[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



 
                           CATCH SHARES AS A

                          MANAGEMENT OPTION:

                         CRITERIA FOR ENSURING

                         SUCCESS--PARTS 1 & 2

=======================================================================


                           OVERSIGHT HEARINGS

                               before the

                    SUBCOMMITTEE ON INSULAR AFFAIRS,

                          OCEANS AND WILDLIFE

                                 of the

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

          Tuesday, March 16, 2010 and Thursday, April 22, 2010

                               __________

                           Serial No. 111-48

                               __________

       Printed for the use of the Committee on Natural Resources



  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
                                   or
         Committee address: http://resourcescommittee.house.gov





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                     COMMITTEE ON NATURAL RESOURCES

              NICK J. RAHALL, II, West Virginia, Chairman
          DOC HASTINGS, Washington, Ranking Republican Member

Dale E. Kildee, Michigan             Don Young, Alaska
Eni F.H. Faleomavaega, American      Elton Gallegly, California
    Samoa                            John J. Duncan, Jr., Tennessee
Frank Pallone, Jr., New Jersey       Jeff Flake, Arizona
Grace F. Napolitano, California      Henry E. Brown, Jr., South 
Rush D. Holt, New Jersey                 Carolina
Raul M. Grijalva, Arizona            Cathy McMorris Rodgers, Washington
Madeleine Z. Bordallo, Guam          Louie Gohmert, Texas
Jim Costa, California                Rob Bishop, Utah
Dan Boren, Oklahoma                  Bill Shuster, Pennsylvania
Gregorio Sablan, Northern Marianas   Doug Lamborn, Colorado
Martin T. Heinrich, New Mexico       Adrian Smith, Nebraska
George Miller, California            Robert J. Wittman, Virginia
Edward J. Markey, Massachusetts      Paul C. Broun, Georgia
Peter A. DeFazio, Oregon             John Fleming, Louisiana
Maurice D. Hinchey, New York         Mike Coffman, Colorado
Donna M. Christensen, Virgin         Jason Chaffetz, Utah
    Islands                          Cynthia M. Lummis, Wyoming
Diana DeGette, Colorado              Tom McClintock, California
Ron Kind, Wisconsin                  Bill Cassidy, Louisiana
Lois Capps, California
Jay Inslee, Washington
Joe Baca, California
Stephanie Herseth Sandlin, South 
    Dakota
John P. Sarbanes, Maryland
Carol Shea-Porter, New Hampshire
Niki Tsongas, Massachusetts
Frank Kratovil, Jr., Maryland
Pedro R. Pierluisi, Puerto Rico
Vacancy

                     James H. Zoia, Chief of Staff
                       Rick Healy, Chief Counsel
                 Todd Young, Republican Chief of Staff
                 Lisa Pittman, Republican Chief Counsel
                                 ------                                

          SUBCOMMITTEE ON INSULAR AFFAIRS, OCEANS AND WILDLIFE

                MADELEINE Z. BORDALLO, Guam, Chairwoman
     HENRY E. BROWN, JR., South Carolina, Ranking Republican Member

Dale E. Kildee, Michigan             Don Young, Alaska
Eni F.H. Faleomavaega, American      Jeff Flake, Arizona
    Samoa                            Doug Lamborn, Colorado
Frank Pallone, Jr., New Jersey       Robert J. Wittman, Virginia
Gregorio Sablan, Northern Marianas   John Fleming, Louisiana
Donna M. Christensen, Virgin         Jason Chaffetz, Utah
    Islands                          Bill Cassidy, Louisiana
Diana DeGette, Colorado              Doc Hastings, Washington, ex 
Ron Kind, Wisconsin                      officio
Lois Capps, California
Carol Shea-Porter, New Hampshire
Frank Kratovil, Jr., Maryland
Pedro R. Pierluisi, Puerto Rico
Nick J. Rahall, II, West Virginia, 
    ex officio
Vacancy
                                 ------                                
                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Tuesday, March 16, 2010..........................     1

Statement of Members:
    Bordallo, Hon. Madeleine Z., a Delegate in Congress from Guam     1
        Prepared statement of....................................     2
    Brown, Hon. Henry E., Jr., a Representative in Congress from 
      the State of South Carolina................................     3
        Prepared statement of....................................     4
    Hastings, Hon. Doc, a Representative in Congress from the 
      State of Washington........................................     5
        Prepared statement of....................................     6
    Jones, Hon. Walter B., a Representative in Congress from the 
      State of North Carolina, Prepared statement of.............   118

Statement of Witnesses:
    Backus, Edward H., Vice President, Community Ecosystem 
      Services, Ecotrust.........................................    39
        Prepared statement of....................................    41
        Response to questions submitted for the record...........    48
    Cobb, Leesa, Executive Director, Port Orford Ocean Resource 
      Team.......................................................    54
        Prepared statement of....................................    57
        Response to questions submitted for the record...........    62
    Fina, Mark, Ph.D., J.D., Senior Economist, North Pacific 
      Fishery Management Council.................................    21
        Prepared statement of....................................    22
        Response to questions submitted for the record...........    30
    Rosenberg, Andrew A., Ph.D., Senior Vice President for 
      Science and Knowledge, Conservation International..........    34
        Prepared statement of....................................    36
    Schwaab, Eric, Assistant Administrator for Fisheries, 
      National Marine Fisheries Service, National Oceanic and 
      Atmospheric Administration, U.S. Department of Commerce....     7
        Prepared statement of....................................     9
        Response to questions submitted for the record...........    12

Additional materials supplied:
    Anderson, Lee, University of Delaware; Trevor A. Branch, 
      University of Washington; Mark Carr, University of 
      California, Santa Cruz; Christopher Costello, University of 
      California, Santa Barbara; David B. Eggleston, North 
      Carolina State University; Steven D. Gaines, University of 
      California, Santa Barbara; John C. Ogden, University of 
      South Florida; Michael K. Orbach, Nicholas School of the 
      Environment, Duke University; Stephen Palumbi, Stanford 
      University; Charles H. Peterson, University of North 
      Carolina at Chapel Hill; Pete Raimondi, University of 
      California, Santa Cruz; James N. Sanchirico, University of 
      California, Davis; Wolfram Schlenker, Columbia University; 
      and Bob Steneck, University of Maine, Letter submitted for 
      the record.................................................    87
    Arnold, Stephen A., Kingston Trawlers, Inc., West Kingston, 
      Rhode Island, Statement submitted for the record...........    90
    Bowman, Ben, Policy Analyst, Food & Water Watch, Washington, 
      D.C., Letter and attachment submitted for the record.......    90
    Brooks, Glen, President, Gulf Fishermen's Association, Letter 
      submitted for the record...................................    95
    Carroll, Richard, Ocean Gold Seafoods Inc., Westport, 
      Washington, Statement submitted for the record.............    97
?

    Christiansen, Fred, Chairman, and Gale K. Vick, Executive 
      Director, Gulf of Alaska Coastal Communities Coalition 
      (GOAC3), Joint statement submitted for the record..........    98
    de Poutiloff, Mary Beth, Fisherwoman, F/V Blue Ocean, F/V 
      Patience Too, Provincetown, Massachusetts, and Harrington, 
      Maine, Statement submitted for the record..................   106
    Dochtermann, Shawn C., Executive Director, Crewman's 
      Association, Statement and attachments submitted for the 
      record.....................................................   107
    Dooley, Robert E., President, United Catcher Boats, Seattle, 
      Washington, Statement submitted for the record.............    82
    Hansen, Kathy, Executive Director, Southeast Alaska 
      Fishermen's Alliance, Juneau, Alaska, Letter submitted for 
      the record.................................................   117
    Kozak, Linda, Consultant, Crab Group of Independent 
      Harvesters, Kodiak, Alaska, Statement submitted for the 
      record.....................................................   119
    Odlin, James A., Commercial Fisherman, Portland, Maine, 
      Statement submitted for the record.........................   122
    Phillips, Mark, F/V/ Illusion, Greenport, New York, Statement 
      submitted for the record...................................   123
    Poulsen, Edward, Executive Director, Inter-Cooperative 
      Exchange Policy Advocacy Committee, Statement submitted for 
      the record.................................................   124
    Preble, David E., Narragansett, Rhode Island, Rhode Island 
      Representative, New England Fishery Management Council 
      (NEFMC), U.S. Commissioner to the Northwest Atlantic 
      Fisheries Organization (NAFO), Statement submitted for the 
      record.....................................................   126
    Shackelford, Britton, President, North Carolina Watermen 
      United, Letter submitted for the record....................   127
    Swetzof, The Honorable Simeon, Jr., Mayor, City of Saint Paul 
      Island, Alaska, Statement submitted for the record.........   128
    Taufen, Stephen, Groundswell Fisheries Movement, Kodiak, 
      Alaska, Statement submitted for the record.................   130
    Zuanich, James and Shirley, Bellingham, Washington, Letter 
      submitted for the record...................................   136



                                  (iv)
                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Thursday, April 22, 2010.........................   139

Statement of Members:
    Bordallo, Hon. Madeleine Z., a Delegate in Congress from Guam   139
        Prepared statement of....................................   140
    Brown, Hon. Henry E., Jr., a Representative in Congress from 
      the State of South Carolina................................   141
        Prepared statement of....................................   141

Statement of Witnesses:
    Alexander, Captain Terry Arnold, Fishing Vessels Jocka and 
      Rachel T...................................................   204
        Prepared statement of....................................   205
        Response to questions submitted for the record...........   206
    Angers, Jefferson, President, Center for Coastal Conservation   163
        Prepared statement of....................................   164
        Response to questions submitted for the record...........   167
    Donofrio, James A., Executive Director, Recreational Fishing 
      Alliance...................................................   182
        Prepared statement of....................................   184
        Response to questions submitted for the record...........   188
    Dooley, Robert E., President, United Catcher Boats...........   190
        Prepared statement of....................................   191
    Goethel, Captain David T., Owner/Operator, Fishing Vessel 
      Ellen Diane................................................   142
        Prepared statement of....................................   144
        Response to questions submitted for the record...........   146
    Magras, Julian, Chairman of the Board, St. Thomas Fishermen's 
      Association................................................   149
        Prepared statement of....................................   150
        Response to questions submitted for the record...........   153
    Moody, Captain Wayne, Fishing Vessel Capriccio, and Member, 
      Board of Directors, Morro Bay Commercial Fishermen's 
      Organization...............................................   154
        Prepared statement of....................................   156
        Response to questions submitted for the record...........   161
    Rothschild, Brian, Ph.D., Montgomery Charter Professor of 
      Marine Science and Technology, University of Massachusetts 
      Dartmouth..................................................   194
        Prepared statement of....................................   195
        Response to questions submitted for the record...........   201

Additional materials supplied:
    Allen, Richard B., Commercial Fisherman and Fishery 
      Consultant, Westerly, Rhode Island, Statement submitted for 
      the record.................................................   213
    Bellavance, Rick, President, Rhode Island Charter and Party 
      Boat Association, Statement submitted for the record.......   215
    Charterboat and Headboat Captains in the Gulf of Mexico, 
      Letter submitted for the record............................   216
    de Poutiloff, Mary Beth, Scallop Fishing Family, F/V Patience 
      Too, Provincetown, Massachusetts, Letter submitted for the 
      record.....................................................   220
    Dochtermann, Shawn C., Executive Director, Crewman's 
      Association, 
      F/V Isanotski, Kodiak, Alaska, Statement submitted for the 
      record.....................................................   221
    Food & Water Watch, Washington, DC, Letter submitted for the 
      record.....................................................   223
    Fussell, Troy, Gulf of Mexico Reef Fish Fisherman, F/V Irma 
      Lee, Morriston, Florida, Statement submitted for the record   224
    Gilmore, Jim, At-sea Processors Association, Statement 
      submitted for the record...................................   227
    Grachek, Dick, Stonington, Connecticut, and Point Judith, 
      Rhode Island, Statement submitted for the record...........   229
    Lewis, Brian, Clearwater, Florida, Email submitted for the 
      record.....................................................   241
?

    Mack, Hon. Henry, Mayor, City of King Cove, Alaska, Letter 
      submitted for the record...................................   244
    Mack, Hon. Stanley, Mayor, Aleutians East Borough, Letter 
      submitted for the record...................................   245
    Marchand, A. Pierre, President, Jessie's Ilwaco Fish Co, 
      Inc., Letter submitted for the record......................   246
    Mose, Brian, Nanoose Bay, British Columbia, Canada, Letter 
      submitted for the record...................................   247
    Norvell, Bernard, Sr., F/V Donna J,; Michelle Tarantino-
      Norvell; Vince Doyle, F/V Verna Jean 3; Tom and Shelley 
      Estes, F/V Tara Dawn; Brian Jourdain, F/V Blue Pacific; 
      Richard Kelley, F/V Miss Hailee, F/V Miss Kelley, F/V Miss 
      Kelley II; and Randall Schlect, F/V Northern Light, Fort 
      Bragg, California, Statement submitted for the record......   248
    Pennisi, Giovanni (John), F.V. Irene's Way, Monterey, 
      California, Letter submitted for the record................   250
    Robinson, M. Sunny, on behalf of Citizens for Gloucester 
      Harbor, Gloucester, Massachusetts, Letter submitted for the 
      record.....................................................   250
    Selby, Hon. Jerome M., Borough Mayor, Kodiak Island Borough, 
      Letter and resolution submitted for the record.............   252
    Walker, Captain David, Letter submitted for the record.......   255



                                  (vi)
                                     



 OVERSIGHT HEARING ON ``CATCH SHARES AS A MANAGEMENT OPTION: CRITERIA 
                         FOR ENSURING SUCCESS''

                              ----------                              


                        Tuesday, March 16, 2010

                     U.S. House of Representatives

          Subcommittee on Insular Affairs, Oceans and Wildlife

                     Committee on Natural Resources

                            Washington, D.C.

                              ----------                              

    The Subcommittee met, pursuant to call, at 10:05 a.m. in 
Room 1324, Longworth House Office Building, Hon. Madeleine Z. 
Bordallo [Chairman of the Subcommittee] presiding.
    Present: Representatives Bordallo, Christensen, Capps, 
Shea-Porter, DeFazio, Brown, Wittman, Chaffetz, Cassidy, 
Inslee, and Hastings.

STATEMENT OF HON. MADELEINE Z. BORDALLO, A DELEGATE TO CONGRESS 
                   FROM THE TERRITORY OF GUAM

    Ms. Bordallo. The oversight hearing by the Subcommittee on 
Insular Affairs, Oceans, and Wildlife will now come to order.
    Today we will hear testimony on ``Catch Shares as a 
Management Option: Criteria for Ensuring Success.''
    Rebuilding fisheries has clear, ecological, and economic 
benefits for fish and fishers. To achieve these benefits, 
fisheries must be managed using the best available science and 
a suite of management tools, including catch restrictions and 
gear modifications.
    Included in these tools are catch shares, in which 
individual fishermen, cooperatives, or communities are 
allocated a specific portion of a total allowable catch.
    The management of fisheries using catch shares has thus far 
been limited in the United States. However, under the new 
Administration, the National Oceanic and Atmospheric 
Administration has taken steps to actively promote the use of 
this particular tool, through a draft policy and a Fiscal Year 
2011 budget request of $54 million for a national catch share 
program.
    There is no universal agreement on the merits of the use of 
catch shares. Proponents argue that they reduce bycatch, 
increase efficiency, and enhance the industry's role in 
fisheries conservation.
    Opponents, on the other hand, are concerned that catch 
shares will result in fleet consolidation and the loss of 
fishing communities. The amount of anecdotal evidence to 
support either side is considerable, but research about the 
impacts of catch shares on both the fish and the fishers is 
quite slim.
    One thing is clear. As we continue to rebuild fisheries in 
the United States, there will be much debate about which tools 
are most effective and appropriate for different fisheries. 
What everyone seems to agree on, however, is a growing need for 
better data to make those management decisions. Because before 
any tool, including catch shares, can be implemented, managers 
must determine how much fish can actually be caught.
    In fact, the Regional Fishery Management Councils are 
required to set annual catch limits, or ACLs, and 
accountability measures by 2010 for all fisheries subject to 
overfishing, and for all other fisheries by 2011. Establishing 
ACLs and accountability measures require the most current 
information possible. Yet many stock assessments are outdated, 
and NOAA's new Recreational Fishing Data program is still not 
providing timely information needed to make management 
decisions.
    Investing in stock assessments, cooperative research, and 
collecting more accurate and timely recreational fishing 
information should be the highest priority. But these programs 
did not receive increases in the President's budget request, 
while the Catch Share program enjoyed an increase of more than 
100 percent.
    The concern of some Members of Congress and some in the 
industry is that this push for catch shares by the agency is 
coming at the expense of other management responsibilities and 
fundamental data needs.
    So I look forward to hearing from our witnesses today to 
better understand how catch share programs, if well designed, 
can be a valuable tool in our management toolbox to sustain 
healthy fish populations and fishing communities. Still, we 
must ensure that the push to adopt catch shares does not 
undermine the fundamental data needs that all fisheries 
management plans must be built on.
    Now it is my pleasure to recognize Mr. Brown, the Ranking 
Republican Member of the Subcommittee, for any statement that 
he may have.
    [The prepared statement of Chairwoman Bordallo follows:]

     Statement of The Honorable Madeleine Z. Bordallo, Chairwoman, 
          Subcommittee on Insular Affairs, Oceans and Wildlife

    Rebuilding fisheries has clear ecological and economic benefits for 
fish and fishers. To achieve these benefits, fisheries must be managed 
using the best available science and a suite of management tools, 
including catch restrictions and gear modifications. Included in these 
tools are ``catch shares'', in which individual fishermen, 
cooperatives, or communities are allocated a specific portion of a 
total allowable catch.
    Management of fisheries using catch shares has thus far been 
limited in the United States. However, under the new Administration, 
the National Oceanic and Atmospheric Administration has taken steps to 
actively promote the use of this particular tool through a draft policy 
and a Fiscal Year 2011 budget request of $54 million for a National 
Catch Share Program.
    There is no universal agreement on the merits of the use of catch 
shares. Proponents argue that they reduce bycatch, increase efficiency, 
and enhance the industry's role in fisheries conservation. Opponents 
are concerned that catch shares will result in fleet consolidation and 
the loss of fishing communities. The amount of anecdotal evidence to 
support either side is considerable, but empirical research about the 
impacts of catch shares, on both the fish and the fishers, is quite 
slim. One thing is clear--as we continue to rebuild fisheries in the 
United States, there will be much debate about which tools are most 
effective and appropriate for different fisheries. What everyone seems 
to agree on, however, is growing need for better data to make those 
management decisions, because before any tool, including catch shares, 
can be implemented, managers must determine how much fish can actually 
be caught.
    In fact, the Regional Fishery Management Councils are required to 
set annual catch limits, or ACLs, and accountability measures by 2010 
for all fisheries subject to overfishing, and for all other fisheries 
by 2011. Establishing ACLs and accountability measures require the most 
current information possible, yet many stock assessments are outdated 
and NOAA's new recreational fishing data program is still not providing 
timely information needed to make management decisions. Investing in 
stock assessments, cooperative research, and collecting more accurate 
and timely recreational fishing information should be the highest 
priority, but these programs did not receive increases in the 
President's budget request, while the catch share program enjoyed an 
increase of more than 100%. The concern of some Members of Congress and 
some in the industry is that this push for catch shares by the agency 
is coming at the expense of these other management responsibilities and 
fundamental data needs.
    I look forward to hearing from our witnesses today to better 
understand how catch share programs--if well designed--can be a 
valuable tool in our management tool box to sustain healthy fish 
populations and fishing communities. Still, we must ensure that the 
push to adopt catch shares does not undermine the fundamental data 
needs that all fisheries management plans must be built on.
                                 ______
                                 

  STATEMENT OF HON. HENRY E. BROWN, JR., A REPRESENTATIVE IN 
           CONGRESS FROM THE STATE OF SOUTH CAROLINA

    Mr. Brown. Thank you, Madame Chair. Just a few weeks ago, 
thousands of fishermen--recreational, charter, commercial 
fishermen--came to Washington, D.C., to air their concerns 
about the direction fishery management has taken in this 
country. Rarely do we see all the fishery sectors speaking with 
one voice, but in this case we did.
    The fishermen came to D.C. to make sure we heard their 
concerns that Federal agencies are making decisions without 
good science, and that agencies ignore the fishermen when 
making fishery management decisions. I share their concerns.
    If the agency cannot collect adequate information on how 
many fish are out there, how can they set harvest levels? If 
they do not collect the adequate information on the harvest 
levels of recreational and commercial fishermen, how will they 
know how many fish are being taken?
    This is not rocket science, but it does take money. It 
seems that while the agency is willing to increase funding by 
$810 million for one satellite program to gather climate 
information, it apparently can only find about $1 million in 
increase for the stock assessment for the 530 fishery stocks 
that NOAA manages. This does not reflect the actual need of the 
agency for fishery management.
    Where do catch shares fit into all of this? We have some 
catch share programs across the country that require funding, 
and we should fund those. But I cannot see why we need to spend 
$54 million in one year on a new initiative to spread these 
catch share programs further, especially when fishermen do not 
appear to be asking for them.
    Madame Chair, I know that at the budget hearings we 
requested a breakdown of how the $17 million for catch share in 
2010 is being spent, and how the agency intends to spend the 
$54 million in 2011. I don't believe we have received that 
information yet.
    But I would also like to ask the agency to provide us with 
how that 2011 budget proposal will enable us to keep the Red 
Snapper Fishery open next year. Maybe we should use the $54 
million that is proposed for catch share to either get the 
information necessary to reopen the fishery, or compensate 
those who have lost their jobs as a result of the closures.
    Fishermen are frustrated. And hearing that the budget will 
not make their fishing opportunities any better next year is 
not what they want to hear. Nor do they want to hear that catch 
shares are the answer to all of their problems.
    I would like to suggest that NOAA concentrate on figuring 
out how many fish are out there, and how to keep fishermen 
working, rather than spending $54 million to tell fishermen how 
great catch shares are.
    Thank you, Madame Chair, and I am interested in listening 
to the witnesses this morning.
    [The prepared statement of Mr. Brown follows:]

  Statement of The Honorable Henry E. Brown, Jr., Ranking Republican, 
          Subcommittee on Insular Affairs, Oceans and Wildlife

    Good morning, Madam Chairwoman.
    Madam Chairwoman, just a few weeks ago, thousands of fishermen--
recreational, charter, and commercial fishermen--came to Washington, DC 
to air their concerns about the direction fisheries management has 
taken in this country. Rarely do we see all of the fisheries sectors 
speaking with one voice, but in this case, we did.
    The fishermen came to DC to make sure we heard their concerns that 
Federal agencies are making decisions without good science and that 
agencies ignore the fishermen when making fishery management decisions. 
I share that concern. If the agency cannot collect adequate information 
on how many fish are out there, how can they set harvest levels? If 
they do not collect adequate information on the harvest levels of 
recreational and commercial fishermen, how will they know how many fish 
are being taken? This is not rocket science, but it does take money.
    It seems that while the agency is willing to increase funding by 
$810 million for one satellite program to gather climate information, 
it apparently can only find about $1 million in increases for the stock 
assessments for the 530 fishery stocks that NOAA manages. This does not 
reflect the actual needs of the agency for fisheries management.
    Where do catch shares fit into all of this? We've got some catch 
share programs across the country that will require funding and we 
should fund those, but I cannot see why we need to spend $54 million in 
one year on a new initiative to spread these catch share programs 
further--especially when fishermen do not appear to be asking for them.
    Madam Chairwoman, I know at the budget hearing we requested a break 
down of how the $17 million for catch shares in FY2010 is being spent 
and how the agency intends to spend the $54 million in FY2011. I don't 
believe we have received that information yet, but I would also like to 
ask the agency to provide us with how their FY2011 budget proposal will 
enable us to keep the red snapper fishery open next year. Maybe we 
should use the $54 million that is proposed for catch shares and use it 
to either get the information necessary to reopen the fishery or 
compensate those who have lost their jobs as a result of the closures.
    Fishermen are frustrated and hearing that the budget will not make 
their fishing opportunities any better next year is not what they want 
to hear. Nor do they want to hear that catch shares are the answer to 
all of their problems. I would like to suggest that NOAA concentrate on 
figuring out how many fish are out there and how to keep fishermen 
working rather than spending $54 million to tell fishermen how great 
catch shares are.
    Thank you, Madam Chairwoman.
                                 ______
                                 
    Ms. Bordallo. I thank the gentleman from South Carolina. I 
would now like to recognize--first of all, I would like to ask 
for unanimous consent that the gentleman from Oregon and member 
of the full Committee, Congressman Peter DeFazio, be allowed to 
join us on the dais for this hearing. Hearing no objection, so 
ordered.
    I would like to now recognize the Ranking Member of the 
full Committee, Mr. Hastings, for his opening statement.

 STATEMENT OF HON. DOC HASTINGS, A REPRESENTATIVE IN CONGRESS 
                  FROM THE STATE OF WASHINGTON

    Mr. Hastings. Thank you, Madame Chair, and thank you for 
your courtesy.
    I appreciate your holding this hearing on the issue of 
catch shares. Catch share fishery management plans have proven 
to be an effective management tool in some regions, and in some 
fisheries. But they are not appropriate, in my mind, for every 
fishery.
    Catch share programs, if desired, should be developed from 
the bottom up through the Regional Fishery Management Council 
system, and not forced or mandated by the agency. The agency 
should not be pushing catch shares where they are not wanted.
    A recent presentation by NOAA claims that there are 37 
catch share programs that will either be implemented or are in 
the development stage within the next two-and-a-half years. 
Where there have been approximately a dozen catch share plans 
implemented in the last 20 years, expecting three times that 
number to be implemented or developed in the next two-and-a-
half years is unreasonable--especially when the Regional 
Fishery Management Councils are not aware of which fisheries 
the agency intends to turn into catch share plans.
    There are some who feel that NOAA is pushing catch shares 
because the agency believes they will solve all of the 
management problems that face the agency. Implementing catch 
shares does not replace the need for basic stock assessments, 
data collection, and enforcement. These are fundamental 
requirements for effective management of the fishery, whether 
under a catch share program or some other fishery management 
plan.
    The agency needs to focus its energy on collecting the 
basic data it needs to effectively manage the fisheries, rather 
than imposing a new initiative.
    There is also growing concern about where the funding for 
the 37 new catch share programs will come from. At the 
Subcommittee's hearing on the President's Fiscal Year 2011 
budget request, concern was raised that the new catch share 
program initiative request for $54 million is taking funding 
away from other agency needs, such as stock assessments, 
cooperative research, and data collection on recreational 
fishing activities.
    The agency needs to make sure it funds basic fishery 
management activities, and does not take money away from other 
fishery management priorities.
    NOAA must seek long-term solutions to resolve fishery 
allocation conflicts. Catch share programs have been, and can 
be, effective, but only when the fishermen are active 
participants in the development and the design of those 
programs. Catch shares will not replace the need for other 
management activities, and funding for new catch share programs 
should not come at the expense of existing priorities within 
the agencies.
    Finally, Madame Chair, on a more parochial note, I would 
like to follow up on a request for a legislative hearing on 
H.R. 3910, whose bill sponsor is my colleague from Washington 
State, Rick Larson. The bill would allow members of the 
longline catcher-processor sector of the Bering Sea to approve 
a co-op management plan if 80 percent of the members agree. I 
am an original co-sponsor of this bipartisan bill, and would 
encourage the Subcommittee to hold a hearing on this 
legislation.
    Thank you once again for your consideration, and thank you 
for holding this hearing on this issue. I yield back my time.
    [The prepared statement of Mr. Hastings follows:]

  Statement of The Honorable Doc Hastings, Ranking Republican Member, 
                     Committee on Natural Resources

    Madam Chair, I appreciate you holding this hearing on the issue of 
catch shares. Catch share fishery management plans have proven to be 
effective management tools in some regions and in some fisheries, but 
they are not appropriate for every fishery.
    Catch share programs, if desired, should be developed from the 
bottom up through the regional fishery management council system and 
not forced or mandated by the agency. The agency should not be pushing 
catch shares where they are not wanted. A recent presentation by NOAA 
claims that there are 37 catch share programs that will be either 
implemented or in the development stage within the next 2 1/2 years. 
While there have been approximately a dozen catch share plans 
implemented in the last 20 years, expecting three times that number to 
be implemented or developed in the next 2 1/2 years is unreasonable--
especially when the regional fishery management councils are not aware 
which fisheries the agency intends on turning into catch share plans.
    There are some who feel that NOAA is pushing catch shares because 
the agency believes they will solve all of the management problems that 
face the agency. Implementing catch shares does not replace the need 
for basic stock assessments, data collection, and enforcement. These 
are fundamental requirements for effective management of the fishery--
whether under a catch share program or some other fishery management 
plan. The agency needs to focus its energy on collecting the basic data 
it needs to effectively manage the fisheries rather than imposing a new 
initiative.
    There is also growing concern about where the funding for 37 new 
catch share programs will come from. At the Subcommittee's hearing on 
the President's FY 2011 budget request, concern was raised that the new 
National Catch Shares Program initiative request for $54 million is 
taking funding away from other agency needs such as stock assessments, 
cooperative research, and data collection on recreational fishing 
activities. The agency needs to make sure it funds basic fishery 
management activities and does not take money away from other fishery 
management priorities.
    NOAA must seek long term solutions to resolve fishery allocation 
conflicts. Catch share programs have been and can be effective, but 
only when the fishermen are active participants in the development and 
the design of the program. Catch shares will not replace the need for 
other management activities and funding for new catch share programs 
should not come at the expense of existing priorities within the 
agency.
    Finally, Madam Chair, I would like to follow up on a request for a 
legislative hearing on H.R. 3910 made by the bill's sponsor, 
Congressman Rick Larsen. The bill would allow members of the longline 
catcher processor sector in the Bering Sea to approve a coop management 
plan if 80 percent of the members agree. I am an original cosponsor of 
the bill and would encourage the Subcommittee to hold a hearing on the 
legislation.
    Thank you for your consideration, and, again, thank you for holding 
today's hearing.
                                 ______
                                 
    Ms. Bordallo. I thank the gentleman for his opening 
statement.
    Before I introduce the witnesses of our panel, I would like 
to welcome Congresswoman Lois Capps from the State of 
California, Congresswoman Donna Christensen from the Virgin 
Islands, Mr. Cassidy from Louisiana, and Mr. Wittman from 
Virginia. Thank you for being with us this morning.
    Now it is my pleasure to introduce our panel. First, Mr. 
Eric Schwaab, Assistant Administrator for Fisheries, National 
Oceanic and Atmospheric Administration; Dr. Mark Fina, Senior 
Ecologist, North Pacific Fishery Management Council; Dr. Andrew 
A. Rosenberg, Senior Vice President for Science and Knowledge, 
Conservation International; Mr. Edward Backus, Vice President 
for Community Ecosystem Services, Ecotrust; and Ms. Leesa Cobb, 
Executive Director of the Port Orford Ocean Resource Team. I 
welcome you all this morning, and I would like to thank you for 
being here.
    As we begin, I would note that the red timing light on the 
table will indicate when five minutes have passed, and your 
time has concluded. We would appreciate your cooperation in 
complying with these limits. Be assured, however, that your 
full written statement will be entered into the record.
    We will begin now with Mr. Schwaab. This is your first time 
appearing, I understand, before the Subcommittee, and I believe 
your first time testifying before Congress, since you were 
appointed as the new Director of the National Marine Fisheries 
Service. Congratulations on your appointment. I thank you for 
being here today, and look forward to working with you to 
rebuild the bridge between the fishing industry and the agency.
    With that, please proceed.

    STATEMENT OF ERIC SCHWAAB, ASSISTANT ADMINISTRATOR FOR 
  FISHERIES, NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION, 
                  U.S. DEPARTMENT OF COMMERCE

    Mr. Schwaab. Madame Chairwoman, members of the Committee, 
thank you for the opportunity to testify before you today on 
catch shares.
    My name is Eric Schwaab, and I am the new Assistant 
Administrator for Fisheries at NOAA. It is a pleasure to 
testify before you for the first time in that capacity. Thank 
you.
    In my career in public service, one of my primary 
objectives has been to focus on creative problem solving that 
works to fix systemic challenges that we face, working to 
address the underlying root causes of problems, rather than 
using a Band-Aid approach to fix symptoms.
    The use of catch shares provides an important and effective 
mechanism to address some of the systemic problems, 
particularly on the economic side of fisheries management.
    As you are aware, we are currently implementing annual 
catch limit and accountability provisions of the Magnuson-
Stevens Act to end overfishing and rebuild fish stocks. In many 
cases around the country, this requires us to ratchet down 
fishing levels, which can lead to significant short-term 
economic impacts in our coastal communities.
    However, in the long term, rebuilding U.S. fisheries has 
the potential to increase the value of fish brought into our 
ports by an estimated $2.2 billion annually, a 54 percent 
increase over current values.
    In too many cases current management systems have not 
controlled overfishing, or have done so through the blunt 
instruments of closures, dramatically shortened seasons, or 
other economically disruptive measures. Thousands of fishing 
jobs have been lost as fish stocks have declined. Adverse 
impacts continue as additional valuable fisheries face large 
closures or dwindling seasons having undesirable impact on 
fishing jobs, safety at sea, and the economic vitality of 
coastal communities.
    Catch share systems provide, in many cases, innovative 
solutions that keep fishermen fishing while resources recover. 
Rather than employing closures or other very restrictive 
seasons which push fishermen off the water, catch shares can 
provide for continued fishing even as stocks recover.
    Within a framework of scientifically established annual 
catch limits, catch share systems give more direct control of 
fishing activity back to fishermen, allowing fishermen to plan 
their seasons and be more selective about when and how they 
catch their allotment.
    Because there are shares allotted in the fishery, fishermen 
gain an economic incentive to catch their allocation at the 
least cost, when market values are most advantageous, and 
without going over their allotment. Because as stocks rebuild, 
the holder's share increases in value.
    The security and predictability that comes with catch 
shares has the potential to help us get out in front of some of 
the boom-and-bust cycles that we have been dealing with in 
fisheries for decades. However, I will caution that while catch 
shares have been successful in many instances, they are not 
appropriate for every fishery. We need to remain mindful of 
potential drawbacks that programs may have.
    By their nature, catch shares can result in consolidation 
of the harvesting sector, because some fishermen holding shares 
will decide to sell or lease privileges to someone else. There 
have also been concerns about catch share effects on 
recreational fisheries, the ability to contribute to job losses 
on shore, or threaten small boat communities as shares are 
transferred among vessels and ports. All of these concerns can 
be resolved through proper catch share design.
    NOAA's draft catch share policy, released last December and 
open for comment until April 10, encourages regional fishery 
management councils to consider the use of catch shares where 
appropriate.
    Catch shares have a great deal of design flexibility to 
support diverse fleets of both small and large vessels, 
encourage owner-operated fleets, protect the interests of 
fishery-dependent communities, set aside shares for specific 
sectors, including recreational participants, and provide 
opportunities for future generations to enter the fisheries. 
Councils must pay particular attention to these design issues.
    I would like to spend the last minute I have speaking about 
the budget situation. The President's Fiscal Year 2011 budget 
requests a total of $54 million for catch shares nationwide. 
This request supports analysis and evaluation of fisheries for 
catch share programs, development of fishery management plans 
and regulation, and increased investment in observing and 
monitoring cooperative research and other activities.
    This funding is not requested at the expense of other 
important fisheries research and management programs. Our 
overall budget has increased from $724 million in 2009 to $908 
million in 2011. This $184 million increase demonstrates that 
fisheries research and management has been a clear priority, 
and continues as a clear priority, for NOAA.
    Many councils face extremely difficult choices as we work 
to rebuild stocks and improve economic profitability. NOAA is 
committed to working with the Councils to take the necessary 
steps to recover these fisheries, and ensure that we are on the 
path to long-term sustainability of both the resources and the 
fishing communities.
    At this time, or at the appropriate time, I would be 
pleased to address questions. Thank you.
    [The prepared statement of Mr. Schwaab follows:]

  Statement of Eric Schwaab, Assistant Administrator, National Marine 
  Fisheries Service, National Oceanic and Atmospheric Administration, 
                      U.S. Department of Commerce

    Madam Chairwoman and members of the Committee, thank you for the 
opportunity to testify before you today on NOAA's draft Catch Share 
Policy. My name is Eric Schwaab and I am the Assistant Administrator of 
the National Marine Fisheries Service, within the National Oceanic and 
Atmospheric Administration (NOAA).
    Catch shares are a fishery management tool that has been 
recommended for consideration by the National Research Council and the 
U.S. Commission on Ocean Policy, as well as several Members of 
Congress. In appropriate circumstances, catch share programs can play 
an essential role in meeting our national goal of rebuilding and 
sustaining our fishery resources. Such outcomes are a key ingredient to 
achieving our larger objective of healthy and resilient marine 
ecosystems.
    On December 10, 2009, NOAA released a draft national policy 
encouraging the use of catch shares, a powerful tool for managing 
fisheries. The draft policy encourages but does not require the use of 
well-designed catch share programs. In appropriate circumstances, these 
programs can help end overfishing, rebuild fisheries, and sustain 
fishing jobs and fishing communities. In the development of the draft 
policy, NOAA received individual input from representatives of each of 
the eight regional fishery management councils (Councils) as well as 
NOAA experts. NOAA has also worked with individuals from key 
stakeholder groups before and after the issuance of the draft policy to 
get their input on this important policy initiative.
    In catch share programs, a portion of the scientifically-based, 
total allowable catch for a species is apportioned to individual 
fishermen or groups, according to the allocation rules recommended by 
the regional fishery management councils and approved by NOAA. Each 
holder of a catch share must stop fishing when his/her specific quota 
is reached. Catch share programs, which include a variety of approaches 
like individual fishing quotas and Limited Access Privilege Programs, 
authorized by the Magnuson-Stevens Fishery Conservation and Management 
Act (MSA), have operated successfully in the United States since 1990. 
Currently, there are 15 different catch share programs in place, 
stretching from Alaska to Florida, and several additional programs are 
expected to start over the next year.
    NOAA's goals in developing a national policy on the use of catch 
shares are to: (1) reduce administrative or organizational impediments 
to the Councils' consideration of catch shares; (2) inform and educate 
stakeholders of the different options and capabilities of catch share 
programs; and (3) help organize collaborative efforts among interested 
councils, states, communities, fishermen and other stakeholders on the 
design and implementation of catch share programs. The draft catch 
share policy itself is quite simple. It states that: To achieve long-
term ecological and economic sustainability of the Nation's fishery 
resources and fishing communities, NOAA encourages the consideration 
and adoption of catch shares wherever appropriate in fishery management 
and ecosystem plans and amendments, and will support the design, 
implementation, and monitoring of catch share programs.
    While the draft policy encourages the careful consideration of 
catch shares, it does not mandate catch shares be used in any specific 
fishery or sector (e.g., commercial vs. recreational fisheries). In 
fact, we believe that catch shares may not be the best management 
option in some fisheries. Catch shares are but one tool among several 
for effectively managing fisheries, and they are not a panacea. The key 
to developing any successful fishery management program is active 
involvement from fishermen and other stakeholders in the regional 
fishery management council where the programs are designed.
    Under traditional fishery management approaches, a scientifically-
based total allowable catch is established for a species overall, and 
is not allocated to specific individual fishermen or groups. Under this 
approach, anyone who wants to participate in the fishery can fish, 
until the overall total allowable catch limit is reached. This can lead 
to a competitive environment, with fishermen racing each other to catch 
as many fish as they can before the total allowable catch is reached 
and the fishery is closed for the season. We have also seen this 
approach result in more boats and gear in the water than is either 
biologically or economically necessary to catch the available harvest. 
The results of this type of management system often are shorter fishing 
seasons, unsafe fishing practices and high levels of bycatch. Finally, 
one other serious drawback to this system is that too many fish may be 
brought to market at once, depressing the price of fish for fishermen 
and coastal communities.
    Conversely, catch share programs allow fishermen to plan their 
fishing seasons and be more selective about when and how they catch 
their allotment, knowing their individual shares are secure. Fishermen 
participating in catch share programs are able to plan their fishing 
effort around the weather, markets, or other business considerations. 
Because they are allotted a share in a fishery, fishermen gain an 
economic incentive to catch their allocation at the least cost and 
without going over their allotment because as a fish stock rebuilds the 
holder's share increases in value. In addition, fishermen need not take 
unnecessary risks because they can fish whenever they want, and they 
can fish at times when there is not a glut in the market.
    Catch share programs have a proven track record of success in many 
fisheries in the United States and around the world. Here are a few 
examples:
      The Crab Rationalization Program allocates Bering Sea and 
Aleutian Islands (BSAI) crab resources among harvesters, processors, 
and coastal communities. The program was implemented in 2005 when 
overcapacity in BSAI crab fisheries had resulted in a frenzied race for 
crab. Harvesting and processing capacity had expanded to accommodate 
highly abbreviated seasons, encouraging unsafe fishing practices and 
resulting in significant portions of the capacity to be idle between 
seasons. Under the rationalization program, season lengths have 
increased from 3-5 days to 93-230 days, revenues from the fishery have 
increased by 40 percent (in constant dollars) in just three years, and 
fatalities and U.S. Coast Guard search and rescue cases have declined 
to historic lows.
      The Halibut Individual Fishing Quota Program in Alaska, 
now more than a decade old, eliminated a dangerous derby fishery that 
lasted less than a week per year and replaced it with a program 
allowing for a longer, more profitable and much safer fishing season, 
and has helped sustain local fishing-dependent communities and jobs.
      Gulf of Alaska rockfish were historically caught in a 
limited entry derby fishery during 3 weeks in the middle of the busy 
Alaska salmon season. Product quality was low, and bycatch and discard 
rates were high. In 2005 the North Pacific Council adopted a catch 
share-based management program which permits harvesters to form 
voluntary cooperative associations. Revenues for northern rockfish and 
Pacific perch have since doubled (in constant dollars) as a longer 
fishing season (7 months) allows fishermen to produce more high value 
products, and deliver their catches to processors at times that do not 
conflict with the salmon season. Notably, the incidental catch of 
halibut has been reduced substantially, as have discards of other 
species. Participants report that cooperative management has allowed 
them to adopt conservation-minded practices without sacrificing their 
overall opportunity in the fishery.
      A two-year-old catch share program in the Gulf of Mexico 
is helping rebuild Gulf of Mexico red snapper fish stocks, reducing 
overcapacity in the fishery and boosting profits for participating 
fishermen. NOAA scientists announced that overfishing has ended in the 
Gulf of Mexico red snapper fishery after more than two decades of 
overfishing. The use of catch shares in the commercial fishery has 
helped maintain the fishing industry while strict management measures 
have been in place to end overfishing and move toward rebuilt stocks.
      In British Columbia, the multispecies groundfish fishery 
use of individual vessel quotas for all species has resulted in 
sustainable catch levels, greatly reduced bycatch, improved cooperation 
among fishermen, and safer fishing practices.
    While catch shares have been a successful tool in many instances, 
it is important to note that catch shares are not appropriate for every 
fishery, and we need to remain mindful of the negative impacts these 
programs can have. By their nature, catch shares can result in some 
consolidation of the harvesting sector because some fishermen holding 
shares make a willing business decision to lease or sell their 
privileges to someone else. While they are compensated for their exit, 
others are impacted by their decisions. For example, in the Bering Sea 
crab fishery noted above, the rate and extent of vessel consolidation 
surprised many observers, and the traditional number of crew positions 
was reduced significantly in the first year as vessel owners sold their 
shares and their vessels left the fishery. Many part-time crew jobs 
were lost, although catch shares typically lead to an increase in the 
number of full-time jobs. There have also been other concerns expressed 
about how catch shares programs might affect recreational fisheries, 
contribute to job losses on shore, or threaten the sustainability of 
small boat communities as shares are transferred among vessels, ports 
and sectors.
    NOAA's draft policy encourages the regional fishery management 
councils to carefully design catch share programs to effectively avoid 
or mitigate these issues, using the tools available in the MSA. With 
the development of any new catch share program, there is a great deal 
of design flexibility to allow fisheries to support diverse fleets of 
both small and large vessels, encourage owner-operated fleets, set 
aside shares for specific sectors such as recreational participants, 
and provide opportunities for new entrants to enter the fisheries.
    NOAA recommends that Councils pay particular attention to the 
following critical design issues:
      Set Specific Goals: Identification of specific management 
goals for each catch share program is critical, such as eliminating 
overfishing; ending a race for fish; reducing bycatch; or creating 
socio-economic stability for fishermen and communities. The more 
specific the goals, the more precisely a catch share design can be 
structured to attain them.
      Define Transferability: Councils need to work directly 
with harvesters and the larger fishing community to choose whether, 
when, and to whom to allow transfers of catch shares to ensure the 
long-term success of the program. This is a balance between promoting 
maximum flexibility for fishermen's business decision making and 
controlling the rate and scale of change in a fishery to address 
harvesting, processing and community sustainability goals.
      Consider New Entrants: Councils need to evaluate catch 
share designs that allow new generations of fishermen or small 
businesses into the fishery. Besides set-asides and proper design of 
initial allocation and transfer criteria, loan programs and permit 
banks can help ensure continued fishery access in traditional ports.
      Help Communities: Thoughtful catch share design can 
promote sustainable fishing communities, including good jobs, 
preservation of wharfs, processing facilities, fuel and ice suppliers 
and other coastal businesses essential to a working waterfront. There 
are several recently added provisions in the Magnuson-Stevens Act to 
help sustain fishing communities and small owner-operator fleets via 
catch shares. These provisions include special allocations to fishing 
communities and regional fishing associations, and loan programs for 
small vessel--and entry level--fishermen.
      Consider Recreational Impacts: Councils allocate the 
total allowable catch among sectors in all fisheries, regardless of 
whether a catch share is used to further distribute the allocation 
among eligible participants in a sector. Councils can opt to manage the 
commercial sector with catch shares and manage the recreational sector 
by other means. The draft policy states that where catch shares are 
proposed for the commercial sector but not the recreational sector, 
Councils should evaluate the effects of catch shares on all sectors 
associated with a fishery.
      Improve Data: A key component in any well designed 
fishery management system, catch shares or otherwise, is accurate and 
credible data in which managers and stakeholders have confidence. Every 
limited access privilege program collects a fee of up to 3 percent of 
the ex vessel value of the landings to support management, data 
collection and enforcement. Additional appropriated funds have been 
requested to support expanded data collection, monitoring and observer 
programs. These funds will support both the science and management 
needs of catch shares in the areas of stock assessments, catch and 
bycatch monitoring, research, and catch share compliance and 
management.
      Review Progress: Councils should periodically review all 
catch share and other fisheries programs to gauge whether they are 
meeting the goals and objectives; no program will be perfect the first 
time and Councils should plan for making adjustments over time. Getting 
feedback on management plan performance and being adaptive makes good 
sense, and already is required by law for limited access privilege 
programs.
    NOAA has already and will continue to meet with stakeholders and 
seek broad input on these and other aspects of its draft policy, and we 
welcome your feedback as well, to ensure the policy addresses any 
concerns your constituents may have. We continue to schedule 
constituent briefings, and are traveling to all eight Councils to 
present the policy and take public comments. We are accepting comments 
through April 10, 2010.
    The President's fiscal year (FY) 2011 budget request a total of $54 
million to accelerate and enhance the implementation of catch shares 
nationwide. The request supports analysis and evaluation of fisheries 
for catch share programs, development of fishery management plans and 
regulations, observing and monitoring at sea and on shore, and 
enforcement activities.
    I want to assure you that this catch share funding is not requested 
at the expense of other fisheries research and management programs. The 
FY 2011 budget sustains funding for Fisheries Research and Management 
and adds to investments to implement the Magnuson-Stevens Fishery 
Conservation and Management Reauthorization Act. The National Marine 
Fisheries Service Operations, Research, and Facilities budget request 
increased from $724.2 million in Fiscal Year 2009 to $907.8 million in 
FY 2011; this $183.6 million increase demonstrates that fisheries 
research and management has been, and continues to be, a clear priority 
for NOAA.
    In addition, to collect the foundational data required for 
fisheries research and management NOAA has invested significantly in 
its fleet of fisheries survey vessels (FSV). In 2007, Henry B. Bigelow 
was commissioned and started fisheries research in the northeast in FY 
2008. Since then NOAA has received delivery of Pisces and Bell M. 
Shimada to support fisheries science efforts in the near future. The FY 
2011 budget includes requested funds for two fisheries survey vessels, 
FSV5 and FSV6.
    In closing, many Councils face extremely difficult management 
choices as we work to rebuild stocks and improve economic 
profitability. NOAA is committed to working with Councils to take the 
necessary steps to recover these resources and ensure we are on the 
path to long-term sustainability of both the resource and the fishing 
community. Whether catch shares are ultimately the option chosen for a 
fishery or another tool is selected, NOAA is committed to keeping 
fisheries viable and helping to ensure a future for fishermen, fishing 
communities and working fishery waterfronts. NOAA will be there 
supporting and coordinating the science and management actions 
necessary to attain this shared goal of sustainable fisheries, but we 
can't do it without help, and we need everyone's support.
    Thank you for allowing me to speak with you this afternoon. At this 
time, I would be pleased to take your questions.
                                 ______
                                 

    Response to questions submitted for the record by Eric Schwaab, 
Assistant Administrator for Fisheries, National Oceanic and Atmospheric 
              Administration, U.S. Department of Commerce

