Legislature(2017 - 2018)BUTROVICH 205

03/24/2017 03:30 PM RESOURCES

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Audio Topic
03:30:14 PM Start
03:30:44 PM Overview: Alaska's Seafood Industry
05:25:02 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Overview: Alaska's Seafood Industry TELECONFERENCED
Department of Commerce, Community and Economic
Development
Department of Fish & Game
Alaska Seafood Marketing Institute
Presentation from Private Sector Stakeholders
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
              SENATE RESOURCES STANDING COMMITTEE                                                                             
                         March 24, 2017                                                                                         
                           3:30 p.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Cathy Giessel, Chair                                                                                                    
Senator Natasha von Imhof                                                                                                       
Senator Shelley Hughes                                                                                                          
Senator Kevin Meyer                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator John Coghill, Vice Chair                                                                                                
Senator Bert Stedman                                                                                                            
Senator Bill Wielechowski                                                                                                       
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
OVERVIEW: ALASKA'S SEAFOOD INDUSTRY                                                                                             
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
CHRIS HLADICK, Commissioner                                                                                                     
Department of Commerce, Community and Economic Development                                                                      
(DCCED)                                                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Commented on his and the department's place                                                              
in the state's fishing industry.                                                                                                
                                                                                                                                
TRENT HARTILL, Federal Fisheries Coordinator                                                                                    
Alaska Department of Fish and Game                                                                                              
Kodiak, Alaska                                                                                                                  
POSITION STATEMENT:  Presented a high-level overview of                                                                       
fisheries management and jurisdiction in the State of Alaska.                                                                   
                                                                                                                                
GLENN MERRILL, Assistant Alaska Regional Administrator                                                                          
National Oceanic & Atmospheric Administration (NOAA)                                                                            
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Provided a high-level overview  of the role                                                             
of the State of Alaska in federal fisheries management.                                                                         
                                                                                                                                
ALEXA TONKOVICH, Executive Director                                                                                             
Alaska Seafood Marketing Institute (ASMI)                                                                                       
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Provided an  overview on how ASMI brands the                                                             
Alaska seafood commodity.                                                                                                       
                                                                                                                                
ANDY WINK, Seafood Economist                                                                                                    
McDowell Group                                                                                                                  
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Provided an  overview of research contracted                                                             
by ASMI since 1998.                                                                                                             
                                                                                                                                
NICOLE KIMBALL                                                                                                                  
Pacific Seafood Processors Association (PSPA)                                                                                   
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Provided an overview  of PSPA participation                                                             
in marketing Alaska salmon.                                                                                                     
                                                                                                                                
MARK VINSEL, Executive Administrator                                                                                            
United Fishermen of Alaska (UFA)                                                                                                
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   Provided  overview  of industry  marketing                                                             
initiatives,  technology   and  modernization,   and  sustainable                                                               
management.                                                                                                                     
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
3:30:14 PM                                                                                                                    
CHAIR  CATHY   GIESSEL  called  the  Senate   Resources  Standing                                                             
Committee meeting  to order at 3:30  p.m. Present at the  call to                                                               
order were Senators Hughes, von Imhof, and Chair Giessel.                                                                       
                                                                                                                                
                                                                                                                                
^OVERVIEW: Alaska's Seafood Industry                                                                                            
              OVERVIEW: Alaska's Seafood Industry                                                                           
                                                                                                                                
3:30:44 PM                                                                                                                    
CHAIR GIESSEL said  the committee's agenda today  was an overview                                                               
of Alaska's  seafood industry.  She said  this committee  is very                                                               
concerned  about the  vibrancy  and success  of Alaska's  coastal                                                               
communities, and control  of our fisheries was one  of the things                                                               
that  pushed  Alaska  to  statehood.   Senator  Ted  Stevens  was                                                               
instrumental in establishing Alaska's  control over its fisheries                                                               
with the  Magnuson Stevens  Act that  will be  41 years  old next                                                               
month.  It serves  a two-fold  purpose: a  spear against  foreign                                                               
fleets  and a  shield  mandating  sustainably managed  fisheries.                                                               
Senator Stevens'  vision of  value-added resources  was extremely                                                               
important and  has guided the  state and this industry  since its                                                               
inception.                                                                                                                      
                                                                                                                              
3:31:39 PM                                                                                                                    
CHAIR  GIESSEL said  a panel  of great  presenters will  show the                                                               
interaction of  local, state, and federal  officials with private                                                               
industry  in  sustainably  managing the  state's  fisheries.  She                                                               
invited   Department   of   Commerce,  Community   and   Economic                                                               
Development  (DCCED) Commissioner  Chris  Hladick forward  adding                                                               
that  he has  a  unique perspective  having  managed the  seafood                                                               
community of Unalaska in a previous position.                                                                                   
                                                                                                                                
3:32:32 PM                                                                                                                    
CHRIS  HLADICK, Commissioner,  Department of  Commerce, Community                                                               
and  Economic  Development  (DCCED),  Juneau,  Alaska,  said  his                                                               
"journey of  education and discovery about  commercial fishing in                                                               
Alaska"  began on  the  Yukon  River in  the  1990s with  meeting                                                               
Sidney Huntington  and learning about  the chum fishery.  In 1994                                                               
he  went to  Dillingham as  its  city manager  and his  fisheries                                                               
education really  took off. He  said Bristol  Bay is home  to the                                                               
largest red  salmon fishery in the  world and the history  of the                                                               
commercial  salmon fishing  in "the  Bay" goes  back to  the late                                                               
1800s.                                                                                                                          
                                                                                                                                
3:33:05 PM                                                                                                                    
SENATOR MEYER joined the committee meeting.                                                                                     
                                                                                                                                
COMMISSIONER  HLADICK said  life  in  Dillingham revolves  around                                                               
fishing seasons  and the  quality of  their fish  is a  source of                                                               
pride for everyone  in the community - and  he includes fishermen                                                               
and processors that  come from Outside as part  of the community,                                                               
because they all contribute.                                                                                                    
                                                                                                                                
In 2001, the  commissioner said he moved his  family to Unalaska,                                                               
home to the  International Port of Dutch Harbor. He  was aware of                                                               
inshore/offshore fishing,  but had  no idea  what he  was getting                                                               
himself into. He learned what  ground fish are and the importance                                                               
of the  Bering Sea  to the  Alaskan and the  U.S. economy  not to                                                               
mention the fact  that its products are  delivered worldwide. The                                                               
shipping infrastructure in Unalaska  can ensure that fish arrives                                                               
on a scheduled service virtually anywhere on the globe.                                                                         
                                                                                                                                
He  also learned  about the  North  Pacific Fisheries  Management                                                               
Council and  that Alaska  has the best  managed fisheries  in the                                                               
world,  bar none.  Fish stocks  are managed  with input  from all                                                               
sectors  of  the industry  and  government  and rely  upon  sound                                                               
science. It's a process that works.                                                                                             
                                                                                                                                
COMMISSIONER HLADICK  said one of  the reasons he wanted  to move                                                               
to Unalaska was because it ranks  in the top schools in Alaska on                                                               
a regular  basis and  it also  has the  Coast Guard,  an integral                                                               
component of any  fishing community in Alaska. If a  ship gets in                                                               
trouble in  the Bering Sea or  any Alaskan waters, there  is only                                                               
one group to call: the U.S. Coast Guard.                                                                                        
                                                                                                                                
COMMISSIONER HLADICK  said seafood is  a bright spot  in Alaska's                                                               
economy, and  others will testify  about the numbers of  jobs and                                                               
total value  created, but  the competition  is fierce.  There are                                                               
more options for  fish protein alternatives coming  on the market                                                               
every day.   But he  has also  learned that the  fishing industry                                                               
can turn on  a dime to get  things done to adapt  to markets. One                                                               
year, surimi  is the  optimal product sought  by the  market, the                                                               
next is  filets: the equipment  in the  plant gets taken  out and                                                               
new efficient  equipment gets  installed in  a matter  of months.                                                               
Government could  never respond  this fast. The  fishing industry                                                               
is dynamic  and ever  vigilant in  responding to  market demands,                                                               
which can  make it  a bit of  a roller coaster  for them  and the                                                               
community in which they reside.                                                                                                 
                                                                                                                                
He  said they  would  also  hear today  from  the Alaska  Seafood                                                               
Marketing Institute  (ASMI) and  the job it  does for  Alaska. As                                                               
commissioner  of DCCED,  he  is  on over  20  boards,  but he  is                                                               
honored to be on the ASMI  board working with industry members to                                                               
promote the best Alaska has to offer.                                                                                           
                                                                                                                                
Anyone who has been to  Unalaska realizes that commercial fishing                                                               
is not just  about the boats, not just the  processors; it's also                                                               
about support  industries: welding, trucking, cold  storage, fuel                                                               
and  equipment, ship  supply, bulk  food  supply, having  capable                                                               
labor 24/7, and  it's having everything available  24/7. It's the                                                               
contractors  that  build  the docks,  the  power  plants,  living                                                               
quarters,  and processing  facilities that  all provide  jobs and                                                               
hard dollars  into the community.  It's a  symbiotic relationship                                                               
between industry and the community, with both benefits.                                                                         
                                                                                                                                
Communities have a host of  responsibilities in their link to the                                                               
economy.  Capital  projects  include  public  facilities:  docks,                                                               
landfills,  power   plants,  waste   water  and   drinking  water                                                               
facilities, clinics,  schools, public services such  as police as                                                               
well  as fire  and emergency  medical services  (EMS). Often  the                                                               
community  provides  the  public  library,  the  only  place  for                                                               
workers to go and check their email.                                                                                            
                                                                                                                                
So,  you may  ask how  that is  different than  anywhere else  in                                                               
Alaska. Commissioner  Hladick said it's different,  because there                                                               
is an ebb and flow to  fishing seasons creating peaks and valleys                                                               
in utility and  service demand. Unalaska is a  community of 4,500                                                               
people, but  32,000 airplane  seats are  sold each  year destined                                                               
for  Unalaska. All  services are  staffed  appropriately to  meet                                                               
this demand. For  instance, the water plant  in Unalaska provides                                                               
up  to  7 million  gallons  a  day to  meet  the  demands of  the                                                               
processing  plants.  This  utility  is the  fifth  largest  water                                                               
supply in Alaska based on  volume. Municipal government can never                                                               
let up on planning and maintenance.                                                                                             
                                                                                                                                
In  summary,   he  said  living   in  rural  Alaska   in  fishing                                                               
communities  has been  an incredible  experience for  himself and                                                               
his  family.  The  exposure  he has  gotten  while  working  with                                                               
multiple  state   and  federal  agencies  has   been  a  learning                                                               
opportunity  of  a  life  time.   While  the  commercial  fishing                                                               
industry  is  dynamic and  has  many  complexities regarding  the                                                               
plethora  of  federal  and state  agency  regulations,  there  is                                                               
tremendous opportunity  for innovation  to increase the  value of                                                               
Alaska's seafood products.  The seafood we produce  comes from an                                                               
incredible renewable resource and it  is managed wisely, he said,                                                               
and he  is honored  to come to  know many of  the players  in the                                                               
industry and know that every day  they work to sell the brand and                                                               
maintain the  highest quality  seafood possible  wild sustainable                                                               
seafood to  the world. "It's  a great story  and I'm proud  to be                                                               
part of that story."                                                                                                            
                                                                                                                                
