HB 80-SPT FSH HATCHERY FACIL ACCT; SURCHARGE  11:08:39 AM CHAIR STUTES announced that the final order of business would be HOUSE BILL NO. 80, "An Act establishing the sport fishing hatchery facilities account; establishing the sport fishing facility surcharge; and providing for an effective date." CHAIR STUTES noted the bill sponsor is the House Rules Standing Committee by request of the governor. CHAIR STUTES invited Commissioner Vincent-Lang to provide an opening statement on the bill. 11:09:03 AM DOUG VINCENT-LANG, Commissioner, Alaska Department of Fish and Game (ADF&G), on behalf of the governor, provided an opening statement in support of HB 80. He explained that HB 80 goes back to the unique package used to fund construction of the Anchorage and Fairbanks hatcheries. The package attached a surcharge to sport fishing licenses to pay back bonds that were taken out; no general funds were used to build the two hatcheries. The surcharge money was used to match Dingell- Johnson federal funding and the bonds were repaid much quicker than expected. When doing the bonding it was realized that Southeast Alaska anglers, both nonresident and resident, were paying surcharge fees but not getting benefit from these hatcheries. It was therefore decided to take $500,000 of surcharge fees right off the top and support various private- non-profit (PNP) hatcheries across Southeast Alaska to produce Chinook and coho salmon. COMMISSIONER VINCENT-LANG explained that the bonds are paid off, but that there is a hole for deferred maintenance on the existing hatcheries, along with a $500,000 hole in Southeast Alaska for production of Chinook and coho salmon. The department recognizes that it made a commitment to get rid of the surcharge when the bonds were paid off. But, since the hatcheries must be maintained and cannot just be closed, it was realized that without a surcharge the money would be taken from the fish and game fund. The department looked for a way to continue enhancement projects in Southeast Alaska, and HB 80 is an attempt to reinstate a surcharge at a lower level to maintain hatchery activities throughout sport fish related activities across Alaska. Commissioner Vincent-Lang voiced ADF&G's support of the bill, along with that of the governor's office. 11:11:59 AM CHAIR STUTES opened public testimony on HB 80. 11:12:11 AM DAVID LANDIS, General Manager, Southern Southeast Regional Aquaculture Association (SSRAA), testified in support of HB 80. He noted that SSRAA operates seven hatcheries in the region. One of those facilities is Crystal Lake Hatchery in Petersburg, a designated sport fish facility owned by the State of Alaska. The state owns three sport fish hatcheries one in Anchorage, one in Fairbanks, and Crystal Lake in Petersburg. As the state's contracted operator of the Crystal Lake Hatchery, he said SSRAA supports the passage of HB 80. MR. LANDIS stated HB 80 would allow ADF&G to continue funding operation of the Crystal Lake facility, and to fund critically needed repairs, which the department has characterized as a critical need. Failure of the raceways at the facility is truly not "if" it is going to happen but when, putting the millions of Chinook salmon reared at the facility in jeopardy. It is a shovel ready project fully designed, engineered, and ready to go; it just needs funding. If additional funding beyond the surcharge amount currently in the bill becomes available, SSRAA's view is that this project and others like it could happen more quickly. Keeping Crystal Lake intact with full operational and maintenance funding is compelling. A recent department fact sheet shows Crystal Lake providing an impressive amount of Chinook in Southeast Alaska, and SSRAA's figures reflect that 40-50 percent of hatchery king salmon harvested in Southeast Alaska result from the Crystal Lake production. This would be a user paid system that is fair and appropriate, and SSRAA supports the bill's passage. 11:14:38 AM BEN MOHR, Executive Director, Kenai River Sportfishing Association (KRSA), testified in support of HB 80. He related that the sport fish license surcharge ended last year because the bonds that were issued for sport fish hatcheries were repaid early. The hunting and fishing communities have acted for nearly 100 years to support the user pays model for fish and game conservation management, and this case is no different. The sport fishery, whether in fresh or salt water, directly benefits from Alaska's sport fish hatcheries. This is the central reason why KRSA supports the governor's bill, which introduces a surcharge on sport fishing licenses, the funds from which are specifically dedicated to supporting sport fishing activities. It is KRSA's understanding that these funds will specifically be used for operation and maintenance costs of the sport fish hatcheries across the state. To KRSA, the critical