HB 203-TRANSPORTATION OF LIVE CRAB  1:04:38 PM CO-CHAIR TARR announced the first order of business would be CS FOR HOUSE BILL NO. 203(FSH), "An Act relating to transportation of live crab." [Before the committee was CSHB 203(FSH), read across the House floor and referred to the House Resources Standing Committee on 2/5/20.] 1:04:53 PM REPRESENTATIVE GARY KNOPP, Alaska State Legislature, sponsor of HB 203, informed the committee HB 203 is a noncontroversial bill that would remove antiquated legislation. He explained during the '60s, there was a prohibition on the surface transportation of three species of live crab for two reasons: the crab needed to be landed in Alaska to collect fisheries taxes and there was a high mortality rate of crab transported by means other than air transport. However, due to improvements in technology and methods of shipping, live crab now can be shipped and kept alive in excess of 30 days. Representative Knopp advised removal of the prohibition on surface transportation would add value to the crab end product and strengthen the market for crab. 1:06:33 PM INTIMAYO HARBISON, Staff, Representative Gary Knopp, Alaska State Legislature, on behalf of Representative Knopp, sponsor of HB 203, paraphrased from the sponsor statement which read [original punctuation provided]: House Bill 203 This bill would change the language of Alaska Statute (AS) 16.10.240 to remove restrictions on the surface transport if live crab. As the law is currently written there is a restriction on the transport of crab species except for when shipped, live, via air freight after pre-packaging. House Bill 203 would change the language of AS 16.10.240 to allow for surface transport of live crab after the product has been first landed in an Alaskan port and recorded on an Alaska Department of Fish and Game fish ticket. The current Alaska Statute pertaining to the transport of live crab was written in the 1960's and revised in 1996 due to concerns regarding loss of product as well as concerns regarding toxins when transporting by surface rather than air. Since the initial passing of this legislation, and subsequent amendments, there have been many breakthroughs in the safe transport of live crab species. These breakthroughs allow for the movement of live crab by surface transport while maintaining freshness of product. New technology allows for transport, and storage of live crab, while keeping product in cooled and aerated saltwater for its entire journey to market. Furthermore, this method of transport allows for crab to be held up to a month or longer after harvest, if necessary, without significant loss of product or risk to consumers. As it currently stands dead loss on the shipment of live crab out of Alaska can be high due to several factors including improper packaging, delays to air shipment from weather, and a general lack of air shipment service to remote Alaskan crabbing communities. This bill will allow for high quality Alaskan crab to reach markets despite the limitations to air freight. As live crab markets continue to expand around the globe, Alaska has fallen behind due to the limitations placed on live export from the State. Red King crab is currently sold live on global markets by industries in other countries. This includes sales to the United States and Canada as well as other prime markets who would be better served by the Alaskan crabbing industry. The ability to sell currently restricted species in a larger and more consistent volume would help to expand consumption of Alaskan crab, bring economic opportunity to Alaskan crabbing communities, and benefit the State and State industries as a whole. 1:09:56 PM REPRESENTATIVE KNOPP noted there is broad support for the bill from state agencies; in fact, the Department of Public Safety (DPS) said passage of the bill would make its job easier and the Department of Environmental Conservation (DEC) has no concerns about the bill. REPRESENTATIVE HANNAN asked whether the changes to the bill made by the committee substitute passed by the House Special Committee on Fisheries were related to the species of crab affected by the bill. REPRESENTATIVE KNOPP said yes. He explained after the first hearing of HB 203, the Alaska Department of Fish and Game (ADFG) expressed concern that only three species of crab were identified in the original bill; to eliminate confusion in the future, all references to crab species were removed by [CSHB 203(FSH)]. REPRESENTATIVE RAUSCHER asked how the bill solves the problem of improper packaging. REPRESENTATIVE KNOPP described how crab were previously shipped before the use of saltwater injection, aeration, pumps, and other improved methods. At one time, four days of surface transportation could result in a mortality rate of 100 percent. 1:12:30 PM MR. HARBISON further explained an advance in technology enables air to be injected into the water which allows crab to breathe, and the water temperature is controlled. He pointed out crab that are currently shipped by air freight are removed from water, cooled, and packaged out of water; however, surface shipping in water is beneficial to crab. REPRESENTATIVE TUCK asked whether shipping crab by air freight would still be an option. MR. HARBISON said yes. He noted there still will be a high demand for overnight fresh crab deliveries, and the bill would create an increase in the volume of fresh crab delivered to markets. REPRESENTATIVE TUCK questioned why the state imposed a prohibition on surface shipping crab when the fishermen/suppliers are responsible for their products. REPRESENTATIVE KNOPP surmised the state sought to ensure crab were landed in Alaska in order to collect taxes, and also wanted to prevent tainted products from reaching markets. REPRESENTATIVE TUCK asked if the bill requires shippers to use new methods of transportation. He suggested if not, current methods of surface transportation would continue to be used. REPRESENTATIVE KNOPP said no. Shippers could opt to continue to use the previous methods. REPRESENTATIVE TUCK asked for further information on the history of this issue and procedures related to the collection of fisheries taxes. REPRESENTATIVE KNOPP expressed his understanding fish tickets are collected when crab are unloaded from the fishing vessel to the processor. He deferred to representatives of the fishing industry to provide more information. 