This note is a combination of thanking everybody for getting involved with the hatchery mitigation issue, some discussions about the mitigation hatcheries and recommendations on some very important next steps that in my opinion the mitigation hatcheries must take.

To begin - I want to thank everybody who got involved and helped to restore the funding for the mitigation hatcheries. Restoring the mitigation funds – and having Congress provide the Fish and Wildlife Service specific directions - was the result of the efforts of many, many folks – all of you and many others. Your efforts will ensure the continued growth and health of the mitigation hatcheries as well as the aquatic habitats and fisheries resources. Absolutely fantastic job by everybody! Thank-you!

I also want to thank all of the hatchery friends groups; all of the trout unlimited chapters; all of the National Fisheries organizations, and everybody that wrote letters, talked to or met with a Representative, Senator or their staffs, or were able to take their Congressional member out on the water to see the habitat and experience catching trout. Again, an absolutely fantastic job by everybody! Thank-you!

The reason I got involved in this issue in the first place was to let everybody know the truth about our hatcheries instead of the constant stream of lies emanating from the Service’s Directorate. Once we were able to reveal the truth - it was upsetting to see the Directorate unable and unwilling to stand up and correct their lies. During my 38 years of working with the Service I had witnessed some decisions that involved the ‘bending’ of the truth – but this was the first time I had ever witnessed the Service’s Directorate totally falsify and lie about everything!

During the mitigation hatchery issue I also provided my opinion on what I considered to be decisions that lacked vision and common sense. One of those issues was when the Service decided to bring back the Bo Ginn and Meridian hatcheries within existing funds. This was the first time I have ever heard of a Region taking back a hatchery, closed by Congress, without receiving new operating and maintenance funds from Congress and the Washington Office.

To operate and maintain Bo Ginn and Meridian – even minimally – may impact the Region’s ability to properly fund the operations and maintenance of the other hatcheries and FWCOs in the Region. The Southeast Region has historically operated its entire Fisheries program utilizing creative financial techniques to offset the insufficient amount of funds it annually receives from the Washington Office. If current programs are not fully funded they will not meet agreed upon resource and fish production goals. As a result, the hatcheries and FWCOs could then be classified as being inefficient, ineffective and too costly to operate - placing their future in doubt.

The signing of the FY 2012 Appropriations bill not only restored funding for the mitigation hatcheries in FY 2012 but it also provided an opportunity for the mitigation hatcheries to determine their own destiny. The signing of the bill provided the Service the following directions:

• All of the mitigation hatcheries will be fully funded in FY 2012.
• Congress supports the efforts by the Service to recover mitigation costs from other Federal partners.
• The amount of reimbursable funding must be sufficient to fully operate and maintain the mitigation hatchery program.
• Each reimbursable must be in place before the Service moves forward to eliminate Service funding for the mitigation hatcheries.
• Since the mitigation hatcheries are fully funded there should not be any operational disruption at any of the hatcheries.

Based on the above directions I offer the following opinions, realities and recommendations:

All of the mitigation hatcheries will be fully funded in FY 2012

Congress wants the mitigation hatcheries to continue to be operated and maintained – by the Service - until the Service negotiates and finalizes written reimbursable agreements with the other Federal agencies.

It is my opinion based on the following sworn testimony before the House Committee on Appropriations, Subcommittee on Interior, Environment and Related Agencies of Acting Director Rowan Gould and Deputy Director Dan Ashe that the mitigation hatcheries will not only be funded in FY 2012 – but also in FY 2013 and beyond:

• “We see it as a transfer of funds.”
• “And it’s our goal to continue the operation of all of these mitigation hatcheries by working with the other federal agencies.”
• “But from a policy perspective our goal is the same, and that is to keep these hatcheries operating and providing the mitigation fish to support this function.”

I fully realize that throughout this ordeal the Directorate has been unable to tell the truth about the mitigation hatcheries and the reimbursable. Hopefully, their sworn words to Congress, the Administration and the American public – will finally mean something to them.

Congress supports the efforts by the Service to recover mitigation costs from other Federal partners

Everybody in the conservation community agrees on this statement – that the Service should be reimbursed by the Corps of Engineers, Tennessee Valley Authority, Bureau of Reclamation’s Central Utah Project and the Bonneville Power Administration for mitigation activities.

To really ensure a long term and binding reimbursable a piece of legislation needs to be passed by Congress and signed by the President. If the Service settles on other means to secure reimbursable funding such as a Cooperative Agreement or Memoranda of Understanding folks need to realize that both of these can be canceled with a 30 day notice. If this happened all of the hatcheries would be closed because of a lack of funds.

The amount of reimbursable funding must be sufficient to fully operate and maintain the mitigation hatchery program

It has become very evident that the Directorate, the Washington Fisheries Office, and even the Regional Directorate’s do not have a clue as to the correct amount of reimbursable funding needed for the mitigation hatchery program or the other mitigation entities (Fish Health stations etc). Therefore, it would not be a smart or wise decision to let the same folks that incorrectly determined, improperly documented and poorly calculated the current reimbursable amount to proceed to recalculate a new reimbursable amount or renegotiate the reimbursable with the Federal partners.

