Legislature(1995 - 1996)
03/13/1996 05:04 PM House FSH
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 514 - REPEAL BAN ON FINFISH FARMING Number 1400 CHAIRMAN AUSTERMAN called the meeting back to order at 5:30 p.m. and noted the next item of business was HB 514, sponsored by Representative Mulder. REPRESENTATIVE ELDON MULDER, sponsor of HB 514, presented the bill, indicating it had been six years in process. He noted that the committee substitute he had prepared was in the committee packets. He read from the sponsor statement: "HB 514 would repeal Alaska's current ban on finfish farming and will allow Alaskans to participate in the economic benefit of a growing worldwide industry. HB 514 will allow Alaskan processors and entrepreneurs to participate in a business that could provide thousands of year-round jobs in areas of the state that otherwise are limited to seasonal employment. "In 1987, the state of Alaska chose to insulate itself from the world salmon market, first by placing a moratorium, and later by enacting an outright ban on finfish farming. This ban was intended to protect long-standing Alaskan wild salmon markets from pen- reared salmon. At the time, Alaska controlled, for the most part, the world salmon market and initially the ban, in part, had its desired effect. Over the years, fish farmers began to improve their product and started to nip away at Alaska's share of the world market. In 1984, Alaska held approximately 44 percent of the world's salmon market, while farmed fish contributed only 5 percent to the world market. Just ten short years later, Mr. Chairman, members of the committee, in 1994, Alaska held approximately 30 percent of the world's salmon market while fish farmer held 35 percent." Number 1515 REPRESENTATIVE MULDER noted that back-up information contained charts and graphs showing Alaska production, as a percentage, had decreased while farmed salmon increased, so that, in fact, in 1993, production of farmed salmon surpassed the production of Alaska wild stock salmon. REPRESENTATIVE MULDER continued with the sponsor statement: "Norwegian fish farmers produced 414,000 pounds of salmon in 1994 and say that they are planning to produce 2 million pounds in 2010." Representative Mulder made some comments, then continued: "That would almost double the amount of salmon they produced in 1994. Alaska's market share has been reduced by 32 percent in only 10 years and can be attributed, almost entirely, to the success of fish farms. Fish farmers are continuing their rapid expansion and there appears to be no end in sight. "Clearly, the intent of the ban has not been successful in protecting Alaska salmon markets. Put simply, Alaska residents and businesses have been banned from participating in the economic growth of this industry. In fact, we may well be so far behind the curve in salmon farming that we may never be able to catch up and our share of the world salmon market will continue to dwindle. "Fish farmers, unlike the harvesters of wild fish, are able to provide a fresh product to consumers on a year-round basis as well as taking great care in the handling of the product to ensure a high-quality product. The ability of fish farmers to provide a consistent year-round product is the single most important advantage that fish farmers have over the harvesters of wild fish. While fish harvesters have been unable to respond to the market demand of providing a fresh product on a year-round basis, they also have had difficulty in matching the aesthetic quality and the handling of farmed fish due to the nature of their fishery. "Fish farmers are now beginning to produce a variety of species, other than salmon, in significant numbers and will, in the near future, be capable of significantly impacting the world market. It is reasonable to expect, Mr. Chairman, that fish farms are going to continue to erode Alaska's share of the world fisheries market unless we choose to recognize and address market trends on a worldwide basis. "HB 514 will allow Alaskans to share in the opportunity for economic growth of this developing industry while providing year- round employment in rural Alaska. HB 514 will help to ensure that Alaska continues as a leader in the world seafood market." Number 1665 REPRESENTATIVE MULDER noted that the packets included articles, graphs and diagrams. He expressed that while Alaska had possibly missed the window of opportunity for salmon farming, a new opportunity was developing for bottom fish, Arctic char and other species. He thought farmed fish were not a threat to current commercial fishermen in Alaska. This value-added industry would provide year-round jobs in locations that were otherwise suffering, he said. He mentioned an Alaska processor that currently imported farmed salmon in order to stay open year-round. Number 1774 REPRESENTATIVE MULDER discussed the committee substitute and noted there was a zero fiscal note. He referred to an article about fish farming in Chile, where no government subsidies went into the fish. He suggested that Chilean farms posed the greatest threat to Alaska. Number 1860 CHAIRMAN AUSTERMAN noted that the committee substitute was version C, dated 3/11/96. He stated he had an additional amendment, version C.3, dated 3/13/96. REPRESENTATIVE DAVIS moved that the committee accept the work draft for CSHB 514, version C, dated 3/11/96. There being no objection, it was so ordered. CHAIRMAN AUSTERMAN explained that the CS from Representative Mulder included all fish. His own amendment excluded salmon from finfish farming. Number 1910 REPRESENTATIVE DAVIS moved that the committee adopt