Existing law requires the Fish and Game Commission to establish fish hatcheries for the purposes of stocking the waters of California with fish, and requires the Department of Fish and Wildlife to maintain and operate those hatcheries.

This bill would enact the Delta Smelt Preservation and Restoration Act of 2016. The act would require the department to develop a Delta smelt hatchery program to preserve and restore the Delta smelt. The bill would require the department to enter into mitigation banking agreements with banking partners for the purpose of providing take authorizations to banking partners and to obtain funding from banking agreements.

The bill would appropriate an unspecified amount of money from an unspecified source to the department for purposes of implementing the bills provisions.

Date of Hearing: January 12, 2016

ASSEMBLY COMMITTEE ON WATER, PARKS, AND WILDLIFE

Marc Levine, Chair

ABPCA Bill Id:AB 1325 (

Author:Salas) – As Introduced Ver:February 27, 2015

SUBJECT: Delta smelt

SUMMARY: Enacts the Delta Smelt Preservation and Restoration Act of 2016 which would require the Department of Fish and Wildlife (DFW) to develop a Delta smelt hatchery program, and to enter into mitigating banking agreements authorizing take of Delta smelt in exchange for funding of the hatchery program. Specifically, this bill:

1. States legislative findings and declarations regarding the Delta smelt, including its status, life cycle, and known threats, the need for a comprehensive strategy for a sustainable Delta that addresses ecosystem and reliable water supply needs, and the need for a comprehensive solution. Further finds that immediate action is needed to address the critical condition of Delta smelt, and that a Delta smelt hatchery is one element in what should be a suit of actions aimed at habitat improvement and species recovery.
2. Requires DFW to develop a Delta Smelt Hatchery Program to preserve and restore the Delta smelt to be implemented by January 1, 2018.
3. Requires that the hatchery program do all of the following:
4. Design a propagation facility for the purpose of:
   1. Establishing a refugia population of Delta smelt;
   2. Developing brood stock for scientific and educational purposes;
   3. Providing a source of fish for supplementation of wild populations.
5. Develop three potential sites within or adjacent to the Delta for a hatchery.
6. By January 1, 2019, design and construct a hatchery on one of the three sites.
7. Develop a hatchery management plan in consultation with the University of California and the United States Fish and Wildlife Service (USFWS), and other scientific peer review as deemed appropriate by DFW.
8. Establish and operate a mitigation bank to provide authorization for take of Delta smelt under the California Endangered Species Act (CESA).
9. Adopt guidelines and procedures for entering into mitigation bank agreements and regarding the cost of participation.
   
10. Requires DFW to enter into mitigation banking agreements with banking partners for the purpose of providing take authorization for Delta smelt under CESA. Requires that the mitigation banking agreements require a banking partner to participate in the mitigation bank at a level that is roughly proportional to the banking partner’s impacts on Delta smelt. Requires that financial contributions to the mitigation bank shall be determined to provide sufficient certainty that financing is available to cover each banking partner’s share of the annual operations and to satisfy the mitigation obligation of the banking partner under a CESA incidental take permit issued by DFW.
    
11. Requires DFW to issue an incidental take permit under CESA for take of Delta smelt if DFW enters into a mitigation banking agreement that satisfies all the requirements of this bill.
    
12. Requires Delta smelt reared for refugia populations, scientific research, and population augmentation to be counted towards mitigation credits, and for hatchery production in excess of the obligations of mitigation banking partners to be available as mitigation credits to meet obligations of future activities, and to satisfy mitigation obligations required under the federal Endangered Species Act (ESA), consistent with a mitigation plan approved by the USFWS.
13. Provides that funding necessary for long-term operations and maintenance of the hatchery program shall be paid for by revenues received from banking partners, and that funds provided through banking agreements shall be dedicated to program implementation, and not used for other purposes.
    
14. Appropriates an unspecified sum of money from an unidentified source to DFW to implement this bill, and provides that the costs of planning, design and construction of the hatchery, including purchase of land, shall be made from this appropriation. Requires an audit of all funds received every 3 years.
15. Authorizes DFW to contract with public agencies outside state government for planning, design, construction, and operation of the hatchery.
16. Authorizes DFW to partner with the USFWS.
17. Requires DFW to cooperate on development of long-term comprehensive Delta ecosystem solutions to ensure consistency with the hatchery and mitigation bank program created by this bill.
18. Mandates that a Delta smelt hatchery program be included as an action in any state-adopted comprehensive Delta ecosystem program.
19. States that nothing in this bill shall diminish the protections provided to Delta smelt under state law, provide for illegal taking of Delta smelt, or eliminate the requirements for compliance with CESA.

