Legislature(2019 - 2020)GRUENBERG 120

03/19/2019 09:45 AM FISHERIES

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Audio Topic
09:48:10 AM Start
09:49:24 AM Presentation: Hatcheries by the Regional Aquaculture Associations & Mcdowell Group
10:58:07 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Time Change --
+ Presentation: Hatcheries by the Regional TELECONFERENCED
Aquaculture Assoc. & McDowell Group
                    ALASKA STATE LEGISLATURE                                                                                  
              HOUSE SPECIAL COMMITTEE ON FISHERIES                                                                            
                         March 19, 2019                                                                                         
                           9:48 a.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Louise Stutes, Chair                                                                                             
Representative Bryce Edgmon                                                                                                     
Representative Chuck Kopp                                                                                                       
Representative Jonathan Kreiss-Tomkins                                                                                          
Representative Sarah Vance                                                                                                      
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Geran Tarr                                                                                                       
Representative Mark Neuman                                                                                                      
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION(S):  HATCHERIES BY THE REGIONAL AQUACULTURE                                                                        
ASSOCIATIONS & MCDOWELL GROUP                                                                                                   
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
TINA FAIRBANKS, Executive Director                                                                                              
Kodiak Regional Aquaculture Association (KRAA)                                                                                  
Kodiak, Alaska                                                                                                                  
POSITION STATEMENT:  During the presentation on hatcheries, co-                                                               
provided a PowerPoint presentation titled "The Alaska Salmon                                                                    
Hatchery Alliance."                                                                                                             
                                                                                                                                
STEVE REIFENSTUHL, General Manager                                                                                              
Northern Southeast Regional Aquaculture Association (NSRAA)                                                                     
Sitka, Alaska                                                                                                                   
POSITION STATEMENT:  During the presentation on hatcheries, co-                                                               
provided a PowerPoint presentation titled "The Alaska Salmon                                                                    
Hatchery Alliance."                                                                                                             
                                                                                                                                
DAN LESH, Senior Analyst                                                                                                        
McDowell Group                                                                                                                  
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:    During  the  presentation  on  hatcheries,                                                            
provided  a PowerPoint  presentation titled  "Economic Impacts  of                                                              
Alaska's Salmon Hatcheries."                                                                                                    
                                                                                                                              
ACTION NARRATIVE                                                                                                              
                                                                                                                              
9:48:10 AM                                                                                                                    
                                                                                                                                
CHAIR  LOUISE  STUTES  called  the   House  Special  Committee  on                                                            
Fisheries meeting  to order at 9:48 a.m.   Representatives Kreiss-                                                              
Tompkins, Vance,  and Stutes  were present at  the call  to order.                                                              
Representatives  Edgmon and  Kopp arrived  as the  meeting was  in                                                              
progress.                                                                                                                       
                                                                                                                                
^PRESENTATION:      HATCHERIES   BY   THE   REGIONAL   AQUACULTURE                                                              
ASSOCIATIONS & MCDOWELL GROUP                                                                                                   
    PRESENTATION(S):  HATCHERIES BY THE REGIONAL AQUACULTURE                                                                
                 ASSOCIATIONS & MCDOWELL GROUP                                                                              
                                                                                                                              
9:49:24 AM                                                                                                                    
                                                                                                                                
CO-CHAIR STUTES  announced that the  only order of  business would                                                              
be presentations  on hatcheries  by Alaska's regional  aquaculture                                                              
associations  and by  McDowell Group  on the  economic impacts  of                                                              
hatcheries.                                                                                                                     
                                                                                                                                
CHAIR STUTES  noted that today's  presentations are part two  in a                                                              
series  of  presentations on  hatcheries.    There is  much  focus                                                              
statewide  surrounding salmon  hatcheries  and science,  exploring                                                              
the  potential  effects of  hatchery  straying.   She  shared  her                                                              
opinion  that the  previous  week's  presentations  by the  Alaska                                                              
Department  of   Fish  and  Game  (ADF&G),  followed   by  today's                                                              
presentations,  would  provide   a  holistic  view  for  committee                                                              
members and  the public  on the  need for  hatcheries, as  well as                                                              
what they are, and what they provide to fishermen and the state.                                                                
                                                                                                                                
9:51:00 AM                                                                                                                    
                                                                                                                                
TINA FAIRBANKS,  Executive Director,  Kodiak Regional  Aquaculture                                                              
Association  (KRAA),  provided a  PowerPoint  presentation  titled                                                              
"The Alaska  Salmon Hatchery Alliance."   Displaying slide  1, she                                                              
began  her testimony  by  noting that  today  she is  representing                                                              
KRAA as well as  the Alaska Salmon Hatchery Alliance.   She stated                                                              
her presentation  would provide  a view  of the hatchery  programs                                                              
as well  as the contributions these  programs make to  their local                                                              
communities and  the economy of the  state.  Showing slide  2, she                                                              
explained  there  are  eight  private   nonprofit  (PNP)  hatchery                                                              
associations   throughout   Southcentral  and   Southeast   Alaska                                                              
[Kodiak  Regional  Aquaculture  Association,  Kodiak;  Cook  Inlet                                                              
Aquaculture Association,  Kenai; Prince William  Sound Aquaculture                                                              
Corporation,  Cordova;  Valdez Fisheries  Development  Association                                                              
Inc.,    Valdez;   Northern    Southeast   Regional    Aquaculture                                                              
Association,  Sitka;   Southern  Southeast  Regional   Aquaculture                                                              
Association,  Ketchikan;  Douglas  Island  Pink  and  Chum,  Inc.,                                                              
Juneau; Armstrong Keta Inc., Juneau].                                                                                           
                                                                                                                                
MS. FAIRBANKS  moved to slide 3  and related that  each hatchery's                                                              
mission is to  increase the abundance and enhance  fisheries while                                                              
protecting wild  stocks.  Fisheries  enhancement projects  are not                                                              
permitted  if they are  anticipated to  have significant  negative                                                              
effect on  natural production.   They are  meant to  provide added                                                              
opportunity  rather   than  supplement  it  or   replace  existing                                                              
populations  or fisheries.   The hatchery  program [in  the Alaska                                                              
Department  of  Fish  and  Game]   and  the  PNP  hatcheries  were                                                              
established in response  to depressed salmon fisheries  across the                                                              
state.   Many of the associations  began with directed  efforts at                                                              
rehabilitation of wild stocks.                                                                                                  
                                                                                                                                
MS. FAIRBANKS turned  to slide 4 and related that  a large part of                                                              
the  rush to  statehood was  predicated  on the  desire to  assume                                                              
management of Alaska's  fisheries within state waters.   Following                                                              
statehood, the  Division of Fisheries Rehabilitation,  Enhancement                                                              
and Development  (FRED) was created  within the Alaska  Department                                                              
of  Fish  and  Game  (ADFG),  and  the  statutory  and  regulatory                                                              
framework for  the PNP  hatchery program  was created  soon after.                                                              
During a  period of  budgetary contraction  and fiscal  challenges                                                              
the  PNP hatchery  program assumed  many of  the state's  hatchery                                                              
facilities as  well as  many of the  rehabilitation duties  of the                                                              
FRED division.                                                                                                                  
                                                                                                                                
