Legislature(2019 - 2020)GRUENBERG 120

03/19/2019 09:45 AM FISHERIES

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09:48:10 AM Start
09:49:24 AM Presentation: Hatcheries by the Regional Aquaculture Associations & Mcdowell Group
10:43:24 AM Mcdowell Group Economic Impacts of Alaska's Salmon Hatcheries
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:      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                                                                                         
Kodiak, Alaska                                                                                                                  
POSITION STATEMENT:  Presented information on salmon hatcheries.                                                              
STEVE REIFENSTUHL, General Manager                                                                                              
Norther Southeast Regional Aquaculture Association                                                                              
Sitka, Alaska                                                                                                                   
POSITION STATEMENT:  Presented information on salmon hatcheries.                                                              
DAN LESH Senior Analyst,                                                                                                        
McDowell Group                                                                                                                  
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented information on the economic                                                                    
impact of 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 Edgmon,                                                                
Kopp,  Kreiss-Tompkins, Vance, and  Stutes were  present at  the                                                                
call to order.                                                                                                                  
^PRESENTATION:  HATCHERIES BY THE REGIONAL AQUACULTURE                                                                          
ASSOCIATIONS & MCDOWELL GROUP                                                                                                   
     PRESENTATION:  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  the  regional  aquaculture                                                                
associations and McDowell Group.                                                                                                
9:49:35 AM                                                                                                                    
CHAIR  STUTES shared  her  opinion  that previous  presentations                                                                
regarding hatcheries,  as well  as  the presentations  from this                                                                
meeting, would provide a holistic view for committee members and                                                                
the public on the need for hatcheries.                                                                                          
9:50:44 AM                                                                                                                    
TINA FAIRBANKS, Executive  Director, Kodiak Regional Aquaculture                                                                
Association,  began her  testimony by  stating  the 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.   Ms. Fairbanks  explained that there                                                                
are   eight  private   nonprofit  (PNP)   hatchery  associations                                                                
throughout  Southcentral  and  Southeast Alaska  and  how  those                                                                
hatcheries were designed  to increase the  abundance and enhance                                                                
the fisheries  while protecting wild  salmon stocks.   She noted                                                                
that 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.  Ms. Fairbanks said                                                                
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  Alaska Department of Fish and                                                                
Game (ADFG) established the Fisheries Rehabilitation Enhancement                                                                
and Development  (FRED) Division  as well  as the  statutory and                                                                
regulatory framework  for the  PNP hatchery  program.   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.   Prior  to the  PNP  program and  the  FRED Division,                                                                
commercial harvest of  salmon had been declining  towards an all                                                                
time low.   Following  the establishment  of the  hatcheries and                                                                
rehabilitation  programs  fisheries 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 commercial  fisheries.  She then  asked whether any                                                                
other groups benefit from hatcheries.                                                                                           
MS. FAIRBANKS said  that the PNP hatchery  programs are mandated                                                                
to benefit all user groups including sport, commercial, personal                                                                
use,  and subsistence  fishers. She  shared information about  a                                                                
project in  Kodiak where hatchery  fish are located  into barren                                                                
lakes near  villages that have no  anadromous salmon populations                                                                
in order to benefit the local citizens.                                                                                         
9:55:18 AM                                                                                                                    
REPRESENTATIVE KREISS-TOMKINS  asked Ms.  Fairbanks  to describe                                                                
where the funding for the programs comes from.                                                                                  
MS.  FAIRBANKS answered  that  the hatchery  programs are  self-                                                                
funded through self-taxation and cost recovery fisheries.                                                                       
REPRESENTATIVE KREISS-TOMKINS  asked  if Ms.  Fairbanks had  any                                                                
explanation  for why  wild  salmon stock  doubled following  the                                                                
establishment of the hatchery programs.                                                                                         
9:57:26 AM                                                                                                                    
STEVE REIFENSTUHL, General  Manager, Northern Southeast Regional                                                                
Aquaculture Association, said  that primarily it was  good state                                                                
management but there was a shift in North Pacific salmon fishery                                                                
production  during  the  same  time  which  contributed  to  the                                                                
increase in stocks of both hatchery and wild fish.                                                                              
9:59:02 AM                                                                                                                    