portion of the bill is that the funds generated from sport fishing licenses stay with the users. MR. MOHR pointed out that the average Alaska fishermen will see a net $5 reduction in annual licenses between last year and next year while maintaining the services of ADF&G. The association recognizes that it may be a challenge for some to see the decrease of license fees when ADF&G has sustained such significant losses due to COVID. However, the previous surcharge wasn't used for operations necessarily, it was a bond repayment. The loss in sport fish license sales in 2020 was primarily driven by a lack of participation by nonresident anglers specifically due to their inability to travel to Alaska. Directing this surcharge to operations and maintenance of sport fish hatcheries provides some relief to ADF&G's budget. The sport fishing community is happy to contribute and KRSA supports HB 80 as submitted. 11:17:01 AM REPRESENTATIVE TARR recalled that when this bill was seen last year, the committee amended it to just be a status quo situation thinking there was great need, and that was prior to COVID-19. She asked whether it would change KRSA's support for the bill if the committee were to consider that again this year. MR. MOHR replied that it would come down to the details. The sport fishing community in general is happy to see a decrease in license fees, he said, and KRSA is supportive of whatever measures can be taken to reduce hurdles for the average Alaskan to access the fishery. The net $5 decrease between last year and next year is something KRSA fully supports, so going back to the full surcharge would be dependent on the details. REPRESENTATIVE TARR remarked that Alaskans highly value their salmon, and that is why she is asking if Alaskans would be willing to support the status quo for something so important. 11:18:29 AM KATIE HARMS, Executive Director, Douglas Island Pink and Chum, Inc. (DIPAC), testified in support of HB 80. She noted that DIPAC is a private-non-profit corporation with the primary mission to sustain and enhance the valuable salmon resources of the state of Alaska for economic, social, and cultural benefits of all citizens. She expressed DIPAC's support of HB 80. MS. HARMS stated that DIPAC operates a Chinook sport fishing program through funds from ADF&G's Division of Sport Fish that is currently almost 90 percent supported by this sport fishing license fee surcharge. Prior to 1994, ADF&G produced Chinook salmon to enhance the Juneau area recreational fisheries. These fish were raised at the state's Snettisham hatchery and released at selected sites in the Juneau area. In 1994 Snettisham was converted to a sockeye salmon production facility and the Juneau Chinook program was transferred to DIPAC's Macaulay Salmon Hatchery. Since that time DIPAC has received just over $340,000 each year for this sport fishing enhancement program. Without these outside funds the Chinook program would have never gotten off the ground at DIPAC, yet it has become a stable program for the Juneau area anglers. MS. HARMS related that during the past two years Southeast Alaska has seen depressed salmon returns. Due to poor chum returns in 2019 and 2020 DIPAC came up well short of its operational and capital revenue needs from its cost recovery harvest programs. With no surcharge license fee revenues coming from ADF&G to DIPAC this year the Chinook program will likely be greatly reduced. If no consistent funding source can be identified for the program into the future, then there is a potential that the DIPAC board may be faced with the tough decision to eliminate the program altogether. 11:20:34 AM AL BARRETTE testified in opposition to HB 80 as written. He stated he is a sport fish user and a subsistence fisherman. He supported the [first] bill passed several years ago that paid off the two hatcheries in Anchorage and Fairbanks that directly affect sport fishermen. He supports continuing the maintenance and operation of those two hatcheries that are dedicated to sport fishing. However, sport fishermen are subsidizing commercial cost recovery programs in the Southeast Alaska hatcheries and as a sport fisherman he cannot support that. He would amend the two state hatcheries in Southeast Alaska that are primarily set up for cost recovery and secondary to sport fishermen users. 