Questions from Chairwoman Madeleine Z. Bordallo (D-GU)
1.  Notwithstanding Section 303A of Magnuson-Stevens Act, which affirms 
        that catch shares are privileges, how will NMFS ensure that 
        these shares are not perceived and do not become property 
        rights?
    Answer: The Magnuson-Stevens Fishery Conservation and Management 
Act (Magnuson-Stevens Act) tasks the Regional Fishery Management 
Councils (Councils) with the responsibility to control the eligibility, 
allocation, transfer, duration and revocation requirements of catch 
share privilege programs. NOAA's National Marine Fisheries Service 
(NMFS) will work with the Councils on the design of any catch share 
programs the Councils choose to design, and lead the transformation of 
these public policy decisions into federal regulations through notice 
and comment rulemaking processes. In addition, NMFS will provide 
guidance and oversight to the Council process to ensure the 
requirements and standards of the Magnuson-Stevens Act are met for 
governing the limited and revocable private use of a permit privilege 
to harvest a portion of the Nation's public fishery resources.
2.  How has NMFS studied the impacts of allocating harvest shares to 
        processors? What percentage of catch would give processors the 
        ability to influence dockside prices?
    Answer: Each time a fishery management plan is completed, an 
environmental and economic impact analysis is conducted, in addition to 
an overall assessment of compliance with the ten National Standards for 
fishery conservation and management outlined in the Magnuson-Stevens 
Act. For catch shares, the analysis includes specific assessment of 
limited access privilege requirements of section 303A of the Magnuson-
Stevens Act governing consideration of processors and other fishery-
dependent businesses. Eligibility to receive initial shares or to allow 
purchase or lease of catch share privileges by processors is determined 
by Councils on a fishery-by-fishery basis, and takes into account the 
unique fishery circumstances and the specific goals that have been 
developed by the Council for that fishery.
    There are as many factors affecting a processor's ability to 
influence dockside prices as there are fishing ports. Such factors 
include location of alternative ports and access to/influence of other 
markets; the species fished and the availability of domestic or 
imported substitutes; and local financial relationships (such as 
processors owning vessels or advancing credit from processors to 
harvesters).
    Councils are required to establish what constitutes an ``excessive 
share'' for each fishery whereby a privilege holder acquiring shares in 
excess of this amount may, among other consequences, have undue market 
power over price. Any catch share program established by the Councils 
would therefore set a limit and issue controls on eligibility, 
allocation and transfers to control this occurrence.
3.  How do current programs prevent absentee ownership of shares? Have 
        these programs been able to meet this objective?
    Answer: Each of the current U.S. catch share programs (15) have 
different objectives relative to absentee ownership of shares. In the 
development of these programs, the Councils and their stakeholders have 
placed different values on the prevention of absentee ownership of 
shares as a management plan goal. Some regions have expressed little or 
no concern about this issue, while others have adopted specific 
measures designed to prevent absentee share or privilege holders. The 
most stringent absentee controls are in the halibut/sablefish program 
where the Council has adopted owner or master on board requirements 
(i.e., generally the holder of the catch share privilege must be on 
board the vessel actually fishing). These provisions have worked 
overall but have required adjustment over time. For example, 
traditionally as captains age and no longer wish to go to sea, they 
have turned over responsibility to run their vessel to another family 
member or a hired master. Owner on board requirements have to be 
cognizant of the fishery's cultural and business traditions and balance 
those considerations with other societal goals to minimize or prevent 
absentee share holders.
    On a coarser scale, the Councils control the overall eligibility, 
allocation, transfer and duration of shares and can thus control which 
entities, in addition to fishermen, receive or are allowed to hold 
privileges (e.g., limiting speculators, ``Wall street investors,'' 
holding companies, etc.). Such controls must be consistent with the 
goals and objectives of the fishery and consistent with the 
requirements of the Magnuson-Stevens Act. Note that precise data on 
ownership interests must be obtained and tracked, although experience 
has shown that at times it can be hard to trace and verify this 
information.
4.  Who pays for data collection under existing catch share programs? 
        Are cost recovery mechanisms being applied to cover the cost of 
        monitoring in any catch share program today?
    Answer: Funding for data collection under existing catch share 
programs is a mix of appropriated and industry sources. The Magnuson-
Stevens Act only authorizes cost recovery for data collection of 
Limited Access Privileges Programs (LAPP) satisfying the definitions 
under section 303A. In these programs, costs for management, data 
collection and enforcement directly attributable to the catch share 
program are recoverable subject to a limit of 3 percent of the ex-
vessel value of the fishery. The Alaska halibut/sablefish, Bering Sea 
crab, and Gulf of Mexico red snapper and grouper/tilefish fisheries 
currently are applying cost recovery mechanisms. The Mid-Atlantic surf 
clam/ocean quahog fishery (cost recovery program is being developed) 
and the South Atlantic wreckfish fishery (no recovery because of the de 
minimus costs of monitoring the two active vessels) comprise the other 
two eligible LAPPs. The New England sector catch share program is not 
authorized under section 303A as a cost-recoverable LAPP.
5.  How will NMFS address the concern that a commercial catch share 
        program may lock in shares, preventing the recreational sector 
        from expanding their shares?
    Answer: Regional Fishery Management Councils allocate the total 
allowable catch among different sectors, including commercial and 
recreational sectors, under all management options, not just catch 
shares. Properly designed management programs ensure these allocations 
use an appropriate range of criteria to ensure fair and equitable 
allocations, and provide the means to periodically re-evaluate the 
allocations to confirm their ongoing relevance to changing biological, 
economic and social conditions. Catch share management options can 
expand these options through the consideration of inter-sector 
transfers of allocations between recreational and commercial sectors.
    The Magnuson-Stevens Act states that limited access privileges do 
not create a right, title or interest in a fishery or to any fish 
before the fish is harvested. The privilege can in fact be revoked, 
limited or modified at any time in accordance with the law. The 
Councils need to acknowledge these attributes when they design 
provisions governing catch share eligibility, distribution, duration, 
and transferability.
    NOAA's draft policy provides specific guidance to the Councils on 
this topic. NOAA recommends the Councils use the flexibility in catch 
share program design to implement a fair and equitable distribution of 
the total allowable catch among the various sectors, including the 
commercial and the recreational sectors, as appropriate. This means 
considering the inclusion of allocation criteria such as past, current, 
and projected fishery participation; current and historical landings; 
and the economic, social, and cultural characteristics of the fishery.
    In practice, a Council could set aside a certain percentage of the 
allocation of the total allowable catch to be allocated on an annual 
basis to account for contingencies and changing circumstances or data. 
Alternatively, a Council could include time schedules in their fishery 
management plan design to consider reallocation of quota at a future 
date, or provide a process for future transfers of allocations when 
certain thresholds or triggers are reached. NOAA recommends such 
reallocative elements be specified and analyzed up front in the program 
design, not after the fact.
    Additionally, it is important to note that the grant of a catch 
share privilege to someone is not made in perpetuity. The law defines a 
limited access privilege as a permit, issued for a period of not more 
than 10 years. A formal and detailed review 5 years after 
implementation of the catch share program (and at least every 7 years 
thereafter) is also required by law. The program can be amended at any 
time as specified by the Council. Therefore, it is important to set 
specific management goals with respect to the distribution of benefits 
and impacts, and consider future reallocation plans and implications in 
the initial program design.
6.  How will NMFS address recreational catch share without sufficient 
        real-time catch data?
    Answer: During Council development of any fishery management plan, 
the data collection, monitoring and compliance aspects of the program 
design are developed. Experience with existing U.S. catch shares 
programs have required additional frequency and timeliness in data 
reporting for the commercial fisheries coming under catch shares. If a 
Council were to choose to implement a catch share in a recreational 
sector, additional real time data collection requirements may need to 
be adopted in that sector as well.
7.  Who should be allowed to purchase catch shares? For example should 
        environmental organizations be permitted to purchase catch 
        shares and set them aside for conservation?
    Answer: Regional Fishery Management Councils are given the 
responsibility under the Magnuson-Stevens Act to determine the 
eligibility, allocation, transferability, revocation and duration of 
limited access privilege programs subject to the requirements of 
section 303A. The Councils can control who is allowed to purchase catch 
shares, consistent with provisions of the Magnuson-Stevens Act and the 
goals and objectives identified for their specific fishery management 
plan. A Council catch share program typically distributes an annual 
catch limit that is based on a scientifically established total 
allowable catch. The annual catch limit accounts for scientific and 
management uncertainty and also accounts for biological, economic, and 
social factors important to that specific plan. It would be contrary to 
a Council's publically developed and approved plan to permit catch 
shares to be used in a manner inconsistent with the stated goal, 
purpose and administrative record of the program. This may include 
precluding the sale of shares to be set aside for conservation if that 
was not an express intent or purpose of the plan.
8.  The budget request includes $12.6 million to implement the west 
        coast groundfish catch share program that has been approved by 
        the Council and is pending approval by the secretary. Why is it 
        so much? Is this a one-time cost?
    Answer: In the FY 2011 President's budget, NOAA requested $12.7 
million for the implementation and operation of the new Pacific Coast 
groundfish trawl rationalization program. A higher level of monitoring 
may be needed in the trawl rationalization program in order to ensure 
that individual or group quotas are adhered to, particularly because it 
is a mixed-stock fishery, and monitoring and enforcement costs will be 
greater than for the previous program. Of the $12.7 million, $10 
million would be for the training and deployment of monitors/observers 
and data collection. The remaining $2.7 million requested funding would 
also support other implementation and operational activities including 
program administration, enforcement, establishing of program specific 
share accounting databases and reporting systems, catch monitoring, 
identifying eligible participants, issuing annual quota for each 
participant, and adjudicating administrative appeals of the eligibility 
and catch share decisions.
    Some or all of the incremental operational costs for the catch 
share program can be recovered once the catch share program is 
operational. Agency cost recovery is capped at a maximum of 3 percent 
of the ex-vessel value of the fishery. The shore-based commercial 
groundfish fishery had an ex-vessel value of $59.3 million in 2007. 
Additionally, NOAA expects that once this program is more established 
and the fishery is more profitable, industry will also pay some of the 
monitoring costs associated with this program. As a result, as this 
catch share program matures, resources planned for this fishery will be 
reallocated in future years to support the transition to and 
implementation of catch share programs in additional fisheries.
9.  Given that large sums of public funds are being spent to buy back 
        permits/quotas so that these can be subsequently leased to 
        fishers from private ``community'' permit banks, what advantage 
        is there to such a system versus just directly vesting 
        municipalities with catch allocations that could be leased 
        directly to fishers?
    Answer: The present use of appropriations to support permit banks 
is partially based on the exigency of time. It is possible to directly 
vest catch allocations to communities under the Magnuson-Stevens Act 
section 303A(c)(3). Councils can develop a limited access privilege 
program that allocates shares to ``Fishing Communities'' comprised of 
residents who conduct commercial or recreational fishing, processing or 
fishery-dependent support businesses within the Council's management 
area.
Questions from Republican Members
1.  Concern has been raised that NOAA is ``pushing'' catch shares. NOAA 
        claims that they are merely providing information on how catch 
        share programs could help fisheries management. How do you 
        explain the graphic from a NOAA presentation that claims there 
        are 37 potential plans to be developed or implemented in FY 
        2011 and FY 2012?
    Answer: The draft NOAA policy states that NOAA is not recommending 
catch shares be used in all fisheries. There is no mandate to adopt 
catch shares. Moreover, the draft NOAA policy repeatedly stresses that 
Councils and stakeholders need to evaluate the range of fishery 
management programs available and choose the one that best fits their 
goals and objectives.
    The 36 potential catch share programs were identified by the eight 
Councils for possible development. This list is subject to change and 
NOAA does not expect that all of these fisheries will necessarily be 
brought under catch share management.
    Councils were already choosing to adopt catch shares for their 
fisheries well before this draft policy was conceived. Six of the eight 
Councils have implemented 15 catch share programs around the country. 
The first was in 1990, with nine additional programs in just the last 6 
years. NOAA has learned many lessons regarding the best practices for 
implementing catch shares over the last 20 years. The Magnuson-Stevens 
Act contains more than 10 pages of new statutory language on using this 
one approach, and therefore NOAA developed a draft policy to provide 
guidance on the use of catch shares.
    NOAA's draft policy closely aligns with the findings and follows 
the recommendations in the Congressionally-chartered report of the 
National Research Council (NRC) \1\ associated with the 1996 moratorium 
on individual fishing quota programs. The NRC Report, the U.S. 
Commission on Ocean Policy, and the 2006 revisions to the Magnuson-
Stevens Act all suggest that catch shares be considered as an option 
where appropriate, and that is what the draft NOAA policy states.
---------------------------------------------------------------------------
    \1\ National Research Council. 1999. Sharing the Fish: Toward a 
National Policy on Individual Fishing Quotas. National Academy Press, 
Washington, D.C.; http://www.nap.edu/catalog.php?record_id=6335
---------------------------------------------------------------------------
2.  Can you tell us what fisheries make up these 37 potential catch 
        share programs?
    Answer: The following table shows 36 potential catch share 
programs. This number includes 4 recently implemented programs and 1 
more program that is in the process of being implemented. Thirty-one 
additional fisheries remain on the list of potential programs. These 
fisheries have been identified by the Councils for possible development 
of catch shares, but the list is subject to change, and NOAA does not 
expect that all of these fisheries will necessarily be brought under 
catch share management.

[GRAPHIC] [TIFF OMITTED] 55542.013

[GRAPHIC] [TIFF OMITTED] 55542.014

        We are told that two of the three being proposed for the 
        Pacific Council are limited access plans for albacore tuna and 
        sardines and that the industry participants do not want limited 
        access for either fishery. Are these two of the fisheries that 
        are considered by NOAA to be potential catch share plans for 
        the Pacific region?
    Answer: Currently, the U.S. West Coast Northern Albacore tuna 
fishery is an open access fishery. The Pacific Fishery Management 
Council may consider developing a limited entry program to control 
excess capacity. The Council adopted a control date of March 9, 2000, 
in case a limited entry program is needed in the future, and any new 
entrants in the fishery after the control date may not qualify for a 
permit if a program is implemented in the future. Control dates are 
established to minimize the rush of new entrants into a fishery that 
often occurs when limited entry is being considered. Meanwhile, a 
limited entry system has been in place in the Pacific Sardine 
commercial fishery since 1999.
    The Council has identified the U.S. West Coast Northern Albacore 
and the Pacific Sardine fishery as potential catch share programs. NOAA 
is committed to working with the Councils and stakeholders in 
evaluating catch share management in the U.S. West Coast Northern 
Albacore tuna and Pacific Sardine fishery, as it works towards our 
shared goal of long-term sustainability of both the resource and the 
fishing community. Whether catch shares are ultimately the option 
chosen for a fishery or another tool is selected, NOAA is committed to 
keeping fisheries viable and helping to ensure a future for fishermen, 
fishing communities and working fishery waterfronts. NOAA will support 
and coordinate the science and management actions necessary to attain 
sustainable fisheries.
4.  Can you tell us where the funding for the $17.4 million for catch 
        shares in FY 2010 was taken from? Can you tell us how it is 
        being distributed (region specific or fishery specific)?
    Answer: The source of the FY 2010 enacted $17.4 million for catch 
shares is comprised of those funds expended for catch shares in 2009 
under the Fisheries Research and Management and the Cooperative 
Research (NE Multispecies Sectors) lines. Please see below for more 
detail.
[GRAPHIC] [TIFF OMITTED] 55542.015

    .epsThe $6 million in the new Catch Share line item dedicated to 
Cooperative Research will continue to focus on enhanced stock 
monitoring and conservation engineering (including technology transfer) 
to support the transition to sectors and annual catch limits (ACLs). 
Priority will be given to:
      Fisheries currently managed under a catch share program 
or for fisheries which are transitioning into catch share management
      Fisheries with interaction with fisheries under catch 
share management or in transition to catch share management
      Fisheries with significant data gaps for ACLs
5.  Can you tell us how the $54 million for FY 2011 will be used? I 
        understand approximately $12 million will be used to implement 
        the Pacific Council's groundfish trawl plan. Is that accurate? 
        What fisheries will the remaining $42 million be spent on? Are 
        these costs expected to be annual costs or are there increased 
        costs associated with the initial implementation?
    Answer: NOAA has requested an increase of $36.6 million, for a 
total of $54 million, in FY 2011 to support the consideration of catch 
share programs by Councils, and to enhance the implementation of catch 
shares nationwide. The requested increase would support analysis and 
evaluation of fisheries for catch share programs, development of 
fishery management plans and regulations, observing and monitoring at 
sea and on shore, and enforcement activities. As catch share programs 
in specific fisheries mature, resources spent to assist those fisheries 
in transitioning to catch shares could then be reallocated to support 
the transition to and implementation of catch share programs in 
additional fisheries.
    In FY 2011, of the $54 million:
      $10.6 million would support activities and capabilities 
common to many catch share programs that are more efficient to 
implement at a regional or national level, rather than managing each 
specific catch share program individually. Examples of such activities 
include overall program management, improvements in fishery dependent 
data collection systems to support future catch share programs, quality 
control on historic catch data to support individual or group 
allocations, fishery data management, social and economic data 
collection or analysis, and adjudication of administrative appeals of 
program participants. Funding requested under this line item would also 
support electronic reporting, quota accounting, and a lien registry. 
Some regions have implemented catch share programs, and therefore have 
a base of expertise and capability to add programs. Other regions need 
capacity building to begin development of, and will eventually 
implement and operate, catch share programs.
      $2.0 million would support analysis and development of 
new catch share programs through the Regional Fishery Management 
Council process. Catch share programs typically take several years of 
analysis, stakeholder participation, and Council deliberation before 
being adopted. Catch Share Plans are more complicated than many fishery 
management plan amendments, and thus carry increased costs for analysis 
of alternatives and their impacts. Special stakeholder committees and 
workgroups, requiring funds for staff support and meetings, are often 
established to advise the Council on appropriate alternatives.
      $41.45 million would support implementation and operation 
of specific catch share programs for 17 fisheries (16 LAPPs plus the 
Northeast multispecies sectors), including four new catch share 
programs: Gulf of Mexico grouper & tilefish ($6.6 million), Mid-
Atlantic tilefish ($0.5 million), Northeast multispecies ($4.4 
million), and Pacific groundfish ($12.7 million). Following Regional 
Council adoption and Secretarial approval of a catch share program, an 
implementation period of one to two years is common. Key implementation 
activities include hiring management and enforcement staff, 
establishment of program specific share accounting databases and 
reporting systems, identification of eligible participants, issuance of 
catch shares, computation of annual quota for each participant, and 
adjudication of administrative appeals of the eligibility and catch 
share decisions. These activities need to be completed before fishermen 
begin fishing under the catch share program. The operational costs 
include program administration, monitoring, enforcement, and science 
evaluation. Included in this $41.45 million is $6 million for 
cooperative research related to catch share programs, and is offset by 
a corresponding reduction in the cooperative research line. NOAA 
believes that cooperative research is important to develop the most 
effective catch share programs. Some or all of the incremental 
operational costs for the catch share programs that meet the definition 
of a Limited Access Privilege Program under the Magnuson-Stevens 
Fishery Conservation and Management Act of 2006 can be recovered once 
the catch share program is operational. Agency cost recovery is capped 
at a maximum of 3 percent of the ex-vessel value of the fishery.
[GRAPHIC] [TIFF OMITTED] 55542.016

.eps6.  Does NOAA consider permit stacking to be a form of catch share?
    Answer: Permit stacking is the registration of more than one 
limited entry permit for a single vessel, where a vessel is allowed 
additional catch for each additional permit registered for use with the 
vessel. Permit stacking may be a form a catch share depending on the 
specific provision of the fishery management plan developed by the 
Council. If each permit is not tied to a specific share of the catch 
limit that a fisherman has the right to harvest, the fishery would not 
be considered a catch share program. However, if the permits are tied 
to a specific share of the catch limit that a fisherman has the right 
to harvest, as is the case in the Pacific sablefish fishery, it can be 
considered a form of catch share.
7.  Concern has been raised that the President's budget request for 
        catch shares is taking funding away from other priorities. Do 
        you agree? If not, why not?
    Answer: Catch share funding is not requested at the expense of 
other priorities. The FY 2011 budget strongly supports NOAA's continued 
investment to implement the Magnuson-Stevens Act with a total request 
of $135.2 million. NOAA's National Marine Fisheries Service Operations, 
Research, and Facilities budget request increased from $724.2 million 
in fiscal year 2009 to $907.8 million in fiscal year 2011; this $184 
million increase demonstrates that fisheries research and management 
has been, and continues to be, a clear priority for NOAA.
8.  Is level funding for stock assessment work adequate?
    Answer: There was a $10 million increase for expanded stock 
assessments in FY 2010, for a total of $52 million. This funding is 
sustained in the FY 2011 President's budget request. Although there is 
no specific budget increase in the FY 2011 request, NOAA's proposed 
budget will maintain its efforts to steadily increase the percentage of 
stocks with adequate assessments from only 52 percent in FY 2005 to 60 
percent in FY 2011; this improvement is associated with the FY 2008-
2010 increases to Expand Annual Stock Assessments (EASA) funding. In FY 
2011, NOAA's National Marine Fisheries Service (NMFS) will be able to 
bring 139 of the 230 priority stocks to an adequate level of 
assessment. The particular assessments that will be updated in FY 2011 
are being determined through regional processes in consultation with 
the Regional Fishery Management Councils and other partners. Those 
stocks that have been experiencing overfishing or are on rebuilding 
plans have the highest priority for immediate assessment. With EASA 
budget increases in FY 2010, NOAA is initiating new fish abundance 
surveys that can support additional assessments over the next several 
years.
9.  When will the Atlantic red snapper stock assessment be completed? 
        Will this give the council time to approve fishing measures for 
        the summer or do you expect the closure to be extended?
    Answer: The South Atlantic Fishery Management Council (Council) is 
scheduled to approve Amendment 17A to the Snapper-Grouper Fishery 
Management Plan (Red Snapper Rebuilding Plan) for Secretarial review in 
June 2010, which means regulations implementing the area closure could 
be effective by the end of the year.
    The tentative schedule for the South Atlantic Red Snapper Benchmark 
Assessment is listed below:
      Data Workshop: May 24-28, 2010, Charleston, SC
      Assessment Workshop: A series of webinars June 21- 
September 29
      Review Workshop October 12-14, Savannah, GA (proposed)
    The new Southeast Data Assessment and Review benchmark assessment 
for red snapper will be completed in October 2010, reviewed by the 
Council Scientific and Statistical Committee in November 2010, and 
presented to the Council in December 2010. NOAA's National Marine 
Fisheries Service is committed to working with the Council to respond 
to the new assessment findings with any needed management adjustments 
as quickly as possible. The agency anticipates such adjustments could 
be implemented by spring 2011.
10.  How are recreational fisheries affected when the commercial sector 
        of the same fishery moves toward a catch share program?
    Answer: Within a mixed-use fishery, Regional Fishery Management 
Councils can recommend management of the commercial sector with catch 
shares and still manage the recreational sector by other means. Catch 
share programs are focused on the commercial sector of a fishery 
because they are built on limited access, whereas no recreational 
fishery sector has limited access to a fishery and no commercial catch 
share program limits recreational access to fishery resources. 
Commercial catch shares can benefit all sectors of a fishery by 
limiting commercial harvests to scientifically based quotas and 
providing economic incentives for conservation. This will have a 
positive impact on fish stock health, which is essential for both the 
commercial and recreational sectors. NOAA's draft catch shares policy 
stresses that the Councils should carefully evaluate the potential 
effects of catch shares on all sectors associated with a fishery, 
regardless of whether they are in the catch share program.
    Additionally, NOAA recommends that Councils periodically review the 
performance of all catch share programs to determine, among other 
things, impacts on the fishing community and changes in participation 
in the fishery at large. Councils are directed to periodically review 
all catch share and non-catch share programs to ensure they are meeting 
the intended goals for the fishery, the fishermen, and the fishing 
communities. The key to success is a thoughtful program design process 
in which these issues are considered and planned for up-front. NOAA is 
committed to working with recreational, commercial, and other 
stakeholder groups to help them assess the pros and cons of adopting a 
catch share program for their sector.
11.  Is NOAA considering catch share programs for any charter 
        fisheries? How would that work? How would that affect 
        recreational anglers?
    Answer: In 2009, NOAA implemented a limited access system for 
charter vessels in the guided sport fishery for Pacific halibut in 
waters of International Pacific Halibut Commission (IPHC) Regulatory 
Areas 2C (Southeast Alaska) and 3A (Central Gulf of Alaska). Charter 
halibut permits are issued to licensed charter fishing business owners 
based on their past participation in the charter halibut fishery. All 
charter halibut permit holders are subject to limits on the number of 
permits they may hold and on the number of charter vessel anglers who 
may catch and retain halibut on permitted charter vessels. The intended 
effect is to curtail growth of fishing capacity in the guided sport 
fishery for halibut. The North Pacific Fishery Management Council found 
that the charter vessel sector was the only halibut harvesting sector 
that was exhibiting growth in IPHC Areas 2C and 3A. Some harvesting 
sectors have specified catch limits that cause fishery closures when 
reached, while others have been relatively stable over time. The 
Council recommended this limited access system to provide stability for 
the guided sport halibut fishery and to decrease the need for 
regulatory adjustments affecting charter vessel anglers while the 
Council continues to develop a long-term policy on allocation between 
the commercial and charter vessel sectors.
    Last summer, the Gulf of Mexico Fishery Management Council 
established a new Ad Hoc Limited Access Privilege Program Advisory 
Panel to provide feedback and ideas regarding the potential application 
of catch share programs to recreational and commercial fisheries. Some 
for-hire fishermen are advocating to be separated from the private 
recreational sector and allocated a percentage of the red snapper 
recreational quota under a catch share program. Such a program would be 
expected to provide charter fishermen greater flexibility to fish when 
they want and to improve the economic profitability of individual 
program participants; although fishery managers may continue to rely on 
fixed seasonal closures to provide specific biological benefits in some 
situations (e.g., protect fish during their spawning season, reduce 
bycatch). NOAA is committed to assisting the Regional Fishery 
Management Councils and constituents in evaluating the pros and cons of 
sector separation and catch share management; however, the for-hire 
sector is currently deeply divided in its support for such a program, 
the implementation of which would likely require a positive referendum 
vote.
    NOAA is currently evaluating public comments solicited on its draft 
policy that encourages the development of well-designed catch share 
programs to help rebuild fisheries and sustain fishermen, communities, 
and vibrant working waterfronts. The draft policy provides a foundation 
for facilitating the wide-spread voluntary consideration of catch 
shares, while empowering local fishermen to be part of the process.
12.  Do you believe limited access is necessary for a catch share 
        program to be effective?
    Answer: Limited access is necessary for a catch share program to be 
effective because there has to be a defined number of participants. 
Limited access involves limiting participation in a fishery to a 
specific group that has met certain eligibility criteria; a Limited 
Access Privilege Program involves a separate permit issued for 
exclusive use by a person as part of a limited access system to harvest 
a quantity of fish expressed by a unit or units representing a portion 
of the total allowable catch of the fishery. Meanwhile, catch share is 
a general term for several fishery management strategies, including 
Limited Access Privilege Programs, that allocate a specific portion of 
the total allowable fishery catch to individuals, cooperatives, 
communities, or other entities. Each recipient of a catch share is 
directly accountable to stop fishing when its specific quota is 
reached. Although there must be a defined number of participants and/or 
quota shares, both limited access and catch share programs provide 
mechanisms for new entrants into the fishery.
                                 ______
                                 
    Ms. Bordallo. Thank you very much, Mr. Schwaab, for further 
explaining NOAA's draft catch share policy.
    Now I recognize Dr. Fina. Thank you for being here today, 
and please proceed.

STATEMENT OF MARK FINA, Ph.D., SENIOR ECOLOGIST, NORTH PACIFIC 
                   FISHERY MANAGEMENT COUNCIL

    Mr. Fina. Good morning, Madame Chair and members of the 
Committee. I am Mark Fina, Senior Economist for the North 
Pacific Fishery Management Council.
    I appreciate having the opportunity to offer comments to 
you on our experience with catch shares in the North Pacific. 
Our Council will be finalizing its comments on NOAA fisheries 
catch share policy at its April meeting.
    A primary focus of those comments will be ensuring that the 
guidance in no way impinges on Council authorities provided by 
the Magnuson-Stevens Act for introducing and designing catch 
share programs for the fisheries it manages.
    The Council's use of that authority, together with the 
flexibility it provides, has been critical to determining when 
and what type of catch share management is appropriate for our 
fisheries.
    The North Pacific Council manages groundfish and shellfish 
fisheries in the Federal waters off Alaska. All of these 
fisheries are managed under annual catch limits and some type 
of limited access program. As a part of our evolution of our 
management, we have adopted a variety of programs, which now 
might be characterized as catch shares or limited access 
privilege programs.
    These programs were adopted for a variety of reasons, and 
serve a variety of objectives, including improvements of safety 
and production efficiency, and reductions in bycatch. Each is 
tailored to the specific needs and circumstances in the 
fishery. Each was developed through years of Council 
deliberation, supported by hundreds of pages of analysis.
    Stakeholders and the public had several opportunities for 
input, with significant and meaningful effects on the outcome. 
This open, deliberative process is critical to both stakeholder 
acceptance of a program, and achieving an appropriate balance 
among often divergent interests.
    While the Council's public process is intended to ensure 
that a program achieves its goals with minimal negative 
consequences, decision makers should be prepared to critically 
review the effects of these programs and adopt modifications as 
needed. In some cases, subsequent actions intended to mitigate 
negative effects may carry equally undesirable consequences. 
These practical barriers to reversing catch share programs to 
remedy hardships suggests the catch share programs should be 
approached with caution.
    When considering a catch share program, the stakeholder and 
management burdens should not be overlooked. Stakeholders' and 
managers' time is greatly taxed by the extensive public 
process.
    The time for rulemaking and implementation of catch share 
programs after Council action can exceed two years. Care must 
be taken to ensure that these time commitments do not constrain 
our ability to address other pressing management needs.
    Monitoring and enforcement burdens may also rise, as each 
permit represents a privilege to harvest a certain quantity of 
fish, rather than the general privilege to participate 
represented by a limited-entry license.
    Despite these caveats, the Council believes that when 
appropriate for a fishery and carefully designed, catch shares 
are a very effective management measure.
    In the North Pacific we have five major catch share 
programs: the Halibut and Sablefish IFQ program; the Bering Sea 
Pollock Cooperatives, as defined by the AFA; the Bering Sea and 
Aleutian Islands Crab Rationalization program; the Amendment 80 
Cooperative program in the Bering Sea and Aleutian Islands; and 
the Central Gulf of Alaska Rockfish Pilot program. My written 
testimony includes brief descriptions of each of those 
programs.
    In two other fisheries, after extensive deliberations, the 
Council elected not to adopt catch share programs. This 
reflects its view that some fisheries may not lend themselves 
to catch share management. In all of the catch share programs 
in the North Pacific, program elements reflect a balance of 
competing interests of those who rely on the fisheries, 
including vessel owners, processors, crew, communities, 
environmental interests, and the public. Yet several important 
management concerns, such as habitat and endangered species 
protections, are unlikely to be addressed by catch share 
management, and may require independent management measures.
    Catch share management, however, may provide a benefit when 
addressing these environmental concerns by allowing for new 
adaptive management measures that might otherwise be 
unworkable.
    In addition, the flexibility provided to participants by 
catch share management may ease the burden associated with 
complying with those management measures. Understanding both 
the benefits and limitations of catch share programs is 
important to their successful use.
    Over the past 15 years, catch share programs have become an 
important part of the fishery management regime in the North 
Pacific. By using the authority to establish catch share 
programs with discretion, the North Pacific Council has 
developed an array of programs that serve a variety of 
interests in the fisheries it manages.
    The Council looks forward to advancing its management of 
North Pacific fisheries, and appreciates the authority 
entrusted to it by Congress under the Magnuson-Stevens Act, 
including the authority to develop catch share management as 
appropriate.
    Thank you for this opportunity. I would be happy to answer 
questions at the appropriate time.
    [The prepared statement of Dr. Fina follows:]

        Statement of Mark Fina, Ph.D., J.D., Senior Economist, 
                North Pacific Fishery Management Council

    Good morning Madam Chair and members of the committee. I am Mark 
Fina, Senior Economist for the North Pacific Fishery Management 
Council. I appreciate having the opportunity to offer comments to the 
Subcommittee on our experiences with catch shares in the North Pacific. 
Our Council will be finalizing its comments on NOAA Fisheries catch 
share policy at its April meeting. A primary focus of those comments 
will be ensuring that the guidance in no way impinges on Council 
authorities provided by the Magnuson-Stevens Act for introducing and 
designing catch share programs for the fisheries it manages. As you 
will note throughout my comments, the Council's use of that authority, 
and the flexibility it provides, has been critical to determining when 
catch share management is appropriate for a fishery and the development 
of programs that equitably balance the interests of stakeholders. I 
would be happy to share those comments with you when they are 
completed.
    The North Pacific Council manages groundfish and shellfish 
fisheries in the Bering Sea, Aleutian Islands, and Gulf of Alaska in 
federal waters off Alaska. Major groundfish fisheries include pollock, 
Pacific cod, rockfish, flatfish, sablefish, and Atka mackerel. In 
addition, allocations in the halibut fishery are determined by the 
Council, in concert with the International Halibut Commission, which 
manages the biological aspects of the fishery. The North Pacific 
Council also jointly manages crab and scallop fisheries with the Alaska 
Department of Fish and Game.
    All federal fisheries off Alaska are managed under annual catch 
limits and some type of limited access program. Over time, the Council 
has adopted a variety of management measures to address specific, 
relevant issues that have arisen in particular fisheries. These 
measures address a range of concerns from social and economic issues, 
such as those addressed by the Community Development Quota program, to 
environmental issues, such as area closures to protect habitat. As a 
part of the evolution of our management, we have adopted ``individual 
fishing quotas'' (IFQs), ``community quotas,'' ``fishery 
cooperatives,'' and ``rationalization'' programs--all of which allocate 
portions of the total allowable catch to fishery participants--in 
several of our fisheries. These programs (which now might be 
characterized as ``catch shares'' or ``limited access privilege'' 
programs) were adopted for a variety of reasons; each tailored to the 
specific needs and circumstances of the fishery, its participants, and 
stakeholders. Each program was developed through years of Council 
deliberation, supported by hundreds of pages of analysis. Stakeholders 
and the public had several opportunities for input throughout the 
Council's development of these programs, often resulting in the 
inclusion and revision of important elements. This open, deliberative 
process is critical to both stakeholder acceptance of a program and 
achieving an appropriate balance among often divergent interests.
    The gravity of the radical change in management to catch shares for 
some stakeholders should not be underestimated. As with all management 
programs, catch shares programs, particularly at the initial 
allocation, define ``winners'' and ``losers''. While the Council's 
public process is intended to ensure that a program achieves its goals 
with minimal negative consequences, decision makers should be prepared 
to critically review the effects of these programs and adopt 
modifications as needed. In some cases, subsequent actions intended to 
mitigate negative effects may carry equally undesirable consequences. 
For instance, redistributing shares after the initial allocation to 
rectify inequities in that initial allocation may be considered unfair 
by some participants, particularly if shares are taken from persons who 
used loans to fund their purchases based on an expected stream of 
income that would be derived from those shares. These practical 
barriers to reversing catch share programs to remedy hardships suggest 
that catch share programs be approached with caution.
    When considering a catch share program, the stakeholder, 
administrative, management, and monitoring burdens should not be 
overlooked. Stakeholders' and managers' time is greatly taxed by the 
extensive stakeholder and public input, alternative analysis and 
review, and Council deliberations associated with development a catch 
share program. In our experience, the time for rulemaking and 
implementation of catch share programs after Council action has in some 
cases exceeded 2 years. Care is taken to ensure that these Council and 
staff time commitments do not constrain our ability to address other 
pressing management needs. Additional monitoring and observer coverage 
may also be necessary to oversee catches and landings of exclusive 
allocations, particularly in multispecies fisheries where catch shares 
may allow a vessel to improve returns by discarding less valuable 
catch. Enforcement burdens may also rise, as each permit represents a 
privilege to harvest a certain quantity of fish, rather than the 
general privilege to participate represented by a limited entry 
license. These added costs and burdens are an important consideration 
for both fishery managers and stakeholders, when considering whether to 
advance a catch share management program in a fishery. Despite these 
caveats, the North Pacific Council believes that, when appropriate for 
a fishery and carefully designed, catch shares are a very effective 
management measure.
    I would like to spend the remainder of my time briefly reviewing 
some aspects of the different catch share programs that we have adopted 
in the North Pacific. I will touch on the Council's rationale for each 
program, design characteristics reflecting the rationale, performance 
of the program, some unanticipated consequences, and the Council's 
responses to mitigate those consequences. I will conclude with a brief 
summary of some considerations that I believe are critical to the 
development of effective catch share programs.
Halibut and sablefish Individual Fishing Quota (IFQ) program
    The halibut and sablefish fisheries support a large number of small 
vessels with strong community ties. In 1995, NOAA Fisheries implemented 
the halibut and sablefish IFQ program approved by the Council in 1992. 
These two fisheries are similar in many respects. Both species are 
targeted with fixed gear, primarily longlines, and command a relatively 
high ex-vessel price. Prior to implementation of the IFQ programs, the 
fisheries were open access, regulated by managers monitoring catch in-
season with closures timed to coincide with harvest of the total 
allowable catch. The catching power of this fleet posed several 
management challenges. To limit total catch to the level needed to 
protect stocks, managers progressively shortened fishing seasons, 
creating a derby as fishermen raced to obtain a share of the fishery. 
At the extreme, in some regulatory areas, halibut seasons were reduced 
to 24-hour derby openings. Managers had difficulty regulating harvests, 
as harvest levels could not be accurately gauged for these very short 
openings. Gear losses were believed to be excessive, resulting in an 
estimated 2 million pounds of halibut mortality annually, as 
unretrieved gear continued to catch fish. Safety was compromised, as 
owners of smaller vessels felt compelled to fish, regardless of the 
weather, to maintain their participation. Catch quality suffered as 
some vessels queued at processing plants for up to a week waiting to 
offload. The IFQ program--the result of years of Council 
deliberations--was largely intended to control expansive growth in 
participation in the fisheries and the end the derby.
    The IFQ program is designed to balance a number of goals and 
interests. To reflect historic participation and fishery dependence, 
initial allocations of shares were based on catches from the fishery 
over three years. Over 4,800 persons received initial allocations in 
the halibut fishery that drew approximately 3,500 participating vessels 
annually in the years leading up to implementation of the IFQ program. 
To maintain fleet composition, shares are classified for use by vessel 
type (catcher processor or catcher vessel) and length, with limits on 
the use of shares outside of their designated vessel type and size 
class. Most shares are divisible and transferable subject to 
consolidation limits. To maintain the small vessel, owner-operator 
character of the fleet, catcher vessel shares carry owner-on-board 
requirements, limits on the use of hired skippers, leasing 
prohibitions, and may be transferred only to individuals (not 
corporations or partnerships). In addition, only persons able to 
demonstrate active time as crew in commercial fisheries are permitted 
to acquire shares. To provide entry opportunities, consolidation of 
small blocks (or allocations) of quota is limited and loans are 
available to aid newcomers and small vessel operators. Seasons extend 
several months allowing share holders to time their harvests to avoid 
poor weather and sell to desired markets.
    Since implementation of the program, several changes have been 
observed in the fisheries. The number of share holders and number of 
vessels in both the halibut and sablefish fisheries have declined 
substantially. A new type of cooperation has developed as share holders 
consolidate their holdings and fish them off fewer vessels to reduce 
costs. This tendency is borne out, as the number of active share 
holders substantially exceeds the number of vessels. This practice is 
significant, as it demonstrates that the program provides an 
alternative, more gradual, means of entry, when compared to purchasing 
a license and vessel to enter a limited entry fishery. In the halibut 
fishery, in particular, product quality has improved dramatically with 
a substantially larger share of the catch being sold to fresh fish 
markets. Gear losses and associated mortality are believed to be 
inconsequential under IFQ management. In addition, safety improvements 
in the fishery have been documented through declining fatalities and 
U.S. Coast Guard search-and-rescue missions.
    Despite these benefits, not all stakeholders are satisfied with the 
outcome of the IFQ program. In many cases, the Council has taken action 
to address these concerns. The first amendments to the program, 
intended to improve entry opportunities, were implemented 
simultaneously with the IFQ program itself. In addition, many quota 
holders in Alaska's smaller coastal communities have chosen to transfer 
their quota to others or have moved out of these communities. As a 
result, the number of residents of small communities holding quota and 
the total amount of quota that they hold have substantially declined 
since the implementation of the IFQ program. In response, ten years 
after the original implementation, the Council revised the IFQ program 
to authorize certain remote coastal communities with few economic 
alternatives to purchase and hold shares to ensure their access to, and 
sustained participation in, the IFQ fisheries. The Council is currently 
conducting a five-year review of this community purchase program, 
giving particular attention to program elements and market factors that 
might contribute to a dearth of community purchases to date. While some 
may suggest that a redistribution of shares to communities might 
address this issue, such a redistribution might be view as inequitable 
by persons who purchased shares, on the expectation of receiving 
returns from those purchases for several years.
Bering Sea pollock cooperatives (under the American Fisheries Act)
    The Bering Sea pollock fishery is a high volume industrial fishery, 
with large scale shore-based and at sea processing sectors. In 1998, 
Congress adopted a cooperative management program for the Bering Sea 
pollock fisheries. This Congressional action followed a prolonged, 
contentious allocation debate between the inshore sector (who deliver 
their harvests to shore-based plants for processing) and the offshore 
sectors (who process their catch at sea). The program divides the total 
allowable catch among the sectors, with 50 percent allocated to the 
inshore sector, 40 percent to the catcher processor sector (including 
the catcher vessels that deliver to catcher processors), and 10 percent 
to the mothership sector (floating processors that receive deliveries 
from catcher vessels at sea), after set asides to the Community 
Development Quota program and to support catches in other fisheries.
    Although an allocation dispute was the catalyst for the development 
of the program, the cooperative structure is intended to address a 
variety of interests and issues. Allocations are made to vessels based 
on historic catches. Eligible vessel may then join a cooperative to 
access exclusive annual allocations. Management burdens are reduced as 
NOAA Fisheries monitors catch at the cooperative level, with all 
members of a cooperative jointly and severally liable for violations of 
their cooperative. Under the system, cooperatives distribute 
allocations among member vessels and oversee individual vessel harvests 
with contractually defined and privately administered penalties for 
violations of the cooperative agreement. In part due to processor-
voiced concerns about the redistribution of landings under the halibut 
and sablefish IFQ program, the catcher vessel program creates a closed 
class of shore-based processors. To access an exclusive allocation, a 
catcher vessel must join a cooperative in association with one of the 
shore-based processors. Vessels that elect not to enter such a 
cooperative may fish a limited access fishery, without the benefit of 
an exclusive allocation. The program also recognizes potential 
spillover effects on other fisheries that could arise if vessels 
consolidate harvests or time of harvests to allow for greater 
participation in other fisheries. To prevent encroachment of pollock 
vessels and processors in these other fisheries, ``sideboards'' limit 
pollock fishery participant catches and processing in these other 
fisheries.
    In the catcher processor and mothership sectors, ending the derby 
fishery has allowed for greater attention to production costs and 
product quality and the development of a broader range of products and 
higher utilization rates. In the inshore sector, the cooperative/
processor structure has induced similar gains. Landings are coordinated 
by cooperatives to avoid gaps in processing and offload delays that 
might compromise product quality and increase processing costs. Many 
participants in the fishery use revenue sharing arrangements, under 
which both catcher vessels and the processors that they delivery to 
share gains from additional product revenues. In addition, the 
exclusive allocations under the program gave participants a secure 
interest that facilitated improved cooperative efforts to pursue added 
value for the fishery as a whole through Marine Stewardship Council 
certification.
    While the pollock cooperative program, in and of itself, is 
considered a success by many stakeholders, some of the greatest effects 
of the program have arisen through ancillary management measures that 
are not directly part of the cooperative program. Almost simultaneously 
with the implementation of the cooperative program, NOAA Fisheries 
introduced area closures and measures to spatially and temporally 
disperse pollock catch to protect Steller sea lions. While these 
measures clearly impinged on fishing activity, participants were able 
to comply more readily and effectively through coordination of fishing 
in cooperatives using their exclusive allocations under the program. 
For example, rather than a concentrated derby developing in areas from 
which a limited portion of the allowable catch could be harvested, 
vessels coordinated harvests from those areas distributing catches over 
a greater period of time. More recently, a series of Chinook salmon 
bycatch measures that require extensive fleet coordination have been 
adopted. First, the Council adopted an industry managed system of 
``rolling hot spot closures,'' which rely on real time bycatch 
information to close areas of high Chinook salmon bycatch, as an 
alternative to a less flexible, regimented system of area closures that 
had unacceptable effect on Chinook salmon bycatch rates. To further 
Chinook salmon avoidance, the Council recently adopted an incentive 
program, under which participants who enter contractual agreements that 
contain incentives for Chinook salmon avoidance at all bycatch levels 
will be subject to a higher Chinook salmon bycatch cap. A performance 
standard requires that participants in this incentive program maintain 
bycatch well below the elevated cap in a majority of years to continue 
to receive the benefits of the elevated cap. The program is intended to 
accommodate uncertainties in Chinook salmon bycatch rates by creating 
incentives for Chinook salmon avoidance in years of low bycatch that 
would not exist under simple fixed quantity bycatch limits. Both the 
``rolling hot spot closures'' and the proposed incentive agreements 
depend heavily on fleet sharing of catch and effort information that 
would likely have been inaccessible prior to implementation of the 
cooperative program.
Bering Sea and Aleutian Island crab rationalization program
    Since their inception, the Bering Sea and Aleutian Islands crab 
fisheries attracted participants willing to undertake great financial 
and personal risks. This large vessel, industrial fishery has a large 
scale onshore processing sector with strong community dependence. 
Notwithstanding the adoption of measures to limit entry, several of 
these crab fisheries attracted excess capital with overcapacity 
resulting in a race for crab. In the each of the last four Bristol Bay 
red king crab fishery derby seasons (prior to the rationalization 
program), the entire season's allowable catch (between 8 million pounds 
and 14 million pounds of crab annually) was harvested in 5 or fewer 
days; in each of the last three Bering Sea C. opilio (snow crab) derby 
seasons, the season's allowable catch (in excess of 20 million pounds 
of crab annually) was harvested in fewer than two weeks. This derby 
management compromised safety as crews worked around the clock to 
maximize catch; economic returns were sacrificed by this race; and 
management and conservation of the resource was complicated as managers 
attempted to time each fishery's closing to avoid overruns of the 
allowable catch. In response to these concerns Congress directed the 
Council to consider ``rationalization'' alternatives for these 
fisheries. In response, the Council developed its Bering Sea and 
Aleutian Islands (BSAI) crab ``rationalization'' program, which 
Congress later authorized.
    The Council's rationalization program reflects its desire to 
accommodate the interests of several groups dependent on these 
fisheries--vessel owners, processors, captains and crew, and 
communities. Under the program, 97 percent of the harvest share pool 
was initially issued to limited access license holders based on catch 
histories. The remaining 3 percent of that pool was allocated to 
captains, based on their fishing histories, for exclusive use by 
persons active in the fisheries. Processors were issued processing 
quota shares base on their processing histories in the fisheries. Under 
these allocations, 90 percent of the catcher vessel owner harvest 
shares are designated for delivery to holders of corresponding 
processing shares. Shares are divisible and transferable subject to 
limits. Share holders are permitted to form cooperatives to aid in the 
coordination of harvests. Community interests are protected through 
several measures including community landing requirements that 
maintained the historic distribution of landings in the first two years 
of the program, a regionalization program that requires that catch made 
with certain shares be landed and processed in designated regions, and 
community rights of first refusal on transfers of processing shares. An 
arbitration system is included in the program to resolve price 
disputes, which could arise because of the constraints on markets 
created by the dual harvester/processor share allocations.
    Many harvesters were concerned about the price effects of the 
market restrictions of processor shares. Yet, in the first few years of 
the program, the arbitration program has effectively ensured that 
harvesters have continued to receive an ex vessel price that reflects 
their historic division of first wholesale revenues for landings, in 
lieu of a competitive price. In addition, the processor share component 
of the program has limited redistribution of landings from historic 
processing plants, which have substantial investments in the fisheries. 
Regional landing requirements have been particularly important in 
maintaining the distribution of landings to remote communities, 
particularly the Pribilof Island community of St. Paul. St. Paul is 
home to one of the largest crab processing plants and derives a notable 
share of its annual tax revenues from the Bering Sea C. opilio (snow 
crab) fishery. The rationalization program, together with a progression 
of U.S. Coast Guard safety measures, is believed to have improved 
safety in the fisheries by allowing captains to remain in harbors or 
stop fishing in inclement weather and take time to service vessels in-
season without risking loss of catch. Some participants have also 
credited the program with allowing vessels to slow operations, 
resulting in significant fuel savings.
    As expected, the program facilitated the removal of a substantial 
number of vessels from the fleet in the first year of the program, 
reducing the Bristol Bay red king crab fleet from approximately 250 
vessels to fewer than 100 vessels and the Bering Sea C. opilio (snow 
crab) fleet from approximately 175 vessels to fewer than 80 vessels. 
This removal of capacity is believed to have provided a substantial 
return to those vessel owners who sold their shares and retired their 
vessels or deployed them in other fisheries, with sale revenues being 
used to pay outstanding vessel mortgages or other vessel related costs 
(if the vessel is maintained for use in other fisheries) and remaining 
amounts being profits to the share holder.
    Although this reduction in capacity was intended and expected, its 
immediacy and magnitude were not. The effect was a dramatic change in 
the number and nature of crew positions in the fisheries. With each 
vessel employing approximately 6 crewmembers, under the rationalization 
program the Bristol Bay red king crab fishery employs approximately 975 
fewer crew, while the Bering Sea C. opilio (snow crab) fishery employs 
approximately 675 fewer crew. Because of the relatively small allowable 
catches in the fisheries in years leading up to the rationalization 
program, most crew worked only a month or so in the crab fisheries. 
Crew typically worked other jobs (including crew jobs in other 
fisheries) throughout the remainder of the year. In addition, since 
crew pay was (and is) typically based on vessel revenues, in the derby 
fishery, pay was subject to risk, as vessel breakdowns or poor catches 
could leave crew with little or no compensation. The relatively short 
tenure of crab crew jobs was attractive to many crew, particularly 
those with other employment who were able to take short periods away 
from that other employment to fish crab. Notwithstanding the relatively 
short term of these jobs, for many crew, crab fishing jobs were 
reported to have provided important contributions to annual income. 
Particularly in the case of crew from remote communities with few job 
opportunities, replacing income from lost crab crew jobs is reported to 
be problematic.
    Overall, data and anecdotal reports suggest that the crew positions 
remaining in the crab fisheries are more stable and better paying under 
the rationalization program. Crew typically know the amount of shares 
that will be harvested and terms of payment prior to beginning fishing, 
allowing them to project income for a season. Prior to implementation 
of the rationalization program, compensation hinged entirely on success 
in the limited access derby fishery. The consolidation of catch under 
the rationalization program has reportedly allowed some crew to rely 
exclusively on crab fishing for their incomes. Other crew are reported 
to work on the crab vessel in other fisheries or tendering catches from 
catcher vessels to processors, relying on employment from their crab 
fishing vessels for all of their income. Vessel owners hiring crew 
generally give priority to crew willing to work in all crab fisheries 
that the vessel participates in (and non-crab fisheries or tendering, 
if the vessel engages in those activities). These preferences have led 
to changes in crew composition, as some former participants are 
unwilling to give up other employment to work exclusively for a crab 
vessel. Maintaining a steady crew, however, can greatly simplify vessel 
management, reduce hiring costs arising from high turnover, and improve 
efficiency and safety, as crew become more familiar with the vessel's 
operation and fellow crew. Although these benefits arise for most crew 
remaining in the fishery, many crew have lost the relatively high 
paying, short term work in the crab fisheries since implementation of 
the program.
    The Council undertook two reviews of the program in its first three 
years and has adopted several amendments to address concerns that have 
arisen. Another review is scheduled later this year. One amendment 
frees shares initially allocated to captains from the landings 
limitations of processing shares, to increase harvest flexibility and 
allow active crew to receive greater value for their share holdings. 
Amendment packages have also been initiated to consider measures to 
strengthen community protections and increase the portion of the 
harvest share pool available only to active crew. Although these 
reviews and modifications may not allay concerns of all stakeholders, 
they demonstrate the Council's receptiveness, willingness, and 
commitment to consider changes to address program shortcomings.
Bering Sea and Aleutian Islands non-pollock groundfish trawl catcher 
        processor cooperatives (Amendment 80)
    In 2008, NOAA Fisheries implemented a Council approved cooperative 
program for the Bering Sea and Aleutian Island non-pollock groundfish 
trawl catcher processor sector, commonly known as Amendment 80. The 
fleet governed by this program participates in a variety of 
multispecies groundfish fisheries. Most vessels in the fishery have 
limited factory space and processing capability, producing only whole 
and ``headed and gutted'' frozen fish. These factors, in concert, led 
to disproportionately high discards rates in this fleet, as vessels 
discarded fish that were deemed to have no or very limited market 
value, given the processing constraints. To address this discard 
problem, the Council developed a ``groundfish retention standard,'' 
which imposes stepwise increases in required retention over a period of 
years. In tandem with this retention standard, the Council developed 
the Amendment 80 cooperative program. The program allocates shares to 
vessels, which can then access exclusive annual allocations by joining 
a cooperative. The cooperative program allows vessels to manage (and 
meet) retention requirements in the aggregate at the cooperative level. 
Cooperative management typically increases communication among members, 
which should facilitate the exchange of information concerning fishing 
patterns and practices and their effects on catch composition, and 
consequently retention. In addition, application of retention standards 
at the cooperative level allows member of a cooperative to develop 
contracts defining terms under which vessels with relatively high 
retention rates derive a benefit from that retention from vessels with 
relatively low retention rates. The intended outcome is a system in 
which all vessels have an incentive for retention improvements. The 
exclusive share allocations under the cooperative program allow 
participants to slow fishing effort without losing a share of the 
allowable catch, refocusing that effort toward retention improvement. 
Exclusive share allocations also provide an opportunity for improved 
production efficiency, which should ease the cost burden associated 
with complying with the retention standard.
    Two years into this program, most participants believe that the 
program has provided much of the expected benefits. Despite this 
consensus, the Council is currently considering two amendments to 
further improve the program. One amendment would modify cooperative 
formation standards (i.e., minimum membership requirements for 
cooperative formation) to more equitably distribute of negotiating 
leverage. The second amendment would allow for vessel replacement, 
which could improve safety, retention capability, and economic 
efficiency in the fleet.
Central Gulf of Alaska rockfish pilot program
    The Council developed the Central Gulf of Alaska rockfish pilot 
program after the Secretary of Commerce received a directive from 
Congress to establish, in consultation with the North Pacific Council, 
a two-year pilot program for management of the directed fisheries for 
three rockfish species in the Central Gulf of Alaska--Pacific ocean 
perch, northern rockfish, and pelagic shelf rockfish. Congress later 
extended the program's duration to five years. Prior to implementation 
of the pilot program, these rockfish fisheries were prosecuted by trawl 
catcher vessels and catcher processors as a derby fishery during the 
first few weeks of July. These vessels all participate in other 
fisheries throughout the year. Landings from the rockfish fisheries 
often conflicted with landings from the summer salmon fisheries that 
are prosecuted at the same time. This conflict often led to delays in 
offloading, resulting in a decline in the quality of products. The 
program is intended to eliminate the race for fish and also allow 
participants to time fishing effort to avoid processing conflicts with 
other fisheries. These changes were intended to achieve improvements in 
product quality and value, provide stability to processing labor force, 
reduce bycatch, and improve habitat protections.
    Based on the Congressional directive, stakeholder input, and public 
testimony, the Council developed a cooperative management program under 
which historic participants receive allocations of those three rockfish 
species, along with allocations of other important species typically 
harvested in these directed rockfish fisheries (including Pacific cod 
and sablefish). Shares are allocated to licenses, holders of which may 
access exclusive annual allocations by joining cooperatives. In the 
catcher vessel sector, each harvester is eligible for a single 
cooperative that must associate with the processor to which the 
harvester delivered the most landings to during a specific time period. 
Eligible vessels that choose not to join a cooperative may fish in a 
limited access fishery without an exclusive allocation. Although this 
constraint on cooperative membership choices is very rigid, the Council 
believed that the cooperative/processor associations that would arise 
would achieve the program's objective of reducing processing conflicts 
with other fisheries and that, given the limited life of the program 
and potential for future modification, any competitive advantage 
arising under the structure would not be unduly exploited. The 
distribution of landings across several months in each of the first 
three years of the program suggests that the structure has facilitated 
the redistribution of landings to avoid those processing conflicts. 
Anecdotal reports also suggest that this redistribution has been used 
to reduce down time at processing plants, allowing for steadier 
employment of processing crews. Although processors made efforts to 
expand markets for higher value products in the first year of the 
program, product prices have not risen appreciably under the program. 
While some in the catcher vessel sector have been quick to suggest that 
the cooperative/processor associations of the program have diminished 
any incentive for quality improvements, the challenges associated with 
the development of new product markets in a down economy should not be 
overlooked.
    Improved habitat protection and reductions in bycatch under the 
program are also notable. Since implementation of the program, habitat 
protection improvements have arisen as a substantially greater share of 
the fishery is prosecuted with ``semi-pelagic'' gear, which has less 
(and less forceful) contact with the seabed than the bottom trawl gear 
traditionally used in the fishery. In addition, bycatch reductions are 
achieve through a few aspects of the program's design. Discards are 
prohibited for all allocated species (with the important exception of 
halibut, as halibut retention is not permitted in any trawl fishery). 
Allocations of halibut under the program are strict limits on the catch 
of halibut. Any cooperative that has fully caught its allocation of 
halibut is required to stop fishing. To create an incentive for greater 
reductions of halibut catch in the fishery, halibut remaining at the 
end of the rockfish fishery in the November is reallocated to other 
trawl limited access fisheries. Under this system of binding halibut 
allocations, accompanied by the incentive of the reallocation, the 
fishery has cut halibut mortality per ton of directed rockfish to less 
than half the level of the best year preceding program implementation. 
The Council is currently considering options to reallocate less than 
100 percent of the unused halibut allocation, in a manner that would 
maintain the incentive to avoid halibut bycatch while reducing total 
trawl fishery halibut mortality. The overall structure of the program 
has led some fishermen to acknowledge a wholesale change in their 
fishing objectives under the pilot program. Under limited access 
management, their objective was simply to ``out fish'' others in the 
fishery to maximize catches of the three directed species, while 
supplementing their income with allowable retention of other valuable 
non-directed species (such as Pacific cod and sablefish). Under the 
pilot program, their primary objective is to time fishing to 
accommodate both processor delivery schedules and personal time 
demands. When fishing, their objective is to fully harvest the various 
retainable species allocations as agreed with the cooperative and 
scheduled with the processor with minimal halibut bycatch. Because the 
pilot program is scheduled to expire at the end of the 2011 season, the 
Council is currently considering alternatives to perpetuate catch share 
management of the fishery.
Conclusion
    Our experience in the North Pacific indicates that catch share 
management should be undertaken only as specific fishery and management 
needs dictate, rather than mandated through sweeping and general 
initiatives. In each case in which the North Pacific Council has 
advanced catch share management, the program was shaped, through an 
arduous, protracted process, to serve the specific needs of the fishery 
and the Council's management objectives for that fishery. Each program 
was developed against the backdrop of existing annual catch limits. In 
one case in particular--the development of a comprehensive 
``rationalization'' program for all Gulf of Alaska groundfish 
fisheries--the Council determined after preliminary analysis and 
deliberations that its efforts to develop a catch share program should 
be abandoned for a variety of practical, social, and other reasons. 
These fisheries all continue to be managed under strict catch limits, 
with a variety of other management measures, including sector 
allocations for some species. The Council similarly retracted its 
decision to advance a catch share program for the halibut charter 
fishery it manages and has instead advanced a variety of other 
management measures in that fishery, including separate commercial and 
charter annual catch limits, a moratorium on entry to the charter 
sector, bag limits, and limited opportunities for charter operators to 
acquire IFQ from the commercial sector. The Council is also considering 
a variety of other long term measures for the charter halibut fishery. 
The Council's decision to pursue management measures other than catch 
shares in these fisheries reflect its view that some fisheries may not 
lend themselves to catch share management.
    In all of the catch share programs in the North Pacific, program 
elements reflect a balance of competing interests of those who rely on 
the fisheries, including vessel owners, processors, crew, communities, 
environmental interests, and the public. The resulting programs 
establish a balance of conservation and social goals against economic 
efficiency gains. Beyond the implementation of program allocations and 
mechanical regulations governing their use, monitoring and enforcement 
measures were adapted with the change to catch share management. Even 
applying an abundance of care, indirect and unanticipated effects arose 
in all of these programs. Consequently, the Council has (and must 
continue to) attend to unanticipated effects and adopt mitigating 
measures. In addition, several important management concerns (such as 
habitat and endangered species protections) are unlikely to be directly 
addressed by catch share management and require independent management 
measures. Catch shares management of a fishery may allow for new 
adaptive management measures that might be unworkable under other 
management programs. In addition, the flexibility provided to 
participants by catch share management may ease the burden associated 
with complying with those management measures.
    Over the past 15 years, catch share programs have become an 
important part of the fishery management regime in the North Pacific. 
By using the authority to establish catch share programs with 
discretion, the North Pacific Council has developed an array of 
programs that serving a variety of interests in the fisheries it 
manages. The Council looks forward to advancing its management of North 
Pacific fisheries and appreciates the authority entrusted to the 
Council by Congress under the Magnuson-Stevens Act (including the 
authority to develop catch share management, as appropriate).
                                 ______
                                 

