SB 22-SHELLFISH ENHANCE. PROJECTS; HATCHERIES  4:23:44 PM CHAIR BIRCH announced the consideration of Senate Bill 22 (SB 22). 4:24:01 PM SENATOR GARY STEVENS, Alaska State Legislature, Juneau, Alaska, sponsor of SB 22, revealed that he worked at his family's cannery in Kodiak from 1970-1975 where king crab and shrimp was canned. His family's cannery was ultimately sold when, "things fell apart" in the Kodiak fishery. He said Kodiak still has king crab, but not of a commercial nature. SENATOR STEVENS set forth that SB 22 would lend itself to creating a commercial fishery as well as a personal-use fishery which is very important in Kodiak. He said SB 22 is about enhancing and restoring the state's shellfish industry and the usage of shellfish by Alaskans, particularly for crabs and clams. He added that the bill promotes the constitutional duty of the "sustained yield principle" for the state's fisheries. He said SB 22 establishes a framework to permit and monitor improvements of the state's shellfish population. He summarized that 40 years of no fishing in Kodiak is a shame where a regime change occurred that went from crab to mostly pollock. He said his hope is to go back to crab with a shellfish enhancement project. 4:26:23 PM TIM LAMKIN, Staff, Senator Stevens, Alaska State Legislature, Juneau, Alaska, said he appreciated Chairman Birch's earlier comments regarding the committee's goals of economic diversification, building the state's portfolio and spurring other economic development, goals that he believes SB 22 speaks to. He explained that SB 22 is the result of a lot of work by stakeholders and the state's scientists and biologists. He noted that the same legislation was introduced during the previous session but did not make it. He detailed that the state's fish industry is a multi-billion- dollar industry that is the largest private employer in Alaska. He noted that most of the wild crab fisheries have been dormant and shutdown for quite some time for reasons that are not entirely understood by the scientific community, but in part might be for over harvesting. He opined that the state has not provided any tools to fix the fisheries other than to simply stop fishing. He said SB 22 will help try to bring a fix to the table. He explained that there has been an "environmental regime shift" where crustaceans were once the oceans' dominant biomass and now the finfish dominate. He detailed that the bill's intent is to provide a legal framework where crabs can be raised in hatcheries and released into the wild to provide a better shot at growing to maturity for harvest. He said the policy addition from SB 22 should have a positive effect on the state's economy, science investment, fisheries-related jobs, and bolster the constitution's principle of sustainable yield that will ultimately show up on Alaskans' supper table. 4:29:51 PM SENATOR KAWASAKI referenced the sponsor's statement for SB 22 and addressed the fifth paragraph as follows: The bill creates a regulatory framework with which Alaska Department of Fish & Game (ADF&G) can manage shellfish enhancement projects and outlines criteria for issuance of permits. It sets out stringent safety standards to ensure sustainability and health of existing natural stocks. The commissioner of ADF&G must also make a determination of substantial public benefit before a project can proceed. He asked Mr. Lamkin to confirm that SB 22 sets out stringent safety standards to ensure sustainability and health of existing natural stocks. MR. LAMKIN replied that SB 22 is closely modeled after existing salmon hatchery permit language so in the spirit of it being closely monitored in high standards of safety for those hatcheries, they will likewise be applied for shellfish hatchery projects. SENATOR KAWASAKI readdressed the sponsor statement where the fifth paragraph had stated, "The commissioner of ADF&G must also make a determination of substantial public benefit before a project can proceed." He asked what "substantial public benefit" is defined as. MR. LAMKIN replied that he did not have the definition memorized but noted that the definition is either in statute or regulation that is consistent with other preexisting statutory language with salmon hatcheries which are applied to the shellfish hatcheries. CHAIR BIRCH asked Mr. Lamkim or ADF&G to address the bill's fiscal note as it relates to commercial fishing as well as the permitting process. MR. LAMKIN replied that he will defer to ADF&G to address the fiscal note for SB 22. SENATOR GIESSEL asked that Mr. Lamkin provide a sectional analysis for the bill. MR. RAYBUNG explained that the fiscal note is indeterminate, but if the fisheries grow there could be a fiscal impact if additional staffing is required. CHAIR BIRCH asked Mr. Lamkin to proceed with a sectional analysis for SB 22. 