Legislature(1997 - 1998)
02/11/1998 05:05 PM House FSH
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 318 - WANTON WASTE OF SALMON Number 0037 CHAIRMAN AUSTERMAN announced that committee would hear HB 318, "An Act relating to waste of salmon." He stated that he would be taking testimony only because it is not his intention to move the bill, as a committee substitute may be introduced at a later hearing. Number 0074 TOM WRIGHT, Legislative Assistant to Representative Ivan, stated that Representative Ivan is the sponsor of HB 318 and is presently attending another meeting but is expected shortly. He read the following statement into the record: "House Bill 318 was introduced in response to the Division of Legislative Audit Report, dated August 22, 1997. The report was entitled 'Department of Commerce and Economic Development, Department of Fish and Game Review of Funding and Operation of Private Nonprofit Hatcheries.' The audit suggested that exemptions should be granted to permit hatchery operators to extract roe from excessive brood stock and deep water dispose of the carcasses. The roe would then be able to enable hatcheries to cost recover, providing an economic benefit to the hatcheries. "The main purpose of this legislation is to prohibit the roe stripping by hatcheries for the purpose of selling the roe while discarding the remainder of the fish. It's a feeling of many fishermen, particularly in Western Alaska that this gives a hatchery that conducts this practice a distinct advantage over a commercial fishery since roe is extremely valued, especially in the Far East markets. Sale of the commercial catch may be limited with little or no market price despite part of the catch having roe content. This legislation would not affect a hatchery's ability to collect roe for brood stock. At least that is the intention of the legislation. "House Bill 318 eliminates the provisions of current law that have caused much confusion in the past and that have permitted the commissioner of the Department of Fish and Game to allow hatcheries to strip roe. "I have been in contact with the Department of Fish and Game and right now we're in the process of working out some of the differences that they may have with this legislation. And I think it is important to note that Representative Ivan is not against the collection of brood stock for rearing purposes. I want to make that clear because that is one of the contentions that you will hear from the hatcheries this evening, that this bill will prohibit. And again it is one of the things that we will have to work out when we tighten up the language in the bill, as it states now. Representative Ivan also believes that it is important that the commissioner have the tools to deal with in-season problems that may occur that are not dealt with in legislation or in other issues or board of fish matters. As it stands right now this bill would not allow the commissioner to have any latitude in making any of those decisions. The bill is broad and it is going to undergo refinements prior to its leaving this committee, as Representative Austerman has indicated, if the committee decides to move it to the next committee of referral. "Again, Representative Ivan is opposed to hatcheries being able to use only the salmon roe while discarding the remainder of the fish. Roe stripping, according to some of the sources we have, gives hatcheries a huge advantage in the market where salmon prices are already depressed and some fisheries are having a hard time finding markets for the entire salmon product." Number 0324 REPRESENTATIVE MARK HODGINS asked what the practical application would be concerning the hatcheries around Cook Inlet. He asked how it would affect the fishermen and the market. He asked what is the ultimate goal out in the bush. Number 0356 MR. WRIGHT stated that the ultimate goal is to prohibit roe stripping by hatcheries and then selling the roe on the open market in cost recovery. He stated that presently hatcheries can conduct cost recovery operations using excessive brood stock or returns to help the hatcheries produce funds. He asserted that currently, a lot of the hatcheries are financially strapped. One of the complaints in Western Alaska is that roe stripping gives the hatcheries a distinct advantage over fishermen who are dealing with depressed prices and lack of market places. He pointed out that salmon roe is especially valued in the Far East. Number 0407 REPRESENTATIVE HODGINS asked if the Western Alaska fishermen get less money for their fish. MR. WRIGHT replied that is the feeling; fishermen have had a hard time finding markets, there are few processors and if the product is not valued this situation will continue. Number 0430 REPRESENTATIVE HODGINS asked if fishermen are only paid for the