  Response to questions submitted for the record by Mark Fina, Ph.D., 
     Senior Economist, North Pacific Groundfish Management Council

Questions from Chairwoman Madeleine Z. Bordallo (D-GU)
1.  How have different catch share designs had different impacts on 
        Alaska's fisheries and fishers? How are the fisheries and 
        communities doing after catch shares?
    Response: In the halibut and sablefish IFQ program, certain shares 
may only be acquired by individuals and must be actively fished by the 
share holder. These components have contributed to maintaining the 
owner-operator character of that fleet. In Bering Sea pollock 
cooperative program and the crab program (both of which have 
historically been more industrial fisheries) no such requirement 
exists. In these fisheries, many vessel owners oversee business 
operations and hire skippers to operate their vessels. In the pollock 
cooperative program and the crab program, historic processing 
dependencies are recognized by cooperative/processor associations and 
the allocation of processing shares, respectively. These processor 
provisions have led to increased coordination of harvesting and 
processing in these two fisheries that generate primarily highly 
processed products (and have limited opportunities for fresh product 
markets). The halibut IFQ program includes no processor provisions. 
Allowing this redistribution of landings both among processors and 
geographically (to locations with better access to transportation hubs) 
is believed to have contributed to the expansion of the fresh fish 
market in that fishery.
    The fisheries that are subject to catch share management are all 
prosecuted under sustainable allowable catch limits that have 
contributed to the health of the fisheries. All other fisheries in 
Alaska are also prosecuted under sustainable allowable catch limits. 
The fisheries under catch share management are believed to be among the 
most lucrative in this region, in part, due to the efficiencies 
afforded by catch share management and the endowment of the initial 
allocation.
    Communities, in general, have benefited from the stability provided 
by catch shares management, although exceptions do exist. In some 
cases, fleet consolidation has reduced the number of vessels in some 
Alaska ports, vessels that have remained in these fisheries typically 
spend more time in those ports, providing a more stable contribution to 
the local economy. Under the previous derby management, many vessels 
spent brief periods in these ports, resulting in intense spikes in 
economic activities, which were followed relatively long periods of 
lower levels of economic activity. In some fisheries, landings have 
been geographically redistributed, with a resulting shift in economic 
activity and fish tax revenues between communities. In other fisheries, 
the extent of this redistribution has been limited by both regional and 
port landing requirements and processor provisions that have indirectly 
maintained the geographic distribution of landings. In the halibut and 
sablefish fishery, some residents of small communities proximate to the 
fisheries have either divested of their share holdings or moved from 
those small communities. These actions of small community residents 
have reduced the overall access of those small communities to the 
fisheries. The Council established a community purchase program to 
address this situation.
2.  Is it true that lease fees are as much as 70% of the landed value 
        in some Alaskan fisheries? Are there ways to create a more 
        equitable balance between fishing and non-fishing share owners?
    Response: In some instances, lease fees for quota are reported to 
have reached as high as 70 percent of the landed value. Although some 
observers might suggest that these lease rates reflect disproportionate 
negotiating leverage between active fishermen and inactive share 
holders, the lease rates are largely a reflection of the value of the 
quota (which is paid in the lease fee) and the costs of harvesting that 
quota (which is retained by the active harvester). To the extent that 
these private lease rates are viewed as inappropriate, a variety of 
measures could be considered, which will differ depending on the policy 
objective. For example, if the objective is simply to ensure that 
active persons hold quota in a fishery, owner-on-board or other active 
participation requirements for share holders could be adopted. While 
such a provision would ensure that only active participants hold 
shares, recipients of the initial allocation who elect to divest are 
likely to receive a substantial windfall for the sale of their shares. 
In other words, it is the initial allocation that determines the 
distribution of benefits (regardless of these recipients lease their 
annual allocations or divest of their allocations altogether).
3.  In the crab catch share program in Alaska, binding arbitration was 
        included to resolve price disputes. Can you briefly summarize 
        why this is necessary and if it is working as intended?
    Response: Under the crab program 90 percent of the annual share 
allocations to catcher vessel owners are required to be delivered to a 
processor holding individual processor quota (i.e., annually allocated 
processor shares). These two share types are allocated in equal 
amounts, so each landing must be supported by individual fishing quota 
and a matching amount of individual processing quota. While some 
harvesters may have a variety of choices of which holder of individual 
processing quota to deliver their catch to, near the end of the 
matching of these share types, remaining harvesters will be left with 
little (or no) choice of who to deliver their landings to. Prior to the 
catch share program being implemented, harvester/processor standoffs 
delayed fishing. The arbitration program is intended to prevent similar 
standoffs, particularly those arising from the limit on market choices 
arising under the program. The arbitration system has prevented 
standoffs that might delay fishing under the program. In addition, the 
system is believed by most to have effectively resolved any problem of 
disproportionate market leverage that might arise out of the market 
limitations of processing shares. Most participants (particularly those 
in the harvest sector) believe that the arbitration system has resulted 
in fair pricing for landings in the fishery.
4.  What analysis has the Council conducted on the impacts of 
        allocating harvest shares to processors in the Gulf of Alaska 
        rockfish fishery? How will the Council address concerns that 
        processors, depending on their allocation, may be able to 
        influence dockside prices?
    The current analysis of the rockfish program alternatives considers 
the effects of the allocation of harvest shares to processors on both 
the future profitability of harvesting operations and the use of those 
allocations by processors to affect dockside prices. It is clear, and 
anticipated, that some processors will use these allocations in the 
negotiation of delivery terms (including landings prices) with 
harvesters. The Council will need to determine the portion of the 
harvest share pool allocated to processors (should the Council elect to 
make such an allocation) to maintain a fair distribution of negotiating 
leverage between harvesters and the processors receiving those 
allocations.
Questions from Republican Members
1.  Your testimony details a number of catch share programs in the 
        North Pacific. How many fisheries are managed under what are 
        considered catch shares? Are all (or any) of the North 
        Pacific's catch share plans alike? Can you explain a few of the 
        differences?
    Response: Currently, 5 catch share programs are in place in the 
North Pacific, which apply to 38 different directed species/area 
allocations (each of which might be considered a target fishery). While 
programs may share similar elements, no two programs are alike. The 
halibut and sablefish IFQ program includes relatively strict owner-on-
board requirements, leasing prohibitions, and vessel length 
designations on shares to maintain the owner-operator, small vessel 
character of those fisheries. The Bering Sea pollock cooperative 
program includes processor/cooperative associations that are believed 
to be important to the coordination of harvesting and processing 
activities in that fishery. The Bering Sea and Aleutian Island crab 
program includes regional landing requirements that are believed to be 
important to maintaining the geographic distribution of landings. The 
Amendment 80 program in the Bering Sea includes several allocations of 
cooperative bycatch quota and a ``groundfish retention standard'' to 
ensure that bycatch limits in that fishery are not exceeded and that 
discards do not exceed acceptable standards, respectively. The Central 
Gulf of Alaska rockfish pilot program includes the allocation of 
important non-rockfish species historically harvested in the fishery to 
maintain the economics of the fishery and establish an appropriate 
limit on the catch of those valuable species.
2.  Can you tell us how long it took to develop the halibut/sablefish 
        plan? How long did it take to develop the Bering Sea crab plan?
    The Council spent several years deliberating means of addressing 
problems in both the halibut and sablefish fisheries and the Bering Sea 
and Aleutian Islands crab fisheries, prior to beginning direct 
development of catch share management programs for those fisheries.
    The Council spent several years debating various limited entry 
measures in the halibut fishery, prior to abandoning those efforts, and 
subsequently, taking up the development of the IFQ program. The Council 
began direct development of the halibut and sablefish IFQ program in 
1987. The Council took final action adopting the program in December of 
1991. NOAA Fisheries implemented the program in 1995.
    The Council began direct development of the Bering Sea and Aleutian 
Islands crab rationalization program in 1999 after receiving testimony 
from an industry workgroup that proposed the development of the 
rationalization program to address a variety of concerns in the 
fishery. The program was then defined through Council deliberations 
over a series of meetings with input from a number of stakeholder 
committees, culminating with its final adoption by the Council at its 
June 2004 meeting. Various aspects of the program were defined 
throughout this period, beginning in June of 2002 and continuing until 
the Council's final action adopting the program in June of 2004.
3.  Can you tell us how many times these plans have been amended?
    The Council has adopted several amendments to the halibut and 
sablefish program, including 5 omnibus amendment packages that each 
incorporated a variety of program changes.
    The Council has adopted approximately 10 amendments to the crab 
program, to date. The Council is also currently considering several 
amendments to the program.
4.  Do you know what 5 fisheries NOAA thinks could be managed under a 
        catch share plan by FY 2012?
    Response: No.
5.  Other witnesses express concern about community impacts and the 
        effect on new entrants. Can you describe some of the components 
        of the North Pacific plans that address these concerns?
    Response: In the crab program, permanent regional landing 
requirements and temporary community landing requirements apply to most 
catcher vessel harvest shares and processing shares to limit the 
geographic redistribution of landings. In addition, community entities 
hold rights of first refusal on certain transfers of processor shares. 
In both the crab program and the halibut and sablefish IFQ program, 
community entities may purchase harvest shares. In the crab program 
substantial portions of the harvest share pool have been purchased by 
community entities. The Council is currently exploring the reasons for 
few purchases of halibut and sablefish IFQ purchases by community 
entities. In both the Bering Sea pollock cooperative program and the 
Gulf of Alaska rockfish program, processor/cooperative associations and 
limits on processor entry have limited the redistribution of landings 
among communities.
    All programs include excessive share limits intended to limit 
consolidation of share holdings and fishing activity. These measures 
might indirectly increase entry opportunities. Vessel length categories 
in the halibut and sablefish IFQ program are intended to reduce 
consolidation of catch on large vessels. In addition, to improve entry 
opportunities in the halibut and sablefish fisheries, the Council 
developed the ``block program'' that prevents persons from 
consolidating holdings of small allocations of shares. A loan program, 
funded with cost recovery funds, is also included in the halibut and 
sablefish IFQ program to increase entry opportunities. A similar loan 
program is incorporated into the crab program, but that loan program 
has yet to be implemented. Entry to the crab fishery is also aided by 
the creation of a separate class of shares available only to persons 
who meet active participation requirements. The Council is considering 
increasing the portion of the harvest share pool subject to these 
requirements from 3 percent to as high as 10 percent.
6.  How do you view the idea of Mr. Bachus that 10-25 percent of every 
        catch plan be mandated for communities?
    Response: While community allocations might be appropriate in some 
fisheries and programs, in some cases, those allocations could have 
undesirable effects, and therefore, should not be mandated. For 
example, in a fishery that is fully utilized, community allocations may 
jeopardize the operations of current participants who depend on the 
fishery (including some residents of coastal communities). In these 
instances, it may be possible to mitigate (or prevent) harmful impacts 
on communities through other measures, such as regional and port 
landing requirements or limits on transfers and consolidation of 
harvest shares.
7.  Can you tell us why the Council backed off from the Gulf 
        rationalization plan? Is this an example of where council 
        flexibility allowed you to change direction when it was clear 
        that the fishing industry did not support the direction the 
        Council was taking?
    Response: The Council elected not to advance the Gulf 
rationalization program for several reasons. As a comprehensive 
program, the program would have regulated all gear types and fisheries 
in the Gulf. The challenge of developing a single system to address the 
variety of interests and needs in these different fisheries was viewed 
as insurmountable. The inability to develop a comprehensive program 
addressing the variety of stakeholder interests led to opposition to 
the program from some of those stakeholder interests.
8.  Are you concerned that NOAA might push for a Gulf rationalization 
        plan? How would this be viewed by the fishermen and the 
        Council?
    Response: I do not believe that NOAA will inappropriately pressure 
the Council to develop a rationalization program for the Gulf. Efforts 
to inappropriately advance any management would be frowned on by both 
the Council and fishermen.
9.  NOAA seems to think that catch shares are the only answer for 
        overfished fisheries. Do you agree?
    Response: Establishing annual catch limits and a management and 
monitoring program that ensures that those limits are not exceeded is 
likely the most effective means to address overfished fisheries. These 
limits can be established with or without catch share management.
10.  Did the halibut/sablefish ITQ plan include any community 
        provisions when first implemented? If not, when was that added 
        and why was it added?
    Several components of the halibut and sablefish IFQ program (as 
initially adopted) are intended to provide some level of protection to 
community interests. These including vessel length categories, owner-
on-board requirements, and prohibitions on leasing, all of which are 
believed to aid small vessel fishermen and residents of remote coastal 
communities, whose participation in the fisheries is more likely as 
active, small vessel fishermen. In addition to these indirect measures, 
in 2002, seven years after implementation of the IFQ program, Council 
adopted the community purchase program amendment, which directly 
authorizes community representatives to acquire shares in the program. 
NOAA Fisheries implemented that program in 2004.
11.  Concern has been raised that there is not enough coordination 
        between councils and that some councils are not learning from 
        the mistakes made by other councils in developing catch 
        shares--in particular that the Pacific Council may not have 
        learned from some of the mistakes made by your council. Do you 
        agree with this concern?
    Response: I was contacted periodically by the Pacific Council staff 
during the development of their catch share program, but did not 
participate directly in that process. Additional coordination among 
Councils is achieved through Council Chair meetings and workshops on a 
variety of specific issues. I do believe that additional coordination 
among regional and Council staff would be beneficial to the development 
of all management programs (including catch share programs). If such 
coordination is developed, it is important that it facilitate direct 
communication across the regions, rather than through intermediaries 
that have no (or less) direct experience with the development of 
management actions.
12.  In your experience, are there any particular things that you 
        believe MUST be in all catch share plans (community 
        protections, allowance for new entrants, etc.)?
    No. In the development of a catch share program, a Council should 
be required to consider a variety of factors (such as entry 
opportunities and community protections) and develop a program that 
adequately addresses those needs. A variety of means to achieving those 
ends are available. The appropriateness of these various measures may 
differ across fisheries and provide different results. For example, 
allowance for new entrants may do little to facilitate full scale entry 
to a fishery, if persons fishing that allowance have no meaningful 
opportunity to acquire shares in the main catch share program. 
Alternatively (and depending on the circumstances), ensuring that small 
allocations are available for acquisition could facilitate a more 
meaningful entry to the fishery. Likewise, a variety of measures are 
available to protect community interests, including community 
allocations, regional and port landing requirements, and limits on 
share transfers. The appropriateness (and effectiveness) of these 
measures may vary across fisheries.
13.  In your experience, in a fishery where there is both a 
        recreational component and a commercial component, is it 
        possible to develop a catch share program that will allow the 
        traditional percentage split between the sectors to be altered 
        as the fishery is rebuilt? For example, if a fishery is split 
        50/50, as the fishery rebuilds and the biomass increases, could 
        anything above a specific biomass or TAC level be split in a 
        different proportion? Are there any examples that you can think 
        of where this has already been done?
    Yes, it is possible to alter the distribution of the total 
allowable catch (or annual catch limit) between sectors as the annual 
catch limit changes. A few examples of those distributions are present 
in the North Pacific.
    In the halibut fishery, an estimate of non-guided (non-charter) 
recreational catch is deducted from the annual catch limit prior to 
allocations to the charter (guided recreational) sector and commercial 
IFQ program. This non-guided recreational fishery set aside is a 
relatively small portion of the annual catch limit in the fishery. The 
tonnage of that allocation is not affected by changes in the annual 
catch limit. In addition, the new catch sharing plan for the halibut 
fishery will also change the percent of the annual catch limit 
available to the charter fishery as the annual catch limit changes. At 
annual catch limits below 5 million pounds, the charter sector is 
allocated 17.3 percent of the annual catch limit; at annual catch 
limits of 5 million pounds or above, the charter sector is allocated 
15.1 percent of the annual catch limit. So, at low annual catch limits, 
the charter sector gets a larger share of the fishery, with more of the 
burden of downward annual catch limit changes borne by the IFQ fishery. 
As the annual catch limit increases, the IFQ fishery will receive a 
greater share of the increase. Similarly, the percentage of the annual 
catch limit of certain species allocated to the Amendment 80 catch 
share program fluctuates with the annual catch limit.
    In addition, in most of the catch share fisheries in the North 
Pacific, set asides for incidental catches in fisheries that are not 
subject to catch share management are established prior to any 
allocation to the catch share fishery. Many of these set asides are a 
small part of the total allowable catch and many are unaffected by 
changes in the total allowable catches.
                                 ______
                                 
    Ms. Bordallo. Thank you very much, Dr. Fina, for sharing 
your experiences with catch shares in the North Pacific.
    Now it is my pleasure to introduce Dr. Rosenberg. Please 
begin.

STATEMENT OF ANDREW A. ROSENBERG, Ph.D., SENIOR VICE PRESIDENT 
     FOR SCIENCE AND KNOWLEDGE, CONSERVATION INTERNATIONAL

    Dr. Rosenberg. Madame Chairwoman and members of the 
Subcommittee, thank you very much for the opportunity to 
testify today. I am Andrew Rosenberg, Senior Vice President for 
Science and Knowledge at Conservation International, and I am 
Professor of Natural Resources at the University of New 
Hampshire. But I should say that I am not speaking on behalf of 
either of my organizations today. Conservation International 
has no position on this issue. I am speaking from my experience 
in fisheries over the last 25 years.
    Catch shares are a general term for fishery management 
strategies that allocate a specific portion of the total 
allowable catch to individuals, cooperatives, communities, or 
other entities, and the concept isn't new. Nor is the 
controversy.
    The controversy is so intense because catch shares are 
ultimately about allocation, allocation of fishing privileges 
on a public resource to different users. In fact, most fishery 
management controversy is about allocation between fleets, 
gears communities, areas, and so on.
    The increased interest has been prompted in part by ongoing 
problems of overfishing that, despite years of difficult and 
time-consuming management efforts, persist in many fisheries in 
the U.S. and internationally. The requirements of the Magnuson-
Stevens Act to end overfishing and rebuild overfished stocks as 
soon as possible is exactly the right thing to do, and the 
setting of annual catch limits is the key to ending 
overfishing.
    There are methods for setting such limits in a sensible, 
proactive manner, even when data are incomplete or limited. I 
would refer you to a range of publications on that topic.
    For the purposes of this hearing, I would note that in my 
opinion, the setting of annual catch limits and the 
implementation of catch share systems do not necessarily have a 
greater data and information requirement than other fishery 
management approaches. The requirement is there for any fishery 
management approach, not just catch shares.
    Catch share systems can increase the value of the catch, 
reduce the cost of fishing, thereby increasing profitability, 
and can engender a greater sense of resource stewardship in the 
fishery because of the durability of fishing opportunities for 
participants.
    One of the greatest potential benefits for the catch share 
system is that in principle, many of the decisions about 
fishing tactics are internalized to the fishery, rather than by 
regulation. All of these benefits have been shown to occur in 
some fisheries, domestically and internationally, and I think 
many of those benefits are shown in the North Pacific fisheries 
we just heard about.
    In my observation, those participating in catch share 
systems usually become strong supporters of the approach. But 
the corollary is that those who opt out or are left out usually 
seem to assign all problems of the fishery to that same catch 
share approach.
    In reality, catch share systems can have substantial 
benefits, but may not suit all situations, nor will they suit 
all participants.
    Careful design of catch share programs is critical to their 
success, and many of the potential negative impacts, such as 
excessive consolidation and decline of traditional fishing 
communities, can be minimized or avoided by incorporating 
specific policies, if done carefully.
    Nevertheless, the transition to catch share systems 
represents fundamental change from a long tradition of race to 
fish to get dedicated privileges, to catch a specific amount of 
fish, from competition to cooperation, from maximizing fishing 
opportunity to maximized profits, to minimizing costs to 
maximized value and profit.
    In deciding whether a catch share system is appropriate, 
key design elements include setting of goals, including social 
and economic goals; setting the comprehensiveness of this 
issue, of the system--does it cover the entire fishery; 
allocation and transferability of shares of the catch; 
monitoring, reporting and enforcement policies, communication 
and decision-making processes.
    These elements are challenging for managers and 
stakeholders to address, but are very much resolvable by 
specific policies that have been developed for existing catch 
share programs. Of course, new policies can be developed as we 
gain additional experience.
    In any particular program, however, the choices are 
critical because fisheries vary so much, one to the other. And 
those choices will result in strong or weak programs to achieve 
the goals, or simply engender more controversy.
    I would simply refer to a few key points in design 
structure, and then leave you to my written testimony for other 
details.
    While the Magnuson-Stevens Act sets broad national goals, 
the specific goals within those national goals are going to 
vary greatly from place to place. And managers need to work 
with stakeholders to identify biological, ecological, social, 
and economic goals to shape catch share systems. You can't 
leave out that goal-setting step.
    In a transition strategy, in order to meet that set of 
goals, there needs to be very careful consideration to the 
design, rules, fees, eligibility requirements, and 
transferability requirements--and to funding transition costs 
into a new system. Public funding of the administration of a 
system is critical to the evolution of that system into an 
effective way to prevent overfishing, as well as to manage the 
fishery.
    Finally, monitoring and reporting and enforcement are 
critical to catch share systems, but that is true of other 
fishery management systems, as well. In principle, much of that 
monitoring enforcement requirement can be done by sectors, 
shares, or catch share holders themselves; therefore, not 
making it solely a governmental program.
    The agency can, in that situation, be in a position of 
working with fishermen in monitoring and enforcement, as 
opposed to focusing on the enforcement side.
    Thank you very much, Madame Chair. I would be happy to 
answer questions.
    [The prepared statement of Dr. Rosenberg follows:]

    Statement of Andrew A. Rosenberg, Ph.D., Senior Vice President 
         for Science and Knowledge, Conservation International

    Madam Chairwoman, Thank you and the members of the subcommittee for 
the opportunity to testify today concerning the design and 
implementation of catch share programs for the management of fisheries. 
I am Andrew A. Rosenberg, Senior Vice President for Science and 
Knowledge at Conservation International and a Professor of Natural 
Resources and the Environment at the University of New Hampshire. I was 
a member of the U.S. Commission on Ocean Policy and a current member of 
the Joint Ocean Commission Initiative. I have been involved in the 
science and management of ocean resources, particularly fisheries, 
throughout my career. I served as a scientist, then Northeast Regional 
Administrator and Deputy Director of NOAA Fisheries during the 1990's 
before moving to the University of New Hampshire.
    Catch shares are a general term for fishery management strategies 
that allocate a specific portion of the total allowable catch to 
individuals, cooperatives, communities, or other entities. Some 
fisheries across the nation, and indeed internationally, employ catch 
share systems for a range of commercial fisheries. The concept of catch 
share systems is not new, though the approach has used different labels 
at various times. Nor is the controversy over catch share systems new. 
In fact, from the one sentence description of catch share systems that 
I just gave, it is clear why the controversy occurs and why it is so 
intense and durable I might add; because catch shares are ultimately 
about allocation of a portion of the catch or fishing privileges. In 
fact most fishery management controversy is about allocation; between 
fleets, gears, communities, areas and so forth.
    The increasing interest in catch share systems has been prompted in 
part by ongoing problems of overfishing that, despite years of 
difficult and time consuming management efforts, persist in many 
fisheries in the U.S. and internationally. The requirements in the 
Magnuson-Stevens Act to end overfishing and rebuild overfished stocks 
as soon as possible is exactly the right thing to do, but the 
management measures needed to do so are difficult for managers, 
fishermen, and all stakeholders to come to grips with. It is the 
requirement to set annual catch limits that is the key to ending 
overfishing. The catch limits themselves are often controversial 
because restricting the size of the catch intensifies the difficulties 
of allocation.
    There are methods for setting such limits in a sensible, proactive 
manner even when data are limited and I would refer you to reports I 
have co-authored on this topic for further information. For the 
purposes of this hearing I would note that in my opinion, the setting 
of annual catch limits and the implementation of catch share systems do 
not necessarily have a greater data and information requirement than 
other fishery management approaches. In other words, it is almost 
always helpful to have more stock assessment and other fishery 
information, not just for annual catch limits and catch share 
approaches. But the lack of full information doesn't prevent or obviate 
the need for moving forward with better more effective management 
approaches.
    This hearing is about catch shares and why such a system may, or 
may not, help address problems in fisheries management. After all, if a 
catch limit is set and adhered to fully, then overfishing should no 
longer occur. The role of catch shares is not to end overfishing but to 
address allocation, and more importantly, catch share systems can 
increase the value of the catch, reduce the costs of fishing, thereby 
increasing profitability, and can engender a greater sense of resource 
stewardship in the fishery because of the durability of fishing 
opportunities for participants. One of the greatest potential benefits 
of a catch share system is that, in principle, many of the decisions 
about fishing tactics are internalized to the fishery, rather than by 
regulation. That is, fishermen make decisions on tactics and 
regulations in principle can be simplified to those that address annual 
catch limits rather than fishing tactics. All of these benefits have 
been shown to occur in some fisheries domestically and internationally.
    In my observation, those participating in catch share systems 
usually become strong supporters of the approach. But the corollary is 
those that opt out or are left out usually seem to assign all the 
problems of the fishery to the catch share approach. In reality, catch 
share systems can have substantial benefits, but may not suit all 
situations nor will they suit all participants. I think this simple 
statement is factual and is clear in the NOAA draft catch share policy.
    Careful design of catch shares programs is critical to their 
success and many of the potentially negative impacts, such as excessive 
consolidation and decline of traditional fishing communities and 
methods, can be minimized or avoided by incorporating specific 
policies. Nevertheless, transitions to catch shares systems represent 
fundamental change--from a long tradition of the race-to-fish to 
dedicated privileges to catch specific amounts of fish; from 
competition to cooperation, from maximizing fishing opportunity to 
maximize profit to minimizing costs and value to maximize profit. 
Allocation of the available catch among fishermen often leads to 
impassioned debate about what is ``fair'' among members of industry and 
managers.
Design Considerations for Catch Shares Programs
    In deciding whether catch shares are appropriate for particular 
fisheries several key elements requires careful consideration. These 
include aspects of initial program design including goals of the 
program including social and economic considerations and its 
comprehensiveness; allocation and transferability of shares of the 
catch; monitoring, reporting, and enforcement policies; communication 
and decision making processes. These elements are challenging for 
managers and stakeholders to address, but are very much resolvable via 
specific policies that have been developed in existing catch shares 
programs around the U.S. and internationally. In any particular program 
however, the choices are critical and will result in strong or weak 
programs that will achieve the goals or simply engender more 
controversy.
    Goals and objectives: Setting clear and measurable goals and 
objectives to guide management is critical to the success of any 
fisheries management system, including catch shares. While the 
Magnuson-Stevens Act sets broad national goals, goals for specific 
regions and fisheries often vary greatly from place to place. During 
transitions to catch shares, stakeholders often express concern that 
the goals of programs are unclear. Managers should work with 
stakeholders to identify measurable biological, ecological, social, and 
economic goals and objectives at appropriate region- and fisheries-
specific scales and articulate how catch shares programs can meet them. 
In addition, if some of the catch is not allocated but remains in a 
common pool, i.e., in a given fishery if the catch share system is not 
comprehensive covering the whole fishery, then the rules for the common 
pool must be designed such that the conservation program is not 
undermined such that the catch limits cannot be adhered to. This will 
very likely mean that the regulations for the common pool, recreational 
or commercial, will need to be quite restrictive compared to those for 
vessels in the catch share systems. It is not surprising that if only a 
partial system is implemented then those not in the system will be in 
conflict with those in the share system and potentially the benefits of 
a catch share system will dissipate. However, a partial system may 
still be better than the alternative, even with partial benefits.
    Initial allocation: One of the greatest challenges decision makers 
and stakeholders face in transitioning to catch shares is determining 
the initial formula for allocation of the TAC because the decision is 
grounded in varying interests' ideas of what is fair. What seems fair 
to any one group of fishermen will often seem unfair to others. Key 
considerations include how the decision will be made, what the formula 
will be, how catch history or fishing capacity will be calculated, how 
errors in government records will be corrected so that fishermen 
receive accurate allocations, what kind of appeals process will be put 
in place, and which kind of entities will be allocated quota shares.
    Transition strategy: Transitioning to any fishery management system 
that confines harvesting to sustainable catch limits can be initially 
difficult for fishermen. However, a well-designed and executed 
transition strategy can ease the burden of change for fishery 
participants and managers alike. Transition strategies can include 
limits on quota transfers in the early years of implementation, public 
funding for administration of catch shares until industry returns to 
sufficient profitability to shoulder these costs, and step-wise 
evaluation of biological, ecological, and socioeconomic impacts that 
prompt improvement in programs over time.
    Harvesting strategies and policies: Maintaining sustainable harvest 
rates is not the only requirement for protecting and restoring 
ecosystem health, but also minimizing impacts of harvesting on habitat 
and bycatch of nontarget species. For this reason, habitat and gear 
considerations must be taken into account in catch shares systems. 
Catch shares programs should include requirements and incentives 
related to use of selective harvesting strategies and gear. If the TAC 
is applied to catch--instead of landings--incentives to reduce bycatch 
through gear selectivity will be built automatically into the system. A 
caution here is that the strategies for addressing ecosystem issues 
should not result in dissipating the benefits of catch share systems 
more generally. The same principle of allowing flexibility in fishing 
tactics if the conservation outcomes are achieved must be maintained.
    Transferability of quota: Allowing transfers of quota via sale, 
trade, or lease among fishery participants is critical for economic 
efficiency, a key goal for most catch shares programs. However, there 
are potential downsides to providing unlimited transferability that are 
often of major concern to those interested in protecting small-boat 
fleets and traditional fishing communities. These impacts can include 
excessive consolidation and inflated quota purchasing and leasing 
prices that can undermine the ability of independent and small-
operation fishermen to compete. In order to meet social and economic 
goals, important considerations in program design include the rules, 
fees, and eligibility requirements placed on transferability of quota 
shares at vary points of maturity of catch shares programs. These 
issues can be dealt with but it is very much harder to do so after the 
implementation of the system than as part of the initial 
implementation.
    Adaptive management set-asides: Setting aside part of the TAC for 
adaptive management can provide decision makers flexibility to take 
action to address unintended consequences without having to reduce 
shares of fishermen's catch mid-season. Managers need to decide the 
appropriate level of set-aside for this purpose and for how long they 
should hold that quota into the fishing year before releasing it to 
harvesters. In addition to setting aside quota for adaptive management, 
managers should consider providing incentives for fishermen to engage 
in cooperative research. Cooperative research is an important way for 
fishermen and scientists to learn from one another, gain better 
understanding of fisheries, and provide costs savings for scientists 
and extra income for fishermen.
    Monitoring, reporting, and enforcement: Reliable catch monitoring 
and reporting are critical for the success of any fishery management 
system. For catch shares programs, where harvesters are held 
accountable for staying within strictly defined catch limits, 
enforcement must rely on collective responsibility of the group holding 
quota. In other words, if any member of the group does not adhere to 
the rules all members of the group must have some accountability. 
Choosing appropriate monitoring and reporting levels, methods, and 
technologies should be partly decided on statistical grounds and partly 
decide upon perception of the monitoring program. The statistical 
issues are usually fairly clear with a certain level of monitoring or 
sampling resulting in a certain level of confidence in the results. The 
perception issues are much more difficult such that participants and 
the public have confidence in the system. Further, determining who will 
pay the administrative and infrastructure costs is an important 
decision that can make or break a catch shares program. Adequate and 
fair enforcement will also be critical for meeting program goals and 
improving relationships among managers and fishermen. Furthermore, if 
there is a common pool portion of the fishery then enforcement will be 
complicated because two sets of rules will be in operation. Ensuring 
that participation in the fishery as a whole is contingent upon 
following the rules is an appropriate level of accountability for a 
public resource, in my opinion.
    Forums for improving trust and communication: A long history of 
conflict among fishermen, managers, and scientists in many regions of 
the U.S. complicates meaningful improvements to fisheries management, 
including the establishment of catch shares programs. Decision makers 
should ensure that a diversity of stakeholders are productively engaged 
in program design by providing neutral forums for discussing and 
learning about various design elements of catch shares.
    Information to support decision making: Effective policies can 
feasibly be implemented even when the information on the fishery is not 
complete. Nevertheless, better analyses of baseline conditions, 
projections for impacts under proposed management systems, and tracking 
of progress toward biological and socioeconomic goals can improve any 
fisheries management program. Managers should identify early in the 
process any special studies that will be needed to support informed 
design and implementation of programs, as well as ways information can 
be shared with fishermen in forms useful to their business decision 
making and for their productive contribution to program design.
    Quantity and quality of jobs: Social and economic characteristics 
that are important to fishermen and their communities, which ultimately 
depend on healthy fish stocks for long term success, are necessarily 
constrained by the limitations of the natural environment. However, 
within those limitations are abundant opportunities to define social 
and economic goals for fisheries and incorporate policies into catch 
shares programs that can help regions and communities achieve those 
goals. Unfortunately, fishermen often disagree among themselves about 
these details, putting managers in a difficult position of having to 
make decisions in the face of some guaranteed measure of opposition. 
Key factors that will require clarification for fisheries transitioning 
to catch shares include the appropriate mix of vessel and ownership 
types, definitions of excessive consolidation and what measures are 
appropriate to prevent it, how social and economic impacts will be 
measured through time in light of confidentiality restrictions on the 
collection of such data, and how to address the unintended transfer of 
effort from fisheries transitioning to catch shares to others.
    Concluding remarks: Overall, catch share systems can be affective 
tools for allocating fishing privileges and engendering greater 
accountability and stewardship in a fishery, while increasing value and 
profitability. Because these benefits can be obtained, it doesn't mean 
they always will be if the system isn't designed well. Whether there is 
a catch share system or not, it is essential that fisheries are managed 
to stay within prudent catch limits that avoid overfishing and resource 
declines that have plagued fishery management for many years. 
Proponents of catch share systems need to accept that the design issues 
are important to the result for the resource, fishermen and fishing 
communities. Opponents of catch shares need to suggest alternatives 
that do not continue the overfishing and resource declines of the past 
while changing the dynamics of the fisheries debate.
    Madame Chair, thank you for the opportunity to testify today and I 
look forward to your questions.
                                 ______
                                 
    Ms. Bordallo. Thank you, Dr. Rosenberg, for your statement, 
and for being here today.
    Now I would like to recognize Mr. Backus. Please proceed.