1:19:51 PM EDWARD POULSEN, member, GKC Holdings, informed the committee his company is involved in crab harvesting and processing operations in Dutch Harbor. He spoke in favor of the bill, noting the bill would allow all crab species to be shipped live by sea. During the past few years his company has transported live golden crab from Dutch Harbor to Seattle utilizing new containerized technology. Currently, Alaska Statutes allow for the shipment of golden king crab in this method, but not red king crab; in fact, the crab arrive in Seattle healthy enough to airship to destinations across the U.S. and to Europe and Asia. He pointed out air service to Dutch Harbor is unreliable due to limited infrastructure and weather. In additions, markets have shifted from buying cooked frozen crab to live crab, which can be provided by the Russian fishing industry to South Korea and China, and by the West Coast Dungeness crab industry. The market for live red crab is well-established and the market for bairdi crab would benefit if shipped live; in fact, interest in live Alaska crab by consumers and high-end chefs and restaurants is high, and high prices are paid for premium products. Mr. Poulsen concluded the bill would benefit crews, vessel owners, and processors, and the new containerized technology has been proven to allow remote Alaska ports to successfully ship live red and bairdi crab to markets by container ship. 1:22:52 PM MR. POULSEN, in response to Representative Tuck, explained fish tickets are issued in accordance with the landing of vessels and at the time the crab are offloaded; dead loss is noted, and there are no fees paid for dead loss. The crab is held onshore and prepared for shipping after the harvester and taxes have been paid; neither the harvester nor the state loses revenue if there is additional mortality. Further, he pointed out the bill would not remove the opportunity for air transport when air transport is a viable option; however, the new technology is needed in remote communities such as Dutch Harbor and Kodiak. REPRESENTATIVE RAUSCHER asked for a comparison of the dollar value of the present and new markets [for live crab]. MR. POULSEN said it is difficult to compare; bairdi crab is a larger and better product than snow crab. He described how in the live crab market, high-end chefs are always interested in something new to promote and will pay a premium price, but it is hard to quantify what the price could be. In addition, markets are seasonal and domestic markets are still developing. In further response to Representative Rauscher, he added the containerized technology is too new to define the potential of the market; however, it is known the process of cooking and freezing crab utilizes about 65 percent of the product, but selling a live crab monetizes 100 percent of the product. 1:28:54 PM REPRESENTATIVE TUCK spoke in support of the bill and the provision requiring that the fish are reported on a fish ticket at landing and prior to transportation. He directed attention to the bill [on page 1, beginning on line 12, and continuing to page 2, line 1, which read: (b) Notwithstanding (a) of this section, live [DUNGENESS] crab [, SPECIES CANCER MAGISTER,] may be taken, shipped, transported, or sent from the state by means of surface transportation only if the crab are taken at a time and location in the state for which the Department of Environmental Conservation does not require seafood processors to test [DUNGENESS] crab for the presence of marine toxins. REPRESENTATIVE TUCK surmised [under existing statute] DEC may require testing only on Dungeness crab and asked whether the bill allows for testing of all species of crab when required by DEC. REPRESENTATIVE KNOPP agreed. Currently, only Dungeness crab are tested for paralytic (PSP) poisoning and the bill provides that every species is subject to testing should DEC wish to do so. 1:31:17 PM FRANCES LEACH, executive director, United Fishermen of Alaska (UFA), informed the committee UFA represents 34 commercial fishing groups ranging from geoduck divers in Southeast Alaska to Bering Sea crabbers. Ms. Leach said members of UFA unanimously support HB 203 because limiting surface transportation limits marketability for many species of crab, such as red king, Dungeness, and bairdi. New surface shipping technology successfully transports live crab, with minimal dead loss, in response to consumers preference for live crab over previously frozen, even at a premium price. Passage of the bill would allow Alaska to compete with Russian suppliers - who seek to rebrand Alaska crab as their own - and she urged the committee to support the bill and thereby, the seafood industry. REPRESENTATIVE HANNAN observed Southeast crabbers cannot take their catch directly to market in Seattle, but must offload in Alaska and obtain a fish ticket. She questioned whether crabbers in Southeast might travel with their catch south, or if they would utilize a separate vessel equipped with the new containerized tanks for transportation. MS. LEACH has not heard of any Southeast fishermen who plan to transport their crab, although their vessels are equipped with recirculating pumps, and she expressed her belief fishermen would utilize processors for transportation to market. 