female fish. Number 0441 Mr. WRIGHT replied no, the fishermen don't sort the fish by sex. Number 0455 REPRESENTATIVE IVAN IVAN stated that he is trying to level the playing field for some of the residents in the lower Kuskokwim, Arctic Yukon Kuskokwim (AYK) area, that depend on the chum fishery especially for commercial fishing. He stated that a marketing council is trying to help his area get the best price for the salmon. Number 0548 DON STILES, Chairman, Norton Sound Economic Development Corporation (NSEDC), testified via teleconference from Nome in support of HB 318. He stated that the definitions in the bill strengthen the law and most importantly remove the authority of the commissioner of the Department of Fish and Game to grant exemptions to this law. He stated that under current law the commissioner of the Department of Fish and Game granted exemptions in 1996, allowing hatcheries in Southeast to dump over 3.2 million chum salmon after stripping the roe. He stated that not only has the overproduction by hatcheries glutted the flesh market for salmon, but the exemption to the waste law glutted the roe market as well. He asserted that this waste has devastated an already depressed fishery in the Southern Norton Sound. MR. STILES stated that there was a report from the Department of Commerce and Economic Development and the Department of Fish and Game, asking the legislature to consider amending the salmon waste law to permit private nonprofit hatchery exemptions to the law. This recommendation is made only as a benefit analysis and not as a cost benefit analysis. He declared that there was no consideration given to the associated drop in prices and income felt by Western Alaska fishermen. He pointed out that the chum markets are still affected by the flood of salmon and this has adversely affected every person living in the North Sound Region. Number 0711 PETER ESQUIRO, General Manager, Northern Southeast Regional Aquaculture Association, (NSERAA) testified via teleconfernec from Sitka that he did not think it is a good idea to strip the commissioner of the Department of Fish and Game of the ability to respond to unplanned situations, such as what happened in 1996. In 1996 markets were overwhelmed, processing capacities were not large enough due to the 6 to 9 percent marine survivals of salmon when 2 percent is the normal rate. He pointed out that the world markets were also saturated at the same time. He informed the committee that he has never seen this happen except in 1996 and seriously doubts that he would see that amount of chums again in his lifetime. MR. ESQUIRO stated that the NSRAA operates the Hidden Falls Hatchery and the Medvejie Inlet facilities in Sitka. He asserted that the NSRAA tries very hard to minimize the number of surplus brood fish that they have returning to the facilities. However, it is very hard to accurately estimate the number of fish in a school while looking at choppy waters and glaring sunlight. Surplus brood fish cost the NSRAA money and as a result they try to avoid that situation, if at all possible. He explained that the Hidden Falls Hatchery has had some very large returns but there as been up to 85 percent interception rate of those fish by the common property users. He stated that the hatchery usually get 15 percent back of a total run of which the hatchery uses for the brood stock and cost recovery purposes. He explained that they do not try to make a surplus of brood stock. When this occurs crews have to be kept on for a much longer time period in order to properly take care of the fish. He asserted that it is not a money making enterprise as some people would suggest. The brood stock situation has never been a part of the wanton waste law and hopped that it would not be made a part of it. Number 0923 CHAIRMAN AUSTERMAN stated that the committee plans to amend the bill to exempt brood stock. He asked how many of NSRAA's fish were used for cost recovery in 1997. Number 0940 MR. ESQUIRO replied that in 1997 at the Hidden Falls Hatchery they utilized about 200,000 chum salmon and at the Medvejie Hatchery they utilized 300,000 for cost recovery. He stated that he has been with the NSRAA for 17 years and they have never had any difficulty selling the whole cost recovery fish, the only eggs that are taken out are from the few surplus brood fish that cannot be avoided. Number 0978 CHAIRMAN AUSTERMAN asked what their brood stock amounts to. MR. ESQUIRO responded that the brood stock at Hidden Falls is approximately 100,000 fish and 30,000 at the Medvejie Hatchery. Number 1005 GARY FANDREI, Executive Director, Cook Inlet Aquaculture Association, testified via teleconference from Kenai that the association does not want to see or support the waste of Alaska salmon resources. He stated that the association