STATEMENT OF EDWARD BACKUS, VICE PRESIDENT, COMMUNITY ECOSYSTEM 
                       SERVICES, ECOTRUST

    Mr. Backus. Good morning, Chairman Bordallo and members of 
the Subcommittee. My name is Edward Backus, and I am the Vice 
President for Community Ecosystem Services at Ecotrust, a 
nonprofit organization based in Portland, Oregon.
    I am also founder and Chair of the North Pacific Fisheries 
Trust, a $6 million community fishing quota revolving 
investment fund. I very much appreciate the opportunity to 
speak before you today.
    Ecotrust's mission is to work toward creating economic 
opportunity, social equity, and environmental well-being. We 
work in a wide variety of economic development activities, 
including banking, ecological forest management, fisheries, 
finance, marine spatial planning, green building, and organic 
farm market development.
    In fisheries, we regard catch share programs as having 
several valuable features, including increasing vessel safety, 
extending fresh market seasons, and, most important, 
accountability and incentives at the level of individual 
vessel.
    But the dark side of fisheries quota programs is that they 
create an intangible asset, which can then migrate away from 
communities, displacing the economic benefits of fishing in a 
painful manner.
    These are not trivial issues. Some of the most successful 
fishing communities in Alaska and the U.S. West Coast are 
struggling with the transition to the next generation of 
fishermen. How catch shares are treated can well determine 
whether such communities make it or not into the future.
    Catch shares create markets and market value from this 
public trust asset. But they must remain a public trust asset, 
whether at the state, Federal, or local community level.
    Quota programs empower the first generation of recipients, 
but hamper future generations. An examination of the patterns 
of quota transactions in Alaska and British Columbia shows an 
emerging pattern of market price, debt, leasing, and wage 
effects.
    Some observers say that catch shares privatize fisheries. 
An example of this is when quota shares are leased. Ownership 
structures are key. Our national policy should not allow the 
creation of perpetual leasing operations by corporations or 
family trusts.
    The current Pacific Trawl IQ program does just this, and 
will stifle innovation, reduce the benefits of liquid trade of 
quota shares, create barriers for new entrance, divert revenues 
from crew, communities, and economic multipliers.
    So what do communities want? From our observations, 
Ecotrust recommends a required implementation of the community 
provisions as part of any catch share program, as provided for 
in the Magnuson-Stevens Act, Section 303 [a], the limited 
access privilege programs.
    These provisions should become mandatory policy, not just a 
requirement for fishery management councils to consider the 
provisions. There should be some teeth in them so that fishery-
dependent communities receive appropriate priority in the 
decision-making process as a matter of good public policy.
    The policy should require that some proportion of fisheries 
quota shares be anchored in communities through entities like 
community trusts, such as the Community Quota Entity program in 
Alaska.
    Why? As the 2004 Government Accountability Office report, 
GAO 04277, found, the easiest and most direct way to help 
protect communities under an IFQ program is to allow the 
communities themselves to hold quota. The unpredictable 
political process of the fishery management councils does not 
guarantee that community issues will be addressed, even using 
the current standards, presumed requirements, and options now 
in the MSA.
    I would like to point out that the Pacific Fishery 
Management Council just last week again delayed the treatment 
of community fishing associations, effectively regarding it as 
not an integral part of the pending trawl individual quota 
program.
    Recommendations. That NOAA strengthen the new policy on 
catch shares to set the following required standards of U.S. 
fishery management councils, if and when they undertake catch 
share programs.
    Mandate the direct allocation to community ownership of at 
least 10 percent of all quota shares in each fishery management 
council region.
    Require the development of community fishing associations, 
regional fishing associations, and other community structures 
now authorized in Magnuson.
    Initiate a national quota-share trading registry to promote 
ownership transaction and pricing transparency, a feature which 
has been law since 1996.
    Last, the National Marine Fishery Service has not yet 
issued the rule for limited access privilege program criteria 
or guidelines for the development of regional fishery 
associations and other community structures. The agency 
requested public input in 2007; here in 2010 we do not have any 
guidelines, criteria, or rules.
    The Councils themselves are required to provide these 
criteria, and we are still waiting for them. NOAA and Congress 
need to provide mandatory oversight in any U.S. catch share 
program to address these community issues.
    Thank you for the opportunity to make this statement this 
morning. I look forward to your questions.
    [The prepared statement of Mr. Backus follows:]

             Statement of Edward H. Backus, Vice President 
               for Community Ecosystem Services, Ecotrust

    Good morning, Madam Chairwoman, Honorable Members of Congress, 
fellow witnesses, and distinguished guests. My name is Edward Backus, 
and I am the Vice President for Community Ecosystem Services at 
Ecotrust a non-profit organization based in Portland, Oregon.
    Ecotrust's mission is to inspire fresh thinking that creates 
economic opportunity, social equity and environmental well-being. 
Ecotrust works within a wider family of organizations which includes 
important partners such as Ecotrust Canada, ShoreBank Pacific--a for-
profit commercial bank, ShoreBank Enterprise Cascadia--a non-profit 
rural community development financial institution, and Chicago's 
ShoreBank Corporation. We own and manage commercial timberlands through 
Ecotrust Forests LLC including carbon credit sales. Together, we have a 
collective staff of over 130 professionals and more than $300 million 
in assets.
    Ecotrust believes we need fresh thinking--innovation--that creates 
market (economic), environmental, and social ``value.'' We need an 
innovative systems approach to our challenges because social, economic 
and environmental conditions are all interconnected and interdependent 
parts of a larger system of life support. Only systemic solutions solve 
systemic problems. And we need resilience in order to survive and 
restore in times of stress. We need to innovate our way towards more 
resilient ecosystems, economies and social systems.
    The deepest, most powerful ``fresh'' thinking is inspired by nature 
because we are a dependent part of natural systems. Over the 
evolutionary history of life on Earth, nature has solved all the 
fundamental design challenges of resilient, adaptive organisms, living 
communities, natural economies and robust ``institutions.'' We can 
achieve ``reliable prosperity'' by practicing a natural model of 
development not because it is a better model, but because it is the 
only one (Jane Jacobs).
    The Economist defined innovation is as ``fresh thinking that 
creates market value.'' Fresh thinking inspired by nature is deep 
innovation. Crisis creates the opportunity to scale deep innovation for 
transformational change.
Market Design is Critical in Public Trust Assets
    To the point of this hearing, I am the Founder/Chair of the North 
Pacific Fisheries Trust, a $6M community quota revolving investment 
fund.
    We are working with longline fishermen in Southeast Alaska on the 
Alaska Sustainable Fisheries Trust, working with many communities in 
the Community Quota Entity program in Gulf of Alaska, and community 
fishing associations in Port Orford, Oregon, San Francisco and San 
Diego, California.
    Our finance activities are but tailpipe solutions that struggle to 
work as a result of some weak policy choices that have been made in 
existing catch share programs. Choices that we are on the verge of 
repeating in the pending Pacific trawl IQ program on the U.S. west 
coast.
    Catch shares (known as limited access privilege programs in the 
Magnuson-Stevens Fishery Conservation and Management Act) are a good 
tool for establishing individual vessel accountability in a fishery 
with a clear Annual Catch Limit, can stop the ``race for fish'' thereby 
increasing the safety of fishing and fishing fleets, and creating a 
more even flow of fresh, higher value seafood products to consumer 
markets.
    But catch share programs also generate powerful financial 
incentives that can warp the long-term outcomes and success of such 
programs. These effects are growing stronger and in some cases just 
manifesting themselves.
    Catch share programs need to be carefully designed need to address 
long term issues in community stability, economic viability, and 
intergenerational processes. We call this the 3E's: ecosystems, 
economics, and equity. Fisheries are a public trust and community 
economic development asset and should remain as such. In October 2007, 
Ecotrust developed a Market Design Workshop for Limited Access 
Privilege Programs in U.S. Fisheries at the Harvard Business School. 
Many new markets have been created from public trust assets. Catch 
share programs in fisheries should learn from these experiences.
Recommendations:
    NOAA needs to strengthen the new policy on Catch Shares to set the 
following required standards of U.S. fishery management councils if and 
when they undertake catch share programs:
      Create catch share design pilot programs with fixed terms 
for quota ownership, periodic auctioning of all or part of the catch 
shares, triple bottom line (ecological, economic, social) performance 
based allocations, and other strategies to understand the effects of 
quota programs on long-term sustainability.
      Mandate direct allocation of quota shares to community 
entities.
      Mandate community ownership of at least 10-25% of all 
quota shares in each fishery management council region.
      Require the development of Community Fishing 
Associations, Regional Fishery Associations and other community 
structures now authorized in the Magnuson-Stevens Act as enacted.
      Initiate a national quota share trading registry to 
promote ownership, transaction and pricing transparency.
    NOAA should also act to:
      Fund the National Fisheries Innovation Fund of the 
National Fish and Wildlife Foundation for the support of community 
entities interested in participating in catch share programs.
      Review existing catch share programs in terms of their 
performance to date, to determine what those experiences can offer for 
the design of new programs, rather than putting in motion a set of 
parallel efforts that are not informed by what has happened on the 
ground/dock/ocean already.
Why do I make these recommendations?
    The recently issued NOAA Catch Shares Policy is a set of program 
goal statements but that the agency is challenged to actually implement 
the policy. Many of the desired policy elements that fishing 
communities would like to see as outcomes are there, but the reality is 
quite different.
    For example, the policy states:
    Fishing Community Sustainability: NOAA encourages Councils to take 
advantage of the special community provisions in the MSA to help assure 
sustainable fishing communities, including the continuation of working 
fishery waterfronts, fishery infrastructure, diverse fishing fleets, 
and resource access... To this end, NOAA will help support community-
based design and investment in innovative fishery management options. 
This partnership would include providing technical assistance in the 
development and submission of community sustainability plans under MSA 
Section 303A, and providing technical assistance in the creation of 
fishing community trusts or permit banks to help retain access to 
fisheries resources by fishermen in local communities.
    The capricious political process of the fishery management councils 
does not guarantee that community issues will be addressed even using 
the current standards, presumed requirements, and options now in the 
Magnuson-Stevens Fishery Conservation and Management Act (MSA). NOAA 
needs to provide mandatory oversight measures in any U.S. catch share 
program to address these community issues.
Key Issues
    Ecotrust, and its finance subsidiary the North Pacific Fisheries 
Trust, have been monitoring and evaluating several issues related to 
the patterns emerging from the quota fisheries that are in place in 
Alaska and British Columbia.
    History in these fisheries shows that groundfish are an important 
economic development asset that provides the broadest set of benefits 
when access is tied to the traditional pattern of fishing communities 
on our coast. The IQ program needs the flexibility to meet the multiple 
goals it has defined either explicitly or implicitly such as bycatch 
avoidance, rebuilding of stocks, community stability, and economic 
``effectiveness'' (not necessarily always efficiency) via different 
incentives. In changing resource, policy, and business environments, 
stability and flexibility can foster innovation and adaptation in new 
markets, fishery methods, and adaptive organizations such as Community 
Fisheries Associations.
Community stability: quota can migrate away
    Fishery quota shares are intangible assets that can migrate away 
from communities. A NMFS study found that in the small communities of 
the Gulf of Alaska, the number of persons holding halibut quota shares 
dropped by 46% from 1995-2004.
[GRAPHIC] [TIFF OMITTED] 55542.001

.epsQuota programs empower the first generation of recipients and 
        hamper the future.
    Testimony from the recent North Pacific Fisheries Management 
Council February 2010 meeting from the Alaska halibut fishery shows 
that second generation (even with gifting of quota--which generates 
capital gains tax stress) does not earn the same revenues as those who 
were initially issued quota. An examination of fifteen years of data on 
quota transactions also shows an emerging pattern of market price, 
debt, and social effects.
Leasing and debt kills the culture of fishing and fishing communities
    Ownership structures are key; our national policy should not allow 
the creation of perpetual leasing operations (family corporations or 
otherwise). The current Pacific Trawl IQ program does just this, and 
will stifle innovation, reduce the benefits of liquid trade of quota 
shares (one of the presumed benefits of catch share programs), 
individual ownership, incentives for new entrants, divert revenues from 
crew, communities, and economic multipliers. The Pacific Trawl IQ was 
set up for economic efficiency, not as a strategy for conservation or 
community viability.
    In the pending Pacific trawl TIQ program, the current definition of 
``eligible to own'' quota shares does not limit the ability of 
prospective owners of quota shares to lease those shares into the 
future. The biggest risk associated with leasing is the dissipation of 
fishing revenues away from active vessel owner/operators, new entrants, 
crewmembers and communities as leasing fees come ``off the top'' before 
regular expenses and wages are paid. In some cases lease fees are 70% 
of gross landing receipts (Alaska crab fisheries). Whenever and 
wherever lease rates reach these levels, it is very difficult for non-
owners to earn a fair return on their fishing assets and time.
``Desperation''
    Two recent publications 1 (see endnote) from the British 
Columbia quota fisheries experience have demonstrated that leasing of 
quota undermines the financial stability of remaining fleets after the 
implementation of an IQ program, particularly in situations where non-
fishing owners and processors control quota share.
---------------------------------------------------------------------------
    \1\ ``A Cautionary Tale About ITQs in BC Fisheries'', Briefing, 
Issue 8, 2009, Draft 13 May 2009, Vancouver, BC: Ecotrust Canada. 
Pinkerton, E. and D. Edwards, 2009, ``The elephant in the room: The 
hidden costs of leasing individual transferable fishing quotas'', 
Marine Policy 33:707-713.
[GRAPHIC] [TIFF OMITTED] 55542.002

    .eps  75% of the landed value in BC halibut fishery goes to 
pay lease fees to the non-fishing owners of quota.
      84% of the total costs in the BC halibut fishery is lease 
fees.
    Evelyn Pinkerton of Simon Fraser University, in a long term study 
of the effects of leasing in British Columbia quota fisheries, heard 
characterizations of small boat fishermen as ``desperate'' in the 
control of processors who dominate the holdings of quota shares. Vito 
Giacalone of Gloucester, Massachusetts, who operates a permit bank for 
trawlers, says leasing will lead to fishermen being sharecroppers.
[GRAPHIC] [TIFF OMITTED] 55542.003

    .eps  30-50% decline in crew shares occur when all quota on 
BC groundfish trawler is leased.
[GRAPHIC] [TIFF OMITTED] 55542.004

.epsDebt:
    A serious issue that will face the next generation of fleet members 
is debt associated with Quota Share purchases. In order to enter the 
fishery, new entrants will buy quota shares, be gifted Quota Share, or 
lease them from initial recipients.
    We are empowering the current generation of quota recipients, who 
have certainly earned their way by building businesses, but we are 
saddling all future generations of fishermen with debt (unless you have 
quota issued already in the family--but even that generates capital 
gains pain...gifting quota from one family member to another is a 
taxable event.)
    As a specific example, 25,000 lbs. of halibut QS at $24/lb. = 
$600,000. If a new entrant could acquire a NMFS loan at 30% down, the 
cash upfront required would be $180,000. The remaining debt would be 
$420,000. At 8% interest for 30 years, payments would total $1.12M 
including principal and interest (interest of $700k, which is 166% of 
the principal.)
Prices Escalate: Price/Earnings Ratios of Fisheries Quota
    We can use the data from the Alaska halibut IQ fishery from the 
period 2000-2007 as a benchmark example. Every year, between 38 and 52% 
of transfers in that period were financed. The Alaska halibut QS price 
has been tracking with dock prices but has inflated on a relative basis 
from 1995 to 2009 2 (see endnote). The historical ratio of 
QS/ex-vessel prices has been generally in the range of 3-5:1, but has 
been substantially above that range for the past several years. 
Recently, both QS and ex-vessel (dock) prices have been coming down, 
but dock price has fallen much faster (back to historic long term 
levels near $2.50 - $3.00/lb.), with the result being that the QS 
price/dock earnings index is now double historical norms at 
approximately 8:1, worse by 100%. New entrants that need to finance QS 
in order to enter the fishery have been and are continuing to face a 
strong headwind in this environment.
---------------------------------------------------------------------------
    \2\ Ex-vessel prices based on data from Alaska Commercial Fisheries 
Entry Commission for 1995 thru 2007. Estimated prices reflect weighted 
average ex-vessel prices reported for all fixed gear types (longline, 
troll, jig, and handline) and all delivery/condition types. Estimates 
reflect deliveries by catcher vessels to shoreside processors. 2008 and 
2009 values based on anecdotal evidence.
    2) IFQ market value based on NMFS/RAM data for1995 thru 2005, 
PermitMaster for 2006 thru 2009.
[GRAPHIC] [TIFF OMITTED] 55542.012

    .epsOne issue driving the run-up in this ratio appears to be 
Gifting of QS to new entrants. Gifting of AK QS halibut shares was 18-
28% from 2000-2007 3. Gifting cuts the cost basis of 
acquiring new QS substantially, creating a major competitive advantage 
for further accumulation of QS by the Giftee. On the other hand, 
Gifting usually comes with an implied revenue commitment of at least 
50-70% to the Giftor. Thus the Price/Earnings ratio is at least 25% 
better for the Giftee compared to a new entrant.
---------------------------------------------------------------------------
    \3\ Table of Alaska Halibut Transfer data summary (2000-2007), 
courtesy of the Restricted Access Management Program, NOAA Fisheries, 
Juneau, AK, prepared March 2009.
---------------------------------------------------------------------------
What do we need to do?
    We need firm program requirements as national standards that must 
be implemented in all catch share programs.
Community Fisheries Trusts: creating different incentives
    Require Councils to make at least a 10% (or more) allocation to 
Community Trusts:
    Why?
      Having an allotment of quota that is permanently anchored 
in communities can help community and geographic stability.
      Trusts with no debt can lease for 8-12% overhead rates.
      New entrants to the fishery have an incentive to stay and 
fish in that community if they can get a start with low rate leases of 
quota.
      New entrants can then bootstrap themselves into gradual 
individual ownership of quota as they earn greater revenues with less 
overall debt.
      Trusts can offer capital gains tax solutions to retiring 
fishermen, thus investing additional amounts of quota into the 
community.
      Community or Regional Fishery Associations as written the 
Magnuson Act can function as Trusts.
    Community Fisheries Trusts (including Regional and Community 
Fishing Associations) can contribute to environmental, economic, and 
community needs, including:
      Protecting smaller ports and smaller-scale fishermen. 
Community Trusts can help protect smaller ports and smaller-scale 
fishermen by initiating strategies to (a) anchor fishing quota in the 
community; (b) facilitate intergenerational transfer of fishery access; 
(c) incentivize and leverage affordable catch share financing; (d) help 
fishermen diversify their fishing ``portfolios''; and (e) deliver 
health care to fishermen and their families. In turn, these activities 
will support the maintenance of fisheries related infrastructure in 
communities and attract new entrants to the fishing community.
      Participating in the development and design of effective 
fisheries management. Trusts can provide a key role in emerging catch 
share systems (e.g. program design, planning, permit auctions, finance, 
marketing) by bringing fishermen's voices to FMC meetings or by 
retaining specialized expertise. In addition, they can participate in 
bycatch reduction initiatives such as gear modification, mapping 
bycatch hotspots, improved fishing practices, etc.
      Creating fishery conservation networks. Community Trusts 
can serve as vehicles for information sharing, contribute to scientific 
research, reduce carbon footprints, and mentor young fishermen.
      Building and participating in new emerging markets for 
sustainable community-based seafood products. In recent years, 
increases in aquaculture production and seafood imports have had a 
profound effect on the domestic ocean fishing industry. While 
aquaculture and foreign seafood may have a competitive advantage in 
price, U.S. fishermen still have several advantages over producers of 
these product types. First, many domestic wild fisheries have the 
advantage of being closer to markets and therefore a shorter supply 
chain to the consumer. At the same time, the demand for both fresh and 
locally caught seafood is growing rapidly. A CFA could capitalize on 
these advantages by (a) supporting development of regional brand; (b) 
initiating marketing to reach key consumers and providing increased 
coordination for existing marketing efforts; and (c) promoting 
awareness among consumers about local and seasonal seafood options.
    The Magnuson-Stevens Act now allows for the creation of these kinds 
of community-based fishing support organizations and innovative fishing 
communities around the country have already been finding ways to meet 
the major challenges they face. We need to support the development 
process of Community and Regional Fishery Associations early and 
widely, however, so that communities may engage in the creation of the 
standards or guidelines to be developed to encourage these alternatives 
to mature.
Experiences from Alaska fisheries: one that works, one that does not.
    Let us look at the Community Development Quota corporations in 
Alaska--successful due to allocation (vs. Community Quota Entities--
which have to purchase on open market, not competitive).
    Two experiences in Alaska with Community Fisheries Trust-like 
entities are instructive for developing the Community FA framework: 
Community Quota Entities (CQEs) and Community Development Corporations 
(CDQ).
    CDQs were established 15 years ago by an act of Congress and were 
allocated 10% of overall quota in many species. Today they are vibrant 
multi-million dollar revenue community based economic development 
engines.
    Community Quota Entities (CQEs) were formed 10 years into the 
Alaska IFQ program by the North Pacific Fishery Management Council and 
were not allocated any Quota Shares and must buy them on the open 
market. They do this with great difficulty, given the price for quota 
and the capital barriers to entering into the market.
    Both CDQs and CQEs are examples of Community Fisheries Trusts. The 
management processes of both organizations create a sense of cohesion 
and cooperation at the scale of communities. Both forms have evolved 
considerable managerial skill and capacity. In terms of viability, 
however, one system is healthy, one is not.
    The major lesson here is that it is beneficial to establish Trust 
type institutions immediately when starting an IFQ program.
    As a 2004 Government Accounting Office report found (GAO-04-277), 
``the easiest and most direct way too help protect communities under an 
IFQ program is to allow the communities themselves to hold quota''.
Recommendations:
    NOAA needs to strengthen the new policy on Catch Shares to set the 
following required standards of U.S. fishery management councils if and 
when they undertake catch share programs:
      Create catch share design pilot programs with fixed terms 
for quota ownership, periodic auctioning of all or part of the catch 
shares, triple bottom line (ecological, economic, social) performance 
based allocations, and other strategies to understand the effects of 
quota programs on long-term sustainability.
      Authorize direct allocation of quota shares to community 
entities.
      Mandate community ownership of at least 10-25% of all 
quota shares in each fishery management council region.
      Require the development of Community Fishing 
Associations, Regional Fishery Associations and other community 
structures now authorized in the MSA as enacted
      Initiate a national quota share trading registry to 
promote ownership, transaction and pricing transparency.
    NOAA should also act to:
      Fund the National Fisheries Innovation Fund of the 
National Fish and Wildlife Foundation for the support of community 
entities interested in participating in catch share programs.
      Review existing catch share programs in terms of their 
performance to date, to determine what those experiences can offer for 
the design of new programs, rather than putting in motion a set of 
parallel efforts that are not informed by what has happened on the 
ground/dock/ocean already.
    Thank you for your time and I look forward to your questions.
                                 ______
                                 

   Response to questions submitted for the record by Edward Backus, 
        Vice President, Community Ecosystems Services, Ecotrust

Questions from Chairwoman Madeleine Z. Bordallo (D-GU)
1.  If properly designed, catch share programs can play an effective 
        role in a multi-faceted approach to responsibly managing 
        fisheries. However, poorly designed catch shares can create as 
        many problems as they solve. Would you agree with this 
        statement?
    Yes I would. Poor design can generate a variety of negative social 
and economic effects including; impacts to the culture and structure of 
fishing communities, increasing debt loads among existing and second 
generation fishing participants, reduced revenues and access from the 
practice of leasing, disenfranchisement of crew and their role in 
successful fishing businesses, disruption of the geographically 
proximate relationships between communities and natural resources via 
the migration of the intangible asset of quota shares away from 
communities through market trading, among other effects.
    Well designed catch share programs will draw on the market design 
principles from other industries where new markets have been created 
using public trust assets (e.g. the wireless spectrum). In fisheries, 
good design should address economic, ecological, and social issues. 
Market design experts suggest that all of these issues can addressed by 
market approaches. Some of these approaches were explored by Ecotrust 
during a market design workshop for catch shares programs in U.S. 
fisheries at the Harvard Business School in October 2007 (proceedings 
at: http://www.ecotrust.org/cbfm/WPS4--Fisheries--Mrkt--Design.pdf)
    Julia Olson, social scientist with NOAA Fisheries, NE Fisheries 
Science Center in Woods Hole Massachusetts has conducted a social 
impact assessment of catch shares in fisheries in detail in the context 
of the New England scallop fishery. Her report is available here; the 
New England Fishery Management Council's September 22-24, 2009 Council 
Discussion Documents. #9a Environmental Impacts Section 1.5.2 - Pages 
93-103.
2.  How can catch shares give fishers a ``false sense of security?''
    The emergence of catch shares as a defacto ``property right'' has 
supported the creation of much wealth in the U.S. fisheries sector. But 
it is hard for fishermen to remember that quota is a privilege that can 
be revoked, especially after many participants have engaged in 
successful market transactions to buy or sell quota shares.
    First, in terms of allocations, quotas provide no more legal 
protection to fishermen than regular fishing permits or licenses. 
Whether a fisherman owns a permit or quota, the government can 
reallocate commercial catches to settle international or other 
treaties, or to meet demands of the sports-fishing sector. By way of 
example, in British Columbia, 12 percent of the commercial halibut 
catch was reallocated to the sports-fishing sector in 2003. There is a 
similar ongoing process in Southeast Alaska in the halibut sector, this 
time with litigation. This was done without compensation to halibut 
quota holders. Catch share quotas don't strengthen the property rights 
of fishermen to prevent reallocations or in seeking compensation.
    Second, catch share quotas do nothing to mitigate ecological 
uncertainty. Climate change, marine survival rates, habitat damage, 
predation and other factors cause fish stock levels to fluctuate and 
thereby create the greatest uncertainty for fishermen. It must be 
remembered that quotas are generally a defined percentage of the total 
allowable catch (TAC) and don't represent a specific poundage of fish 
(even though quota shares are often sold in units of pounds). As a 
result, when fish stock levels rise and fall from year to year because 
of environmental conditions so do fishermen's quotas. Quotas will do 
nothing to mitigate this kind of ecological uncertainty. In fact when 
TACs decline, fishermen have a tendency to lobby Councils and other 
management entities (International Pacific Halibut Commission) to set 
the TAC higher than biological recommendations would suggest. This 
happened at the IPHC in 2010. In this sense, catch shares tend to 
develop a sense of entitlement and a resulting sense of betrayal when 
things must change due to ecological or biological limits.
    Third, in terms of market forces, quotas can help fishermen respond 
better to the market by giving them flexibility to deliver catches when 
demand and prices are high. However, many fishermen lease quota in pre-
season agreements, locking themselves into lease rates per pound. In 
some fisheries, 60 to 75 percent of the landed value goes to paying 
quota lease fees. If fish prices drop or fuel costs rise, their profits 
could disappear. As a result, quota leasing can actually increase 
fishermen's risk and exposure to changing market forces.
    One certain aspect of catch share programs is that some fishermen 
will opt to lease their quotas if allowed, thus guaranteeing themselves 
revenue without any risk of having to actually go fishing.
3.  In your testimony, you reference the research of Evelyn Pinkerton 
        of Simon Frasier University, who found British Columbia small 
        boat fishermen as ``desperate'' in the control of processors 
        who dominate the holding of quota shares. Can you expand upon 
        this point?
    The term ``desperation'' demonstrates how extreme the results, 
feelings, and impacts of allowing leasing in catch share programs can 
be. The context of the fisheries examined by Pinkerton also 
demonstrates that the effects are not just about economic efficiency, 
but have everything to do with fishing culture, community structure and 
well-being, inter-generational hope, and maintaining a sense that 
fisheries are a viable business to enter. It is critical to learn from 
the experience in British Columbia to prevent catch share programs from 
undermining small boat fishing as a viable small business. Fishing is 
not viable if it becomes just the labor component in a larger equation 
of control by non-fishing entities.
    Quoting from the Pinkerton and Edwards paper in Marine Policy...
        ``Of the 182 active halibut fishing vessels in 2006, 37 vessels 
        leased 90% or more of the halibut quota they fished, 67 vessels 
        leased 70% or more of the halibut quota they fished, and 91 
        vessels (half the active fleet) leased 50% or more of the 
        halibut quota they fished.... It is impossible to know exactly 
        what percent of leasing creates a marginal operation, because 
        individual situations are varied and complex. But it is clear--
        that leasing is by far the largest fishing cost and that 
        operations become increasingly less profitable, the more of 
        their quota they must lease. It is also clear--that a 
        significant number of operations...more than a third of the 
        fleet...currently fall in the less viable or marginally viable 
        category (those leasing 70% or more of the quota they fish).''

        ``Why do lessee skippers continue to fish if their operations 
        are marginal? Why do not they correctly receive the market 
        signals that they are financially non-viable? Economic theory 
        predicts that such marginal operations will simply cease to 
        lease quota and find more profitable employment. But there are 
        many reasons why marginal operations continue. Sometimes a 
        vessel owner leases quota to pay for the maintenance of the 
        vessel. A vessel may serve multiple subsistence, 
        transportation, identity, or prestige functions, or maintaining 
        it may simply represent the hope that the price will go up. 
        Operating a vessel may be the best or only way to offer a job 
        to a son to help pay for his education, and to have a working 
        experience with him. In some cases, fishermen know no other 
        life, have no other skills, subsidize their fishing with 
        another job or another fishery, or are unwilling to relocate to 
        places with more economic opportunity because they have 
        extended family and community and low cost housing where they 
        live.''
    Pinkerton and Edwards conclude;
        ``Increasingly, those who have advocated ITQs as economically 
        efficient are making broader claims about the general health of 
        the industry and broader public benefits. So in the question of 
        ``efficient for whom?'', the answer is assumed to be 
        ``efficient not just for holders of ITQs but also for all 
        actors in the fishery and the owners of the resource, the 
        Canadian public''. This discussion has shown that this 
        assumption, as well other assumptions under- pinning the 
        indiscriminate promotion of ITQs, do not apply in the British 
        Columbia halibut fishery.''...

        ``The quota leasing market in the BC halibut fishery is 
        limiting efficiency, stifling innovation, and causing financial 
        hardship. It is clear that a well functioning ITQ fishery 
        requires greater forethought, oversight, and regulation in the 
        design and implementation of transferability rules.''
    Reference: Pinkerton E, Edwards DN. The elephant in the room: The 
hidden costs of leasing individual transferable fishing. Marine Policy 
33 (2009) 707-713.
4.  Could you describe the advantages that community entities could 
        provide in addressing the issues of leasing, debt, new 
        entrants, taxes, and other issues?
    Fisheries are an important economic development asset that provides 
the broadest set of benefits when access is tied to the traditional 
pattern of fishing communities on our coasts. A catch share program 
needs the flexibility to meet the multiple goals it has defined either 
explicitly or implicitly such as bycatch avoidance, rebuilding of 
stocks, community stability, and economic ``effectiveness'' (not 
necessarily always efficiency) via different incentives. In changing 
resource, policy, and business environments, stability and flexibility 
can foster innovation and adaptation in new markets, fishery methods, 
and adaptive organizations such as Community Fisheries Associations.
    If, under the community provisions of the MSA, community entities 
are set up such as Fishing Communities (yet needing definition by 
Councils) or Regional Fishery Associations as non-profit 501c3 tax 
exempt organizations under the IRS code, then these organizations can 
provide economic incentives to address leasing, debt, taxes and other 
issues.
    Using the example of the pending Pacific trawl individual quota 
program, a fisherman receives an allotment of quota. Let's say he 
wishes to retire and sell his quota (not leasing it.) His cost basis 
for receiving the quota is zero and so he will have to pay capital 
gains taxes. Selling his quota at a discount to a non-profit community 
entity creates a multi-year capital gains tax abatement strategy. The 
discount is a charitable donation, an ``investment'' in that 
fisherman's own community that has supported him during his fishing 
career.
    To continue this same example, now a new generation fisherman 
wishes to get into the business, and he has just enough capital to buy 
the active vessel from the retiring fisherman, but he cannot afford a 
loan to buy quota shares which are required to go fishing. Now he can 
lease that quota from the Community Entity at rates well below sub-
market (assuming the Community Entity has no debt--which it might'') 8-
12% rates which help pay the low overhead for the Community Entity.
    The issue of whether the Community Entity has any debt is germane 
to the initial allocation issue. Again, in the case of the Pacific 
trawl individual quota program, there is a 10% set aside known as the 
Adaptive Management Program, the specific use or allocation of which is 
yet undefined by the Pacific Council. This 10% might be allocated to 
processors in fact as one of the options. But, it could be (should be) 
allocated to community entities thus combining the program ideas for 
Adaptive Management and Community Fishing Associations that the Pacific 
Council is considering in trailing actions after it submits this new 
catch share program as an amendment to its groundfish management plan.
    One potential use of the 10% Adaptive Management allocation could 
be to reduce capital requirements for in-season needs to cover overages 
incurred by vessels (disaster tows). The Groundfish Management Team 
report on this matter indicates that this allocation should be ``used 
for reasons beyond generating profit, for a broad sector benefit.'' For 
example, the Adaptive Management 10% could also be used to buffer the 
``margin'' needed to address Over Fished Species (OFS) allocations. 
Allocating this 10% set-aside to Community Fishing Associations for 
these purposes could also reduce in-season transaction costs by making 
it easier for vessels to find and lease the needed marginal Quota Share 
to address these bycatch or overage issues.
    Community Entities as described in the MSA are conceived of exactly 
to provide ``broad sector benefits'' as described by Pacific Council 
process.
5.  In the Magnuson-Stevens Fishery Conservation and Management Act, 
        the language of part of the Limited Access Privileges Program 
        section describes Regional Fishery Associations. Can you 
        explain the term Community Fishing Associations and describe 
        how either of those entities can function to help communities?
    As described in the previous question the MSA contains two specific 
community provisions in relation to catch share (limited access 
privileges) programs; Fishing Communities and Regional Fishery 
Associations. One can be allocated catch share quota--Fishing 
Communities, and one cannot--Regional Fishery Associations.
    In the case of the pending Pacific trawl individual quota program, 
the Pacific Fishery Management Council began to explore using the 
concept of the Regional Fishery Associations (RFA) in March of 2009, 
well into to the design process of the program. The Council decided to 
name them Community Fishing Associations (CFA), which we interpret as 
the same as the RFA structures defined the Magnuson-Stevens Fishery 
Conservation and Management Act.
    In any case, RFA or CFA entities can function as community entities 
(trusts) as described in the previous question. The overall functions 
of a CFA/RFA are to provide fishing communities a way to hold quota 
share assets within catch share programs, either through purchase or 
donation thus providing tax advantages. Having a CFA entity in a 
community also can provide incentives to keep fishermen, landings, and 
infrastructure in place, and therefore tax revenues, and economic 
multipliers from other businesses.
    CFAs will require community boards to run them, and this will 
enhance the transparency of the quota process, leasing, market prices 
of quota sales and other functions. Markets work best when there are 
multiple sources of information about prices and community entities can 
be a source.
    To reiterate the functions and benefits of CFA/RFA structures, I 
quote from my prior written testimony;
      Having an allotment of quota that is permanently anchored 
in communities can help community and geographic stability.
      Trusts with no debt can lease for 8-12% overhead rates.
      New entrants to the fishery have an incentive to stay and 
fish in that community if they can get a start with low rate leases of 
quota.
      New entrants can then bootstrap themselves into gradual 
individual ownership of quota as they earn greater revenues with less 
overall debt.
      Trusts can offer capital gains tax solutions to retiring 
fishermen, thus investing additional amounts of quota into the 
community.
      Community or Regional Fishery Associations as written the 
Magnuson Act can function as Trusts.
    In addition, Regional and Community Fishing Associations can 
contribute to environmental, economic, and community needs, including:
      Protecting smaller ports and smaller-scale fishermen. 
Community Trusts can help protect smaller ports and smaller-scale 
fishermen by initiating strategies to (a) anchor fishing quota in the 
community; (b) facilitate intergenerational transfer of fishery access; 
(c) incentivize and leverage affordable catch share financing; (d) help 
fishermen diversify their fishing ``portfolios''; and (e) deliver 
health care to fishermen and their families. In turn, these activities 
will support the maintenance of fisheries related infrastructure in 
communities and attract new entrants to the fishing community.
      Participating in the development and design of effective 
fisheries management. Trusts can provide a key role in emerging catch 
share systems (e.g. program design, planning, permit auctions, finance, 
marketing) by bringing fishermen's voices to FMC meetings or by 
retaining specialized expertise. In addition, they can participate in 
bycatch reduction initiatives such as gear modification, mapping 
bycatch hotspots, improved fishing practices, etc.
      Creating fishery conservation networks. Community Trusts 
can serve as vehicles for information sharing, contribute to scientific 
research, reduce carbon footprints, and mentor young fishermen.
      Building and participating in new emerging markets for 
sustainable community-based seafood products. In recent years, 
increases in aquaculture production and seafood imports have had a 
profound effect on the domestic ocean fishing industry. While 
aquaculture and foreign seafood may have a competitive advantage in 
price, U.S. fishermen still have several advantages over producers of 
these product types. First, many domestic wild fisheries have the 
advantage of being closer to markets and therefore a shorter supply 
chain to the consumer. At the same time, the demand for both fresh and 
locally caught seafood is growing rapidly. A CFA could capitalize on 
these advantages by (a) supporting development of regional brand; (b) 
initiating marketing to reach key consumers and providing increased 
coordination for existing marketing efforts; and (c) promoting 
awareness among consumers about local and seasonal seafood options.
6.  There are two community entity structures in Alaska, the Community 
        Quota Entities and the Community Development Corporations. 
        Could you explain their functions and similarities or 
        differences?
    Let us look at the Community Development Quota corporations in 
Alaska--successful due to allocation vs. Community Quota Entities--
which have to purchase on open market, and therefore not competitive 
nor successful.
    Two experiences in Alaska with Community Fisheries Trust-like 
entities are instructive for developing a Community Entity framework: 
Community Quota Entities (CQEs) and Community Development Corporations 
(CDQ).
    CDQs were established 15 years ago by an act of Congress and were 
allocated 10% of overall quota in many species. Today they are vibrant 
multi-million dollar revenue community based economic development 
engines.
    Community Quota Entities (CQEs) were formed 10 years into the 
Alaska IFQ program by the North Pacific Fishery Management Council and 
were not allocated any Quota Shares and must buy them on the open 
market. They do this with great difficulty, given the price for quota 
and the capital barriers to entering into the market.
    Both CDQs and CQEs are examples of Community Entities. The 
management processes of both organizations create a sense of cohesion 
and cooperation at the scale of communities. Both forms have evolved 
considerable managerial skill and capacity. In terms of viability, 
however, one system is healthy, one is not.
    The major lesson here is that it is beneficial to establish 
community entity organizations immediately when starting any catch 
share program.
7.  If access to the federal fisheries finance program were expanded, 
        would that help the situation in communities?
    Representatives for the Community Quota Entity Program in Alaska 
and the North Pacific Fisheries Trust have had discussions with the 
headquarters (Silver Spring/NOAA) and regional offices of the federal 
fisheries finance program. The headquarters office was not aware of the 
CQE program.
    The current federal program which finances the purchase of quota 
shares is only accessible by individuals. This is a very successful 
program in financial terms and has the enviable record of no defaults 
on loans the program has made for quota purchases.
    It would be of great benefit to communities if the access to this 
federal finance program was provided for community entities, such as 
the Community Quota Entity Program in Alaska, as well as Community 
Fishing Associations and Regional Fishery Associations.
    Our understanding is that this would require legislative action by 
the Congress, and we endorse such a potential action.
Questions from Republican Members
1.  Are you familiar with the North Pacific halibut plan? How would 
        that fishery have changed if your idea of requiring up to 25 
        percent of the fishery be giving to communities?
    I am familiar with the halibut quota program as implemented by the 
North Pacific Fishery Management Council. The North Pacific Fisheries 
Trust is active in many Alaska communities that fish halibut, own 
quota, or seek to acquire quota.
    The halibut fishery experienced a 25% consolidation in the early 
years (1-4) of the program. Based on studies by Alaska-based university 
social scientists and economists and NOAA program administrators, one 
would project that community allocations would have dampened the 
negative effects of the program (see references at end of section). In 
fact the subsequent allocations to the Community Development Quota 
Corporations managed to allow many communities to recover from those 
effects.
    In general with community allocations, one would expect to see far 
less quota migrate away from communities, more stable communities from 
a social and economic structural perspective, far more viable small 
fishing communities, less human migration away from communities, a 
greater sense of hope in communities which became marginalized through 
the process, more time for people to understand the creation of a new 
``asset''--quota shares and how the value of that asset would change 
over time and more incentives for fishing businesses to stay in 
particular communities in order to access the community-based quota.
    Fishing businesses are not independent in their relationship to 
communities, although many of them migrate around with the seasonal 
fisheries, even as they may be based in another state or larger 
community somewhere else in the same state. Crews, gear shops, fuel 
docks, processors, secondary businesses in supplies and other services 
must be part of the equation when considering the design of catch share 
programs with public trust fisheries. Owners should not be the sole 
beneficiaries of the ``conversion'' catch shares. One way to recognize 
the role and relationship of communities in this process is to allocate 
a modest amount (10%) to community entities (either Fishing Communities 
or Regional Fishery Associations) as provided for in the Magnuson-
Stevens Fishery Conservation and Management Act (as revised 2006).
References:
    Enclosing the Fisheries: people, places, and power. Marie E. Lowe 
and Courtney Carothers, editors. 223 pages. Published by the American 
Fisheries Society, December 2008. Bethesda, MD. ISBN: 978-1-934874-05-9
    Report on Holdings of Individual Fishing Quota (IFQ) by Residents 
of Selected Gulf of Alaska Fishing Communities 1995--2004, March 2005. 
Alaska Region, NOAA Fisheries Service (NMFS) Restricted Access 
Management Program , Juneau, AK 99802 www.fakr.noaa.gov
2.  Do you think that taking a percentage of the quota off the top for 
        communities would work in New England fisheries?
    Yes I do. But in fact the sector allocations could effectively 
generate the same result. However they are not designed consistently 
for geographic coherence. In other words some sectors have boats from 
Maine and Martha's Vineyard in the same sector, boats that do not 
share/fish the same waters and stocks, or use/participate in the same 
ports. This is not an approach that supports the connections between 
``people and place''--the natural affinities and knowledge that 
fishermen have for fisheries resources--the patterns of seasons, 
stocks, and their inherent variability.
    If sectors, which are effectively co-operatives, were delimited 
geographically, such as the Cape Cod hook sector, then you would have a 
set of community supporting structures, assuming you require all 
fishery participants in that cluster of related communities to 
participate in the sector in order to fish. That way all of the issues 
subordinate to the initial allocation of potential harvests to that 
sector can be managed by the co-op approach to the sector; when and 
where to fish, catch and bycatch sub-allocations, intra-sector in-
season exchange of sub-allocations to allow fishing to continue as long 
as possible etc.
    The goal of community allocations, either via community entities, 
or community-based sectors is to provide an ``anchor'' for the quota or 
allocations in communities to dampen the potential effects of quota 
markets, escalating prices, quota and human migration, barriers to new 
entrants, and so on. Some observers suggest that bycatch species or 
stocks still under rebuilding plans overly limit the sector approach 
and thus it will not work. Within an ecosystem-based approach to a 
multispecies fishery (such as New England groundfish) I do not see any 
other approach which could provide more flexibility in dealing with a 
broad spectrum of issues while operating within the biological limits 
of the marine ecosystem.
3.  How would a community set-aside work in an area where there are 
        many small communities? Would there be enough quota in any one 
        community to support a fleet? If not, how would a community 
        set-aside work?
    In general, any community set-aside will not be enough to support 
an entire fleet regardless of how many or few communities are involved. 
However, the central concept is that a community allocation creates as 
incentive for individual fishermen to stay fishing in that community as 
there is an ``anchor'' of quota that will never leave that community. 
The assumption is made in the community set-aside process that 
individuals will have quota holdings that can be matched up with 
community holdings to create larger pools in income. Thus there is an 
incentive to stay and fish in that community.
    In addition, the potential uses of that quota (based on experiences 
in Alaska) could be to promote new entrants into a fishery--such as the 
skiff class in the halibut fishery. The overall goal being to create 
interactions between individual and community incentives, specifically 
by helping new fishermen have access to low cost leases for quota, then 
earning enough income to be able to save for their own quota purchases 
in the same vessel class (again using the Alaska halibut example). Thus 
you are using the community process to ``bootstrap'' individual 
ownership of catch share quota, building community stability in the 
process.
    In Alaska, the Community Quota Entity program allows for multiple 
communities to operate under one single Entity (organization) thus 
pooling quota and representing a greater synergy of interests. This 
option has yet to be used.
4.  Most people believe that Councils should have flexibility in 
        developing fishery management plans. Why do you believe it is 
        okay to mandate community set-asides?
    Flexibility has its place, but we need some boundaries on 
flexibility. We need some mandates and as well limits on those 
mandates, balance in other words. Sideboards or basic requirements are 
needed, based on the lessons one can learn from the experience to date 
from around the world with catch shares in fisheries. 10% set asides 
have been established in Alaska in many quota fisheries, 10% has been 
allocated--though not defined in its ultimate purpose--for adaptive 
management in the Pacific trawl individual quota program being 
proposed. We have enough experience with the negative effects of catch 
share programs, and enough experience with community set-asides to show 
that, done correctly, their economic and social effects are positive. 
10% hardly impacts any flexibility the Councils have in designing catch 
share programs.
5.  You have harsh things to say about the fishery management councils. 
        Do you think we would have better fishery management plans if 
        NOAA wrote them? If you are concerned about NOAA's push toward 
        catch shares and you are concerned with the council, who do you 
        think should develop fishery management plans?
    This question tries to frame the issue as ``one or the other'' e.g. 
the Councils vs. NOAA as the decision maker or arbiter in fisheries 
management. This is a false dichotomy. My point is that within the 
democratic process of the fishery management councils, we commonly 
observe that economic politics tends to highly influence the outcomes 
of the voting process in the creation or amendment of fishery 
management plans. If I appear critical of that process, I am only 
making a realistic statement that describes the process.
    The reason we have national standards (which do not carry the force 
of law as does the rest of the Magnuson-Stevens Act) is to try and 
provide some consistency in the outcomes of fishery management plans in 
the U.S. But since these standards are open to wide interpretation by 
Councils depending on the political pressures they are subject to, the 
outcomes are inconsistent - for example National Standard 8 (the social 
and economic effects on communities) requiring only the consideration 
of these effects.
    The Council process is a genuinely democratic process but it needs 
to some minimum requirements. NOAA is pushing catch shares as a policy 
but it cannot implement that policy except through the Councils (aside 
from technical or financial assistance NOAA may provide). Catch shares 
are complex market instruments. Few if any Council members, staffs or 
committee members have expertise in market design.
    Therefore, based on what is widely known on the social and economic 
effects of catch shares on communities, in the process of creating 
catch share programs it is time we established some mandates for 
minimum requirements for Councils to implement the community provisions 
that are already written in the Magnuson-Stevens Fishery Conservation 
and Management Act (as revised 2006).
                                 ______
                                 
    Ms. Bordallo. Thank you, Mr. Backus, for your remarks on 
how catch shares can be improved.
    Now I would like to recognize Ms. Cobb. Please proceed.

         STATEMENT OF LEESA COBB, EXECUTIVE DIRECTOR, 
                PORT ORFORD OCEAN RESOURCE TEAM

    Ms. Cobb. Good morning, Madame Chairwoman and members of 
the Subcommittee. My name is Leesa Cobb. My husband is a 
commercial fisherman on the southern Oregon coast, and I serve 
as Executive Director at the Port Orford Ocean Resource Team, 
which is a community fisheries program.
    I have submitted written comments, and offer the following 
summary.
    After studying catch share programs worldwide, it is clear 
that even the most carefully designed programs can have 
negative impacts to communities, fishermen, and fisheries that 
should be of concern to all of us.
    For example, catch share programs established by sector or 
gear do not include ecosystem management or marine spatial 
planning principles, while at the same time ecosystem 
management is called out by the Joint Ocean Commission Report, 
and the importance of marine spatial planning has been elevated 
in this Administration.
    Also, vessels exiting catch share fisheries may increase 
fishing pressure in non-catch share fisheries. For example, 
when fishers that choose to sell their quota realize an 
enormous financial gain and exit the catch share fishery, they 
may then increase our effort in other regulated fisheries, and 
the spillover effect happens.
    I cannot even list one fishery on the West Coast that can 
withstand additional capital infusion from a catch share 
fishery.
    In a catch share fishery, many ports can suddenly see their 
access to fish disappear, as quota of something moves out of 
smaller ports. Serial depletion may occur for some species due 
to limited spatial controls because, as quotas are consolidated 
in specific areas, effort increases closer to those home ports.
    Catch share programs prevent people from entering the 
fishery unless they come from established fishing families 
already owning boats, or are wealthy enough to purchase quota.
    For the purpose of the hearing today, let me start by 
asking why an investment of $54 million in catch shares, and 
why catch shares to the exclusion of other fishery needs?
    I want to emphasize that catch shares are only one tool for 
fisheries management, and you have heard that several times 
today. But it seems disingenuous for NOAA to also acknowledge 
catch shares as only one tool, and then in turn allocate $54 
million to exclusively develop catch shares.
    NOAA is not offering this funding to help councils decide 
how to best manage for sustainable fisheries from the list of 
management options. They are only providing them funding for 
catch shares.
    It is difficult to understand NOAA's push for catch shares. 
The most confusing aspect of the campaign is a claim made by 
groups that catch shares will end overfishing. It is the total 
allowable catch based on good science that is responsible for 
ending overfishing in any fishery. If the total allowable catch 
is set at unsustainable levels, the fishery is likely to 
collapse, regardless of allocating the TAC to quota.
    Many fishermen have expressed concern that NOAA's new 
budget to assist councils with catch shares comes at the 
expense of funding for science that will actually provide the 
data to determine total allowable catch that every fishery 
needs to be sustainable.
    I am troubled by NOAA and council saying that catch shares 
are not a property right. If you can buy and sell quota, take 
it to the bank and mortgage quota, and if you can fight over 
quota in Divorce Court, quota is property. It seems the only 
way to get quota back from second-generation quota holders who 
have purchased it is going to be to buy it back.
    The most important point is the language in the NOAA draft 
catch share policies. The most ironic point is the language in 
the NOAA catch share policy that states NOAA encourages 
councils to take advantage of the special community provisions 
in MSA to help ensure sustainable fishing communities, and so 
on.
    It is common knowledge that catch share programs improve 
economic efficiency; and, by their very nature, result in 
consolidation of the fleet. This, in turn, causes loss of jobs, 
economic disruption to coastal communities that rely on fishing 
jobs, and can cause a loss of infrastructure at ports that 
traditional fishing relies on.
    One wonders at an Administration that is concerned about 
jobs, why catch shares would receive this level of support.
    We also know that initial allocation of quota comes at a 
high social cost. Many fishermen, including captains and crew, 
are pushed out of these fisheries in an initial allocation, and 
young fishermen are burdened with the expensive loans to pay 
for buying their first quota share.
    Additionally, in many fisheries, actual fishers are leasing 
quota from so-called absentee landlords. This sharecropper 
fishing, where independent fishermen are now fishing for 
investors, will take money out of fishing communities.
    If not carefully regulated, the balance of power between 
processor and fishers may change greatly, as well. A 
simplistic, one-size-fits-all approach to fisheries management 
does a disservice to the diversity of fisheries management 
options that have proven effective, and others that show 
promise.
    We do know that a catch share program if tightly regulated 
with low accumulation caps, owner-operator provisions, and 
opportunities for new entrance can be one way to manage a 
fishery. Unfortunately, the catch share campaign has now 
drowned out all the other ideas and approaches to fisheries 
management in public discourse and among policy makers.
    If NOAA decides to proceed with their full court press for 
catch shares, the following will be critical; they should 
require NOAA to establish a process for communities to 
participate in the socioeconomic analysis of catch share 
programs.
    Presently, communities rely on the National Marine 
Fisheries Service and the Councils' analyses; and frankly, 
communities don't have the capacity to be able to do this work 
for themselves.
    This process should run parallel to catch share design, so 
communities can participate as preferred alternatives are 
selected. Require community quota be provided if communities 
can show a community development plan and address catch share 
impacts; require NOAA to set aside funds to mitigate damage to 
fishing communities from unanticipated problems with catch 
share programs; and this should be a long-term fund.
    Madame Chairwoman and members of the Committee, I listed 
several other examples, as well.
    Thank you for the opportunity to testify today, and I 
appreciate the opportunity to answer questions.
    [The prepared statement of Ms. Cobb follows:]

             Statement of Leesa Cobb, Executive Director, 
                    Port Orford Ocean Resource Team