4:33:08 PM MR. LAMKIN referenced the sectional analysis for SB 22 as follows: Section 1:  Provides the Alaska Board of Fisheries authority to direct the department to manage production of enhanced shellfish stocks, beyond broodstock needs, for cost recovery harvest. Section 2:  Increases the permit application fee for new private nonprofit salmon hatcheries from $100 to $1,000. Section 3:  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 issuance of permits for private nonprofit shellfish fishery enhancement projects and establishes a $1,000 permit application fee. This section directs the commissioner 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 broodstock 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 a 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 received 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. Section 4:  Provides the Commercial Fisheries Entry Commission (CFEC) authority to issue special harvest area entry permits to holders of private nonprofit shellfish rehabilitation, or enhancement project permits. Section 5:  Defines legal fishing gear for special harvest area entry permit holders. Section 6:  Exempts shellfish raised in a private nonprofit shellfish project from the farmed fish definition. Sections 7-8:  Establish state corporate income tax exemption for a nonprofit corporation holding a shellfish fishery enhancement permit. Section 9:  Exempts shellfish harvested under a special harvest area entry permit from seafood development taxes. Section 10:  Establishes an effective date for the salmon hatchery permit application fee described in section 2. Section 11:  Authorizes the Department of Fish and Game to adopt implementing regulations. Section 12:  Establishes an immediate effective date for section 11 pursuant to AS 01.10.070(c). Section 13:  Establishes an effective date for section 8 concomitant with section 2, Chapter 55, SLA 2013. 4:39:50 PM SENATOR COGHILL addressed AS 16.12.070 in section 3 regarding taking broodstock "where feasible." He asked Mr. Lamkin to elaborate on taking approved broodstock "where feasible." MR. LAMKIN answered that his understanding is the broodstock is delicate and to the extent possible, practical, or feasible, broodstock will be taken from the first selected location to maximize quality. If the first choice is not available or feasible, the appropriate next steps will be taken. He asked that ADF&G confirm his previous assessment. SENATOR COGHILL replied that ADF&G can corroborate later. He said there have been discussions on how to keep the integrity of local broodstocks. He said the concern moving forward is, "Where the exception becomes the rule." 4:41:50 PM CHAIR BIRCH [opened invited and public testimony]. 4:42:22 PM TOMI MARSH, President, Oceans Alaska, Ketchikan, Alaska, testified in support of SB 22. She explained that Oceans Alaska is a nonprofit shellfish hatchery located in Ketchikan. We believe mariculture is important for economic diversification, existing businesses, education, and fisheries. SB 22 helps create the regulatory framework for which ADF&G can manage shellfish fishery enhancement, restoration, and shellfish hatcheries; this will allow interested stakeholders to either continue or begin enhancement and or restoration of certain species. At Oceans Alaska we support SB 22 as it will diversify economic development and increase environmental stewardship through enhancement of traditional and economically important commercially harvested shellfish species such sea cumbers and geoducks which have been impacted by sea otter predation; two, enhance a shellfish species as integral to marine ecosystems and habitat restoration; three, enhancement of shellfish species that are vital to climate change and pollution mitigation. 4:43:48 PM CHAIR BIRCH announced that he "officially" opened public testimony. 4:44:09 PM JEFF HETRICK, Director, Alutiiq Pride Shellfish Hatchery, Seward, Alaska, testified in support of SB 22. He explained that Alutiiq is the institute that has been doing most of the work towards shellfish enhancement for almost 20 years. He summarized that Alutiiq worked on the following projects and species: • Littleneck and butter clam's enhancement; • Cockle projects; • Red and blue king crab research; • Worked with NOAA and AKCRRAB on king crab enhancement; • Sea cucumber project with the Southeast Alaska Regional Dive Fisheries Association (SARDFA) to test the feasibility for large-scale enhancement; • Abalone; • Purple hinge rock scallops. MR. HETRICK specified that Alutiiq's programs have been done under a commissioner's permit or a research permit through ADF&G. He noted an earlier question by a committee member regarding working with other regions and countries. He disclosed that Alutiiq has been, "Sitting on this technology now for quite some time and they look to us for advice and direction trying to raise some of these species." He disclosed that Alutiiq is in the final year of doing its out- stock and experiments of Kodiak. Alutiiq has developed hatchery technology and is currently working on out-stocking in terms of size of release, location, density, and all the things that scientists look for to maximize survival once stock is released. He said Alutiiq believes they are at the point to do a large- scale release of 500,000 crabs. He noted that a large-scale release is needed to find out if king crab enhancement is going to work. He summarized that Alutiiq's primary focus is to bring back the depressed stocks and is standing by for the approval of SB 22. 