MS.  FAIRBANKS addressed  slide 5,  pointing out  that since  that                                                              
time  Alaska has  enjoyed  a period  of  abundance  in its  salmon                                                              
harvest that  is unmatched in the  history of the fishery.   Prior                                                              
to the  PNP program and the  FRED division, commercial  harvest of                                                              
salmon  had  been  in  decline   and  were  at  an  all-time  low.                                                              
Following   establishment   of   the  enhancement   programs   and                                                              
favorable climate  regime shift, the average harvest  of both wild                                                              
and  enhanced  stocks  increased  and have  remained  high  for  a                                                              
sustained period.                                                                                                               
                                                                                                                                
9:54:13 AM                                                                                                                    
                                                                                                                                
CHAIR  STUTES commented  that  its   been said  hatchery  programs                                                              
only  benefit the  commercial fisheries.   She  asked whether  any                                                              
other groups benefit from hatcheries.                                                                                           
                                                                                                                                
MS.  FAIRBANKS   replied  that  the  PNP  hatchery   programs  are                                                              
mandated  to benefit  all  user  groups.   She  said the  programs                                                              
benefit  the  common  property   fishery,  which  includes  sport,                                                              
personal use, subsistence,  and commercial fishing.   For example,                                                              
[KRAA]  has  several  lake stocking  projects  for  sockeye  where                                                              
hatchery fish  are located  into barren  lakes near villages  that                                                              
have  no anadromous  salmon  populations.   Those  fish return  to                                                              
those villages and salmon is put on the people's plates.                                                                        
                                                                                                                                
9:55:18 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS  asked  Ms. Fairbanks  to  describe                                                              
where funding for the enhancement programs comes from.                                                                          
                                                                                                                                
MS. FAIRBANKS responded  that the PNP hatchery  programs are self-                                                              
funded by the  industry.  The commercial salmon  permit holders in                                                              
each region  with an  active aquaculture  association have  levied                                                              
upon themselves  a salmon  enhancement tax, with  the tax  rate of                                                              
from  1-3  percent  determined  by vote.    In  addition,  through                                                              
statute,  [the  PNPs] are  provided  the  opportunity  to offer  a                                                              
licensing  agreement  on  an  annual basis  on  the  adult  salmon                                                              
returning  to their  projects,  a  process called  cost  recovery.                                                              
Those cost  recovery activities allow  [the PNPs] to  recoup their                                                              
operational expenses.                                                                                                           
                                                                                                                                
REPRESENTATIVE KREISS-TOMKINS  observed that the graph  on slide 5                                                              
shows a jump  in the return of  wild salmon from 40  million to 75                                                              
million  on  average  post enhancement  programs  in  Alaska,  not                                                              
counting  hatchery   returns.    He  asked  whether   there  is  a                                                              
biological explanation  for why  wild salmon stock  nearly doubled                                                              
circa 1975  and how  that would  be associated  with or  caused by                                                              
the hatchery program.                                                                                                           
                                                                                                                                
9:57:26 AM                                                                                                                    
                                                                                                                                
STEVE REIFENSTUHL,  General Manager,  Northern Southeast  Regional                                                              
Aquaculture Association  (NSRAA), answered  that primarily  it was                                                              
the good  state management  that came into  play in 1960  and that                                                              
took some  time to catch  up following the  fish traps.   Also, in                                                              
1977  there  was  a  regime  shift,  called  the  Pacific  Decadal                                                              
Oscillation.  This  period of time has been identified  in science                                                              
as when  North Pacific  Ocean productivity  increased.   The graph                                                              
is showing  the benefits  of that  regime shift  to both  hatchery                                                              
and wild  fish.   When there  are regional  downturns, like  there                                                              
has  been in  Southeast Alaska  recently  for pink  salmon, it  is                                                              
seen in both the hatchery and wild fish at the same time.                                                                       
                                                                                                                                
9:59:02 AM                                                                                                                    
                                                                                                                                
MS.  FAIRBANKS displayed  slide  6 and  resumed her  presentation.                                                              
She shared  that much of  the success of  the PNP program  was due                                                              
to emphasis  on pink  and chum salmon  production.   She explained                                                              
that  because of  their short  hatchery residency,  pink and  chum                                                              
salmon are  ideal for Alaska's  hatchery production.   While those                                                              
programs are  most cost  effective and  represent over  90 percent                                                              
of  enhanced production,  the smaller  numbers  of coho,  sockeye,                                                              
and chinook,  though more costly  to produce, generally  return at                                                              
higher rates  and at a higher value.   The smaller scale  of coho,                                                              
sockeye,  and chinook production  is dictated  primarily  by their                                                              
longer  freshwater   residence  time,  but  they   are  often  the                                                              
greatest  contributors  to  enhanced  fisheries  for  subsistence,                                                              
sport,  and  personal  use.    The  larger  scale  pink  and  chum                                                              
production  offsets the costs  of the  smaller programs  and makes                                                              
production of the other salmon species possible.                                                                                
                                                                                                                                
10:00:19 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  VANCE  observed  slide  6 states  that  most  non-                                                              
commercial  hatchery  sockeye  were   harvested  by  personal  and                                                              
subsistence  fishermen.     She   inquired  about  the   ratio  of                                                              
commercial versus noncommercial hatcheries.                                                                                     
                                                                                                                                
MS.  FAIRBANKS replied  there  are  two state  operated  sportfish                                                              
facilities.   Facilities  operated  by PNP  hatchery  associations                                                              
typically  are  a  combination   of  projects  that  benefit  both                                                              
commercial  and  other common  property  users;  none  of the  PNP                                                              
hatcheries are simply sport fish or commercial fish directed.                                                                   
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS observed  from slide  6 that  there                                                              
is substantial  non-commercial  harvest.   He asked whether  there                                                              
was  any  thought  or  discussion   regarding  the  sport  fishing                                                              
sector,  particularly   guided  sport  fishers,   helping  finance                                                              
hatchery programs in a proportional and equitable way.                                                                          
                                                                                                                                
MR. REIFENSTUHL  responded there has been discussion  in Southeast                                                              
Alaska  about  having  sport  charter  groups  contribute.    That                                                              
hasn't  taken place  because other  political issues  are at  play                                                              
with the split of  treaty salmon in Southeast, so  the boards have                                                              
decided not to  accept money, although not much  has been offered.                                                              
Because  of the mechanism  had for  doing cost  recovery there  is                                                              
not really  a need to  bring in additional  money.  Seventy  to 75                                                              
percent of  the returning  fish go  to common property  fisheries,                                                              
which  includes personal  use, commercial,  sport, sport  charter,                                                              
and subsistence.                                                                                                                
                                                                                                                                
CHAIR  STUTES asked  whether there  have been  any discussions  in                                                              
Southcentral Alaska concerning sport fisheries contributing.                                                                    
                                                                                                                                
