By Jenny Neyman
When the Cook Inlet Aquaculture Association was established in 1976, the purpose, potential and parity of funding for the organization was a simple, straight line to follow: Commercial fishermen would voluntarily contribute 2 percent of the value of their catch to support the organization, which would work to perpetuate, rehabilitate and enhance fish populations through research, habitat protection and stocking programs, creating stronger and more consistent fish runs that fishermen could harvest.
In the intervening 30 years, that line has gotten tangled into a snarled web of complexity and challenges, leaving some fishermen today to wonder whether CIAA is producing enough benefit to warrant continued financial support — through the salmon-enhancement tax as well as public money in the form of state loans and state and federal grants — or whether enough is simply enough.
“It’s not uncommon for me to talk to people I fish near and around and with who express concern that the moneys that are being paid don’t necessarily realize a measurable benefit. And the benefit doesn’t necessarily have to mean, ‘Because I’m paying 2 percent I’m getting more fish,’” said Jim Butler, who fishes a set-net site north of the Kenai River and has been a Central District drift-net fisherman. He also is a former member of the CIAA board of directors. “I think the benefit I hear from a lot of folks is, overall, is it creating a broader opportunity for anybody to catch fish, whether they be sport or commercial? And it’s not clear that that’s the case, that that’s happening.”
Worth 2 percent?
In the 2010 fishing season, there can be little argument that CIAA’s efforts didn’t produce much direct benefit in terms of fish to harvest. Runs of hatchery-produced sockeye expected back to Resurrection Bay inexplicably didn’t return, and a run of pink salmon that was slated to become brood stock for a new stocking program at Tutka Bay also didn’t materialize in near high enough numbers to allow the egg take to happen.
In an effort to diversify funding from its traditional majority reliance on salmon-enhancement tax funds, CIAA is attempting to build cost-recovery fisheries in Resurrection and Kachemak bays, and was granted harvest priority by the Alaska Board of Fish, allowing CIAA first crack at the fish before commercial boats. This year, with the unexpected failure of the Resurrection Bay sockeye returns, CIAA not only fell far short of its cost-recovery goal — netting about $500,000 instead of $1.4 million — it ended up harvesting all available sockeye and not leaving any for commercial seiners with permits that cover Resurrection and Kachemak bays.
That’s not how the cost-recovery fishery is supposed to go, said Gary Fandrei, CIAA executive director. The intention is that 50 percent of the Resurrection runs will be common-property fish, and all the stocked sockeye returning to lower Cook Inlet will be available for fishermen.
“If the fish in Resurrection Bay had come back as we projected, and with the price what it was, we would
have been done with our cost-recovery harvest about June 7 or 8. Because we didn’t get that return we ended up taking 100 percent of the fish that returned,” Fandrei said. “Obviously, if we take 100 percent of the fish coming back from the hatchery program, we’re not contributing anything to the common property. That’s why we’re here.”
CIAA is hoping the disastrous 2010 season, with the run return failures and a viral outbreak at Trail Lakes Hatchery that led to the loss of over 2 million sockeye fry, is a fluke rather than a continuing trend of stock-enhancement failures. The organization has hope for the future, that the Resurrection Bay sockeye stocking programs will flourish, despite this year’s ominous missing runs; that Kachemak Bay sockeye runs will continue to build; that a successful pink salmon stocking program can be established in Tutka Bay; and that the necessary permits can be secured to expand operations in other areas.
The organization started September facing a $900,000 deficit, which was trimmed to $120,000, and was considering shutting down Trail Lakes Hatchery, the only CIAA-operated hatchery still functioning. The majority of the board voted to keep Trail Lakes open for another year to wait and see what happens with next year’s runs, and seek additional loan funding from the state, on top of its existing $3 million loan debt, to cover operational shortfalls and to start the Tutka pink program.