    Good morning, Madam Chairwoman, Honorable Members of Congress, 
fellow witnesses, and distinguished guests. I am pleased to testify 
before this Subcommittee on Catch Shares. My husband is a commercial 
fisherman from the southern Oregon coast. We fish for Dungeness crab, 
albacore tuna, blackcod, nearshore live rockfish, and halibut. I have 
served as Executive Director of the Port Orford Ocean Resource Team's 
(POORT) since 2001. POORT is a community-initiated and inclusive 
community-based management organization founded in 2001, focused on 
maintaining a sustainable fishery and healthy marine ecosystem in local 
nearshore waters and healthy upland watersheds. POORT seeks to combine 
the best science and experiential knowledge available to the community 
to make management decisions that: 1) sustain/improve the habitat and 
population base of fish; 2) provide high quality, high value seafood 
products to consumers; and 3) support the economic viability of Port 
Orford, Oregon. Port Orford fishermen all fish boats under 40 feet and 
participate in a portfolio of fisheries including salmon, crab, 
blackcod, tuna, halibut and nearshore fishing. This traditional small 
boat port has been delivering commercial fish since the late 1800's and 
today 25% of our 1,200 population works directly on the fishing boats 
or off loading produce at the dock. Our community is heavily dependent 
on fishing. That is why we have formed a community-based fisheries 
project; to sustain our fisheries and livelihood. It is in the capacity 
as Executive Director of Port Orford Ocean Resource Team that I address 
you today.
    My experience with Catch Shares goes back to 1994 when I joined a 
group of west coast fixed gear fishermen in asking Congress, 
specifically Oregon Senators Hatfield and Packwood, to stop the Pacific 
Fishery Management Council from implementing a blackcod Individual 
Quota (IQ) program. We were concerned that the process was not 
transparent, most of the IQ would be allocated to a small group of 
fishermen, and little outreach had been done to help fishing 
communities understand how they would be impacted. In 1994 Members of 
Congress were reluctant to intervene in Council business, but they were 
concerned, and stepped up to write to the Council requesting a delay in 
Individual Quota Programs until more was learned about the impacts to 
fish, fishing communities and fishermen. It is interesting to note that 
sixteen years later, in 2010, after learning more, I have even more 
concerns about the impact of Catch Share programs to fish, fishing 
communities and fishermen. Today I will talk about my most recent 
experience with Catch Shares being developed for the west coast trawl 
groundfish program. I will talk about the importance of controls to any 
catch share program. And lastly, I will talk about the fishing program 
established in my community that serves as a model, different than 
catch shares, of how to sustain fish stocks while sustaining the 
fishing community. But let me start by asking WHY CATCH SHARES?
WHY CATCH SHARES AT THE EXCLUSION OF OTHER FUNDING NEEDS?
    I want to emphasize that Catch Shares are only one tool for 
fisheries management. It seems disingenuous for NOAA to say that they 
understand Catch Shares is only one tool, and then NOAA in turn 
allocates $54 million to exclusively develop Catch Shares. NOAA is not 
offering this funding to help Councils decided how to best manage for 
sustainable fisheries; they are only providing this money for Catch 
Shares.
    I find it difficult to understand NOAA's push for Catch Shares. The 
most confusing aspect of the campaign is the claim made by groups that 
Catch Shares will end overfishing. The Total Allowable Catch (TAC) is 
based on good science that is responsible for ending overfishing in any 
fishery. If the TAC is set at unsustainable levels, the fishery is 
likely to collapse regardless of the method of allocating the TAC. If 
quotas themselves are set too high, over-fishing will still occur. If 
fisheries can be managed sustainably using biologically responsible 
TAC, then there is no reason to privatize the fish by giving away 
quota.
    Many fishermen have expressed concern that NOAA's new budget to 
assist Councils with Catch Shares comes at the expense of funding for 
science that will actually provide the data to determine Total 
Allowable Catch which every fishery needs to be sustainable. I 
constantly hear at Council meetings that there are not enough resources 
(money to buy capacity) for the work that needs to be done.
    I am troubled by NOAA and the Councils saying that Catch Shares are 
not a property right. If you can buy and sell quota, take it to the 
bank and mortgage quota, fight over quota in divorce court--quota is 
property. Why would the United States privatize and give away this 
important public resource? I do not believe the United States should go 
down this path and I do not think NOAA is making public what Catch 
Shares will do to public ownership of fish.
    The most ironic point is the language in the NOAA DRAFT Catch 
Shares Policy that states:
        NOAA encourages Councils to take advantage of the special 
        community provisions in the MSA to help assure sustainable 
        fishing communities, including continuation of working 
        waterfronts, fishery infrastructure, diverse fishing fleets, 
        and resource access.
    It is common knowledge that Catch Share programs improve economic 
efficiency and by their very nature result in consolidation of the 
fleet. This in turn causes loss of jobs, economic disruption to coastal 
communities that rely on fishing jobs, and can cause the loss of 
infrastructure at ports that traditional fishing relies on. One wonders 
in an Administration that is concerned about jobs, why Catch Shares 
would receive this level of support.
    We also know that the initial allocation of quota comes at a high 
social cost. Many fishermen, including captains and crew, are pushed 
out of these fisheries in an initial allocation, and young fishermen 
are burdened with expensive loans to pay for buying their first quota 
share. Additionally, in many fisheries, the actual fishers are leasing 
quota from so-called ``absentee landlords'' or ``armchair fishermen''. 
This share cropper fishing, where independent fishermen are now fishing 
for investors, will not be good for fishing families or communities.
    A number of concerns have been raised about Catch Share social 
impacts, especially in terms of fairness and equity. Catch Shares will 
concentrate power in the hands of fewer people, who can turn into quota 
``landlords'' that do not themselves fish, but instead lease their 
quota to the quota-less. The windfall gains of quota ownership accrue 
largely to the generation who are fishing when ITQs are implemented, 
while later fishers have to pay for their quota, hardly an equitable 
outcome.
    If not carefully regulated, the balance of power between processors 
and fishers may change greatly; processors have greater access to 
capital and may end up controlling most of the quota. An additional 
problem is the impact to nonfishing members of small fishing 
communities who may be harmed if the quota holders sell their shares to 
other communities, thereby impacting their social and economic 
stability of their community
    A simplistic one-size-fits-all approach to fisheries management 
does a disservice to the diversity of fisheries management options that 
have proven effective, and others that show promise. We do know that a 
Catch Share program, if tightly regulated with low accumulation caps, 
owner-operator provisions, and opportunities for new entrants can be 
one way to manage a fishery. The classic example, and one that is 
mentioned in all the pro-IFQ literature, is the Alaskan sablefish/
halibut fishery. However, in practice IFQ fisheries are rarely 
implemented in this fashion, and generally come under intense political 
pressure to remove owner-operator requirements and accumulation caps as 
fishermen age. This eventually creates consolidation that in the 
beginning was deemed unacceptable.
    Catch Shares can reduce the race to fish but are certainly not the 
only way to do that. Unfortunately, the ``catch share'' campaign has 
now drowned out all other ideas and approaches to fisheries management 
in public discourse and among policy makers. Amidst all of the 
discussion about catch shares, another approach to fisheries 
management, community-based fisheries management, has gotten a lot less 
attention despite its increasing popularity with many fishing 
communities around the country.
The West Coast Trawl IQ Plan
    I have participated in meetings, sent letters to the Council and 
provided public input at Council meetings--all the time speaking from 
the outside. The not so subtle message I continuously receive is that 
this is a trawl program and fixed gear fishermen should mind their own 
business. I know the reality is that the trawl IQ program will affect 
species and fisheries that are not included in the program and impact 
communities and fishermen that are not included in the program.
Problems with the trawl IQ plan:
    1.  It only addresses one gear group for groundfish and excludes 
fixed gear and recreation fishermen. Fixed gear fishermen have no idea 
what the future is for our fishery. The irony is that our gear is the 
cleanest commercial gear for groundfish and we are completely left out 
of any planning for the future of groundfish while the fishery is 
handed over to the gear with the highest bycatch.
    2.  Vessels exiting from ITQ fisheries may increase fishing 
pressure in non-ITQ fisheries. Fishers that choose to sell their quota, 
realize enormous financial gain, and exit the ITQ fishery may increase 
their effort in other less regulated fisheries--the spillover effect. 
We saw this in Oregon with the west coast trawl buyback. Trawlers with 
their hundreds of thousands of dollars of buyback money moved to crab, 
salmon and other fisheries and contributed to further 
overcapitalization of those fisheries. Increased capitalization in west 
coast fisheries from trawlers selling their quota could be 
devastating--there is not one fishery on the west coast that can 
withstand additional capital.
    3.  In an IFQ fishery, many ports could suddenly see their access 
to fish disappear as quota simply moves out of smaller ports.
    4.  The IFQ systems would likely only hasten the collapse of port 
infrastructure already badly in need of repair, particularly when quota 
leaves small port communities and fleet consolidation shifts efforts to 
larger vessels in large ports.
    5.  Serial depletion may occur for some species due to limited 
spatial control because effort increases closer to home ports. TACs are 
still managed on a very large spatial scale (Golden 2005). In its 
consideration of a limited entry trawl individual quota system, The 
Pacific Fishery Management Council's Trawl Individual Quota Committee 
(TIQC) considered alternatives that could have restricted distribution 
of optimum yield (OY) and access privileges on an area basis. The 
TIQC's analytical team prepared an analysis titled ``On the Need for 
Spatial Management in West Coast Groundfish Fisheries.'' Several 
arguments supporting the need to spatially manage groundfish on a finer 
scale were made based on the life histories of groundfish, 
documentation of instances of localized depletion of groundfish, 
current management practices with spatial approaches, and potential 
fleet behavior if spatial management of OY is not taken into 
consideration. Despite these arguments, the TIQC did not recommend the 
distribution and management of OY on a spatial scale any smaller than 
presently used. Details of the analysis can be found at 
www.oceanresourceteam.org. Our concern is that quota pounds will be 
consolidated, or purchased into ports that will then become the entry 
and exit point for the fish. We are concerned that quota pounds will 
end up in Coos Bay, Oregon (for example). This increase in fishing 
pressure on the grounds will impact the availability of fish to 
everyone in their region
    6.  IFQs prevent people from entering the fishery unless they come 
from established fishing families already owning boats or are wealthy 
enough to purchase quota.
    7.  The trawl catch share program proposes to allow trawlers to 
switch to fixed-gear with no analysis or consideration for how this 
will impact the fixed-gear fleet. If trawlers switch to pot gear, that 
gear is left in the grounds continuously and our opportunity to 
longline will be impacted.
    8.  The extensive allocation process to cut off trawl quota from 
other user groups allocated almost all the groundfish away from our 
Limited Entry fixed gear permits. We had access to fish that is now 
almost completely gone to us. This devalued our permits with one fell 
swoop.
    The Pacific Fishery Council is aware of each problem with the trawl 
IQ program but they continue to push ahead.
Better Management
    If NOAA decides to proceed with their full court press for Catch 
Shares the following will be critical:
    Require NOAA to establish a process for communities to participate 
in socioeconomic analysis of Catch Share programs. Presently 
communities rely on NMFS and the Council's analysis. Capacity should be 
provided to communities to have their questions analyzed so they can be 
informed participants in the process. This process should run parallel 
to Catch Share design so communities can participate as preferred 
alternatives are selected.
    Require community quota be provided if communities can show a 
community development plan that addresses Catch Share impacts.
    Require NOAA set aside funds to mitigate damage to fishing 
communities from unanticipated problems with Catch Share programs. This 
should be a long-term fund.
    Require Councils to include all gear groups and users in a Catch 
Share program. Piecemeal programs will not work.
    Use Catch Shares as an opportunity to promote sustainable fisheries 
by designing programs to allocate fish to gears that minimize bycatch 
and discards instead of using fishing history for allocation.
    Require each Catch Share program to provide for new entrants to the 
fishery.
FINAL COMMENTS
    There are many different programs to manage fisheries in the United 
States. Our community program rejected pursuing IQs because it would 
reward a few and create many losers, while doing nothing to stabilize 
the economy of our fishing community. We chose to develop community-
based fisheries to help sustain the fish and community into the future. 
I have included information on our project below.
    The next step for our community process is to form a Community 
Fishing Association(CFA). as provided for in the MS Act. For our 
community, this would be a framework to secure our opportunity to fish. 
We would use this framework to hold permits and quota, allowing us to 
stabilize our community economy as fisheries change.
    At this time, no work has been done by the PFMC to provide 
direction for CFAs, and we can't proceed. At the Sacramento Council 
meeting last week, fixed-gear fishermen asked the PFMC to set up a CFA 
committee. The Council declined to do so. Perhaps NOAA could work on 
this issue.
    In closing, I had the experience of traveling to New Zealand with 
California Sea Grant and a group of commercial fishermen to examine the 
New Zealand IQ programs. I was shocked at what I learned. Quota is 
primarily held in New Zealand by processors. Fishermen told us horror 
stories of the tactics used to push them out of the fisheries, 
including processors lowering the price for several years so fishermen 
couldn't make money (bleed them out of the fishery) to the overwhelming 
amount of IQ paperwork they couldn't keep up with. Fishermen are now 
unemployed or working for the processors running their boats and 
fishing the processor quota. Those fishing jobs are low paying; the 
fishermen commented that if they wouldn't work for the low pay there 
was another fisherman right behind them that would because they are 
desperate for work. We asked fishermen how they let this IQ program get 
away from them, why didn't they have caps on ownership. They responded 
that they thought they had that taken care of with a hard cap on 
accumulation from the beginning. But as soon as the processors reached 
the cap they lobbied successfully to have the cap increased, over and 
over. Fishermen noted that the local fish and chip houses could not 
even get fish to serve because it has been allocated away from their 
communities.
    In a question and answer forum, I asked the owner of Sea Lord, New 
Zealand's largest processor, what happened to their fishing communities 
when processors ended up with all the fish. His response was, ``there 
were no fishing communities in New Zealand, next question''. 
Ridiculous, the entire coast of New Zealand was one fishing community 
after another. New Zealand has to rewrite their history to wave off the 
impacts of IQs to their fishermen and communities. I believe the United 
States is going to end up in the same situation. I encourage members of 
the Committee to carefully examine this rush to privatize fisheries.
PORT ORFORD: IMPLEMENTING COMMUNITY-BASED OCEAN MANAGEMENT ON THE 
        OREGON COAST
INTRODUCTION
    There is a growing interest in the use of community and ecosystem-
based ocean management approaches in the United States. This interest 
is reflected in the U.S. Ocean Commission's Report to Congress and the 
Sustainable Fisheries Act, and also evidenced in initiatives underway 
in Alaska and New England..
    Community-based management may be defined as a process where 
citizens actively participate in local management efforts through 
defining needs and goals, and making decisions through an inclusive and 
transparent process. With respect to ocean resources, community-based 
management allows for consideration of local environmental and economic 
variables, as well as the integration of community knowledge into the 
decision making process. Community-based ocean management may also be 
incorporated into broader, coast-wide management plans, thereby 
addressing important issues of scale.
    The community-based management model can offer a number of 
significant benefits as a complement to existing state and federal 
management structures. Foremost among these benefits is an enhanced 
level of stewardship for ocean resources among community participants. 
Community-based management is also flexible and adaptive and may result 
in greater equity and improved compliance with regulations from local 
pressure. Finally, community-based management can allow for managing 
complex systems at a finer scale through the integration of local 
knowledge and the leveraging of collaborative science opportunities.
    Our collaborative endeavor in Port Orford, Oregon may provide a 
viable model for how community-based ocean management may be 
effectively implemented. One key element to the success of community-
based initiatives is the presence of local leadership. In Port Orford, 
this service is provided by the Port Orford Ocean Resource Team 
(POORT), a locally run non-profit organization comprised of fishermen 
and fishing family members. POORT provides the necessary local 
infrastructure through which community-initiated marine policy and 
research activities can be carried out. At the behest of POORT, other 
non-profit organizations and individuals within leading academic 
institutions and government agencies are helping identify ways in which 
the community of Port Orford can actively engage in the management of 
local marine resources.
BACKGROUND: Port Orford Ocean Resource Team
    POORT is a community-initiated and inclusive organization founded 
in 2001, focused on maintaining a sustainable fishery and healthy 
marine ecosystem in local nearshore waters. POORT seeks to combine the 
best science and experiential knowledge available to the community to 
make management decisions that: 1) sustain/improve the habitat and 
population base of fish; 2) provide high quality, high value seafood 
products to consumers; and 3) support the economic viability of Port 
Orford, Oregon.
    POORT was created in large part because local fishermen felt 
disenfranchised from the existing top-down fishery management system 
during a period of increased restrictions. Over the last decade this 
historic fishing community has lost its longline fisheries, experienced 
dramatic losses in revenues as a result of declining salmon stocks, and 
survived a boom and bust urchin fishery. Forty boats using fixed gear 
currently fish out of the Port of Port Orford, targeting groundfish 
(including several rockfish species for the Asian live fish market), 
Dungeness crab, albacore tuna and blackcod.
    As a local non-profit organization, POORT works to empower fleet 
members and other citizens to participate in bottom-up ocean management 
efforts. These activities include a significant focus on collaborative 
science and stewardship, as well as marketing of local seafood 
products.
POORT'S COMMUNITY-BASED PROCESS
    The POORT process is guided by a formal board of five fishermen. 
The POORT Board functions as the ultimate governing body of the 
community process and is charged with advancing POORT's vision of a 
sustainable fishery and healthy marine ecosystem. As such, the POORT 
Board provides a transparent and functional mechanism for decision-
making--a key element to the success of any community-based process 
(Dalton 2006).
    The POORT Board's efforts are closely connected to the broader 
fishing fleet. Facilitation is provided by staff from POORT and partner 
organizations to assist fleet members in developing common goals and 
objectives and determining alternatives for action. Fleet meetings also 
include an educational component, as a recognized prerequisite of 
empowerment at both the individual and community. Recent meetings have 
included presentations on topics such as rockfish reproduction, state 
and federal management authorities, and design considerations for 
marine protected areas (MPAs).
    The POORT process includes formal input from a Community Advisory 
Team that provides recommendations and expertise to the POORT Board and 
project partners. Comprised of stakeholders and community leaders, the 
Team is intended to reflect the interests and concerns of the broader 
Port Orford community. Engagement of the Community Advisory Team 
ensures that different segments of the community are formally 
represented within the POORT process. Such diverse participation is 
important for improving understanding between different groups and can 
also facilitate development of stronger solutions by community 
participants.
    The Community Advisory Team also includes a staff representative 
from the Oregon Department of Fish and Wildlife (ODFW) to ensure that 
community planning efforts are connected to existing management. By 
involving agency staff early in the process, greater trust and 
communication may be realized to support the community's efforts to 
implement co-management strategies.
THE ROLE OF SCIENCE
    A critical factor in implementing community-based ocean management 
is the collection and application of relevant scientific information. 
POORT is therefore in the process of developing a collaborative 
research program to be run through the local science center. 
Collaborative research programs provide opportunities for people with 
diverse interests in fisheries to collectively resolve complex issues.
    To inform development of this program, POORT staff regularly 
convenes meetings with fishermen to identify important research 
questions, data gaps, and monitoring priorities. During 2007, staff and 
board members are collecting local ecological knowledge from fleet 
members through personal meetings and facilitated forums. An at-sea 
project to gather information on population dynamics of nearshore 
rockfish species is underway.
    POORT has also collaborated with Oregon State University, ODFW and 
NOAA Fisheries to create a Geographic Information System (GIS) product 
that includes geologic, bathymetric, and fish habitat information.
    Finally, POORT recognizes that an advisory group of scientists that 
can provide oversight and expertise for local research and management 
efforts is necessary. Accordingly, POORT and its partners are currently 
assembling a technical team representing various marine science 
disciplines and affiliations.
STRATEGIES FOR CITIZEN ENGAGEMENT
    To ensure transparency of the community process and promote ocean 
literacy, POORT sponsors two public forums each year. Such forums 
provide an important mechanism for disseminating information and 
bringing together different stakeholders from the community. The first 
of these forums was held in June 2006 and titled Orford Reef: Our 
Heritage, Our Future. The event featured a short film on the reef, as 
well as presentations from fleet members and project partners. Over 180 
people attended, including community members and representatives from 
agencies and non-profit organizations. In January of 2007, POORT and 
its partners sponsored a second public forum coinciding with a local 
meeting of the Oregon Ocean Policy Advisory Council (OPAC). Additional 
public forums have been held each year.
    POORT has also recently established a water quality testing 
laboratory in partnership with Pacific High School and the Surfrider 
Foundation. The lab supports a volunteer-based program that provides 
water quality data for four locations within the area. Sampling and lab 
analysis is conducted by Pacific High School students, Surfrider 
members, commercial fishermen, and other interested volunteers. In 
addition to providing important educational and citizen involvement 
benefits, the program also provides a platform for POORT to address 
land-sea connections as part of an ecosystem-based approach to 
management. In 2009 POORT worked closely with the city of Port Orford 
to amend the storm water ordinance that provides valuable protection to 
the nearshore environment.
LOOKING TO THE FUTURE
    To realize its vision of a sustainable fishery and healthy 
nearshore ecosystem, POORT has established a Community Stewardship 
Area. The Stewardship Area would encompass the community's fishing 
grounds and associated watershed, and provide a framework for managing 
local ocean resources at a finer scale and more integrated fashion. The 
intent is to maintain public access to the resource for those who are 
fishing selectively, while also conserving the marine biological 
diversity of rocky reefs and surrounding waters.
    Planning for the Stewardship Area has been conducted in a 
transparent and inclusive manner within Port Orford, consistent with 
POORT's community-based process. The project has also cemented longtime 
partnerships between POORT and the Pacific Marine Conservation Council, 
Surfrider Foundation and Ecotrust, who provide a variety of support 
services for local planning efforts.
    As a critical element of achieving designation of a Stewardship 
Area, POORT is working to secure policy space for its community process 
at the state and federal levels. While POORT's current efforts do 
provide significant benefits to both the resource and community, the 
full benefits of such a process cannot be fully realized without formal 
recognition and authority sharing from government agencies. As such, 
POORT is exploring alternatives for co-management of local ocean 
resources with relevant agencies and management authorities.
    Although the activities of POORT remain centered in the community 
of Port Orford, an increasing number of managers, fishermen, 
scientists, and elected officials throughout the state have expressed 
interest and enthusiasm for this approach to ocean stewardship. While 
still an evolving process, the Port Orford Community Stewardship Area 
initiative holds significant potential as a model for how community and 
ecosystem-based ocean management principles may be successfully 
implemented.

Golden, J. 2005. On the need for spatial management in west coast 
        groundfish fisheries. Pacific Fishery Management Council, 
        Portland, Oregon.
                                 ______
                                 

     Response to questions submitted for the record by Leesa Cobb, 
          Executive Director, Port Orford Ocean Resource Team

Questions from Chairwoman Madeleine Z. Bordallo (D-GU)
1.  What advice would you give to other fishing communities who are 
        interested in community-based management?
    I would advise fishing communities who are interested in community-
based management to:
        a.  Engage local leaders to launch the program. If local folks 
        need leadership training, make sure they get it.
        b.  Include everyone who wants to participate, and seek out 
        those who do not know they need to be at the table--bring them 
        in.
        c.  Always work with conservation and other interests even if 
        it's difficult. Build the relationships from the beginning.
        d.  This is a place-based program. Bringing people to ``the 
        table'' means bringing them to your place, your community. 
        Don't let folks use conference calls and email to replace 
        traveling to your place and working with your people.
        e.  This is a bottom-up program that ultimately has to be 
        endorsed by the folks who run the top-down process. Get those 
        folks on board early to provide political cover. If you do not, 
        your program will be a great idea that never gets implemented 
        because ultimately the power is at the top (until we can change 
        it!).
        f.  The program must work on the principles of the triple 
        bottom line: ecology, economics and equity. Each project must 
        consider all three, people, planet and profit to bring the best 
        results to the resource and the community.
2.  In your testimony you mention quota as a property right and the 
        possibility of the government having to buy it back from the 
        second generation quota holders. What would be the situation 
        that would cause the government to take quota back?
    The government of New Zealand had to buy back quota when they did 
not include recreational fishermen in one of their quota programs. This 
cost the government millions of dollars ``buying quota was the only way 
to reissue it.
    A very real example is the West Coast groundfish trawl IQ program. 
Legal issues about allocation between user groups could be raised 
because this is a trawl only program. Once the quota is out the door to 
trawlers, issued to fishermen who begin to sell it, the only way to get 
it back to fix a legal problem will be to buy it back.
3.  Has the Pacific Fishery Management Council supported your community 
        in developing a Regional Fishery Association? What would this 
        Association look like?
    We have been waiting for the Pacific Fishery Management Council to 
provide guidance on Regional Fishing Associations (RFAs) so we can 
begin work. Finally, with no action by the Council, several fishermen 
asked the Council at the March, 2010, meeting to form a committee to 
begin working on details. The Council declined to form a committee. 
Council guidance for forming RFAs should have been running parallel 
with developing the trawl IQ plan so communities can be prepared for 
the negative impacts coming their way. Implementation of the trawl IQ 
plan should be put on hold until RFAs are formed in the communities 
that are ready to move forward.
    In our case, a Port Orford RFA would be a business framework to 
hold permits and quota to help stabilize our fishing community's 
economy. Just as a marine reserve can provide resilience for fisheries, 
a RFA can provide resilience to a fishing economy.
    Ideally, the community RFA would inform the Council, with 
documentation, the anticipated negative impacts of the trawl IQ program 
and negotiate for initial allocation of quota to provide for 
mitigation. This of course will not happen, because the Council has not 
provided guidance for RFA's.
4.  What is the most important thing NOAA could do to help your 
        community?
    We would greatly benefit from formal recognition of the Port Orford 
Stewardship Area by NOAA. We want to partner with NOAA on local 
research and stewardship efforts. We have an amazing local program, 
built from the bottom up. But we have to have recognition and support 
from the folks at the top. We need this policy space, for example, so 
we can talk to the Council about solutions to local problems. The PFMC 
Groundfish Advisory Subpanel told me very clearly that they are not 
considering place-based problems or solutions. We can't move forward 
with science-based, sustainable solutions that we know will help our 
local fisheries--we need NOAA's help with the policy space.
    Port Orford Ocean Resource Team could be a NOAA pilot program for 
community-based fisheries management. NOAA would use our successes and 
challenges to inform other place-based fisheries programs in the 
country. Most importantly, NOAA would work with the community to build 
a local research field station to gather important data on local 
fisheries and the broader California Current that will inform both 
local area management, and coast-wide management.
    If we could get NOAA's support for our program, including a local 
research facility--it would be like we won the fishing lottery!
Questions from Republican Members
1.  Are you opposed to all catch share programs or do you primarily not 
        like the Pacific Council's trawl catch share plan.
    I am opposed to privatizing fisheries. I believe privatization of 
fisheries offers up an immense benefit to corporate interests and I 
have serious concerns about the negative impacts to fishing communities 
and fishing families from Catch Share programs.
    The EIS for the trawl IQ program provides extensive information 
about anticipated negative impacts to communities and the fixed-gear 
fleet. The analysis is done, and then nothing...no change in the plan 
to address the negative impacts. That process, of asking the question 
and ignoring the answer, shows me that a process to protect communities 
and fishermen from negative impacts of the trawl program does not exist 
and it will not exist for Catch Share programs.
2.  You mention the North Pacific halibut plan and seem to think it has 
        many of the components that might be desirable in a catch share 
        plan. Many of those components came in stages as the North 
        Pacific Council amended the plan. Do you think it is possible 
        for a council to anticipate all of the needs of fishermen and 
        communities with the first draft of a catch share plan?
    Yes, I believe the fundamental needs of fishing communities and 
fishing families can be anticipated and addressed in the initial design 
of a Catch Share program. Most importantly, how will the Councils 
address negative impacts by changing the program? The fish has already 
been given away, the quota allocated, the fishery opened up to non-
spatial management. You can't un-ring the bell.
    If you're asking if I think Councils can fix the problems as they 
go, no I do not believe that is even possible.
    An example is the comment made by a member of the PFMC staff about 
spatial management when I asked how we can protect fishing communities 
from trawl IQ consolidation, and subsequent serial depletion of fish on 
the fishing grounds near areas of consolidation. The staffer said, ``If 
that happens, we can just go back and add some spatial management 
lines''. Was he joking? The notion that a quota owner would blithely 
accept new spatial lines and regulations on where he can fish his quota 
is ridiculous? He bought the quota and paid the asking price with no 
restrictions, and now he has to run 500 miles to fish it? That 
adjustment to the trawl IQ plan will not happen without compensation to 
the quota owner.
3.  You are concerned about ``absentee ownership''. Should councils 
        require owner-on board provisions?
    Yes, Councils should require owner-on-board provisions for 
fisheries that have traditionally been fished by boat owners.
    For fisheries that do not have a historic operating structure of 
owner-on-board, Councils should consider as part of the EIS analysis 
how owner-on-board provisions might help the fishery, fishing 
communities, and fishing families. In the case of traditional corporate 
ownership it may, or may not be appropriate.
4.  Your members fish in a limited access fishery. This type of system 
        requires new entrants to purchase an existing permit. How is 
        this different from a catch share fishery where a new entrant 
        must purchase quota to enter the fishery?
    The difference is the design of the programs. A Catch Share fishery 
is designed for consolidation, quota can be broken down to small 
pieces, and ownership has few limitations. The fixed-gear limited entry 
program can't be broken up into pieces, it is a permit, not pounds of 
quota that can be split up and moved around.
    In addition, Catch Share quota can be leased and mortgaged because 
the resource is owned by the quota owner. The fixed-gear permits can 
only by leased by first generation owner. Second generation have owner-
on-board requirements to keep the fishery in the hands of fishermen.

5.  You mention that ``if not carefully regulated, the balance of power 
between processors and fishers may change greatly.'' If a council 
decides to transform a fishery into an ITQ fishery, how would that 
balance be shift? Should councils take processor investments in the 
fishery into account in developing a catch share fishery?

    It seems pretty simple to the fishermen I work for; if the 
processors own quota they can further control the market. When 
processors control the market, they can lower the price to the 
fishermen.
    An example can be found in New Zealand, when Leigh fishermen told 
us after quota was issued, and processors gained a solid holding, the 
price was lowered to such a low level they could not afford to fish. 
There was not profit to be made. The processors could wait them out. 
The fishermen don't have lines of credit and operating capital to be 
able to wait out the processor until the price goes back up and fishing 
becomes profitable. On the reverse side, the processors do have lines 
of credit and operating capital so they can wait until the fishermen 
are out of business, buy their quota, and go back to selling the fish. 
This can happen in just two or three years.
    Interestingly, today in New Zealand processors own most of the 
fisheries quota. We asked NZ fishermen what happened; why did they let 
this happen? They said the initial quota programs had ownership caps 
that should have protected fishermen from processors controlling the 
fishery. As the processors bought quota, they began to lobby for 
increasing the ownership caps. In a short time, processors owned enough 
quota to be considered part of ``the industry'', and if industry wanted 
to increase ownership caps in their fishery--why not, the caps were 
increased.
    I do not support PQ or initial allocation to processors. 
Unfortunately, having to deal with processor quota is just one of the 
really tough downsides of going down this path of Catch Shares. The 
reality is that it would completely disrupt the market forces in the 
fishery to give out quota to processors.
                                 ______
                                 
    Ms. Bordallo. Thank you very much, Ms. Cobb, for your 
useful input. I will now recognize the members of the Committee 
for any questions that they may ask, beginning with myself.
    I have a few questions for Mr. Schwaab, the Assistant 
Administrator for Fisheries, National Oceanic and Atmospheric 
Administration. I think what I really want here is just a no or 
a yes for the record, Mr. Schwaab.
    Do you agree that good science is fundamental to good 
fisheries management? Do you agree that many in the fishing 
industry have concerns about the science being used to make 
management decisions?
    Mr. Schwaab. Yes, and yes.
    Ms. Bordallo. Good, excellent. Number two. Do you think 
NOAA has prioritized catch shares over science, by asking for a 
big increase in the catch share budget, but not in data 
collection programs?
    Mr. Schwaab. Madame Chairwoman, no. We obviously have 
placed some significant investment in catch shares as a means 
to address some of the management challenges that we face in 
new ways. But as I indicated in my testimony and provided in 
more detail in my written testimony, we have also continued to 
invest heavily in other aspects of our fisheries management 
challenges, including significantly in data related to both 
recreational and commercial activities, as well as in other 
science and stock assessment work.
    The last point I would make is that a significant amount of 
the investment in catch share dollars will, in fact, yield 
important new monitoring and observer data, which will 
contribute to our overall science picture.
    Ms. Bordallo. Good. Now, this one you may have to explain 
here. How will NMFS prevent the consolidation and the migration 
of catch shares away from coastal communities to ensure the 
protection of fishing communities?
    Mr. Schwaab. There is significant latitude in program 
design and implementation, and I think we have already seen a 
number of tools that have been developed and built into some of 
these program designs, both as it relates to the limits in the 
amount and type of ownership that might occur, as well as some 
limits on transferability.
    So we see things like community shares, small boat and 
processor provisions. We also see innovative approaches like 
permit banking to protect the interests of small, remote 
communities and others who we are concerned about through a 
socioeconomic process.
    But I would just conclude by saying we depend very heavily 
on the Councils, sort of from the ground up, to build the 
specific design elements that are required to meet local, 
social, and economic desires.
    Ms. Bordallo. Thank you very much. Now I will go to Dr. 
Fina, Mark Fina. What are the top three things you would change 
in the Alaska Crab Catch Share program, if you could, to 
protect fishing communities?
    Mr. Fina. Madame Chair, I think one thing that we probably 
would have done at the onset of the program that we didn't do 
at the time, but I don't know how much we can go back to it, is 
I think vessel caps were one issue.
    The consolidation in that program was very fast. I think 
there were a number of jobs lost by crew. The nature of crew 
jobs changed, and I think there are some merits to the way crew 
jobs changed, as well as some problems with respect to it. But 
I think that's one aspect that I think we would have had a 
graduated cap, where the caps maybe start at a more restrictive 
level, and then become looser over time, to ease that 
transition.
    A couple other aspects that I think that right now the 
Councils are already working on that are important to the 
fishery, we are looking at changes in the community rights of 
first refusal on processing shares, that communities currently 
have a right of first refusal on transfers of certain 
processing shares where the community can acquire those shares. 
We are working to try to make that a more effective program.
    Communities, at times they don't have the resources to 
acquire those shares. Also, the way the right is structured 
right now, it requires communities to make, at times, 
substantial investments to exercise. So that is another area 
that we are looking at, and that we may be able to make some 
improvements that will benefit some of the small communities 
that derive a significant benefit from processing.
    Ms. Bordallo. Thank you. I asked you for three, you gave me 
how many?
    Mr. Fina. I gave you two so far.
    Ms. Bordallo. Two. A third.
    Mr. Fina. A third one that I would look at is another one 
that I think the Council is trying to work with. It is as much 
a community issue as a fishery issue. We are looking at changes 
in the way the regionalization program works, to allow certain 
exemptions to regionalization.
    In some cases there are safety issues that can arise, 
particularly in the North region, in the Pribilof Islands, with 
ice. What we are trying to do is achieve a balance that will 
allow fishermen the flexibility to redirect deliveries to other 
locations when icing is a problem, but yet maintain the 
integrity of the regionalization program for the communities, 
particularly in the Pribilofs.
    Ms. Bordallo. Thank you. I have one quick question, and 
then I will turn to the Ranking Member for his questions.
    Dr. Rosenberg, what are some examples of what decision 
makers can do to provide neutral forums to discuss catch share 
program design and improve trust and communication among the 
fishermen, the managers, and the scientists?
    Dr. Rosenberg. Thank you for the question, Madame 
Chairwoman. I think that is a really critical issue for design 
of programs. One of the opportunities would be to have some of 
those design discussions outside of a strict regulatory 
framework.
    Once you are into the council process and the process on 
the regulations with the Fisheries Service, you are into a 
rather stilted regulatory discussion, in my view. If there is 
the possibility to have open fora that are not decision-making, 
and may or may not impact on the regulations, where people 
don't have to take any final positions, then you might have a 
more open dialogue. And then some of the design questions could 
be put on the table.
    That is really a more speculative process. It is difficult 
to get people to engage, because fishermen and everyone else 
are very busy. But it would provide an opportunity for a 
discussion that isn't on an immediate regulation that is 
sitting in front of you, where you have to take a position in 
favor or against.
    Ms. Bordallo. Thank you, Doctor. And we will have a second 
round for the Members here.
    I would like to recognize the Ranking Member, Mr. Brown.
    Mr. Brown. Thank you, Madame Chair. Mr. Schwaab, if I might 
ask you the first question.
    When will the Atlantic red snapper stock assessment be 
completed? And will this give the Council time to approve 
fishing measures for the summer? Or do you expect the closure 
to be extended?
    Mr. Schwaab. Thank you, Mr. Brown. The current schedule 
will provide the information for the Council by the end of 
2010. So we expect that we will be dealing with the current 
directed fishery closure, and the potential of a broader area 
closure, through 2010.
    Mr. Brown. I know they were talking about moving the lines 
along the coast, the Eastern Seaboard. Is there any movement 
there to establish some firm lines?
    Mr. Schwaab. Yes, sir. The current council proposal, as I 
understand it, is focused on a slightly, a somewhat reduced 
area closure over the one that was initially proposed. That is 
under council deliberation now, as we speak.
    Mr. Brown. Do you have an idea when they might make that 
choice?
    Mr. Schwaab. My understanding is it will be at the next, at 
the next council meeting later on this spring. But I don't have 
an exact date for you, sir.
    Mr. Brown. OK. When will that take effect, do you think?
    Mr. Schwaab. You know, rather than try to get into the sort 
of the nuances of the current emergency action versus the 
timing of the proposed closure, would you mind if I got back to 
you with specifics on that?
    Mr. Brown. OK.
    Mr. Schwaab. Thank you.
    Mr. Brown. Because we have a lot of people in the 
Charleston area, which I represent, whose livelihoods depend 
upon it, and it is very critical for them.
    Before you established the catch share program, what method 
did you have to determine how many fish were being taken, say 
on a daily basis, out of a certain area?
    Mr. Schwaab. Well, in general for the commercial fisheries, 
those include a variety of direct harvester reporting, as well 
as dealer reporting. In the recreational sector that is based 
largely on sampling, previous MRFSS data is now migrating into 
the new MRIP system.
    Mr. Brown. Under the catch share program, I know we heard 
testimony from some of the other people, too, that you are 
going to set quotas for the commercial fishermen. How would you 
address just the recreational fishermen? Will they have quotas, 
too? Or how does that, how do you plan to implement it?
    Mr. Schwaab. Sir, the basic framework of setting annual 
catch limits is essentially the same, regardless of the 
management system, on a gross sense. From the perspective of 
most fisheries, there is some established allocation of that 
total annual catch between the commercial sector and the 
recreational sector.
    If you move into a catch share system for the commercial 
sector, what you see, then, is that that annual catch limit 
then gets assigned down to individual harvesters or other 
parties in the process. On the recreational side, generally you 
would see continued management under sort of a broad share of 
the annual catch that is assigned to the recreational sector 
and managed through traditional seasons and size limits and bag 
limits and the like.
    Mr. Brown. So you would restrict so many takes per day, or 
so many takes per season per recreational fisherman? Or how 
would you allocate those resources?
    Mr. Schwaab. Yes, so basically it would be similar to the 
system that is already in use for most recreational fisheries, 
where there is one broad share of an annual catch limit that is 
assigned to the recreational sector. And then that is managed 
across the recreational fishery through seasons, size limits, 
and the like.
    And then we use the recreational catch and effort data 
essentially after the fact to monitor compliance with that 
total catch limit that has been established.
    Mr. Brown. Is it true, on the commercial fishermen's side, 
that you can barter with the quotas?
    Mr. Schwaab. Well, under catch share systems there are 
provisions for assignment leasing, trading of quota, in a 
number of the systems that are in place.
    Mr. Brown. So they can trade them, you can buy and sell 
them based on something?
    Mr. Schwaab. Which provides one of the real advantages as 
you try to manage, particularly in mid-stock fisheries, bycatch 
issues, and move quota back and forth to take advantage of what 
is brought on board within the limits of quotas that have been 
established.
    Mr. Brown. What would denote value?
    Mr. Schwaab. I am sorry, sir?
    Mr. Brown. What would denote value in the trade? If you 
want to buy some of this other guy's quota, how would you 
establish the value?
    Mr. Schwaab. Under most circumstances, those would be 
market transactions.
    Mr. Brown. OK. Thank you, Madame Chair. Thank you very 
much.
    Mr. Schwaab. Thank you, sir.
    Ms. Bordallo. I thank the Ranking Member. Now I would like 
to recognize the gentlelady from California, Mrs. Capps.
    Mrs. Capps. Thank you, Madame Chair. Thank you for holding 
this hearing on this important topic. I appreciate the 
testimony of all of our witnesses today.
    I think this is an important topic that we all are involved 
in. Catch shares, when properly designed, I believe can have 
strong economic and ecological benefits. I say this as someone 
who represents several fishing communities on California's 
central coast, struggling to keep their industry going.
    Prices for fuel and gear are going up. There are severe 
restrictions on groundfish fisheries. Many fishermen are 
finding that the cost of navigating regulations is just too 
high to stay in business.
    Now, I think we all know there is no silver bullet for 
managing our fisheries. But I believe today's hearing is very 
important, for no other reason than to begin a discussion on 
ways to help our struggling fishing communities, and how catch 
shares might play a role in this.
    So Mr. Schwaab, again, you may be aware of the innovative 
partnership in Morro Bay in my district, on the Pacific coast, 
between fishermen, the harbor district, and conservation 
groups. This community fishing association, which the local 
fishers feel very strongly about, was established by them to 
preserve the heritage of the local fishing industry, as well as 
to create stable, economically viable fishing opportunities, 
for them, and perhaps even for their children.
    So my question to you. By providing a catch share quota to 
entities like community fishing associations, giving them the 
quota, or cooperatives, however it is designed, what types of 
benefits would you hope to see? That they could envision. Mr. 
Schwaab.
    Mr. Schwaab. Congresswoman Capps, thank you. Good question. 
I am somewhat familiar with the example you describe.
    I think there are a variety of benefits that can be derived 
from catch share systems, some of which we have already 
mentioned, providing greater latitude to individual fishermen 
in making decisions about when they fish, when they bring the 
product to the market, the opportunity to maximize value, to 
take advantage in mixed-stock fisheries, some of the bycatch 
issues that we deal with more directly, and manage them more 
effectively.
    Certainly in some catch share systems, design allows for 
meeting certain local socioeconomic goals, like retaining quota 
share in a particular community, or within a particular segment 
of the fishery. There certainly are also opportunities to 
accommodate new entrance into the fishery from a particular 
community.
    I also think, and I think one of the things, as I 
understand what is happening in Morro Bay, there is an 
opportunity to experiment with different fishing techniques, 
and take more of an adaptive approach to going out and fishing 
to target most effectively the most desirable product over 
time. Thank you.
    Mrs. Capps. Thank you very much. Dr. Rosenberg, I have a 
couple of questions for you.
    We have seen that a carefully designed catch share system 
can contribute to the sustainability of the resource, the value 
of the fishery, and the economy of fishing communities. At 
least, that is the witness that I have.
    We also heard that scientific research brings significant 
improvement, when that is the basis for deciding the quota and 
all the rest, to catch shares. I think you would agree that 
rigorous science is the best way to understand the health of 
our fishery resources.
    So my question is, how can we ensure that the best 
scientific research goes into the design--I mean, really up 
front--of catch share programs, while taking into account 
different fisheries and different fishing communities, the 
science to then be reflected in that way.
    Dr. Rosenberg. Thank you, Congresswoman, for the question. 
I think this is an important issue. Of course, when we think 
about fishery science, we often mostly focus on the biological 
sciences. And we want to know how many fish are in the sea, and 
their production rates, so that you can estimate sustainable 
yields. That is necessary for catch share systems, but it is 
necessary for any fishery management system.
    I think for the design of catch share systems, we need a 
much greater emphasis on the social and economic analyses, 
particularly the economics, because it is easy for different 
groups, from any particular perspective, to maintain a 
particular set of impacts will occur. But that is different 
from actually going through the analysis to try to put 
information in front of all stakeholders.
    Mrs. Capps. Can I just push this one question? Because I 
appreciate where you are going with that answer.
    In other words, how do you feel that should catch shares be 
allocated, what steps can be taken to limit consolidation, 
then? As one aspect of the local economic factors.
    Dr. Rosenberg. Well, again, I think there is an economic 
analysis and a financial analysis that needs to occur on the 
potential for consolidation, as well as what would be 
appropriate ways to mitigate that tendency for consolidation.
    Mr. Backus suggested community associations as holders of 
quota. That may work in certain situations, but not in others. 
Certainly there are other kinds of structures that have been 
used in the North Pacific to try to limit consolidation.
    I think it depends upon an actual analysis of what the 
financial conditions are for many of the businesses within the 
fishery, and probably multiple communities. I think Ms. Cobb 
referred to the need for people to be engaged in that 
discussion directly.
    Now, that can happen through the usual Magnuson-Stevens and 
NEPA process, but it doesn't always happen in a very helpful 
way. Because many times the social and economic analysis sort 
of follows on the design of the regulations, as opposed to 
preceding the design of the management system in the 
regulations.
    And so turning that around such that there is more analysis 
up front would be very beneficial.
    Mrs. Capps. Thank you. I apologize. I just really believe 
this hearing begs the need for more hearings on this topic. 
Many, many unresolved questions and concerns.
    Ms. Bordallo. I agree.
    Mrs. Capps. Thank you very much.
    Ms. Bordallo. Thank the gentlelady from California. Now I 
recognize the gentleman from Louisiana, Mr. Cassidy.
    Mr. Cassidy. Thank you, gentlemen and lady. So, Mr. 
Schwaab, best as I can figure out from what you guys are 
telling us is that in a sense, we have put in stone how much 
fishery is going to commercial, how much is going to 
recreational, to an extent. A little bit of tweaking back and 
forth.
    It seems you have, but it seems like the two systems don't 
work well. It would seem like we are applying the same system 
to two different entities.
    If more people buy boats, in a sense you have more new 
entrants into the recreational field, but you are not really 
allowing those new entrants. They are buying boats, they are 
buying rods, reels, a growing population on the coast, et 
cetera. But they hit their allocation sooner, so therefore you 
squeeze down their allocation. Their season, if you will. Their 
allocation remains constant, but you squeeze their season.
    Now, the commercial guys consolidate--your testimony was 
very good--the consolidation of the commercials is expected. 
But in the recreational, there is consolidation, but it is by 
season, not by market. Do you follow the distinction I am 
making? It actually seems discriminatory against new fishermen, 
if you will.
    Mr. Schwaab. Thank you, Mr. Cassidy. I think the 
circumstance you describe is not a function of the catch share 
system, it is a function of many of the management systems that 
have been in place for a long time, that have established 
longstanding allocations between recreational and commercial 
sectors.
    Mr. Cassidy. So is there an ability to move the line back 
and forth between recreational and commercial?
    Mr. Schwaab. There is certainly that ability within the 
council process now, independent of catch share systems. I 
think one of the things, as we develop this catch share policy, 
that we are focusing significant attention on, is the way in 
which catch share systems might actually provide an additional 
mechanism for, for quota or share of the catch to move back and 
forth between sectors.
    Mr. Cassidy. Now, that seems counter-intuitive to me, 
because I have heard here that there is this corporatization of 
the commercial market. And life has taught me that once you 
have investors investing in a commercial commodity, property, 
as I think one of the fellows said you can split it up in 
Divorce Court, that it becomes more and more written and 
concrete. It takes a Divorce Court to split it.
    It actually seems no, it is going to be increasingly 
difficult to allocate a greater percentage to the recreational 
people. Is that not true?
    Mr. Schwaab. I am not sure there are a lot of examples of 
allocation under current management systems moving 
significantly in one direction or another to accommodate the 
kind of concerns you describe.
    What I would submit is that properly designed catch share 
systems may allow, through a market mechanism, the recreational 
sector to purchase and move shares over into that common pool 
that is available to meet the kind of growing demands that you 
describe, and we all witness, in the recreational sector.
    I am not saying it is the only way, but I think it is an 
additional way.
    Mr. Cassidy. So theoretically, just to pursue that, 
theoretically, OK, you have 75 percent going to the commercial, 
25 percent to recreational. That some entity, the State of 
Louisiana, for example, could buy 15 percent of the 75 percent, 
move it over to recreational, and you would lengthen the 
season? Is that possible?
    Mr. Schwaab. Theoretically, yes. The means by which to 
manage and control that is something that we are focusing 
attention on----
    Mr. Cassidy. Now, again it seems a little counter-
intuitive, because again, I think I learned from the gentleman 
from Ecotrust that as the fisheries return, that as opposed to 
eliminating the catch share system, if you will, actually the 
property becomes more valuable. If you get 10 percent of the 
catch and there is more catch, then you actually have a more 
valuable product, which increasingly prices it out of the range 
of anybody but investors.
    It almost seems we are on this inevitability of a 
corporatization. Is that not true?
    Mr. Schwaab. It is true that, under most commonly designed 
systems, the share becomes more valuable as the annual quota 
grows in size. So if the percentage remains the same, actual 
numbers or amount of fish increase.
    Mr. Cassidy. It almost seems it would be better, if you 
will--and tell me if this has been done--that you have a catch 
share that is based upon an absolute amount, not upon a 
percentage. So, the absolute amount of the fishery grows, hits 
a ceiling. You have this amount, but whatever comes on top is 
then shared with the broader society.
    Now, is that done in any of these?
    Mr. Schwaab. To my knowledge, Dr. Rosenberg says yes, I 
mean, it certainly could happen.
    Mr. Rosenberg, do you mind? Dr. Rosenberg. I am sorry.
    Dr. Rosenberg. That is fine. The New Zealand system tried 
it that way, and it was really problematic. Then they have to 
buy it back into a percentage-share system. Because the 
difficulty is that stocks can go down, as well, due to natural 
variability, as well as due to overfishing.
    Mr. Cassidy. So in New Zealand, did they actually create 
more shares? Or did they just allocate that to the recreational 
guys, since the recreational guys are the ones that get 
squished, it seems, if there is any shortcoming?
    Dr. Rosenberg. That was in the specific case I am thinking 
of, it was a commercial-only fishery, so there wasn't the 
recreational problem. It may or may not be the case that 
recreational gets squished, as you described it. As stocks 
improve, that is not necessarily the case.
    Mr. Cassidy. I just know that our red snapper season is 
getting squished.
    Dr. Rosenberg. Well, it is the status of the stock, not the 
catch share system, though.
    Mr. Cassidy. Yes, thank you.
    Ms. Bordallo. I thank the gentleman, and would now like to 
ask for unanimous consent that the gentleman from Washington, a 
member of the full Committee, Congressman Jay Inslee, be 
allowed to join us on the dais for this hearing.
    Hearing no objection, so ordered.
    Our next Member to be recognized is the gentlelady from the 
Virgin Islands, Ms. Christensen.
    Mrs. Christensen. Thank you, Madame Chair. I am between two 
hearings, so I am sorry, I may have missed some of the 
questions.
    But Administrator Schwaab, I hope this hasn't been asked; 
it probably has in one way or another. But given all of the 
differing reports on the successes and failures of catch shares 
and the many possible pitfalls, why is NOAA so committed to 
them? Why not use more of that $54 million to provide better 
data collection, expand monitoring, so that we can have 
reliable annual catch limits? Since everybody agrees that that 
is really what reduces overfishing.
    Mr. Schwaab. Thank you, Ms. Christensen. I would submit 
that we have to do both, and that we are doing both. On the one 
hand, we have to increase our understanding of the status of 
stocks and the timeliness of that understanding. And we are 
continuing to invest there.
    At the same time, we have to seek new management approaches 
that allow us an opportunity to move beyond some of the 
traditional management approaches that have, in too many cases, 
failed us over time. By investing fishermen in the growth of 
stocks, by providing to fishermen more latitude to manage 
individual quotas, with more freedom to time markets to take 
advantage of availability of fish--with one eye on the present 
and one eye on the future--will, on the management side, help 
to move us forward in the same way that we move forward on the 
science side.
    Mrs. Christensen. I see. These two are probably not, don't 
have to be mutually exclusive of each other, but I have been 
interested in the fish habitat partnership-type program as a 
way to address our fishing challenges. Because it brings 
everyone in the community together, every stakeholder together, 
and develops a more comprehensive approach to managing our 
fisheries, and hopefully gets some, builds consensus, which is 
very difficult to reach.
    Does NOAA support these habitat partnerships? Is there 
funding in the budget to support the development of them?
    Mr. Schwaab. Yes, a big focus of our attention continues to 
be devoted to habitat. In a prior life, I actually helped to 
develop the National Fish Habitat Action Plan, which became the 
basis for these fish habitat partnerships and legislation that 
is before Congress now.
    Let me make one quick observation, and that is that I think 
the opportunity of improving fish habitat addresses systemic 
failures on the ecosystem side, in the same way that the 
opportunities associated with catch shares provide us an 
opportunity to address systemic failures on the economic side 
of the equation.
    Mrs. Christensen. OK, so they could work collaboratively.
    Mr. Schwaab. Absolutely.
    Mrs. Christensen. Ms. Cobb, what, to you, are the main 
differences between Port Orford's community-based management 
efforts and catch share? What are the main important 
differences?
    Ms. Cobb. Sure. Well, I can use, for example, the trawl 
catch share program on the West Coast that is being developed 
right now, versus our community-based program.
    The difference is that in a catch share program, quite 
often the Councils are looking at quota that goes to 
individuals. In our community-based program, we are looking at 
what are solutions for our entire community. It is very place-
based, so that our community can continue to fish sustainably. 
But also so that our economy will be sustainable, as well.
    So really, our project in Port Orford is about the triple 
bottom line; it is about the economy and ecology or 
conservation, and it is about equity and access. Catch share 
programs, while they have the potential to address those, don't 
emphasize those at all.
    Mrs. Christensen. It sounds like something more akin to 
what my community might be interested in putting together.
    Dr. Fina, like many in this room today, you ascribe to the 
belief that there is not one approach that can be tailored to 
every fishery. We have, I mean, the Virgin Islands only has 
120,000 people total on all three islands. Our fishery is 
small.
    What type of fishery do you think catch shares would be 
best suited for? And are they suited to small communities like 
mine?
    Mr. Fina. Madame Chair, that is a difficult question. 
Usually, we look at them in the North Pacific as generally 
local questions, as to whether, whether the fishery itself and 
the participants and the stakeholders are ready to make that 
type of a transition into a catch share program. We do it 
typically through a pretty long process in front of the 
Council.
    But I think that a lot of it depends on whether the 
participants in the fishery are ready for that kind of 
transition.
    Ms. Bordallo. I thank the gentlelady from the Virgin 
Islands. Now I recognize the acting Ranking Member, Mr. Wittman 
from Virginia.
    Mr. Wittman. Thank you, Madame Chairwoman. Members of the 
panel, thank you so much for joining us today; we appreciate 
you taking your time out of your busy schedules.
    Mr. Schwaab, I will begin with you. I sense a growing level 
of frustration by both recreational and commercial fishermen 
with the various tracks on management of our fish stocks. I 
know a month ago there were a number of folks here in 
Washington, and just last week a number of recreational 
fishermen, again expressing their frustration, and I guess a 
feeling of disenfranchisement in this process.
    So what I wanted to ask is, is there a way that we could do 
a better job of recognizing the important role that fishermen 
and communities have in our overall management strategies, and 
how they affect our local communities? I know you spoke a 
little bit, or have spoken here a little bit about how the 
Councils can keep in mind the social and economic impacts of 
their decisions.
    But it seems like to me there is potentially a growing 
divergence in the agency's track on managing fisheries and 
fishermen and communities. I would like your thoughts about how 
we can maybe bring that back on track. Because we all know that 
the association between communities and sustainable fisheries 
is extraordinarily important.
    We have seen a lot of changes in that through the years. I 
want to get your thoughts about how you think we can, through 
this process, sort of bring those elements back together.
    Mr. Schwaab. Yes, sir, Mr. Wittman, thank you. Well, that 
is a big question.
    I would offer a couple of observations. First of all, as 
you know, to a large degree the Councils do include that kind 
of representation. We have worked hard within the agency over 
the years to enhance that balanced representation across the 
Councils, as well as within the Councils--and to provide to the 
Councils the kinds of support that they need to reach out 
farther into the community but, at the same time, engage on 
some fairly high-level and important decision-making processes.
    I think another way to address your question that I would 
submit is that one of the things that we have to do is be 
careful to separate the questions, so that we have some clarity 
in the discussions.
    You know, there are debates around the status of fish 
stocks. We need to continue to not only do a better job in 
improving the accuracy and timeliness of our science, but also 
having, developing a more shared appreciation, an agreement 
around that current reality. One subcomponent of that, of 
course, is the catch and effort data on the recreational side, 
which we are working on.
    Then those questions, at some level, have to be 
distinguished from the questions that are partly the focus of 
today's hearing, which are the management options. And catch 
shares represent just one management option.
    Largely before you get to catch shares, as we already 
discussed with Mr. Cassidy, you have these allocation decisions 
between sectors that have, in some cases, existed unchanged for 
decades. Catch share systems represent one mechanism to 
continue that dialogue, specifically as it relates to 
management approaches and allocations.
    Clearly, I think one of the things that almost unanimously 
has resonated here so far this morning is an expectation, an 
understanding that the best management systems, including catch 
share systems, are those that take into account the local 
social and economic goals of the communities and the fisheries, 
in addition to the realities of the science and the status of 
the stocks. We have to do a better job of having those 
conversations very clearly and as locally as possible.
    Mr. Wittman. You spoke a little bit about the impact on the 
recreational side. As I have said, I think the recreational 
fishermen are feeling a little more challenged, let us call it, 
in this scheme of management.
    What do you think we can do to restore the confidence and 
access for recreational fishermen? As you know, they are 
obviously one of the constituent groups out there that like to 
utilize the resource. I think there is a growing element of 
dissatisfaction with them.
    So if you can talk a little bit about that, maybe how you 
could restore confidence and access for the recreational 
portion of our folks that utilize the resource.
    Mr. Schwaab. Well, confidence in the data I spoke about a 
moment ago. I think the access question goes back again to what 
Mr. Cassidy was raising. They are really largely questions of 
scarcity, in comparison to, in many cases, growing demand.
    As I said earlier, one of the things that I think we should 
continue to look to catch share systems to do is to provide for 
us an additional mechanism to provide for some market-based 
transfer of quota based on that increasing demand on the 
recreational side.
    Now design and implementation to that is tricky. It is 
something we are spending some time on in this catch share 
policy. But I think it is something that we should be very 
attentive to.
    Mr. Wittman. Thank you.
    Ms. Bordallo. I thank the gentleman. Now I would like to 
recognize Mr. DeFazio, the gentleman from Oregon.
    Mr. DeFazio. I thank the Chair, I thank the Chair for 
holding this important hearing. Mike Thompson from California 
and I asked quite some time ago, and we are pleased to see this 
going forward before we make some irrevocable or difficult-to-
change decisions
    Dr. Rosenberg, in your testimony it says, ``In order to 
meet social and economic goals, important considerations of 
program design include rules, fees, eligibility requirements 
based on transferability of quota shares at varied points 
during catch share programs. These issues can be dealt with, 
but it is very much harder to do so after the implementation of 
the system, than as part of the initial implementation.''
    Of course, as Ms. Cobb said, there is potential for catch 
share to address some of these varied issues.
    Then finally, Mr. Schwaab, you said the local, social, 
economic goals, you could do a better job, more clearly 
communicate and get as local as possible.
    So I guess in context of that, are we ready to move 
forward, particularly with the rule in the Pacific Northwest? 
Have we adequately addressed all those issues on the timeline 
that your agency has set? Or perhaps we should take a little 
longer to discuss this? Particularly, as Dr. Rosenberg says, if 
you mess it up at the outset, it is really hard because, then, 
of the ownership issues and everything else, to go back in and 
change it later.
    I mean, April 10 EIS, and then implement for the next 
fishing season. Can we resolve, have they already resolved 
those issues? Do you think they resolved those issues in the 
proposal and the PFMC?
    Mr. Schwaab. Thank you, Mr. DeFazio. My understanding is--
well, in fact, I know at the last council meeting there was 
significant attention devoted to discussion about the schedule. 
The relative preparedness that the Council has, as well as the 
affected communities have for moving forward. And based on that 
discussion, there are a number of elements that process, moving 
forward, that have to be addressed.
    Mr. DeFazio. Well, very careful and very bureaucratic, but 
would you support taking longer to do this at the outset? You 
know, i.e., is there pressure coming from the national office 
to PFMC, we want this for 2011? Or could you say well, gee, if 
you can't really address these issues before 2011, let us put 
it off and spend more time getting it right. Yes or no?
    Mr. Schwaab. If you don't mind, I will preface by saying my 
understanding is that there are significant elements of the 
fishing community out there that are as anxious to move forward 
as anybody else.
    If circumstances suggested that we could not move forward 
on the current timeline in an effective way, we would certainly 
be receptive to delay. We may find ultimately that we are not 
able to meet that January 1, 2011 date.
    Mr. DeFazio. Do you agree with what Dr. Rosenberg said, 
which is once you put this in place, it is a hell of a lot 
harder to change it than if you take a little more time to 
settle some of these questions about community impacts; you 
know, about actually how you set the shares, what years you 
choose, how those shares are going to be set, who is going to 
be allowed, what you are going to be able to do with those 
shares in the future, how you are going to have new entrants.
    Don't you think it would be better to get all that stuff 
done and arranged beforehand?
    Mr. Schwaab. Yes. Theoretically, yes.
    Mr. DeFazio. No, not theoretically. I think practically. 
Yes or no?
    Mr. Schwaab. Yes.
    Mr. DeFazio. OK, good. OK.
    Mr. Schwaab. Well, my point----
    Mr. DeFazio. OK, that is good. I was going to say I am 
disturbed at the continuing obsession and fascination with 
market-based solutions around here. We had a market-based 
solution on Wall Street not too long ago; worked out real well. 
We had a market-based solution on deregulation of energy; that 
worked out real well. We are paying $4,000 a megawatt-hour to 
Enron, a corrupt company that went bankrupt.
    Now I am very concerned here. I have had this experience in 
aviation. You are going to apportion this valuable resource at 
the outset. You are going to establish a property right.
    You know, we can't deal with National Airport rationally, 
or LaGuardia Airport, because all those airlines, who just 
happen to have been there, or their predecessor airlines who 
were there at the outset, they have a property right, by God, 
and they own the gates. And no one else can land and come in 
there, unless they want to pay them $10 million for a gate.
    I don't understand how the successor clauses are going to 
work. I don't understand how we are going to deal with the 
leasing issue. The last thing I want is Goldman-Sachs buying up 
all the shares in a fishery in three years, after the 
restriction in the third year we can lease it to anybody, 
including financial speculators.
    Then we have derivatives of fisheries shares being sold on 
Wall Street. I mean, the craziness that can come out of this is 
extraordinary.
    You have to get it right at the beginning. I don't think 
you really have a clue and have thought through the 
implications.
    And even those who are advocating this, because they are 
desperate to fish, you know, if you raise these issues with 
them, well, it might mean that all the fish are going to go to 
one community and one processor. In the not-too-distant future 
they would say oh, no, that can't happen. Well, yes it can, 
because of how you deal with the leasing of these shares in the 
future, and how you deal with the accumulation of the lease 
shares. Not the ownership, but the leasing of the ownership, 
and the actual fishing that takes place, and where those fish 
get directed, and who actually controls that, whether it is 
some processor or some Wall Street broker or somebody else.
    I don't think you have thought this stuff through. I think 
we could have a disaster like they had in New Zealand at the 
outset.
    So I would hope that you will take your time, get it right, 
and not just rush off to oh, well, we can just, market-based 
system, here we go, and the local councils will solve it. I 
just don't want to see that pressure from the national office. 
I don't have tremendous trust in PFMC not to rush ahead, 
either, but we will try and deal with that by region.
    Would anybody else--Ms. Cobb or the gentleman, Mr. Backus 
from Ecotrust--care to comment? Do you share some of the 
concerns I just expressed, Ms. Cobb?
    Ms. Cobb. Yes. Thank you, Congressman DeFazio. At the last 
council meeting, which was last week in Sacramento, several of 
us approached the Council, the Pacific Fishery Management 
Council, and asked them to set up a committee on community 
fishing association so that we could prepare these communities 
for impacts from this trial IQ plan. The Council declined to do 
that, because they are literally so rushed to get this IQ 
program through.
    Mr. DeFazio. Rushed by whom?
    Ms. Cobb. I don't know what--I mean, there are certain 
elements in the fishing industry that are pushing this to move 
it forward. But the Council repeatedly says we have spent six, 
seven years on this; we have to get it done, we have to start 
this program in 2011. I don't see any reason----
    Mr. DeFazio. Really? Have they answered all those issues 
and concerns and questions I just raised?
    Ms. Cobb. I don't think so, no. I think that that program 
could be slowed down. I really think that there needs to be a 
meeting held with the people who are very concerned about that 
program and with NMFS to be able to express that, so we can 
find out how----
    Mr. DeFazio. Well, then, maybe what we need is some 
direction from the national office to the PFMC, looking at 
saying well, we don't think you have answered this range of 
questions. And if we look at testimony from Dr. Rosenberg and 
others, it is going to be a lot harder to change this after you 
implement it, because of the property rights. Thank you. OK, I 
appreciate that.
    So maybe we need some intervention. But not to rush it, but 
to get it right and take your time. It sounds like--yes, sir.
    Mr. Backus. If I may, Mr. DeFazio, thank you. Yes, I think 
in my oral statement earlier this morning I pointed out that 
ownership structures are very much key to the future. And the 
way that the Pacific Trawl IQ program is structured now in 
terms of its eligibility to own rules, it essentially allows 
perpetual leasing to happen.
    I am all for----
    Mr. DeFazio. Sort of like California water rights, right?
    Mr. Backus. I am all for family businesses in fishing, 
working their way through the generations. But if we are going 
to have--one of the presumed benefits of having a quota market 
if it is properly structured is, is liquid trade. When people 
retire, it is a public-trust asset. It should go back into the 
system.
    If you have perpetual leasing the way that ownership 
structures are set up now, that will never happen. As Ms. Cobb 
said, we have been discussing with the Council the 
implementation of these community provisions that are already 
in Magnuson, regional fishery associations, fishing community 
structures, which are clearly defined in Magnuson. We have been 
pressing for community fishing association criteria and rules 
of engagement for communities to be defined, so the communities 
that are ready to develop CFAs, community fishing associations, 
can go forward and feel that what they are doing is valid.
    It is not an integral part of the trawl IQ program. Given 
National Standard 8 about social and economic consequences, a 
lot of us don't understand why these provisions are not a key 
part of the design, the market design of this program, from the 
get-go.
    The adaptive management program, which sets aside 10 
percent of the trawl groundfish allocation, is going to be a 
trailing action that is going to be played out for two years, 
after the initial start date of the program.
    I don't understand why that would be the case. There are a 
lot of unanswered questions about unintended consequences, but 
we firmly believe, at a community level, like in Alaska, 
allocate 10 percent to the community development quota 
corporations. It has worked out very well. Ten percent for this 
adaptive management program.
    But let us make some solid decisions about where it should 
be placed. And that I think should be at the community level, 
and these community structures that are already described in 
the Magnuson-Stevens fisheries law.
    Thank you.
    Mr. DeFazio. OK, thank you. Thank you, Madame Chair, you 
have been very generous with the time. Thank you.
    Ms. Bordallo. I thank the gentleman. Now I would like to 
recognize Ms. Shea-Porter from New Hampshire.
    Ms. Shea-Porter. Thank you, and thank you for being here.
    I, too, was concerned when I heard the words ``market 
transaction.'' And I thought, what are we really talking about 
here?
    I have been very concerned about the impact this is going 
to have on the small fishermen. I am concerned about the extra 
cost of monitoring on board, monitoring at the dock, increased 
management costs.
    But when we start talking market transaction, I worry that 
what will happen is that we will be crowding out the small 
fishermen, and that we will indeed wind up with some major 
corporations that will be taking over. I think that would be 
tragic for a number of reasons.
    I just heard from a local fisherman in New England. And he 
said, ``I am becoming increasingly concerned that the amount of 
money being spent to implement a program that no one in New 
England wants is approaching the gross value of the fishery.''
    Mr. Schwaab, I listened to you talk about how things should 
be settled as much as possible on a local level, and at least 
include them. I do understand the tension that we have here, 
because we have to take care of our fish, and we have to make 
sure that the system doesn't collapse.
    But what about his comment, that the costs now are going to 
exceed or come in close to the gross value of the fishery?
    Mr. Schwaab. Congresswoman, I don't have either of those 
sets of figures in front of me. I would only suggest that costs 
associated with the management decision-making process, as well 
as catch monitoring and all the associated science that 
underpins that exists to a large degree, regardless of the 
particular type of management system that is employed.
    And so there are costs and benefits in each case. I think 
as you look down the road, one of the expectations that we have 
is that by conveying more of the day-to-day management 
decision-making of the fishery to the fishermen certainly 
within limits established by the programs that each council 
constructs, that we will have the opportunity to focus more and 
more of our attention on the broader issues relating to 
underlying stock science, as well as focused attention on 
monitoring appropriately the total annual catches.
    But I would be happy to get you a little more detail with 
respect to cost of implementation of the sector program versus 
the value of the fishery.
    Ms. Shea-Porter. OK. Because I have seen some numbers that 
are surprising. But in the--I am glad you brought up the 
science, because I was obviously leading you to the next one.
    In the 2011 budget, NOAA proposed a $10.5 million cut to 
cooperative research, a $2.3 million cut to observers, and 
inadequate funding for stock assessment.
    Is this a question of we are creating a cart-before-the-
horse scenario? We have a lot of fishermen at this point who 
are suspicious of the science. I appreciate your comments about 
trying to work things out at a local level and getting the 
local buy-in, but I don't think we are anywhere near close, 
based on the comments that I am hearing, and the fact that 
while they are still not confident about the science, you are 
actually cutting back the science.
    Mr. Schwaab. From a national budgetary perspective, we are 
maintaining the increase in investment in the stock assessment 
that, that we saw last year. About a $10 million increase, as I 
recall.
    There is a specific reduction in cooperative research, a $4 
million reduction in cooperative research from the national 
program. There is an additional $6 million shift from the 
cooperative research general-line budget to cooperative 
research under this new catch shares line.
    So that money is predominantly Northeast money. So that 
cooperative research will continue to occur. It will occur 
under the auspices of the catch share program, as opposed to 
under the auspices of the general cooperative research budget.
    The last thing I would mention is something that I said 
earlier, which is a significant amount of the new money 
dedicated to catch share program implementation will go 
directly to pay for observers and monitoring. So there will be 
a net increase, particularly in those places where catch share 
systems are being implemented this year, including the sector 
system, in monitoring and observer data.
    Ms. Shea-Porter. So what would you say to the man or the 
woman who is fishing in New Hampshire, who is looking at all 
this, looking at the plan, and says I don't think this is a 
good deal for me? What would you say?
    Mr. Schwaab. Well, I think there are two things at play 
here. One is sort of the gross allocations. I think one of the 
big challenges that we have run up against are reductions in 
allocations that are based on assessment of stocks.
    So in some cases, it is less the catch share or sector 
program, and it is more the reality of the reduction in annual 
catch that would have existed whether we were in a days-at-sea 
program, or in a sector program. You know, that is a certain 
reality.
    Are there potentially winners and losers in this system? 
Yes. And you know, one of the things that we continue to try to 
do in New England is invest in ways, particularly to minimize 
the impacts to some of the small fishery-dependent communities 
that exist out there. And you are aware of some of those 
investments. We continue to work very closely to protect those 
interests.
    Ms. Shea-Porter. But when you start using the words market 
transaction, how are they supposed to understand that? It 
doesn't sound very promising for the individual fishermen.
    Mr. Schwaab. Yes. I mean, market transactions within the 
confines of the rules established for the program.
    My use of the term ``market transaction'' was specific to a 
price question. It was not intended to imply that that would be 
the only control on movement of shares.
    Clearly, there are significant controls on movement of 
shares, allocation and movement of shares in the system 
designed to ensure a variety of localized social and economic 
goals are met.
    Ms. Shea-Porter. But do you think they are right to worry 
that they could be driven out?
    Mr. Schwaab. I am not sure that they should be worried 
about being driven out of a catch share system or the sector 
system in New England, any more so than they should have been 
worried about being driven out under the prior days-at-sea 
program, which had with it its own economic pressures and 
costs.
    Ms. Shea-Porter. Thank you, I have run out of time.
    Mr. Schwaab. Thank you.
    Ms. Shea-Porter. Thank you.
    Ms. Bordallo. I thank the gentlelady, and now I would like 
to recognize the gentleman from the State of Washington, Mr. 
Inslee.
    Mr. Inslee. Thank you. I really appreciate NOAA's interest 
in catch shares and trying to advance this cause, for many 
reasons. One of which is we have seen a continual decline in 
fisheries where we have not had catch shares, and this is one 
tool in the toolbox to help make sure we have a fishery for the 
grandchildren of our current fishers.
    I want to put into the record, if I may, a statement by the 
President of United Catcher Boats in support of this effort, 
dated March 16, 2010. If I may, Madame Chair, if I may put this 
into the record.
    Ms. Bordallo. No objection. So ordered.
    [The statement submitted for the record by United Catcher 
Boats follows:]