MS. FAIRBANKS  answered she is  unaware of any discussions  taking                                                              
place in  Southcentral, mainly for  the reasons identified  by Mr.                                                              
Reifenstuhl.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  VANCE commented  she was happy  to hear  about the                                                              
PNP  hatcheries   having  adequate  funding.    She   thanked  the                                                              
fishermen for their contributions and making it sustainable.                                                                    
                                                                                                                                
10:04:52 AM                                                                                                                   
                                                                                                                                
MS.  FAIRBANKS moved  to  slide 7  and resumed  her  presentation.                                                              
She  said Alaska's  PNP  hatchery programs  represent  one of  the                                                              
most  successful  and consistent  public-private  partnerships  in                                                              
the  state's history.   Whether  state or  privately owned,  these                                                              
facilities  produce   salmon  for   the  common  property,   which                                                              
includes  sport,   subsistence,   personal  use,  and   commercial                                                              
fisheries,  at no cost  to the State  of Alaska.   The  program is                                                              
entirely  self-funded through  cost  recovery  of returning  adult                                                              
salmon as  well as the self-assessed  Salmon Enhancement  Tax that                                                              
salmon permit  holders levied  on themselves  in each  region with                                                              
an  active  aquaculture  association.     The  revenues  generated                                                              
through  commercial  harvests, landing,  and  fish  taxes go  back                                                              
into the  communities and into  the state's coffers  and represent                                                              
a  great  return  on  the  state's  initial  investment  in  these                                                              
programs.                                                                                                                       
                                                                                                                                
MS.  FAIRBANKS turned  to  slide  8 and  explained  the bar  graph                                                              
depicts  the varying  overall production  levels for  each of  the                                                              
four associations  in  the Southcentral  area, as  well as,  for a                                                              
given year,  how the  releases of juvenile  salmon compare  to the                                                              
overall permitted  capacity.   However, she  noted, the  programs,                                                              
production, and  species vary from  region to region  and hatchery                                                              
to hatchery.   She  said ADF&G monitors  hatchery performance  and                                                              
reviews  programs   and  permit   requests  for  compliance   with                                                              
management, pathology,  genetics, and  the policy for  sustainable                                                              
salmon fisheries.                                                                                                               
                                                                                                                                
MS.  FAIRBANKS addressed  slide  9,  reporting that  the  projects                                                              
established  in   Southcentral  Alaska  are  operated   by  Kodiak                                                              
Regional Aquaculture  Association  (KRAA), Cook Inlet  Aquaculture                                                              
Association (CIAA),  Prince William Sound Aquaculture  Corporation                                                              
(PWSAC),  and   the  Valdez   Fisheries  Development   Association                                                              
(VFDA).   Collectively  they  contribute  $365 million  in  annual                                                              
economic output,  2700 annualized jobs, $76 million  in annual ex-                                                              
vessel  value, and  $125 million  in annual labor  income.   These                                                              
are  impressive  figures  for  nonprofit  organizations  operating                                                              
with a collective  budget of about $25 million, she  remarked.  At                                                              
a minimum that is  a 3:1 ratio in terms of  ex-vessel value versus                                                              
the cost of operations.                                                                                                         
                                                                                                                                
10:07:30 AM                                                                                                                   
                                                                                                                                
MS. FAIRBANKS  discussed  each of the  individual associations  in                                                              
Southcentral  region.   Showing slide  10, she  related that  KRAA                                                              
was formed  in 1983 and  has a 15-member  board composed  of purse                                                              
seine,  set gillnet,  and  beach  seine commercial  salmon  permit                                                              
holders, as  well as subsistence,  sport fishing,  processing, and                                                              
marketing  representatives.   The  boards  of other  associations,                                                              
she added, are  similarly comprised, though they vary  in size and                                                              
may  include   municipal,  borough,   tribal,  and   personal  use                                                              
representatives, as  well as those representing state  and federal                                                              
agencies as  either voting  or nonvoting members.   She  said KRAA                                                              
operates  two state  owned hatchery  facilities  and produces  all                                                              
five  species  of  Alaska's  Pacific salmon  as  well  as  rainbow                                                              
trout.   The KRAA  hatcheries provide  large  numbers of coho  and                                                              
sockeye  that  are  available to  subsistence  and  sport  anglers                                                              
around Kodiak  and surrounding  villages  and partners with  ADF&G                                                              
Division  of  Sport Fish  to  provide  chinook and  rainbow  trout                                                              
fishing on  the Kodiak road system.   The KRAA has a  long history                                                              
of partnering  with local ADF&G  staff to conduct  rehabilitation,                                                              
research,  and  monitoring projects  throughout  the  archipelago.                                                              
These  partnerships   extend  to   limnology  and  water   quality                                                              
monitoring  on  sockeye  nursery   lakes  on  Kodiak  and  Afognak                                                              
islands, and  monitoring returning adult  salmon as well  as smolt                                                              
operations.    The  KRAA research  and  monitoring  staff  conduct                                                              
activities related  to oversight of KRAA's projects  in every life                                                              
stage, including  otolith collection, reading, and  analysis; weir                                                              
monitoring for adult  counts; effluent water monitoring;  and data                                                              
collection  and research  for potential  future  projects.   Also,                                                              
KRAA partners  with local tribal  entities on data  collection and                                                              
internships  to  promote  capacity building  within  those  tribal                                                              
entities  and conducts  outreach and  educational programs  within                                                              
the  local school  systems  and  public events.    However, it  is                                                              
still  commercial  production  and contributions  that  drive  the                                                              
bulk  of  activities  at  KRAA.     On  average,  KRAA's  projects                                                              
contribute over  4 million fish  to the common property  fisheries                                                              
of  Kodiak  each   year  and  KRAA's  programs   provide  a  vital                                                              
contribution to the  community and economy of Kodiak  in both good                                                              
and  bad years.   For  example, in  2018 KRAA  suspended its  cost                                                              
recovery operations  for pink salmon  in favor of putting  as many                                                              
fish as  possible into  the nets  of fishermen, contributing  over                                                              
half of  the pink  salmon caught  in the  Kodiak Management  Area.                                                              
In 2019  KRAA estimates  a contribution  of over  7 million  adult                                                              
salmon at  an estimated  value of  $12 million.   This  equates to                                                              
just under  25 percent  of the projected  pink salmon  harvest and                                                              
15 percent of  the projected sockeye salmon harvest  in the Kodiak                                                              
Management Area for 2019.                                                                                                       
                                                                                                                                
10:10:37 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  KOPP  asked  why  some hatcheries  have  opted  to                                                              
produce  pink and  chum versus  higher value  salmon like  sockeye                                                              
and coho.                                                                                                                       
                                                                                                                                
