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TOM WHEELER:

Welcome to the Econews Report. I'm your host this week, Tom Wheeler, executive director of EPIC. And we are going to be talking about the Nordic Aquafarms project and most particularly, a big announcement last week that they're changing the fish that they are hoping to raise here on the North Jetty of Humboldt Bay. Joining me to talk about changes to the project are Scott Thompson, the Project Manager and Engineer with Nordic. Hey, Scott. And Jacki Cassida, the Public Relations Manager from Nordic. Welcome both of you to the show. Thanks very much. Nordic is changing what species it hopes to grow at its future facility on the North Jetty of Humboldt Bay. Scott, tell us what you were planning to raise and what is the plan now?

SCOTT THOMPSON:

So, originally the project proposed to raise Atlantic salmon on the Small Peninsula, and now we're switching to a yellowtail kingfish, which is native to the Pacific, where Atlantic salmon obviously is not.

WHEELER:

Why Atlantic salmon in the first place? I think a lot of people were kind of scratching their heads and I think initially led to some concerns with the project that non-native fish, we've seen Atlantic salmon escapes from net pen facilities, which this is not, elsewhere on the West Coast. So why Atlantic salmon in the first place?

THOMPSON:

Well, that's really where the roots of Nordic Aqua Farms was. We are not a net pen company. We kind of are trying to solve some of the issues that exist within water fish farming by bringing everything on land. But over the last three years, all of our facilities in Europe have converted to yellowtail kingfish and they're seeing a lot of success with that species. It's a much smaller market than Atlantic salmon. With Atlantic salmon, it's one of the most commonly farmed fish in the world and it's a huge market. So the scale of the Atlantic salmon project was necessary to be competitive in that market where with yellowtail, we can start a little smaller.

WHEELER:

So, you're making the switch to yellowtail. As I understand, there are, it has a smaller market, but it is perhaps a more attractive market for Nordic. Jackie, can you talk about the kind of expectations for Nordic in terms of the US retail market for this species of fish?

JACKI CASSIDA:

One thing that we noticed with yellowtail is that there is a higher price point and the popularity for yellowtail in the sushi market is quite good. Ceviche, crudo, it's also a very versatile fish. So as more people learn about how to utilize it, the more popular it becomes. It's a mild flavored fish, so it's well-received. In terms of the market demand in 2022, there was a good increase both in the US and in Europe. There's been experts in the industry who have expected to see the same for the coming years. So we're in a pretty good position to make this switch.

WHEELER:

So from a price point to as I understand a yellowtail can sell a higher dollar amount per pound than Atlantic salmon because it is perhaps a more luxury item, which I'm sure it's not the framing that you would like, but because it has a higher price point, that means that the facility in Humboldt could potentially be downsized or that there are adjustments to this project because of the change in fish. Scott, perhaps you could tell us about kind of the initial size of the project and how big the build-out would have been and now what the company is expecting because of the change in fish species.

THOMPSON:

Absolutely. So what we analyzed in the EIR was a 28,000 metric ton per year salmon facility. And with yellowtail, well, and that was in two phases. So it'd be about half that in each of the phases. With the yellowtail kingfish, like it's mentioned, it was a smaller market. So the phase one of the project will be much smaller than 14,000 metric tons, probably closer to 3,000 metric tons. And eventually we would grow into potentially a similar footprint, but it would be more of an organic growth over time as the market grows. With us, yes, it will be smaller in the first phase. And time and again, through the permitting process, we heard from the public, why can't you start smaller and build trust in the community and prove that you can do exactly what you say you can do? This will allow us to do that. With Atlantic salmon, the scale was really necessary for the financials to work out. But with the yellowtail kingfish, the smaller facility makes sense. The follow on question when we say we're starting smaller is, are you still going to remediate the site? And absolutely that no matter what is the first step of the project is bringing down the old boiler building, the old smokestack. We have a ground improvement we need to do. So we'll be moving a lot of soil around and through that, everything will be sampled. Anything that has any impacts will be segregated and disposed of properly. The cleanup of the site will still move forward.