3:39:27 PM                                                                                                                    
CHAIR GIESSEL  thanked Commissioner  Hladick for his  remarks and                                                               
finding no questions,  she said the committee would go  on to the                                                               
interaction between state and federal  agencies, and welcomed the                                                               
Alaska Department of Fish and Game (ADF&G).                                                                                     
                                                                                                                                
3:40:05 PM                                                                                                                    
TRENT HARTILL,  Federal Fisheries Coordinator,  Alaska Department                                                               
of Fish and  Game, Kodiak, Alaska, said he would  present a high-                                                               
level overview  of fisheries management  and jurisdiction  in the                                                               
State of  Alaska. In  general, there  are two  primary regulatory                                                               
bodies in  Alaska that are responsible  for fisheries management:                                                               
one is  the Alaska Department of  Fish and Game (ADF&G),  and the                                                               
regulations  that govern  these fisheries  are developed  through                                                               
the Alaska  Board of Fisheries.  These fisheries  generally occur                                                               
from zero  to three nautical  miles. The other primary  agency is                                                               
the National Marine Fisheries Service  (NMFS) and the regulations                                                               
for  these  fisheries are  developed  through  the North  Pacific                                                               
Fishery Management Council (NPFMC).  These fisheries occur from 3                                                               
to 200 miles  offshore. He noted that the  ADF&G commissioner has                                                               
a  dedicated seat  on  the NPFMC,  so  the state  has  a role  in                                                               
assisting  in  the  development   of  regulations  and  fisheries                                                               
management in the federal fisheries.                                                                                            
                                                                                                                                
3:41:46 PM                                                                                                                    
Within these two management bodies  there are three general types                                                               
of fisheries:  a federal  fishery that  occurs in  federal waters                                                               
from 3 to  200 nautical miles offshore and  those regulations are                                                               
guided by the Council process.  The harvest in these fisheries is                                                               
deducted from a  federal total allowable catch  (TAC), the target                                                               
amount of catch for vessels to take.                                                                                            
                                                                                                                                
The second type of fishery is  a parallel fishery and that occurs                                                               
inside  state waters.  It is  managed  by the  ADF&G through  the                                                               
Alaska Board of  Fisheries. The unique nature of  this fishery is                                                               
that the  Board of Fisheries  generally adopts the  federal rules                                                               
and regulations that  occur in the adjacent  federal waters. This                                                               
provides a seamless transition for  the fishery participants 0 to                                                               
200  nautical miles  offshore. Despite  the  federal rules  being                                                               
adopted into  state waters,  it's still  a state  managed fishery                                                               
and   still   falls  under   the   Alaska   Board  of   Fisheries                                                               
jurisdiction.  Harvest in  these fisheries  is deducted  from the                                                               
total federal TAC.                                                                                                              
                                                                                                                                
3:43:12 PM                                                                                                                    
SENATOR HUGHES asked if the TAC is per vessel or per region.                                                                    
                                                                                                                                
MR. HARTILL  answered in open  access fisheries,  vessels compete                                                               
for  the amount  of  available  TAC and  there  is no  individual                                                               
allocation. But  some fisheries have individual  allocations. His                                                               
example is open access.                                                                                                         
                                                                                                                                
3:43:43 PM                                                                                                                    
The third type  of fishery is a state-waters fishery  that uses a                                                               
guideline harvest level (GHL), which  is analogous to the federal                                                               
TAC.  These  fisheries are  wholly  within  the Alaska  Board  of                                                               
Fisheries process and only prosecuted  from 0 to 3 nautical miles                                                               
offshore.                                                                                                                       
                                                                                                                                
3:44:08 PM                                                                                                                    
MR.  HARTILL  provided  a  map   of  state  and  federal  fishery                                                               
boundaries  noting that  some areas  of state  and federal  areas                                                               
align better  than others,  but in general  there is  pretty good                                                               
agreement  between  the state  and  federal  government on  where                                                               
fishery boundaries occur.                                                                                                       
                                                                                                                                
MR. HARTILL  said he would use  the Pacific cod fisheries  in the                                                               
central  Gulf of  Alaska  as  an example  of  where  some of  the                                                               
overlaps  occur. The  state has  many fisheries  and there  is no                                                               
single template that is used.  The fisheries are generally geared                                                               
towards the  user groups, the  areas, the fleets, and  the target                                                               
species. He explained that the  acceptable biological catch (ABC)                                                               
limit is a bright red line  that the federal fisheries don't want                                                               
to  exceed. The  total allowable  catch (TAC)  is an  amount less                                                               
than the ABC and is what they target to catch.                                                                                  
                                                                                                                                
MR.  HARTILL explained  that the  central Gulf  of Alaska  has an                                                               
acceptable  biological catch  (ABC)  and 75  percent  of that  is                                                               
allocated to  the TAC.  That is  further distributed  between the                                                               
two seasons, A and  B, with a little bit more  dedicated to the A                                                               
season  compared  to the  B  season.  Within  each of  those  the                                                               
Pacific cod  is allocated  to specific gear  groups, and  that is                                                               
what  actually hits  the water.  Twenty-five percent  of that  is                                                               
allocated to the state waters fisheries  in the form of GHL. That                                                               
25  percent   is  further   distributed  between   the  different                                                               
management areas  in the  Central Gulf  (Cook Inlet,  Kodiak, and                                                               
Chignik  are the  three state  management  areas). The  different                                                               
proportions  of GHL  are allocated  to  the gear  types in  these                                                               
fisheries.                                                                                                                      
                                                                                                                                
3:47:59 PM                                                                                                                    
SENATOR VON  IMHOF asked if  the A season  and the B  seasons are                                                               
completely separate for the federal and state fisheries.                                                                        
                                                                                                                                
MR. HARTILL replied that they are completely separate.                                                                          
                                                                                                                                
SENATOR  VON IMHOF  said it  seemed that  some areas  are getting                                                               
fished twice.                                                                                                                   
                                                                                                                                
3:50:14 PM                                                                                                                    
MR. HARTILL explained  that the A season and the  B season in the                                                               
federal fishery can  occur from 0 to  200 miles in the  form of a                                                               
federal fishery  and the  parallel fishery  and the  state season                                                               
(GHL) starts when that fishery closes.                                                                                          
                                                                                                                                
3:50:35 PM                                                                                                                    
SENATOR HUGHES  said about 75  percent of the allocation  goes to                                                               
the  3 to  200-mile marker,  leaving 25  percent for  the smaller                                                               
area and asked why. Are there more fish closer to land?                                                                         
                                                                                                                                
MR. HARTILL  answered that  when the  state waters  GHL fisheries                                                               
were developed  there had to  be a starting point  for allocation                                                               
and one  of the metrics that  informed the Board of  Fisheries in                                                               
development of these fisheries is  the historic proportion of the                                                               
catch that occurs  inside of three miles, and at  the time it was                                                               
about  25   percent.  That  is   where  the  board   started  the                                                               
allocation.                                                                                                                     
                                                                                                                                
SENATOR HUGHES  said she assumed  that they have stuck  with that                                                               
proportion because it has worked well.                                                                                          
                                                                                                                                
MR. HARTILL  answered yes, and  added there are GHL  fisheries in                                                               
many  other  areas of  the  state  that  might have  a  different                                                               
percentage,  which  reflects  historical  participation  in  that                                                               
area. Stakeholders drive  the board process and  can advocate and                                                               
request  modifications.  For  example, the  board  increased  the                                                               
allocation to  the fisheries in  the South Alaska  Peninsula area                                                               
from 25 percent to 30  percent. The beginning allocation amounts,                                                               
and  the  ongoing  management  of  each fishery  is  a  Board  of                                                               
Fisheries job.                                                                                                                  
                                                                                                                                
3:53:09 PM                                                                                                                    
MR. HARTILL said the next slides  were a high-level overview of a                                                               
federal fishery, a parallel fishery,  and a state waters fishery,                                                               
the  take-away   being  the  difference  in   management  of  the                                                               
fisheries.                                                                                                                      
                                                                                                                                
The  federal Pacific  cod  fishery  is 3  to  200 nautical  miles                                                               
offshore. The  harvest limit  is based on  a fixed  percentage of                                                               
the  Pacific cod  ABC and  there  are specific  gear sectors  for                                                               
trawl,  long line,  pot, and  jig gear.  There are  also separate                                                               
allocations  for  whether  the  operations  are  catcher  vessels                                                               
versus catcher processors.                                                                                                      
                                                                                                                                
3:54:40 PM                                                                                                                    
MR.  HARTILL  explained that  the  Parallel  Pacific Cod  Fishery                                                               
occurs  just in  0  to  3 nautical  miles  and  is essentially  a                                                               
federal fishery that  occurs inside state waters  where the state                                                               
adopts  similar  regulations.  It  is also  called  a  concurrent                                                               
fishery. It  has a shared  TAC, a single overall  total allowable                                                               
catch for  all participants, whether  they are inside  or outside                                                               
three  miles, and  the same  gear and  sectors that  participate.                                                               
However, the  Board of Fisheries  has provided some  bottom trawl                                                               
restrictions: the Gulf of Alaska has  quite a bit of state waters                                                               
that are  closed to bottom trawl  gear. The A and  B seasons also                                                               
apply during  the parallel fishery.  There is no gear  limit, but                                                               
the  board  has developed  some  vessel  length restrictions  for                                                               
certain gear types and in certain areas.                                                                                        
                                                                                                                                
He explained  that the differences  between the parallel  and the                                                               
federal fishery are:                                                                                                            
-the  parallel fishery  is open  access.  This essentially  means                                                               
that any vessel  can participate as long as it  follows the other                                                               
rules,  such as  seasons and  gear  types. (The  State of  Alaska                                                               
doesn't  administer  an  FFP  or  an  LLP  program  nor  does  it                                                               
recognize the LLP or FFP requirements in the federal fishery.)                                                                  
-the  state   also  adopts  most  Steller   sea  lion  protection                                                               
measures, and                                                                                                                   
-the observer  program requirements  only apply to  the federally                                                               
permitted vessels.                                                                                                              
                                                                                                                                
3:56:35 PM                                                                                                                    
MR. HARTILL further  explained that the state  waters Pacific cod                                                               
fisheries are  only 0  to 3  NMI and  were developed  through the                                                               
Board of  Fisheries process;  the harvest limits  are based  on a                                                               
percent of the  federal Pacific cod ABCs. The  seasons are opened                                                               
after  the  federal  parallel  fisheries  close,  which  prevents                                                               
overlapping fisheries from going on at the same time.                                                                           
                                                                                                                                
One  of the  key  differences between  the  parallel and  federal                                                               
fisheries and  the state  waters fisheries is  the gear.  Most of                                                               
the state waters  Pacific cod fisheries are open to  just pot and                                                               
jig  gear with  a couple  of  exceptions: one  in Prince  William                                                               
Sound and one in the  Aleutian Islands. Both Prince William Sound                                                               
and  the  Aleutian  Islands  are  open to  long  line  gear;  the                                                               
Aleutian Islands is also open to trawl gear.                                                                                    
                                                                                                                                