MS.  FAIRBANKS replied  that in  terms of  cost effectiveness  the                                                              
residence time  in a hatchery for  pink and chum salmon  allow for                                                              
producing  larger numbers.    Sockeye, coho,  and  chinook have  a                                                              
longer freshwater  residence time  and require greater  freshwater                                                              
resources, longer  periods of rearing,  and more  dedicated staff;                                                              
but  they do  return  at higher  rates and  have  a higher  dollar                                                              
value at  return.   In terms  of input/output,  the pink  and chum                                                              
projects constitute  the bread  and butter  of an association  and                                                              
allow  for offsetting  the cost  of  the smaller  and more  costly                                                              
production   of  the  other   species.     She  deferred   to  Mr.                                                              
Reifenstuhl  to address  the other  reasons  that Alaska's  salmon                                                              
hatchery production has mainly focused on pinks and chums.                                                                      
                                                                                                                                
MR.  REIFENSTUHL  explained  that   some  of  the  pink  and  chum                                                              
production is done  based on niche availability in  the ocean.  In                                                              
Southeast Alaska  there is  very little or  almost no  pink salmon                                                              
production  whereas  there is  a  lot  of chum  salmon  production                                                              
because there  is a  good ocean niche,  whereas in Prince  William                                                              
Sound and Kodiak  there is a niche for the pink  salmon.   Boiling                                                              
it down  to numbers,  the cost  of raising  chinook  on a cost  to                                                              
benefit  basis is  1:1 to 1:2,  if lucky,  and coho  might be  3:1                                                              
benefit to cost, while pink and chum are 8:1 or higher.                                                                         
                                                                                                                                
10:13:54 AM                                                                                                                   
                                                                                                                                
                                                                                                                                
MS. FAIRBANKS resumed  her presentation, stating that  each of the                                                              
PNP salmon  hatchery associations  in Alaska  has a similar  story                                                              
to  KRAA's.   Moving to  slide 11,  she discussed  the Cook  Inlet                                                              
Aquaculture  Association  (CIAA),  headquartered  in Kenai.    She                                                              
said CIAA provides  harvest opportunities for the  Kenai Peninsula                                                              
and  waters of  Cook  Inlet stretching  up  to  the Matanuska  and                                                              
Susitna drainages  as well  as the western  and lower  portions of                                                              
Cook Inlet.   The CIAA operates  three salmon hatcheries  at Trail                                                              
Lakes  near Seward,  Tutka Bay  Lagoon,  and Port  Graham.   These                                                              
facilities  produce  pink,  sockeye,  and coho  salmon  for  users                                                              
throughout  the  Cook  Inlet  region.   Many  of  CIAA's  projects                                                              
contribute to, and  are specifically directed at,  sport, personal                                                              
use, and  subsistence  fisheries.   In some areas  of the  region,                                                              
hatchery   produced  salmon   are  the  only   source  for   those                                                              
fisheries, such  as silver and sockeye  salmon that are  caught in                                                              
Resurrection  Bay.    During the  recent  five-year  period,  CIAA                                                              
produced  more than 26,000  sockeyes annually  for sport  anglers.                                                              
Also, CIAA's stocking  projects provide additional  opportunity in                                                              
many  locations  throughout the  region.    Further, CIAA  has  an                                                              
active research  and evaluation  division which dedicates  time to                                                              
otolith  reading   and  analysis  as  well  as   smolt  and  adult                                                              
enumeration projects  and evaluation.  In addition,  CIAA has long                                                              
been involved  in evaluation  and eradication  efforts related  to                                                              
invasive species  on the  Kenai Peninsula and  other areas  in its                                                              
region.                                                                                                                         
                                                                                                                                
10:16:22 AM                                                                                                                   
                                                                                                                                
MS. FAIRBANKS turned  to slide 12 and spoke to  the Prince William                                                              
Sound Aquaculture  Corporation (PWSAC), which is  headquartered in                                                              
Cordova  and  which  has logistic  and  laboratory  facilities  in                                                              
Anchorage.   Three of  the five hatcheries  operated by  PWSAC are                                                              
owned  by the  State  of  Alaska.   Four  are located  within  the                                                              
Prince  William Sound  and the  fifth  is located  on the  Gulkana                                                              
River.    The Main  Bay  and  Gulkana facilities  are  focused  on                                                              
sockeye  salmon production,  while the  Wally Noerenberg,  Cannery                                                              
Creek, and  Armin F.  Koernig hatcheries  produce primarily  pink,                                                              
chum, and  coho.   On average,  70-80 percent  of PWSAC's  goes to                                                              
the  common  property fisheries  of  the  Copper River  in  Prince                                                              
William  Sound and  provide  an  average common  property  harvest                                                              
value  of $49  million.   Over  16,000  fish  were contributed  by                                                              
PWSAC's  projects  directly  to   sport  fishing  harvest  in  the                                                              
communities  of  Cordova,  Whittier,  and  Chenega  and  elsewhere                                                              
where  coho are stocked  annually.   The Village  of Chenega  also                                                              
received  stocked chinook  through  a cooperative  agreement  with                                                              
ADF&G.   Salmon harvesters  of all user  groups that  benefit from                                                              
PWSAC  projects represent  residents from  across the  state.   In                                                              
2018 over 30 percent  of the Chitina dipnet harvest  on the Copper                                                              
River was provided  by fish returning to the  Gulkana hatchery and                                                              
annually  that hatchery  contributes approximately  25 percent  of                                                              
the famed Copper River red run.                                                                                                 
                                                                                                                                
MS. FAIRBANKS showed  slide 13 and discussed the  Valdez Fisheries                                                              
Development Association  Inc. (VFDA),  which operates  the Solomon                                                              
Gulch  Hatchery to  produce pink  and coho salmon  for the  common                                                              
property  fisheries of  Prince William  Sound.   Solomon Gulch  is                                                              
currently the  largest single  pink salmon  facility in  the state                                                              
and is unique  its utilization of  an early pink salmon  stock for                                                              
production.    The  returns  of VFDA  pink  salmon  provide  early                                                              
season harvest  opportunity  for the Prince  William Sound  salmon                                                              
seine fishery and  for the last decade have contributed  more than                                                              
15  million fish  annually  to the  common  property fisheries  of                                                              
Prince  William  Sound  and  Valdez, about  33  percent  of  seine                                                              
harvest in  the region  overall.  In  addition, VFDA  generates an                                                              
annual  average  of  83,000 returning  adult  coho  salmon,  which                                                              
represents  more  than  80  percent   of  the  sport  caught  coho                                                              
harvested in  Valdez Arm.   The VFDA's  coho program  also targets                                                              
local  subsistence  opportunity through  a  small  release in  the                                                              
Valdez area  and more than 15,000  VFDA pink salmon  are harvested                                                              
by sport anglers each year.                                                                                                     
                                                                                                                                
10:19:34 AM                                                                                                                   
                                                                                                                                
MR.  REIFENSTUHL began  his  presentation by  following  up on  an                                                              
earlier  question  regarding sport  fish.  He explained  that  the                                                              
hatchery  programs by  statute are  supposed to  provide a  public                                                              
good.   So,  in the  sense of  providing  fish to  all Alaskans  -                                                              
sport  fish,  subsistence,  personal  use  -  the  hatcheries  are                                                              
providing a  public good at  the expense of commercial  fishermen,                                                              
which the hatcheries  as a group are happy to do.   He pointed out                                                              
that the  hatcheries in  Juneau and  Ketchikan are received  money                                                              
from the  Division of Sport  Fish to produce  king salmon  for the                                                              
local sport  fishers in those areas.   Responding to  Chair Stutes                                                              
he confirmed that money is from ADF&G's Division of Sport Fish.                                                                 
                                                                                                                                