MS. FAIRBANKS 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.                                                                
Then she  shared that although  coho, chinook, and  sockeye cost                                                                
more to  produce, the percentage  of those species  that return,                                                                
and  their higher  value, is  beneficial to  a wider  variety of                                                                
fishers.   The larger  scale pink and  chum programs  offset the                                                                
costs of production of other salmon species.                                                                                    
10:00:19 AM                                                                                                                   
REPRESENTATIVE  VANCE inquired  about  the  ratio of  commercial                                                                
versus noncommercial hatcheries.                                                                                                
MS.  FAIRBANKS  answered  that  there  are  two  state  operated                                                                
sportfish  facilities,  and  the rest  of  the  facilities  were                                                                
operated by  PNP hatcheries for  the benefit of  both commercial                                                                
and other common property users.                                                                                                
10:01:20 AM                                                                                                                   
REPRESENTATIVE KREISS-TOMKINS asked  if Ms. Fairbanks  was aware                                                                
of  any  thought  or  discussions regarding  the  sport  fishing                                                                
sector,  particularly  guided  sport  fishers,  helping  finance                                                                
hatchery production.                                                                                                            
10:02:18 AM                                                                                                                   
MR.  REIFENSTUHL said  there had  been discussions  in Southeast                                                                
Alaska in regard to having  sport charter groups contribute.  He                                                                
went on  to explain  there were  other political issues  at play                                                                
that have curtailed any serious discussions on this issue at the                                                                
Board of Fisheries.  Mr. Reifenstuhl explained that there is not                                                                
a need for additional money.                                                                                                    
10:03:36 AM                                                                                                                   
CHAIR  STUTES  asked  if  there  had  been  any  discussions  in                                                                
Southcentral Alaska concerning  having sport charters contribute                                                                
MS. FAIRBANKS responded that she  was unaware of any discussions                                                                
in  Southcentral and  reiterated that  those  discussions likely                                                                
didn't  happen  for  the  same   reasons  they  were  tabled  in                                                                
Southeastern Alaska.                                                                                                            
10:04:15 AM                                                                                                                   
REPRESENTATIVE  VANCE commented  she  was  happy  to hear  about                                                                
hatcheries having adequate funding.                                                                                             
MS. FAIRBANKS  explained that hatcheries produce salmon  for the                                                                
benefit of all Alaskans at no cost  to the State of Alaska.  She                                                                
explained the funding mechanism was through self-taxing and cost                                                                
recover fisheries.                                                                                                              
MS. FAIRBANKS said she was going to give a brief overview of the                                                                
aquaculture  associations located  in  the Southcentral  coastal                                                                
areas.    She  shared  that  the  projects  established  in  the                                                                
Southcentral  region  of  the  state  were  operated  by  Kodiak                                                                
Regional   Aquaculture  Association,   Cook   Inlet  Aquaculture                                                                
Association, Prince  William Sound Aquaculture  Corporation, and                                                                
the Valdez Fisheries Development Association.  Collectively they                                                                
contributed $365 million annual  economic output, 2700 jobs, $76                                                                
million in  ex-vessel value,  and $125  million in  annual labor                                                                
income.    She commented  that those are  impressive figures for                                                                
nonprofit organizations  operating with  a collective  budget of                                                                
about $25 million.                                                                                                              
MS.   FAIRBANKS  shared   information   about  Kodiak   Regional                                                                
Aquaculture  Association  (KRAA).     She  explained  that  KRAA                                                                
provided  harvest opportunities  for  Kodiak,  Larsen Bay,  Port                                                                
Lions, and  Ouzinkie, as well  as for the  Sun'Aq tribe, Leisnoi                                                                
Inc. and  natives of Kodiak and  various tribal entities through                                                                
two state-owned hatcheries.  She  said KRAA often partnered with                                                                
ADFG on research projects.                                                                                                      
10:10:37 AM                                                                                                                   
REPRESENTATIVE KOPP asked  why some hatcheries  produce pink and                                                                
chum versus higher value fish like silver, king, and sockeye.                                                                   
MS. FAIRBANKS  answered that  pink and chum  spend less  time in                                                                
hatcheries and this  allowed for larger  production numbers, and                                                                
that  equated to  those fisheries  being more  profitable.   She                                                                
explained that sockeye,  silver, and chinook spend  more time in                                                                