“There have been a couple of aquaculture associations — DIPAC (Douglas Island Pink and Chum association) was in debt like $30 million dollars. This $3 million we’re in debt is very small compared to others,” said Brent Johnson, president of the CIAA Board of Directors. “They’ve been paying off $4 million a year, and so has the Prince William Sound Aquaculture Corporation. The state has seen Prince William Sound go from these sort of hopeless situations that we’re in right now to very hopeful situations with their loans being paid back. So there is hope for us.”
But with salmon, a single failure sets up a string of far-reaching impacts. The virus outbreak at Trail Lakes Hatchery this year means there won’t be fry to release next spring, which means those sockeye won’t be returning in 2013 and 2014, which means CIAA will again be challenged to meet its cost-recovery goal, which means fishermen likely won’t have a shot at harvesting those stocked fish again those years. And if whatever went wrong with the missing Resurrection Bay- and Bear Lake-released sockeye this summer happens again to next year’s fish, the cycle will repeat itself, with Area H fishermen contributing their 2 percent tax and getting few fish in return.
“If it goes according to plan — we’re talking about fishing, here — I would say you could see a direct benefit to the common-property fishery as early as next year,” Fandrei said. “My biggest fear right now is the loss of the fish to IHN (the outbreak of infectious hematopoietic necrosis virus at Trail Lakes Hatchery). That’s going to affect us a couple years down the road. In 2014 we’re going to have another tight year, it looks like.”
Even in a good year, like 2009 when CIAA met its cost-recovery goal and there were still stocked fish available for fishermen, there’s debate over whether CIAA produces enough benefit to be worth the salmon-enhancement tax and public money that supports it.
In terms of direct cost benefit to fishermen, CIAA’s stocking programs are not equitable to those paying for them. The majority of commercial permit-holders in Area H fish in the Central District, from Boulder Point in the Nikiski area to Anchor Point. CIAA only stocks one run in the Central District — a small sockeye program in Hidden Lake, which feeds into the Kenai River. It doesn’t stock anything available to Northern District fishermen.
All the rest of the fish CIAA regularly produces are stocked in Kachemak Bay and Resurrection Bay waterways, and the pink salmon program CIAA is hoping to start would be in Tutka Bay, also in the Kachemak Bay area. There are about 80 permit-holders eligible to fish those areas, although only about 15 to 20 seiners have done so in recent years.
That begs a question that the CIAA board has faced repeatedly over the years: Why are commercial fishermen throughout Cook Inlet paying for CIAA to produce fish which are predominantly only available for a small number of commercial permit-holders to harvest?
“It’s been brought up before. There were some gear types, some individuals that were pretty sour on opening Tutka (Bay Hatchery for pink salmon production) and on the projects we had going in Resurrection Bay. They say, ‘There’re only 20 seiners that are participating, so you’re just helping them out,’” Johnson said. “It is true there are fewer seiners and (that fishery) doesn’t have great participation, but it’s because the fishery’s depressed. If we make more fish, there will be more fishermen.”
Butler, the set-netter and former CIAA board member, said the question takes on even more weight considering the financial problems CIAA is facing.
“I think a lot of people are seeing two things — one, is what is the benefit? But the other is, who is on the hook for the obligation to pay when the organization undertakes debt obligations? And I think a lot of folks are starting to wonder why the majority of people who pay this tax are not people who realize what they believe is a measurable benefit,” Butler said.
With a funding structure supported by the 2 percent salmon enhancement tax and, the organization hopes, increasing cost-recovery revenue, the “spend money to make money” adage holds true.
“They have to produce fish so the organization can stay on its feet, that’s the bottom line,” said Steve Tvenstrup, a CIAA board member, Central District drift-net fisherman and past president of the United Cook Inlet Drift Association. “It’s pretty tough for me to grasp the funding for Trail Lakes and Tutka being that the Central District drift- and set-net fisheries probably put in at least 50 to 70 percent of the 2 percent tax. From a fisherman’s standpoint, the Central District is funding a lot of the Lower District seine area for the (hatchery) releases. But if that ever gets successful and we do have good returns coming back, the lower Cook Inlet seiners and Seward with them will definitely increase their proportion of the tax.”