MR. HARTILL  said there are gear  limitations: 60 pots and  5 jig                                                               
machines, and most areas have  vessel length limitations. The GHL                                                               
fisheries  have an  access  provision that  is  different than  a                                                               
permit system.  The state implements an  exclusivity requirement,                                                               
essentially  a  way  to  control   a  vessel's  participation  in                                                               
different registration areas in the  same calendar year. So, some                                                               
areas have more stringent requirements than others.                                                                             
                                                                                                                                
The state has Steller sea  lion protection measures, but only the                                                               
rookery protection measures. So,  the federal haul out protection                                                               
measures are  not adopted in  the state water's  fisheries. There                                                               
are no observer program requirements for the GHL fisheries.                                                                     
                                                                                                                                
3:58:25 PM                                                                                                                    
SENATOR  VON  IMHOF  asked  how long  the  parallel  and  federal                                                               
fishery seasons are.                                                                                                            
                                                                                                                                
MR.  HARTILL answered  that  a number  of  factors influence  the                                                               
season length:  one is  the size  of the TAC  and another  is the                                                               
participation in the fishery. In  general, the fisheries close in                                                               
February or March.                                                                                                              
                                                                                                                                
SENATOR VON  IMHOF said  that closure  would amount  to 30  to 60                                                               
days  and asked  if  smaller  boats will  fish  the state  waters                                                               
versus bigger boats fishing the  federal waters. How do fishermen                                                               
select which fishery to participate in?                                                                                         
                                                                                                                                
MR. HARTILL replied  that there is a lot of  overlap. Many of the                                                               
vessels  will participate  in both  the federal  parallel fishery                                                               
and the  state waters fishery,  but many only participate  in the                                                               
state  waters  fishery.  So,  it's  largely  dependent  upon  the                                                               
business plan and other opportunities that the vessel will have.                                                                
                                                                                                                                
3:59:49 PM                                                                                                                    
MR.   HARTILL   summarized   that  there   are   two   management                                                               
jurisdictions  in  Alaska: federal  and  state.  There are  three                                                               
types  of groundfish  fisheries: the  federal, the  parallel, and                                                               
the state, and  they have varying levels of  overlap. There isn't                                                               
a single  form of fishery  in Alaska;  each is unique  and highly                                                               
dynamic across all of the areas.                                                                                                
                                                                                                                                
4:00:50 PM                                                                                                                    
SENATOR  HUGHES  thanked Mr.  Hartill  for  his presentation  and                                                               
asked how federal employees work together with state employees.                                                                 
                                                                                                                                
MR.  HARTILL  explained  that  the   state  has  a  good  working                                                               
relationship  with   the  in-season  federal   management  staff.                                                               
Typically, as the  federal fisheries begin to wind  down (as they                                                               
approach their  TAC), the state will  be in contact with  them to                                                               
determine  the timing.  The state  has a  time period  unique for                                                               
each area  in regulation  on when the  state waters  fishery will                                                               
open.  So, they  have some  flexibility  in the  timing of  these                                                               
closures  on the  federal portion  and the  opening on  the state                                                               
portion.                                                                                                                        
                                                                                                                                
SENATOR   GIESSEL  thanked   Mr.  Hartill   for  his   very  good                                                               
presentation and welcomed Glenn Merrill to the committee.                                                                       
                                                                                                                                
4:02:50 PM                                                                                                                    
GLENN MERRILL, Assistant  Alaska Regional Administrator, National                                                               
Oceanic  &  Atmospheric  Administration (NOAA),  Juneau,  Alaska,                                                               
said he would provide a  high level and relatively brief overview                                                               
of the  role of  Alaska in  federal fisheries  management. Within                                                               
the  federal  system,  many  of  the  concerns  and  issues  that                                                               
residents  of   Alaska  have  are  recognized   through  specific                                                               
provisions in the  Magnuson Stevens Act, which he  would touch on                                                               
briefly,  as  well  as the  North  Pacific  Fisheries  Management                                                               
Council (NPFMC)  process. He would  then provide examples  of how                                                               
NOAA  coordinates with  residents of  Alaska as  they manage  the                                                               
federally managed fisheries.                                                                                                    
                                                                                                                                
4:03:44 PM                                                                                                                    
MR.  MERRILL said  the  residents of  Alaska  interface with  the                                                               
federal government  for the day-to-day management  of the federal                                                               
fisheries through the North  Pacific Fisheries Management Council                                                               
(NPFMC), through cooperative management  for a number of species,                                                               
and  ongoing  research. The  federal  process  is a  very  public                                                               
process, because they the importance  of engaging with the public                                                               
seriously  so  that  they understand  the  implications  and  the                                                               
management process used at the federal level.                                                                                   
                                                                                                                                
4:04:33 PM                                                                                                                    
MR.  MERRILL  acknowledged  that  the nuances  of  fisheries  are                                                               
complex, but  Senator Stevens and  other senators  recognized the                                                               
importance of  having direct involvement  by the  stakeholders in                                                               
the policy development  process and that is unique  about the way                                                               
the fisheries are managed in  Alaska through the Magnuson Stevens                                                               
Act.                                                                                                                            
                                                                                                                                
The NPFMC  is a policy  development body. It  recommends policies                                                               
to  the  federal  government  and  the  federal  authorities  are                                                               
responsible for  reviewing those policies  to make sure  they are                                                               
consistent  with  existing  laws,  and then  they  implement  the                                                               
regulations that result from those  policies. The State of Alaska                                                               
is a  key voting member  on the NPFMC having  6 of the  11 voting                                                               
seats.  The ADF&G  commissioner has  one of  those seats  and the                                                               
other  five  represent  a variety  of  different  interests  from                                                               
various communities and different  fishery groups that are active                                                               
in the fisheries.                                                                                                               
                                                                                                                                
The Magnuson  Stevens Act requires  balancing a lot  of different                                                               
interests   in  developing   policies.   Fisheries  is   complex;                                                               
typically, restricting  or limiting  one fishery  for one  set of                                                               
participants  provides  opportunities  for others.  The  Magnuson                                                               
Stevens Act  recognizes that by  requiring all of  these policies                                                               
to  balance a  range of  "national  standards." Four  of the  ten                                                               
standards  are: trying  to  achieve the  optimum  yield from  the                                                               
fishery,  providing  for  fair and  equitable  allocations  among                                                               
residents   of   various    states,   providing   for   sustained                                                               
participation in communities, and minimizing by-catch.                                                                          
                                                                                                                                
4:06:30 PM                                                                                                                    
MR. MERRILL used groundfish catch  as an example of the balancing                                                               
act. Groundfish  refers to basically anything  except for salmon,                                                               
shellfish, herring, and halibut. He  showed a chart of groundfish                                                               
catch in the  federal fisheries off of Alaska in  metric tons for                                                               
a  number of  years and  explained  that they  have attempted  to                                                               
ensure  that active  fishermen are  minimizing by-catch  and they                                                               
are doing a very good job  of that from a groundfish perspective.                                                               
Ninety eight percent of all  of the groundfish that are harvested                                                               
are  retained.  This  is  done through  a  variety  of  different                                                               
regulations.                                                                                                                    
                                                                                                                                
Key  to that  is  Alaska's very  robust  scientific and  research                                                               
program and  that includes  science and  research done  in Alaska                                                               
and what the federal government does  in terms of grants that are                                                               
active in  a lot of  these fisheries  research areas. One  of the                                                               
hall marks  of federal fisheries off  of Alaska is that  they are                                                               
very linked  to their science. That  isn't the case in  all areas                                                               
in the nation.                                                                                                                  
                                                                                                                                
MR.   MERRILL  stated   that  Alaska   has  the   most  effective                                                               
monitoring,  counting,  and  enforcement   systems.  It  has  the                                                               
largest at-sea observer program in  the nation; tens of thousands                                                               
of days are  observed on various vessels  throughout Alaska. That                                                               
provides very  essential information that  is used in  their day-                                                               
to-day management of  the fisheries. There are  limits on fishing                                                               
capacity and  on the total amount  of catch that is  allowed, and                                                               
those are  adhered to. Uncertainty  in state  management policies                                                               
is   recognized   by   having  precautionary   and   conservative                                                               
management. They  want to understand  the impacts of  habitat and                                                               
protections and how that can help all species moving forward.                                                                   
                                                                                                                                
4:09:33 PM                                                                                                                    
SENATOR VON IMHOF asked if the  U.S. has a way to monitor foreign                                                               
vessels that come into the Aleutians  or Bristol Bay right at the                                                               
200-mile mark. How do you handle that?                                                                                          
                                                                                                                                
MR. MERRILL  answered that NOAA  undertakes a  robust enforcement                                                               
process particularly  with the U.S.  Coast Guard and they  have a                                                               
monitoring  system to  ensure that  vessels  don't encroach  into                                                               
domestic waters.  No foreign  vessels are  authorized to  fish in                                                               
U.S.  waters.  So, if  a  vessel  were  to  cross over  into  our                                                               
exclusive economic zone  (EEZ) that would be a  violation of laws                                                               
that  could  be  prosecuted.  It is  relatively  rare,  but  they                                                               
certainly keep an eye on it.                                                                                                    
                                                                                                                                
4:10:36 PM                                                                                                                    
SENATOR HUGHES  asked how many  foreign vessels hover  within 100                                                               
miles of that 200-mile mark in any given year.                                                                                  
                                                                                                                                
MR. MERRILL answered  that it is difficult to know  because it is                                                               
such  a vast  amount of  ocean, but  they have  joint enforcement                                                               
agreements with Russia, Korea, and  Japan, and other nations that                                                               
border U.S. waters  in the North Pacific. For the  most part some                                                               
vessels, including  ours, will  fish close  to the  line, because                                                               
that happens to  be where the stock is, and  they are fishing off                                                               
their  allocations  that  are  provided  through  their  domestic                                                               
management bodies. It  is difficult to provide  a precise number,                                                               
but the  idea is to  better understand whether their  vessels are                                                               
increasing  the  amount of  activities  they  have near  Alaska's                                                               
waters. They  haven't seen a high  degree of interest, but  it is                                                               
monitored.                                                                                                                      
                                                                                                                                
4:12:00 PM                                                                                                                    
SENATOR HUGHES asked for a ballpark estimate.                                                                                   
                                                                                                                                
MR. MERRILL  estimated that  probably a  handful of  vessels fish                                                               
really  close to  the line,  primarily between  the U.S.  and the                                                               
Russian maritime boundary  for pollock. That varies  from year to                                                               
year.  Because they  are fishing  there doesn't  necessarily mean                                                               
that they  are encroaching into  U.S. waters; it could  simply be                                                               
that happens to  be where the stocks are.  Sometimes U.S. vessels                                                               
get close to the line, as well.                                                                                                 
                                                                                                                                
4:12:42 PM                                                                                                                    
SENATOR  MEYER  asked  how NOAA  monitors  these  activities;  by                                                               
satellite, by drones?  What jurisdiction do they  have if someone                                                               
is where they shouldn't be in our area?                                                                                         
                                                                                                                                
