02/22/2021 03:30 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| SB33 | |
| SB64 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 33 | TELECONFERENCED | |
| *+ | SB 64 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
February 22, 2021
3:31 p.m.
MEMBERS PRESENT
Senator Joshua Revak, Chair
Senator Peter Micciche, Vice Chair
Senator Gary Stevens
Senator Natasha von Imhof
Senator Jesse Kiehl
Senator Scott Kawasaki (via teleconference)
MEMBERS ABSENT
Senator Click Bishop
COMMITTEE CALENDAR
SENATE BILL NO. 33
"An Act relating to a seafood product development tax credit;
providing for an effective date by repealing secs. 32 and 35,
ch. 61, SLA 2014; and providing for an effective date."
- HEARD & HELD
SENATE BILL NO. 64
"An Act relating to management of enhanced stocks of shellfish;
authorizing certain nonprofit organizations to engage in
shellfish enhancement projects; relating to application fees for
salmon hatchery permits and shellfish enhancement project
permits; allowing the Alaska Seafood Marketing Institute to
market aquatic farm products; and providing for an effective
date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 33
SHORT TITLE: SEAFOOD PRODUCT DEVELOPMENT TAX CREDIT
SPONSOR(s): SENATOR(s) STEVENS
01/25/21 (S) PREFILE RELEASED 1/8/21
01/25/21 (S) READ THE FIRST TIME - REFERRALS
01/25/21 (S) RES, FIN
02/22/21 (S) RES AT 3:30 PM BUTROVICH 205
BILL: SB 64
SHORT TITLE: SHELLFISH PROJECTS; HATCHERIES; FEES
SPONSOR(s): SENATOR(s) STEVENS
01/29/21 (S) READ THE FIRST TIME - REFERRALS
01/29/21 (S) RES, FIN
02/22/21 (S) RES AT 3:30 PM BUTROVICH 205
WITNESS REGISTER
TIM LAMKIN, Staff
Senator Gary Stevens
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided an overview of SB 33.
JEREMY WOODROW, Executive Director
Alaska Seafoods Marketing Institute
Juneau, Alaska
POSITION STATEMENT: Testified in support of SB 33.
CHRISTOPHER BARROWS, President
Pacific Seafood Processors Association
Seattle, Washington
POSITION STATEMENT: Testified in support of SB 33.
NICOLE REYNOLDS, Deputy Director
Tax Division
Department of Revenue
Anchorage, Alaska
POSITION STATEMENT: Answered questions regarding SB 33.
MARK PALMER, CEO
OBI Seafoods
Seattle, Washington
POSITION STATEMENT: Testified in support of SB 33.
ABBEY FREDERICK, Director of Communications
Silver Bay Seafoods
Juneau, Alaska
POSITION STATEMENT: Testified in support of SB 33.
JULIANNE CURRY, Public Affairs Manager
Icicle Seafoods
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 33.
TIM LAMKIN, Staff
Senator Stevens
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided an overview of SB 64.
DR. GINNY ECKERT, Professor
University of Alaska; Director
Alaska Sea Grant
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of SB 64.
HEATHER MCCARTY, Co-Chair
Alaska King Crab Research, Rehabilitation and Biology Program
Juneau, Alaska
POSITION STATEMENT: Testified in support of SB 64.
SAM RABUNG, Director
Commercial Fisheries Division
Alaska Department of Fish and Game
Juneau, Alaska
POSITION STATEMENT: Testified in support of SB 64.
JEREMY WOODROW, Executive Director
Alaska Seafoods Marketing Institute
Juneau, Alaska
POSITION STATEMENT: Testified in support of SB 64.
JEFF HETRICK, Mariculture Director
Alutiiq Pride Marine Institute
Seward, Alaska
POSITION STATEMENT: Testified in support of SB 64.
JULIE DECKER, Executive Director
Alaska Fisheries Development Foundation
Wrangell, Alaska
POSITION STATEMENT: Testified in support of SB 64.
ACTION NARRATIVE
3:31:59 PM
CHAIR JOSHUA REVAK called the Senate Resources Standing
Committee meeting to order at 3:31 p.m. Present at the call to
order were Senators Stevens, Kiehl, von Imhof, Micciche,
Kawasaki (via teleconference), and Chair Revak.
SB 33-SEAFOOD PRODUCT DEVELOPMENT TAX CREDIT
3:33:27 PM
CHAIR REVAK announced the consideration of SENATE BILL NO. 33
"An Act relating to a seafood product development tax credit;
providing for an effective date by repealing secs. 32 and 35,
ch. 61, SLA 2014; and providing for an effective date."
3:34:04 PM
SENATOR GARY STEVENS, speaking as sponsor, stated SB 33 is
value-added legislation, true growth in market demand from the
fishing industry, and it encourages innovation in the fishing
industry.
He noted the state has previously used a similar policy for
direct economic development to support the long-term development
of Alaska's seafood processing industry by specifically
targeting salmon and herring fisheries. What SB 33 does is
extends the sunset [date] and broadens the scope of the tax
credit to include investment incentives of both pollock and cod
products.
3:35:10 PM
TIM LAMKIN, Staff, Senator Gary Stevens, Alaska State
Legislature, Juneau, Alaska, explained the intent of SB 33 is to
improve the business and marketing climate for seafood
processing in Alaska. The bill essentially translates into
partial reimbursement for investments, hardware, machinery,
infrastructure in processing the byproducts from the respective
fisheries' scales, fins, and the remaining biomass produced via
laser cuts. The biomass is in turn used to render oil and long
list of other downstream products that are in market demand that
committee members will hear more about during proceeding
testimony.
He noted the sunset provision technically expired January 1,
2021 and that is one amendment the sponsor would like to make to
make the legislation retroactive to a January 1 effective date;
otherwise, the tax credit currently applies to salmon and
herring fisheries. The bill would not only extend the sunset but
also open the program to include invest incentives for pollock
and cod.
CHAIR REVAK asked him to proceed with the sectional analysis for
SB 33.