But just as fishermen are restricted on where and when they can fish, CIAA is constrained in where and how many fish it can produce. Tight finances necessitate decisions of where resources can be used most cost-effectively. Nature poses constraints on enhancement programs — some waterways simply aren’t suitable for stocking, and streams have carrying capacities that can only support so many fish. And regulatory agencies have a large hand in guiding CIAA’s operations.
“We’re kind of stuck between a rock and hard spot for where we can release fish. The better spots to release them sometimes you don’t get the permits to do it. That’s where the Department of Fish and Game would come in awfully handy,” Tvenstrup said.
In the Central District, CIAA only stocks Hidden Lake. It used to operate a sockeye-stocking program in Tustumena Lake, but that permit was revoked in 2003 after the 9th Circuit Court of Appeals decided the program constituted a commercial enterprise in a federally designated Wilderness Area — the Kenai National Wildlife Refuge — which is not allowed under the federal Wilderness Act.
Tvenstrup said he’d like to see the Eklutna Lake Hatchery back in operation raising pinks and chums. CIAA recently completed work on a fish ladder at Paint River on the west side of Cook Inlet. That’d be a good place to stock pinks and possibly operate another cost-recovery fishery, he said.
Johnson said he’d like to see the Tustumena Lake stocking program resume.
“As far as east-side set-netters, certainly south of the Blanchard Line, when we ran that Tustumena project people more than got their money’s worth. It was a fabulous project,” said Johnson, who has a set-net site in that area. “Nobody’s ever questioned whether lower inlet seiners are getting their money’s worth. We’ve been doing lots of projects down there.”
Johnson, Fandrei and others point out that CIAA does more than just produce fish, it provides myriad other benefits through its research and habitat work. The association operates an internship program that provides training in the fishery biology and management fields. And it secures grants to do habitat improvement projects, like the Paint River fish ladder, and conduct research throughout the Cook Inlet drainage.
“That’s definitely the goal (of CIAA), to be an asset for all the fishermen. We’ve had a lot of problems, so I suppose some people will say they’re not getting their 2 percent worth. But I maintain they definitely have been getting their 2 percent worth in the sake of science alone,” Johnson said.
One of the most prominent research projects CIAA has undertaken is the Susitna River drainage. That system has seen salmon production drop precipitously in recent years. Commercial fishermen in the inlet are often blamed for intercepting salmon before they can make it back to Northern District streams to spawn, but CIAA studies are helping establish the significant impacts of problems in the river system itself, most notably beaver dams and invasive Northern pike, which eat salmon. And it was CIAA weir counts that brought attention to problems with Alaska Department of Fish and Game escapement estimates in the Susitna system, that were overestimating the number of fish returning to spawn.
“When you look at the Cook Inlet Aquaculture Association, it is also involved in habitat projects. It is also is involved in monitoring and making sure you have good management, and operating some flow-control structures that allow fish to get to their spawning grounds on a regular basis. I cannot tell you how much those activities contribute to the fishermen in terms of their harvest. They do contribute, but it’s very, very hard to quantify what that amount is,” Fandrei said. “With habitat, you open up 10 miles of stream to access to salmon and it’s going to produce some fish, but without a very costly, extensive monitoring program, we really don’t know how much that is.”
Another sometimes-overlooked facet of CIAA is that it doesn’t just benefit commercial fishermen. That may have been the primary focus when the association was created 30 years ago, but the makeup of fishing has changed substantially in Cook Inlet in the intervening years, with sport- and personal-use fisheries filling a larger presence at the regulatory table and getting a bigger piece of the allocation pie. Fish produced by CIAA end up on sport lines and in dip nets as well as commercial nets, and improvements to fish runs from CIAA habitat and research projects are a boon to all fishermen.
Given that a lot has changed in Cook Inlet since CIAA was established, maybe it’s time that CIAA changed, too, Butler said.