12) Defines various terms for purposes of this bill.

EXISTING LAW:

1. Provides, under the state CESA and the federal ESA for the listing of species that are threatened or endangered for additional legal protections, including a prohibition on “taking” of such listed species, in order to avoid extinction. Allows for the issuance of permits by DFW authorizing take of listed species where the take is incidental to an otherwise lawful activity, the impacts of the authorized take are minimized and fully mitigated, as specified, and the take will not jeopardize the continued existence of the species.
2. Lists the Delta smelt as threatened under the federal ESA, and as endangered under the state CESA.

FISCAL EFFECT: Unknown; Includes an appropriation of an unspecified amount.

COMMENTS: This bill requires the DFW to construct a Delta smelt mitigation hatchery and to enter into mitigating banking agreements authorizing take of Delta smelt in exchange for funding of the hatchery program.

1. Author’s Statement: The author’s stated purpose with this bill is to require DFW to establish and operate a Delta smelt fish hatchery as a mitigation bank to spawn and rear smelt for release into the Delta, with the intent of increasing the population to a level that warrants removal of the species from the endangered species list. The author, in background information provided to the committee, indicates that the listing of the Delta smelt under federal and state endangered species acts “has triggered a series of regulatory and legal actions, and despite these measures, the Delta smelt population has reached record lows. Water supplies have been dramatically reduced for two-thirds of California residents and for Central Valley farmers that grow half the nation’s fruits and vegetables. In addition to these cut-backs, more protections have been put in place, which are expected to reduce water deliveries by 30 percent, affecting at least 25 million Californians. For over 15 years, UC Davis’ Fish Conservation and Culture Lab have bread Delta smelt in captivity, with the goal of preserving the population until Delta conditions are such that the population can be released into the wild. The Bureau of Reclamation has committed funding of $2.5 million per year, but more resources are needed to continue research and breeding of a smelt population that could replenish the population in the wild. The effect of the Delta smelt crisis has been significant in many communities. Not only is there a decrease in agricultural production, but corresponding decreases in agricultural employment. The restrictions on Delta pumping have not improved the long-term prospects for the smelt.”
   
2. Background:

a) Status of the Delta smelt: Delta smelt are a small fish endemic to the Sacramento San Joaquin Delta. They inhabit the freshwater/saltwater mixing zone of the estuary, and migrate upstream to spawn in freshwater. They typically have a one year life cycle, with some fish surviving for up to two years. The Delta smelt was first listed as threatened under the federal ESA and state CESA in 1993. Record low indices prompted the listing of the species as endangered under CESA in 2010.

A smelt working group, consisting of scientific fisheries experts with the USFWS, United States Bureau of Reclamation, United States Environmental Protection Agency, California Department of Water Resources, DFW, and the National Oceanic Atmospheric Administration (NOAA) Fisheries, has been meeting for over a decade to address recovery efforts for the species. The USFWS and smelt working group have identified four significant threats to Delta smelt, including: 1) direct entrainment in state and federal water export facilities, 2) summer and fall increases in salinity, 3) summer and fall increases in water clarity, and 4) effects from introduced species. Other potential threats include ammonium, predation, entrainment in power plants, contaminants, and small population size. According to the USFWS, low abundance, in concert with ongoing threats throughout the species’ range, indicate the Delta smelt is now in danger of extinction throughout its range.

Leading fisheries biologists have warned that the Delta smelt is on the verge of extinction and could disappear from the wild within the next two years. The 2014 Fall mid-winter trawl survey showed the lowest number of Delta smelt in 47 years of record keeping. The 2015 Spring trawl survey caught only 6 smelt. It is also worth noting that while the status of the Delta smelt has in the past significantly affected operations at state pumping facilities and water exports from the Delta, in the past year federal fish officials placed no restrictions on pumping from the South Delta because the smelt were mostly not present.