MR. MERRILL  answered that a  variety tools are  used: satellite,                                                               
overflights  with  the U.S.  Coast  Guard,  cutter presence,  and                                                               
reports from  the fleet  if they  see vessels  that are  near the                                                               
maritime boundary.  Some vessels use an  automatic identification                                                               
(AIS) system.                                                                                                                   
                                                                                                                                
4:13:31 PM                                                                                                                    
SENATOR MEYER asked what jurisdiction NOAA has.                                                                                 
                                                                                                                                
MR.  MERRILL  replied that  NOAA  has  a variety  of  enforcement                                                               
tools: the  domestic laws for  one -  the Lacey Act  and Magnuson                                                               
Stevens Act, for  instance. A number of these  countries are also                                                               
members of  various "regional fishery  management organizations,"                                                               
that have  agreed to certain  provisions and restrictions  on the                                                               
use of their vessels  in high seas. If they have  an issue with a                                                               
vessel  in  those cases,  then  they  can  bring  a case  to  the                                                               
domestic body  and address  it. They have  had some  success with                                                               
scrapping or  removing several vessels  from service  for various                                                               
infractions  that  have  occurred  over the  years.  This  is  an                                                               
agreement on an international basis, as well.                                                                                   
                                                                                                                                
Some of  the domestic agencies have  joint enforcement agreements                                                               
with NOAA,  he said. In  other words,  they would inform  NOAA if                                                               
they  witness  any  vessel  behaving  in  a  way  that  would  be                                                               
inconsistent with  their domestic  laws or  our domestic  laws if                                                               
that  vessel  were  to  transit back  into  their  waters.  Those                                                               
incidents can be pursued through these joint agreements.                                                                        
                                                                                                                                
4:14:59 PM                                                                                                                    
MR.  MERRILL  highlighted that  the  NPFMC  and NOAA  are  always                                                               
looking at ways  to innovate management. They have  a very robust                                                               
observer  program, and  one of  the  things the  Council and  the                                                               
federal government has  been responsive to and is  trying to find                                                               
better ways  to gather  at-sea information  that is  perhaps less                                                               
onerous  or  less  difficult  than   having  observers  on  board                                                               
vessels, which is  a concern for some of the  small-boat hook and                                                               
line fleets.  So, they  have developed  a series  of arrangements                                                               
with the  fleet to  have volunteers take  cameras on  board their                                                               
vessels to see whether some video  system could be used to detect                                                               
the specific species that are  being discarded at sea and measure                                                               
those to use the information in their day-to-day management.                                                                    
                                                                                                                                
They just published  yesterday a proposed rule that  will look at                                                               
ways to  enshrine this in regulations  that they hope to  have in                                                               
place for next  year to provide an opportunity for  some of these                                                               
small boats  to take a camera  instead of a human  on board. This                                                               
kind  of innovation  has allowed  Alaska to  be at  the forefront                                                               
with its  management by continuing to  look at ways to  work with                                                               
the stakeholders,  engage them in  finding solutions  to problems                                                               
that  they  have,  and  yet   at  the  same  time  recognize  the                                                               
importance of getting good data for management.                                                                                 
                                                                                                                                
4:16:38 PM                                                                                                                    
MR. MERRILL highlighted a few  places to look for information and                                                               
context on the variety of groups that are involved:                                                                             
-National   Oceanic   and   Atmospheric   Administration   (NOAA)                                                               
fisheries                                                                                                                       
-North Pacific Fisheries Management Council                                                                                     
-International Pacific Halibut Commission                                                                                       
                                                                                                                                
4:17:08 PM                                                                                                                    
SENATOR GIESSEL  thanked Mr.  Merrill for  his comments  and said                                                               
once  the seafood  is caught  how it  gets to  market is  another                                                               
issue. She invited Ms. Tonkovich to talk about ASMI.                                                                            
                                                                                                                                
4:17:53 PM                                                                                                                    
ALEXA  TONKOVICH, Executive  Director,  Alaska Seafood  Marketing                                                               
Institute (ASMI),  Juneau, Alaska,  said she  would give  a brief                                                               
overview of  how ASMI  brands the  Alaska seafood  commodity. She                                                               
would talk  about the Alaska  brand in the seafood  market place,                                                               
the global  factors impacting  the seafood,  sustainability, eco-                                                               
labels   and  marketing,   and  Alaska's   responsible  fisheries                                                               
management from a marketing perspective.                                                                                        
                                                                                                                                
4:18:10 PM                                                                                                                    
MS. TONKOVICH  said ASMI is a  public/private partnership between                                                               
the  Alaska  seafood  industry  and the  State  of  Alaska;  they                                                               
promote  all commercially  harvested seafood  from the  state and                                                               
they are the official promotional arm for the State of Alaska.                                                                  
                                                                                                                                
ASMI's current budget breakdown  demonstrates that they are truly                                                               
a public private  partnership and that ASMI is a  good example of                                                               
how  industry,  state,  and federal  governments  collaborate  to                                                               
promote a  U.S. product. ASMI  is currently receiving  money from                                                               
the State of Alaska general  fund and the Alaska seafood industry                                                               
through  a  voluntary assessment,  which  is  paid by  processors                                                               
through  the  State Department  of  Revenue.  ASMI also  receives                                                               
federal  funding through  the  U.S.  Department of  Agriculture's                                                               
(USDA)  Market  Access  Program,   a  federal  grant  which  ASMI                                                               
competes  for annually.  The funding  goes  towards promotion  of                                                               
U.S. agricultural commodities in international markets.                                                                         
                                                                                                                                
4:19:23 PM                                                                                                                    
MS. TONKOVICH said ASMI is part  of a network of commodity boards                                                               
and industry  associations who  also compete  for the  USDA grant                                                               
funding  and  who also  promote  U.S.  goods overseas.  Some  are                                                               
public private  partnerships with their state,  like ASMI. Others                                                               
are  primarily  industry  driven.  They all  share  the  goal  of                                                               
raising the  economic value of  their goods and  promoting state,                                                               
country,  and commodity  brand and  ASMI collaborates  with these                                                               
commodity groups and combines resources whenever it can.                                                                        
                                                                                                                                
MS. TONKOVICH said  ASMI is the brand manager  for Alaska seafood                                                               
and they aim to promote that  brand in the United States, as well                                                               
as  27   other  countries.  While   they  strive  to   have  some                                                               
consistency  in their  brand, the  same messaging  attributes and                                                               
aesthetic  does   not  work  in  every   market.  Through  market                                                               
research,   in-country  expertise   and   close  alignment   with                                                               
partners,  they  strive  to  find a  message  and  a  promotional                                                               
vehicle to suit each market  and market segment. They use several                                                               
different platforms;  ecommerce, in-store retail  promotions, and                                                               
consumer advertising social media.                                                                                              
                                                                                                                                
4:20:46 PM                                                                                                                    
She said ASMI  uses many traditional means to  promote the Alaska                                                               
seafood  brand like  print advertising  and in-store  promotions,                                                               
but thanks to the digital age  there are new, exciting, and often                                                               
less expensive  ways to  reach millions  of consumers  with their                                                               
messaging.  E-commerce  is  quickly  becoming the  new  way  that                                                               
consumers shop for  groceries, particularly in Asia,  but also in                                                               
parts of Europe and in the U.S.                                                                                                 
                                                                                                                                
Social media  has changed  the marketing  landscape, as  well. On                                                               
the first  "Alaska Wild  Salmon Day" in  August, ASMI  engaged in                                                               
almost  exclusively on-line  promotional activities.  They didn't                                                               
hold an in-person event and  didn't pay for any advertising. They                                                               
used public  relations and primarily  digital promotions  such as                                                               
snap-chat in highlighting  the event on their  social media. This                                                               
was a lower cost effort  than traditional promotion and they were                                                               
still able to generate 94 million consumer impressions.                                                                         
                                                                                                                                
4:21:47 PM                                                                                                                    
MS.  TONKOVICH  said  ASMI  works  with  a  number  of  different                                                               
partners  to  promote  the  Alaska   brand  and  customize  their                                                               
promotional efforts to build on  the strong brand equity of these                                                               
partners leveraging their  budgets in addition to  ASMI's as well                                                               
as their customer base and media channels.                                                                                      
                                                                                                                                
That ASMI  and the Alaska  industry has spent years  building the                                                               
strength  of  the Alaska  brand,  particularly  in the  U.S.,  is                                                               
apparent.  In  2015, for  the  first  time ever,  Alaska  seafood                                                               
became the number  one brand among proteins on  U.S. menus. "This                                                               
is the first  time we have ever managed to  beat Angus beef," she                                                               
exclaimed.                                                                                                                      
                                                                                                                                
Each year  ASMI conducts consumer  research in most of  its major                                                               
markets and  the latest  U.S. research found  that 94  percent of                                                               
consumers are  more likely to  order seafood in  restaurants when                                                               
the word "Alaska" is used. These  numbers aren't quite as high in                                                               
international markets where Alaska has  a less familiar origin to                                                               
consumers.                                                                                                                      
                                                                                                                                
4:22:48 PM                                                                                                                    
MS. TONKOVICH  said ASMI's primary focus  is to add value  to the                                                               
Alaska brand. However,  many things that impact the  value of the                                                               
seafood are outside of their  control. A strong U.S. dollar makes                                                               
Alaska's  products  more  expensive compared  to  competitors  in                                                               
overseas markets. It  also makes the U.S. market  a desirable one                                                               
for imported  seafood. And Alaska  faces fierce  competition from                                                               
farmed  and imported  seafood as  well as  other protein  sources                                                               
because  the  wild  harvest is  unpredictable.  Things  like  the                                                               
Russian  embargo  enacted in  2014  closed  off our  largest  roe                                                               
market  and diverted  farmed  salmon into  our  major markets  in                                                               
Europe and the U.S.                                                                                                             
                                                                                                                                
MS. TONKOVICH  said sustainability  has long been  a part  of the                                                               
Alaska  brand. However,  the  ways in  which  they have  messaged                                                               
around this  topic have changed  in the  last decade and  a half.                                                               
Around  the year  2000, the  failure of  the EU  common fisheries                                                               
policy led  to a  collapse in  EU fishery  stocks, 80  percent of                                                               
which were over fished. This  prompted a fisheries sustainability                                                               
movement   and   the    heightened   role   of   non-governmental                                                               
organizations (NGOs)  in sustainability. Wild  capture fisheries,                                                               
like  Alaska  seafood,  have  been  on  the  forefront  of  these                                                               
sustainability measures and are  decades ahead of other fisheries                                                               
and commodity groups.                                                                                                           
                                                                                                                                
4:24:40 PM                                                                                                                    
The fishery sustainability  movement led to the  formation of the                                                               
Marine Stewardship  Council (MSC)  which is  backed by  the World                                                               
Wildlife Foundation.  It was formed  to bring market  pressure on                                                               
companies  to support  sustainability.  MSC needed  a fishery  to                                                               
showcase this movement and Alaska  salmon was the natural choice.                                                               
Alaska   saw   a   competitive   advantage   in   marketing   its                                                               
sustainability  and  so the  ADF&G  signed  on  with the  MSC  to                                                               
certify Alaska salmon.                                                                                                          
                                                                                                                                