I strongly recommend that the mitigation hatcheries place their destiny into their own hands and be proactive in the reimbursable funding issue. A mitigation workgroup comprised of every mitigation hatchery manager and supervisor impacted by the reimbursable needs to be established. The workgroup would have as its primary responsibility – the goal to determine the correct amount of money needed by the Service to fully meet its long standing mitigation commitments with the Corps of Engineers, Tennessee Valley Authority, Bureau of Reclamation’s Central Utah Project and the Bonneville Power Administration

As a final outcome the workgroup would develop a document that would clearly show that all reimbursable funding calculations are correct and fully adequate to sustain and grow the hatchery mitigation program into the future. The document would be submitted to the Service’s Directorate for review and approval. Once the document is approved and signed workgroup members would take the lead in all negotiations.

The workgroup document for each Federal partner’s reimbursement should address the following:

• Develop funding and production baselines encompassing one or several years to identify as normal a year(s) as possible for each hatchery. These baselines must be comprised of actual spending as well as actual numbers and weight of fish produced and stocked. The baselines added together will determine the amount of funds the Service actually spent and how many fish were produced for mitigation – in a normal year. The baselines would also be able to identify such items as cost per fish, cost per pound etc – per hatchery. These types of baselines must be developed in order to properly determine the amount of reimbursable needed.
• Develop and cost out a thorough up-to-date deferred maintenance list. It is important to update all of the costs in the deferred maintenance lists since construction costs increase at a much higher rate than inflation. Determine the amount of deferred maintenance funds that need to be annually recovered in the reimbursable.
• Discuss and develop a mechanism that would enable the mitigation hatcheries to park some of the deferred maintenance reimbursable into a no-year account. Some of the reimbursable ‘maintenance’ funding would be added to that account each year. This account would be used to address very large maintenance projects and also serve as an emergency maintenance fund to address damage from acts of God etc.
• Discuss and develop a mechanism that will allow mitigation hatchery staff to receive annual pay increases or promotions. If this mechanism is not in place there will be insufficient base reimbursable funds available for any pay increases or promotions in year 2, year 3, etc of the reimbursable!
• Discuss and move forward with language identifying annual inflation and how that will be addressed in the reimbursable..
• Discuss and move forward with a recommendation on the amount of overhead that needs to be added to the reimbursable. It is extremely important for the Service to arrive at one fixed amount – and stay with that fixed amount throughout the length of the reimbursable. In reviewing the current indirect cost recovery rate structure the Service could legally charge anywhere from 0% to as high as 38% overhead. For example, a reimbursable of $7 million with an overhead of 38% would require the COE to pay an overhead cost of $2.66 million – making the $7 million dollar reimbursable – a $9.66 million reimbursable. That number is outrageous! A discussion and final recommendation on overhead must involve the Directorate.

When these issues are fully addressed the workgroup will arrive at the actual or real amount of mitigation funds needed to be reimbursed by each of the Federal partners.

To offset the severe credibility and integrity problem the Directorate has created for itself – this workgroup needs to be very open and very transparent. It would behoove the workgroup and especially the Directorate if the workgroup conducted regular briefings for interested Representatives and Senators in order to discuss and review workgroup progress and documents. As previously mentioned the outcome of this workgroup must show that all reimbursable funding calculations are correct and fully adequate to sustain and grow the hatchery mitigation program into the future.

Each reimbursable must be in place before the Service moves forward to eliminate Service funding for the mitigation hatcheries

This is an excellent directive and ensures that the Directorate must wait until all of the Federal partners have signed agreements that clearly identify the necessary funding required in order to fully and correctly operate and maintain the hatchery mitigation program at its historic long-standing baselines as well as into the future.

As I mentioned before to really ensure a long term and binding reimbursable a piece of legislation is required. If the Service settles on other means to secure reimbursable funding such as a Cooperative Agreement or Memoranda of Understanding folks need to realize that both of these can be canceled with a 30 day notice.

Since the mitigation hatcheries are fully funded there should not be any operational disruption at any of the hatcheries

Since the mitigation hatcheries will be fully funded all of the operational and maintenance needs for FY 2012, FY 2013 and beyond will be met. There should be no more threats to reduce production or withhold maintenance funding. Congress should be notified if any hatchery does not receive full operational and maintenance funding.

Reality clearly tells us that because of the long and heated negotiations that Congress and the Administration have been involved in regarding the Federal deficit and spending – all Federal programs will probably be facing budget issues during the next several years. For a Service program to be successful during any type of budget issue – the program must meet its mutually agreed upon resource goals and objectives, it must be cost efficient and cost effective and it must have strong public and political support. The current hatchery mitigation program has been successful and it will continue to be successful as long as the Service and the Directorate fully meet the directions that Congress provided in the FY 2012 Appropriations bill.

One other point – this entire issue should have sent a clear message to every National Fish Hatchery and FWCO in the Nation – about the importance of having a Friend’s group, of being connected to your community and State, and working with everybody that has an interest in/with the fisheries resource. People can and do make a difference with everything that you do!

This is going to be my last email – unless the Directorate or Regional Directorate fails to provide full mitigation hatchery operational funding or full maintenance funding or if they try to reduce mutually agreed upon fish production goals. Please, let me know if that happens and I will renew my email conversations with the Directorate!

Rick Nehrling