        Statement submitted for the record by Robert E. Dooley, 
                    President, United Catcher Boats

    Dear Honorable Madeleine Bordallo and Members of the House Natural 
Resources Committee, Subcommittee on Insular Affairs, Oceans and 
Wildlife,
    Thank you for the opportunity to present the following comments to 
your oversight hearing on commercial fishery Catch Shares management. 
My name is Bob Dooley and I am the President of United Catcher Boats 
(UCB), a vessel owner's trade association that represents the interests 
of the owners of 70 trawl vessels that participate in the Bering Sea, 
Aleutian Islands, Gulf of Alaska and West Coast federal trawl 
fisheries. My brother and I own and operate two trawl vessels and 
together have participated in the West Coast and Alaska groundfish and 
crab fisheries for over 40 years. We live in Half Moon Bay, California 
and the UCB office is located in Seattle Washington. The members of UCB 
reside in Alaska, Washington, Oregon and California.
    Our primary concern is the timely approval and enactment of the 
Pacific Fishery Management Council's recommendation on the West Coast 
Trawl Rationalization program (FMP Amendments 20 & 21) and the 
appropriation of adequate federal funding to ensure that this new 
program becomes a success in 2011. To this end, we ask that the 
Subcommittee convey its support for the West Coast Trawl 
Rationalization program to NOAA/NMFS leadership and support funding 
requests for this program through the congressional budget 
appropriations process this year to help the West Coast Region of NMFS 
and the Pacific Fishery Management Council get this new program up and 
running as soon as possible.
    The members of UCB are very strong supporters of Catch Shares 
programs, or more commonly known as `rationalized' fishery programs. We 
believe that our comments can be quite beneficial to the Committee 
members because we participate in both a major rationalized fishery, 
the Bering Sea Pollock fishery, and a fishery that is still an `open 
access' fishery, the Pacific Whiting fishery. Through our experience of 
both management styles we are able to provide you with an understanding 
of the benefits associated with rational fisheries management programs.
    The stated benefits of a catch shares program include reducing 
overcapitalization, minimizing bycatch, ending the `race for fish', 
maximizing vessel safety, maximizing the value of the harvest and 
allowing for sustainable fishery management practices. Under the 
provisions of The American Fisheries Act (MA) that passed Congress in 
1998, the Bering Sea Pollock catcher vessel fleet has been operating 
under a cooperative style (co-op) of management since 2000. With over a 
decade of experience in fishing in a rationalized fishery, we can 
unequivocally state that the stated benefits of rationalization are 
very real and far outweigh any costs associated from shifting from an 
open access style of management. All of these benefits, without a 
doubt, have been realized and experienced.
    One recent example is our ability to use our co-op style management 
to address the problem of Chinook salmon bycatch taken incidentally in 
the Pollock fishery. We are able to voluntarily enact co-op provisions 
that provide strong incentives to minimize the encounter of salmon 
while fishing for Pollock in the Bering Sea. Through the Co-op program 
the Pollock fleet is able to enact a real-time reporting system to keep 
vessels away from discrete areas of high rates of salmon bycatch. We 
call this program the Rolling Hotspot Avoidance Program. In addition to 
this avoidance program, we are able to use the co-op program to embark 
on experimental fishing to develop a salmon excluder in the trawl net 
that is now used by almost all of the Bering Sea Pollock fleet and some 
of the Pacific Whiting fleet off the West Coast that allows salmon to 
escape our trawl nets while catching Pollock These programs were 
initiated by the Pollock industry to solve real-time problems and not 
generated through government regulations or actions.
    Compare this to the current open access style management of the 
West Coast Pacific Whiting fishery. Similar to salmon bycatch in the 
Pollock fishery, the incidentally caught rockfish species taken in the 
Whiting fishery is the largest problem for the fishermen. In an open 
access fishery, the government places hard caps of incidentally caught 
bycatch species on the fishery that can close the fishery when these 
caps are reached. This encourages a 'race for bycatch' by the fleet and 
has resulted in closing the fishery down prematurely with harvest left 
in the water. If the fleet had a co-op program in place, the owners can 
pool the allocations of bycatch species and enact rules within the co-
op that result in avoidance of bycaught species. For example, the fleet 
can choose to fish during times of the year, and in areas known for low 
encounter rates of bycatch if they don't have to race for the fish when 
the start of the fishery occurs. Without a co-op structure in place, 
these kinds of avoidance incentive programs cannot exist.
    The Pollock-Whiting comparison is very useful when analyzing the 
problem of overcapitalization of the fleet. The present Whiting fishery 
is exactly where the Pollock fishery was at the end of 1999. In that 
year, the Pollock fishery fished for less than three months and the 
value of the fishery was about 1/3 of the present value. Utilization 
rates of the harvest was about half of what it is today and a number of 
Pollock fishing companies were either just trading dollars or the cost 
of fishing exceeded the gross revenues generated. This past year, the 
Pollock fishery lasted for over six months, the fleet was able to avoid 
bad weather, target on high value fish, spread the fishery out over the 
entire year, match the size of the fleet to the level of harvest and 
the products produced were matched to market demand. This past year's 
Whiting fishery lasted less than one month, occurred during the time of 
year when encounter rates of rockfish bycatch species were high and the 
catch rates and product recovery rates of the fish were poor or sub-
optimal.
    There is a feeling of stability and security, including the ability 
to act and plan for the future in the Pollock fishery which was created 
by the co-op rationalization element of the AFA. This sense of 
stability is not present in the West Coast Pacific Whiting fishery. 
Participants have continued to `capital stack' or put more investment 
into catch capacity of the vessels and processing capacity in the 
processing plants and the result has been shorter and shorter seasons. 
This past year's Mothership catcher vessel fishery lasted about three 
weeks and the Shore-side catcher vessel fishery lasted about one month.
    In conclusion, I hope this comparison of two fisheries helps you 
understand that a properly structured catch share program can solve 
many of the problems fishermen face in an open access, race-for-fish 
management style fishery. A co-op style management program allows for 
fishermen to reduce their fishing capacity thereby lengthening seasons 
and the ability to choose when and where to fish and gives fishermen 
tools to voluntarily minimize bycatch of unwanted species without 
government regulations. It allows us to better plan our businesses and 
we are able to minimize costs while striving to maximize revenues from 
a set amount of fish that get allocated to the individual members of 
the co-op.
                                 ______
                                 
    Mr. Inslee. Thank you. But I think about small fishers, 
fishermen and women when I do this, I think of one of my 
heroes, a fisherman named Rudy Neuser, who is my dad's best 
friend from sixth grade, who fished the Shirley Ann for many 
years. It was a beautiful wood boat, and he had many 
adventures. He was an idol growing up, and still is. I want to 
make sure that this program is designed in a way that everyone 
feels they have a fair shake.
    So I want to ask Dr. Fina to start with. This program has 
been approved by the representatives of the Council from all 
the states, as I understand it. What has been done to design 
the catch share program so that the small fisherman who has got 
that little, old wood boat out there is protected, and at least 
has a fair shot at this?
    Mr. Fina. Madame Chair, Mr. Congressman, in Alaska we have 
done a few things in some of our programs, most particularly 
the halibut and sablefish IFQ program, where there are vessel 
classes and there are limitations on the movement of share 
among vessel sizes. So that you can create classes that are 
restricted to, for use on small vessels. You can also create 
owner-on-board requirements that require the shareholder to be 
on the vessel. You can limit leasing or limit the use of hired 
skippers on vessels. Those types of, those types of elements 
are included in the IFQ program in particular.
    You can limit who can acquire shares, too. You can limit 
the acquisition to people who meet certain fishing time 
requirements prior to their purchase.
    Mr. Inslee. Mr. DeFazio has risen issues about a concern 
that you don't want to rush into an ill-considered decision. I 
will just tell you my perspective. It is my understanding this 
has been a multi-year process. Is it five or six years now? It 
sounds like there is consensus from council members from the 
Northwest, in any regard.
    Is there any issue that has not been considered already, 
that is sort of a new issue that no one has thought of, that 
should delay this? Can anyone posit any that hasn't been 
considered during this multi-year process?
    Ms. Cobb, did you have a comment?
    Ms. Cobb. Yes, thank you, Congressman. As I mentioned to 
Congressman DeFazio, we asked the Pacific Fishery Management 
Council to look at community fishing associations. Frankly, 
those should have been running parallel with the design of this 
IQ program.
    Mr. Inslee. When did you propose that?
    Ms. Cobb. We wrote letters to the Council, and were at the 
Council meeting last week in Sacramento. The Council had every 
opportunity to set up a CFA committee.
    And again, these committees, community fishing 
associations, could be very place-based, would need to respond 
to these impacts from this trawl IQ program. And you know, we 
couldn't even get them to set a committee date.
    Frankly, as I said to Congressman DeFazio, this council, 
the Fishery Management Council, is extremely rushed in trying 
to get this through by 2011. I spoke with a council member in 
the hall who said we may have to set all other issues aside for 
this council, and just work on the Trawl IQ plan.
    I kind of pushed back, because we have a halibut proposal 
before the Council. And he said we don't want this thing to go 
out the door a mess. We have to work on this, right, by 2011.
    Mr. Inslee. So that makes, just briefly, because I have 
limited time. So this has been going on for several years. Was 
this the first time you had proposed the community council 
approach, in this letter? Is this the first time this issue 
came up?
    Ms. Cobb. Do you want to respond to that? You have been 
working on it, too.
    Mr. Backus. Actually, the issue had come up several years 
back, and the Council began to take action on it, I believe in 
March of 2009, for the first time, when the Congresswoman from 
California, Mrs. Capps, mentioned a project in her district in 
Morro Bay which is large enough in terms of one of the 
organizations involved, owns a significant amount of trawl 
permits now in that project. I think that got the attention of 
the Council to begin to address these social and economic 
issues.
    I would argue that these community provisions are already 
clearly stated in the Magnuson-Stevens Act, in Section 303[a], 
the Limited Access Privilege Program section. It clearly 
defines that councils should define criteria for the 
development of, in two sections: fishing communities in one 
section, and regional fishery associations and other related 
entities in the next section of the Act.
    And a lot of us firmly believe that if you are going to 
have a fully integrated approach in catch share design related 
to communities, fishing businesses, and individual fishermen as 
an integral part of the fisheries to start with, before you 
start catch shares, that it is council responsibility to take 
an integrated approach to the design of those programs from the 
get-go. Not having us on the outside saying hey, what about 
these provisions.
    Mr. Inslee. Well, I hope that they are a success. This has 
been several years. I think there are great opportunities for 
improvement with a catch share program. I hope there is success 
getting this going, taking in everyone's consideration, 
particularly in light of the vote of the Council to move 
forward.
    Thank you. My time has expired.
    Ms. Bordallo. I thank the gentleman. I have a couple of 
questions, and I think Mr. Wittman also has a few questions.
    This is for Mr. Backus. When is quota leasing necessary and 
constructive, and when does it become exploitive?
    Mr. Backus. Thank you for the question, Madame Chair. In a 
single season, in a particular season of fishing that is going 
on, there is often quota that is assigned around bycatch 
species. And that can be practically and valuably traded 
between vessels who might have gone over on some other bycatch 
quota, and some other person who has not had that experience, 
they can trade or lease intra-annual leasing of quota, to make 
the system work.
    Cooperative approaches to that issue are commonly exercised 
in the North Pacific, and beginning to emerge here on the West 
Coast.
    So intra-annual leasing I think serves a very useful 
function for fleets to operate under a catch share program. I 
think when it gets abusive is when, as you see in British 
Columbia, a majority portion of the quota is owned by non-
fishing entities or individuals, and it is leased so that 70 
percent to 80 percent of the catch value goes off the top to 
pay the lease fees that are demanded by the lessor. The lessees 
feel like they are really becoming sharecroppers.
    Leasing, for example, in Alaska is limited to the first 
generation of initial issues of halibut quota. It is going to 
sunset. That is a very good thing. That is a compromise I 
believe in the design, but it is recognizing that leasing going 
forward can be highly negative.
    In the Pacific trawl program, as I mentioned, the way that 
ownership structures are set up, even Ecotrust or the North 
Pacific Fisheries Trust could buy trawl quota and lease it. We 
would probably do very positive things with it, but again, I 
think permanent perpetual leasing entities and trusts should 
not be allowed. That is where it becomes abusive. Thank you.
    Ms. Bordallo. I have another question for you. Has Ecotrust 
been able to distinguish between the improvements of fish 
stocks from setting a total allowable catch, versus 
establishing a catch share program? And what does this 
indicate, given the fact that the President's Fiscal Year 2011 
budget request shifts funding for basic science over to catch 
shares?
    Mr. Backus. Thank you. As you have heard in this 
discussion, it is very essential to address harvest levels 
through total allowable catch or annual catch limits. It is 
essential to allocate the proper proportion of budgets to the 
science and the surveys and the analysis to establish those, 
those levels, the TAC or the ACL.
    I think the challenge, of course, for a manager is how do 
you know when a fleet is getting up toward that annual limit, 
and how do you prevent going over it.
    Catch shares, for their good and bad, on the good side, as 
I said in my earlier testimony, they do get down to the 
accountability of individual vessels. That is a key positive 
aspect of catch shares, properly designed, as I have said.
    So I think it is important to recognize that TACs and ACLs 
in and of themselves are the first benchmark that you want to 
establish for control of the fishing. There are some distinct 
advantages in being able to hold individual vessels accountable 
for how they operate, and that is a positive aspect.
    Ms. Bordallo. Thank you very much. Now I would like to 
recognize the acting Ranking Member, Mr. Wittman from Virginia.
    Mr. Wittman. Thank you, Madame Chairwoman. Dr. Fina, I 
wanted to sort of get your perspective on the economics of this 
whole realm of catch share. I am going to relate a story that I 
experienced in Virginia. Back, I believe it was 1990, the Surf 
Clam and Ocean Quahog Fishery underwent essentially an 
individual fishery program. I watched that through the years 
develop. I watched surf clam plants in Virginia, in Maryland, 
and in Delaware close down.
    I watched permits consolidate. I watched many boats go down 
to a few boats, all controlled by one company, about 80 percent 
of the catch controlled by one company. Then eventually that 
one large facility that was there in Virginia being bought out 
by a larger entity.
    So the whole idea of making sure that we have healthy 
communities, working waterfronts, a diverse fishing economy in 
these areas, under that scenario, escapes me.
    So I want to get your thoughts. How do you think we best, 
in the scheme of fisheries management, how do you think we best 
assure that we have healthy diverse fisheries, sustainable 
fisheries, but also sustainable coastal economies that are, 
again, diverse from top to bottom, not just for large 
producers, but with small producers.
    So how do we do that in that context, using the backdrop of 
the individual fishery quota scenario we had with surf clams 
and ocean quahogs.
    Mr. Fina. Madame Chair, Mr. Congressman, in the North 
Pacific we have done a few things. Like I mentioned before, we 
have put in vessel caps, and you can use those to try and 
maintain the size of your fleet, or make sure that nobody gets 
bigger than a certain size. Also shareholding caps. We have, 
where we have co-ops we have caps on how big a co-op can get. 
That is a group of fishermen that join together and are managed 
as a group, and their catch is managed as a group.
    Also, in at least one of our programs and a few of our 
programs where we have processors recognized as processors in 
the program, we have processing caps, as well, that prevent any 
processor from getting above a certain size.
    I know that there is a lot of controversy around the 
processing aspects of programs, but they are directed at two 
things. Part of is that shore-based industry that you referred 
to, as well as some of the community interests that you might 
be able to protect with those.
    So, and you can keep the distributions, you can affect the 
distributions by some of those caps and some of those 
provisions.
    Mr. Wittman. Sir, do you believe then, as the fishery or 
fisheries grow, under the scenario you have painted, that we 
would actually be able to grow jobs? Have more people been 
involved, both on the fishing side and on the processing side, 
by making sure you have diversity both on the catch side and on 
the processing side?
    Mr. Fina. Madame Chair, Mr. Congressman, I think there is 
potential for that. Other things that you can use are port 
landing requirements that are now provided for in regional 
landing requirements. Those may be appropriate for certain 
circumstances. We have them in one fishery, and we are 
considering them in another. So you can use a different tool, 
which doesn't necessarily get down to the processor level in 
that regard.
    But I think with respect to your question about the 
economy, I think you can use these types of measures to 
redirect landings in ways that can provide for that basis.
    Mr. Wittman. Thank you, Dr. Fina. It is great to have a 
fellow Hokie here on the Hill. Thank you.
    Ms. Bordallo. I thank the gentleman. I want to thank all of 
the witnesses for their participation in the hearing today. 
Members of the Subcommittee may have some additional questions 
for you, and we will ask you to respond to these in writing.
    In addition, the hearing record will be held open for 10 
days for anyone who would like to submit additional information 
for the record.
    Again, as Chair of the Subcommittee, I would like to thank 
the members of the Subcommittee and our witnesses. If there is 
no further business before the Subcommittee, the Subcommittee 
now stands adjourned.
    [Whereupon, at 2:00 p.m., the Subcommittee was adjourned.]

    [Additional material submitted for the record follows:]

    [A letter submitted for the record by Lee Anderson, 
University of Delaware; Trevor A. Branch, University of 
Washington; Mark Carr, University of California, Santa Cruz; 
Christopher Costello, University of California, Santa Barbara; 
David B. Eggleston, North Carolina State University; Steven D. 
Gaines, University of California, Santa Barbara; John C. Ogden, 
University of South Florida; Michael K. Orbach, Nicholas School 
of the Environment, Duke University; Stephen Palumbi, Stanford 
University; Charles H. Peterson, University of North Carolina 
at Chapel Hill; Pete Raimondi, University of California, Santa 
Cruz; James N. Sanchirico, University of California, Davis; 
Wolfram Schlenker, Columbia University; and Bob Steneck, 
University of Maine, follows:]

March 30, 2010

The Honorable Nick J. Rahall, II
Chairman
Committee on Natural Resources
1324 Longworth H.O.B.
Washington, D.C. 20515

The Honorable Madeleine Z. Bordallo
Chairwoman
Subcommittee on Insular Affairs, Oceans & Wildlife
Committee on Natural Resources
1324 Longworth H.O.B.
Washington, D.C. 20515

The Honorable Doc Hastings
Ranking Member
Committee on Natural Resources
1329 Longworth H.O.B.
Washington, DC 20515

The Honorable Henry Brown, Jr.
Ranking Member
Subcommittee on Insular Affairs, Oceans & Wildlife
Committee on Natural Resources
1329 Longworth H.O.B.
Washington, DC 20515

Dear Chairman Rahall, Chairwoman Bordallo, and Ranking Members Hastings 
and Brown:

    We, the undersigned scientists, are writing to ask you to support 
key investments in natural and social science needed to build a strong 
and sustainable fishery management system in the United States by 
supporting the President's proposed FY11 funding for the National 
Oceanic and Atmospheric Administration's (NOAA) National Catch Share 
Program. This key program will help improve science, restore fish 
populations, and improve fishermen's livelihoods.
    Good science is essential for good decision-making in fisheries 
management. Good science involves strong fishery-dependent information 
(including effective accounting of catches, and related social and 
economic effects) and robust fishery-independent information (including 
stock assessments). Many essential scientific elements remain woefully 
underfunded in the United States, to the detriment of fishermen, 
fishing communities, and ocean ecosystems.
    Well-designed catch share systems provide an excellent tool to 
build stronger fishery science and management at the same time. Core 
elements of well-designed catch share systems include robust catch 
accounting, monitoring and compliance systems, as well as improved 
tracking systems for social and economic outcomes. Catch shares can 
actually improve science, because they result in rapidly improving 
fishery-dependent information--reducing uncertainty, allowing greater 
yields for every stock condition, and getting fishermen back on the 
water faster--and because stocks rebuild faster and more profitably 
1 when compliance with appropriate catch targets is assured.
---------------------------------------------------------------------------
    \1\ Newell, R., J. N. Sanchirico, and S. Kerr. 2005. Fishing Quota 
Markets. Journal of Environmental Economics and Management 49(3): 437-
62.
---------------------------------------------------------------------------
    The President's budget request for catch shares includes 
significant funding (over $19 million--or 35% of the total for the 
National Catch Share Program) for getting better data through dock-side 
and at-sea monitoring, as well as helping to set up the infrastructure 
for fisheries around the country to move forward with improved 
electronic reporting systems.
    Strong and compelling scientific evidence concludes that catch 
shares are effective. Six recent studies have documented that catch 
shares help prevent the collapse of target stocks and rebuild 
fisheries:
      ``Can catch shares prevent fisheries collapse?'' looked 
at 11,000 fisheries worldwide and concluded that catch shares prevent--
and even reverse--fisheries collapse. 2
---------------------------------------------------------------------------
    \2\ Costello, C., S. Gaines and J Lynham. 2008. Can catch shares 
prevent fisheries collapse? Science 321: 1678-81.
---------------------------------------------------------------------------
      ``Sustainable Fisheries'' demonstrated that fishery 
production, on average, increases significantly after catch share 
management is implemented--in some cases, dramatically so. 3
---------------------------------------------------------------------------
    \3\ Heal, G. and W. Schlenker. 2008. Sustainable Fisheries. Nature 
455: 1044-5.
---------------------------------------------------------------------------
      ``Rebuilding Global Fisheries'' presented a strong 
consensus from scientists around the world--built around a brand-new, 
sophisticated fisheries database--that catch shares is one of, and 
perhaps the, most effective fishery management tool. Catch shares were 
credited by experts as ``an essential tool'' in four of the six 
ecosystems where reductions in total allowable catch were essential. 
Conventional management was deemed ``essential'' in just two other 
ecosystems, and one of those is now also finalizing catch shares. 
4
---------------------------------------------------------------------------
    \4\ Worm, B., R. Hilborn, J. Baum, T. Branch, J. Collie, C. 
Costello, et al. 2009. Rebuilding Global Fisheries. Science 325: 578-
85.
---------------------------------------------------------------------------
      ``Ecological indicators display reduced variation in 
North American catch share fisheries'' examined the ecological 
performance of 15 North American catch share fisheries and reaffirmed 
two critical benefits. First, catch shares drastically reduced catch-
to-quota ratios--i.e. fisheries complied with management targets and 
avoided quota overages. Second, bycatch rates significantly declined 
under catch shares--by an average of 30%. 5
---------------------------------------------------------------------------
    \5\ Essington, T.E. 2010. Ecological indicators display reduced 
variation in North American catch share fisheries. Proceedings of the 
National Academy of Sciences 107(2): 754-9.
---------------------------------------------------------------------------
      ``How do individual transferable quotas affect marine 
ecosystems?'' demonstrated that catch shares lowered fishing mortality, 
and raised fish abundances, but also led to requests from fishermen for 
more conservative catch limits, stronger monitoring programs, better 
research, and improving data collection and stock assessments. Fighting 
about the science was replaced by cooperating for improved science. 
6
---------------------------------------------------------------------------
    \6\ Branch, T.A. 2008. How do individual quotas affect marine 
ecosystems? Fish and Fisheries 10(1): 39-57.
---------------------------------------------------------------------------
      ``Thirty years later: the global growth of ITQs 
[Individual Transferable Quotas] and their influence on stock status in 
marine fisheries'' chronicled improvements in most stocks managed under 
ITQs, and documented the need for concomitant improvements in science, 
including better total allowable catch specification, improved 
monitoring, and accounting for related aspects of ecosystem-based 
fisheries management. 7
---------------------------------------------------------------------------
    \7\ Chu, C. 2009. Thirty years later: the global growth of ITQs and 
their influence on stock status in marine fisheries. Fish and Fisheries 
10(2): 1-14.
---------------------------------------------------------------------------
    An investment in catch share systems in fisheries for which they 
are appropriate is an investment in better science and better fisheries 
management. We respectfully request that you support the President's 
$54 million budget request for the National Catch Share Program in 
FY11.

Sincerely,

Lee Anderson
University of Delaware

Trevor A. Branch
University of Washington

Mark Carr
University of California, Santa Cruz

Christopher Costello
University of California, Santa Barbara

David B. Eggleston
North Carolina State University

Steven D. Gaines
University of California, Santa Barbara

John C. Ogden
University of South Florida

Michael K. Orbach
Nicholas School of the Environment, Duke University
Stephen Palumbi
Stanford University

Charles H. Peterson
University of North Carolina at Chapel Hill

Pete Raimondi
University of California, Santa Cruz

James N. Sanchirico
University of California, Davis

Wolfram Schlenker
Columbia University

Bob Steneck
University of Maine
                                 ______
                                 
    [A statement submitted for the record by Stephen A. Arnold, 
Kingston Trawlers, Inc., West Kingston, Rhode Island, follows:]

       Statement submitted for the record by Stephen A. Arnold, 
          Kingston Trawlers, Inc., West Kingston, Rhode Island

    Thank you for the opportunity to provide my personal perspective on 
catch share management.
    I am an owner/operator of an inshore/offshore 55 foot commercial 
fishing trawler from Pt. Judith, Rhode Island. I have been fishing for 
more than 25 years and participate in several different fisheries: 
large and small mesh multispecies, squid, mackerel and butterfish. For 
this last year, I participated in the Rhode Island Summer Flounder 
Sector Allocation Pilot Program, a type of catch share program.
    I support catch shares and support the fluke sector being renewed, 
modified, and expanded for fishing year 2010. Over this last year, the 
fluke sector has accomplished a drastic reduction in fishing mortality 
because of the catch share program. Going forward with the new 
requirements of annual catch limits (ACLs) and accountability measures 
(AMs), it will be increasingly important to take control over managing 
discarded fish. Working under input controls makes it difficult and 
even impossible to achieve this. By having control over how individuals 
harvest the fish to suit their needs, we can manage the fluke mortality 
while adding value to the days fished throughout the year. The fluke 
sector enabled fishermen to extend the summer period to get fish into 
August, September, and October, when in past years the fishery was 
closed and became a pure discard fishery. By moving forward and 
continuing with the fluke sector as a pure catch share program, we will 
be better able to understand how this program can be better integrated 
with the new groundfish sectors coming into effect May 1, 2010. I 
believe catch shares can work with a well funded with fish catch share 
management system.
    I consider this fluke sector program a management proof of concept 
study. We should not stop with only one year's worth of data, but 
continue and expand it so we can see how it can develop with a larger 
diversified fleet of boats that are interested in participating. Until 
we have some new ideas put on the table, this is the only alternative 
to access more of the resource.
                                 ______
                                 
    [A letter and attachment submitted for the record by Ben 
Bowman, Policy Analyst, Food & Water Watch, Washington, D.C., 
follows:]

March 29, 2010

U.S. House of Representatives
Subcommittee on Fisheries, Wildlife and Oceans
187 Ford House Office Building

RE:  House Subcommittee on Insular Affairs, Oceans and Wildlife--
Oversight Hearing on ``Catch Shares as a Management Option: Criteria 
for Ensuring Success''

Honorable Committee members,

    Food & Water Watch (FWW) is a nonprofit consumer action 
organization headquartered in Washington, D.C. that runs cutting-edge 
campaigns to help ensure clean water and safe food. We work with 
various community outreach groups around the world to create an 
economically and environmentally viable future. We advocate for safe, 
wholesome food produced in a humane and sustainable manner; and public 
rather than private control of water resources, including oceans, 
rivers and groundwater.
    On February 25, 2009, FWW and the Pacific Coast Federation of 
Fisherman's Associations wrote jointly to members of congress to 
request oversight hearings on the fair allocation of fishing access 
privileges. FWW would like to thank the House Subcommittee on Insular 
Affairs, Oceans and Wildlife for holding the hearing. We hope for more 
oversight hearings on this issue and hope testimony from small-scale 
fishermen and consumer representatives will be included.
    Limited Access Privilege Programs (LAPPs), now commonly known by 
the euphemism ``catch share'' programs, allocate access to public trust 
fish stocks by apportioning the Annual Catch Limit to identified 
entities. FWW is not opposed to LAPPs and has undertaken international 
research to identify a catch share approach (titled Cap-Rent-Recycle) 
that we believe will best serve the U.S. people. Unfortunately, to date 
LAPPs have been used to privatize access to public fish stocks and 
develop a market-based cap-and-trade system that benefits speculators 
while putting hard working primary producers out of work.
    As the Oversight Hearing was focused principally on the development 
of LAPPs for the Pacific Coast Groundfish Fishery, we would like to 
place our comments regarding this proposal on the record. FWW has 
provided comment to the Pacific Fishery Management Council on numerous 
occasions. Through both public testimony and written comments we have 
made it clear that we, and those we represent, do not support the 
proposed changes (Amendment 20 and 21 to the Pacific Coast Groundfish 
Fishery Management Plan). FWW asserts that the PFMC is deeply confused 
about its fishery management role, and needs to be re-oriented, and 
provided with contemporary policy development tools. FWW appreciates 
the opportunity to provide comments on this matter.

Sincerely,

Ben Bowman
Food & Water Watch, Policy Analyst
[email protected]
                                 ______
                                 
Food & Water Watch
1616 P Street, N.W., Suite 300
Washington, DC 20036
www.foodandwaterwatch.org

March 15, 2010

Barry A. Thom
Acting Regional Administrator
Northwest Region, National Marine Fisheries Service
National Oceanic and Atmospheric Administration
7600 Sand Point Way NE
Seattle, WA 98115

    Food & Water Watch re: Draft Environmental Impact Statement for 
Allocation of Harvest Opportunity Between Sectors of the Pacific Coast 
 Groundfish Fishery: Pacific Coast Groundfish Fishery Management Plan 
                            Amendment (A21)

Dear Mr. Thom,

    Food & Water Watch (FWW) is a nonprofit consumer action 
organization headquartered in Washington, D.C. that runs cutting-edge 
campaigns to help ensure clean water and safe food. We work with 
various community outreach groups around the world to create an 
economically and environmentally viable future. We advocate for safe, 
wholesome food produced in a humane and sustainable manner; and public 
rather than private control of wild capture fisheries and water 
resources, including oceans, rivers and groundwater. Importantly, FWW 
supports some Limited Access Privilege Program (LAPPs) designs that 
affirm the public trust on fish.
    FWW has taken a strong interest in the Pacific Coast Groundfish 
Fishery Management Plan (PCGFMP) Amendment 21 (A21), and related 
amendments. We view the allocation of access privileges to harvest the 
Pacific coast groundfish resource as strategically important. Without 
access to this keystone resource it will be difficult for many Pacific 
coast communities to continue to participate in commercial fishing in a 
meaningful way. They may lose their jobs, as well as the opportunity to 
respond to the growing consumer demand for local, sustainably caught 
seafood. Local food requires local primary producers.
    FWW has provided comment to the Pacific Fishery Management Council 
(PFMC) on numerous occasions. Through both public testimony and written 
comments we have made it clear that we, and those we represent, do not 
support A21 as the enabler of fishery privatization through 
Rationalization of the Pacific Coast Limited Entry Trawl Fishery: 
Pacific Coast Groundfish Fishery Management Plan Amendment 20 (A20).
    FWW asserts that A21 is one segment of a major federal action to 
establish private control over access to, and use of, the public's 
Pacific coast groundfish resource. These ``major Federal actions 
significantly affecting the quality of the human environment''--A20 and 
A21--should be a single amendment presented for National Environmental 
Protection Act (NEPA) review (42 USC Sec. 4332(C). Presently, it is not 
possible to review the environmental impacts of A21 as the Draft 
Environmental Impact Statement does not include sufficient 
environmental analysis. Rather, it serves to justify a predetermined 
course of action. FWW appeals to Secretary of Commerce to disapprove 
A21 on this basis.
    In the following comments we will provide additional specific 
comments and a number of attachments. Please feel free to contact me 
with any questions or for further information.

