance, HyperKelp will pay District a revenue share over time up to a maximum $1,750,000.
General Counsel’s Comments:
The Office of the General Counsel has reviewed and approved this agenda, proposed agreement and resolution, as presented, as to form and legality.
Environmental Review:
The proposed Board action, including without limitation, to authorize an agreement with HyperKelp to begin a two year pilot project which would include the deployment of five buoys to test and validate a tailored smart buoy platform for various Port monitoring applications including, dissolved copper concentrations, underwater noise levels, atmospheric carbon dioxide concentrations, and water quality, is Categorically Exempt pursuant to California Environmental Quality Act (CEQA) Guidelines Sections 15301 (Existing Facilities), 15303 (New Construction or Conversion of Small Structures), 15304 (Minor Alterations to Land), 15306 (Information Collection), and 15311 (Accessory Structures), and Sections 3.a. (1), 3.c., 3.d. (6), 3.f., 3.i. (1) of the District’s Guidelines for Compliance with CEQA because the project would consist of deploying buoys for the purposes of monitoring underwater activities as described earlier that would result in no permanent effects on the environment, and would not involve the removal of mature, scenic trees and is for the purpose of basic data collection/research/experimental management/resource evaluation activities which would not result in a serious or major disturbance to an environmental resource. The District has determined none of the six exceptions to the use of a categorical exemption apply to this project (CEQA Guidelines Section 15300.2).
The proposed Board action complies with Section 87.(a)(1) of the Port Act, which allows for the establishment, improvement, and conduct of a harbor, and for the construction, reconstruction, repair, maintenance, and operations of wharves, docks, piers, slips, quays, and all other works, buildings, facilities, utilities, structures, and appliances incidental, necessary, or convenient, for the promotion and accommodation of commerce and navigation. The Port Act was enacted by the California Legislature and is consistent with the Public Trust Doctrine. Consequently, the proposed Board action is consistent with the Public Trust Doctrine.
The proposed Board action is considered excluded development pursuant to Section 8.a: Existing Facilities; Section 8.c: New Construction or Conversion of Small Structures; Section 8.d: Minor Alterations to Land; and Section 8.e: Information Collection, of the District’s Coastal Development Permit Regulations because the project would consist of deploying buoys for the purposes of monitoring underwater activities to test and validate a tailored smart buoy platform for various Port monitoring applications as described earlier that would involve negligible or no expansion of use beyond that previously existing, would involve negligible or no change of existing use of the property, would not involve the removal of mature, scenic trees, and would not result in a serious or major significant disturbance to an environmental resource. If the Board approves this action, District staff would notify California Coastal Commission (CCC) staff in accordance with Coastal Act Section 30717. The approval would become effective after the 10th working day after notification to CCC staff, unless an appeal is filed with the CCC within that time frame.
Diversity, Equity, and Inclusion Program:
This agenda sheet has no direct impact on DEI workforce or contract reporting at this time.
PREPARED BY:
Walden Kiker
Associate Environmental Specialist, Aquaculture & Blue Technology
Paula Sylvia
Program Director, Aquaculture & Blue Technology
Attachment A: HyperKelp Incorporated. - Agreement
Attachment B: Blue Economy Incubator Highlights Report - Fourth Edition