hatcheries  and  required  greater  resources.     In  terms  of                                                                
production costs, pink and chum are more profitable.                                                                            
10:12:58 AM                                                                                                                   
MR. REIFENSTUHL  added that  financially the  cost of  raising a                                                                
chinook is approximately  one  to one  or maybe one to  two.  He                                                                
then added that the cost  of raising coho is approximately three                                                                
to one  while the cost to  produce pink or chum  salmon is about                                                                
eight to one.                                                                                                                   
10:13:54 AM                                                                                                                   
MS.  FAIRBANKS   told  the   committee  that   each  aquaculture                                                                
association  could warrant  a  full briefing  on  their own  but                                                                
indicated  she was  only  sharing brief  synopses  of what  each                                                                
association  does.    She  continued  her  explanation  of  each                                                                
association in Southcentral Alaska by sharing information on the                                                                
Cook  Inlet  Aquaculture  Association (CIAA).    She  said  CIAA                                                                
provided  harvest opportunities  for Cordova,  Valdez, Tatitlek,                                                                
Chenega,  Whittier,   and  Eyak,  as   well  as  a   variety  of                                                                
shareholders in the Prince William Sound region.                                                                                
MS.  FAIRBANKS  next  spoke   about  the  Prince  William  Sound                                                                
Aquaculture  Corporation  (PWSAC),  which  is  headquartered  in                                                                
Cordova and provides  harvest opportunities for Cordova, Valdez,                                                                
Tatitlek, Chenega, Whittier, and  Eyak, as well as  a variety of                                                                
shareholders.   She  said PWSAC  hatcheries are  responsible for                                                                
over 25  percent of the Copper  River salmon run  annually.  The                                                                
final  association  Ms.  Fairbanks  spoke  too  was  the  Valdez                                                                
Fisheries Development Association Inc. (VFDA). She said VFDA has                                                                
operated the Solomon Gulch Hatchery, which is the largest single                                                                
pink salmon hatchery in the state.   She said that VFDA provides                                                                
harvest  opportunities for  Valdez, Cordova,  Tatitlek, Chenega,                                                                
Whittier, and  various shareholders in the  Prince William Sound                                                                
10:19:34 AM                                                                                                                   
MR. REIFENSTUHL started  his presentation by following up  on an                                                                
earlier  question regarding  sportfish.  He  explained that  the                                                                
hatchery programs  by statute are  supposed to provide  a public                                                                
good.   He said, "We  are happy, as  a group,  to be able  to do                                                                
that."   He went on to  say that local hatcheries  in Juneau and                                                                
Ketchikan are  receiving money  to produce  king salmon  for the                                                                
local sport fisheries.                                                                                                          
10:20:45 AM                                                                                                                   
CHAIR STUTES asked Mr. Reifenstuhl if the funding was from ADFG.                                                                
MR. REIFENSTUHL replied yes.  He went on to say he would explain                                                                
the economically  important public/private partnership  with the                                                                
State  of  Alaska.   He  said  the  programs  dovetail with  the                                                                
constitutional  mandate  for  sustainable fisheries  management,                                                                
protection of wild stocks, and  providing a public benefit.  Mr.                                                                
Reifenstuhl  provided  a  brief   overview  of  the  aquaculture                                                                
associations  in Southeast  Alaska.   The  four  associations in                                                                
Southeast Alaska are the Northern Southeast Regional Aquaculture                                                                
Association (NSRAA), the Southern Southeast Regional Aquaculture                                                                
Association  (SSRAA),  Armstrong  Keta  Incorporated  (AKI)  and                                                                
Douglas  Island  Pink  and  Chum  (DIPAC).    Collectively  they                                                                
contribute $237  million in  annual economic output,  2000 jobs,                                                                
$44 million in ex-vessel value,  and $90 million in annual labor                                                                
MR.  REIFENSTUHL  told  the  committee  that  NSRAA  operated  a                                                                
hatchery in Kake,  Alaska, two hatcheries in  Sitka, and another                                                                
facility,  Hidden Falls,  on  Baranof  Island.   He  said  these                                                                
facilities provided harvest opportunities for Petersburg, Sitka,                                                                
and Haines, as well as sport and commercial fishermen throughout                                                                
Southeast Alaska.                                                                                                               
10:24:25 AM                                                                                                                   
REPRESENTATIVE      KREISS-TOMKINS     complimented      NSRAA's                                                                
administration of the  Kake hatchery.  He proceeded  to say that                                                                
NSRAA was  one of the  best administered nonprofit organizations                                                                
he knew.                                                                                                                        
MR.  REIFENSTUHL told  the  committee  that  SSRAA operated  six                                                                