4:47:29 PM TREVOR SANDE, member, Alaska Fisheries Development Foundation, Ketchikan, Alaska, testified in support of SB 22. He disclosed that he has operated an oyster farm for eight years. He explained that hatcheries are learning how to adapt to changing pH levels in the ocean. He opined that mariculture enhancement will be a tool when ocean acidification impacts Alaska's wild stock. 4:49:04 PM STEVE RICCI, Staff, Aleutian Pribilof Island Community Development Association (APICDA), Juneau, Alaska, testified in support of SB 22. He referenced his support letter, paraphrased as follows: APICDA is one of six Community Development Quota (CDQ) organizations created in 1992 by the Magnuson-Stevens Act. Our mission is to increase direct participation in the Bering Sea an Aleutian Islands fisheries for our members and to develop fisheries related economic opportunities in our communities. The CDQ program utilizes fisheries resources to create jobs, build infrastructure, and provide scholarships and workforce development training. The CDQ program has generated critically important and sustainable economic opportunities to 65 coastal communities for over 25 years and help leverage private sector dollars through partnerships and investments. We see tremendous opportunity in mariculture in western Alaska. Business and revenue generation are part of a larger picture. Potential increases to subsistence fisheries, workforce development, and furthering research efforts to better understand the impacts of climatic related ocean changes are all potential long-run benefits. APICDA is a member organization of the [Alaska Fisheries Development Foundation, Inc.] (AFDF), which spearheaded the mariculture initiative. We have also been involved in the AKCRRAB program which researches the rehabilitation of king crab stocks. SB 22 will fill a current gap that exists for permitting and regulating restoration efforts such as the AKCRRAB program and will provide a very important framework for future enhancement efforts. We believe that SB 22 is consistent with the objectives of the Alaska Mariculture Initiative and we fully support the bill. 4:51:37 PM TOMMY SHERIDAN, Director of Government Affairs, Silver Bay Seafoods, LLC, Cordova, Alaska, testified in support of SB 22. He referenced his letter of support, paraphrased as follows: Silver Bay Seafoods began in 2007 as a single salmon processing facility in Sitka, Alaska and has since grown into one of the largest seafood companies in the state, currently operating large scale processing facilities in Sitka, Craig, Valdez, and Naknek. The company is also active in the California squid fishery and is currently constructing a seafood processing facility in False Pass where we will process salmon, pollock, and cod. We also hope to expand into Kodiak in the future as well. Silver Bay has aspirations for developing production-scale mariculture operations in Sitka Sound which at full production would yield up to 20 million Pacific oysters per year, bringing year- round employment to the area along with the production of an environmentally friendly, sustainable, and healthy food source for sale and distribution both locally and worldwide. SB 22 creates a regulatory framework for the effective management of shellfish fishery enhancement, shellfish restoration activities, and shellfish hatcheries. Seed security for such operations has been identified as an impediment to mariculture development in Alaska and it certainly has been a consideration in the development of our own program. This act will allow interested stakeholders to either begin or continue with the enhancement and or restoration of species such as king crab, sea cucumber, geoduck, abalone, or razor clams, thereby supporting shellfish hatchery development in the state. 