11:21:48 AM FORREST BRADEN, Executive Director, SouthEast Alaska Guides Organization (SEAGO), testified in support of HB 80. He noted SEAGO is a nonprofit association representing fishing lodge and charter businesses across the Alaska panhandle, with these businesses making up roughly half of the marine charter fishing activity in the state. The bill has SEAGO's full support and SEAGO hopes to see the enhancement surcharge quickly reestablished. Hatchery production at the state-operated facilities in Fairbanks and Anchorage, as well as production through private contracts in Southeast, are critical in maintaining key sport fishing opportunities across Alaska, and these programs need continued funding. MR. BRADEN spoke to the surcharge funds that have benefitted Southeast Alaska anglers. He said the Southeast sport fishery is heavily dependent on fishing opportunity for kings and cohos and, to date, surcharge money directed to Southeast has gone largely toward Chinook hatchery production. A quarter of all king salmon harvested in the Southeast sport fishery are fish from Southeast hatchery origin, and for inside waters around Juneau, Petersburg, and Ketchikan that number goes up to 50 percent. Given current wild stock closures on inside waters into late season, terminal harvest areas with hatchery returns are the only access many anglers have to king salmon all year. When waters are open to wild stock harvest, hatchery fish available for harvest in common property fisheries help take pressure off those wild stocks while those stocks rebuild. MR. BRADEN pointed out that a lot of the Southeast hatchery production benefitting sport anglers in common property fisheries is supported from landing taxes in the commercial fishery. So, he continued, sport fishermen can and should contribute to the availability of target species in waters that they share with other user groups by paying an enhancement surcharge to fishing licenses. Hatchery production costs are rising, and repair of infrastructure continues to be needed. Maintaining fishing opportunities for sport, personal use, and commercial fisheries supported by current hatchery production and sport surcharge funds are key in making that happen. Mr. Braden added that SEAGO can support placing nonresident surcharge amounts back to original levels with the condition that any additional funds go toward increased production of fishery access, and not activities unrelated to the intent of the bill. He urged that HB 80 be moved forward. 11:24:21 AM REPRESENTATIVE KREISS-TOMKINS thanked SEAGO for testifying on both HB 79 and HB 80. 11:24:37 AM SUSAN DOHERTY, Executive Director, Southeast Alaska Seiners Association (SEAS), testified in support of HB 80 and its intent to provide a source of revenue to ensure critical infrastructure and enhancement activities can be maintained and have a continued funding source. She said SEAS would favor keeping the nonresident surcharge at its previous level to guarantee that the many projects in ADF&G's fact sheet can be sufficiently funded. Addressing previous testimony that sport fish dollars support the cost of recovery activity, she said it is the opposite. Chum production and the cost of recovery activities of those fish allows the association to continue to raise coho and Chinook, which are not as valuable commercial harvested fish, except to the trollers. MS. DOHERTY pointed out that when looking at projects and their locations, the six sites in Southeast Alaska only depict projects where sport fish dollars are partnered with private- non-profit association dollars to achieve these release numbers. The commercial fishermen in Southeast, through their regional associations, pay for and operate the majority of enhancement activities in this region, many of which are coho and Chinook. Over the 35 years from 1985-2019, commercial fishermen through their 3 percent enhancement tax have provided more than $104 million through assessment alone. This is an average of $3 million every year for the last 36 years. The private-non- profit associations operate many programs that provide sports opportunity for coho and Chinook harvest throughout the region that are solely paid for by the fishermen associations. Some assurance that the share of the surcharge money comes to Southeast is an important piece of this legislation to consider. She said SEAS supports passage of HB 80, hopefully with some amendments to address ways to make it even better. 11:27:16 AM MICHAEL KRAMER, Chair, Fisheries Subcommittee, Fairbanks Fish & Game Advisory Committee, testified that the advisory committee opposes HB 80, and he personally opposes it as well. He said the surcharge was designed for the specific purpose of constructing the hatcheries in Anchorage and Fairbanks that benefit sport users. A small portion of that, $517,000 a year, was directed to Crystal Lake, which annually produces about 2 million king salmon smolt. According to Crystal Lake's website, about 20,000 of those fish were harvested in 2020, of which 17,525 were harvested in the commercial fishery, leaving less than 2,500 available for cost recovery for the hatchery and for directed sport fishing. The surcharge, even if cut in half, would still raise tens of millions of dollars that the advisory committee doesn't think would be well spent by a private-non- profit hatchery run by the commercial fish industry. The