Amendment 1 but wanted an objection for discussion purposes. REPRESENTATIVE CARL MOSES objected. REPRESENTATIVE DAVIS asked whether salmon was being removed, leaving opportunities for halibut. CHAIRMAN AUSTERMAN clarified that the amendment left in every other species of finfish for the possibility of being farmed in Alaska, including halibut, trout and others. REPRESENTATIVE DAVIS asked if the amendment was based on a strong opposition to finfish farming for salmon. CHAIRMAN AUSTERMAN affirmed that. Number 2025 REPRESENTATIVE MULDER emphasized that he thought Alaska had for the most part missed the window of opportunity for salmon. However, there was a booming industry beginning with other species, he said, citing examples. He stated acceptance of the amendment. REPRESENTATIVE MOSES removed his objection. CHAIRMAN AUSTERMAN asked if there were further objections to Amendment 1. There being none, Amendment 1 passed. Chairman Austerman asked George Utermohle to describe the CS section by section. Number 2214 GEORGE UTERMOHLE, Legislative Counsel, Legal Services Division, Legislative Affairs Agency, said the key operative provisions of CSHB 514 were Sections 1 and 10, which provided for regulation of finfish farming. Section 10 replaced the existing prohibition against finfish farming with an authorization to the commissioner of the Department of Fish and Game (ADF&G) to issue finfish farming permits. The remainder of the bill contained technical revisions and conforming provisions so that regulation would occur on essentially the same basis as for aquatic farms. Number 2266 MR. UTERMOHLE explained Sections 2 through 4 provided for regulation of activities of finfish farms and products by the commissioner of the Department of Environment Conservation (ADEC). Section 5 amended the powers of the commissioner of ADF&G to provide power to regulate finfish farms on the same basis as for aquatic farms. Section 6 provided that the Board of Fisheries would not have a regulatory role except for management of stocks. The same provision applied to aquatic farms, which dealt with non- finfish species, primarily shellfish. Number 2331 MR. UTERMOHLE said Section 7 exempted finfish farming activities from commercial fishing statutes, the same as for aquatic farms. Section 8 amended the current definition of fish and game farms in the fish and game code; with the introduction of this bill, the fish farming section of that definition was no longer necessary. Section 9 was a technical amendment to exempt finfish farming activities from laws governing sale and purchase of fish taken in a commercial fishery, clarifying that finfish stocks and products would be treated differently from commercially caught fish. Number 2378 MR. UTERMOHLE reiterated that Section 10 was a key provision eliminating the prohibition on finfish farming and replacing it with authority to issue permits. Section 11 was a technical conforming amendment. Section 12 provided that finfish farming was not subject to regulation by the Commercial Fisheries Entry Commission (CFEC), as also applied to aquatic farms. Section 13 amended the definition of seafood as used in AS 16.51, the Alaska Seafood Marketing Institute Act; currently, aquatic farm products were excluded from provisions of that act. Number 2424 MR. UTERMOHLE said Section 14 made a technical change to food labeling requirements in Title 17, amending the definition of farmed salmon so that finfish products and aquatic farm products were both defined to mean farmed salmon products for purposes of that statute if the product was derived from salmon. This was primarily directed at out-of-state operations, Mr. Utermohle said. Sections 15 through 19 made technical changes to Title 38 to provide that state land could be made available for use as finfish farming sites on the same basis as for aquatic farms. TAPE 96-13, SIDE B Number 0001 CHAIRMAN AUSTERMAN referred to page 2, line 14, and noted there had been a question as to whether the language "issuing the permit and operating" should not be "issuing the permit and managing". MR. UTERMOHLE replied, "In this case, I think `operating' is intended to allow the department to charge a fee that covers its costs in administering its finfish ... regulatory program." CHAIRMAN AUSTERMAN asked Mr. Utermohle if he felt, with Amendment1, that the wording of the bill was strong enough to stop salmon from being farmed in Alaska. Number 0050 MR. UTERMOHLE said the language just adopted was strong enough to prohibit finfish farming of the five species of Pacific salmon found in Alaska. It also included Atlantic salmon and other species of salmon. CHAIRMAN AUSTERMAN asked if anything else in the bill would conflict with the amendment. MR. UTERMOHLE said he was aware of no other provision of the bill that would conflict with that prohibition. Number 0095 ROGER ANDERSON, President, New Hope Industries, Incorporated, testified via teleconference from Anchorage in favor of HB 514. He was interested in the indoor raising of tiliapia, a tropical fish that he said would not be reared in or released into state waters. He wanted provisions for that species included in the bill. Number 0244 THEO MATTHEWS, Executive Director, United Cook Inlet Drift Association (UCIDA), testified via teleconference, noting that he had been active as the United Fishermen of Alaska vice president during the original mariculture debate. He said UCIDA opposed HB514, even with the amendment, citing concerns over non-salmon species, exotic fish, high costs to the state, water-borne disease and conflicts over water use and land use. Mr. Matthews thought