Sincerely,

Ben Bowman
Policy Analyst, Food & Water Watch
                                 ______
                                 

                   Specific Comments on the A21 DEIS

NEPA and Segmentation
    The Pacific Coast Groundfish Fishery Management Plan (PCGFMP) is 
the single document outlining the management of the entire Pacific 
coast groundfish fishery. Recent proposed amendments to the PCGFMP have 
not been presented in a coherent and logical way. Instead, reforms have 
been unnecessarily segmented into a number of different management plan 
amendments. These amendments have then been pushed through in a 
confusing manner, resulting in decreased public comprehension and 
participation, and an inadequate NEPA review.
    The plan, if presented logically as one major federal action, would 
likely be very unappealing to a public weary of both industrial-scale 
trawl fishing and corporate welfare. In brief:
        Allocate to the trawl sector 90%+ of the total Pacific coast 
        groundfish quota, essentially in perpetuity (A21); restrict 
        entry to this fishery to suppress competition (A15/A20 
        Alternative 4b); privatize quota share; then introduce measures 
        to promote concentration of market share in the restricted 
        entry fishery through vertical and horizontal integration (A20 
        Alternative 4b).
    Segmentation of this major federal action into component parts has 
led to a piecemeal and fragmented analysis of environmental effects 
relative to Environmental Impact Statement (EIS) analysis. The NEPA 
rule against segmentation was developed to guard against such efforts.
    The PFMC Groundfish Allocation Committee (GAC) recognized the need 
for the two amendments to be studied together:
        ``The GAC acknowledged that it is difficult to discuss 
        Intersector Allocation (IA) without also thinking about trawl 
        rationalization. The IA and trawl rationalization processes 
        would have to be reconciled.''
      FWW concurs with the assessment of the PFMC Groundfish 
Allocation Committee, and asserts that improper segmentation of this 
major federal action is reason alone for the Department of Commerce to 
disapprove A21. The major federal action (A20 and A21) should be 
reconsidered as a single amendment. FWW requests that the Department of 
Commerce disapprove A21--select the status quo alternative--and send 
the PFMC back to the drawing board with respect to groundfish 
allocation.
Proposed Actions and Purpose and Need?
    The proposed actions presented in A21 all relate to how to 
undertake a course of action that has (seemingly) already been decided: 
to make long-term formal allocations of groundfish species to the 
combined limited entry trawl sectors. This is putting the cart before 
the horse.
    There is no statement of a policy problem, and thus no presentation 
of policy alternatives. What is presented for review is a predetermined 
course of action to lock in the lion share of groundfish quota to the 
trawl fishery. The alternatives presented are not alternatives but 
simply tweaks to the same plan. Of note, this lock in of access is 
described in A21 as a move required in the interests of ``better 
business planning'' rather than as a precursor to fishery access 
privatization.
        ``In support of the Trawl Rationalization Program, the main 
        socioeconomic impact of Amendment 21 allocations is longer term 
        stability for the trawl industry. While the preferred Amendment 
        21 allocations do not differ significantly from status quo ad 
        hoc allocations made biennially, there is more certainty in 
        future trawl harvest opportunities, which enables better 
        business planning for participants in the rationalized fishery. 
        This is the main purpose for the Amendment 21 actions.'' 
        1
---------------------------------------------------------------------------
    \1\ Ibid, at 201
---------------------------------------------------------------------------
    This amendment has no public interest basis and is simply an 
egregious attempt to lock in special privileges for vested interests 
without any analysis of allocation alternatives.
      The regulatory principles in EO 12866 (Regulatory Impact 
Review) emphasize careful identification of the problem to be addressed 
and make it clear that the Department of Commerce should choose policy 
approaches that maximize net benefits to society. A21 does not identify 
a problem to be addressed nor does it provide alternatives that allow 
the choice of an approach that would maximize societal benefits. Yet 
the proposed action will undoubtedly have an impact on the economy of 
$100 million or more, and will affect jobs, competition, and local 
communities. FWW requests that the Department of Commerce disapprove 
A21.
Catch History: A Problematic Allocation Device
    This proposed amendment illustrates the problems of using catch 
history as the means of undertaking intersector allocation; and by 
extension fishery privatization through the awarding of exclusive, 
transferable, and essentially perpetual limited access privileges in 
A20.
    Catch history is influenced by past management decisions and 
neither reflects a past optimal intersector allocation, nor the basis 
for a future optimal allocation. Problematic practices may simply be 
locked in place--blocking innovation and continual improvement. The 
Groundfish Allocation Committee recognized this:
        ``The alternatives in the ISA analysis are based on historical 
        catch percentages by sector. However, it was suggested by the 
        NMFS representative to the GAC that there could be other ways 
        to approach sector allocations. The current fishery is the 
        result of years of declining catches, including declaration of 
        a fishery disaster in 2001. In addition, the presence of 
        overfished species has forced restructuring of the fishery to 
        avoid harvesting these species, resulting in further changes to 
        fishing patterns. The Amendment 21 ISA action is an attempt to 
        allocate the groundfish stocks among the various sectors to 
        reduce the risk that the activities of one sector will affect 
        or be affected by the others. The initial strategy under 
        discussion by the Council has been to look at recent harvest 
        splits among the sectors and then lock in these harvest 
        percentages, with some alteration of strict historical patterns 
        on a case-by-case basis. However, the current harvest 
        percentages are the result of several years of perturbations 
        and, if the ISA were to have been done in the 1980s, an 
        allocation based strictly on historical catches would likely 
        have been different. If we were to do nothing, the fishery 
        would be free to rearrange itself among the sectors as 
        overfished species rebuild themselves and communities recover. 
        In addition, the Council has received public testimony stating 
        that an allocation directed more toward fixed gear could be 
        more ``environmentally friendly'' and could help support more 
        fishing communities. However, the impact of allocating quota to 
        sectors based on other than historical methods has not been 
        fully analyzed. In particular, an analysis could explore the 
        impacts of allocating more than a historical proportion of 
        quota to a sector on habitat, bycatch, overfished species, 
        fishing communities, and endangered species.'' 2
---------------------------------------------------------------------------
    \2\ Ibid, at 254
---------------------------------------------------------------------------
      The PMFC should have analyzed ways to allocate other than 
through catch history. The GAC understood the merit of the concept of 
allocating access in such a way as to favor gear types that are more 
selective, have less environmental impact, and also happen to employ 
more people and provide potential for a higher quality product that is 
worth more at market. However, this analysis was not undertaken. FWW 
asserts that A21 does not identify a problem to be addressed, nor does 
it provide alternatives that allow the choice of an approach that would 
maximize societal benefit--including environmental outcomes. FWW 
requests that the Department of Commerce disapprove A21.
Alternatives?
    According to the Council on Environmental Quality (CEQ) Regulations 
for implementing NEPA, the analysis and comparison of alternatives is 
considered the ``heart'' of the NEPA process.
    Careful allocation can integrate social, economic and environmental 
factors, assert public ownership of our ocean resources, and achieve 
the nation's goals for fishery management. As an indication of fair 
alternatives, FWW advocates the cap-rent-recycle model of LAPP 
management. This model supports public control of wild fish stocks, 
provides flexibility for management improvement over time, and creates 
an even-handed business setting. International support for the 
environmental fiscal reform tenets of the cap-rent-recycle catch share 
model is coming together--from the Pacific Coast to Washington D.C., 
from Namibia to Iceland, and from the United Nations to the World Bank.
    In this context, environmental fiscal reform is about capturing 
resource rent. Resource rent capture will allow the government--the 
steward entrusted with management of the public's valuable resource--
with revenue to invest in protecting the resource base, and ensure that 
extractors face the full social cost of their activities, which should 
lead to more efficient and sustainable use. 3 In the A21 
DEIS this resource rental approach has not been explored as a robust 
alternative.
---------------------------------------------------------------------------
    \3\ The World Bank, Environmental Fiscal Reform, What Should Be 
Done and How to Achieve It. 2005, at 69
---------------------------------------------------------------------------
    FWW asserts that within this resource rental system, agreements 
could be structured to support eco-friendly community-based cooperative 
catching and marketing business models that could be linked to an area-
based management regime. Furthermore, the investment of rental revenues 
into ocean policy and programs is urgently required and consistent with 
the priorities of the Obama Administration and Congress to support 
economic development initiatives--including green jobs--and to enhance 
natural resource management.
    Consistent with this position, the Joint Ocean Commission 
Initiative, when discussing the urgent need for an Ocean Trust Fund in 
the U.S. Treasury to supply greater funding for ocean policy and 
programs states as one of three central principles:
        ``Require Payment for the Use of a Public Resource: The use of 
        a publicly-owned resource by the private sector in federal 
        waters should be contingent on a reasonable return of some 
        portion of the revenues to taxpayers in order to support 
        programs that will help sustain the health and vitality of our 
        nation's oceans and coasts.'' 4
---------------------------------------------------------------------------
    \4\ Joint Ocean Commission Initiative, Ocean Policy Fact Sheet. New 
Funding for Ocean Policy and Programs. http://
www.jointoceancommission.org/rc-fact-sheets.html, accessed June 2009.
---------------------------------------------------------------------------
    With respect to the effect of a resource rental approach upon 
efficiency, Bromley (2009) states:
        ``The single policy innovation that will induce efficiency in 
        the fishery is to require fishing firms to pay for the fish 
        they catch. A market economy requires that all owners of 
        factors of production--and fish in the EEZ are a factor of 
        production to fishing firms--must receive a payment for their 
        relative contribution to the value of the total product of the 
        firm using those factors. In this case fish are the raw 
        material (similar to gold, silver, timber, and oil) gathered up 
        by the private sector and delivered to the market ready for 
        further processing. Payment for this raw material is correctly 
        understood to be resource rent.'' 5
---------------------------------------------------------------------------
    \5\ Bromley, Daniel W. Abdicating Responsibility: The Deceits of 
Fisheries Policy. Fisheries Vol. 34 (4). June 2009, at 287.
---------------------------------------------------------------------------
    FWW fact sheets explaining this concept are attached.

                               Conclusion

    FWW asserts that A21 is one part (A20 and A21) of a major federal 
action that should be combined for review. The regulatory principles in 
EO 12866 (Regulatory Impact Review) emphasize careful identification of 
the problem to be addressed and make it clear that the Department of 
Commerce should choose policy approaches that maximize net benefits to 
society. A21 does not identify a problem to be addressed, nor does it 
provide alternatives that allow the choice of an approach that would 
maximize societal benefits. As presented, A21 is inconsistent with the 
Magnuson-Stevens Fishery Conservation and Management Act in respect to 
National Standards 4, 5, 6, 8 and 9. The proposed amendment is not 
reasonably calculated to promote conservation (and does not even 
promote a reduction in bycatch); instead, economic allocation is its 
sole purpose. Finally, A21 does not provide scope for changing 
contingencies, nor does it take into account the importance of the 
resource to different communities. FWW requests that the Department of 
Commerce disapprove A21.
    The PFMC should be sent back to the drawing board with respect to 
the major federal action (A20 and A21) to develop a long-term strategic 
assessment of the challenges and opportunities likely to affect the 
ecological and social systems of the Pacific Coast. This analysis 
should inform the development of a subordinate analysis of alternative 
designs for allocation of the groundfish resource, including community 
based fishery management models and market based approaches that assert 
the public trust (see FWW comments on alternatives). FWW respectfully 
requests that the Department of Commerce disapprove A21.

Attachments

[NOTE: Attachments have been retained in the Committee's official 
files.]
                                 ______
                                 
    [A letter submitted for the record by Glen Brooks, 
President, 
Gulf Fishermen's Association, follows:]

The Honorable Madeleine Bordallo
Chairwoman
Insular Affairs, Oceans, & Wildlife Subcommittee
1324 Longworth House Office Building
Washington, DC 20515

The Honorable Henry Brown
Ranking Member
Insular Affairs, Oceans, & Wildlife Subcommittee
House Natural Resources Committee
1329 Longworth House Office Building
Washington, DC 20515

Dear Chairwoman Bordallo and Ranking Member Brown:

    On behalf of the Gulf Fishermen's Association, thank you for the 
opportunity to provide information on Individual Fishing Quotas 
(``IFQs'') for the subcommittee's hearing on fishery catch share 
programs. Commercial fishermen living in the Gulf region of the United 
States have greatly benefited from the implementation of IFQs, which 
have helped end overfishing, while preventing and even reversing the 
collapse of fisheries.
    The Gulf Fishermen's Association is dedicated to ensuring the 
fishing future for all fishermen and is comprised primarily of 
commercial fishermen who are concerned about the fishing industry and 
its future. These organizations have been strong proponents of IFQs and 
support the development and implementation of similar programs, like 
catch shares, in other fisheries.
    Until recently, red snapper fishermen in the Gulf of Mexico were 
faced with depleted stocks and an uncertain future. The Gulf's red 
snapper fishery has a long history in America, dating back to the 19th 
century. This fishery was rather stable until the 1970s and 1980s, when 
demand for fish began increasing as the technology to catch fish was 
improving. During that time, fishermen were able to catch fish easily 
and deplete abundant stocks; due to the decline, fishermen had to 
travel farther offshore to catch smaller fish. When regulators stepped 
in to establish catch limits, fishermen began racing against one 
another to catch as much fish as possible before the limit was hit and 
fishing shut down for the year. This ``derby'' style system resulted in 
large discards of dead red snapper, a decrease in fish prices, higher 
operating costs and dangerous fishing conditions, as fishermen risked 
their lives and boats in dangerous weather.
    Fortunately, in 2007, the Gulf of Mexico red snapper fishermen 
began fishing under an IFQ program. Under IFQs, each fisherman is 
allotted a share of the total catch and is held individually 
accountable for adhering to that limit. Fishermen are able to fish 
throughout the year when it is good for business, as seasonal closures 
are not needed. Further, as commercial fishermen, we are able to 
deliver high-quality fish to market when consumer demand increases and 
the weather is suitable for fishing. Under an IFQ program, fishermen 
can lease or sell shares if they are unable to fish for any reason. 
Best of all, with an IFQ program, fish are not wasted but retained and 
counted against the individual quotas. Under previous rules, fishermen 
were forced to throw fish overboard to comply with management 
directives.
    The red snapper IFQ has engaged commercial fishermen in the Gulf, 
empowering them to be stewards of the resource, to run efficient 
operations and minimize the waste of fish. Further we have the ability 
to carefully target and market red snapper to earn more money with less 
fish. Catch share programs provide fishermen with an economic stake in 
the fishery, while holding them accountable to their allocation and 
health of the stock.
    Recently, scientists said that the red snapper population is 
finally improving after decades of decline. The IFQ program has helped 
stop overfishing and will increase allotments of fish in the coming 
years. The commitment of commercial fishermen to the red snapper IFQ 
has helped the program succeed since its implementation.
    An August 2009 report from the National Marine Fisheries Service's 
(``NMFS'') Southeast Region stated that ``two years after initial 
implementation of the red snapper IFQ program, progress has been made 
toward achieving [the] program's objectives--[which] include mitigating 
derby fishing conditions and reducing overcapacity.'' 1 The 
NMFS report also states that the IFQ's benefits are ``numerous'' and 
``include increasing flexibility for fishing operations; providing 
cost-effective and enforceable management of the fishery; reducing 
bycatch; eliminating quota overages; improving safety at sea; and 
optimizing net social, economic, and biological benefits from the 
fishery.''
---------------------------------------------------------------------------
    \1\ 2008 Gulf of Mexico Red Snapper Individual Fishing Quota Annual 
Report, August 17, 2009. Southeast Region, National Marine Fisheries 
Service.
---------------------------------------------------------------------------
    Many of these goals and objectives are already being achieved. For 
example, since 2006, the average ex-vessel value of red snapper has 
increased 10 percent when adjusted for inflation (17 percent when not 
adjusted). At the same time, the number of fishermen holding IFQ shares 
has decreased nearly 15 percent, demonstrating that fishing capacity is 
becoming aligned with the available catch.
    The NMFS report also states that fishermen have benefited from the 
IFQ program through increased flexibility as to when and whether they 
fish, as well as how much they may catch. For example, in the 15 years 
prior to the implementation of the IFQ program, the commercial red 
snapper fishery was open for an average of 88 days. During this period, 
fishermen were limited to either 200-pound or 2,000-pound trip limits 
and 10-day fishery openings per month. Under the IFQ, fishermen are not 
constrained by fishery closures or trip limits; a fisherman is limited 
instead to his annual allocation or red snapper that he can catch 
throughout the year. Subsequently, the NMFS report states that ``the 
IFQ program has lead to greater efficiency for many red snapper IFQ 
program participants.''
    NMFS also cites the biological benefits resulting from the IFQ 
program, saying that during the 17 years of management prior to 
implementation of the IFQ, the commercial quota was exceeded nine 
times. Conversely, in the first two years of the IFQ program, 
``reported [commercial] landings have been below quotas.'' Similarly, 
NMFS found that the ratio of landed to discarded fish has increased 
three to four times since the implementation of the 13-inch minimum 
size limit. The report acknowledges that while ``the IFQ program is not 
directly responsible for large reductions in red snapper bycatch, it 
has indirectly allowed managers to implement a lower minimum size limit 
to achieve reductions in bycatch.''
    Commercial catch share programs such as IFQs also support good jobs 
in the seafood industry and throughout the broader economy. When catch 
share management is used, seasonal harvesting restrictions are often 
reduced or eliminated as unnecessary. The result is more stable 
employment for fishermen, as well as their suppliers and buyers, 
lasting for longer periods of time and helping to prevent economic harm 
to fishing communities that depend on the fishing industry to sustain 
their livelihoods.
    The IFQ program currently in place for commercially-caught red 
snapper in the Gulf of Mexico has been extremely successful, as it 
allows fishermen to lower operating expenses, increases the price paid 
at the dock, and meets high conservation standards, which has improved 
both economic performance and safety at sea. A recovering fishery is 
good for commercial, recreation and other fishing interests.
    We respectfully urge you to consider supporting the development and 
implementation of catch share programs in other fisheries throughout 
the nation. The future health of fishery stocks depends on the 
elimination of overfishing. Catch share programs can help meet this 
goal while providing fishermen with an economically sound and healthy 
resource to fish in the future.

Sincerely,

Glen Brooks
President, Gulf Fishermen's Association
941-920-7302
[email protected]
                                 
                                 ______
                                 
    [A statement submitted for the record by Richard Carroll, 
Ocean Gold Seafoods Inc., Westport, Washington, follows:]

        Statement submitted for the record by Richard Carroll, 
                        Ocean Gold Seafoods Inc.

Written testimony on Amendment 20 to the pacific Groundfish Trawl IFQ 
        program
    I would like to submit on behalf of myself and Ocean Gold Seafoods 
and the groundfish trawl vessel F/V Sea Clipper, the following comments 
regarding amendment 20 to the pacific ground fish management plan.
    Amendment 20 was approved by the Pacific Fisheries Management 
Council at the November 2008 meeting, however it fails, in our belief, 
to meet the objectives and provide the benefits sought by the 
commercial fishing industry in a trawl rationalization program.
    The goal of this process was to produce a comprehensive trawl 
rationalization program that would stabilize the west coast groundfish 
trawl fishery. We were initially hopeful this might occur, and still 
believe in the merits of trawl rationalization in some form, but as the 
details of this plan have come to light, we are left with a program we 
cannot support.
    This plan like many before it, serves the interests of a few, 
against the greater interests of the many. Those currently attempting 
to derive their livelihood from commercial fishing on the pacific coast 
are shortchanged by this plan. This plan provides no compensation to 
the American public, to who this resource truly belongs. This plan by 
extending exclusive access privileges to federal groundfish permit 
holders attempts to achieve a conservation benefit that may or may not 
exist.
    We have seen examples under catch share management where stocks 
were subjected to overfishing just as they were under other management 
schemes. The orange roughy fishery in New Zealand is just one such 
example.
    The Pew commission analysis show the conservation benefits 
attributed to catch share programs have been overstated and oversold, 
and can be achieved with far less radical management alternatives. The 
environmental defense fund which has been one of the driving forces 
behind pacific groundfish trawl rationalization recognizes the problems 
associated with using catch history as a means of determining initial 
allocation.
    Throughout this process, most of the problems in this plan were not 
addressed due to their structural nature. This amendment's primary 
flaws were built in at the outset, by those less interested in building 
a fisheries management plan then creating a retirement plan in which 
they were heavily vested. Approximately 40% of the non whiting ground 
fish allocated under this plan go to permits that are not active 
participants in the fishery. Active fisherman will be required to buy 
or lease quota upon implementation of this program just to achieve 
their status quo fishing levels prior to its implementation.
    This plan considers historical participation that will be 17 years 
old at the time of implementation but not 7-year-old history, and this 
assumes the program will be ready for implementation in 2011. There has 
never been a successful rationalization plan implemented anywhere in 
the world with a qualifying period for allocation that contrasts so 
sharply from the current state of the fishery.
    The National Marine Fisheries Service has publically expressed 
reservations about the inclusion of the early years of the qualifying 
year range, The inclusion rewards fisherman with quota during the same 
time period when their fishing behavior created the groundfish disaster 
this amendment is attempting to address. It includes years with 
inaccurate species composition data, and discard data that skew our 
picture of the true state of nature.
    The problems with the year range in amendment 20 were recognized by 
the PFMC in their vote when they chose a different year range, rather 
than the 1994-03 for the purposes of allocation of by catch species. 
This was recognition that the qualifying period did not represent the 
current state of the fishery
    For this reason I and my colleagues believe that Amendment 20 as 
currently conceived fails to meet the recentcy requirements outlined in 
the Magnuson-Stevens Act, and we expect that this will be demonstrated 
during the litigation this plan will likely encounter prior to its 
implementation.
    Since 2000 we have seen significant changes in the markets and 
technology in ground fish processing. This has lead to a shift in 
fishing behavior and increased values and market opportunities for the 
ground fish fishers and processors. Investments have lead to improved 
vessels that can fish deeper water, farther off the shelf and later in 
the year with lower bycatch
    The effect of amendment 20 would be to undo all that has been 
accomplished in the last ten years. This plan rewards the 
inefficiencies, inadequate infrastructure and lack of investment that 
characterized the qualifying year window.
    The overly historical and retrospective nature of this plan will 
result in allocations that shift catch from the present participants to 
the past, from the north to the south, from the new to the old, from 
the efficient to the inefficient. This plan if implemented as proposed 
would likely reverse some of the conservation benefits achieved in the 
last few years in the groundfish fishery.
    We need a forward looking management plan that provides a 
transition to a rationalized fishery, without the burdens of 
significant additional investment the average fisherman cannot afford 
and will likely not make. This plan as currently configured will 
increase the level of consolidation that is likely to occur leaving 
many ports no longer viable. It will require the redirection of limited 
capital, badly needed for infrastructure and vessel improvement to 
acquisition of needed quota.
    The best alternative to resolve the flaws and inequities in the 
amendment 20 ground fish trawl IQ program would be to adjust the year 
range to be consistent across sectors. 1997 is the point of creation of 
the three sector split in the whiting trawl fishery and the year range 
used by the offshore for their rationalization plans. In addition the 
PFMC and NMFS need to recognize a new control date of January 1, 2007. 
The year range 1997 through 2006 should be used for allocation of 
target species and 2003 through 2008 for allocation of by-catch 
species.
    We believe Amendment 15 to the groundfish management plan created 
a, new control date of January 1 2007. The council, by taking action to 
create a moratorium to vessel entrants to the trawl whiting fishery and 
by including these years for the allocation of bycatch species has 
established the significance of this date for management purposes in 
the groundfish trawl program. The NMFS and PFMC need to recognize 
January 1 2007 as the correct control date for the purposes of 
consideration of recent participation in the fishery.
    Seven years have passed since the 2003 control date was issued; the 
PFMC and the NMFS have an obligation to implement its proposed plan in 
a timely manner. The current industry participants should not be 
further penalized for the inability of the PFMC and the NMFS to do so.
    We believe this would go a long way to address the many of the 
concerns about recent participation and eliminate the basic inequities 
in this program, making it more of a management plan and more 
consistent with the current state of the fishery
    I hope that these comments will be considered and with the efforts 
of your agency there will be an opportunity to rectify the flaws in 
this proposed program.
    Our goal is to produce a plan that will benefit the marine resource 
on which we rely for our livelihood, the fishing industry to which we 
belong, and the coastal communities in which we reside. If you have any 
questions, please contact me at 360-310-0664
                                 ______
                                 
    [A statement submitted for the record by the Gulf of Alaska 
Coastal Communities Coalition follows:]

    Joint statement submitted for the record by Fred Christiansen, 
Chairman, and Gale K. Vick, Executive Director, Gulf of Alaska Coastal 
                     Communities Coalition (GOAC3)

    Chair Bordallo and Members of the Subcommittee:
    Thank you for this opportunity for the Gulf of Alaska Coastal 
Communities Coalition (GOAC3) to provide a statement to the 
Subcommittee on Insular Affairs, Oceans and Wildlife on issues 
regarding fisheries catch shares.
    We are submitting this statement on behalf of the GOAC3, a non-
profit coalition formed in 1998 to provide a voice for the small 
coastal, fisheries-dependent communities of the Gulf of Alaska and to 
help ensure that they retain current, and regain lost, fishing effort 
in order to maintain sustainable economies to provide for the 
survivability of those communities.
The Location and Economy of Gulf of Alaska (GOA) Communities
    The Gulf of Alaska (GOA) spans east to west over 2400 miles from 
its southeastern to its western most points, with the Aleutian chain 
separating it from the Bering Sea/Aleutian Islands (BSAI) to the west. 
The BSAI and GOA are two very different and distinct eco-systems. The 
GOA is one of the most diverse large marine environments (LME) in the 
world. The Bering Sea dominates fishery productivity with a total 
fisheries biomass almost 10 times the biomass of the Gulf of Alaska.
    The GOA encompasses a marine area of approximately 592,000 square 
miles. Within this area are 80+ coastal communities, over half of which 
are under 1,500 in population, not connected to each other and are 
fisheries-dependent in the clearest sense of the phrase.
    The GOAC3 was established to provide a collective voice for the 
smaller coastal communities of the Gulf of Alaska that were that were 
without adequate representation in fishery regulatory arenas and were 
being severely impacted by regulatory decisions (42 of these are 
eligible under federal law for CQE designation by the National Marine 
Fisheries Service 1).
---------------------------------------------------------------------------
    \1\ The 42 small coastal fisheries-dependent communities that the 
GOAC3 was established to assist are located in three fisheries areas in 
the Gulf of Alaska as follows:
    Area 3A (Central Gulf): Chenega, Tatitlek, Seldovia, Nanwalek, Port 
Graham, Tyonek, Halibut Cove, Old Harbor, Ouzinkie, Port Lions, Karluk, 
Larson Bay, Yakutat;
    Area 3B (Western Gulf): Sand Point, Perryville, Chignik Bay, 
Chignik Lake, Chignik Lagoon, King Cove, Ivanoff Bay, Akhiok; and
    Area 2C (Southeast): Angoon, Coffman Cove, Edna Bay, Elfin Cove, 
Gustavus, Hoonah, Kake, Craig, Kasaan, Klawock, Thorne Bay, Hollis, 
Hydaburg, Metlakatla, Meyers Chuck, Pelican, Point Baker, Port 
Alexander, Port Protection, Tenakee Springs, and Whale Pass.
---------------------------------------------------------------------------
    In 1998, the out-migration of fishing effort was already taking its 
toll on local economies. By 2005, twenty-seven (27) of the smaller 
fishing communities of the Gulf of Alaska were considered ``severely 
distressed'' by the State of Alaska. In 2010, the situation has grown 
worse.
    The remote communities of the Gulf of Alaska operate in an 
exclusively marine environment. No roads connect them to the mainland; 
access is only by air or water. Weather dictates much of the travel to 
and from the communities. As may be expected, fishing and marine-
related activities dominate the economies and the importance of the 
fishing industry on the community fishing families and related 
businesses is profound. In Southwest Alaska, for instance, the fishing 
industry accounts for just over half of all private-sector employment.
    ``It's no exaggeration to say that many Southwest Alaska 
communities would virtually disappear without fishing,'' reported Dan 
Robinson and Michael Patton, co-authors of a 2006 State of Alaska 
Department of Labor report on ``Employment in Alaska's Fisheries.'' The 
authors expanded this observation to include Aleutians East, Kodiak 
Island, Lake and Peninsula Borough, Central Gulf communities and 
Southeast--basically, all of the unconnected communities of the Gulf of 
Alaska.
 A Contrast in Community Protections for North Pacific Fishing 
        Communities
    Alaska leads the nation in both fisheries value and number of catch 
share programs but it is still evolving in its understanding and 
prudent application of catch shares, particularly in regard to 
community protections.
    On one end of the spectrum in terms of providing communities access 
to fisheries is the enormously successful ``industrial model,'' i.e., 
the western Alaska Community Development Quota (CDQ) program, which was 
granted rights to ten percent (10%) of Bering Sea and Aleutian Islands 
(BSAI) rationalized species, received start-up capital through their 
joint venture operations and has received federal loan access. This 
program was originally implemented by the North Pacific Council in 1992 
and subsequently authorized by the Magnuson-Stevens Fishery 
Conservation and Management Act (MSA). The six CDQ corporations 
(representing 65 communities) now own hundreds of millions of dollars 
in assets and receive millions of dollars each year as rents for their 
ownership rights. In general, others fish those rights through joint 
venture arrangements providing income to the CDQ corporations and to 
the communities.
    On the other end of the spectrum are the 42 communities of the Gulf 
of Alaska who were authorized by the 2004 Amendment 66 to the GOA 
Groundfish Fisheries Management Plan, to form individual (or 
collective) non-profits to purchase halibut and sablefish quota shares 
and to subsequently lease those quota shares to local residents. This 
resulted in the Community Quota Entity (CQE) program under the Halibut 
and Sablefish IFQ program. It is strictly a small boat, local resident, 
``owner on board'' program, with no initial fishing assets unlike the 
CDQ communities. Because of the lack of quota shares and funding 
access, the CQE program, though well intentioned, will have no value to 
and cannot assist the small communities until they can secure a CQE 
loan program that is workable and/or granted income for purchase of 
quota share or granted quota share itself.
    Both the CDQ and CQE programs were based on the need to help 
coastal communities deal with extreme economic challenges, but for 
different reasons. The CDQ communities had demonstrated that their lack 
of infrastructure prevented them from participating in the lucrative--
and growing--industrial fishing in their ``back yards.'' In contrast, 
the smaller fishing communities of the Gulf of Alaska were able to 
demonstrate that fisheries regulatory practices had significantly 
contributed to their increasing loss of traditional fishing access.
    Neither the CDQ nor the CQE program is inclusive of all fishing 
communities within their respective regions, but general similarities 
end there. The contrasts between the two programs' financial and 
political status could not provide a clearer lesson to fishing 
communities everywhere: Unless a community owns rights to a percentage 
of non-transferable quotas (as the CDQ communities do), it really has 
nothing. Therefore, today, there is a huge disparity between the CDQ 
communities of the Bering Sea and the CQE communities of the GOA.
    The GOAC3 was the primary motivator for the CQE program concept but 
openly opposed the purchase-only concession to the fully rationalized 
Halibut and Sablefish IFQ program because, without initial issuance of 
quota, it was going to be extraordinarily difficult to launch the CQEs; 
there was simply nothing to leverage. In the end, the choice was to 
accept purchase-only terms or not get a program at all. At the time, we 
knew purchase was going to be a hard road. We just didn't know how 
hard.
    Since the Gulf of Alaska CQE program was authorized in 2004, 
2 only 20 CQEs have been formed as of late 2009 and only two 
have actually purchased quota share of any kind and those have not even 
come close to purchasing quota share up to the caps authorized. Neither 
of those purchases was able to use the State CQE loan program or 
federal loan programs. Both of those CQEs are currently operating on 
thin margins, having obtained private financing that is not likely to 
be replicated in other areas nor expanded utilizing existing state loan 
opportunities.
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    \2\ The CQE program was established as an amendment (#66) to the 
Fishery Management Plan (FMP) for Groundfish of the Gulf of Alaska and 
an amendment to the Pacific halibut commercial fishery regulations for 
waters in and around Alaska by the North Pacific Fishery Management 
Council. The CQE program was made into a Final Rule in the Federal 
Register, Volume 69, No. 84, April 30, 2004, Rules and Regulations, 
page 23681, June 1, 2004 and 50 CFR 679.2)
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    There are many substantive reasons for the lack of participation in 
the CQE program (most recently outlined in the CQE Review Report by the 
North Pacific Fishery Management Council), but the simple answer is a 
lack of funding (loans and grants) with which to purchase quota share. 
The CQEs did not receive gifted shares (like CDQs) nor was the CQE 
program funded administratively. Given the absence of quota share, 
percentage of catch or funding, it should not be surprising that the 
CQE program has generally not worked.
    The CQE program could work extremely well if funded. A key factor 
in trying to craft a remedy for the CQE program is the fundamental 
public policy distinction between a program for individual fishermen 
and one for small fishing communities. Community goals, purposes, and 
outlook are for the greater good of all of the people in that community 
as opposed to what is best for one individual or one family. In other 
words, the strategies for financial help that may work for an 
individual fisherman are not necessarily applicable to a community-
based organization. This important distinction is the reason that the 
current application of financial remedies for individuals most often 
does not work for an organization in the community trust.
    For a newly formed community non-profit CQE in a remote community 
without assets to leverage and with an additional layer of 
administrative burden, it is a seemingly impossible task to utilize 
existing loan programs and/or attract grants that can help CQEs 
purchase quota share and still be able to pay their debt service. To 
address this conundrum, the GOAC3 working with many of the GOA 
communities, economists, fishermen and fishing community 
representatives have been working on the development of a loan program 
that would work. This group has identified specific loan terms that 
will ``pencil out'' but currently do not exist in the open market. Such 
a program, although not as helpful as the granting of quota shares or 
TAC to communities, would be of enormous benefit. This will require 
lawmakers (and regulators) to act. Such a plan is being strongly 
recommended to the State of Alaska by small communities of the GOA and 
it would make sense to have something similar at the federal level to 
help implement the federal CQE program in the GOA.
The Value of Combination (Diversified) Fishing
    The economic viability of the fishing communities in the Gulf of 
Alaska is based on small boat, ``combination,'' (i.e. ``diversified'') 
fishing. As fish species fall into various rationalization (catch 
share) programs, the ability to maintain a boat and gear that can fish 
multiple species and be able to purchase permits or quota shares has 
become increasingly problematic.
    The following observations on this subject were made in connection 
with a workshop in 2000 conducted by the H. John Heinz III Center 
entitled ``Improving Federal Fisheries Management in the North 
Pacific'' at which community participants discussed their experience in 
the loss of diversified fishing as the backbone of small community 
fisheries economies:
        ``Some participants said that small fishing communities will 
        not be able to last unless they can diversify over different 
        fisheries. But, others noted that the management trend is the 
        opposite--to push people into discrete fisheries. This happens 
        because when new programs are developed, people without a 
        fishing history during the qualifying period do not receive 
        licenses...Specialized programs have cumulative effects that 
        require cumulative assessments of their impacts. There was some 
        agreement that small coastal communities have their own culture 
        and have their own way of doing things, in contrast to the one-
        size-fits-all style of the federal government...Some 
        participants noted that many small communities were at a 
        disadvantage when it came to individual fishing quota 
        allocations because their diversified fishing patterns left 
        them without substantial fishing histories during the window 
        period.''
    Fisheries regulatory decisions very often continue to help out the 
``haves'' vs. the ``have-nots.'' Fishing communities need the Congress 
to ensure that federal policies and programs do not preordain the 
dismemberment of their communities because the moneyed interests in the 
fishing industry are able to be most effective in securing for 
themselves ``public assets'' such as federal fisheries resources.
Catch Share Programs Create Dramatic Shifts
    Most small coastal communities in Alaska are entirely fisheries-
dependent, with many of the Alaska Native villages having ``fishing 
histories'' going back 8,000 years and more. Over-capacity of fishing 
effort is not an issue in any of these communities; quite the opposite 
is true. However, because catch shares are designed for a fishery and 
not a community, the vulnerability of communities is acute. The 
economies of scale can make even a single catch share action very 
debilitating to a community if not crafted with the sustainability of 
both fisheries and communities at the forefront.
    Dr. Marie Lowe of the University of Alaska Institute of Social and 
Economic Research (ISER) wrote in her paper ``Eastern Aleut Society 
Under Three Decades of Limited Entry'' (for salmon): ``Aleuts who were 
not given permits initially could not afford to purchase these.'' This 
situation, Dr. Lowe notes, resulted in Aleut migration away from their 
home communities to search for jobs. This simple statement illustrates 
an increasingly common situation that prevails throughout all Alaskan 
small fishing communities and has resulted in wholesale shifts in 
population, gear and income.
    At the time the North Pacific Council was considering the CQE 
program (2001-2002), there had already been a significant out-migration 
of quota share of halibut from small communities since the 1995 IFQ 
program implementation. By 2009, the National Marine Fisheries Service 
RAM Division reported that CQE communities had lost between 29-45% of 
their initial IFQ holdings in halibut and up to 89% of their initial 
sablefish holdings. This does not include pre-IFQ fishing effort, for 
which there is no data, particularly for Alaska Natives who have 
depended on the sea for their survival for centuries. That data would 
be expected to indicate a much greater loss.
    The qualifying years for the halibut and sablefish IFQ program has 
often been criticized for its narrow window of time. In his 2004 report 
on Alaska Residency in Alaska Fisheries, Neil Gilbertson, an economist 
with the Alaska Department of Labor, wrote:
        ``When the IFQ program was finally adopted in 1995, only 
        fishermen who had landed halibut in 1988, 1989, or 1990 were 
        allowed quota shares. These shares were based on the 
        individual's production in the 1984-1990 period. Under these 
        terms, many new or one-time participants were excluded, and 
        this exclusion led to a dramatic decrease in resident 
        participation.''
    Nor was there an accommodation for communities with a proven 
historical dependency. The North Pacific Council did not, because it 
was not required by law, consider the thousands of years of traditional 
halibut fishing by Alaska Native communities. Archeological data 
suggests that GOA coastal communities, when unimpeded by limited 
access, maintained highly sustainable fishing cultures for millennia.
    Dr. Steven Langdon, University of Alaska Department of 
Anthropology, wrote in his 2009 paper 3 on the CQE program:
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    \3\ ``The Community Quota Program in the Gulf of Alaska: A Vehicle 
for Alaska Native Village Sustainability,'' ``Enclosing the Fisheries: 
People, Places and Power'', American Fisheries Society 2009, Dr. Steve 
J. Langdon, Department of Anthropology, University of Alaska Anchorage.
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        ``A series of distinct archeological traditions and adaptations 
        appeared in the central Gulf of Alaska region from the Kodiak 
        Archipelago to Prince William Sound approximately 8,000 years 
        ago. Continuity with contemporary peoples of this region, known 
        collectively at Sugpiaq or more recently Alutiiq, can be 
        identified at least for 1,000 years in certain locations and 
        for nearly 4,000 years in other locations. In all of these 
        regions, archeological evidence and oral tradition demonstrate 
        that these groups built complex societies with rich ceremonial 
        practices based on their relations with rich resources of the 
        Gulf of Alaska ecosystem.''
Cumulative Impacts of Catch Share Programs
    Small fishing communities in the Gulf of Alaska are dying through 
no fault of their own. Since the implementation of Limited Entry for 
salmon in the mid 1970's, through the more recent Halibut and Sablefish 
IFQ program and the fall-out to the Gulf of Alaska from the Bering Sea 
Crab Rationalization Program, the fishing communities of the Gulf are 
virtual shadows of their former selves. For example, one Southeast 
Alaska community lost almost half its population since 2000. This IS a 
crisis. And many of those, if they had jobs in fishing in the community 
would return.
    The pending LLP reductions and sector allocations of groundfish are 
going to exacerbate the problem, even with community provisions. The 
fishing communities of the GOA wonder what further has to happen in 
terms of a wake-up call for lawmakers to understand that community 
fisheries will disappear altogether without immediate remedial action.
    The communities are not alone in their concerns. Dr. Seth Macinko, 
Department of Marine Affairs, University of Rhode Island, a member of 
the North Pacific Council Science and Statistical Committee, raised in 
Kodiak, author of many fisheries papers, is a strong critic of 
approaches to IFQ programs that don't consider the severity of 
unintended consequences, unequivocally stating ``Coastal Alaska is 
dying. I question how much longer permanent giveaways to selected 
individuals will somehow make communities better off. This process is 
killing us.''
    Loss of fishing access means loss of boats, gear, jobs, 
infrastructure and eventually schools. It is not just fishing families 
who suffer, but all the families dependent on the support systems. When 
the economic dominoes start to fall, social ills increase: alcoholism, 
drug abuse, child and spousal abuse, teenage suicide and unemployment 
rates become toxic, jeopardizing the viability of the community. 
Families are forced to move to urban settings where the opportunities 
for failure are much greater. Kids who learned from their parents how 
to work hard and make a living from the sea are similarly displaced. 
The skill sets that people took for granted for generations are lost. 
Families are split up. Briefly stated, it is a human disaster that is 
totally preventable.
    A letter written just a few weeks ago by the Mayor of the City of 
Pelican, once a very vibrant fishing community, expressed the 
following:
        ``One look at the Pelican Boat Harbor and one can see that 
        employment opportunities are scarce. Many coastal communities 
        are on the brink of economic collapse. We need to generate 
        fishing jobs and opportunities for our residents...furthermore, 
        Pelican struggles to stay current with fishing regulations 
        because we have experienced first-hand the consequences of 
        government regulations that have eroded our ability to sustain 
        our economy through our traditional fisheries.''
    It is the cumulative impact of catch share programs on the loss of 
diversified fishing that is the most devastating. As species are 
rationalized, all other species still in open access are marginalized. 
Not only is the cumulative loss often unsustainable, but also the 
combination fishing cycle can actually contribute to a loss of fishing 
in qualifying years, thereby making a community fisherman ineligible 
for initial quota. Regulators simply do not have the statutory 
guidance, much less a tool set, that will guide them in sufficiently 
addressing cumulative impacts on fishing communities.
The High Cost of Entry into a Catch Share Program
    Catch shares can dramatically increase the cost of entry into a 
particular fishery, especially over time. For people who qualify for 
initial issuance, that is the point of creating a catch share program, 
they simply want the value. The halibut IFQ program, for instance, more 
than tripled the price of quota share in just the last six years alone.
    At average current prices, a small amount of quota--12,000 pounds 
as example--will cost up to $300,000. Larger amounts run into the 
millions. Remote fishing community residents often cannot collateralize 
their homes because of lack of valuation or no available fire 
protection, and cannot meet minimum loan requirements. This compounds a 
long list of complicated scenarios caused by rationalization, not the 
least of which is loss of fishing access that residents had previously 
depended on to live in their home community.
    For a CQE to purchase quota there are additional costs and 
complications. Even with community-held quota, the supreme irony of 
community residents having to lease back fishing effort that they once 
utilized for just the cost of gear and boats under an open access 
fishery is never far from one's mind during discussions about the cost 
of entry to a fishery. Tony Gregorio, long time Chignik multi-species 
fisherman knows full well that most small community residents cannot 
afford to buy. ``It's like taking away someone's job and then charging 
them outrageous rates to get it back.'' This makes the CQE program the 
only viable option...if it were working.
Feasible CQE Loan Program Could Make The CQE Program a Model Soon
    Every region of the nation is different but fishing communities 
around the country share many elements and concerns in common. Fishing 
communities, regulators, NGOs, etc., are all looking for models that 
illustrate their particular point of view.
    The GOAC3 has been concerned that the CQE program has been held up 
as a model to emulate. We hope it will soon become one to emulate, it 
is just not there yet. One of this coalitions primary goals is to see 
that loan programs are developed that will facilitate full 
implementation over time of the CQE program as authorized by federal 
law.
    The Gulf of Alaska CQE program would be a good model except for the 
serious flaw that there was no initial issuance of quota (or sufficient 
seed funding) as was made to the CDQ communities in the Bering Sea and, 
in the alternative, there is no loan program in place that ``pencils 
out'' so that community CQEs can actually purchase the quota share 
allotted to them under the law.
    In the Gulf of Alaska, people want to work and specifically want to 
work in the fishing industry. It is where their roots are. It is 
integral to their history and culture. Many communities have people who 
have moved away who would move back in an instant if the CQE program 
were functional. The exodus must be reversed and reversed soon if there 
is to be a rural coastal Alaska with real viable communities intact.
    If the CQE communities are able to capitalize on the CQE program in 
the immediate future, many of them might have a chance to revitalize 
their community economies. CQE communities are desperately searching 
for solutions that can help them make the margins work. They are 
running out of time. This is a human crisis of historic proportions, 
one that has been triggered by past regulatory actions and one that can 
be fixed at the will of lawmakers and regulators with an understanding 
of how catch share programs affect fisheries-dependent communities.
The High Cost of Participation in Regulatory Arenas:
    A comment frequently heard at the community level: ``When the 
voices go away because they have been driven away, they are no longer 
able to communicate their story.''
    But seeking a voice in regulatory arenas is an arduous and 
expensive process. The GOAC3 has played a significant role in 
representing the smaller fishing communities of the Gulf of Alaska 
simply because those communities cannot afford, on their own, to attend 
the years of regulatory meetings necessary and to garner even minimal 
political support. The issues are so diverse and complex that fishery 
meetings go on year round. Even veterans find themselves mired. 
Meetings are ``open and transparent'' but not without significant cost. 
The Council, for example, meets five times a year for nine days at a 
time, four meetings in Alaska, one in Seattle or Portland. The annual 
cost (air fare, housing, meals, etc.) for a single individual from a 
remote Alaskan community to attend Council, related committees and 
Alaska Board of Fisheries meetings can run as high as the equivalent of 
a year at Harvard (over $50,000.) Yet the Council's and Board of Fish 
decisions have enormous impacts on Alaska's coastal communities.'' It 
is therefore an absolute necessity to have an advocacy and information 
sharing and coordinating organization that can help the smaller 
communities, especially, have any voice at all in such forums.
What will it take to Revitalize and Sustain Small Fishing Communities?
    Any catch share program will have ``winners and losers,'' but 
fishing communities have unique situations that should encourage 
lawmakers and regulators to take extra precautions to avoid creating 
unnecessary economic devastation across a broad swath of coastal 
America. Here are some essential requirements we believe necessary for 
a community quota program to fulfill the intent of anchoring fishing 
effort in a fisheries-dependent community in perpetuity:
    Either:
    1.  Gifted Quota Shares or gifted set percentage of TAC (total 
allowable catch)
    2.  Ability to purchase Quota Shares
    3.  Non-transferable quota
    4.  Eligibility for loans
    5.  Consistent ``Code of Conduct'' (operational criteria) and good 
management
    6.  Single umbrella organization identified for technical 
assistance and advocacy
    Or:
    1.  Ability to purchase Quota Shares and sufficient seed funding to 
both purchase Quota Shares and administer a program until there is an 
adequate revenue stream
    2.  Eligibility for loans that are specifically designed for 
community quota purchase
    3.  Non-transferable Quota Shares
    4.  ``Owner on board'' requirement (i.e., the individual community 
resident who leases the Quota Shares form the CQE must actually fish 
the quota themselves)
    5.  Consistent ``Code of Conduct'' (operational criteria) and good 
management
    6.  Single umbrella organization identified for technical 
assistance and advocacy
    A 2004 General Accounting Office (GAO) report regarding methods for 
community protections under an IFQ program stated:
        ``Several methods are available for protecting the economic 
        viability of fishing communities and facilitating new entry 
        into IFQ fisheries. The easiest and most direct way to help 
        protect communities under an IFQ program is to allow the 
        communities themselves to hold quota.'' (Emphasis added).
    This recommendation has been reinforced by the last two 
reauthorizations of the federal fisheries management act that governs 
actions of all the fishery management councils.
Federal Law Supports and Encourages Fishing Community Protections
    The 2006 Magnuson-Stevens Fishery Conservation and Management 
Reauthorization Act (MSRA) reiterated the national standards of the 
1996 reauthorization, specifically the National Standard No.8 relating 
to fishing communities:
        ``Conservation and management measures shall, consistent with 
        the conservation requirements of this Act (including the 
        prevention of overfishing and rebuilding of overfished stocks), 
        take into account the importance of fishery resources to 
        fishing communities by utilizing economic and social data that 
        meet the requirements of paragraph (2), in order to (A) provide 
        for the sustained participation of such communities, and (B) to 
        the extent practicable, minimize adverse economic impacts of 
        such communities.''
    The April 4, 2006 Report of the Committee on Commerce, Science and 
Transportation on S. 2012 stated:
        ``Coastal communities dependent on fishery resources crossing 
        their docks and the associated taxes and jobs from related 
        shoreside businesses have raised concerns that quota programs 
        reward the ``actual participants'' but ignore the community and 
        next-generation fishermen who were not part of the initial 
        allocation and could be forever priced out of the fishery.''
    Further, the report defined the fishing community section of MSRA 
relative to holding harvest privileges. 4 It is very clear 
that the Senate intended MSRA to provide additional and specific 
protections to those small, remote fishing communities that were most 
likely to be disadvantaged by catch share programs. 5
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    \4\ ``Fishing Communities,--New section (303A(c)(3) would establish 
that fishing communities may be deemed eligible to receive and hold 
harvest privileges if they meet criteria developed by the relevant 
Council. According to new section (303A(c)(3)(A)(i), the community 
would have to (1) be located within the management area of the relevant 
Council, (2) meet criteria developed by the relevant Council, approved 
by the Secretary, and published in the Federal Register, (3) consist of 
residents who conduct commercial or recreational fishing, processing, 
or fishery-dependent support businesses with the relevant Council's 
jurisdiction, and (4) develop and submit a community sustainability 
plan to the Council and Secretary. This plan must address the social 
and economic development needs of the community, including those who 
have not historically had access to resources to participate in the 
fishery. ``..Participation criteria for a Council to consider are: (1) 
traditional fishing or processing practices in, and dependence on, the 
fishery, (2) the cultural and social framework of the fishing 
community, (3) economic barriers to access to the fishery, (4) the 
existence and severity of projected socio-economic impacts associated 
with a LAPP (limited access privilege program) on participants in the 
fishery and related businesses, (5) the expected effectiveness, 
transparency and equitability of the community sustainability plan, and 
(6) the potential for improving economic conditions in remote coastal 
communities that lack resources to participate in fishery related 
activities. The Committee intends the Councils to consider as 
``traditional'' those uses that pre-date contemporary commercial 
fishing in smaller, isolated communities that can demonstrate historic 
dependence on combination fisheries or participation in the fishery 
during years that may not fall within the qualifying period for 
individual LAPPS.''
    \5\ Senate Committee Report No. 109-229, April 4, 2006, to 
accompany S. 2012 to reauthorize the Magnuson-Stevens Fishery and 
Conservation Management Act (16 U.S.C. 1801 et.seq.)
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Conclusions and Recommendations
    Catch Share programs around the country (including Alaska) remain 
highly controversial. They have some benefits to safety, product 
quality and markets, as well as conservation (in some cases) but they 
have consistently been detrimental to fishing communities by virtue of 
how they were implemented and by whom. Catch share programs can have 
the effect to consolidate fleets, reduce crew, and automatically raise 
the price of entry via increased quota share prices.
    Designers of catch share plans need to both recognize and admit 
that fishing communities are likely to take the biggest hit as the cost 
of participation will most often result in fishing effort leaving the 
community, perhaps to the final demise of that community. After the 
initial shifts of quota, the real costs may not be known for years. By 
then, it will likely be too late to salvage or resurrect what may be 
the only way for a community to survive. And this loss becomes a loss 
to the larger hub communities as well as they experience loss of buying 
power for goods and services, fish landings, taxes and increased 
burdens to social services organizations.
    The best ways to help fishing communities become self-sustaining is 
to grant them a certain amount of initial issuance of the public 
resource quota share either individually or through a collective 
arrangement, or, to grant them a percentage of the annual catch limit 
on a particular species for lease to community residents or a 
combination of both. In a fully rationalized fishery--one already under 
a quota share program--the best option is to provide a combination of 
grant funding and loan funding with loan terms that are realistic and 
feasible for such communities.
    If the small fishing communities of the Gulf of Alaska, for 
instance, cannot have access to a specifically designed loan program 
they will need a significant amount of seed capital and/or a percentage 
of the annual catch limit in some form in order for the CQE program to 
be feasible for them to utilize and to help such communities obtain 
over time the quota shares authorized by law.
    Once CQEs are able to access such opportunities, and can obtain by 
gifting or purchase, over time, their allocation of quota shares 
established by federal law--they will be able to sustain themselves 
using fishing and related means of economic diversification to make 
their communities viable into the future.
    In closing, we wish to make the following recommendations to the 
Subcommittee on Insular Affairs, Oceans and Wildlife for its 
consideration and potential action:
    1.  Ensure that catch share programs recognize the unique 
circumstances and needs of small fishing communities: Include in the 
design of any catch share programs recognition of the economic needs 
and history of fisheries-dependent fishing communities looking far 
beyond just the catch histories of individuals, of the importance of 
aiding opportunities for combination (or diversified) fishing, and of 
the cumulative adverse impacts of many catch share programs.
    2.  Authorize and Direct the Development of a CQE Loan Program: 
Authorize and direct the development of a CQE loan program with terms 
and conditions that are feasible and equitable for CQEs in small 
coastal communities of the Gulf of Alaska.
    3.  Require Fishery Management Councils to Report to Congress 
Annually on their Achievements on Behalf of Small Communities in their 
Regions: Require that each Fishery Management Council report annually 
to Congress on its work in the past year that genuinely and 
specifically involved and accommodated in its decisions the needs and 
concerns, including particularly access to fisheries, of the small 
fisheries-dependent communities in their regions.
    The people of the Gulf of Alaska whom this coalition was 
established to assist will be deeply indebted to the Members of this 
Subcommittee, as well as to House Natural Resources Committee, for your 
respective efforts to achieve workable solutions to help make sure the 
CQE program actually works for the small CQE communities of the GOA.
    Thank you for the opportunity to submit this statement for the 
record of this Subcommittee's hearing on catch shares.
                                 ______
                                 