commissioner has said that ADF&G will support the rearing and release of all the hatchery kings produced by Crystal Lake in 2021 and 2022. The advisory committee doesn't know where those funds are coming from but apparently there are funds still available. MR. KRAMER argued that most of the state funds going into the Crystal Lake Hatchery are benefitting the commercial fishery approximately 90-95 percent. While of some interest to sport opportunity in the Southeast area, that is not the hatchery's mission as it is releasing at remote sites that are primarily engaged in by commercial fishing. Recent regulatory changes would expand cost recovery efforts in those terminal release areas that are remote and not accessed often by sport fishers. The specific purpose of the surcharge was to build the two hatcheries in Fairbanks and Anchorage. That purpose has been accomplished and it is time for the surcharge to go away. There needs to be concern about Alaska's wild fish stocks and the impacts that hatchery over-releases are having on wild stocks. Taxing sport fish anglers who primarily rely on wild stocks to support a commercial fish enhancement program is inappropriate. 11:30:14 AM REPRESENTATIVE TARR acknowledged Mr. Kramer's concerns about Crystal Lake, but said the hatchery is just one piece of a much bigger effort here. According to the committee's research, she continued, the bill would benefit both commercial and sport anglers. To provide Mr. Kramer with a better sense of how Interior Alaska sport anglers would benefit from this program, she stated she would email him an ADF&G document that shows 270 release locations throughout Alaska. 11:31:28 AM RAY DEBARDELABEN testified in support of HB 80. He stated he is testifying on behalf of himself, but that he is currently president of the Kenai River Professional Guide Association (KRPGA). He related that he has spoken with several KRPGA board members and general members, and they are in full support of HB 80. He pointed out that while the hatcheries in Anchorage, Fairbanks, and Southeast are mentioned, the hatchery at Crooked Creek is not and it could also use some help. He questioned why this hatchery isn't mentioned in the language given the king salmon concern on the Kenai River, and that over the past five seasons it has been rare to harvest any Kenai kings that are greater than 34 inches. He said he likes Representative McCabe's suggestion to combine HB 79 with HB 80 because increasing the license fee by $4.00 for the hatchery program and $2 for the logbook program would be a simple solution. 11:33:04 AM RONI CARMON noted that the term "common use" is used often in relation to HB 80, a term that means everyone can use it. Even though Southeast hatcheries are being talked about, it relates to all hatcheries. The 3 percent paid by commercial fishermen has enhanced the sport fishery. The Prince William Sound hatcheries are for commercial fishermen and their livelihoods, and so should not be mixed with common use. The Kenai River is common use, and everything is common use, so it means everybody has a right to fish. It is the commercial fishery that is paying that price, so if it's common use then the sport fishery should pay the 3 percent enhancement off of their fees and licensing. As stated by a previous witness, the commercial fishery is paying for this. Nothing or very little is being contributed by the sports fishery. Common use means that the commercial fishermen should get their cost recovery and the expenses they've paid for their hatcheries first; common use is a term that shouldn't be used for those hatcheries. 11:35:30 AM LISA VON BARGEN, Borough Manager, City and Borough of Wrangell, testified in support of HB 80. She stated that on the surface HB 80 appears to be a vehicle only for sustaining sport fish enhancement, but offered her understanding that the committee realizes that is not the case. The funding generated under this program will support hatcheries like Crystal Lake in Petersburg, considered to be a sport fish hatchery. However, Crystal Lake also rears king salmon used to stock four commercial fisheries used by seine, troll, and drift fishers in southern Southeast Alaska. In 2020 the estimated ex-vessel value of those fisheries was $1.284 million, and over the past five years the ex-vessel value was estimated at $7.341 million. The Anita Bay fishery is vital to the Wrangell fleet; its ex-vessel value in 2020 was about $640,000 and over the past five years more than $4 million. In August [2020] Wrangell was the first community in Southeast Alaska to declare an economic disaster, one of the reasons being the collapse of the salmon fisheries. Without this enhancement funding, hatcheries like Crystal Lake will close and those commercial fisheries will disappear. Wrangell and the entire region cannot sustain another economic blow. She requested that the committee approve HB 80. 