the burden of proof that something had changed should be on the sponsor. He objected to HB 514 being introduced so late in the session. Number 0313 CHRIS BERNS testified via teleconference from Kodiak that he had been a commercial fisherman since 1970. He suggested exotic species should not be mixed up with what we already have. "Alaska doesn't have any problem producing fish," he said. "We're the fifth largest seafood producer in the world." He voiced approval of salmon being removed from the bill but thought producing fish of any kind would create direct competition with Alaska's commercial fishermen. He suggested HB 514 was not in the best interests of rural Alaskans. Number 0431 ANDY GOLIA testified via teleconference from Dillingham, saying he opposed HB 514. He thought that until domestic and international markets were developed, the legislation would hurt Alaska's salmon industry and fishermen. Number 0486 ROBIN SAMUELSEN testified via teleconference from Dillingham. He opposed HB 514 both as amended and in its original version. He thought tropical fish would be Bristol Bay's worst nightmare. Even with the exclusion of salmon from the bill, halibut fishermen under a quota would be affected by farm-raised fish, he said. If there were to be fish farming, Mr. Samuelsen wanted to ensure that Alaskans and not just multi-national corporations would benefit. He suggested that Japanese interests controlled the Chilean fishing industry and had heavy investment in Russia; he feared the same would happen here. Number 0557 AL JORGENSEN testified via teleconference from Mat-Su. He read a portion of a letter he had submitted to The Frontiersman, a local paper. He said AS 16.40.210 should be repealed. He cited reasons for looking at fish farming, including effects of overfishing; rising prices of boats, which favored big corporations; the good product that fish farming produced in other nations; and favorable effects that it would have on small communities. Number 0621 JACK HOPKINS testified via teleconference from Cordova that he opposed HB 514. He suggested that people who thought they could salmon farm as a "mom and pop" operation were kidding themselves and cited high costs and risk as factors. He believed that other countries often went into salmon farming because they did not have any fish to jeopardize, whereas Alaska had a whole spectrum of species that could be ruined. He referred to a symposium of scientists who had discussed disease from escaped salmon; that had resulted in having to kill wild fish and Mr. Hopkins expressed concern about that. Number 0720 RICH DAVIS, Seafood Producers Co-operative, testified that he was a 35-year resident of Juneau and a commercial fisherman. He said he represented the 370 members of the Seafood Producers Co- operative, a harvesting/marketing/processing association based in Sitka that opposed HB 514, as they had opposed similar legislation six years ago. "We appreciate your efforts to amend the bill to remove the most contentious part of it, which is the salmon farming end of it," he said. "Salmon comprises the bulk of what we produce and it also is probably the issue that would divide people the most at a Board of Fish[eries] level." Number 760 MR. DAVIS recalled a presentation made six years ago to the Senate Resources Committee, which had included a video segment made by a company that advocated fish farming for two reasons. First, the world's waterways were degraded to where they no longer sustained a harvestable surplus of fish. Second, resources had been exploited to the point that they could not sustain a harvestable surplus of fish. "Those two conditions do not exist here in Alaska," Mr. Davis said, "... and it's our effort in the fisheries to see to it that they don't." Number 0793 MR. DAVIS suggested that his organization, which had produced and marketed $22 million worth of seafood resources last year, should have the opportunity to examine an accurate, comprehensive model of what fishery species in Alaska were thought to be economically viable to farm. "Our problem with that," he said, "is that you have to farm fish with a close proximity to a travel link." Those were the most congested and popular waterways in the state, he said. Number 0830 MR. DAVIS emphasized that his organization had two primary objections to the legislation. First, the state's constitution prohibited private for-profit ownership of fish and game resources. Second, no matter which of Alaska's commercially viable resources was chosen for farming, there would be a new user group created that would make an appearance at the Board of Fisheries asking for allocations of those resources, despite having thus far not having been a player or contributed financially to the management of the state's resources, as others had through aquaculture assessments. For example, Alaska's salmon fishermen had spent $200 million in the last 20 years seeing to it that those resources were kept healthy and that populations were suitable for successive harvest years. Mr. Davis reiterated opposition to the bill. Number 0883 REPRESENTATIVE DAVIS asked Mr. Davis if he had done any research on economic viability. MR. DAVIS replied, "Not recently, because we ... just now got the picture that somebody has introduced legislation that would open the door to farming. But if our organization could make money raising the fish and there was an economic plus for our members, we'll be the first people to tell you so." Number 0917 GEOFF BULLOCK, United Southeast Alaska Gillnetters, provided hand- outs to the committee. He indicated many gillnetters had recently spent a lot