hatcheries  in  Petersburg,  Craig, Neets  Bay,  Deer  Mountain,                                                                
Whitman  Lake, and  Burnett  Inlet.   These  facilities provided                                                                
harvest  opportunities for  Ketchikan, Prince  of  Wales Island,                                                                
Wrangell, and Petersburg, as  well as for many  rural tribes and                                                                
village corporations.                                                                                                           
MR. REIFENSTUHL described Armstrong Keta Incorporated as a small                                                                
PNP near the southern tip  of Baranof Island that produces chum,                                                                
coho,  and pink  salmon.   He  indicated this  hatchery provided                                                                
harvest opportunities for Juneau and many communities throughout                                                                
the Chichagof and Admiralty Island regions.                                                                                     
10:30:25 AM                                                                                                                   
CHAIR STUTES asked about a huge Crawfish [Inlet] return [of chum                                                                
salmon] and wondered whether  hatcheries had participated in the                                                                
production of salmon for the fishery.                                                                                           
MR. REIFENSTUHL answered that the chum salmon return to Crawfish                                                                
Inlet was  from a  NSRAA program that  was initiated  four years                                                                
ago.   He  explained the  large return  numbers were  an unusual                                                                
phenomenon because  typically only  3 to  15  percent of  a chum                                                                
salmon run  is composed of three-year-old  fish.  He went  on to                                                                
say the  large number  of chum  salmon was unexpected.   Working                                                                
with ADFG, NSRAA was able to open up a commercial fishery to get                                                                
the unusually  large return  harvested, which brought  about $15                                                                
million of unexpected  income to the commercial  fishery in that                                                                
CHAIR STUTES  asked how  hatchery fish stabilize  otherwise wild                                                                
commercial fisheries.                                                                                                           
MR. REIFENSTUHL shared  that from the inception  of the hatchery                                                                
program, the  hatcheries were designed to  enhance fisheries for                                                                
economic benefit while protecting wild stocks.                                                                                  
10:34:13 AM                                                                                                                   
REPRESENTATIVE KOPP asked  whether Mr. Reifenstuhl was  aware of                                                                
any research being done to  see if hatchery produced pink salmon                                                                
could be displacing any other species.                                                                                          
MR. REIFENSTUHL answered there had been research for over twenty                                                                
years.   He explained  that the  primary organization  doing the                                                                
research was the North Pacific Anadromous Fish Commission, which                                                                
includes members from Russia,  Japan, Canada, the United States,                                                                
and Korea.  Mr. Reifenstuhl told  the committee that he would be                                                                
delivering a  paper to the  American Fisheries Society  on ocean                                                                
carrying capacity.   He went on to  reference information in the                                                                
paper  which explained  that as  fry  leave streams  in the  Icy                                                                
Strait  area, they  consume  less than  half  a  percent of  the                                                                
available  food source,  zooplankton.   He said  the  near shore                                                                
survival  [of fry]  is tied  to  predation.   He  explained that                                                                
between fifty and 90 percent of  salmon die in their first 30 to                                                                
45 days in the ocean.                                                                                                           
10:37:14 AM                                                                                                                   
REPRESENTATIVE  VANCE  asked  if Mr.  Reifenstuhl  knew  of  any                                                                
comparison of the quality of meat between hatchery fish and wild                                                                
MR. REIFENSTUHL replied that comparisons of meat quality between                                                                
farmed and  wild salmon  had been  done, and  for the  most part                                                                
people could  not tell the difference.   He wasn't  aware of any                                                                
studies between hatchery and wild salmon.                                                                                       
REPRESENTATIVE VANCE  stated, "For clarification,  hatchery fish                                                                
are not farmed fish."                                                                                                           
MR. REIFENSTUHL answered that  Representative Vance was correct.                                                                
He went on to explain that  farm fishing is illegal in the State                                                                
of Alaska.                                                                                                                      
REPRESENTATIVE  VANCE  asked  what the  difference  was  between                                                                
farmed and hatchery fish.                                                                                                       
MR. REIFENSTUHL  described how  hatchery salmon  are kept  for a                                                                
short period  of time then  go into  the ocean and  compete like                                                                
wild salmon before returning to the  hatchery to spawn.  He then                                                                
explained that farmed  salmon are kept in net  pens their entire                                                                
life, fed  for their entire  life, and  don't have to  deal with                                                                
10:40:13 AM                                                                                                                   