MR. REIFENSTUHL  offered his appreciation  for the  opportunity to                                                              
explain the  economically important public/private  partnership of                                                              
hatcheries  with the  State of Alaska.   He  stated that  hatchery                                                              
programs   dovetail   with   the    constitutional   mandate   for                                                              
sustainable fisheries  management, protection of wild  stocks, and                                                              
providing a public  benefit.  The PNP program was  signed into law                                                              
by Governor  Jay Hammond  in 1974 and  since then has  contributed                                                              
nearly $2 billion  to the common property  [commercial] fisheries.                                                              
This is  without any  assessment or evaluation  of what  the value                                                              
is to the sport fisheries.                                                                                                      
                                                                                                                                
10:22:10 AM                                                                                                                   
                                                                                                                                
MR. REIFENSTUHL displayed  slide 14 and provided  a brief overview                                                              
of the  aquaculture associations  in Southeast  Alaska.   He noted                                                              
slide  14  shows the  permitted  capacity  for  each of  the  four                                                              
associations  in Southeast  Alaska:   Northern Southeast  Regional                                                              
Aquaculture  Association  (NSRAA),   Southern  Southeast  Regional                                                              
Aquaculture  Association  (SSRAA),   Armstrong  Keta  Incorporated                                                              
(AKI), and Douglas Island Pink and Chum (DIPAC).                                                                                
                                                                                                                                
MR.  REIFENSTUHL   turned  to  slide  15  and   pointed  out  that                                                              
collectively the  four Southeast Alaska PNP  hatcheries contribute                                                              
$237  million in  annual economic  output,  2000 annualized  jobs,                                                              
$44 million in  annual ex-vessel value, and $90  million in annual                                                              
labor income.                                                                                                                   
                                                                                                                                
MR.  REIFENSTUHL moved  to  slide  16 and  spoke  to NSRAA,  which                                                              
operates  one hatchery  in Kake,  two hatcheries  in Sitka,  and a                                                              
state-owned  facility  at Hidden  Falls  on  Baranof Island.    He                                                              
noted NSRAA  has a contractual  arrangement with ADF&G  to operate                                                              
the Hidden Falls  facility, which was built by the  state in 1978-                                                              
1980, and NSRAA  entered this relationship in about  1988 when the                                                              
legislature  decided  to  have  all  the  PNPs  run  the  hatchery                                                              
programs.                                                                                                                       
                                                                                                                                
10:24:25 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE   KREISS-TOMKINS   offered  his   compliments   for                                                              
NSRAA's administration  of the  Kake hatchery.   He said  NSRAA is                                                              
one of the  best administered nonprofit organizations  he knows in                                                              
Alaska.                                                                                                                         
                                                                                                                                
CHAIR  STUTES interjected  that  she would  say all  the PNPs  are                                                              
"right up there," including Southcentral.                                                                                       
                                                                                                                                
MR. REIFENSTUHL quipped  he is glad to see that  there is partisan                                                              
"bickering" in this regard.                                                                                                     
                                                                                                                                
10:25:38 AM                                                                                                                   
                                                                                                                                
MR.  REIFENSTUHL  resumed his  discussion  of the  Kake  hatchery,                                                              
which has  been putting fish  in the water  for about  four years.                                                              
He said  2019 is  the first  year that  the hatchery  is going  to                                                              
have common property  openings in or near Kake.  It  is a big deal                                                              
for this  small community  that is  struggling economically.   The                                                              
expectation is  for 1.7 million  fish, which  will bring in  a lot                                                              
of boats  as well as  provide fishing for  the locals.   He stated                                                              
NSRAA has 35  full-time employees and NSRAA operates  on an annual                                                              
budget of $8 million.                                                                                                           
                                                                                                                                
MR. REIFENSTUHL turned  to slide 17 told the  committee that SSRAA                                                              
operates two state-owned  facilities, one located  in Crystal Lake                                                              
near Petersburg  and the Klawock  hatchery in Craig.   It operates                                                              
four other  hatcheries at  Neets Bay,  Deer Mountain,  and Whitman                                                              
Lake near Ketchikan, and Burnett Inlet near Wrangell.                                                                           
                                                                                                                                
MR.  REIFENSTUHL  showed  slide  18 and  stated  that  DIPAC,  the                                                              
Macaulay  Hatchery,  is a  premier  facility in  Juneau.   It  was                                                              
built with  fine architecture  and lots of  art around  it because                                                              
it is representing  Juneau, the capital of Alaska.   Ladd Macauley                                                              
was a Juneau  visionary who began  the program in a cave  in Kowee                                                              
Creek  across the  bridge from  Juneau in  the late  1970s and  he                                                              
grew it into  the facility of today.   Mr. Macauley was  killed by                                                              
a drunk driver in  a tragic accident nearly 20 years  ago, but his                                                              
legacy  lives on  as  an outstanding  example  of  what a  private                                                              
nonprofit  can do  and  what a  visionary  can  accomplish in  his                                                              
lifetime.   Mr.  Reifenstuhl noted  that DIPAC  also operates  the                                                              
state  facility  at  Snettisham  where Juneau  gets  most  of  its                                                              
power.   This facility  produces sockeye and  some of  these smolt                                                              
are  planted  in   Sweetheart  Lake,  which  is   a  program  done                                                              
specifically for  sport and personal  use fisheries.  Part  of the                                                              
sockeye program  is tied  to the Pacific  Salmon Treaty  and flown                                                              
to Canadian  lakes  each summer.   All the  programs in  Southeast                                                              
Alaska  are  making some  contribution  based  on demands  of  the                                                              
Pacific   Salmon  Treaty,   primarily   with   chinook  and   coho                                                              
production.                                                                                                                     
                                                                                                                                
10:29:25 AM                                                                                                                   
                                                                                                                                
MR. REIFENSTUHL  moved to slide  19 and  described AKI as  a small                                                              
PNP near  the southern tip of  Baranof Island that  produces coho,                                                              
chum, and  pink salmon.   He said  AKI is  the only facility  that                                                              
produces pink salmon  in Southeast, all the other  facilities have                                                              
chosen not to produce pinks.                                                                                                    
                                                                                                                                
MR.  REIFENSTUHL  noted  there   are  two  other  hatcheries  that                                                              
haven't  yet been  mentioned, both  operated  by National  Oceanic                                                              
and Atmospheric  Administration (NOAA)  Fisheries in  its research                                                              
facilities, one in  NOAA's Auke Bay facility in Juneau  and one in                                                              
Little Port Walter that has operated since the 1940s.                                                                           
                                                                                                                                
MR. REIFENSTUHL  concluded with  slide 20.   He invited  committee                                                              
members to visit any of the fish hatcheries discussed today.                                                                    
                                                                                                                                