WHEELER:

That's good to hear and you beat me to my next question, but maybe I can rephrase it in a way to make sure I'm understanding. So, although it's going to be a smaller project footprint, the physical building size will be less. The amount of site cleanup will remain the same between the project as envisioned before and the project as envisioned now. Am I hearing you correct? Yep.

THOMPSON:

Absolutely. So I'd say around 80 to 90% of the costs of cleaning up that site are the smokestack and the boiler building. The smokestack unfortunately has an asbestos coating on it, and there's asbestos in every other building on the site. Our investors would never build a world-leading modern facility in the shadow of an old smokestack that has cracks in it. The seismic concerns that we have here locally, so it's going to start about the same. It might be more phased on the ground densification side of things, but we need to get those old structures down to de-risk the site from an investment perspective.

WHEELER:

How does the change in fish species and then accordingly the change in project size, how does that impact what is the development window? Are you still on track to where you thought you'd be able to tear down the smokestacks? How far out into the future, I guess, should we have a planned celebration for the demolition of that?

THOMPSON:

In my role, I'm forced to be an optimist and permitting never really goes by the optimistic timeline. I thought for sure by now somebody would let me blow up that smokestack. But as we're looking right now, our permitting timeline is already extending into 2024. So the Army Corps of Engineers has a permit for the Harbor District intake side of the project and they are statutorily required to go last. So that would be after the Coastal Commission and after the water board. So yeah, we're into 2024 before we can even get all of our permits. And we have complication on the site of the bird nesting season. That's April through August. So the structures out there are decaying and are missing pieces. So they're very porous. And you do see a lot of bird activity out there. So trying to do demolition over the summer is not a wise move. Every time you have a bird nest, you have a radius around that. And eventually you have no site you can work on and a bunch of equipment costing a lot of money sitting doing nothing. So it really depends when everything falls into line. But once we do get all of our permits, are able to get out on the site, the demolition is going to take six to nine months. And then we have ground densification activities after that. So there is a lot of time until we can actually start pouring concrete on the foundations. But that's kind of generally high level what we're looking at now. But there's no guarantee that we'll get permits when we think we will or they will get.

WHEELER:

little. Optimistically, Jackie, when might somebody see fish in a recirculating aquaculture system on the Nordic site here in Humboldt Bay?

CASSIDA:

I tend to be optimistic like Scott. I would love to be able to say that we can see a fish put in the water by 2026, but that's still a little bit of an unknown I think.

WHEELER:

permitting, I know that this has been a bit of a frustration for Nordic, particularly at its main facility. So for folks watching what's going on in Maine, why do you have expectations that California might go differently? What about this project is different than that project? That means that you might have more smooth sailing here.

CASSIDA:

Jackie? A lot of it has to do with the connections with the community in terms of making sure that we're hearing and addressing all of the concerns, making sure those communication lines are open, making sure that we understand the expectations from all of the aspects for this project. And we've learned a lot from our experience here in Maine, and we wanted to do it just a little bit differently in California to pave the way a little bit smoother. It's still going to have its challenges, but I think that connection with community and the organizations is helpful to keep strong.

THOMPSON:

Yeah, one advantage we have here in California is the existing infrastructure. So there is already an outfall pipe that's highly underutilized at this point, and there already is infotainment infrastructure existing on the site, and then the site's a brownfield, so it's hard to find anybody that wants that site to remain the way it is, and finding somebody to come and clean it up is not an easy proposition. Yeah.

CASSIDA:

Definitely got both perspectives from the engineering side and the community side.

