July 29, 2004
Division Of Scientific Authority
U.S. Fish and Wildlife Service
4401 N. Fairfax Drive, Room 750
Arlington, VA 22203
This letter by Sturgeon AquaFarms LLC (SAF) responds to the request of the U.S. Fish and Wildlife Service (FWS) for public comment on the proposed rule under Section 4(d) of the Endangered Species Act relating to beluga sturgeon. SAF has established a beluga aquaculture facility in Pierson, Florida, in a partnership with Evans Farms, and seeks a permit exemption for Florida beluga sturgeon farmers (allowing importation of live captive-bred fish and trade in domestically farmed beluga products), thereby placing us on a par with our counterparts outside the U.S. As outlined in comments submitted by the Florida Department of Agriculture and Consumer Services (FDACS), Florida’s extensive management policies and regulatory framework governing aquaculture place it in a unique position to address many of FWS’s concerns related to domestic beluga farming. Further, we believe that it is unwarranted to exclude domestic fish farmers from the opportunity to contribute to international efforts targeting species conservation.
In the rule listing the beluga as threatened and in the proposed special rule, FWS expresses several concerns related to domestic aquaculture: 1) risk to U.S. native sturgeon through aquaculture of foreign species; 2) lack of any conservation benefit to wild populations if broodstock from native countries is exported and concomitant undermining of incentives for sustainable harvests in the range countries; and 3) limited amount of caviar from aquaculture sources sufficient to reduce demand on wild stocks.
The first concern dealing with potential risk to U.S. sturgeon species is addressed in detail in the submission by FDACS. However, we would like to supplement that submission by setting out specific examples utilized at our aquaculture facility in Pierson, Florida, designed to prevent any harm to native fish. The farm is completely land-locked, with no outlet to any natural body of water. The fish are kept in high-walled concrete tanks covered with protective netting, so there is no danger of fish escaping or being taken by wild animals or birds. We use a re-circulating water system, with effluent water channeled to a wetland within farm limits, ensuring that no effluent contacts any surface body of water. Additionally, we employ a closed-cycle operating system; the energy sources and water filtration system are triple-redundant in case of a technical or mechanical malfunction. We are confident that these and other safeguards eliminate any potential risk to native fish.
The second concern is the potential undermining of incentives for sustainable harvests in range countries if competing aquaculture operations are allowed in other nations. FWS has referred to cases involving management of the American alligator and South American vicuna as analogous: in both instances, farming for commercial purposes was limited to range countries. However, the facts surrounding those species are different in a number of relevant respects from those surrounding the beluga sturgeon. It was the range countries themselves that prohibited commercial farming operations abroad vis-à-vis the alligator and vicuna. The U.S. determined that only domestic farming of the alligator would provide sufficient economic incentive to protect the reptile. Similarly, the vicuna range nations signed a convention agreeing not to export fertile specimens. Thus, in both cases the range countries saw fit to protect their own nascent domestic ranching operations, and exercised their ability to exclude other countries through their monopolistic control over the respective species.
In contrast, beluga production is a well-established industry in many of the range countries, spanning nearly half a century. The economic incentives entailed by local farming are well-documented in the administrative record and are clearly providing for sustainable harvests, as evidenced by the recent documented increase in beluga populations. Additionally, the beluga range countries export live, fertile captive-bred specimens. Part of the revenue from this trade contributes to beluga conservation in the form of funding for anti-poaching and restocking activities. For example, SAF has an agreement with a Romanian aquaculture operation on the Danube River for a supply of live sturgeon fry. This agreement requires a compensatory release of fingerlings for every kilogram of exported fish. In 2004 alone, this Romanian operation released over 40,000 beluga fingerlings into the river delta. Based on such exports of live, captive-bred beluga, aquaculture operations have already been established in non-range countries (including the U.S.); the undersigned has personally visited substantial beluga farms in Germany and Israel.
The FWS proposed special rule will prohibit aquaculture of beluga sturgeon only in the U.S. The special rule will not reach non-range country aquaculture operations outside the U.S., which will continue to supply the world market with beluga products. Thus, the proposed rule will single out U.S. farmers as the only national group barred from engaging in commercial beluga operations. While it is understandable when countries act to protect commercial activities involving species within their own borders (as the case with the alligator and vicuna), it is perplexing that the U.S. would act to the detriment of its own citizens, shutting down a legal commercial aquaculture facility while the residents of other countries remain free to pursue this type of enterprise. It is all the more perplexing when viewed in light of the U.S. initiating this policy on its own, and not at the request of the range countries. Apparently, the range countries believe there is sufficient economic incentive to maintain sustainable harvests and promote conservation without resort to anti-competitive measures.
It is doubtful that prohibiting U.S. beluga aquaculture will have the intended effect of improving the species’ conservation. As noted above, other countries’ residents already engage in commercial trade in farmed beluga products and the proposed rule will have little effect on their operations. Moreover, allowing U.S. beluga aquaculture will not adversely affect wild beluga populations for a number of reasons, the main one being that there are sufficient captive-bred specimens available for farming. It is unnecessary to resort to wild stock to either start or maintain an economically viable operation. If FWS is concerned that wild broodstock might be used for U.S. aquaculture, the special rule could include a requirement that only captive-bred fish can be imported and used for farming. There currently exists technology where it is possible to distinguish between wild and farm-raised specimens based on their diets. These tests are available from various educational and scientific institutions in many countries, including Russia and the U.S. Using this technology, there will be no danger of aquaculture diminishing wild stocks, because farm broodstock can be limited to known captive-bred beluga.