It is also important to understand the Delta smelt crisis in the larger context of the overall health of the Delta environment. The Delta smelt has been significant because, as one of the species most sensitive to changes in the Delta, it has served as an indicator species of the overall health of the Delta ecosystem. Fishery biologists warn that as the Delta smelt go, so are other listed fish species affected by conditions in the Delta. Such species include Chinook salmon, Longfin smelt, green sturgeon, and Central Valley steelhead. A Delta smelt hatchery alone would not address the underlying problems in the Delta that impair Delta smelt habitat, and the habitat of other listed species.

b) Existing Delta smelt fish hatchery programs are already in operation: Two Delta smelt hatchery operations in California already exist to protect a refugia population of Delta smelt in the event of their extinction in the wild. The USFWS manages a population of captive bread Delta smelt at its fish hatchery below Shasta Dam. The University of California at Davis (UCD) also manages a captive breeding program of Delta smelt for experimental and conservation purposes at a lab in the Delta south of Stockton. Both facilities raise hundreds of smelt at a time through their entire life cyles.

The USFWS hatchery program is part of a pilot program at Livingston Stone National Fish Hatchery, a small hatchery on the Sacramento River near the base of Shasta Dam. Currently, there is no plan to reintroduce the 20,000 smelt raised at Livinston Stone into the Delta. Rather, they are being kept as a safety net in case the ongoing population crash causes extinction in the wild. The pilot project is planned to last for about five more years, and could be supplanted by a permanent smelt-breeding operation.

Delta smelt being raised at the UCD Fish Conservation and Culture Laboratory in the Delta are similarly being held as an emergency stock. The facility has been operating for the past 7 years raising a refuge population, working to preserve their genetic diversity, and to supply fish for scientific research. In the Spring of 2015 the facility was awarded a $10 million grant - $2.5 million per year for four years – from the United States Bureau of Reclamation (Bureau). In approving the grant award, the Bureau stated that the lab, by maintaining a genetically diverse population of Delta smelt in captivity, could provide a seed population for future rehabilitation should their habitat in the Delta ever recover. UCD indicates the goals of the project are: 1) to continue to develop the Delta smelt refuge population as a safeguard against species extinction, 2) to create a genetically sound population of captive fish for research purposes, and 3) to conduct experiments on smelt physiology, health, condition and behavior.

c) Policy Questions for the Committee: The mitigation provisions in this bill would allow entities who agree to pay a portion of the costs of a mitigation hatchery, to receive an incidental take permit for the take of Delta smelt under CESA. This is a significant departure from current CESA requirements. Under existing law, the state can issue an incidental take permit for a species that is listed as endangered only if: 1) the take is incidental to an otherwise lawful activity, 2) the impact of the take is minimized and fully mitigated, and 3) the take will not jeopardize the continued existence of the species. In contrast, this bill would require DFW to issue a take permit to any entity who enters into a mitigation banking agreement with DFW and agrees to pay a proportional share of the costs of operating a Delta smelt hatchery. This bill would also appear to provide that this alone would be sufficient to satisfy all of the avoidance and mitigation required for an incidental take permit under CESA. This is particularly significant since it appears extremely unlikely, at least at this time or for the foreseeable future, that Delta smelt reared in the hatchery would be able to be released or survive in the wild.

The committee may also wish to consider whether requiring a third hatchery program to be developed by DFW at this point, particularly if that hatchery is focused on maintenance of a refuge population of Delta smelt, wouldn't be redundant and duplicative of the existing hatchery programs operated by UC Davis and the USFWS.

d) Can captive populations be used to restore Delta smelt in the wild? According to Dr. Peter Moyle, this question is not an easy one to answer, but it is clear that “this could not work as long as the conditions that caused the Delta smelt to decline continue. These conditions include competition and predation by alien species, altered food supply, multiple water contaminants, and water exports upstream and within the Delta. The extended drought also presumably has worsened these conditions and pushed the smelt over the edge of the extinction cliff, or close to it.” (quoting Dr. Moyle from March 18, 2015, article “Prepare for Extinction of Delta smelt” posted by UCD’s Center for Watershed Science.) Dr. Moyle further states that “at the very least, reintroduction would have to wait until we had wet years with lots of inflow from the rivers. But if we wait too long for reintroduction, the smelt may not be capable of living on their own in the wild. Having multiple generations in captivity tends to alter behavior and general “fitness” of fish. The problems hatchery salmon have surviving in the wild are a reflection of this lack of natural selection.”

1. Prior and related legislation: SB 207 (Florez) of 2009 was substantially similar to this bill. SB 207 was held in the Senate Natural Resources and Water Committee.