Prior   to  MSC   certification   ASMI   was  already   marketing                                                               
sustainability, Ms.  Tonkovich said, particularly in  places like                                                               
the   U.K.,  the   U.S.,  and   Germany.   After  receiving   MSC                                                               
certification, ASMI  began to use  certification language  in its                                                               
marketing  efforts  and  was  able  to  capture  some  additional                                                               
promotional efforts  through MSC-themed activities;  other Alaska                                                               
species followed suit in gaining this certification.                                                                            
                                                                                                                                
As MSC  grew globally,  ASMI began  to see  it replace  Alaska on                                                               
packaging, in-stores, and in advertising.  ASMI felt some erosion                                                               
of  the Alaska  brand, because  now  Alaska salmon  would be  MSC                                                               
salmon. And  as MSC  has expanded to  include fisheries  that are                                                               
making progress  toward but being  not fully  sustainable, Alaska                                                               
fisheries were then grouped in with that broader group.                                                                         
                                                                                                                                
The Marine Stewardship Council (MSC)  has taken hold particularly                                                               
in  Europe  and  is  aggressively  expanding  to  other  markets.                                                               
Despite  Alaska's track  record on  sustainability, certification                                                               
is a requirement in most of  those markets and most customers are                                                               
now demanding  third party verification of  sustainability. Given                                                               
that certification  is increasingly necessary for  market access,                                                               
she said, the  industry and customers expressed the  need to have                                                               
a choice  in certification  programs, and  so ASMI  developed the                                                               
Alaska Responsible Fisheries Management Certification (RFM).                                                                    
                                                                                                                                
4:26:15 PM                                                                                                                    
MS. TONKOVICH  explained that RFM  is an  independent third-party                                                               
certification of Alaska's  seafood sustainability. Alaska salmon,                                                               
halibut, black cod,  pollock, cod, and crab are  all certified by                                                               
this standard, which is owned by  the ASMI board. RFM is based on                                                               
the United  Nations Food and Agriculture  Organization (FAO) code                                                               
and guidelines.                                                                                                                 
                                                                                                                                
4:26:36 PM                                                                                                                    
MS. TONKOVICH said fisheries  management and certification, which                                                               
is  the  focus of  the  RFM  program,  are  only two  aspects  of                                                               
sustainability,  which is  an evolving  topic.  Alaska does  very                                                               
well  with  its fisheries  management  thanks  to the  state  and                                                               
federal  regulatory agencies  and certification  is available  to                                                               
major Alaska fisheries both through  the RFM and the MSC. Another                                                               
part  of  sustainability  is   full  utilization.  ASMI  supports                                                               
industry  efforts through  their  technical  program and  through                                                               
supportive  programs   initiated  by   groups  like   the  Alaska                                                               
Fisheries  Development Foundation.  Social responsibility  is the                                                               
coming trend  in sustainability,  and again  the U.S.  has strong                                                               
regulatory  agencies to  manage  this.  It's not  a  part of  the                                                               
Alaska RFM  program and  it is  not known  how these  trends will                                                               
affect Alaska.                                                                                                                  
                                                                                                                                
More broadly,  to many, sustainability is  about fishing families                                                               
and communities. Alaska's fisheries are  well managed so that the                                                               
resource will be  available for next generations and  so that the                                                               
Alaska industry  will continue to  support our  communities. This                                                               
is an important  part of the Alaska  story and a key  part of its                                                               
brand.                                                                                                                          
                                                                                                                                
4:27:47 PM                                                                                                                    
MS. TONKOVICH  said choice in certification  isn't just important                                                               
to  Alaska,   other  FAO-based  programs  have   gained  momentum                                                               
worldwide.  Iceland  and  Louisiana   have  similar  programs  to                                                               
Alaska's that  are fully operational.  Australia and  New Zealand                                                               
are  conducting feasibility  studies, and  Canada and  Japan have                                                               
expressed interest in forming similar FAO-based programs.                                                                       
                                                                                                                                
4:28:09 PM                                                                                                                    
MS. TONKOVICH  said they are  very proud of  Alaska's responsible                                                               
fisheries management  program, as  it is the  first certification                                                               
to   successfully   benchmark   against  a   globally   developed                                                               
benchmarking  standard  through  the Global  Sustainable  Seafood                                                               
Initiative (GSSI),  a platform to streamline  sustainable seafood                                                               
sourcing  worldwide. Major  companies  have signed  on that  they                                                               
will  accept  certifications that  are  benchmarked  by GSSI.  In                                                               
fact,  Walmart announced  that  it is  changing  to include  GSSI                                                               
certifications.                                                                                                                 
                                                                                                                                
4:28:44 PM                                                                                                                    
MS. TONKOVICH  said issues of  social responsibility  and ethical                                                               
harvesting  practices are  the coming  waves  in the  sustainable                                                               
movement. This  is in part  to recent headlines about  poor labor                                                               
practices in other fisheries. Many  major customers are beginning                                                               
to  feel at  risk  and are  requesting  more formal  assessments,                                                               
which  will place  an  additional demand  on  Alaska industry  to                                                               
demonstrate its  responsible practices. This is  outside Alaska's                                                               
RFM program and ASMI will look  to industry as it crafts messages                                                               
on these topics.                                                                                                                
                                                                                                                                
4:29:24 PM                                                                                                                    
SENATOR HUGHES  asked at what  point the RFM  certification takes                                                               
place.                                                                                                                          
                                                                                                                                
MS.  TONKOVICH  answered  that the  RFM  certifies  major  Alaska                                                               
fisheries,  so  the  fishery  itself  is  certified,  and  anyone                                                               
selling  seafood can  say it  is  certified sustainable  seafood.                                                               
There is also  a mechanism through which people can  get chain of                                                               
custody, so  they can have an  audit of the fish  from the moment                                                               
it's caught to when it is processed and sold in a grocery store.                                                                
                                                                                                                                
4:30:09 PM                                                                                                                    
SENATOR VON  IMHOF asked what the  additional cost to ASMI  is to                                                               
do this.                                                                                                                        
                                                                                                                                
MS. TONKOVICH clarified  that the RFM program is  managed by ASMI                                                               
and has a budget of $1 million per year.                                                                                        
                                                                                                                                
4:30:51 PM                                                                                                                    
SENATOR GIESSEL  thanked Ms. Tonkovich  and welcomed Mr.  Wink to                                                               
the table.                                                                                                                      
                                                                                                                                
4:31:08 PM                                                                                                                    
ANDY WINK, Seafood Economist,  McDowell Group, Anchorage, Alaska,                                                               
said  McDowell Group  has  been a  research  contractor for  ASMI                                                               
since  1998. It  tracks market  conditions, informs  industry and                                                               
buyers   about  key   trends,   submits   ASMI's  federal   grant                                                               
application  for  MAP  funds, and  supports  all  ASMI's  various                                                               
programs with data and strategic  consulting services. Beyond its                                                               
work  with  ASMI,  the  McDowell  Group has  a  long  history  of                                                               
studying  economic impacts  in  the  seafood industry,  outlining                                                               
market conditions,  and working on economic  development projects                                                               
for dozens of clients throughout the state.                                                                                     
                                                                                                                                
In addition  to seafood,  they provide  research services  to the                                                               
oil and gas, and the  mining industry, health care, Alaska Native                                                               
organizations,   the  maritime   support  sector,   as  well   as                                                               
government agencies.                                                                                                            
                                                                                                                                
MR.  WINK   said  slide  2  graphed   "Alaska  Seafood  Marketing                                                               
Institute  Volume  and  Value by  Species  (2011-2015)"  with  an                                                               
emphasis  on   coastal  impacts.   He  said  it's   important  to                                                               
understand where the  value and the volume comes  from. The graph                                                               
included all  commercial seafood harvest and  its ex-vessel value                                                               
(the  value of  the fish  as it  goes from  the fisherman  to the                                                               
processors).  He explained  that some  catcher-processors process                                                               
seafood  on the  same boat  it was  caught. In  those situations,                                                               
they use an  imputed ex-vessel price. Most of  the harvest volume                                                               
is dominated  by pollock,  cod, and  Amendment 80  (A80) species,                                                               
which includes mackerel, sole and  flounder, and rock fish. Those                                                               
three pieces  of pie are about  81 percent of the  volume and are                                                               
primarily federally managed fisheries.                                                                                          
                                                                                                                                
On the value side, the pieces  are much smaller, about 42 percent                                                               
between the three.  The way to look  at this is: yes,  we catch a                                                               
lot  of  high-volume low-value  ground  fish,  but the  value  is                                                               
represented by  a very diverse  portfolio of species.  Frankly, a                                                               
lot of  states would count themselves  lucky to have just  one of                                                               
these  pie slices.  Alaska accounts  for 62  percent of  the U.S.                                                               
harvest  volume;  no  one  else comes  close  to  producing  that                                                               
volume. Halibut,  black cod, and crab  is less than 3  percent of                                                               
the  overall  volume, but  almost  over  a quarter  of  ex-vessel                                                               
value.                                                                                                                          
                                                                                                                                
4:34:58 PM                                                                                                                    
MR. WINK  showed a graph  of production by product  type averaged                                                               
over 2013  and 2014,  because some years  can shift  depending on                                                               
the species that  are caught. It basically  indicates that Alaska                                                               
produces mostly  primary and intermediate  products. So,  most of                                                               
our  production   will  be  sold   to  secondary   processors  or                                                               
distributors,  and  those  buyers  also buy  species  from  other                                                               
fishery producers and other aquaculture  companies. So, Alaska is                                                               
definitely competing in a global market place.                                                                                  
                                                                                                                                
He also noted  that a lot of Alaska  production (about two-thirds                                                               
of Alaska's  seafood value) comes  from foreign markets.  Most of                                                               
the value  from filets  comes from pollock,  not salmon.  Most of                                                               
the headed  and gutted  (H&G) value  comes from  salmon, halibut,                                                               
black cod, as well as Pacific cod.                                                                                              
                                                                                                                                
4:36:27 PM                                                                                                                    
MR. WINK said  slide 4 breaks down the ex-vessel  value by Alaska                                                               
residents  versus  non-residents. Non-residents  out-earn  Alaska                                                               
residents  overall,  but it  depends  on  which species  you  are                                                               
talking  about. In  the federally  managed  fisheries, the  high-                                                               
volume ground fish tends to  be more non-resident whereas salmon,                                                               
halibut,  and  black  cod  tend to  have  higher  percentages  of                                                               
resident earnings.                                                                                                              
                                                                                                                                
So, when one  thinks about the Alaska fleet and  the seafood that                                                               
matters to it  and what drives the value for  that group, that is                                                               
represented by another  pie chart where salmon is  almost half of                                                               
the Alaska resident fleet's value.                                                                                              
                                                                                                                                
4:37:31 PM                                                                                                                    
MR.  WINK said  slide  5  graphs the  ex-vessel  value over  time                                                               
(inflation  adjusted  in  billions  of dollars)  using  the  U.S.                                                               
dollar index.  Back in  the early  2000 Alaska  had a  real value                                                               
crisis  when  companies  and  fishermen  went  out  of  business,                                                               
especially in salmon harvesting. A lot  of that was driven by the                                                               
strong U.S. dollar at the time.  There was also the misfortune of                                                               
having relatively  poor salmon  runs in 2002  and 2003.  But that                                                               
salmon crisis led to a lot  of investment and innovation, and the                                                               
entire  industry really  got better.  The products  improved, and                                                               
the  efficiency improved,  and  as  a result  value  went up.  An                                                               
important "tailwind" happened at that  time in a weakening dollar                                                               
(2000 -  2011) making the  value of the  fish go up.  It probably                                                               
would have continued  the same trajectory, but 2010  and 2009 had                                                               
very low pollock  harvests.  But since 2011,  things have shifted                                                               
and the values  in the fisheries have declined, at  the same time                                                               
being driven by the stronger dollar.                                                                                            
                                                                                                                                