10:30:25 AM                                                                                                                   
                                                                                                                                
CHAIR  STUTES  noted  the  huge Crawfish  Inlet  return  [of  chum                                                              
salmon]   and   inquired   whether    the   hatcheries   had   any                                                              
participation in that return.                                                                                                   
                                                                                                                                
MR. REIFENSTUHL  replied that the  chum salmon return  to Crawfish                                                              
Inlet  was from an  NSRAA program  that was  initiated four  years                                                              
ago.   He  explained  the large  return  numbers  were an  unusual                                                              
phenomenon  never seen  before  because most  of  these fish  were                                                              
three-year-old  and  chum  normally only  come  back  as 3  to  15                                                              
percent of  a return  and there were  3 million of  them.   It was                                                              
permitted  by ADF&G in  a place  that does  not have wild  stocks.                                                              
It was  unexpected so NSRAA  had to act  fast to get  a commercial                                                              
fishery on  it.  That  project alone was  worth about  $15 million                                                              
to the  commercial fishery.   If it hadn't  been for  that program                                                              
there would  have been dozens of  trollers and seiners  that would                                                              
not have made their season.                                                                                                     
                                                                                                                                
CHAIR  STUTES asked  whether  the  hatcheries participate  in  the                                                              
NOAA hatchery research program.                                                                                                 
                                                                                                                                
MR. REIFENSTUHL  responded with his  belief that Chair  Stutes may                                                              
be  conflating  two  different  things.   He  explained  that  the                                                              
hatchery wild  investigation is done  through the State  of Alaska                                                              
and  has  a   science  panel  that  includes  some   retired  NOAA                                                              
scientists.   However,  what he  specifically  mentioned were  the                                                              
NOAA  programs in  Auke  Bay and  Little  Port  Walter, which  are                                                              
salmon and  other fish research  facilities.  He surmised  that of                                                              
these  two  programs   the  one  this  committee   would  be  most                                                              
interested in  is the  one that Mr.  Bill Templin testified  about                                                              
last week.                                                                                                                      
                                                                                                                                
CHAIR STUTES inquired  how hatchery fish stabilize  otherwise wild                                                              
commercial fisheries.                                                                                                           
                                                                                                                                
MR. REIFENSTUHL  answered  that, because  of the low  productivity                                                              
of wild fish  in the mid-1970s, these programs  were designed from                                                              
the  inception  to  enhance fisheries,  not  to  mitigate  habitat                                                              
loss,  human encroachment,  industrial encroachment,  agriculture.                                                              
None of  those things are  present in Alaska  to any  large degree                                                              
and  the hatchery  programs  were  simply designed  to  supplement                                                              
fisheries  for an economic  benefit while  protecting wild  stocks                                                              
and being  careful with the management  of wild stocks  during the                                                              
prosecution of wild stock fisheries and hatchery returns.                                                                       
                                                                                                                                
10:34:13 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  KOPP asked  whether  there any  research is  being                                                              
done to see if  hatchery produced pink salmon  could be displacing                                                              
other species.                                                                                                                  
                                                                                                                                
MR. REIFENSTUHL replied  that there has been ongoing  research for                                                              
over  20 years.   Research  is primarily  being  conducted by  the                                                              
North Pacific Anadromous  Fish Commission, which  includes members                                                              
from  Russia, Japan,  Canada, the  United States,  and Korea,  and                                                              
which  has a  huge staff.   The  commission  has research  vessels                                                              
that are associated  with universities and some  of the individual                                                              
countries.  He noted  that tomorrow he will be  delivering a paper                                                              
at a meeting  of the American Fisheries Society  on ocean carrying                                                              
capacity,  and he  can speak  quite a  bit on  the interaction  of                                                              
specifically  Alaska fish  near shore  with wild  stock or  in the                                                              
greater  North Pacific  Ocean.   Salmon have  been studied  in the                                                              
near shore  areas in  Juneau and  in Prince  William Sound.   When                                                              
studying that  to understand  the impact, one  must know  the prey                                                              
species is  primarily zooplankton  and understand  the biomass  of                                                              
that zooplankton  and the  consumption rate of  the fry  going out                                                              
for both  wild and  hatchery.  That  has been  done in  Icy Strait                                                              
and  near Juneau  and the  results are  that on  a one-day  period                                                              
when the  fish come through and  their density has  been measured,                                                              
they  are   consuming  less  than   one-half  a  percent   of  the                                                              
zooplankton  available.   Generally,  the near  shore survival  is                                                              
tied  to predators  - and  that  is Alaska's  king salmon  problem                                                              
right now.  The  best understanding is that it's  predators as the                                                              
salmon come out  of the river into the near shore  area and that's                                                              
where predation  occurs.   When there are  low survivals,  that is                                                              
generally  where most  of the  mortality occurs.   Research  shows                                                              
between 50  and 90 percent of salmon  die in the first  30-45 days                                                              
of their life in the ocean.                                                                                                     
                                                                                                                                
10:37:14 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE VANCE  inquired whether comparisons  have been made                                                              
on the quality of meat between hatchery fish versus wild stock.                                                                 
                                                                                                                                
MR.  REIFENSTUHL   responded  that  comparisons  have   been  done                                                              
between the meat  quality of farmed fish and wild  chinook and for                                                              
the most part  people could not  tell the difference.   He said he                                                              
unaware of  any experiments with  hatchery fish, but he  would bet                                                              
that people  would not be  able to tell  the difference.   The fry                                                              
are  going out  at 2-20  grams,  so they  are very  small and  are                                                              
going out  in the ocean  competing for life  for 2-4 years.   When                                                              
they return,  they have multiplied in  biomass by 20 times.   They                                                              
are having  to swim fast  to avoid predators,  are having  to find                                                              
prey,  are eating  the same  kind of  prey as  their wild  cohorts                                                              
with which  they are mixed, and  it would be remarkable  for there                                                              
to be a difference.                                                                                                             
                                                                                                                                
REPRESENTATIVE VANCE  clarified that hatchery fish  are not farmed                                                              
fish.                                                                                                                           
                                                                                                                                
MR.  REIFENSTUHL confirmed  Representative  Vance  is correct  and                                                              
pointed out  that farm  fishing is  illegal in  Alaska.   That was                                                              
pushed  through  because  commercial fishermen  didn't  want  fish                                                              
farming in the state of Alaska.                                                                                                 
                                                                                                                                
REPRESENTATIVE  VANCE requested  Mr. Reifenstuhl  to describe  the                                                              
difference between farmed and hatchery fish.                                                                                    
                                                                                                                                
MR.  REIFENSTUHL replied  there  is a  huge difference.   He  said                                                              
[hatchery] fish  are small  and [the hatcheries]  have them  for a                                                              
short period  of their life and  then they go into ocean  and must                                                              
compete  for two  to  four years  before  they  return as  adults.                                                              
Farmed salmon are  kept in raceways or net pens  their entire life                                                              
and  harvested  in  those  pens.     Farmed  salmon  do  not  have                                                              
predators  going after  them and  are fed for  their entire  life.                                                              
They  are fed  a color  dye at  the end  to bring  color to  their                                                              
meat.  One might  think there would be a taste  difference or that                                                              
a consistency  difference  could be  felt because  all those  fish                                                              
must stay  upright in  their net pens  since they aren't  avoiding                                                              
predators and  there possibly could be  a difference.   But in the                                                              
tests  that  he   is  aware  of  not  everybody   could  tell  the                                                              
difference.                                                                                                                     
                                                                                                                                