does not support unlimited roe stripping and has not conducted this practice. House Bill 318 is directed at the practice of roe stripping by private nonprofit hatcheries. He stated that it is drafted in response to a recent recommendation by the Department of Commerce and Economic Development. He stated that the department felt that private nonprofit hatcheries should be allowed to extract roe from excessive brood stock to recover some of the costs of operations. He explained that the intent of this recommendation was to provide an economic value to an otherwise valueless salmon resource. He pointed out that the removal of roe from excessive brood stock is not the same as the roe-stripping activity that occurred in 1996. Excessive brood stock are fish that are left over after the hatchery egg take needs are met. He explained that these fish are of a very low quality and are not suitable for sale. The only valuable component is the roe itself, the flesh is not an asset. He pointed out that Cook Inlet Aquaculture does not extract and sell roe. The association does collect eggs for hatchery operation and disposes of the carcasses. He continued that most of the operations are associated with sockeye salmon enhancement, sockeye salmon carcasses are an important nutrient source in sockeye rearing lakes. He asserted that the ability must be maintained to return the carcasses to the water body that they came from, in order to maintain the rearing environment. MR. FANDREI stated that his real concern with HB 318 centers on the limitations imposed by it. The bill states that the only acceptable use of salmon flesh is for human or domestic pet food, fertilizer or for scientific and education purposes. Without the commissioner's ability to make exceptions to these uses, we could be limiting the opportunity for other uses and hindering the development for new uses for the salmon resource. He added that the ability of the commissioner is also compromised if there can not be adjustments made during the season. MR. FANDREI stated that if the purpose of the bill is to limit roe stripping, he recommended that language be drafted that does just that. Number 1165 DREW SPARLIN, Cook Inlet Commercial Fisherman, testified via teleconference from Kenai that he has been a commercial fisherman for 30 years and has served on the Cook Inlet Aquaculture Board for 15 years. He stated that he supported Mr. Fandrei's comments. He stated that roe stripping in Cook Inlet has not been an issue and he does not anticipate to become an issue. He stated that he was glad to hear the bill was going to be worked on and he hoped it would be more narrowly focused. Number 1214 DON AMEND, General Manager, Southern Southeast Regional Aquaculture Association, testified via teleconference from Ketchikan and read the following statement into the record: "The Alaska state not- for-profit hatcheries do not want salmon wasted nor do we want unlimited roe stripping. However, we have concerns regarding HB 318. The state of Alaska has invested over $109 million in the private not-for-profit hatcheries, and this investment may be jeopardized by the passage of this bill. There have been several public meetings in the last two years sponsored by the Governor's Salmon Industry Response Cabinet on hatchery operators selling roe from mature salmon. There has also been a lawsuit filed and ruled on. There have been many facts brought before the public's attention. In addition, similar concerns have been expressed by some legislators and a legislative audit was ordered. The legislative auditors reviewed all the facts, made conclusions, and submitted recommendations. "A conclusion from the legislative audit was that hatcheries are achieving their goal of enhancing fish, but financially many are unstable. This makes the state loans unstable. The Legislative audit also recommended legislative changes which would allow hatchery operators to obtain economic value from hatchery fish which cannot be economically harvested under the current statutes. What the legislative audit concluded and recommended were logical and should be adopted. There is no question that the hatcheries are having a significant economic impact on the fisheries and communities in which they operate. Legislative action should be focused on stabilizing the financial foundation of the hatcheries rather than attempting to destabilize them. "House Bill 318 should not be passed in its present form because it would make the hatcheries uneconomical and would result in many hatchery closures. The primary problem is there is no exemption for brood stock. Brood stock carcasses have no commercial value and in many cases cannot even be given away without substantial costs to the hatchery operator. Unless there is a way to discard brood stock