“We have significantly more people participating in the overall harvest of salmon in Cook Inlet than we did when the aquaculture association was formed. It was basically limited-entry commercial people and a few people fishing on the rivers. Now we have a dip-net fishery that has a very high expectation of fish, we have complexities of wilderness areas that were created by Tustumena. The original model of how things were supported financially might not necessarily work leapfrogging ahead 30 years to where we are today,” Butler said. “I think people are just becoming aware of that and, in looking backwards in order to look forward, it may be that the practices of the past are not necessarily well-suited for the benefits of the future.”
Hatching fish is an expensive, risky endeavor, where one failure can have long-term financial repercussions. Operating in a restrictive regulatory environment makes things that much harder. And financially supporting it all on a revenue stream — fish — that is inherently inconsistent, with fluctuating prices and run returns, creates little wonder that CIAA is in financial trouble.
“I think that it’s not anything nefarious, it’s sort of all these things have culminated over 30 years and it’s hard to shift the paradigm and say, ‘Maybe investing a lot of money in growing fish isn’t the best way to realize a benefit to the people who want to have access to more fish,’” Butler said. “I think whenever you incur a significant amount of debt and you’re doing it on projects that as yet have not been as successful as originally planned, that’s a dangerous thing. It’s sort of hard to borrow your way out of a problem.”
In Butler’s view, CIAA is at a crossroads and needs to decide which of several paths it could take.
Full speed ahead?
One option is to continue on with business as usual. That’s essentially what the board has done in voting to continue operations at Trail Lakes Hatchery, start a pink-stocking program in Tutka Bay and seek additional loans in as-yet-undetermined amounts. Not all board members think that’s a wise course of action.
Ken Tarbox, who sits on the CIAA board as a representative of the Kenai Area Fisherman’s Coalition, voted against that plan.
“The hatchery has had multiple failures and the cause of some failures was unknown and therefore not fixable. These included how IHN is infecting the stocks, why fish did not return to the (Bear Lake) stocking in one year, and why fish did not return to the (Resurrection Bay) net pens in another year,” Tarbox said. “The best-case projections indicate shortfalls in the budget and no common-property fishery for a number of years. Additional loans to keep the facility going will cause debt levels to increase beyond what the 2 percent enhancement tax can repay. Interest alone could exceed the loan payment. Opening Tutka and keeping Trail Lakes going will increase the debt load significantly and the probability of paying the loan back is low in the event of a failure. Therefore, the risk is to the citizen of the state of Alaska as well as future generations of commercial fisherman.”
Butler also is leery of the organization taking further loans to continue enhancement projects. If CIAA fails to pay back the loans, commercial fishermen will be the ones on the hook for the bill, paying off CIAA’s debts with their 2 percent tax far into the future. And those fishermen don’t even get a direct say in the matter.
“The taxpayers don’t vote whether or not to undertake the debt, the board does,” Butler said. “There’s a disconnect between the taxpayers and the people running the organization when it comes to that. They can obligate the taxpayers without any input of the taxpayers. It’s not like a bond or something where the local people have to vote to incur debt for the library.”
Commercial fishermen can petition to call an Area H-wide vote on whether to dissolve CIAA to halt operations and prevent it from incurring further debt, but they’d still be on the hook to pay any outstanding balance.
“I don’t want my children to be stuck paying 2 percent for their careers just because somebody from the government wants to give the aquaculture association $5 million to fund a project that, as yet, hasn’t been able to sustain itself,” Butler said. “… At a minimum, before they (the CIAA board) incur a whole bunch of debt, they should have a vote of the people who are paying it.”
Breaking up is hard to do
Another option is to regionalize the CIAA organization. Butler suggests splitting the organization into one that would cover lower Cook Inlet and Resurrection Bay, and a separate one or even two for the Central and Northern districts.
“That way those folks who benefit from the enhancement are more responsible for those obligations and commitments than the people who are not,” he said. “If you want to have a Seward/Kachemak Bay aquaculture association and they can fund it, fine. But I don’t know that permit-holders up in the northern part of the inlet should necessarily be at risk for a generation of debt if it doesn’t work.”
Splitting up the organization would also address concerns some have raised about the makeup of the board. For one thing, the board is quite large, with 12 appointed seats that represent commercial fishing associations; five elected, inletwide commercial fishing representative seats; seven appointed seats representing governments; and three appointed seats representing regional organizations and processors.