So,  in  general, a  weak  dollar  and  low  index, is  good  for                                                               
Alaska's fishing economy:  a strong dollar is bad.  It just means                                                               
that  it  takes more  foreign  currency  for  buyers to  buy  our                                                               
products.                                                                                                                       
                                                                                                                                
He  pointed  out  that  even  this  chart  says  a  lot,  but  it                                                               
understates   the  difference   in   market  conditions   between                                                               
2001/2002 and 2015. In early 2000,  the Russian ruble was quite a                                                               
bit stronger;  the ruble  in 2015 is  actually 49  percent weaker                                                               
than  it  was in  2002.  That  was  particularly bad  for  Alaska                                                               
because Russia  catches a  lot of  the same  species that  we do.                                                               
They have  also seen  larger harvests of  pollock, up  96 percent                                                               
since 2002. Their harvest of  chum/sockeye/pink salmon are all up                                                               
dramatically.                                                                                                                   
                                                                                                                                
Alaska has also faced more  competition from things like Atlantic                                                               
cod. Between  2002 and 2015 Atlantic  cod went up 44  percent and                                                               
farmed Atlantic  salmon went  up 119 percent.  At the  same time,                                                               
halibut and  black cod -  the two  high-value species -  have had                                                               
their harvest volume drop 56  percent. So, even though the dollar                                                               
index was  technically higher  back in the  early 2000,  a strong                                                               
case  can  be made  that  market  conditions  now are  even  more                                                               
difficult for Alaska seafood producers.                                                                                         
                                                                                                                                
4:41:41 PM                                                                                                                    
MR. WINK,  page 6,  said the strong  dollar isn't  just affecting                                                               
Alaska seafood,  it's also affecting its  two-other major natural                                                               
resource  industries: oil/gas,  and minerals.  Seafood volume  is                                                               
down 8  percent since 2011 through  2015 and we have  had a first                                                               
wholesale  (when a  product gets  sold  from the  processor to  a                                                               
buyer) value  change of an  8 percent decline (from  $4.6 billion                                                               
in 2011 to $4.25 in 2015).                                                                                                      
                                                                                                                                
Other industries  have been impacted  by the strong  dollar, too,                                                               
as well as other factors. Oil  is down from $16.3 billion to $5.6                                                               
billion, a 59  percent decrease. Minerals, mainly  gold and zinc,                                                               
are  down from  $3.5 billion  to $2.6  billion. In  this context,                                                               
seafood is not the only one being hit by "this currency truck."                                                                 
                                                                                                                                
4:43:06 PM                                                                                                                    
MR. WINK referred  to slide 7 and said each  year the total value                                                               
is going  to be driven  by the catch  volume and what  it's worth                                                               
and there are  important changes over time in  harvest volumes of                                                               
different  species. The  main  species to  pick  out are  salmon,                                                               
halibut and black cod, about  a $300 million loss. Basically, the                                                               
catch is down from 2011  even with slightly higher prices. Salmon                                                               
had a  larger harvest in  2015, but prices collapsed,  partly due                                                               
to the large  harvest, but also due to the  strong dollar and the                                                               
fact  that  it was  hard  to  find  competitive buyers  for  some                                                               
species  for several  reasons. In  the end,  the ex-vessel  value                                                               
went to 27  percent since the peak in 2011.  That isn't good, but                                                               
considering that  the dollar index  gained 27 percent,  that puts                                                               
it in the appropriate context.                                                                                                  
                                                                                                                                
4:44:46 PM                                                                                                                    
MR. WINK  referred to  slide 8  and said  the question  is always                                                               
what is  going to happen this  year. And there is  good reason to                                                               
believe the value  might increase for the first time  in a while.                                                               
This year the  salmon forecast is better: pinks are  way up after                                                               
an historically poor run last  year; the sockeye forecast is down                                                               
next year  but prices  are building, and  demand is  building for                                                               
that. So, salmon values are expected to rebound in 2017.                                                                        
                                                                                                                                
The pollock harvest is expected to  be down in the Gulf of Alaska                                                               
and overall. There is more downside  with pollock in terms of the                                                               
value and  they think it will  probably be flat depending  on how                                                               
the roe  harvest and  roe markets  go. Last year  was a  poor roe                                                               
yield for  pollock. A  lot of  pollock were  caught, but  the roe                                                               
yield wasn't there.                                                                                                             
                                                                                                                                
Halibut and black  cod quotas are up a little  bit, not near they                                                               
were  historically, but  trending in  the right  direction. There                                                               
are strong  prices, so they expect  value to be up  for that. Cod                                                               
and flat fish both have  seen better pricing, both slightly lower                                                               
tax. One  thing about expecting  less harvest from  pollock, cod,                                                               
and flat fish,  is that the biomass and the  biological health of                                                               
these  species in  the  Bering Sea  is doing  very  well and  the                                                               
acceptable  biological catch  in the  Bering Sea  for all  ground                                                               
fish is over 4 million metric  tons. However, there is a hard cap                                                               
in the  Bering Sea of 2  million metric tons. So,  no matter what                                                               
the  biomass  is  there,  and   how  much  they  think  they  can                                                               
successfully  catch, the  rule is  not  to cross  that 2  million                                                               
metric ton threshold.                                                                                                           
                                                                                                                                
4:47:29 PM                                                                                                                    
MR.  WINK said  slide  9 presented  a table  of  the fishing  and                                                               
processor workers  that were down  a little bit over  all looking                                                               
at  the  difference between  the  peak  in  2011 and  2015  data.                                                               
Similarly,  slide 10  presented a  table for  skipper counts  and                                                               
gross earnings  by resident versus  non-resident and  indicates a                                                               
bigger impact on residents.                                                                                                     
                                                                                                                                
4:48:13 PM                                                                                                                    
Slide 11  summarized fishing  employment and  earnings. Declining                                                               
ex-vessel value  has had a  larger impact on the  resident fleet,                                                               
both in  terms of  employment and  gross earnings.  This resident                                                               
fleet  has  more  exposure  to   salmon  and  generally  includes                                                               
smaller,  less  efficient  boats,  which  are  impacted  more  by                                                               
pricing. Then  it depends on which  fishery gets hit with  a poor                                                               
harvest from year to year.                                                                                                      
                                                                                                                                
4:48:42 PM                                                                                                                    
MR. WINK said slide 12  graphed ex-vessel value by Alaska regions                                                               
in 2013/2014  to see  where fishing  dollars go:  Southcentral is                                                               
the largest  followed by Southeast  and then Kodiak.  Even though                                                               
those three  are the largest  in terms of  the piece of  pie, the                                                               
impacts and the money that goes  to Western Alaska and Kodiak, as                                                               
well, is  proportionately larger than Southcentral  and Southeast                                                               
with  the lower  populations  there. It  is a  huge  part of  the                                                               
Western Alaska economy  given that the pies  for Southcentral and                                                               
Southeast are so much larger.                                                                                                   
                                                                                                                                
4:49:39 PM                                                                                                                    
MR. WINK said  slide 13 charts how this  industry impacts coastal                                                               
and rural areas in terms  of permit holders, active skippers, and                                                               
two  categories for  non-ground  fish  ex-vessel value  comparing                                                               
2011 vs. 2016 and 2011 vs.  2015.  Basically, they have seen less                                                               
participation and less employment,  but the gross earnings really                                                               
took a hit from 2011 to 2015/16.                                                                                                
                                                                                                                                
4:50:25 PM                                                                                                                    
MR.  WINK said  lower employment  and lower  revenues results  in                                                               
less residual economic impacts due  to spending and taxes.  While                                                               
the values grew  permit values also grew, as well  as boat values                                                               
and quota values.  So, a lot of things got  more expensive in the                                                               
fisheries and  then things started  to cool down. In  some cases,                                                               
prices  have  come  down,  but   in  most  cases,  they  haven't.                                                               
Fishermen have less revenue, but they still have big bills.                                                                     
                                                                                                                                
The lower  values also  resulted in a  balance sheet  hit. Salmon                                                               
permit values  are something that  can be tracked, and  the total                                                               
value of Alaska  salmon fishing permits fell 21  percent in 2016,                                                               
a loss  of $175 million  basically off  of the balance  sheets of                                                               
commercial fishermen. Alaska residents  bore over $100 million of                                                               
that. Basically,  they are seeing  contraction and less  value in                                                               
both 2015 and  2016, and a significantly lower  harvest volume in                                                               
2016.                                                                                                                           
                                                                                                                                
4:51:51 PM                                                                                                                    
MR. WINK referenced slide 15,  and said current market trends are                                                               
low  prices for  Alaska pollock  filets and  that is  usually the                                                               
largest  pollock product.  Industry  is  competing fiercely  with                                                               
Russian product, which  is typically sent to  China and processed                                                               
and  then resold  as a  twice-frozen product.  Encouraging things                                                               
have been seen in terms of  marketing of once frozen versus twice                                                               
frozen due to  superior quality and hope  that continues, because                                                               
that has been a very beleaguered product.                                                                                       
                                                                                                                                
Low salmon prices have been seen  for a couple of years, but that                                                               
in  addition to  the ASMI's  work  has really  been important  in                                                               
building  demand for  salmon and  cod,  specifically sockeye  and                                                               
cod. Tremendous in-store demonstrations  and promotions have been                                                               
done  throughout   the  U.S.  and   they  are  really   making  a                                                               
difference.                                                                                                                     
                                                                                                                                
Crab prices are at record levels  and there is low tax, but there                                                               
are some mixed results of  good fishing where they thought stocks                                                               
were lower,  but fishermen  are still finding  the crab.  We have                                                               
strong prices and better halibut  and black cod quotas, so that's                                                               
a plus.  Retailers overall  are finding  that consumer  demand is                                                               
fitting  more  and more  each  year  with what  Alaska's  seafood                                                               
attributes are. This is really encouraging going forward.                                                                       
                                                                                                                                
On  the flip  side, Russia  still has  a very  favorable currency                                                               
situation;  it makes  their cost  of production  much lower  than                                                               
Alaska's. Companies over  there can really turn  out high quality                                                               
salmon, pollock,  and crab, and Alaska  must figure out a  way to                                                               
beat  them  in  the  marketplace.  In some  cases  that  will  be                                                               
difficult.                                                                                                                      
                                                                                                                                
MR. WINK said pollock roe  is another beleaguered pollock product                                                               
where supply  has grown  faster than demand  for years,  and that                                                               
has  resulted  in  very low  prices.  Historically,  the  pollock                                                               
fishery  really depended  on roe,  because it  was a  high margin                                                               
product  and paid  a  lot of  the  bills. That  is  not the  case                                                               
anymore.  These  are some  of  the  big  things the  industry  is                                                               
facing. He closed by asked for questions.                                                                                       
                                                                                                                                