WHEELER:

I know the first time I visited the site, I was shocked by like the Mad Max dystopian future that it looked like. Rusty metal everywhere, ponds filled with weird liquid. So I, having visited the site, could see why cyber mediation and a redevelopment for something that might be less impactful, it could be a benefit to the site, could be a benefit to Apple Pay to get weird toxic things out of the ground. Let's turn to how the changes in fish species might change environmental impact. And then you've gone through this long experience of doing CEQA California Environment Quality Act analysis for this project and how that change might impact your CEQA analysis. Let's start at energy use. And I know that this is probably a frustration for you, Scott, because the past EIR somewhat examined yellowtail as a potential alternative to Atlantic salmon. And the past EIR concluded that it would actually increase energy use. Energy use has been a big concern for folks here locally because pumping water, chilling water, all of these sorts of things are fairly energy intensive. But last time we talked, you said that the yellowtail, the switch to yellowtail, will actually reduce the total energy from the project. You talk about why that is and why the past environmental impact report was incorrect. ?

THOMPSON:

Absolutely. So when we put together the EIR, we're operating off of the best information we had available. You think a warm water species might need more energy in the cold waters of the Northern California here. So it is a little counterintuitive, but we've also learned from converting an Atlantic salmon facility into a yellowtail facility in a similar climate. So the water's a little cooler over there where this change happened, but not significantly. And what we saw was about a 10% reduction in energy use overall for the project. So it yeah, it's counterintuitive again, but what it comes down to is that the yellowtail kingfish likes water warmer, where Atlantic salmon likes the water cold. So all of that equipment that we use for treating the water and keeping it clean and making sure that our effluent is perfectly clean, it puts heat into the water. So with the Atlantic salmon, we need to get rid of that heat to keep the salmon cool. But with the yellowtail kingfish, we kind of run the heat pumps the other way. So we keep all of the heat on the farm and our effluent temperature will actually go down and be closer to the receiving waters, which is counterintuitive for a warm water species. But that's what we've seen on our farms and we have the data and everything. So now we're just in a much more knowledgeable position, but we did the best we could do when we put together that document. And unfortunately we got that one a little off.

WHEELER:

things like that happen and I appreciate the kind of process of CEQA and the ability to update when there's better new information. So one thing I wanted to focus on that you said the temperature of the effluent that will come out of the pipes right so this is the water that has some degree of nutrients that is going to be discharged at the end of the pipe back into the ocean. You say it's going to be cooler than it would have been because you're going to take the heat that was in the water kind of suck it back out and keep that heat within the aquaculture system. Is that right? That's correct. Okay so how how does that change in temperature how might that affect the diffusion of the effluent so we might have nutrients in this is it going to change how fast it can get absorbed into the surrounding waters?

THOMPSON:

Thankfully, that existing infrastructure, the outfall pipe, has a very large diffuser array on the end, so it breaks down the large pipe into two-inch ports, 144 of them at the end, and those are angled up at a 45-degree angle, and the water will still be slightly warmer than the receiving waters, so it will still have a tendency to rise. So we will still see very rapid mixing to background. It's very dynamic off the coast here in the Pacific Ocean with strong currents, and our previous analysis showed that everything went back to background within six feet of the diffusers, you know, in 80 feet of water in the Pacific Ocean, but with this temperature being closer to the receiving waters, that would probably go back to background even faster.

WHEELER:

The change to Atlantic salmon. Fish are able to take in food and convert it to protein differently. How does yellowtail compare to Atlantic salmon in the amount that you're going to need to feed the fish per pound of product that you're able to sell, pound of protein, that can go back to human markets?

THOMPSON:

So I can't speak specifically to the protein, but what the metric in the industry is, is called food conversion ratio or FCR. So Atlantic salmon have been farmed since the seventies and the food conversion ratio has come down over that time through research and improving the quality and makeup of the feed to more appropriately match the dietary requirements of Atlantic salmon. So Atlantic salmon is very low right now. It's close to 1.1, which almost feels like it's impossible where you put in 1.1 pound of feed and you get one pound of fish out of that. So yellowtail hasn't been farmed as long, but we are still seeing the same trends of the FCR going down. And that includes on our own farms. So it was maybe as high as 1.4 when we did the EIR, but it is coming down over time. And the expectation is that eventually we will get pretty close to where they've gotten with salmon. I don't know if it'll get all the way down to 1.1, but it is something that's coming down and improving. Our farm is part of leading that effort to study these fish and improve, make it most efficient system.