SB 994 (Florez) of 2008 was also substantially similar to this bill. SB 994 was heard in this committee in April and May of 2008, and subsequently held in the Assembly Appropriations Committee. The Assembly policy committee analysis noted that SB 994, as initially proposed, set objectives for a smelt hatchery that were difficult if not impossible to achieve, including removal of the Delta smelt from listing under the ESA. The analysis pointed out that a hatchery population cannot be relied on as a sustainable population for purposes of the ESA. Second, the analysis noted that a hatchery or refuge population may in fact impair the likelihood of the Delta smelt’s survival, noting that federal biologists have identified salmon hatcheries as a stressor on wild salmon, due to problems such as spreading of disease. Third, the analysis noted that the concept of a Delta smelt hatchery had not been proposed by ESA regulators, or by state or federal biologists that administer the ESA, in any biological opinion or conservation recommendation.

SB 994 was then amended to shift the emphasis to mitigation bank credits and take permits under the state but not the federal ESA, and to require banking partners to pay all costs. The amendments retained the requirement that DFW create a hatchery, but focused the hatchery on creation of a refuge population rather than on reintroduction or supplementation of wild populations, though that continued to be one of three stated purposes for the hatchery. The amended bill was then re-heard by the committee. The committee analysis again pointed out that neither state nor federal biologists had recommended a new Delta smelt refuge population as a conservation recommendation in any federal biological opinions, or in drafts of the Bay Delta Conservation Plan (BDCP).

Committee staff is not aware that any such recommendations have been made by federal biologists since that time, and recommendations for a Delta smelt hatchery were not included in drafts of the BDCP. Moreover, since SB 994 was proposed there have been two Delta smelt hatchery programs implemented in California that are already rearing refuge populations. Consequently, the same concerns that were raised with the earlier proposals remain relevant today.

The Department of Fish and Game (now DFW) opposed SB 994, finding it problematic on a number of fronts. Among the objections raised by the department were the following:

1. It is unclear under the language if the bill would create an exemption from all CESA requirements for export water diverters who provide Delta smelt hatchery funding, by establishing a presumption that funding a hatchery is adequate to address the proportional minimization, avoidance and full mitigation requirements for water exports. It also indicates that the hatchery must be part of a long-term comprehensive solution. If an assumption is created that a hatchery alone compensates for the “proportional impacts” of export water diversions, then the bill appears to pre-decide that the balance of the comprehensive solution is to be funded by the public or others.
2. The bill is too narrowly focused on growing Delta smelt, which is only one of the imperiled species in the Delta, and ignores other critical factors including the need for habitat and revisions to water management.
3. The bill conflicts with existing CESA protections and current mitigation banking practices, and would be expensive, with the planning, design, construction, operation and maintenance of a hatchery, costing many millions of dollars.
   
4. Support Arguments: Supporters assert this bill would help to restore the Delta smelt population and allow state, federal and other water users to enter into agreements to provide funding to operate smelt hatcheries. They argue this bill would provide the dual benefits of developing methods of research to increase the Delta smelt population and allowing Delta smelt reared in the hatcheries to be counted toward mitigation credits for mitigation bank partners so that more water will be available to supply water users that rely on the State Water Project and the Central Valley Project.
   
5. Opposition Arguments: Opponents assert this bill would gut the requirements of the California Endangered Species Act, undermining protections for fish and wildlife in the Bay-Delta estuary, without addressing the underlying causes of the decline of numerous fish and wildlife species in the Delta. By requiring DFW to construct and operate a mitigation hatchery (using taxpayer funding) that would provide authorization to take listed species, opponents assert this bill would effectively eliminate existing legal requirements that the impacts of take be fully mitigated and that the take not jeopardize the continued existence of the species. Opponents further argue that hatcheries do not address the underlying causes of numerous fish declines in the Bay-Delta estuary, do not minimize and mitigate the effect of take on the species, and are unlikely to prevent the extinction of the species in the wild.

Prior Committee Action: This bill was previously heard by this committee on April 28, 2015, and failed passage. Reconsideration was granted and this bill is scheduled to be heard for VOTE ONLY on January 12, 2016.

REGISTERED SUPPORT / OPPOSITION:

Support

Semitropic Water Storage District

Kern County Water Agency

Metropolitan Water District (in concept)

Opposition

California League of Conservation Voters

Center for Biological Diversity

Clean Water Action

Coastal Environmental Rights Foundation

Defenders of Wildlife

Environmental Water Caucus

Friends of the River

Natural Resources Defense Council

Restore The Delta

Sierra Club California

The Nature Conservancy

Wholly H2O

Analysis Prepared by: Diane Colborn / W., P., & W. / (916) 319-2096