4:54:48 PM                                                                                                                    
SENATOR  GIESSEL,  finding  no questions,  thanked  him  for  his                                                               
presentation and began taking industry presentations.                                                                           
                                                                                                                                
4:55:22 PM                                                                                                                    
NICOLE  KIMBALL, Pacific  Seafood Processors  Association (PSPA),                                                               
Anchorage, Alaska, showed a map  of the nine communities in which                                                               
shore-side processing plants are  located and explained that like                                                               
other trade  associations for other  resource industries  a group                                                               
of people came  together over 100 years ago  for this association                                                               
and decided there  were enough statewide and  federal issues that                                                               
they  could collaborate  on and  have  an interest  in that  they                                                               
could work  together on some of  them. That is what  PSPA does in                                                               
addition  to just  trying foster  a better  understanding of  the                                                               
seafood industry and its importance to Alaska.                                                                                  
                                                                                                                                
4:56:48 PM                                                                                                                    
MS. KIMBALL said  these member companies have  about 31 different                                                               
shore-side  plants  and  two companies  have  floating  processor                                                               
vessels  that only  buy seafood  and process  it on  shore. These                                                               
companies purchase,  process, and market hundreds  of millions of                                                               
pounds  of  pollock,  cod,  halibut,  sable  fish,  and  all  the                                                               
fisheries  they have  heard about  today. They  are dependent  on                                                               
state  water fisheries  and federal  fisheries,  large boats  and                                                               
small.                                                                                                                          
                                                                                                                                
4:57:43 PM                                                                                                                    
MS.  KIMBALL said  she wouldn't  cover  the previously  discussed                                                               
issues, but  focus on  seafood value:  $4.2 billion  in wholesale                                                               
value  for all  the  seafood off  Alaska  annually. We  typically                                                               
harvest  between  5 and  6  billion  pounds annually  under  very                                                               
conservative  management.  It's  important because  it  generates                                                               
almost  $6 billion  in economic  activity in  Alaska every  year.                                                               
Domestic  markets are  very important  and  key when  there is  a                                                               
strong dollar, but  some of the export markets  are very critical                                                               
for  specific species.  Alaska makes  up 55  percent of  all U.S.                                                               
seafood exports.                                                                                                                
                                                                                                                                
She showed a chart of  important species illustrating that Alaska                                                               
is in  a global fish market.  The very tallest bar  in 2015 shows                                                               
that the  global salmon  market is  dominated by  farmed Atlantic                                                               
salmon.  Wild salmon  is what  Alaska provides  and that  is only                                                               
about 28 percent  of the supply. This  makes Alaska price-takers,                                                               
which means  we don't  have enough market  share to  really drive                                                               
prices. This means  we are linked to global price  trends. So, as                                                               
aquaculture or farmed  supply increases, Alaska is  linked to any                                                               
price trends that they create.  It's very important to understand                                                               
that  Alaska is  a  salmon  state, and  salmon  creates the  most                                                               
economic  activity in  Alaska.  So, all  fisheries,  in terms  of                                                               
jobs, income and  total value among all species  (from Mr. Wink's                                                               
presentation) make up  one-third of the total  wholesale value of                                                               
all  fish species  off Alaska.  It's important  to know  where we                                                               
fall in the global market.                                                                                                      
                                                                                                                                
4:59:00 PM                                                                                                                    
Pollock is  another situation that has  competing products (white                                                               
fish products). Tilapia  is one of those. One can  see the global                                                               
tilapia supply is  about 5 million metric tons,  and that greatly                                                               
outweighs  Alaska's total  pollock supply  of 3.5  million metric                                                               
tons. Even the growth in some  of these farmed white fish species                                                               
markets  outweighs the  total pollock  supply from  wild sources.                                                               
That creates a  big strain on harvesters and  processors that are                                                               
dependent  on  pollock.  The  market is  depressed  and  it's  in                                                               
terrible  shape  for  all  the reasons  they  have  heard  today:                                                               
competition,  market increase  in  Russian  production, a  strong                                                               
dollar, and  a Russian embargo to  the point that the  U.S. can't                                                               
export fish to Russia, but Russia can export fish into the U.S.                                                                 
                                                                                                                                
This  is significant  to Alaska  because pollock  is the  state's                                                               
highest  volume  fishery.  It   has  long  seasons  and  supports                                                               
activity in a  lot of different communities  with processors from                                                               
the Pribiloff Islands,  the Alaska Peninsula, and  Gulf of Alaska                                                               
communities  like  Kodiak, King  Cove,  and  Sand Point,  not  to                                                               
mention Dutch Harbor.  Pollock has the volume  to keep processing                                                               
plants  in  some  communities operating  nearly  year-round,  and                                                               
that's important  for job growth.  Like salmon, pollock  makes up                                                               
about one-third of  the first wholesale value of  all seafood off                                                               
Alaska; between  pollock and salmon  that's two-thirds,  which is                                                               
why she uses them as examples.                                                                                                  
                                                                                                                                
MS.  KIMBALL noted  that the  Department of  Labor and  Workforce                                                               
Development (DOLWD) came out with  their unemployment rate of 6.4                                                               
percent  for February.  Unemployment fell  in 10  different areas                                                               
across  the state  and  the regions  with  winter fisheries,  the                                                               
ground fish fisheries, had the lowest unemployment rates.                                                                       
                                                                                                                                
5:01:04 PM                                                                                                                    
MS. KIMBALL  said she was really  asked to talk about  the key to                                                               
seafood being control  of supply. Buyers want to  commit to those                                                               
processing  companies  that they  trust  to  follow through  with                                                               
supply and they only want to  invest in species that are reliably                                                               
available.   So,  generally   that  combination   -  volume   and                                                               
reliability -  puts Alaska in  a unique position despite  all the                                                               
other  market challenges.  In  these  highly competitive  markets                                                               
from  species that  have a  controllable supply  and low  cost of                                                               
production,  the   value  is  added  to   Alaska's  seafood  with                                                               
investment in marketing, production, and management.                                                                            
                                                                                                                                
At each  step of  the supply  chain everyone  is adding  money to                                                               
increase the value. Harvesters and  processors clearly have "sunk                                                               
costs." Even  though last  year saw a  terrible pink  salmon run,                                                               
everybody still had to make  their boat payment, have crew ready,                                                               
and  processing plants.  When the  fish  don't materialize  those                                                               
costs  are lost.  Retailers and  food services  are a  little bit                                                               
different. They  have sunk costs,  as well, but they  aren't tied                                                               
to a specific species or specific  product. They can walk away to                                                               
some other species or product.                                                                                                  
                                                                                                                                
5:02:28 PM                                                                                                                    
MS.  KIMBALL said  Alaska  competes by  pushing  out new  product                                                               
development to  find new seafood  products that major  buyers are                                                               
going to  want to push out  to their consumers. So,  creating new                                                               
fish  consumers is  a major  objective all  the time.  She listed                                                               
some of  the domestic buyers  indicating that a strong  dollar is                                                               
putting more emphasis on domestic  markets. The main message from                                                               
this slide  is because Alaska  doesn't have the  marketing budget                                                               
to move  the whole  needle on  U.S. seafood  demand, it  needs to                                                               
leverage  the marketing  budgets of  these major  buyers to  tell                                                               
that story  for us.  In other  words, we need  them to  use their                                                               
marketing  budgets to  say  why Alaska  seafood  and Alaska  wild                                                               
seafood  is the  best  product. A  foot-long  wild caught  Alaska                                                               
pollock is a new product from  Subway; it's in 1,000 stores. That                                                               
took  two years  of research  and  development by  one of  PSPA's                                                               
processing company members. Alaska pollock  is coated in sea salt                                                               
and pepper breading; it's precooked  (to meet the customer's food                                                               
safety   requirements),   but   the  marketing   around   it   is                                                               
interesting: it's no  longer a "fish" sandwich;  it's wild caught                                                               
Alaska  pollock, recognizing  that  pushing the  Alaska brand  is                                                               
good for  them in selling more  fish. She showed a  short YouTube                                                               
video  of a  McDonald's  Filet-O-Fish, a  product  that has  been                                                               
around  for  50  years,  but they  changed  the  marketing.  That                                                               
happened because one of their  companies got McDonald's buyers to                                                               
physically  come out  and go  on these  boats and  experience the                                                               
fishery.   So,  now   they  are   using   the  fishery,   fishery                                                               
participants,  crew  members, and  social  media  to market  that                                                               
Alaska fish.                                                                                                                    
                                                                                                                                
5:03:20 PM                                                                                                                    
MS.  KIMBALL  said  she  was   also  asked  to  talk  about  some                                                               
investments  in operations  and facilities.  There are  a lot  of                                                               
demands on  the industry to  keep up with  current infrastructure                                                               
and a lot of the infrastructure is  aging at the same time. As an                                                               
example,  in  the  past  they  have  heard  there  is  a  lot  of                                                               
investment in  new technology  such as  filet and  vacuum packing                                                               
machines, moving more  from the canned salmon  world into filets.                                                               
That continues to  happen. There has been a lot  of investment in                                                               
salmon  oil extraction  machinery  to move  into the  nutritional                                                               
supplement  market.  There  has  also   been  a  lot  of  "boring                                                               
investments"  like  moving  from   traditional  lighting  to  LED                                                               
lighting to save  money, finding ways to  self-power the facility                                                               
in  case  the   community  can't  handle  that   level  of  power                                                               
generation. At  present, salmon  has been  emphasized, especially                                                               
in  Bristol  Bay, to  using  refrigerated  seawater systems  (RSW                                                               
tanks)  on   fishing  boats.  The  impetus   comes  from  seafood                                                               
processing  companies that  are  paying  financial incentives  to                                                               
fishermen to meet certain quality standards.                                                                                    
                                                                                                                                
In  the future,  there is  still the  possibility of  new canning                                                               
line  technology   and  automation   will  likely   replace  some                                                               
functions in processing  plants due to minimum  wage increases of                                                               
26 percent  over the past two  years. There are also  going to be                                                               
continued  major  capital  expenditures to  expand  the  existing                                                               
fresh and  frozen markets. Kodiak  has a new facility;  it didn't                                                               
replace a processing plant or  upgrade it, which is unusual. That                                                               
plant rounded out  all the product forms that  that company could                                                               
provide.   It  has   state-of-the-art  technology;   it's  highly                                                               
computerized, but  it offers some great  long-term highly skilled                                                               
positions for Kodiak residents.                                                                                                 
                                                                                                                                
5:07:21 PM                                                                                                                    
MS. KIMBALL said slide 11 was  a "good visual" of how the seafood                                                               
industry has survived in the  Bering Sea/Aleutian Islands because                                                               
of  its stability  due to  the state  management system  based on                                                               
sustainable yield and  the federal systems that are  based on the                                                               
concepts in  the Magnuson Stevens  Act. It showed the  biomass at                                                               
over 21 million metric tons;  fishing levels and catch limits are                                                               
buffered before the catch is tabulated.                                                                                         
                                                                                                                                
5:08:15 PM                                                                                                                    
MS. KIMBALL said seafood processors  invest in this data, because                                                               
getting  a  sustainability  certification  is  key  to  competing                                                               
globally. Meeting these global sustainability  standards is a big                                                               
win for fishermen in Alaska.                                                                                                    
                                                                                                                                