WHEELER:

possible. And that's important because one of the environmental concerns from aquaculture systems is the use of feedstock. That's been one of the things that we've been interested at at EPIC and Humboldt Baykeeper and other environmental groups is trying to use Nordic to move the feedstock industry to develop more sustainable feedstocks. So instead of taking bycatch or bait fish from the ocean, can we start to find algal or vegetal or insect based foods? In this report we're talking about Nordic aqua farms and their announced change from Atlantic salmon to yellowtail. So for yellowtail, what do we know about their kind of dietary demands compared to Atlantic salmon? Will they need kind of a more protein rich food or is it kind of a one to one we can still sub the food?

THOMPSON:

My understanding is that there is slightly higher protein in the feed for the yellowtail, but outside of your groups, there is extreme pressure on the industry as a whole to be as sustainable as possible. And all of our farms have third-party certification. Our feed suppliers have third-party certification. There's a lot of interesting things happening at the research level and coming out into the industry over time. But insects is a big one. Like you said, algae is another big one. That's where the omegas start in the food chain. They're not produced by fish. They move their way up the food chain. There's a lot of pressure on the industry and there's been a lot of movement on the responsible side of farming. But I will say there are a lot of terrible and irresponsible things happening, like you said, with the bait fish. That's not something that we would ever source our fish meal or fish oil from. That's part of the certification process. Typically, a lot of the things that are included in the feed are byproducts. Like if you take a sustainable fishery and take what the human consumption market wants to use, what's left is very suitable for our needs as a feed source.

CASSIDA:

I was at a conference recently for aquaculture and one takeaway that I could say from talking with feed industry representatives from around the world really, is they are noticing that demand for sustainable resources. And so the entire feed industry is working towards making those changes. So that's a great step in the right direction. It's not just for Nordic, but lots of other farms that are making that request to be more sustainable. So the feed industry is hearing it and they're making those changes as much as they can. The priority is making sure that we are paying attention to fish health and welfare. So that's of course the thing that we have to make sure that we prioritize.

WHEELER:

So let's talk about fish health. One of the promises of Nordic has been no antibiotics. There's not going to be anything funky escaping from the farm that's going to go back and impact human health by, let's say, the use of antibiotics, creating, you know, antibiotic-resistant strains of bacteria. Scary stuff, right? This is a problem with large factory farms of other stripes over use of antibiotics. So how will you ensure that the fish here are going to be healthy, not sick, not needing antibiotic steroids, other things pumped into the system? What is the process to make sure that, you know, it's just going to be fish and fish food going into that water?

CASSIDA:

We have a very strong bio plan. As we develop our knowledge with yellowtail production, that bio plan that will always evolve. But the primary goal is to make sure that our facility is secure biologically, the biosecure facility, that our broodstock begins in a healthy capacity. And, and just maintaining and monitoring the water quality, how the fish look every day, how the behavior is maintaining that sort of monitoring on a daily basis, which can get pretty, probably tedious for our, for our techs, but it's important. And, and we'll, we'll have a state certified veterinarian that, that we use to consult with if we need to. So those are, our bio plan is, is something that is going to be adhered to, to make sure that we are doing all the right things for our fish.

THOMPSON:

You know, us being on land, we really have control over our facility. It's very robust water treatment on the intake and the outfall. So it's sterile is a medical term. It's not the correct term to use here, but technically we're sterilizing everything that's coming onto the farm and leaving the farm, unlike other farming operations that are in the ocean and net pens, they have no control what comes in or leaves. So they're, they're forced into a situation where they need to use things like you mentioned to deal with pathogens and parasites within the population. So us being on land and having this robust water treatment system, we're able to preclude those things from coming onto our farm in the first place, being able to amplify in our systems or being able to get off of the farm. And then to the brood stock, which Jackie mentioned, fish and wildlife require that any thing coming onto our farm comes from a facility that has a three year clean bill of health. And that includes pathogen monitoring. There's very robust, redundant systems in place to make sure that things don't get onto our farm, but we always do reserve the right. If the impossible happens, we want to be able to treat the fish instead of call them. And that would be disclosed. Absolutely. But our active farms, which we have a long track history of clean bill of health. We don't use antibiotics or anything like that.