REPRESENTATIVE  VANCE  remarked  that she  thinks  Alaskans  could                                                              
tell the difference.                                                                                                            
                                                                                                                                
10:40:13 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE   KREISS-TOMKINS   asked  whether   there  is   any                                                              
research  into adult  hatchery  salmon  returning  from the  ocean                                                              
preying on  wild and hatchery salmon  fry, given adult  salmon are                                                              
known to eat salmon fry.                                                                                                        
                                                                                                                                
MR.  REIFENSTUHL  confirmed there  has  been  such research.    He                                                              
shared  information  from a  recent  paper that  speculates  there                                                              
could be  a negative  relationship between  Southeast Alaska  pink                                                              
salmon  - so  not hatchery  fish -  and coho.   He  said he  would                                                              
dispute the  data and  thinks it  is a  correlation that  may have                                                              
been teased  out.   He stated  he thinks  the research  shows that                                                              
there  is more of  a positive  relationship on  large pink  salmon                                                              
years, general  there is large  coho returns  as well.   He agreed                                                              
there  is  cannibalism   -  larger  fish  eat   smaller  fish,  so                                                              
undoubtedly some hatchery  fish like a coho that is  going to feed                                                              
on some pink,  chum, or king salmon  fry.  Another way  to look at                                                              
it is  that the  large release  of hatchery  fish can actually  be                                                              
predator  shelters in  that when  large numbers  of pink and  chum                                                              
salmon  are released  as fry and  there are  predators out  there,                                                              
and comparatively  there  are small  numbers of  king or coho  fry                                                              
mixed in,  there is  going to  be more  hatchery fish picked  off,                                                              
called predator  sheltering, than  there would  be the  wild fish.                                                              
He  qualified  that  that  has   not  been  proven  but  has  been                                                              
speculated on.                                                                                                                  
                                                                                                                                
10:43:24 AM                                                                                                                 
                                                                                                                                
DAN LESH,  Senior Analyst, McDowell  Group, provided  a PowerPoint                                                              
presentation   titled  "Economic   Impacts   of  Alaska's   Salmon                                                              
Hatcheries,"  a project  completed in  2018 and  for which  he was                                                              
the project  manager (slide 1).   Addressing slides 2-3,  he noted                                                              
the McDowell  Group was founded  in 1972 and studies  the economic                                                              
impacts  of  nearly every  major  industry  in  Alaska.   He  said                                                              
McDowell Group  has conducted  well over  a dozen economic  impact                                                              
reports  for the  various hatchery  associations  over the  years,                                                              
though this is the  first time to look at all  the groups together                                                              
collectively.    As well,  McDowell  Group  does dozens  of  other                                                              
projects  looking  at other  aspects  of  the seafood  economy  in                                                              
Alaska every year.                                                                                                              
                                                                                                                                
MR. LESH  turned to  slide 4  and stated  that McDowell  Group has                                                              
very  good  data from  the  Alaska  Department  of Fish  and  Game                                                              
(ADF&G)  on the  fish  as they  are harvested  both  in sport  and                                                              
commercial fishing  in terms  of their hatchery  origin.   He said                                                              
four  types of  economic  impacts were  added  up to  come to  the                                                              
total  number  that  he  will present  at  the  end:    commercial                                                              
fishing  income, value  added in  seafood processing,  nonresident                                                              
spending  on  sport  fishing,  and the  economic  impacts  of  the                                                              
hatchery  operations   themselves.    Businesses  in   these  four                                                              
sectors,  as well as  the employees,  will spend  money they  earn                                                              
from hatchery  fish  in the economy,  which is  called by  several                                                              
different   names  -   secondary   effects,  multiplier   effects,                                                              
indirect effects,  or induced  effects.   McDowell Group  uses its                                                              
40  years  of   experience  conducting  studies,   along  with  an                                                              
economic  modeling  program  called   IMPLAN,  to  look  at  those                                                              
secondary  effects.    This  specific  study  conflates  a  6-year                                                              
period  and takes an  average across  those years  to account  for                                                              
the  fluctuations in  salmon  returns.   There  are  many ways  in                                                              
which the  estimates are  conservative, including  a focus  on new                                                              
money.    For  example,  the  focus  is  on  nonresident  spending                                                              
because an  argument could be made  that a lot of the  spending by                                                              
residents on hatchery fish would be happening anyway.                                                                           
                                                                                                                                
MR. LESH  showed slide 5 and  discussed hatchery  funding sources.                                                              
He recalled a question  about sport fish money that  comes to some                                                              
of the PNPs to  support chinook development and said  some of that                                                              
money did come from  ADF&G.  However, he explained,  that money is                                                              
a pass-through from  the federal Dingell-Johnson funds.   He noted                                                              
that  79 percent  of  the  collective  budgets of  the  hatcheries                                                              
comes from  cost recovery  fisheries and  [11 percent]  comes from                                                              
the Enhancement Tax.                                                                                                            
                                                                                                                                
MR.  LESH moved  to slide  6 and  reported that  the combined  ex-                                                              
vessel value to  fishermen from the harvest and  sale of hatchery-                                                              
originated  salmon is  $120 million.   Continuing  to slide  7, he                                                              
explained that $120  million is the average per year  and that the                                                              
value  varied from  year  to  year during  the  six  years of  the                                                              
study.   The  $120  million represents  22  percent  of the  total                                                              
value of all Alaska salmon harvests.                                                                                            
                                                                                                                                
10:46:53 AM                                                                                                                   
                                                                                                                                
MR. LESH  displayed slide  8 and  provided more details  regarding                                                              
commercial fishing  earnings.  He specified that  the $120 million                                                              
goes  to pay  crew, expenses,  taxes,  and the  owner's income  or                                                              
profits.  Between  the crew and the owners, about  60 percent, $71                                                              
million, is  [direct] labor income.   Through multiplier  effects,                                                              
an additional  $24 million in labor  income is created  in support                                                              
sector businesses,  such  as marine services  and grocery  stores.                                                              
About  8,000  fishermen  earn  some income  from  the  harvest  of                                                              
hatchery fish.   Because  not all the  fishermen's income  is from                                                              
hatchery  fish and  because many  are seasonal  jobs, that  figure                                                              
when  condensed down  to  annualized jobs  tied  only to  hatchery                                                              
fish comes to  1,040 annualized commercial fishing  jobs and 1,540                                                              
annualized jobs including multiplier effects.                                                                                   
                                                                                                                                