3:36:33 PM
MR. LAMKIN stated the bill first and foremost extends the
sunset, otherwise it is largely conforming amendments that
includes the existing tax credits applied for salmon and herring
to include two additional fisheries, cod and pollock.
He presented the following sectional analysis for SB 33::
Section 1
AS 43.75.035(b)(1) and (2), relating to tax credits
applied to value-added activity for the processing of
salmon and herring products, (1) adds the fisheries of
pollock and cod as applicable for the tax credit; and
(2) extends the sunset of the applicable tax credits
through year 2025.
Section 2
AS 43.75.035(c), conforming amendment, relating to
applying a tax credit for investment equipment used to
process salmon or herring, to include equipment used
for processing pollock and cod.
Section 3
AS 43.75.035(d), conforming amendment, relating to a
3-year carry-forward of unused tax credits for the
processing of salmon and herring, adds the same carry-
forward of tax credits to be applicable for pollock
and cod processing.
Section 4
AS 43.75.035(e), relating to the 50% of liability cap
on applicable tax credits, is legal drafting statutory
clean-up, deleting a duplicative and redundant clause
already contained in Section 1 of the bill.
Section 5
AS 43.75.035(g)(5), conforming amendment, relating to
state claw-back of a carry-forward tax credit, in the
event an asset used for the processing of salmon or
herring to which a carry-forward applies, if the asset
is removed from the state, adds pollock and cod in
determining qualified investment of processing within
the state.
Section 6
AS 43.75.035(j)(3), conforming amendment, relating to
the definition of "qualified investment" under this
tax credit program, adds investment in assets used for
processing pollock and cod products.
Section 7
AS 43.75.035(j)(6), conforming amendment, relating to
the definition of "value-added" products under this
tax credit program, adds processing of pollock and cod
byproducts.
Sections 8-11
Are historical sunset dates and repealers of this tax
credit program, consolidating all of the various
sunset provisions of the program into a single sunset,
occurring now in section 8, and set for Jan. 1, 2026.
Section 12
Sets an effective date for the bill of Jan. 1, 2022.
3:38:56 PM
MR. LAMKIN noted that the sponsor's office received two
additional support letters within the last 24 hours from the
Southeast Alaska Fishermen's Alliance as well as Ocean Beauty
Seafoods.
SENATOR VON IMHOF asked he wanted the effective date in Section
12 to be 2021, as he mentioned.
MR. LAMKIN answered the bill sponsor's office would like to make
that change.
3:39:49 PM
CHAIR REVAK announced the committee will hear invited testimony
for SB 33.
3:40:07 PM
JEREMY WOODROW, Executive Director, Alaska Seafoods Marketing
Institute, Juneau, Alaska, testified in support of SB 33. He
stated the Alaska Seafood Marketing Institute (ASMI) supports
all efforts that will help increase the value of Alaska's
fisheries. SB 33 would provide the Alaska seafood industry
incentive and support to continue much needed investments in
processing facilities and take additional measures to create
more value for key Alaska seafood species.
MR. WOODROW detailed Alaska's commercial fisheries annually
harvest on average 5.5 billion pounds of seafood with
approximately 2.5 billion pounds of seafood sold to markets
worldwide after processing; that leaves an opportunity to add
even more value to 3 billion pounds of Alaska's seafood
resources.
He noted products such as fish and bone meals, and fish oil
currently generate hundreds of millions of dollars annually for
Alaska's seafood industry. Forecasts call for additional growth
in pet foods, nutraceuticals, medical advancements, food
preservation, and moreall produced from byproducts via fish
skin and heads, crab shells, and similar often discarded items.
Any effort made to help maximize Alaska's sustainable seafood
resources will benefit the state.
He detailed the January 2020 economic value of Alaska's seafood
industryreported via the McDowell Groupthe state's major
shoreside seafood processors invest over $100 million annually
in capital expenditures. Processors' investment and multiplier
impacts closely tie to the resource value. Expanding value
provides processing companies capital to modernize plants,
expand production lines, and pay higher fish prices; all these
benefit local communities in Alaska and provides growth
elsewhere in the U.S. economy.
He noted market research shows that consumers worldwide are
increasingly seeking convenient, easy to prepare products that
match their busy lifestyle. Consumers also no longer want to
sacrifice health, flavor, and quality when choosing convenience-
based products. This trend creates tremendous opportunity for
Alaska's seafood products to capitalize on by producing new,
innovative, and value-added seafood products. SB 33 supports
this trend and would help Alaska's seafood companies develop
products to match consumer demand.
3:42:59 PM
CHRISTOPHER BARROWS, President, Pacific Seafood Processors
Association, Seattle, Washington, testified in support of SB 33.
He noted Pacific Seafood Processors Association (PSPA)founded
in 1914is comprised of eight major seafood processing companies
from Ketchikan to Unalaska, to Saint Paul. PSPA operates in the
center of Alaska's wild and sustainable seafood supply chain.
PSPA members operate 25 facilities in 15 coastal communities
across Alaska, and that also includes 3 floating processors that
purchases Alaska seafood from harvesters and process it into
various product forms with distribution to the United States and
around the world.
MR. BARROWS said SB 33 is a bill that would reestablish and
augment Alaska's Seafood Product Development Tax Credit Program
which expired in 2020. PSPA's understanding is the bill would
reestablish a longstanding program through 2025 and expand the
list of eligible speciescurrently salmon and herringto also
include pollock and cod.
He stated the legislation is an important expansion because wild
Alaska pollock and Pacific cod comprises 69 percent of Alaska's
statewide harvest, which represents a lot of opportunity for
obtaining more value from high-volume species over the long
term. Higher value means more value to fishermen, processors,
and to the local and state governments that base fish taxes on
fish value; this type of program and investment incentive can
make a difference by allowing companies to obtain value-added
equipment and other types of investment that will benefit Alaska
for years to come.
