The “Save the Bay” flotilla in protest of an industrial salmon farm passes by the Bar Harbor town pier, where people holding signs against the proposed fish farm gathered in August. Ted O’Meara photo

A controversial project that Maine fishermen fear would harm the state’s lobster industry suffered a setback this week when a state agency terminated American Aquafarms’ application to operate a massive industrial fish farm in Frenchman Bay.

Department of Marine Resources Commissioner Patrick Keliher notified American Aquafarms of his decision to terminate the lease application Tuesday, said Jeff Nichols, spokesman for the DMR.

American Aquafarms was proposing to raise 66 million pounds of Atlantic salmon annually at two, closed 15-pen sites in Frenchman Bay, between Bar Harbor and Gouldsboro, with each pen encompassing 60 acres. The company also proposed operating a fish processing plant in Gouldsboro.

Nichols said DMR cited two issues with American Aquafarms’ application.

First, Keliher said American Aquafarms, a Portland company funded by Norwegian investors, failed to find a proper source for its fish eggs. Keliher said the hatchery listed in the application, Aquabounty in Newfoundland, is not on Maine’s list of qualified egg sources.

American Aquafarms also failed to show that the proposed hatchery satisfied genetic requirements mandated by state law, Keliher said.

“They were unable to provide the required information about fish health and genetics,” Nichols said.

The issues raised by the commissioner are not new, Nichols added. The DMR notified the company in September that they needed to be addressed.

After giving the company eight months to come up with an acceptable solution, Keliher decided to terminate the lease application, which would have granted American Aquafarms permission to raise salmon at the two sites for 20 years. American Aquafarms can reapply for the leases.

“They would have to start from scratch,” a process that could take two or three years, Nichols estimated.

It was unclear what steps American Aquaculture might take next. Attempts to reach Keith Decker, American Aquafarms’ chief executive officer, and Project Development Director Tom Brennan were unsuccessful Wednesday evening.

In its application to DMR, dated Nov. 3, 2020, American Aquafarms proposed increasing production at the facility over time, eventually producing 30,000 metric tons of salmon for domestic markets. The total investment in the project was estimated at $300 million. The company said its system would address issues associated with the traditional aquaculture industry by controlling waste and preventing fish escapes.

Fishermen and area residents expressed support for Keliher’s decision.

Protect Maine’s Fishing Heritage Foundation has vigorously opposed the fish farm since it was first proposed in 2020. Last summer, the foundation organized a protest off the coast of Bar Harbor involving more than 125 lobster boats and pleasure craft. Organizers said the “Save the Bay” flotilla demonstrated the depth of opposition to the salmon farm.

“Protect Maine’s Fishing Heritage Foundation couldn’t be more pleased with this result,” foundation Executive Director Crystal Canney said in a statement Wednesday evening. “This is a blow to industrial scale aquaculture in the water and it will result in protecting Maine’s future. There is a lot more work to be done so this doesn’t happen anywhere along the Maine coast.”

Frenchman Bay United also expressed relief over Keliher’s decision. Fishermen feared the loss of fishing grounds as well as potential environmental threats from such a large farming operation.

Frenchman Bay United, a coalition of interests fighting the proposal, called the fish farm that would be located near Acadia National Park “a grave threat to area jobs, the environment, and the quality of life residents and visitors have enjoyed for generations.”

“We are grateful that DMR came to this conclusion but it has been a lot of work by a significant number of concerned groups and citizens. The environmental and economic impacts would have been significant. We are asking American Aquafarms to end this ill-conceived project now,” Henry Sharpe, president of Frenchman Bay United, said in a statement Wednesday night.

In March, Friends of Schoodic Peninsula presented a petition signed by 100 local fishermen to the Gouldsboro Board of Selectmen. The fishermen said they oppose the fish farm because it would take away valuable fishing grounds for lobster, scallops and shrimp; potentially cause water pollution; cause navigational conflicts; and spread harmful diseases to other fish species.

Bar Harbor’s Town Council was presented with a similar petition signed by 26 lobstermen last year.