1:34:15 PM JEREMY WOODROW, executive director, Alaska Seafood Marketing Institute (ASMI), paraphrased from the following written statement in support of HB 203 [original punctuation provided]: Alaska's crab species are known worldwide as premium products from an unrivaled ocean environment. Alaska crab species king, opilio (snow), bairdi (Tanner) and Dungeness on an annual basis, represent 12 percent of the total value of all commercially harvested Alaska seafood species, despite accounting for just one percent of the total catch. The first wholesale value of all crab species combined exceeds $300 million annually. Live crab sales, however, account for less than 1 percent of this total, which can be attributed to several factors including shipping limitations. Alaska's crab is enjoyed by consumers both domestically and abroad. However, in every market where Alaska crab is available, a comparable species of crab harvested from a different region in the world is available as well. Often, Alaska crab species are undercut by cheaper foreign crab with more favorable trade terms. Increased competition and lower competitor prices negatively impact the market position of one of Alaska's most prized seafood species. Transportation technology for seafood has made vast improvements in recent years. As such, the ability to ship live crab via surface now exists as it never had before. This new technology means that more crab can be delivered fresh at a lower cost to the seafood company with less financial risk than associated with shipping live crab via air. Currently, the majority of Alaska crab is sold in the form of frozen or cooked products. However, at market, live crab is sold for a significantly higher price. HB 203 will correct Alaska Statute 16.10.240 and allow Alaska processors the ability to capitalize on the newfound shipping technology by expanding markets for the highest value product forms. HB 203 supports Alaska's largest private direct employer by providing the seafood industry with the tools necessary to compete in the global market. 1:37:24 PM JAMIE GOEN, executive director, Alaska Bering Sea Crabbers, paraphrased from the following written testimony [original punctuation provided]: The Alaska Bering Sea Crabbers (ABSC) is a non-profit trade association representing the harvesters of king, opilio (snow), and bairdi (Tanner) crab in the Bering Sea and Aleutian Islands. We are actively involved in fisheries management, policy development, scientific research, and marketing. ABSC would like to offer our support for HB 203 (Transportation of Live Crab). Allowing the transport of all commercial species of live crab via surface transport in addition to air transport would increase flexibility and market opportunities for Alaska's crab fisheries and communities. For some ports where crab are landed, air transport cannot handle live crab shipments in larger volume, or it may not be economical. Allowing surface transport would increase opportunities for some ports and fishermen to bring live, fresh crab into markets. Currently, all crab may be sent via air transport but only live golden king crab, opilio, and Dungeness (with some exceptions) may be sent via surface transport from Alaska. This bill would extend live crab surface transport to bairdi and other king crab species (red and blue), as well. In other words, all commercial crab species could be shipped live via surface or air transport after being landed in the state and recorded on a fish ticket. Providing diversity in product forms and the opportunity for increased market value benefits Alaska's economy and communities. Given variability in crab stocks, fishermen look for ways to increase the value of their product, especially in times of lower catch levels. The option to also transport any commercial crab species live via surface transport, in addition to air transport, provides options for fishermen. This position is in alignment with the United Fishermen of Alaska (UFA), of which ABSC is a Board member. 1:39:09 PM FRANK KELTY, research fisheries consultant, City of Unalaska, expressed his personal support for HB 203 and provided a personal history of his experience working in crab fisheries. He said he also recommended that the City of Unalaska support the bill and opined the bill maximizes economic benefits to harvesters, quota shareholders, and communities, from a low-volume, high-market species. Mr. Kelty agreed the technology has improved from 30-40 years ago, and the shipment of live crab species would increase the value of the product and develop new export markets in a time of closures and declining catch. In fact, the Bering Sea crab fisheries have been in decline for many years and some fisheries have been closed, or opened for minimal seasons, creating economic hardship for all. Further, Mr. Kelty pointed out in [3/20] the Board of Fisheries, ADFG, will review the bairdi fisheries management plan and changes made therein may increase Tanner crab deliveries for the Asian market. He restated several reasons supporting the passage of HB 203. 1:43:46 PM CO-CHAIR TARR opened public testimony on HB 203. After ascertaining no one wished to testify, public testimony was closed. HB 203 was held over.