carcasses, many hatchery operations would not be financially viable. The committee should address the problem of brood stock carcasses. "One of the stated reasons for HB 318 was introduced was because the practice of selling roe and discarding carcasses gave the hatcheries a distinct advantage over a commercial fishery. This statement is not supported by any of the facts. There are several reports that conclude that this practice has no impact. Alaska salmon and roe compete on a world market which are controlled by forces outside Alaska." Number 1365 MR. AMEND stated that despite the low return of sockeye, prices are still very low. He continued to read the following statement into the record: "There have been no studies shown that hatchery sale of salmon or roe have any impact on markets. Certainly brood stock carcasses do not compete against commercial fishermen or any of the other markets. They are unfit for human consumption and cannot be rendered into fish meal, economically." MR. AMEND stated that he would be willing to offer suggestions and help the committee in drafting some legislation that might be more helpful. Number 1402 CHAIRMAN AUSTERMAN stated that there is going to be a redraft of HB 318 and another public hearing will result. He asked for the number of cost recovery fish that they take. MR. AMEND responded that last year the association harvested 2 million fish out of Bernice Bay's cost recovery operation of 4.4 million fish. Number 1418 CHAIRMAN AUSTERMAN asked if it is correct that they harvested 2 million cost recovery fish out of 4.4 million fish. MR. AMEND replied that is correct. Number 1435 DAVE COBB, Business Manager, Valdez Fisheries Aquaculture Corporation, testified via teleconference from Valdez that it is a private, not for profit hatchery. He stated the hatchery has decided that they have an inherent responsibility to find a use for the carcasses. In 1996, Valdez Fisheries gave away to the public, in excess of 1 million pounds of carcasses at the corporation's expense of $100,000. He continued that this past year they gave away approximately 400,000 pounds of carcasses to the public. He informed the committee that they are in the process of looking at technology and working through the Kake Native Corporation to find a use for these carcasses. He pointed out that there is the possibility for the use of the carcasses as a dried fish. He asserted that hatcheries are often used as scape goats for world conditions and world markets, that they do not have any control over. He stated that the hatcheries are trying to find an answer to what to do with the carcasses and at the same time they need to recover their costs. He stated that he has a hard time facing the public and the fishermen when he has a carcass that he can't use and can't recover any economic benefit from it to offset the costs. It is important the this bill is not passed in its present form. He reiterated that hatcheries are being used as scapegoats for situations that are beyond their control. Number 1532 CHAIRMAN AUSTERMAN asked for the number of cost recovery fish that they took in 1997. MR. COBB replied that it was approximately 2.1 million fish for cost recovery out of a return of 8 million fish. Number 1551 GERON BRUCE, Legislative Liaison, Department of Fish and Game, stated that the department has been in discussions with Representative Ivan and they do have some concerns with the bill. The first is the issue of brood stock. The hatcheries are authorized to dispose of their brood stock, fish that they take the eggs from for propagation purposes. He explained that they are authorized to do this by a regulation the Board of Fisheries passed 20 years ago, directing the commissioner of the Department of Fish and Game to use his authority under the salmon waste law and to authorize other uses of these carcasses for brood stock. He stated that the way HB 318 is written now, the commissioners authority to authorize that would be removed; which would remove the authority of the Board of Fisheries' regulation and hatcheries would then have no legal basis to dispose of their brood stock carcasses. He stated that Representative Ivan has recognized that as a concern. Number 1642 MR. BRUCE continued that the other concern is to keep flexibility in the law to allow the commissioner to deal with unforeseen conditions. Salmon are at the end of their life upon return to the terminal hatchery sites; they will die within a few days. He stated that if circumstances are such that the commercial harvest does not occur and there is a large build up fish in one of these areas, the best alternative is not necessarily to just let the fish die there. He stated that it does not necessarily have to result in the removal of the roe, it could just be for the removal of the