4:54:01 PM NANCY HILLSTRAND, Shareholder, Pioneer Alaskan Fisheries, Inc., Homer, Alaska, testified in opposition of SB 22. She detailed that Pioneer Alaskan Fisheries has been a corporation in Alaska since 1964, primarily crab fishermen in addition to salmon, herring, and seafood processing. She explained that she is concerned with SB 22 based upon what she has seen with legislation that has been used for salmon hatcheries. She noted that she submitted to the committee an ADF&G review regarding the potential for the legislation to devolve into a problem for wild stocks as well as the wild stock fishermen. She asserted that AKCRRAB needs to take a step-by-step approach for research rather than opening wide open to the large-scale industrial activities that will happen with SB 22. She contended that ADF&G does not have the money to adequately monitor and provide oversight. She opined that ADF&G should have additional funds to do a good job or not do the project at all. She pointed out that some wild stocks are rebounding and noted that a similar situation occurred with salmon wild stocks were naturally coming back when hatcheries were coming on. She asked if the program has an on-off switch and noted that an on-off switch with salmon hatcheries is not used. She disclosed that king crab was released in the Barents Sea and the crab became an invasive species that impacted its cod fishery. She asked that a feasibility study, cost analysis, and risk assessment be done ahead of time. CHAIR BIRCH confirmed that Ms. Hillstrand had submitted a 2009 ADF&G review to the committee. 5:00:31 PM MARCOS SCHEER, Second Vice President, Southeast Conference, Juneau, Alaska, testified in support of SB 22. He disclosed that he is the founder and CEO of Premium Aquatics which is an aquatics farming company. He added that he has served on the board as well as being a member for Alaska Fisheries Development Foundation since 2007. He explained that Southeast Conference is a state and federally funded designated regional economic development organization for southeast Alaska. He continued as follows: For more than 60 years, Southeast Conference has served as a collective voice in advancing the southeast region's economy. Southeast Conference has over 200 members from organizations representing business and governments from 32 regional communities. My company is also a member of Southeast Conference. The mission of Southeast Conference is to undertake and support activities that promote strong economies, healthy communities, and quality environment in southeast Alaska. He set forth that SB 22 is important to the communities and user groups in southeast Alaska that might be advantaged by the legislation, particularly for the rehabilitation of the stocks that have been decimated by sea otter predation. 5:02:49 PM JULIE DECKER, Executive Director, Alaska Fisheries Development Foundation, Inc. (AFDF), Wrangell, Alaska, testified in support of SB 22. She noted in her previous presentation that she failed to mention that AFDF partakes in facilitating seafood sustainability certification in some of Alaska's fisheries. She explained that Alaska's major fisheries are certified as sustainably managed by two international standards via two different programs: The Marine Stewardship Council, and the Alaska Responsible Fisheries Management Program. She said the reason why AFDF seeks certification is because ADF&G puts a priority on wild stocks and uses a precautionary approach to managing Alaska's fisheries. She disclosed that the noted language is included in SB 22 and AFDF expects the same would happen moving forward with shellfish enhancement. 5:04:11 PM SENATOR KIEHL noted that SB 22 does not address seaweed, a subject that Ms. Decker addressed in her previous presentation. He asked if ADF&G looks at seaweed seed producers elsewhere and how seaweed is addressed. MS. DECKER explained that there is no commercial fishery in the state for seaweed, therefore a fisheries enhancement is not eligible for seaweed. She specified that when seaweed is addressed as a mariculture development species, seaweed is expressed only in the aquatic farming realm. SENATOR KAWASAKI asked where in the bill does it have protections for "existing" or "natural" stocks. He referenced the pink salmon issue where studies talk about the possible impact on red and king salmon stocks in Prince William Sound. MS. DECKER replied that ADF&G would be best suited to answer Senator Kawasaki's question. She noted that ADF&G has strict policies around genetics, marking, disease, and where to site enhancement activities in order to reduce conflicts. She said some of ADF&G's policies are embedded and do help with a precautionary approach. 5:06:49 PM JERRY MACCUNE, President, Cordova District, Fishermen United, Cordova, Alaska, testified in support of SB 22. He revealed that Cordova was once known as the "clam capital of the world." He noted that the legislation does not involve a "full blown" hatchery for all the shellfish. He specified that the intent is to boost the stock in some places to see if it will take root. He said in reference to pink salmon, he disclosed that a multi- million-dollar study being paid for by the processors and hatcheries will be completed within two years. He explained that the study will address the interaction between wild stocks and pink salmon. He emphasized that there is no direct evidence at this time that pink salmon are impacting red or king salmon. He opined that SB 22 is a great opportunity. He noted that seaweed is taking off in the world and will be productive for a lot of people in Alaska. 5:08:30 PM CHAIR BIRCH closed public testimony. 5:08:33 PM CHAIR BIRCH held SB 22 in committee.