MR. BARROWS said PSPA's member companies and Alaska's wild
seafood products compete in global markets and have a steady
volume of annual harvest on the order of about 5.7 billion
pounds. However, volume of Alaska's fisheries is not likely to
change significantly over time, therefore increasing the value
of Alaska's seafood is the key to future growth. Increasing
seafood value requires market differentiations, research and
development, and building consumer awarenessdetails that
require significant investment.
He stated SB 33 serves the objective of increasing seafood value
by encouraging innovation in the seafood processing sector,
facilitating greater utilization of each fish, and providing
incentives to respond to changes in market demands. Seafood
processors have used the previous authorized tax credit to make
critical investments in processing technologies that would
otherwise be cost prohibitive for some. Salmon is a great
example as the previous tax credit has changed the face of
salmon processing to increase production of filet and other
value-added-salmon products that have a stronger U.S. market
demand.
MR. BARROWS explained a higher value product means a higher
return on investment for Alaska, coastal communities, and
fishery participants. Value-added products also require more
labor than simply freezing or heading-and-gutting and increases
job and labor income to the state as well.
MR. BARROWS summarized the health of the commercial fisheries
and seafood industry is critical to Alaska as it annually
generates between $5-$6 billion in economic value to Alaska and
creates more direct jobs than any other private industry in the
state. PSPA supports reauthorizing and expanding the Seafood
Product Development Tax Credit Program as well as establishing
an effective date of January 1, 2021 to allow for value-added
investments during the current year.
3:47:00 PM
SENATOR STEVENS asked what percentage of salmon is processed
into filets.
MR. BARROWS answered he will get back to him on that, although
some of his colleagues may have the information.
SENATOR STEVENS remarked the value of salmon seems to have
increased so much via salmon filets over the simple processing.
SENATOR MICCICHE asked Mr. Barrows, all processors, or the
department to provide additional details to Senator Stevens'
question to include specific species information and the
ultimate return for the tax credits currently in existence
without the expansion of pollock and cod. He added he would like
to know how far the state has gotten with those credits, what
have been the market improvements, and species specific versus
general information.
MR. BARROWS replied his question will require further research.
He asked him to confirm the basis of his question is to
understand the return on investment from previous product forms
to new product forms that benefited from the tax credit across
all species.
SENATOR MICCICHE answered yes. He wants to be able to
demonstrate the value of the tax credits to the state as well as
the processors and fishermen.
3:49:24 PM
CHAIR REVAK noted Ms. Reynolds from the Department of Revenue
may be able to answer his question.
3:49:40 PM
NICOLE REYNOLDS, Deputy Director, Tax Division, Department of
Revenue, Anchorage, Alaska, noted from 2017-2020 the tax credit
value ranged from $2.3-$4.4 million; this value strictly
represents the credit for the equipment used to create the
value-added salmon and herring products.
SENATOR MICCICHE commented he is obviously asking for something
much more comprehensive. He said he would like to be able to
demonstrate there is value to the state, not just the
processors. He remarked he thinks there has been [value to the
state] and collectively they can provide a comprehensive
response that will prove that case.
SENATOR VON IMHOF noted fish meal is a byproduct example that
affects Alaska businesses where investment stays in the state.
People from the Mat-Su Valley have used fish meal as an
affective fertilizer alternative. She said she sees a benefit
from knowing how many cottage industries in Alaska have created
dog food treats, fish meal, or whatever; have there been any
sales outside of Alaska and how are those numbers; and who is
buying for how much.
SENATOR STEVENS suggested including the number of jobs added due
to a more complicated form of processing.
3:52:58 PM
MARK PALMER, CEO, OBI Seafoods, Seattle, Washington, testified
in support of SB 33. He noted Ocean Beauty Seafoods changed its
name to OBI Seafoods after the 2020 merger with Icicle Seafoods.
OBI operates 10 processing plants in Alaska.
He pointed out economic development revolves around investments
derived from the tax credit. When OBI built its meal and oil
plant in Cordova to utilize the facilities waste stream, the
cost of building the infrastructure to support the equipment OBI
used via the tax credit resulted in OBI hiring local
electricians, concrete, construction labor; that part of the
investment was over double what OBI paid for the processing
equipment.
He said the economic development derived from the tax credit
resulted in job creation. Many processing plants around Alaska
built in the early 1900scarry its waste stream into the ocean
without providing jobs in the process. However, when adding a
line to capture waste for a value-added product, the process
adds at least 10 higher-paying jobs. OBI is putting in filet
machines, computerized oil extractors, centrifuges, a lot of
sophisticated equipment that pays more to those labors operating
the equipment.
MR. PALMER pointed out there is a great history with the
legislation. Capacity increases at almost every plant when OBI
adds [value-adding equipment]. Increased capacity means
fisherfolk are less likely to go on limits in those times when
there are large production peaks. When OBI diversifies product
lines, the most important thing the company can do is get its
customer base to compete for its products, the product forms the
company has, the more markets and customers it can access. That
is the way OBI competes for raw materials.
He said to Senator Micciche's question, at the time the valued-
added salmon tax credit came into existence, prices in Bristol
Bay were at record lows, pink salmon prices were at record lows.
What the tax credit did at the time, a case of pink salmon was
selling for $16 a case on the wholesale market, which was 50-
cents less than its production cost; sockeye salmonred halves
was $36 a case; however, last year that averaged $60 a case, and
OBI has seen a marked improvement in the product forms because
OBI was not forced into canning everything.
MR. PALMER noted OBI took a big chunk of its product that would
normally have either gone [headed and gutted] (H&G), frozen, or
canned, and moved20 percent of its capacityto fillets; that is
the difference between not over-canning. Right sizing the market
allows for producing for the market and its dynamics work.
However, oversupplying any one area weakens a processor's whole
product portfolio and lowers the return to the fisherfolk and
the state.
He reiterated there is great history with the legislation; the
processors demonstrated it can increase product value and
resource utilization is something that worldwide customers
demand. People want to see less waste of their products going
into a waste stream, and they want to be able to talk about
sustainability and full utilization. SB 33 gives processors a
shot at full utilization.