of money on IFQs, spending a lot of money to be able to harvest the halibut out there now. Allowing farmed halibut on shore would greatly reduce that. He said he had, just that day, telephoned some meat and fish markets in Miami, which received Chilean salmon for $2 per pound. "I talked to a couple of processors and priced out silver salmon," he said. "We can't touch that. You can't get a silver salmon in Alaska down to Miami for $2 a pound unless you lose money on it." He complimented Representative Mulder for trying to fix the problem but emphasized his association opposed making a quick decision. Number 1009 KELLUS SEWELL read testimony which he provided to the committee, saying he was testifying in favor of the bill if certain objectives could be met. He provided a personal history, which included fishing, consulting, marketing and trading. He believed farmed salmon would take over the American market and thought value-added opportunities were many. He thought likely non-competing species were steelhead, Arctic char and innoco or sheefish. He said the growth in Chilean and Canadian farmed salmon production was expected to be 100 times the number of pounds produced in 1985, with an increase from 25,000 to 300,000 metric tons in Norway. He said the Norwegian industry, which employed almost 15,000 full-time workers, was approximately $1.5 billion as compared to $240 million for the Alaska seafood industry. Number 1264 MR. SEWELL discussed expectations for the future. He said Alaska had resources for feed, which constituted about 50 percent of finfish aquaculture expenses, and a perfect environment for a healthy industry. He asserted that the time is now to start developing the industry, given certain conditions. Number 1360 KARL OHLS, Resource Development, Division of Trade and Development, Department of Commerce and Economic Development, said he had provided the committee with written testimony based on the earlier version of HB 514. He indicating he needed to review the new version of the bill and discuss it within the department before he could offer the department's position on it. Number 1398 RICHARD HOFFMAN, President, Board of Directors, Alaska Trollers Association, testified in opposition to HB 514, expressing concern about the escape hazard. "No matter what kind of laws we put in place, accidents occur," he said, noting that there had been a large number of farms in British Columbia that were destroyed a couple of years ago, with their fish getting loose. "And we're catching them out there now," he said. "I'm catching two or three of these Atlantic salmon out here on our coast every year, now. And I'm just one of a couple thousand trollers out there." He thought bringing tropical fish in would bring tropical diseases. With recent budget cuts, ADF&G was unable to monitor programs. "If we add another industry that they're going to have to take control of, somebody's going to lose," he said, "whether it's sport fish or commercial fish." He suggested that fish farm jobs would pay minimum wage and would replace businesses that had been in Alaska a long time. Number 1501 GERON BRUCE, Legislative Liaison, Office of the Commissioner, Department of Fish and Game (ADF&G), emphasized that HB 514 was major legislation and the department wanted time to put together an outline of what their regulatory and permitting systems would look like. The original zero fiscal note was for the original version of the bill. "Even though I understand the sponsor's intent that this program would be self-funding," he said, "there would be, certainly, some significant fiscal implications to it and we would be developing a fiscal note that would lay out the costs for permitting, regulating and the other factors that would have to be covered under such a program like this." Number 1577 MR. BRUCE suggested that ADF&G's concerns would include questions that had been addressed six years before in the earlier debate. In both fisheries and wildlife, the department had discouraged importing exotic species into the state. As a general policy, that importation not allowed. Furthermore, ADF&G had genetic and disease concerns that needed to be addressed. Even working with natural species, ADF&G would be concerned about protecting the natural stocks and would require a system in place to monitor the situation and take necessary action. There were also brood stock acquisition issues because stocks would be required from the wild. Number 1663 MR. BRUCE noted that a mariculture industry, currently centered around oysters, was just beginning to develop in the state. Looking at all the time and effort that had gone into developing that program, which involved species like oysters that were already successfully cultured elsewhere, pointed out that developing a major new industry would take time. It would not happen overnight and would require a major involvement by state government. "And we just want to make sure that all the policy decisions are identified during the legislation discussions, that you make them consciously and that all the costs that can be anticipated are also identified and the decision to incur those costs and cover them are also consciously considered and decisions made," he said. Number 1784 REPRESENTATIVE DAVIS stated, "I don't think there's any question about the questions that this bill brings up and they certainly haven't been answered here. There is another committee but I would prefer to listen to them here." He mentioned ADF&G's concerns. CHAIRMAN AUSTERMAN rescheduled the hearing on HB 514 for Monday, March 18.
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