“One of the governance challenges is because the board is so big that it becomes a little bit more unwieldy,” Butler said.
Johnson said the habit has been to include anyone who has an interest.
“If somebody wants to be involved, we welcome them,” he said. “The thing we really run into is the opposite of that — people who come on and want to be involved but don’t want to go to monthly meetings and sit through them. That sort of deal.”
Board members are mostly people in or associated with the commercial fishing industry, raising concern over conflicting interests, since members are often voting on matters that could have direct financial impacts on them.
“I think it’s a challenge for the board to police itself in that regard. That’s not to impugn anybody who’s attempting to do things, but it’s just a reality that when you’ve got people who are in the harvest or processing sectors at the table, how do you wear two hats? It gets kind of complicated,” Butler said.
As Johnson points out, that conflict wasn’t CIAA’s doing.
“The way that the state set up these regional nonprofit aquaculture associations is that commercial fishermen must maintain 51 percent of the votes on there. We’re not the ones that are making it a conflict-of-interest deal,” he said. “The bottom line is the people that are making money are commercial fishermen, and we’re the ones usually footing the bill, too.”
There’s also nothing to prevent a certain gear type or regional interest from holding a board majority, since a board member could be a municipal representative and also a permit holder, for example. Currently, people associated with the lower inlet and Resurrection Bay seine fisheries represent a majority voting block on the board. In those situations, it’s incumbent for board members to think about what’s best for CIAA as a whole and all the areas it covers, Johnson said.
“If I’ve done anything while I’ve been president of the aquaculture association it’s been to just preach and try to get everybody to stay together. I believe firmly that we’re going to be a way better and more effective aquaculture association if we don’t divide up the areas and gear groups and keep this unified,” Johnson said.
Charting new course
A third option is for CIAA to move away from salmon stocking altogether and focus on research projects and habitat enhancement.
“The term ‘protecting habitat’ was sort of theoretical in the mid-’70s, and now with invasive species and increased pressure we’ve really learned that those are critical components that might have significantly more benefit and be more cost-effective for the number of fish that return, just because you’re dealing with habitat,” Butler said. “So we need to look at the model that we’re continuing to prop up. The cost associated and the debt associated in trying to grow fish when they have not been successful at it is far greater and riskier than trying to just make the natural systems better.”
Tarbox proposes a similar change in course away from hatchery operations.
“CIAA has spent over $20 million in enhancement fish tax monies and has loans on top of this, plus the Ted Stevens earmarks. The question I keep asking is, ‘How does this revenue benefit upper Cook Inlet commercial, personal-use, and sport fishermen?’ I do not see it under the present enhancement/hatchery approach. If they changed direction and went for habitat protection, invasive species programs and restoration projects, they could be a valuable partner with government and other nonprofits,” Tarbox said.
An organization that’s been rolling in one direction for 30 years inevitably has an infrastructure and momentum built up to keep it heading in that direction. That can be good or bad, depending on whether the goal is achievable, and whether that goal still represents the best direction for the organization.
“One of the positives (of CIAA) is it’s been around for a long time and it’s found a way to navigate a pretty challenging operational environment. I think maybe the risk is, because of that, it’s hard for it to make changes,” Butler said.
CIAA’s ultimate challenge is one with which fishermen are quite familiar: Is it time to fish, cut bait or cast in a new direction?
“It definitely gives me concern, and sitting on the board I have a fiduciary responsibility to the other permit-holders in Cook Inlet that I sit on there to represent,” Tvenstrup said. “And there’s definitely going to be a time when enough’s enough and we can’t take any more debt. Whether that’s now or sometime in the future, time will tell.”
Butler challenges that it should be fishermen who tell, not just time.
“It’s basically the frog in the pot,” he said. “That’s kind of the concern. I don’t know what the threshold would be, but I think if (CIAA) is in a position where its operations are not currently sustainable, incurring large portions of debt to try to undertake projects that as yet have not worked, that might get some people looking differently at it.”