3:58:14 PM
ABBEY FREDERICK, Director of Communications, Silver Bay
Seafoods, Juneau, Alaska, testified in support of SB 33. She
detailed Silver Bay Seafoods is a vertically integrated, primary
fisherman-owned processor that processes salmon, herring,
Pacific cod, pollock, rockfish, and other Alaska species. Silver
Bay Seafoods has significantly invested in state-of-the-art,
high-volume-processing facilities throughout Alaska. Silver Bay
Seafoods is relatively newstarted in 2007and operates in
Sitka, Craig, Valdez, Naknek, False Pass, and Kodiak.
MS. FREDERICK noted Silver Bay has been able to take advantage
of the past versions of this legislation which encouraged its
investment in additional equipment and infrastructure to produce
more value-added products for salmon and herring in Alaska.
She said SB 33 would provide a significant return on investment
to Alaska through increased jobs, economic activity, as well as
fish-tax revenue by maximizing the value of fish processed in
the state. The bill provides long-term benefits for the state by
creating value maximization via full fish resource utilization
which benefits its harvesters, processors, and communities.
MS. FREDERICK stated by expanding to other speciespollock and
codsome of which has experienced the market impacts from COVID-
19, the legislation promotes continued investment in the state's
fisheries and encourages businesses like Silver Bay Seafoods to
find innovative and adaptive ways to thrive in time of changing
consumer demands.
4:00:45 PM
JULIANNE CURRY, Public Affairs Manager, Icicle Seafoods,
Anchorage, Alaska, testified in support of SB 33. She detailed
Icicle Seafoods now solely operates as a shore-based processing
facility in Dutch Harbor and a floating processor in the Dutch
Harbor area, both of which participate mainly in the pollock and
cod fisheries in the Bering Sea and Aleutian Islands.
She said Icicle Seafoods was ecstatic to see SB 33 include
pollock and cod as eligible species under the state's long
standing and important program. SB 33 would be a game changer
for Icicle Seafoods' operation. Creating higher value seafood
products is one of the primary ways that Icicle Seafoods can
increase the dockside price of fish for its harvesters and
create stability for its workforce with additional product
forms.
MS. CURRY stated through SB 33 and the inclusion of pollock and
cod as eligible species, Icicle Seafoods would be able to
purchase equipment to not only increase the quality of seafood
it produces, but to also finally produce value-added product
forms that would help revolutionize its processing platforms. In
an industry with razor-thin margins, SB 33 would give Icicle
Seafoods the competitive advantage it needs to affectively
compete in the domestic and global marketplace. SB 33 would also
vastly improve Icicle Seafoods' ability to further capture the
waste stream and turn that unused resource into a valuable
Alaska product.
MS. CURRY said COVID-19 has brought many challenges including
drastically increased operating costs. Icicle Seafoods has
worked hard to streamline its operations since COVID-19 began,
but the company and the industry feels those impacted costs.
Domestic and global retail sales are at all-time highs for
seafoods, but those sales have not been enough to offset the
staggering decrease in restaurant and other foodservice sales.
Although SB 33 is beneficial even in non-pandemic times, Icicle
Seafoods is even more supportive of the vital legislation given
the current COVID-19 challenges facing the industry.
She said in the hope that SB 33 passes during the legislative
session, Icicle Seafoods is actively researching how to upgrade
its processing platforms to bring more value to its processing
efforts. Seafood is Alaska's only major renewable resource
industry and as such, Icicle Seafood's processing efforts and
its harvesters continually face uncertainty such as fluctuating
resource levels as well as domestic and international market
conditions.
MS. CURRY thanked Senator Stevens for introducing SB 33 and
helping create the short-term opportunity for Alaska's seafood
industry that will have lasting impacts for Icicle Seafoods, its
harvesters, and the state. She thanked Senator Kiehl for his co-
sponsorship with the hope that others will similarly support the
legislation that benefits Alaska's largest private sector
employer.
4:03:51 PM
At ease
4:04:12 PM
CHAIR REVAK called the committee back to order.
4:04:17 PM
CHAIR REVAK held SB 33 in committee.
SB 64-SHELLFISH PROJECTS; HATCHERIES; FEES
4:04:32 PM
CHAIR REVAK announced the consideration of SENATE BILL NO. 64
"An Act relating to management of enhanced stocks of shellfish;
authorizing certain nonprofit organizations to engage in
shellfish enhancement projects; relating to application fees for
salmon hatchery permits and shellfish enhancement project
permits; allowing the Alaska Seafood Marketing Institute to
market aquatic farm products; and providing for an effective
date."
4:04:52 PM
SENATOR STEVENS, speaking as sponsor of SB 64, stated he
appreciated the testimony on the previous bill and noted Ms.
Curry made a good comment that the seafood industry is Alaska's
only renewable industry. If the state treats it right, if the
legislature creates opportunities for the processors to go into
new lines, as well as shellfish enhancement, then the state will
see a major long-term benefit.
He said SB 64 is about strengthening Alaska's fisheries
portfolios, promoting economic development policy, creating
jobs, doing more research, and food security. In the big, long
term picture the bill should be a win-win for Alaska,
businesses, and consumers.
4:06:06 PM
TIM LAMKIN, Staff, Senator Gary Stevens, Alaska State
Legislature, Juneau, Alaska, explained SB 64 is a result of a
considerable amount of work by stakeholders, biologists, and
scientists. The large focus of the bill is on the crab and clam
industry.
He noted most of Alaska's crab fisheries have been shutdown for
quite sometime for reasons that the scientific community does
not entirely understand, but certainly may include overfishing
of the state's crab fisheries. However, the state has not
provided any substantive tools to fix the situation other than
to discontinue the fishing of those species.
MR. LAMKIN pointed out there has been what scientists call an
environmental regime shift in Alaska's oceans where at one time
the crustaceansor crabswere the dominant biomass of the
state's waters, but nowadays that has shifted to finfish
dominance.