The proposed rule could actually have a negative effect on beluga conservation. Due to the Florida Legislature’s declaration encouraging advancement of sturgeon production in the state, and its mandate promoting development of aquaculture, Florida has extensive expertise in the field of sturgeon aquaculture. We have drawn on that expertise in the establishment of our aquaculture business. One of the by-products of engaging in aquaculture is increased scientific knowledge of the species. In turn this expertise is shared with other farming operations - including those in the range countries - thereby adding to the growing body of knowledge covering the life-cycle of the beluga.
For example, we have facilitated contacts between various scientific entities in the U.S. and Russia for the purpose of information exchange. One such instance was putting an Idaho research group (University of Idaho Aquaculture Research Institute) in touch with sturgeon scientists in Krasnodar and Yaroslavl, which initiated a fruitful cooperation between these parties. We have shared our business plan and technical design for a closed-cycle aquaculture system with farmers and scientists in Russia and Bulgaria. Additionally, in June 2004, we organized hatchery visits in Astrakhan with Dr. Frank Chapman, a University of Florida Assistant Professor of Fisheries and Aquatic Sciences and a recognized expert in the field of sturgeon reproduction. During this trip we met with farmers, scientists and businessmen involved in sturgeon conservation and breeding, as well as caviar production and identification. We exchanged ideas and shared technologies related to the propagation of beluga sturgeon in the Caspian Sea. It is this type of information sharing that contributes to improved conservation of the beluga. However, without some anticipated economic benefit from commercial activity, such continued research and technical knowledge exchange will be impossible, precluding us from contributing to the species’ conservation.
The third concern can be found in the final rule listing the beluga sturgeon as threatened. There, FWS stated that “it is not clear that the limited amount of beluga caviar available from aquaculture sources would sufficiently reduce the demand on wild stocks to cause a direct conservation benefit to the species.” 69 Fed. Reg. 21428. Conversely, FWS has elsewhere expressed the apparently conflicting concern that non-range country aquaculture will become so successful that it will overtake the U.S. market to the detriment of range country operations. We believe the situation is somewhere between these two extremes: while current non-range country aquaculture is not a significant source of beluga caviar, given time and legal status it will produce sufficient amounts to relieve some pressure on the demand on wild stocks, thereby contributing to conservation. However, the continued strong demand for beluga caviar, when coupled with the difficulty of establishing a viable aquaculture operation (which requires a substantial investment in terms of money, technical expertise and time) ensures that range country trade will not be eclipsed by competing entities.
If FWS remains concerned that there awaits an explosion in caviar production by non-range countries poised to swamp the U.S. market (thereby harming the range countries’ trade and resulting revenues devoted to conservation), the special rule could establish U.S. aquaculture as the sole source of non-range beluga products. This alternative has the advantage of domestic oversight of the entire aquaculture process – from ensuring the import of only captive-bred specimens for stocking, to tracking beluga products through the entire chain of distribution to ensure that no illegally harvested caviar or meat enters the market. It is unlikely that domestic beluga products will overtake range countries’ production, given the investment costs and limited number of states allowing aquaculture of foreign species.
FWS has stated its intention to evaluate domestic aquaculture programs on a case-by-case basis through permitting procedures. We believe this approach to be unworkable and would effectively preclude any beluga aquaculture in the U.S. The establishment of a successful aquaculture operation demands an extraordinary dedication in terms of money, acquiring technical expertise and appropriate facilities/equipment, and most of all – time. The extended life-cycle of the beluga, taking up to 8-10 years to reach maturity and thus capability of producing caviar, means that an aquaculture business must make a substantial long-term commitment. Because of these exceptional demands, a stable and predictable investment climate is paramount. The unpredictability of being able to obtain a permit – and to maintain it for the requisite extended period in order to realize a return on one’s investment – would have the practical effect of prohibiting domestic beluga aquaculture.
Lastly, we disagree with two statements published in the special rule. On page 38868, under the heading “Small Business Regulatory Enforcement Fairness Act,” FWS states that the proposed rule “would not have significant adverse effects on … the ability of United States-based enterprises to compete with foreign-based enterprises.” In fact, the rule as written would have a significant adverse effect on SAF’s ability to compete with its counterparts outside the U.S. Similarly, on page 38869, under the heading “Takings,” FWS states that the proposed rule does not have significant takings implications, and that affected individuals would have more freedom to pursue activities involving beluga sturgeon. In point of fact, if the special rule is promulgated as currently written, SAF is an “affected individual” that would not have the promised increased freedom to pursue activities involving beluga sturgeon. It would still need a permit to engage in aquaculture, just as if the special rule were never implemented. Moreover, if SAF were required to apply for a permit which was denied, this scenario would amount to a taking under the Fifth Amendment requiring just compensation. Therefore, the proposed regulatory action would have the effect of denying all economically viable use of our substantial investment.
For the reasons discussed above, we respectfully request that the special rule regarding beluga sturgeon include an exemption allowing U.S.-based aquaculture for commercial purposes without resort to the permit process.