5:10:00 PM                                                                                                                    
MS.  KIMBALL said  keeping  Alaska seafood  as  a premium  brand,                                                               
which is what  they are trying to do, and  getting a higher value                                                               
for  that  brand means  not  undermining  any of  the  harvesting                                                               
processing management  systems that got  us to where we  are now.                                                               
Part of  that is  this need  for sustainable  management. Without                                                               
funding  for weirs,  surveys, and  in-season management  projects                                                               
management becomes more conservative  to account for uncertainty,                                                               
which  means  less  fish  across   the  docks,  less  income  for                                                               
Alaskans,  less  tax revenue  for  the  state, and  less  revenue                                                               
sharing for  coastal communities.  So, they  are always  a strong                                                               
advocate for keeping those biological systems running.                                                                          
                                                                                                                                
She  said  they   had  already  talked  about   what  puts  those                                                               
investments  at risk  and  summarized  the state-specific  issues                                                               
that can reduce risk, add stability,  and help us compete in this                                                               
difficult  climate are  environmental permitting,  loan programs,                                                               
state  marketing  efforts,   a  commercial  fisheries  management                                                               
budget, fishery  management policy and regulations,  and fish tax                                                               
policy.                                                                                                                         
                                                                                                                                
5:11:14 PM                                                                                                                    
MARK VINSEL, Executive Administrator,  United Fishermen of Alaska                                                               
(UFA), Juneau, Alaska, said he  would touch on industry marketing                                                               
initiatives,  technology   and  modernization,   and  sustainable                                                               
management. He said UFA is  an umbrella association for 34-member                                                               
groups spanning  the fisheries throughout the  state and offshore                                                               
federal waters.                                                                                                                 
                                                                                                                                
MR.  VINSEL said  from the  fishermen  sector everything  relates                                                               
back to ASMI  and to processors, but he wanted  to touch on three                                                               
trends. One  is direct  marketing -  fishermen selling  their own                                                               
fish,  another  one is  regional  marketing,  and then  community                                                               
supported fisheries.                                                                                                            
                                                                                                                                
5:11:30 PM                                                                                                                    
MR. VINSEL  said direct marketing can  be done in four  ways: one                                                               
is  just selling  right  off the  dock and  retail  and to  local                                                               
restaurants,  and  the  broader  market of  shipping  outside  of                                                               
Alaska to U.S.  consumers, and U.S. restaurant  and caterers. All                                                               
those businesses are  different from just being  a fisherman that                                                               
delivers to processors.                                                                                                         
                                                                                                                                
He said in  2004 the salmon industry was bad,  because there were                                                               
a lot of fish,  but the price wasn't paying for  people to go out                                                               
and  fish. The  legislature formed  the Joint  Legislative Salmon                                                               
Industry  Task Force.  Over the  next five  years a  total of  50                                                               
bills  came  out  with  ideas   and  concepts.  SB  286  in  2004                                                               
streamlined the paper  work and tax burden  for direct marketers,                                                               
which increased  that effort. He  explained that  the opportunity                                                               
for direct marketing varies by  local community. Some communities                                                               
don't  have  a  local  market  to   sell  to  -  don't  have  the                                                               
infrastructure,   electricity   costs,  transportation,   and   a                                                               
critical mass of other support services.                                                                                        
                                                                                                                                
5:13:02 PM                                                                                                                    
MR.  VINSEL  said regional  marketing  was  also spawned  by  the                                                               
legislature  in HB  419 that  allowed a  voluntary assessment  of                                                               
fishermen  in each  fishery in  a region;  they can  vote to  tax                                                               
themselves 1  percent on  their catch, which  goes to  a regional                                                               
marketing association that  can then invest as  the local fishery                                                               
needs  to develop  its fisheries.  Right now,  RSDAs include  the                                                               
Bristol  Bay Regional  Seafood  Development Association  (BBSDA),                                                               
the Copper River/Prince William  Sound Marketing Association, and                                                               
a few others  where the impetus started but were  not approved by                                                               
the fishermen.                                                                                                                  
                                                                                                                                
BBSDA identified the quality of  fish coming to the processors as                                                               
the problem  and provided ice  barges, equipment, moving  of ice,                                                               
and  moving  of  fish.  Copper  River  did  a  lot  of  branding,                                                               
promotions,  R&D on  nutrition,  and  product development.  These                                                               
tools have allowed  regional fishermen to go above  and beyond in                                                               
coordination with ASMI. ASMI only  markets for the big picture of                                                               
Alaska seafood.                                                                                                                 
                                                                                                                                
5:14:43 PM                                                                                                                    
MR. VINSEL  said an example  of community supported  fisheries is                                                               
"Alaskans Own,"  which sells  fish in Sitka  and Juneau.  It pays                                                               
ahead on a  subscription basis cutting some of the  risk out of a                                                               
fluctuating price  at the dock.  Some organic farmers do  this in                                                               
the Lower  48. The first one  in fisheries was in  Maine in 2007.                                                               
Mr. Vinsel met the person who  started it and introduced her to a                                                               
few  people in  Alaska where  the  concept has  gone forward.  He                                                               
found  three or  four more  community entities  in preparing  for                                                               
today.  The Alaska  Marine Conservation  Council has  spawned one                                                               
that  now   services  Anchorage,   Mat-Su,  Homer,   Seward,  and                                                               
Fairbanks.  This  gives  customers  confidence in  the  chain  of                                                               
custody;  they are  supporting their  local  community and  their                                                               
fishermen  stay local.  It directly  connects fishermen  to their                                                               
markets. All these rely on  ASMI for materials: their promotions,                                                               
their  brochures,   the  on-line  seafood  directory,   and  chef                                                               
collaboratives.                                                                                                                 
                                                                                                                                
5:16:44 PM                                                                                                                    
MR.  VINSEL  said  fishermen also  directly  interact  with  ASMI                                                               
having three  seats on the ASMI  board, and there is  a committee                                                               
system  where  individual   fishermen  from  different  fisheries                                                               
engage in ASMI planning.                                                                                                        
                                                                                                                                
Technological  and modernization  has  helped  improve the  tough                                                               
times in  salmon. Chilling and freezing  on board has been  a big                                                               
trend to  the point that  many processors won't take  fish unless                                                               
they  are chilled  either with  ice or  refrigerated salt  water.                                                               
This is a lot different than  it was in 2000. Having quality fish                                                               
provides an opportunity to compete against farmed fish.                                                                         
                                                                                                                                
A lot of fuel efficiency  measures have progressed, although they                                                               
all cost  money. A fall  McDowell study on vessel  replacement in                                                               
the  North Pacific  fleet (large  offshore fleet)  estimated $1.6                                                               
billion would be  spent in the next 5-10 years  on rebuilding and                                                               
upgrades.  The Port  of Seattle  commissioned the  report and  he                                                               
thought  there were  definite Alaska  opportunities in  that $1.6                                                               
billion. UFA  members build large  vessels in  Ketchikan, Seward,                                                               
Kodiak,   and  Wrangell.   There  are   also  opportunities   for                                                               
improvements on small boat fleets around the state.                                                                             
                                                                                                                                
Navigation technology  has improved with using  electronic vessel                                                               
monitoring instead of an observer,  and data networks for how and                                                               
where people fish to help them  avoid if suddenly there is a high                                                               
level of by-catch  in a certain area.  These require investments,                                                               
so  both   the  Commercial  Fishing  Agriculture   Bank  and  the                                                               
Department  of  Commerce,   Community  and  Economic  Development                                                               
(DCCED)  loan  programs  have  statutory  requirements  on  their                                                               
loans.  New  programs  often come  through  the  legislature  for                                                               
approval.  There are  fuel efficiency  upgrades and  some product                                                               
quality  improvements that  have  been spawn  by the  fishermen's                                                               
needs. Especially  as they are one  of the very few  tools in the                                                               
toolbox  for Alaska  to favor  its own  residents with  the DCCED                                                               
loan programs.                                                                                                                  
                                                                                                                                
5:19:13 PM                                                                                                                    
MR. VINSEL said sustainable management  is required by the Alaska                                                               
Constitution.  UFA  has  a policy  for  healthy  and  sustainable                                                               
management of  fisheries and supports state  management of salmon                                                               
fisheries, escapement  goal management based on  biological data,                                                               
local  management that  is adaptive  and abundance-based  and the                                                               
use of the commissioner's emergency  order authority on an active                                                               
basis for  the local  management. That  includes an  opening when                                                               
there is  a whole  surplus of  fish coming  through or  a closing                                                               
with  no notice  because there  are no  fish. UFA  supports mixed                                                               
stock management  unless there  are sustainability  problems with                                                               
the by-catch fish.                                                                                                              
                                                                                                                                
In  practice,  the cost  and  the  importance of  the  biological                                                               
information - weirs, counts, management  plans - have thresholds.                                                               
The  board of  Fisheries process  creates these  management plans                                                               
for what can  be foreseen and emergency authority  for the things                                                               
that can't  be foreseen.  Sustainability certifications  bring an                                                               
additional cost,  which he calls  the social license  to operate.                                                               
When MSC was  started, Alaska was already there, so  they came to                                                               
us. The  Marine Advisory Program does  a good job of  helping the                                                               
next  generation  fishermen  work  through  the  difficulties  of                                                               
running a fishing business.                                                                                                     
                                                                                                                                
5:23:12 PM                                                                                                                    
MR. VINSEL summarized  that Alaska feeds the world  and there was                                                               
both  legislative and  ASMI involvement  in  getting Alaska  fish                                                               
into  the global  food aid  programs. Very  little could  be more                                                               
beneficial to people who suffer from no protein in their local                                                                  
area than a shelf stable can of pink salmon. "It's a super                                                                      
food."                                                                                                                          
                                                                                                                                
CHAIR GIESSEL thanked the presenters.                                                                                           
                                                                                                                                
5:25:02 PM                                                                                                                    
There being no further business to come before the committee,                                                                   
Chair Giessel adjourned the Senate Resources Committee meeting                                                                  
at 5:25 p.m.                                                                                                                    
                                                                                                                                

Document Name Date/Time Subjects
1. ADF&G Presentation to Senate Resources Committee_3-24-17.pdf SRES 3/24/2017 3:30:00 PM
Seafood
2. NOAA Presentation to Senate Resources - 3 - 24 - 17.pdf SRES 3/24/2017 3:30:00 PM
Seafood
3. ASMI Senate Resources Presentation 3-24-17.pdf SRES 3/24/2017 3:30:00 PM
Seafood
4. McDowell ASMI Senate Resources Presentation 3-24-17.pdf SRES 3/24/2017 3:30:00 PM
Seafood
5. Presentation by PSPA - 3 - 24 - 17.pdf SRES 3/24/2017 3:30:00 PM
Seafood
6. UFA Senate Resources - 3 - 24 - 17.pdf SRES 3/24/2017 3:30:00 PM
Seafood
Agenda - 3 - 24 - 17.pdf SRES 3/24/2017 3:30:00 PM
7. USCG 2016 Year in Review.pdf SRES 3/24/2017 3:30:00 PM
United States Coast Guard