He explained finfish, for example, virtually all creatures out
there really enjoy feeding on baby crabs and clamswhich are
very vulnerable in the earliest stage of their lifeand
predation is probably a bit part of this picture.
MR. LAMKIN said SB 64 provides a legal framework for large
scale, shellfish hatchery projects to function in Alaska to
nurture the shellfish younglingsking crab, razor clams, and
geoducksin their formative stages to provide them with a better
shot at survival in the wild. The intent of the legislation is
to carefully balance Alaska's wild versus enhanced programs and
resources.
He explained the policy structure contained in the bill
represents an investment in the state's science, fisheries
related jobs, private sector, and in Alaska's constitution for
the principle of sustainable yield. He said hopefully the bill
will ultimately improve what shows up on Alaska's dinner tables.
MR. LAMKIN noted that earlier in the day, Senator Steven's
office received two additional support letters from the
Southeast Alaska Fishermen's Alliance as well as the Aleutian
Pribilof Island Community Development Association in strong
support of the bill.
CHAIR REVAK asked Mr. Lamkin to proceed with the sectional
analysis for SB 64.
4:09:07 PM
MR. LAMKIN presented the following sectional analysis for SB 64:
Section 1
AS 16.05.730(c) Provides the Alaska Board of Fisheries
authority to direct the department to manage
production of enhanced shellfish stocks, beyond brood
stock needs, for cost recovery harvest.
Section 2
AS 16.10.400(b) Removes a flat $100 permit application
fee for new private nonprofit salmon hatcheries, to
instead be determined by the department by regulation,
as described in Section 3 of the bill, below
Section 3
AS 16.10.400 Conforming language consistent with other
fee structures set and adjusted by regulation,
requiring fees to approximately reflect the cost of
administering the application process, and to be
reviewed and adjusted periodically.
Section 4
Adds a new Chapter 12 to Title 16, "Shellfish Stock
Enhancement Projects" AS 16.12.010 Provides direction
to the commissioner of the Department of Fish and Game
on the issuance of permits for private nonprofit
shellfish fishery enhancement projects intended to
improve the yield, rehabilitate stocks, or increase
habitat for shellfish. This subsection also directs
the commissioner to set an application fee and to
consult with technical experts in the relevant areas
before permit issuance;
AS 16.12.020 Provides for a hearing and public
notification and input process prior to issuance of
a permit;
AS 16.12.030 Describes terms and conditions for permit
holders to conduct their work, including cost
recovery fisheries, harvest, sale, and release of
enhancement project produced shellfish, and
selection of brood stock sources;
AS 16.12.040 Describes the revocation process should a
permit holder fail to comply with the terms and
conditions of the permit;
AS 16.12.050 Specifies that shellfish produced under
an approved enhancement project are a common
property resource, with provision for special
harvest areas by permit holders. This section also
specifies the Board of Fisheries to establish
regulations relating to this chapter;
AS 16.12.060 Directs the department to advise and
assist permit holders in their planning, operations,
and construction of facilities to a reasonable and
appropriate extent;
AS 16.12.070 provides department authority to approve
source and number of shellfish taken for use as
broodstock;
AS 16.12.080 places restrictions on how monies
receives from sale of shellfish may be used only for
operating costs associated with their facilities;
AS 16.12.090 Relates to Cost Recovery Fisheries, and
provides a means by which a shellfish hatchery may
contract to either harvest and sell shellfish, or to
implement a self-assessment from amongst its
membership, for purposes of recovering operational
costs associated with the hatchery.
AS 16.12.100 Gives the department authority to inspect
facilities at any time while the facility is in
operation;
AS 16.12.110 Requires a permit holder to submit an
annual report to the department;
AS 16.12.199 provides definitions for "enhancement
project," "facility," "genetically modified
shellfish," "hatchery," and "shellfish."
4:11:55 PM
Section 5
Provides the Commercial Fisheries Entry Commission :
AS 16.43.400(a) Provides the Commercial Fisheries
Entry Commission authority to issue special harvest
area entry permits to holders of private nonprofit
shellfish rehabilitation, or enhancement project
permits.
Section 6
AS 16.43.430 Defines legal fishing gear for special
harvest area entry permit holders.
Section 7
AS 16.51.090 adds marketing and promotion of aquatic
farm products to the powers and duties of the Alaska
Seafood Marketing Institute (ASMI).
Section 8
AS 16.51.110 conforming amendment, prohibiting ASMI
from promoting aquatic farm products not from Alaska,
a specific region of Alaska, or by a specific brand
name.
Section 9
AS 16.51.180(7) conforming amendment regarding the
definition of "seafood."
Section 10
AS 16.51.180 (8) is a new referential subsection
pointing to the existing definition of "aquatic farm
product" as described in AS 16.40.199, which states
"an aquatic plant or shellfish,.. that is propagated,
farmed, or cultivated in an aquatic farm and sold or
offered for sale."
Section 11
AS 17.20.049(b) Exempts shellfish raised in a private
nonprofit shellfish project from the definition of
"farmed fish."
Section 12
AS 37.05.146(c) Makes application fee revenues
received by the Dept. of Fish and Game from the salmon
hatchery and shellfish hatchery programs be accounted
for separately. Appropriations from those program
receipts are not made from the unrestricted general
revenue fund.
Section 13
AS 43.20.012(a) Exempts a nonprofit corporation
holding a shellfish fishery enhancement permit from
state corporate income tax when making shellfish sales
and engaging in shellfish cost recovery activity
Section 14
AS 43.20.012(a) Is a technical conforming amendment
required by prior session law and has no impact on the
policies being set in this bill.
Section 15
AS 43.76.390 Exempts shellfish harvested under a
special harvest area entry permit from seafood
development taxes.
Section 16
Establishes an effective date for the salmon hatchery
permit application fee change, as described in Section
2 above.
Section 17
Authorizes the Department of Fish and Game to adopt
implementing regulations.
Section 18
Establishes an immediate effective date for Section 17
pursuant to AS 01.10.070(c).