fish from the water for disposal in deep water. Number 1687 MR. GERON explained that another concern with the legislation is that it does not authorize the use of salmon as bait. The department has been working on this issue for several years, it has been a historical practice in the crab and halibut fisheries to use salmon as bait, but the law has never authorized that use. The commissioner, through his authority, authorizes other uses than the ones specifically stated in law, the use of salmon as bait has been allowed. That is commercially harvested salmon for use in other commercial fisheries, not sport harvested salmon which is illegal to be used as bait. Number 1737 CHAIRMAN AUSTERMAN asked that couldn't the bait issue be addressed in regulation and then it would not have to be covered in the bill. Number 1743 MR. BRUCE responded that the bill would remove the commissioner's authority to authorize other uses than those uses specifically listed in the statute. Therefore, the commissioner's ability to do it through regulation is removed. He asserted that is why it is important to keep some flexibility in the statute for the commissioner to have the authority to deal with situations that have not been foreseen. He stated that authorization to use bait in the commercials fisheries could be included in statute. Number 1775 REPRESENTATIVE SCOTT OGAN asked what is percentage or poundage in the demand for bait. Number 1783 MR. BRUCE responded that it is a small number, but in the case of brood stock, where the fish are held to their ultimate maturity many fishermen do not want to use those for bait. Typically the salmon that is used for bait is a lower grade commercial quality salmon. He explained that when salmon mature they lose their oil content and the flesh quality greatly deteriorates, which would eliminate their usefulness for bait. He stated that it is not preferred to use brood stock for bait. The lower grade terminal harvest can be used for bait which would utilize the carcasses as well as utilize the roe. Number 1830 REPRESENTATIVE OGAN asked if there was another use for carcasses such as for the enhancement of crab fisheries. Number 1854 MR. BRUCE responded that he did not know of any experiments that have been done to test the feasibility of that. However, in the state of Washington they have begun to return the carcasses that they get from some of the hatcheries returns back to the freshwater environment. This is because it is documented that salmon in the freshwater environment provide a complex of nutrients that are important to that environment. He stated that those streams are nutrient poor. In Alaska, where there are large natural returns and a healthy environment, there aren't many cases where we would need to do that. He stated that he did not think that in regards to the salt water environment, no one has ever really tested that as a feasible way of trying to rebuild crab populations. However, it is known that crab do feed on decaying salmon that have died after spawning. Number 1903 REPRESENTATIVE OGAN asked if it would be worth it to experiment on this. Number 1912 CHAIRMAN AUSTERMAN stated that there are two crab biologists left in the state of Alaska, one is retiring and they are not going to fill that position. He stated that there is a shortage of king crab biologists in the state. He explained that in Kodiak the amount of fish waste was far more than they could consume in their meal plants. Therefore, they had permission to dump the waste offshore. This was done for a number of years and then the National Marine Fisheries Service and National Oceanic and Atmospheric Administration went out to the area with an underground camera and found no more crab than normal. There bottom was also clear, there was not a build up of waste, indicating that the ocean currents had dispersed it. He stated that it was not dumped in the king crab grounds. Number 1865 CHAIRMAN AUSTERMAN stated that there are several fishermen who do their own processing and they freeze their fish for bait. He asked if this was included in the regulation. Number 1979 MR. BRUCE responded that the salmon waste law does not prohibit that as they are using the carcass for bait, therefore they are allowed to sell the roe as a separate product. Some sell the flesh to one buyer and the roe to a different buyer, which is legal and would still be legal under this bill. Number 2000 CHAIRMAN AUSTERMAN asked if that was under statute and not just a regulation. Number 2006 MR. BRUCE responded that for many years the use of salmon for bait was technically illegal but everyone had accepted that as a standard practice. Three years ago the department realized that it was illegal and used the commissioner's authority under the salmon waste law to write a regulation to