Legislature(1995 - 1996)

03/13/1996 05:04 PM FSH

Audio Topic
* first hearing in first committee of referral
+ 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                
 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                  
 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            
 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                
 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               
 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                
 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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