Section 19
Is a technical, conforming effective date for Section
14 concomitant with 2 CH 55, SLA 2013 and has no
effect on the policy set forth in this bill.
4:14:41 PM
CHAIR REVAK announced the committee will hear invited testimony
on SB 64.
4:15:04 PM
DR. GINNY ECKERT, Professor, University of Alaska; Director,
Alaska Sea Grant, Fairbanks, Alaska, testified in support of SB
64. She noted her expertise is in shellfishhaving worked in
shellfish in Alaska since 2000and has worked in king crab
rehabilitation since 2007 as well as served as the science
director and co-chair of the Alaska King Crab Research,
Rehabilitation and Biology (AKCRRAB) Program. She thanked
Senator Stevens and the legislature for their work on SB 64,
noting she testified in support of the previous version of the
legislation in 2016.
She stated she will speak to the need for rehabilitation for
shellfish, a fishery resource that includes crabs, clams, and
abalonemany of these stocks are in decline. She noted she has
done some recent work on abalone, a species with potential as
well.
DR. ECKERT said she is going to talk more about king crab, an
iconic species native to Alaska. Many of the state's king crab
stocks have crashed. In the Gulf of Alaska, king crab stocks
crashed in the early 1980s and have not recovered since, even
with fisheries closure. Over fishing is very likely the cause of
the decline due to very high fishing rates, and the state did
not have much knowledge about fishery science then. There is
great concern about bycatch, including at that time an allowance
for foreign fleets until the early 1970s.
She noted the king crab stocksin the absence of fishinghave
not recovered in almost 40 years. There are current stocks
todaythe Bristol Bay red king crab fisheryin decline that
warrants concern for possible closure in the upcoming years.
DR. ECKERT said AKCRRAB has done quite a bit of research on the
feasibility of rehabilitation through culturing king crab in a
hatchery and out-planting them. AKCRRAB has learned a lot about
king crabs and is learning more about the bottlenecks and
potential for recovery. AKCRRAB has very good evidence these
stocks are recruitment-limited, and enhancement could help.
AKCRRAB has out-planted animals on a small scale and is able to
find these animals when they grow larger several years later
However, moving forward, doing experiments at a larger scale,
and to potentially rehabilitate stocks through stock enhancement
requires SB 64.
DR. ECKERT said she understands there could be concerns about
genetics; however, the noted shellfish are very different from
salmon. Hatcheries collect adult salmon and decide who is mating
with each other. Through shellfish stock enhancement, the
animals are reproducing in the wild, they are mating in the
wild, and AKCRRAB brings them into the lab with the offspring
somewhat intact. The females sort of carry the embryos, so
AKCRRAB can just hatch them out to give them an advantage in the
early stages and then put them out into the wild so that they
can be more successful.
4:18:52 PM
SENATOR KIEHL noted that terminal harvest areas are associated
with salmon hatcheries, which is relatively easy because the
salmon comeback to their release location. He asked if crab show
the same affinity towards a place and whether that is an option
the department will have in managing those cost recovery
fisheries.
CHAIR REVAK asked how crab migrate.
DR. ECKERT replied crabs are very different from salmon, they
are not going to migrate back to the place where they were born.
She conceded AKCRRAB has a lot to learn about where these crabs
go.
She said AKCRRAB has done work in recent years that suggest the
young crabs inhabit shallower waters and migrate into deeper
waters. Crab fisherfolk will note crabs go deeper in the summer
and shallower in the winter. Colleagues at the National Marine
Fisheries Service in Kodiak have out-planted very small
juveniles and they have been able to find them a couple of years
later.
DR. ECKERT summarized that AKCRRAB has opportunities to do more
work, but the program believes these animals are probably
staying relatively in a small area; ADF&G could talk about how
to manage this in the future.
SENATOR KIEHL noted the bill has a prohibition on genetically
modified shellfish and it includes a definition. He pointed out
freshwater fish hatcheries will modify their fish so they cannot
reproduce. However, the sponsor spoke about the intension to
enhance recovery and get reproducing stock numbers up.
He asked if there is the possibility in the future, especially
if shellfish stick to a particular area, to do the same sort of
thing or if the definition of genetic modification rules out the
possibility of enhancing a localized area with nonreproducing
shellfish.
4:21:43 PM
DR. ECKERT replied she does not know the answer. She explained
AKCRRAB does not understand the biology that much but there are
fascinating things that are happening with technology now. The
way AKCRRAB currently grows crab in the hatchery is to allow
female crabs to hatch-out their embryos without genetic
manipulation. AKCRRAB wants to focus carefully to not overwhelm
any of the natural genetic diversity.
She noted there is potential for future modification. Norway is
working on lobster; they are a leader in many of the aquaculture
efforts. However, she does not know if Norway has done anything
like [genetic modification], but if that were to happen, they
would be first.
SENATOR KIEHL conceded that concern is 15-20 years out at the
closest and is not an issue.
4:23:36 PM
HEATHER MCCARTY, Co-Chair, Alaska King Crab Research,
Rehabilitation and Biology (AKCRRAB) Program, Juneau, Alaska,
testified in support of SB 64. She noted she is also the Chair
of the Alaska Governor's Mariculture Task Force (AMTF).
She said her main interest in crab came from her employer,
Central Bering Sea Fishermen's Association (CBSFA), one of
Western Alaska's six [Community Development Quota] (CDQ) Program
groups for St. Paul Island in the Pribilof Islands. Blue king
crab used to surround St. Paul Island, it was a viable and
lucrative fishery both for the local people and for the State of
Alaska for many years. However, like several other crab stocks,
the blue king crab had precipitously declined in the early 1980s
and fisherfolk have not fished the area since then, but the
stocks continue to decline. A group started the AKCRRAB Program
in 2006 to try and bring the stock back as well as the red king
crab in the Kodiak area.
MS. MCCARTY noted she has been part of AMTF since the beginning
in 2016. AMTF consists of scientists, industry people, community
representatives, and agency representatives for the State of
Alaska. AMTF is dedicated to developing mariculture in Alaska
for the benefit of the state and its people. AMTF supports the
passage of SB 64noting previous support for the legislation's
various iterations for the last two legislative sessions.