WHEELER:

So I understand that Yellowtail will no longer require the brackish water that Atlantic Salmon required. So one of the original parts of this project was going to be a fairly substantial pull of water from the municipal water district. What is the change in water sourcing? How is that going to impact this project? The seawater is going to be pulled from the sea chest adjacent to the project. Are you going to require more water from the sea chest? And how do you anticipate mitigating whatever impacts may flow from pulling water from the sea chest from Humboldt Bay? So

THOMPSON:

We are absolutely mitigating for that, but the overall blanket message is the smaller, slower start, we're going to be using less water overall, but the freshwater component is what's decreasing the most. We still need freshwater for all of our facilities, for our staff, and then for processing of fish, but the yellowtail kingfish is a marine species, so it doesn't have a freshwater portion of its life cycle, where with Atlantic salmon, they would naturally start their life in a river in freshwater and then move into saltwater. So that life stage doesn't exist with the yellowtail kingfish, so the use of freshwater will go down, but overall, our use of saltwater will be much slower to start with and lower. Overall, I don't believe we'll get to that 10 million gallon size that we initially proposed, but some of the mitigation that's associated with the intakes is pile pulling. So there's a lot of abandoned creosote piles in Humboldt Bay, and creosote is toxic, it has impacts, and this also impacts the ability of eelgrass to colonize those areas. So we've identified, I believe, 988 piles over by the Kramer Dock, proposed to remove from the bay for the overall improvement of the health of the bay. There's also a longfin smelt impact that's potentially been identified, so we are proposing some channel improvements in a brackish part of the bay that could help the overall health of longfin smelt in the bay as well.

WHEELER:

smaller footprint of the new facility. How much smaller are we looking at and what does that mean for things like the protection of ESHA, Ecologically Sensitive Habitat Areas?

THOMPSON:

Absolutely. So with Atlantic salmon and the scale that was required, we really used every inch of that site. All of our buildings were as close together as they could be with the fire code. We were within 35 feet of the environmentally sensitive habitat area. So that was the setback that we had in the design. So the environmentally sensitive habitat area on the site is mobile sands with the predominance of native plants. So it's not a sand dune shape, it's a flat area, but it's considered a sand dune and sensitive habitat. So with this project change, it just provides us more flexibility. So originally Coastal was hoping we could stay 50 feet away from that Esha and have that as a buffer. And that's absolutely on the table now. There was also an area where we were close to the bay. I think it was a pretty small strip, maybe 50 feet of land. And that was potentially in the marine harassment zone. When we're doing things like ground densification, we would need to do it at a low tide and have biological monitors, but this will probably allow us to not have to go there anymore. So it gives us a lot more flexibility where things were really tight before. Now we just have a little more wiggle room. Even though we think we'll eventually grow into a similar footprint, it does provide us with flexibility that we didn't really have with the scale that was required with the Glamisk Salmon.

WHEELER:

What does this change mean for your SQL process? Have you figured out what's required for updating and disclosing potential new impacts or adjusting your impacts analysis?

THOMPSON:

So there are no new impacts across the board, it will be equal to or less significant than the project that was analyzed. But as far as what needs to happen, the county is the lead agency and technically owns the EIR CEQA document and it will ultimately be their decision on what needs to happen moving forward. But like I said, our permitting timeline is out into 2024 right now and whatever they deem is appropriate, we do have time to accommodate. Yeah, we definitely want to complete the process appropriately.

WHEELER:

And so you also need to have sign off from a number of California agencies. The change in species, how might that impact CDFW's role, the California Department of Fish and Wildlife's review of your project.