authorize bait. Currently, it is legal through a regulation that has statutory authority underlying it to permit such use. Number 2033 REPRESENTATIVE OGAN said "That authorization to use it as bait is probably almost impossible to enforce, if somebody was catching their own fish and have possession of them to use for bait. We'd dump them and say they're chumming or something." He thought that it would be wide open for abuse. Number 2070 JOHN CARTER, Representative, Douglas Island Pink And Chum Incorporated (DIPAC), stated that it seems like this bill is directed at what went on in 1996, more than what was reflected in the Legislative Audit Report. The two situations that the audit report spoke to were the excess to brood stock, which is a very limited situation, and those fish are not of value. He stated that even the roe of those fish are of less value because the fish are extremely mature. He said, "DIPAC has 450 foot fish latter, we have a lot of fish in there that are coming up the latter to be used for brood stock and it is very difficult to call that exactly. And without some ability here we've-- you really would end up wasting revenue, what revenue you would have from the excess fish." He asserted that if the bill passes as is, those fish would have to be put back into the ocean in the round. There would be value wasted. Number 2140 MR. CARTER stated that at the end of a harvest, after the commercial harvest is finished, there are still some fish that continue to come in for a period of time. Those fish are dark and have very little value, therefore fishermen could remove the roe from the fish to sell and then discard the carcasses into the ocean. He reiterated that this is a reaction to the situation in 1996. He stated that the Legislative Audit did not suggest that roe stripping should be allowed again as it was in 1996. Number 2179 MR. CARTER stated that the hatchery programs, as they are now functioning, are a user pay situation. Without cost recovery we would have to go back to state owned and funded hatcheries or would have to do away with the enhancement effort. He stated that would have meant that fishermen would have caught 25 percent less salmon. He asserted that cost recovery is the evil that results in order to make the program work, as a user pay situation. Number 2224 REPRESENTATIVE HODGINS asked what would be the threshold price of the flesh, in order for it to work economically or is the fish of too bad a quality to be worth anything. Number 2234 MR. CARTER asked if he was talking about the excess to brood stock fish. REPRESENTATIVE HODGINS asked when would they find that it is better to discard the fish, rather than to process it. Number 2250 MR. CARTER stated that at the beginning of the run 60 to 70 percent of the fish are bright colored fresh market fish, at the tail-end of run the fish are then called chalks because the flesh is to the point were it will not even cook. He explained that the eggs still have value but the flesh is uncookable. He stated that the processors up until that point bid on the fish responding to the economics of the catch. He stated that this year, in this area, the fishermen were getting 25 cents to 30 cents a pound and if the hatcheries were able to get that same amount it would have made things a lot easier. CHAIRMAN AUSTERMAN asked what their cost recovery for chums were. Number 2316 MR. CARTER stated that it was 600,000 for chum salmon. He added that $1 million of their budget came from chum salmon cost recovery this year. Their budget is about $3.5 million. He stated that they do a lot of things to a raise revenue. Number 2338 CHAIRMAN AUSTERMAN asked how the 600,000 figure compares with the total return. MR. CARTER responded that the total return was about 1.2 million. He stated that DIPAC actually took more than the fishermen this year for cost recovery. He stated that he could get the exact number. Number 2362 CHAIRMAN AUSTERMAN asked how much it really costs to do cost recovery as approximately half the fish go to cost recovery. Number 2369 MR. CARTER responded that when DIPAC's main facility was built, chum salmon prices were at about 80 cents and they had based the economics of it in the loan package to be at 39 cents. He stated that currently when it is 15 cents to 18 cents a pound, one can see what the hatcheries are up against. CHAIRMAN AUSTERMAN stated that he totally understood and that the world market has raised far more questions then they have got answers to. Number 2398 CHAIRMAN AUSTERMAN asked if there was anybody else that would like to testify, seeing none, he stated that HB 318 would be held over. He stated that he would like Representative Ivan and his staff to put together a committee substitute for the bill.
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