She said AMTF believes that the mariculture of shellfish and
seaweed has great potential in Alaska to benefit the economies
particularly of coastal communitiesto provide ocean-related
jobs in those communities in entry-level ways for residents to
make use of their experience on the water and their existing
equipment such as boats and so onnot to mention the existing
processing opportunities in those coastal communities. SB 64 is
a big piece of that development.
MS. MCCARTY explained the bill is one of AMTF's priorities
because advancing the culture of shellfishas Dr. Eckert
describedrequires the legislation for advancement. AMFT spent
the last decade and a half developing methods of crab in
captivity, release monitoring, and understanding habitat needs.
AMTF cannot go the extra step into larger scale production
without the benefit of SB 64 to implement regulations and help
the program go one step further into making shellfish a viable
industry.
4:27:50 PM
SAM RABUNG, Director, Commercial Fisheries Division, Alaska
Department of Fish and Game, Juneau, Alaska, testified in
support of SB 64. He explained Alaska currently limits
mariculture to aquatic farming, sometimes called "wet farming,"
which entails growing privately-owned organisms under positive
control and not releasing themit is private property for
private business for profit. In contrast, the fisheries in
Alaska are common property and owned by all the people of
Alaska. Mariculture could restore extirpated stocks,
rehabilitate weak stocks, and enhance fisheries to support
harvest levels above natural production; however, currently that
is not legal and that is the reason for SB 64.
MR. RABUNG said in response to Senator Kiehl's earlier question
about special harvest areas for crab, there is a provision in SB
64 that allows for a fishery assessment as a cost recovery tool,
so the common property could harvest the organisms in a release
area and they pay an assessment to fund the cost of the project,
it is just one of the many available tools if SB 64 were to
pass.
He noted to answer the previous question by Senator Kiehl
regarding releasing non-reproducing organisms, the problem with
that is that would preclude being able to restore or
rehabilitate stocks because they would not be able to reproduce.
Brood stock collection would occur in an area near the release
location area and brought into a hatchery for spawning
inducement and progency protection until their sizes allow for
out-planting survival until maturity for harvest.
MR. RABUNG said SB 64 would require that the entities performing
the hatchery work be nonprofits. Mechanisms to support the
hatchery work would entail either a fisheries assessment tax,
stakeholder self-assessment, or a direct cost recovery from
fishing. The program would require self-support.
4:31:15 PM
SENATOR KIEHL referenced cost recovery to a fishery. He asked
him if the department is concerned with the comingling of a
common property stocknatural versus enhancedor does he see the
fishery as comparable to the incidental catch of some wild stock
when a hatchery cost recovery is fishing salmon.
MR. RABUNG replied yes, the department will start off at low
levels with monitoring with the intention to augment the
harvest. The harvest will have wild stock with it, but the
intent for a direct cost recovery harvest is to focus on
hatchery or project-produced organisms.
He conceded [crabs] are not as clean a fit as the salmon because
the salmon returns to their release location at maturity;
however, this is a species-by-species approach. For example,
crabs are mobile and can move around, but clams are beach
planted, so each species is unique. He noted the Eastside Cook
Inlet razor clams are in declineno personal-use permits
openings for 5-7 yearsand they are a candidate for a
rehabilitation project for those beaches via hatchery out-
planting.
MR. RABUNG said dive fisheries for [sea cucumbers] and geoducks
in Southeast Alaska is another enhancement-type project example.
Rotating harvests for common-property dive fisheries occur
approximately every three yearsfor natural stock recovery. Out-
planting hatchery juveniles from the area after the fishery
occurs could speed up the rotation.
MR. RABUNG said he feels that most of these projects are
probably not going to be directed-cost recovery because it is
not as easy to sort them out and keep them segregated from their
naturally produced cohorts. The other tools in the billfishery
assessment tax or stakeholders taxing themselveswould probably
be more likely used.
4:35:23 PM
JEREMY WOODROW, Executive Director, Alaska Seafoods Marketing
Institute, Juneau, Alaska, testified in support of SB 64. He
said he will speak to the parts of the bill that pertain to the
Alaska Seafoods Marketing Institute (ASMI). The Alaska
Mariculture Task Force (AMTF) and the Alaska Shellfish Growers
Association support the statutory change.
He said as a public-private partnership between the State of
Alaska and the Alaska seafood industry, ASMI has established a
fostered economic development of Alaska's renewable natural
seafood resources. ASMI plays a key role in the repositioning of
Alaska's seafood industry as a competitive, market driven, food
production industry.
MR. WOODROW detailed ASMI accomplished its work to boost the
value of Alaska's seafood through partnerships with retail
grocers, foodservice distributors and operators, restaurant
chains, universities, culinary schools, and the media. ASMI
conducts consumer campaigns, public relations, advertising
activities, and aligns with industry efforts to maximize
effectiveness. ASMI also functions as a brand manager for the
Alaska seafood family of brands.
He said the economic opportunity for mariculture in Alaska is
expanding quickly. With the support and efforts of AMTF, the
industry is seeing growth from small family businesses selling
boutique products to fisherfolk looking to utilize their vessels
and skills in shoulder-seasons, to significant investment in
production by Alaska's major seafood companies, recognizing the
opportunity to diversify their existing Alaska product
portfolios.
MR. WOODROW detailed AMTF has identified the goal to build
Alaska's mariculture production into a $100 million per year
industry; this is no small feat and will require quite literally
all-hands-on-deck to meet this objective. Providing the same
opportunity for Alaska mariculture products that have benefited
Alaska's fisheries for 40 years will undoubtingly help meet this
goal by utilizing ASMI's expertise to include mariculture
products and consumer retail foodservice and food aid outreach,
and domestic and both in targeted markets.