REPRESENTATIVE KREISS-TOMKINS  asked if  there was  any research                                                                
into adult hatchery  salmon returning from the  ocean preying on                                                                
wild and hatchery salmon fry.                                                                                                   
MR.  REIFENSTUHL shared  information from  a  recent paper  that                                                                
speculated that there  could be a  negative relationship between                                                                
Southeast Alaska pink salmon and coho.   Mr. Reifenstuhl said he                                                                
would dispute the data and indicated the papers  author may have                                                                
"teased out" a correlation in the  data that wasn't correct.  He                                                                
said the  data indicates  to him  a more  positive relationship,                                                                
especially on large pink salmon years.   He went on to say there                                                                
is undoubtedly some predation between adult salmon and fry.  Mr.                                                                
Reifenstuhl  explained predator  sheltering where  the more  fry                                                                
available the less chance  a single fry has at  being eaten by a                                                                
10:42:59 AM                                                                                                                   
MCDOWELL GROUP ECONOMIC IMPACTS OF ALASKA'S SALMON HATCHERIES                                                               
^MCDOWELL GROUP ECONOMIC IMPACTS OF ALASKA'S SALMON HATCHERIES                                                                  
10:43:24 AM                                                                                                                 
DAN LESH, Senior Analyst, McDowell Group, described the McDowell                                                                
Group's  qualifications and  history of  doing  economic studies                                                                
throughout Alaska.  He  explained his presentation would look at                                                                
four areas  of the  seafood industry that  bring money  into the                                                                
state.  Those areas are:  Commercial fishing income, Value added                                                                
in  seafood  processing,  Nonresident  spending  tied  to  sport                                                                
fishing, and Hatchery operations."  He said the study was over a                                                                
six-year  period and  took  an  average of  those  six years  to                                                                
account for  fluctuations in  fishery returns. Mr.  Lesh offered                                                                
information to the  committee that 79 percent  of the collective                                                                
PNP  hatchery budgets  came from  cost recovery  fisheries.   He                                                                
relayed  the  combined ex-vessel  value  to  fisherman from  the                                                                
harvest and sale of hatchery fish  was $120 million.  That value                                                                
represented about  22  percent of  all Alaska  salmon harvested.                                                                
The wholesale  value of the  fishery was $361  million annually.                                                                
Regarding sport  fishing, an  average of 10,000  chinook salmon,                                                                
100,000  coho,  and  138,000  sockeye  salmon  are  produced  by                                                                
hatcheries each  year.   Mr.  Lesh stated  that when  the annual                                                                
economic impact  of hatcheries  is added up,  it comes  to 4,700                                                                
jobs, $218 million in labor  income and $600 million in economic                                                                
output statewide.   He  explained the process  that was  used to                                                                
produce each of the statistics he shared.                                                                                       
10:53:08 AM                                                                                                                   
REPRESENTATIVE KREISS-TOMKINS commented  that he was  pleased to                                                                
see the positive economic benefits from hatcheries.                                                                             
MR. LESH  agreed that it was  impressive that hatcheries produce                                                                
so much economic benefit to the state at no cost to the state.                                                                  
10:54:44 AM                                                                                                                   
REPRESENTATIVE KOPP asked if  Mr. Lesh was able  to identify the                                                                
economic  benefit breakdown  that  could  be  tied back  to  the                                                                
hatchery fish versus wild salmon.                                                                                               
MR. LESH answered yes,  and further explained how the assessment                                                                
was strictly on hatchery caught fish.                                                                                           
REPRESENTATIVE KOPP requested  to know whether  the research was                                                                
looking at commercial sport operators as being in the commercial                                                                
fishing category or sport fishing category.                                                                                     
MR.  LESH  replied  that  commercial sport  operators,  such  as                                                                
charter  boat  captains,  were  reported in  the  sport  fishing                                                                
REPRESENTATIVE KOPP  asked if  the  information from  small fish                                                                
processors was  kept in the  commercial fish processing  data or                                                                
with sport fish processing data.                                                                                                
MR.   LESH   answered;  the   reports   data  was   purposefully                                                                
conservative  so  some  areas  such  as  the  small  sport  fish                                                                
processing company's data would not  be reflected in the overall                                                                
commercial seafood processing data.                                                                                             
10:58:07 AM                                                                                                                   
There being no further  business before the committee, the House                                                                
Special Committee  on Fisheries  meeting was adjourned  at 10:58