MR. LESH  turned to slide  9 and noted  that fishermen  sell their                                                              
harvested fish  to processors  where the  fish are converted  into                                                              
various products,  such as canned salmon, fillets,  "H&G" products                                                              
that are  sold for  additional processing  outside the  state, roe                                                              
products,  which  total  into  a first  wholesale  value  of  $361                                                              
million.   Continuing  to slide  10,  he explained  that the  $361                                                              
million is  the average per  year and that  the value  varied from                                                              
year to year  during the six years  of the study.  In  2013 it was                                                              
nearly $500  million in wholesale  value from hatchery fish.   The                                                              
$361  million represents  24 percent  of  the total  value of  all                                                              
salmon products produced in Alaska.                                                                                             
                                                                                                                                
MR. LESH  moved to  slide 11  and pointed  out that hatchery  fish                                                              
are available for  anyone to catch and some hatcheries  are set up                                                              
particularly  to  benefit  sport, personal  use,  and  subsistence                                                              
fishermen.  He noted  that the photograph on this  slide was taken                                                              
at the very  popular Sweetheart Creek near Juneau,  which benefits                                                              
many households  in Juneau,  including his own.   He  related that                                                              
across the  state over  the six-year study  period, an  average of                                                              
10,000  chinook, 100,000  coho,  and 138,000  sockeye of  hatchery                                                              
origin  are  harvested  annually   in  sport,  personal  use,  and                                                              
subsistence fisheries.   Displaying slide 12, he  pointed out that                                                              
the  report provides  information  on individual  communities  and                                                              
their  sport fisheries  that  are supported  by  hatcheries.   One                                                              
example is the  thriving recreational fishing industry  in Valdez,                                                              
with nearly  30 charter  operators, three  fishing derbies,  and a                                                              
bustling harbor.   In 2019  Valdez is going  to open a  new harbor                                                              
for the  commercial salmon  fishing fleet,  but still  anticipates                                                              
having 200 people,  mostly recreational boaters, on  the wait list                                                              
for slips.   To  a large degree,  this activity  is driven  by the                                                              
coho production  in Valdez.  He  reminded the committee  that this                                                              
is only  the spending  by nonresidents on  such things  as charter                                                              
fishing and boat rentals.                                                                                                       
                                                                                                                                
10:50:12 AM                                                                                                                   
                                                                                                                                
MR. LESH  displayed slide  13 and  specified that when  commercial                                                              
fishing,  seafood  processing,   hatchery  operations,  and  sport                                                              
fishing are  added up it comes  to [an annual economic  impact] of                                                              
4,700  jobs across  the state  tied to  hatchery production,  $218                                                              
million  in labor  income, and  $600 million  in economic  output.                                                              
Continuing  to slide 14  and elaborated  that about two-thirds  of                                                              
the $218 in labor  income is direct labor income  and one-third is                                                              
the   secondary  impacts.      Commercial   fishing  and   seafood                                                              
processing are roughly  equal in the labor income  [43 percent and                                                              
38  percent, respectively,]  hatchery  operations  is 11  percent,                                                              
and sport is 8 percent.                                                                                                         
                                                                                                                                
MR. LESH  showed slide  15 and  explained that  a total  of 16,000                                                              
jobs are impacted  by the harvest of hatchery salmon  in some way.                                                              
When  condensed for  seasonality  and other  issues,  it is  4,700                                                              
annualized  jobs.   Annualizing  of  these jobs  is  done to  make                                                              
these numbers more comparable with other industries.                                                                            
                                                                                                                                
MR. LESH turned  to slide 16 and elaborated that  the $600 million                                                              
in economic  output  is the combination  of the  labor income  and                                                              
the  spending in  the economy.    He further  elaborated that  the                                                              
harvest  and  sale  of  hatchery  fish  generates  an  annual  tax                                                              
revenue, on  average across the  study period, of $3.6  million in                                                              
Fisheries  Business  Tax  revenue;  and  a large  portion  of  the                                                              
Kodiak Island  Borough raw  fish taxes  which total $1.3  million.                                                              
He further  elaborated that the  sales, property, fuel,  and other                                                              
taxes  that  are  [generated]  by   the  hatchery  fish  are  very                                                              
important across  the state and are  the topic of a  current study                                                              
that is being conducted.                                                                                                        
                                                                                                                                
MR. LESH concluded  by stating that  it is clear from  his and the                                                              
previous presentation  that hatchery  production is  a cornerstone                                                              
of  Alaska's  seafood  industry.     He  pointed  out  that  4,700                                                              
annualized  jobs  are  about  13  percent of  the  total  jobs  in                                                              
Alaska's seafood industry.                                                                                                      
                                                                                                                                
10:53:08 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE KREISS-TOMKINS  commented on the  positive indirect                                                              
benefits  of hatcheries.   He  noted that  the commercial  fishing                                                              
industry  pays  its  own  way  in  raw  fish  tax  and  Commercial                                                              
Fisheries Entry  Commission (CFED)  licensing fees in  relation to                                                              
the cost of ADF&G's  Division of Commercial Fisheries.   He stated                                                              
it  seems the  commercial  fishing  industry  is also  paying  out                                                              
millions of  dollars through foregone  revenue with  cost recovery                                                              
and/or   direct   enhancement   revenues   that   benefit   Alaska                                                              
collectively.   It is paying  CFEC, the  State of Alaska,  as well                                                              
as  all Alaskans  in  certain sense  by  underwriting this  common                                                              
benefit.                                                                                                                        
                                                                                                                                
MR. LESH concurred.                                                                                                             
                                                                                                                                
10:54:44 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  KOPP  inquired  whether  the  study  was  able  to                                                              
identify jobs  and the  economic benefit  breakdown that  could be                                                              
tied back to the percent of fish  that are hatchery versus wild.                                                                
                                                                                                                                
MR. LESH  answered yes  and explained  that the study  assessments                                                              
accounted  for this  [when calculating  the  benefits of  hatchery                                                              
caught fish].                                                                                                                   
                                                                                                                                
REPRESENTATIVE KOPP  asked whether the commercial  sport operators                                                              
were looked  at as  being in the  commercial fishing  category for                                                              
income or the sport fishing category.                                                                                           
                                                                                                                                
MR.  LESH  replied  that  commercial   sport  operators,  such  as                                                              
charter  boat  captains,  were   reported  in  the  sport  fishing                                                              
category and were the bulk of that income that he mentioned.                                                                    
                                                                                                                                
REPRESENTATIVE  KOPP  inquired  whether the  figures  for  seafood                                                              
processing   sector  came   just  from   the  commercial   seafood                                                              
processors or also included processors of sport caught fish.                                                                    
                                                                                                                                
MR. LESH  responded  that that  is one  of the ways  the study  is                                                              
conservative  - it  didn't capture  any of  the sport  specialized                                                              
processors in its economic impacts; it is an additional impact.                                                                 
                                                                                                                                
REPRESENTATIVE  KOPP remarked  that on the  Kenai Peninsula  there                                                              
are a  dozen shops in  a mile of  road [that process  sport caught                                                              
fish].                                                                                                                          
                                                                                                                                
10:58:07 AM                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being  no further business  before the committee,  the House                                                              
Special  Committee on  Fisheries  meeting was  adjourned at  10:58                                                              
a.m.