MR. WOODROW said the ASMI board would like to thank Chairman
Revak and the members of the Senate Resources Committee for
recognizing the value of Alaska's maritime economy and for the
committee's consideration of meaningful legislation to aid
economic development across Alaska's coastal communities.
4:38:21 PM
JEFF HETRICK, Mariculture Director, Alutiiq Pride Marine
Institute (APMI), Seward, Alaska, testified in support of SB 64.
He detailed the Alutiiq Pride Marine Institute (APMI) houses its
shellfish hatchery in Seward. APMI has been developing the
hatchery technology for many of the important Alaska shellfish
species such as littleneck clams, butter clams, razor clams,
softshell clams, cockles, purple-hinged rock scallops, as well
as red and blue king crab, Bosworth abalone, sea cucumbers, and
most recently kelp; APMI is the first entity to successfully
raise many of these species.
He said in response to the questions concerning genetic
manipulation, it is a common practice to create triploid or
infertile mollusk shellfish. However, technology for crustaceans
is not quite as understoodas Dr. Eckert saidbut triploidy is a
valuable tool for addressing concerns with genetic impacts from
shellfish hatcheries.
MR. HETRICK noted, although APMI produces geoducks and oysters
for the commercial operations, a major focus has been invested
beyond the aquatic farm industry to conduct trial shellfish
enhancement projects and APMI does that through planting and
monitoring local beaches with clams and other species in an
effort to have some tools to perhaps bring back some of these
declining populations; all this work to date has been conducted
under research permits through the Alaska Department of Fish and
Game (ADF&G)they have been wonderful partnersas APMI develops
this technology.
MR. HETRICK explained due to lack of legislation, APMI has not
been able to conduct programs that might be large enough to
provide more scientific data and harvest opportunities. APMI has
worked in some areasPort Graham, Seldovia, Lower Cook Inlet
where locals are actually harvesting some of APMI's enhanced
populations, but those were planted under research permits and
minimal.
MR. HETRICK noted with king crabs, APMI has assembled a large
team of experts in crab biology and management. APMI just
finished its third year of an out-stocking program in Kodiak
that has given APMI great expectations for success if APMI
continues along the crab enhancement path.
He said he cannot understate the significance of having SB 64 in
play. Alaska's native coastal communities that have financially
supported APMI's work for almost 20 years are anxiously awaiting
some projects to bring back some of those resources. AMPI is
certainly prepared to move beyond the experimental to the
implementation phase of AMPI's work.
4:41:52 PM
JULIE DECKER, Executive Director, Alaska Fisheries Development
Foundation, Wrangell, Alaska, testified in support of SB 64. She
said the bill creates a framework to develop the shellfish
fishery enhancement and allows for ASMI to market aquatic
products which will further the development of the new
mariculture industry.
She stated SB 64 accomplishes two-priority recommendations of
the AMTFwhich she also serves onas a part of a larger plan to
fully develop the mariculture industry in Alaska with a goal to
grow a $100-million-per-year industry in 20 years.
MS. DECKER detailed Alaska Fisheries Development Foundation
(AFDF) membership is comprised of seafood harvesters, seafood
processors, and support businesses. AFDFfounded in 1978has a
mission to identify opportunities common to the Alaska seafood
industry; and develop efficient, sustainable outcomes that
benefit the economy, environment, and coastal communities.
She noted one of foundation's recent areas of work is the
development of mariculture. As a direct result of this work with
others, AMTFestablished in 2016completed a statewide
comprehensive plan in 2018 with the goal of growing a $100-
million industry.
MS. DECKER explained as the facilitator for the certification of
the Alaska salmon fishery as sustainable, AFDF has a unique
viewpoint on some of the concerns of others for the potential of
negative impacts from SB 64. AFDF is the client for both the
Alaska Responsible Fisheries Management (RFM) and the Marine
Stewardship Council (MSC) certifications of Alaska salmon. As a
part of these certifications, ADF&G management of the salmon
fishery, including salmon enhancement program, receives review
every year by independent third-party experts to determine
whether it meets internationally accepted standards for
sustainably managed fisheries. Alaska salmon is currently
certified as sustainable under both the RFM and MSC programs
because ADF&G's management incorporates a cautionary approach
that prioritizes wild fish and minimizes adverse impacts to wild
stocks.
MS. DECKER pointed out ADF&G has extensive enhancement policies
which protect wild stocks, including genetics policies, release
sites, marking, and disease policies; given these policies,
ADF&G's is fulfilling its constitutional mandate to manage the
state's fishery resources for sustainability. ADF&G will
similarly manage shellfish enhancement with the same
constitutional mandate to protect wild stocks.
She said another benefit of developing shellfish fishery
enhancement is the important role that shellfish hatcheries may
play in helping the state adapt to ocean changes and
acidification. During additional shellfish hatchery technique
development, the state will learn more about its abilities to
mitigate the effects of ocean acidification in a hatchery
setting. For example, adjusting pH levels at critical juvenile
stages in hatchery can improve survival after crab release into
the wild. Therefore, shellfish hatcheries may play a critical
role in the future by helping to protect wild stocks from
negative impacts of ocean acidification.
MS. DECKER stated shellfish enhancement can diversify and expand
economic opportunities by increasing harvest for sports,
subsistence, and commercial uselike Alaska's salmon enhancement
program. For example, salmon enhancement, from 2012-2017,
contributed approximately $720 million in ex-vessel value and
$2.1 billion in first wholesale value to the state's economy.
Similarly, shellfish enhancement can infuse the economies of
Alaska's communities.
She said AFDF believes that growth of the mariculture industry
can play an important role in Alaska's economic recovery from
the COVID-19 disaster, and passage of SB 64 is central to fully
enabling that recovery and potential.
4:47:10 PM
CHAIR REVAK announced the committee will hear public testimony
on SB 33 and SB 64 during an upcoming meeting.
4:47:18 PM
CHAIR REVAK held SB 64 in committee.
4:47:40 PM
There being no further business to come before the committee,
Chair Revak adjourned the Senate Resources Standing Committee
meeting at 4:47 p.m.