THOMPSON:

So CDFW has never approved Atlantic salmon to be grown in California and they may never. We don't really know. We always knew it was a big ask, but that said, Cereola lalandi or yellowtail kingfish is an approved aquaculture species in California for fish and wildlife. There are other people already growing it in the state, but that doesn't mean we'll get our aquaculture registration right away. They review every project individually just because it's on the list doesn't mean you'll get your permit and your registration. Yeah, we hope that it helps make their decision easier because salmon is such an iconic species in California, even the entire West Coast up into Canada. And it's a population that's really struggling right now. So yeah, it's challenging times and we hope this helps them make their decision a little easier.

WHEELER:

How about the Coastal Commission? What is the Coastal Commission's role in all of this? And does the change have any impact on how Coastal might think about the project?

THOMPSON:

I believe it would have impacts but what's going on with coastal right now is we were issued a CDP, a development permit by the county, and then that was appealed to the Board of Supervisors, and then that was appealed to the Coastal Commission. That is one of our CDPs for the upland farm, the land based element of the farm. There's also a CDP required for the outfall, use of the outfall pipe, and then for the intakes for operation of the intake so there's three separate actions in front of the Coastal Commission right now and we continue to work with them and look forward to hopefully getting a positive staff report in the.

WHEELER:

So any expectation on when you might hear about your coastal development permit for intake and outfall?

THOMPSON:

It's never a hard timeline, but right now it looks like we could be in front of Coastal for the first time in June or July. And then the water board is likely, hopefully going to be going in close to October. And then it sounds like the other two actions, the review of the appeal of the county CDP and the intake CDP would likely be after that, potentially in October.

WHEELER:

November. Does all this need to be wrapped before any part of the project can begin? Can you not knock down, let's say the smokestack until the final permit is in hand? Yeah.

THOMPSON:

a very complicated process trying to permit anything in California, especially something like this project as three separate CDPs. That's highly unusual. But yeah, we need to know that we'll be able to build the project before our investors are willing to pay the substantial stunt that it's going to take to clean up that site because that is the first step of the project. So it needs to be de-risked from a permitting perspective before they'll be willing to invest in cleaning up the site.

WHEELER:

Question for the both of you. I imagine there have been misinformation or misunderstandings that have been frustrating. Now's your opportunity. What is the thing that you wish people would better understand about the project that you think is just kind of a continuing false narrative? Jackie, would you like to go first?

CASSIDA:

But in terms of the thing that I would love to see people take into account is the work that's been done to study environmental impacts and to understand that we really do have the best intentions in terms of making sure that we adhere to our core values and our mission. And we do take those to heart. It is important to us that the environment be impacted in a minimal way. And it's important to us that our community has the benefit of us being there as a company. So we hope that people understand that those are things that are very important to us and that we're not going to be there to try to pollute the ocean. I mean, we are all nature lovers as well, to put it simply.

WHEELER:

Scott, frustration is misinformation you want to correct. Last chance.

THOMPSON:

I guess the two that kind of come to the front of my mind is that we're not a net pen company. We're not trying to put anything in the water. Also the persistent Frankenfish thing, you know, we've never raised a genetically modified fish and we won't. So yeah, I take and echo Jackie's considerations to as an environmental engineer, my job is to try to improve our relationship with the environment. And I think this project checks every box in my book as far as being a responsible part of this community.

WHEELER:

Well, so I started the show by saying that I hope that we can answer some of the questions that people have had. So I think that I really gained a lot through this show. I hope our listeners did as well. If folks have continued questions that they want answered, who should they reach out to? Who should they talk to at Nordic? Bye.

CASSIDA:

I would love to hear from them. You're welcome to email me anytime and I have a wonderful team to defer to answer as many questions as we can. Jackie, what's your email? Jackie, J-A-C-K-I dot Cassida, C-A-S-S-I-D-A at nordicaquifarms.com.

WHEELER:

Well, Jackie, expect to get a bunch of questions after this show airs. Jackie.

CASSIDA:

j-a-c-k-i dot casida c-a-s-s-i-d-a at nordicaquifarms.com.

WHEELER:

And thank you to both of you for joining us on today's episode.

CASSIDA:

It was a pleasure. Thanks for having us.

WHEELER:

Join us again on this time and channel next week for more environmental news from the North Coast of California.