Yes, this is an issue for all fish hatcheries. The output is a combination of uneaten food and eaten food coming out the other end of the fish. If this were a private business, they would have been shut down long ago.
Do a web search on "fish hatchery pollution" and you will find many examples in NH and around the country of the issue. Other than shuttering the facility, the solution is to build what is effectively a very expensive, waste water treatment facility, something that F&G and the state have been trying to avoid due to budget pressures. In the end, the taxpayers and sporting community will need to bear the cost of the facility.
FYI: The Powder Mill hatchery is the largest one in the state.
Here's one example:
https://www.michiganradio.org/post/p...hery-pollution and further proof that it can be fixed
https://www.outdoorhub.com/news/2011...ery-effluents/