11:37:06 AM CHAIR STUTES, after ascertaining no one else wished to testify, closed public testimony on HB 80. 11:37:22 AM REPRESENTATIVE STORY observed from the backup documentation that the objective is for maintenance and operations for some hatcheries, and in Southeast Alaska it is projected for DIPAC to receive about "$300" and Crystal Lake "$200." She asked what assurance does the bill give in the language on page 1, line 10, Section 1, that directly translates to a fee paid by an angler in say, Region C, allocated for the hatchery stock release. COMMISSIONER VINCENT-LANG replied that he gives his assurance. Even though it wasn't written in the original bill, he said, [ADF&G] is currently giving $500,000 to Southeast Alaska and plans to continue that in recognition of the importance. Crystal Lake is a state-owned hatchery, rather than PNP-owned, and ADF&G is looking at ways to fund its continued operation through the $500,000, as well as other potential funding sources through the salmon treaty, to do some of the long-term deferred maintenance at that hatchery. He allowed there is no written assurance in the bill, but said it is his intent to continue that production in Southeast Alaska given how important it is to all the users and knowing also that any hatchery-produced fish are added on to Alaska's annual allocation of fish. 11:39:07 AM REPRESENTATIVE STORY said she is aware the surcharge has lapsed and offered her understanding that it has been a long-standing practice to distribute the funds in this way. She asked whether that understanding would continue under another commissioner or authority even though there is nothing clearly delineated. COMMISSIONER VINCENT-LANG responded that he intends to continue the funding. There have been four or five commissioners since this began, he said, and those commissioners have all followed through on that commitment to Southeast Alaska. Even though that surcharge would go down, he added, it is his intent to continue the $517,000 investment, which would be a higher percentage of the surcharge fee than ADF&G has paid in the past. 11:40:12 AM REPRESENTATIVE MCCABE asked whether he is correct that the Crystal Lake Hatchery feeds salt water, while the other hatcheries for stocking sport fish in lakes, although Anchorage might have a little salt water. COMMISSIONER VINCENT-LANG answered that the William Jack Hernandez State Fish Hatchery in Anchorage does salt water and fresh water releases, and most of the releases out of the [Ruth Burnett State Fish Hatchery] in Fairbanks are fresh water. 11:42:44 AM REPRESENTATIVE MCCABE asked whether there are any other contributions to the Crystal Lake Hatchery besides the surcharges, such as commercial fishers. COMMISSIONER VINCENT-LANG answered that all Alaska anglers and nonresidents are charged a surcharge. A sport fisherman in Anchorage or Fairbanks gets the benefit of lake stocking and the benefit of salt water stocking along the coast. In Southeast Alaska, about one-fourth of the fees are collected but ADF&G doesn't provide any fish from the Anchorage hatchery because it is too costly to bring those fish to Southeast. So, ADF&G's way of supporting the hatchery operations in Southeast Alaska is through its state-owned facility at Crystal Lake that is run by a PNP, and a couple other facilities. This is done through two mechanisms: 1) giving $517,000 in surcharge money, and 2) in recognition of the importance of sport fishing, additional monies from the fish and game fund are matched with Dingell- Johnson monies to support fish production. REPRESENTATIVE MCCABE asked who else besides the sport fishermen help fund those hatcheries and the repairs to those hatcheries; for example, whether commercial fishermen help fund them. Because some of the fish from the Crystal Lake Hatchery and from the Anchorage hatchery are going to be caught by commercial fishermen, he would like to know if any money is collected from commercial fishermen. While he is a fan of hatcheries, if multiple groups are going to benefit from the fish, then multiple groups should be supporting both hatcheries. COMMISSIONER VINCENT-LANG replied that in Anchorage and Fairbanks, sport fishermen pay the entirety of the cost. For the Crystal Lake and Southeast Alaska hatcheries, contributions come from the commercial industry as well as other federal sources associated with the salmon treaty. REPRESENTATIVE KREISS-TOMKINS quipped that Southeast Alaskans would welcome 100 percent of the costs of that hatchery being supported by the surcharge. 11:44:07 AM CHAIR STUTES said the committee would continue considering the bill along with any proposed amendments on [3/4/21]. She further noted that consideration is being given to rolling the changes into a committee substitute (CS). CHAIR STUTES announced that HB 80 was held over.