    [A statement submitted for the record by Mary Beth de 
Poutiloff, Fisherwoman, F/V Blue Ocean, F/V Patience Too, 
Provincetown, Massachusetts, and Harrington, Maine, follows:]

     Statement submitted for the record by Mary Beth de Poutiloff, 
     Fisherwoman, F/V Blue Ocean, F/V Patience Too, Provincetown, 
                  Massachusetts, and Harrington, Maine

RE: Block NOAA's Catch Share Funding & Impose a Catch Share Moratorium
    Vote NO on NOAA's budget for Catch Shares and help save the 
fishermen and their communities.
    NOAA's budget request is indicative of lack of commonsense, 
communication and cooperation with the fishing industry. Their 
objective seems to be about destroying fishermen and our communities. 
Stock assessments, science, Magnuson-Stevens Act and real data, is 
unnecessary in their quest. This is why the fishery management plans 
are designed to fail?
    My family has been fishing for scallops for over 20 years. Scallops 
are not over fished now or recently. In fact, the resource is at the 
second highest level since keeping records. Some closed area scallops 
are dying of old age.
    With the Catch Share management tool my family can fish only 4 days 
this year. Scallop Amendment #11 took over 2900 permits and qualified 
only 329 small boats. Of these 329, very few boats are viable under 
ITQs/Catch Shares. I only know of one boat that can make a living. The 
rest are like my family-1 day, 2 days, 4 days, or 9 days.
    Catch Shares is an economic tool not a conservation one. It is a 
redistribution of wealth. The majority of the fishing industry is 
against this unfair consolidation of fishermen. We have abided by the 
strict regulations, made sacrifices, and we were led to believe when 
the stocks rebounded we would be able to share the bounty. What 
happened to those promises? Why are current stock assessments being 
ignored?
    NOAA is on a train wreck with the Catch Share scheme. A public 
resource is about to be lost to a wealthy few. This is discriminatory 
and in 2007, the United Nations agreed. No one has the right to 
ownership through transferability. The rich should not be able to buy 
something that should not be for sale.
    For every fishing job it supports 6.6 jobs on land (Univ. of 
Maine). We need more jobs not less. Why spend taxpayer's money to put 
us out of work unnecessarily? This makes no sense. What are all these 
displaced fishermen and related businesses to do?
    The small boat family fleet does less harm to the resources, the 
environment and our money supports coastal communities. Why is NOAA 
favoring huge, corporate fleets while the small boats are practicing 
sustainable fishing? We need diversity in our fleet to sustain our 
resources.
    NOAA is requesting to spend $54 million dollars on Catch Shares 
that the fishing industry does NOT need or want. This should be raising 
red flags! All fisheries management plans need to rely on timely, 
accurate science. Yet, Dr. Jane Lubchenco wants to siphon money from 
our cooperative research to force Catch Shares.
    We need a 2-year Catch Share moratorium and Congressional oversight 
hearings for the Council, NMFS/NOAA-mismanagement, corruption, conflict 
of interest and breaking the Magnuson-Stevens Act (MSA). No one should 
be exempt from laws. The flexibility in rebuilding our resources is 
also needed immediately.
    My kudos to our elected officials, who all ready have joined our 
efforts to insure the continuance of the fish AND the coastal 
communities. A 400-year old tradition does not deserve to die because 
of mismanagement.
    Senators--Bruce Tarr, Scott Brown, Charles Schumer, George LeMieux, 
Richard Burr, Kirsten Gillibrand, Kay Hagan.
    Congressmen & women--John Tierney, Barney Frank, Henry Brown, 
Walter Jones, Carol Shea-Porter, Frank Pallone, John Mica, Cliff 
Stearns, Ileana Ros-Lehtinen, Adam Putnam, Bill Posey, Ron Paul, 
Solomon Ortiz, Michael Michaud, Mike McIntyre, Larry Kissell, Peter 
King, Patrick Kennedy, Alan Grayson, Ander Crenshaw, Joe Courtney, 
Donna Christensen, Michael Capuano, Ginny Brown-Waite, Allen Boyd, Jo 
Bonner, Tim Bishop, Gus Bilirakis, Bob Andrews, John Adler, Peter 
DeFazio.
    Governors--Deval Patrick, Rick Perry, Bobby Jindal, Haley Barbour, 
Bob Riley.
    Mayors--Scott Lang & Carolyn Kirk and Reps. Ann-Margaret Ferrante, 
Tony Cabral, John Quinn, William Straus, James Cantwell, Stephen 
Canessa, Robert Koczera.
                                 ______
                                 
    [A statement and attachments submitted for the record by 
Shawn C. Dochtermann, Executive Director, Crewman's 
Association, follows:]

      Statement submitted for the record by Shawn C. Dochtermann, 
       Executive Director, Crewman's Association, Kodiak, Alaska

    Honorable Chairwoman Madeleine Z. Bordallo and Subcommittee 
members:
    I'm Shawn Dochtermann, a lifelong commercial fisherman from Kodiak, 
Alaska with 31 years experience. Currently participating in salmon, 
halibut, cod and the Bering Sea (BS) crab fisheries, I'm commenting 
today as the executive director of the Crewman's Association.
    Alaskan's Privatization programs (IFQs) are the examples of Catch 
Share programs gone wrong that need to be modified before other Fishery 
Management Plans (FMP) are sabotaged. Otherwise, new Catch Shares 
systems will absolutely be detrimental to United States coastal 
fishermen and their communities, in Alaska and elsewhere.
     We're seeking a 2 to 3 year moratorium on Catch Shares, so 
that they will be properly designed to promote conservation and 
protections of fish stocks, as well as preserve local jobs and fishery-
dependent coastal economies. This would include the Gulf of Alaska 
rockfish FMP.
    A Kodiak-based group, the Crewman's Association represents crewmen 
and captains, and as vessel owners in Alaska and on the West Coast. Our 
major goal is to gain fair and equitable access and compensation to all 
stakeholders. We have made multiple proposals to the North Pacific 
Fishery Management Council (NPFMC) since April of 2007 (Attachment 1), 
primarily regarding the Bering Sea Aleutian Island Crab Rationalization 
(BSAI/CR) program.
     Our message today is that Catch Shares are not pretty, as 
the highly flawed BSAI/CR program demonstrates. Our bad experience 
offers you a key example of what can go wrong.
    In the Bering Sea (BS) crab fisheries, the Total Allowable Catches 
have dropped, ex-vessel prices have fallen considerably, fleet 
consolidation has been dramatic, and we've seen a staggering job loss 
of over 1,000 jobs (while 450 remain). The crew-level economic losses 
were two-fold.
    First, the crewmen lost approximately $400 million in harvest quota 
shares (HQS) due to the unjust taking by the License Limitation Permit 
(LLP) holders while capturing over $1 Billion dollars in initial HQS 
giveaways for themselves. Thousands were disenfranchised with no job 
relocation or retraining benefits. Second, remaining crewmen lose 
millions more in reduced annual compensation.
     NOAA has never utilized Lay Share laws to protect crewmen 
from being forced into sharecropper status, or asked for confirmation 
that vessels pay crewmen with settlements that can be reconciled, as 
the trip recaps are usually incomplete accountings.
          We have settlement sheets from crewmen that prove 
        that crab harvest quota shareholders are siphoning off most of 
        the profits from the BSAI crab fisheries.
          Exorbitant lease rates upward of 70-80% are being 
        extracted off-the-top before trip settlements, and crewmen are 
        receiving unfair and inequitable compensation ratios.
          The CR program needs to be modified to follow MSA law 
        and National Standards in order to protect fishermen and their 
        communities, and to ensure a fair ex-vessel value is being 
        received at the dock for product deliveries.
     Congress needs to step in and modify all Dedicated Access 
Privilege (DAP) or ``catch share'' programs so that they utilize 
``owner on board'' requirements, before any other Catch Shares program 
should be implemented.
     We want a 2 to 3 year moratorium on Catch Shares.
        Other DAPs must be brought up to snuff, so that they abide 
by the National Standards, can be completed by new Congressional 
legislation and undergo more complete review by the SOC's office.
        We need to put strong provisions on Catch Shares to ensure 
that large fish corporations and processors cannot become the absentee 
owners of most U.S. fisheries.
    I'm not saying we're advocating for IFQs/Catch Shares, but we 
understand that just saying ``NO'' has done nothing for us in the past. 
We'd rather hear that Congress would like to find commons-based 
solutions while retaining public ownership and providing future 
generations with opportunities, rather than privatize the rights only 
for a few large economic players.
 These provisions should be installed and stringently adhered to if 
        Catch Shares are used as a tool in the future.
    1.  Owner on Board & assurances HQS can't be purchased by non-
participants
    2.  Crews' historical ratios of compensation must be protected
    3.  Vessel caps need to be kept smaller to protect the small vessel 
fisheries
    4.  No processor affiliations (i.e. no fleet linkages to specific 
processors)
    5.  Limited duration--with a possible guild system built in
    6.  Limited leases, only allow for verified crew to buy in (if a 
guild or point system was not used).
    We attended the Oceans Policy Task Force Hearing in Anchorage, AK 
on August 21, 2009 and read into the record, ``Adjacent but Alienated 
by Catch Shares'' (Attachment 2), which was a compilation of the 
problems with the BSAI/CR privatization regime.
    Dr. Jane Lubchenco was handed a copy (with my business card 
attached) and asked to contact us if she had any questions. She has 
never contacted us. Is that a sign NOAA administrators don't care how 
flawed DAPs are--just like the North Pacific Fishery Management Council 
(NPFMC)?
The Problems of BSAI CRAB RATIONALIZATION:
    We've spent the better part of 6 years at the NPFMC asking that the 
CR program be modified to include ``fair and equitable'' historical 
compensation for crewmen, captains, and vessel owners.
      Due to jurisdictional violations by former Senator Ted 
Stevens Due Process was never served, as the CR was initiated as an 
appropriation's Rider on a must pass Appropriations bill (Attachment 3) 
in November of 2003.
      National Standards (NS) of the MSA that were enacted by 
the Sustainable Fisheries Act of 1996 (SFA) were not adhered to--
especially NS#4, 5, & 8, as a result of misguided legislation.
    The CR ``Purpose and Needs Statement'' outlined the primary reasons 
for making a change to management plan (Attachment 4). It says 
biological need, safety & overcapitalization--and promised a loan 
program for crew--alleged needs and goals that were not met:
      Biological Need: TACs (or ACLs) are now declining, and 
localized depletion is a great possibility.
      Safety: BS crab fishermen still fish in the same storms 
and for longer periods of time.
      Overcapitalization: Last year my banker (Alaska's biggest 
statewide bank) told me that the Bering Sea crab fishery was not 
overcapitalized when they initiated the CR program. Now 
overcapitalization is actually the result of the free quota giveaway, 
since the total value of the BSAI Harvest Quota Shares (HQS) is worth 
approximately $1 billion. Meanwhile, the vessels and gear are worth 
almost nothing without the privileges of Catch Shares.
    A Crew Loan Program was the option chosen by the NPFMC--to excuse 
the robbery from crewmen. Here are some of the problems with that yet 
to be funded option:
      While the HQS was distributed 5 years ago, the $3.5 
million dollar crew loan program has been delayed since 2005. Also, for 
crew to buy into a Billion dollar industry, that measly loan program is 
a promissory joke, one we call ``buyback my back''--since those crew 
quota would have to be procured (mostly under bank financed or vessel 
owner backed mortgages) from ITQ holders who were already gifted the 
crew's historical shares.
      There were 2 other crewmember options in the May 2002 
Public Review Draft that better adhered to the National Standards 
(Attachment 5).
      Likewise, the NPFMC was very crafty in changing parts of 
the original documents so that it read differently than what was in the 
SFA.
    Please keep in mind these points made in early (and current) 
testimonies to the Council and Secretary of Commerce (SOC) by crab 
crewmembers and communities:
      The quotas are selling as if property rights, yet these 
resources are public commons, and international treaties surely 
disallow grants of dominance to specified corporations in global trade 
within resource industries by any nation.
      The exorbitant crab quota lease rates offer room for 
readjustment; and high rents in the realm of 60% to 70% demonstrate the 
de facto property taking;
      The council's 2002-03 economic analysis was not released 
in a timely fashion; as the final EIS was released in August 2004--
after Congress passed Sen. Stevens' Appropriations rider.
      Analysis of whether or not to do crab and other 
``rationalizations'' was not prepared and sent to the Congress in a 
timely manner, as required by law;
      The Senate Appropriations Committee usurped 
jurisdictional authority from the Commerce Committee and violated other 
proper legislative due process (leading to John McCain's hearings);
      The June 2002 AP minority report predicted most of the 
negative consequences (e.g. unnecessarily complex regulations; not 
addressing resource conservation goals; artificially allocating market 
shares; constituting economic protection of competitors not competition 
itself; accelerating unstoppable consolidation, and granting excessive 
power to foreign entities over public resources);
      A five-year price decline has occurred in king crab and 
opilio crab prices; and no subsequent analysis nor Justice Department 
antitrust review has been undertaken;
      With no definition of fishermen or harvesters in the MSA 
to guide allocations, the rights of vessel operators as participants, 
and their historical investments of human capital, were arbitrarily and 
capriciously dismissed;
      The 1-2-3 pie concepts are imperfect economic theory 
without practicable substantiation in the real world, especially since 
foreign-controlled economic structures and concomitant cross-border 
profit laundering strategies (transfer pricing abuses) were wholly 
ignored; and clear legal solutions such as FCMA seller rights and other 
alternatives were not analyzed;
      Lengthier seasons weaken sellers and have caused 
increased inefficiencies in plant worker revenues and imposed costs on 
the fleets for standby time and other factors;
      There has been a lack of promised value-added production 
in crab, which is also a flaw being demonstrated during the first year 
of the Rockfish Pilot Program.
      Crews, plant workers and communities have no official say 
in arbitration, yet suffer losses and costs, whereas the Council's 
chosen standard of focus on preserving the division of revenues (not 
rents) between only processors and vessel owners forms a basis for 
rights to negotiation should, for example, efficiency gains not accrue 
to the sector creating those productivity/cost gains.
NPFMC & Senator Stevens' Actions Disenfranchise the Crab Crewmen:
    In 2002, during the BSAI/CR program development and related motions 
to identify the ``preferred alternative,'' the Council took certain 
wrongful steps:
    1.  The Minutes from the Council's prior meeting in April 2002 were 
not presented and not approved at the Council level in June.
    2.  The June Minority Report of the Advisory Panel, outlining the 
shortcomings of the preferred alternative, was not entered on the 
Council record, and no copies were made for distribution to the public, 
before the Council rushed into place its preferred alternative, and 
ended up leaving the crews rights stranded.
    3.  The Crab EIS was deliberately withheld, and its release was 
delayed until 2004, long after the CR preferred alternative was 
identified, and Senator Stevens pushed CR into law via a Consolidated 
Appropriations rider. It was too late for the crewmen to review, 
criticize and change it to reflect historical rights that would have 
equitably allocated IFQs to all past participants.
    4.  Changes were made to Ted Stevens' legislative language on the 
BSAI/CR program to ensure that the preferred alternative leaving crews 
out became the unique and guiding statute for the MSA. Stevens used a 
flawed decision making process of industry ``regulation negotiation''--
and by ``industry'' he did not mean the communities and crewmen, but 
rather just the corporations and vessel owners. (See again: Attachment 
3)
         a.  A small concession of 3% of the IFQs was made to skippers 
        as vessel operators, under quotas with a separate class of 
        delivery rights.
         b.  Not one pound of the IFQs could have been allocated to the 
        LLP holders had the fish ticket recipients not signed their 
        rights over for NOAA to allocate them to the vessel owners.
    5.  The ``end notes'' (see below) show an example of the means by 
which the Council also reframes and weakens the crew rights argument, 
by manipulating the wording of the National Resource Council, statutes 
and National Standards. In short, they said anything to build a record 
leaving out the crew, while all along making false promises to the crew 
that in the end we'd be taken care of.
    In 2002 and since, whenever crewmembers made efforts to stand up to 
vessel owners, the owners and their hired-skippers used coercion 
against crewmembers trying to secure their fair portion of historical 
shares.
Coercion was used to Disenfranchise the Crab Crewmen:
    Coercion of crewmembers is a serious crime, and we hope the 
Congress would undertake asking law enforcement to investigate this 
ongoing criminal activity, to prevent stakeholders from being denied a 
fair process. If effective coercion can happen to the daring crews of 
``The Deadliest Catch'' sector, it can certainly happen to the smaller 
boats and day-fishermen in other species across the Nation.
      This is not a joke, and we've been coerced since the June 
2002 NPFMC meeting in Dutch Harbor, when crab crewmen were actually 
physically held up to the wall and told by skippers and vessel owners 
not to testify or they'd lose their crew jobs.
      The public coercion re-started in April 2007 (182nd 
Plenary Session--NPFMC) when we put our first reallocation proposal on 
the table for the crewmen. We advised federal law enforcement and NOAA 
authorities about these strong-arm tactics, after several crew already 
signed up (December 2007) to give testimony and were intimidated into 
not speaking on the official record (or at all). To date, we've seen no 
legal action taken to stop the coercion.
    Fishermen work long hard days in raging storms and in unforgiving 
conditions to bring the sea's bounty to our shores. Yet, due to 
deliberate Council scheduling tricks, it is during the time we are 
fishing out at sea when most fisheries policy is drawn up and pushed 
through federal and state agencies. Again this year, the NPFMC has 
essential crab items agenda-timed for October, the session we have 
repeatedly told them is the worst for crab fishermen who are at-sea 
that month.
      The failure to include crew as stakeholders in due 
process should be a crime, since we risk our lives every day to provide 
the first dollar from the products we catch. Just as our labor first 
creates all capital.
Concluding Remarks:
    Again, please institute a 2-3 year moratorium on any further Catch 
Share programs, and go back and fix Crab Rationalization and similar 
privatization mistakes.
    We ask the U.S. Congress, the Secretary and the Inspector General 
of Commerce to help address the problems of present Catch Shares 
programs before one bad fish spoils the whole boat load of American 
fisheries.
      Before the concept that financial investments--which 
government has supported by depreciation allowances (recoveries), 
subsidized loan guarantees and low interest rate programs, and capital 
construction fund tax breaks--allow for more reframing of the arguments 
that vessel owners alone should get private rights, active fishermen 
(who are real participants) should have their real and ongoing 
investments recognized foremost. And that of their fishery-dependent 
communities.
    The BSAI crab crewmen needed to be established as the ``stranded 
labor'' portion of the CR program (i.e. as stakeholders that were not 
included).
    Remember:
        ``Labor is prior to, and independent of capital. Capital is 
        only the fruit of labor, and could never have existed if labor 
        had not first existed. Labor is superior to capital, and 
        deserves the much higher consideration.''--Abraham Lincoln
    Thank you for the opportunity to present our problems with a 
cumbersome and unfair program that did not fulfill its assurances, as 
the chairman of the NPFMC falsely promised in his letter to Congress on 
August 5, 2002:
        ``Rationalization will improve economic conditions 
        substantially, for all sectors of the industry. Community 
        concerns and the need to provide for economic protections for 
        hired crew will be addressed.''--David Benton, NPFMC Chair 
        (2002)
                               End Notes:
 Example of NPFMC Manipulating Language to Disenfranchise Crab Crewmen:
    Below is an example (from the June 2002 NPFMC meeting in Dutch 
Harbor) of the changes that were made in order to diminish the role of 
crewmen's historical participation rights, which was deliberately 
designed to award ``catch share'' quotas to the vessel owner entities 
rather than to participating skippers and crew, in a fair and equitable 
split.
    National Research Council (NRC) Report Recommendations:
        The NRC report ``Sharing the Fish'' recommends that regional 
        councils ``consider including hired skippers and crew in the 
        initial allocation of IFQs where appropriate to the fishery and 
        goals of the specific IFQ program.'' The report concludes that 
        even though crew may invest minor amounts of capital in 
        comparison to vessel owners, crew may have undertaken 
        significant financial and physical risks to participate in a 
        fishery. Crew assume financial risks in fisheries where 
        skippers and crew are paid with crew shares. In addition, crew 
        may assume substantial physical risks in certain fisheries. 
        These risks justify the consideration of crew interests in 
        designing an IFQ program and could justify an initial 
        allocation of shares to skippers and crew.
    Alternatively, the report recommends that councils consider 
developing programs that ensure the availability of QS for crew 
purchase, such as the block program in the halibut IFQ program, and 
loan programs that assist skippers and crew in purchasing QS.
    Then, in the original document from the SFA 1996, Public Review 
document of the Bering Sea/Aleutian Islands Crab Rationalization 
Program from May of 2002, it reads (in highlight) plus other important 
text below:
  1.1.2.5 Sustainable Fisheries Act of 1996
    Requirement for the New IFQ Programs (page 8) ``
        (A) establish procedures and requirements for review and 
        revision of the terms of any such program (including any 
        revisions that may be necessary once a national policy with 
        respect to individual fishing quota programs is implemented), 
        and, if appropriate, for the renewal, Reallocation, or re-
        issuance of individual fishing quotas;
        (C) provides for a fair and equitable_initial allocation of 
        individual fishing quotas, prevents any person from acquiring 
        an excess share of the individual fishing quotas issued, and 
        consider the allocation of a portion of the annual harvest in 
        the fishery for entry-level fisherman, small vessel owners, and 
        crewmembers who do not qualify for individual fishing quotas.
  3.2.6.2. Stewardship (page 164)
    The National Research Council (NRC) report discusses ``.Another 
component of stewardship is who owns the quota. Due to the ownership 
structure of the BSAI crab fisheries, the majority of the quota will be 
issued to vessel owners who do not fish. Proponents of the initial 
allocation of skipper/crew shares and owner-on-board provisions 
advocate that these options would improve stewardship because fishers 
will have ownership in the resource.
  3.3.2 Initial Allocation of QS (or Cooperative Shares) (page 193)
    Paragraphs 1.2 and 1.4 of the list of elements and options define 
options for the initial allocation of harvesting QS (or cooperative 
shares). The initial allocation is of critical importance to a 
rationalization program since it is the foundation for the distribution 
of interests in the resource in the new management regime.
    Here's the NPFMC's version of the NRC report:
    National Research Council Report Recommendations.
    The NRC report on IFQs, ``Sharing the Fish'' advises that an 
initial allocation should widely distribute shares to avoid granting 
excessive windfalls to a few participants in the fishery. Broader 
initial allocations might be favored because they will distribute 
benefits more equitably and compensate more individuals as shares 
become concentrated. In addition, payment for initial allocations 
(thorough either windfall taxes or auctions) should be considered as a 
method of distributing the benefits of the resource to the public. 
Share distributions should consider investments of time and capital in 
the development of the fishery. Crew exposed to safety risks might also 
be considered to have invested in a fishery. A broad distribution might 
consider the distribution of shares to skippers, crews, and processors.
    Catch history is frequently relied on for determining the 
distribution of shares because it is perceived to be a fair measure of 
participation. Allocation based on catch history, however, can have 
unintended or onerous consequences. 3Reliance on participation in a 
single fishery can be detrimental to fishers that move between 
fisheries. These transient fishers might be deprived of an interest in 
a fishery even though their movement between fisheries may have 
resulted in a better distribution of effort across fisheries. Catch 
history can also reward speculative behavior of fishers that enter a 
fishery in hopes of obtaining an interest in the fishery under a future 
rationalization program and fishers that overexploit stocks to obtain 
larger initial allocations of shares.  Alternatively, a portion of the 
initial allocation could be distributed equally to all participants or 
could be based on vessel size.
    In addition to the issues raised in the NRC report, NOAA GC has 
emphasized that the failure of the halibut and sablefish IFQ program to 
give sufficient consideration to recent participation was an important 
issue in the lawsuit filed against that program.
    As required by NS #4 paragraph (c) (3) (i):
    Definition. An ``allocation'' or ``assignment'' of fishing 
privileges is a direct and deliberate distribution of the opportunity 
to participate in a fishery among identifiable, discrete user groups, 
or individuals. Any management measure (or lack of measurement) has 
incidental allocative effects, but only those measures that result in 
direct distributions of fishing privileges will be judged against the 
allocation requirements of Standard 4.
    Excessive HQS was distributed to LLP holders in the initial 
allocation of the CR program, depriving the BSAI crab crewmen of their 
rights to HQS and to fair negotiation for lay share contracts.
    Review NS#4 (c ) (3) (iii), avoidance of excessive shares.
    An allocation scheme must be designed to deter any person or other 
entity from acquiring an excessive share of fishing privileges, and to 
avoid creating conditions fostering inordinate control, by buyers or 
sellers, that would not otherwise exist.
    Due to excessive HQS being allocated to LLP holders, exorbitant 
lease fees have been extracted off the top of gross revenues and have 
deprived the vessel operators (crewmen) from receiving fair and 
equitable compensation from the HQS holders.
    Lay Share contracts have never been included as part of the CR 
program for EDR data or for legal liability of the HQS holders and the 
vessel owners. NOAA/NMFS may not be responsible for enforcing 46 U.S.C. 
section 10601 (and Sec. 11107), but it is their job to follow such 
highly applicable federal code, which was not done in creating the CR 
program.
    Otherwise, it will be the responsibility of the FBI or the courts 
to sort out this problem.
    As stakeholders that were left out of Due Process we ask the U.S. 
Congress to examine the CR program with a microscope to provide relief 
for the labor portion of the industry that was damaged not only 
monetarily, but by long-term losses of jobs, and to the livelihood of 
being an independent contracted fisherman.
    The crewmen that are participating in the crab fisheries presently 
are facing coercion, due to the threat of losing their jobs if they 
come forward and voice their written or oral presentation to the 
Council. This type of action took place at the December 2007 meeting, 
as crewmen were ready to testify and received phone calls from vessel 
owners while at the meeting, and chose not to go on the record, or 
otherwise they would become jobless. Many are furious about their crew 
compensation being diminished due to high lease fees on QS. This has 
been put on the record more than once, so why is nothing being done to 
stop these actions?
    We've been talking with a few individuals in the industry (for the 
last two years) that have advised us that the crew is at fault for not 
joining the vessel owners to fight against PQ and helping 90/10 being 
removed or being diminished. After listening to the 154th Plenary 
Session tapes it's clear the vessel owners were offered only two 
options at that meeting, either status quo and no quota grab or the 
three cow-pie system that has so overcomplicated the crab fishery and 
led to restraint of trade.
    The present vessel owners that bought into the industry since CR 
are almost as bad off as the crewmen. They are at the mercy of the QS 
holders that are charging huge rents for use of their quotas. How can 
the Council expect the vessel owners and crews to survive on 30-50% of 
the net revenues after lease fees (high quota rents), all taxes and all 
expenses? These vessel owners dare not speak up about almost anything 
but safety, as they are being threatened (coercion again) by the QS 
holders or otherwise will have their lease quotas removed. The post-
rationalization vessel owners (those who bought in) would promote the 
idea of lease fees being reduced to past historical levels of between 
30-35% of the net revenues after taxes and trip expenses, if they were 
able to speak freely.
    The QS holders are being threatened by the fisheries processors 
that if they try to change PQs from 90/10 to a lower rate, the 
processors will help the crewmen get a reallocation. The QS holders are 
not willing to allow a reallocation, as they think they would lose 
quota. They would only be allowed to receive their historical ratio of 
compensation (as above, 30-35% net) if the skippers, crewmen and vessel 
owners received their pre-rationalization compensation levels.
    The processors are not willing to allow open markets because they 
would have to pay a fair price or else other processors--competitors 
paying higher ex-vessel prices--would move into the industry.
                                 ______
                                 

                              Attachment 1

            BS/AI CRAB RATIONALIZATION IFQ/ITQ REALLOCATION

          AMENDMENT PROPOSAL--FOR SKIPPER/CREWMEN COOPERATIVE

                North Pacific Fishery Management Council

                  189th Plenary Session--October 2008

                      RE: C-2 BSAI CRAB MANAGEMENT

Name of sponsor: Shawn C. Dochtermann
Originally Introduced at the 181st Plenary Session, April 1, 2007
Address: PO Box 3886
Kodiak, AK 99615
Date: September 15, 2008
Telephone:907-486-8777
Email:[email protected]
 Brief Statement of Proposal: (preferably under a separate agenda 
        placeholder)
    1.  Reallocation of a percentage of Individual Transferable Quota 
(ITQs) harvest privilege shares of ``CR Crab''--Bering Sea/Aleutian 
Islands red king crab, opilio, and tanner crab fisheries--to active 
crab crewmembers; by
    2.  Provision for a single Crewmember's Cooperative for ``CR 
Crab''; with options of multiple Crew coops &/or combined with Regional 
Fisheries Associations (guidelines needed);
    3.  Retain Open Market for All Crewmember Pooled Quota Shares;
    4.  Require Active Participation & Provide for Crew Contracts.
Objectives of the Proposal (What is the Problem?):
    The problem is an inequitable distribution of CR Crab fishing 
privileges that resulted in excessive shares being assigned to vessel 
owners, which granted them inordinate control over fishermen on decks 
and in the wheelhouses, who are engaged in active fish harvesting.
    This was an unbalanced, direct and deliberate distribution of the 
opportunity to fish to a discrete user group or set of individuals that 
excluded long-term participants (boots-on-deck fishermen) without any 
justification in terms of the objectives of the Crab Rationalization 
FMP.
    This failed to preserve the status quo of economic distributions in 
the crab fisheries, ignored the dependence of present participants 
(crew) and coastal communities, and failed to fully consider the social 
and economic consequences (harms) of the scheme (rationalization).
    1.  Correct Inequitable Distribution of Harvester Shares under CR 
Crab FMP; and Restore Historical Crewmembers Compensation Levels.
    Complete failure to recognize deckhands as vessel operators 
(allocating them 0%), combined with Skipper shares of 3%, falls 
drastically short of the historical earnings of crewmembers who 
actually harvest crab. A germane legal argument is that an inequitable 
``takings'' occurred as vessel owners or mere investors confiscated 
those rights, and upwards of 70% of ex-vessel fish ticket earnings as 
high quota rents consequential to implementation of the CR Crab FMP, 
which occurred without prior public production of Economic Data Report 
reports and proper analysis.
    Reallocation of crab quotas would provide crewmen ``fair and 
equitable'' quotas recognizing that their small businesses were 
needlessly harmed (even foreclosed) by inequitable allocations under 
Crab Rationalization, and allow for future career opportunities in 
these crab fisheries.
    2.  Crewmember Representation in Binding Arbitration & Price 
Negotiation.
    Add crewmember representatives to the binding arbitration tables to 
protect the financial interests of the skippers and crewmembers.
    3.  Assure Experienced Crews are Available and Rewarded in CR Crab 
Fisheries.
    Assure crewmember jobs in the future have earnings that are 
commensurate to their personal investments and recognize the dangers of 
active participation in CR Crab fisheries.
Needs and Justifications for Council Action:
    The drastic reduction of jobs and compensation, especially with the 
massive consolidation of the rationalized crab fisheries, demands this 
issue to be dealt with, without further delay: at best, through a 
separate placeholder (e.g. FMP amendment). No provision was made for 
crewmen to initially receive allocated quota for BS/AI crab, 
representing their historical ratio of compensation, which violates:
    Section 600.325 National Standard #4 Allocations [applicable 
excerpts; plus c(3)(i) ``(iii) etc.]
    If it becomes necessary to allocate or assign fishing privileges 
among various U.S. fishermen, such allocations shall be:
    [1].  Fair and equitable to all such fishermen; [and]
    [3].  Carried out in such a manner that no particular individual, 
corporation, or other entity acquires an excessive share of such 
privileges.
    Discussion: Regarding capitalism, Adam Smith first said that labor 
alone is the real standard by which the value of all commodities can be 
compared; but modified it for the claims of ``the landlord and the 
capitalist''. Similarly, Abraham Lincoln noted, ``Labor is prior to, 
and independent of capital. Capital is only the fruit of labor, and 
could never have existed if labor had not first existed. Labor is 
superior to capital, and deserves the much higher consideration.''
    In determining the allocations under CR Crab regime(s):
      ITQ/IFQ privileges were not rationally connected to 
achievement of Optimum Yield--especially considering that it is through 
the crewmembers earnings that maximum net economic benefits flow widely 
to communities.
      The motives for making particular allocations were not 
justified in terms of objectives--i.e. to increase safety and provide 
for value-added benefits.
      The FMP did not restrain income shifts from crewmembers 
to rent-seeking owners, nor deter acquisition of excessive shares.
      The FMP did not prevent exorbitant rents--up to 70% quota 
lease fees.
    The historical ratio of compensation for crewmembers as active 
participants (while oddly recognizing a small ratio of rights for other 
vessel operators, in the 3% skipper shares) was abandoned as the value 
of the ``human capital'' was taken--without permission or negotiation 
by past stakeholders. In legal and economic terms, ``lay share'' rights 
were taken and the crew now has to produce a ``surplus value'' for 
others that represents the degree of private exploitation (of crew 
labor) by a ``high rent seeking'' distant, non-participating 
capitalist: i.e. by a ``sealord''--often investing in quota on a loan-
financed basis only.
    Likewise, there's a new post-rationalization class of vessel owners 
(some of whom may also hold a small portion of ITQs by way of the 
vessel's history) that are paying high rent rates to such 
``sealords''--greatly depressing the crewmembers' net earnings, 
relative to historical ratios of compensation. This is especially true 
because such ``sealord'' rents come off the top of gross vessel 
earnings--prior to direct costs (fuel, bait, groceries, fish taxes and 
related settlement expenses of harvesting crab) and indirect vessel 
operating costs (hull insurance, repairs and maintenance, etc.).
    All of these changes have exacerbated the degree to which 
allocations were neither ``fair and equitable'' nor preventative of 
``excessive shares.''
Foreseeable Impacts of the Proposal (Who wins, who losses?):
    Who Wins: By having quota rights Crewmembers (deckhands, engineers 
and skippers) gain ability for substantial employment opportunities and 
are more likely to achieve fair earnings. This enhances the interests 
of new entrants, as well. Crew will benefit from increased bargaining 
power for ex vessel compensation with both cooperatives and processors. 
Fishery dependent communities will benefit from increased (restored) 
crew incomes. Federal and state taxes will be higher, in total, as 
crewmembers invariably pay taxes whereas corporations often shelter 
them.
Are there alternative solutions?
      Revoke crab rationalization and return to Open Access 
with a 100 pot limit for king crab and 250 for opilio. This is the 
option that would best have modified Status Quo, which when coupled 
with buyback would have helped maintain crew jobs and avoid excessive 
consolidation onto fewer boats.
      Cap rents for vessel owners to a much reduced percentage, 
more like 35%, rather than the current exorbitant rates of between 70%-
50% being taken by boat owners/IFQ holders. This would be coupled with 
giving the crewmembers their historical 35%-to-40% of total fish value.
        An option is to add ``Vessel Caps'' regarding 
consolidation of ITQs per vessel.
Supportive Data and Other Information:
    NOAA is remiss in providing Crewmembers with useful information 
from the EDRs. The open, public provision of EDR data is not only 
overdue (it is now one-year late), but essential and legally warranted 
prior to the Council making any further decisions on ITQ shares.
    For this data to now be regularly characterized as either 
inadequate or non-useful to the decision-making process seriously calls 
into question the initial allocation of shares for all BSAI crab.
    The EDR data apparently does not reflect the federal legal 
requirement of crew contracts, and cross-verification with crew shares 
submitted in EDRs. NOAA must strengthen compliance with the requirement 
in 46 U.S.C. Sec. 10601 that seamen be given pre-trip written 
agreements. The lack of such required data, ensuring appropriate 
analysis and reports for crewmembers seeking restoration of historical 
rights, is an additional deficiency in the decision-making process to 
date.
    Altogether, these are serious deficiencies of the regional council 
in meeting the recommendations of GAO 06-289: Core Principles and a 
Strategic Approach on Stakeholder Participation.
    Discussion: Previous to IFQ shares being allocated to all entities, 
vessel owners, or corporations, they were each required to submit 3 
years (2002-04) of crab data to NMFS in order to receive initial crab 
quota shares. NMFS and/or related agencies could release this data in 
summary to substantiate the overall participation levels (i.e. to 
establish the estimated 35% to 40% historical crew rights).
    The present BS/AI crab rationalization requires that all quota 
shares holders furnish NMFS with extensive crew and other data. Gunnar 
Knapp of ISER conducted a study for the City of Kodiak and it contained 
preliminary analysis that puts job losses in the BSAI crab industry at 
892 persons who held jobs prior to rationalization. (An estimated 1,500 
persons previously held crab jobs before rationalization.) And a draft 
of an upcoming NOAA crew report indicates a range of lost crew jobs of 
between 1,026 and 1,674.
    Final Note in Protest: Critical discussions affecting crab 
crewmembers were placed in an inappropriate committee, and the 
Council's relevant matters have been knowingly scheduled during the 
crab fishing season when crewmembers cannot be present to represent 
their stakeholder interests. The weight of these concerns and 
deficiencies necessitates a separate placeholder for a Crab Crewmembers 
FMP Amendment.

Shawn C. Dochtermann
                                 ______
                                 

                              Attachment 2

Oceans Policy Task Force Hearing                  August 21, 2009
Anchorage, Alaska

              RE:  Adjacent but Alienated by Catch Shares

                 Public Comment: Crewman's Association

Madam Chair, Dr. Jane Lubchenco, Interior Deputy Secretary Hayes, USCG 
Admiral Allen, & Deputy Assistant Zichal.

    My name is Shawn Dochtermann from Kodiak, Alaska. I have commercial 
fished in Alaskan waters for 31 years and I am here today representing 
the Crewman's Association. Alaska's Bering Sea crab fisheries are an 
example of the failure of a Catch Share program. Over 1,000 crewmen 
lost their jobs due to privatization, while many of them had 20 to 25 
years experience in the industry. Consolidation continues and hundreds 
more are losing their crab incomes.
    Crewmembers are also losing jobs as other management programs, such 
as the Rockfish Pilot Program, get politically privatized without 
adequate scientific justification. Total allowable catches are already 
in place. This public larceny hides under ``the theoretical joys of 
privatization'' to benefit non-participating investors. A recent study 
by the University of British Columbia indicates that small-scale 
fisheries are more efficient and better at meeting socio-economic needs 
than large scale fisheries, as the residents of local communities are 
provided with fishing related jobs.
    When the Bering Sea crab catch share system was implemented, 
crewmembers were denied a historical participation share of $400 
million of IFQs--while roughly $1 billion of catcher rights (IFQs) were 
given to vessel owners. Many of these vessel owners are large 
corporations. Now high lease fees paid to quota-holding 'Sealords' come 
right off the top of our vessel trip settlements--costing independent 
contracting crewmen another $35-40 million per year compared to before 
privatization.
    It does not take much effort to realize our fisheries suffer under 
a Resource Curse condition, and that the North Pacific Fishery 
Management Council is a perfect example of Regulatory Capture in 
action. Once again, it is the Labor component who is disenfranchised 
and alienated, and driven into indentured servitude under what are in 
fact sharecropping programs. NOAA is letting this happen in America!
    Vessel owner group representatives have committed perjuries on the 
federal council record and crewmembers have been coerced into not 
giving public testimonies for fear of losing their fishing jobs. NOAA 
has failed to prosecute these criminally false testimonies and 
coercions. When will these perjuries be investigated?
    The NPFMC and NOAA have also ignored 46 U.S.C. section 10601 and 
other federal law requiring fairly contracted ``lay shares'' for crew. 
Individual crewmen who used to net 5% to 6% are now lucky to net 1% to 
2% of the adjusted gross revenues from crab fishing trips. Some quota 
holders presently scalp off upwards of 75% of gross revenues while an 
entire crab crew and skipper collectively receive only 12-15%. Crews 
and skippers historically received 35-40% of the gross revenues.
    Without required active participation, without caps on ownership, 
without limits on consolidation, and without adherence to the national 
standards of a ``fair and equitable'' distribution of rights, Catch 
Shares will clearly lead to more socio-economic harms.
    Contrary to what others may tell you, when examined from the point 
of view of fishermen, communities and regional economics, Alaska's 
rationalization schemes do not serve as good examples of fisheries 
management and national policy. An independent review by the U.S. 
Department of Justice Antitrust Division and the Government 
Accountability Office of the restraints of trade and ownership 
structures is overdue.
    We have grave concern about OCS Gas and Oil Exploration and the 
proposed Pebble Mine, as both of these resource extractions could 
easily damage the renewable resources of the Bering Sea and Bristol Bay 
with only one disaster. Therefore, we urge this panel to do the right 
thing and never let nonrenewable resource extraction take a front seat 
to the precious renewable seafood of Alaska.

Respectfully,

Shawn C. Dochtermann
Crewman's Association--Secretary/Executive Director
PO Box 866; Kodiak, AK 99615
                                 ______
                                 
                                 [GRAPHIC] [TIFF OMITTED] 55542.005
                                 
                                 .eps[GRAPHIC] [TIFF OMITTED] 55542.006
                                 

    .eps[A letter submitted for the record by Kathy Hansen, 
Executive Director, Southeast Alaska Fishermen's Alliance, 
Juneau, Alaska, follows:]

Southeast Alaska Fishermen's Alliance
9369 North Douglas Highway
Juneau, AK 99801
Phone 907-586-6652
Fax 907-523-1168
Website: http://www.seafa.org
E-mail: [email protected]

March 15, 2010

House Committee on Natural Resources
Subcommittee on Insular Affairs, Oceans and Wildlife
Representative Madeleine Z. Bordallo, Chairwoman
1324 Longworth Building
Washington, DC 20515

RE:  Hearing on ``Catch Shares as a Management Option: Criteria for 
Ensuring Success''

Dear Honorable Madeleine Bordallo and Committee Members,

    Today, March 16th you are holding a hearing on catch shares as a 
management option for fisheries and the criteria for ensuring success. 
Catch Shares have been a positive and successful management tool for 
fisheries in Alaska and in other places around the world. For example, 
since catch shares have been implemented in the Alaska halibut and 
sablefish fisheries, these fisheries have not gone over the commercial 
allowable catch. The Canadian groundfish catch share program has 
significantly reduced their by-catch issues in the fishery. Catch share 
programs when designed correctly with good stock assessment and catch 
accounting systems protect the resource from overexploitation and 
ensure the long-term sustainability of the resource. There are lessons 
to be learned from every catch share program that has been implemented.
    You have asked for advice on criteria for ensuring the success of a 
catch share program. First and foremost for the long term success of 
the program you must have good, viable and on-going stock assessment 
program in place and you must have good catch accounting that accurate 
reflects all removals of that resource whether it is the target 
species, bycatch, or a recreational sport harvest.
    In the development phase of the program, there are issues that need 
to be looked at and considered, these include whether you wish to 
maintain an owner-operator on board clauses, excessive consolidation, 
community protections, consideration of crew, and consideration of 
other users of the resource whether you provide an allocation or decide 
to allow another sector to grow which might undermine the catch shares 
in the future (i.e. Alaska Halibut and the guided sport sector).
    With catch share programs, there will be some consolidation over 
time but that is partly because by the time a catch share program is 
considered the industry has overcapitalized and become uneconomical for 
all industry players to continue.
    When Alaska's catch share programs have been developed there has 
been large segments of the industry against the idea but after time 
even those that didn't get an initial allocation mostly agree that the 
program has stabilized the industry, increased price per pound due to 
market changes--processing smaller high quality quantities at a time 
compared to derby style all the fish at once poor quality product, 
better safety record since you don't have to fish in bad weather and 
many other advantages.
    Southeast Alaska Fishermen's Alliance is a multi-gear/multi-species 
membership based commercial fishing organization representing our 
members involved in the salmon, crab, shrimp and longline fisheries of 
Southeast Alaska and federal halibut and sablefish quota share 
programs.
    Please feel free to contact our office for more information about 
catch share programs.

Sincerely,

Kathy Hansen
Executive Director
                                 ______
                                 
    [A statement submitted for the record by The Honorable 
Walter B. Jones, a Representative in Congress from the State of 
North Carolina, follows:]

    Statement of The Honorable Walter B. Jones, a Representative in 
               Congress from the State of North Carolina

    Madame Chair, I want to thank you and the Ranking Member for 
holding this hearing on what is a very important topic of concern for 
not only the fishermen that I have the privilege to represent, but for 
watermen around the country as well.
    The use of catch shares as a management tool is very controversial. 
As you know, catch share programs give shares of the total allowable 
catch in a given fishery to particular fishermen or groups. I can tell 
you that North Carolina fishermen vehemently oppose catch share 
programs as nothing more than thinly veiled attempts to get fishermen 
to leave the business and to destroy fishing communities. These 
sentiments were validated by a 2009 assessment of catch share programs 
and the resulting industry consolidation performed by Dr. Julia Olson 
of the National Oceanic and Atmospheric Administration's (NOAA) 
Northeast Fisheries Science Center. Dr. Olson's report found:
    ``The primary social impacts that have been documented in empirical 
cases involving consolidation range from employment loss, decreased 
income, decreased quality of life, changing relations of production, 
structural disadvantages to smaller vessels and firms, dependency and 
debt patronage, concentration of capital and market power, inequitable 
gains, regulatory stickiness, reduced stewardship, decreased community 
stability, loss of cultural values, and so on.''
    Given these problems, I was very troubled that the Administration's 
Fiscal Year 2011 Budget Request for NOAA included proposals to cut 
funding for fisheries science--which we all acknowledge is necessary 
for adequate management of our fisheries--in order to add $36.6 million 
to expand implementation of catch share programs into new fisheries 
across the country. The last thing the federal government should be 
doing in these economic times is spending millions of taxpayer dollars 
to expand catch share programs that will put even more Americans out of 
work.
    To the extent that solid science demonstrates that catch reductions 
in any given fishery are necessary, there are far better options than 
catch shares for achieving those reductions. In my opinion, expanding 
catch shares is the wrong policy for the United States and I would urge 
the Subcommittee to move legislation that would suspend expansion of 
these programs.
    Thank you for again for holding this hearing and for the 
opportunity to offer my thoughts on this matter.
                                 ______
                                 
    [A statement submitted for the record by Linda Kozak, 
Consultant, Crab Group of Independent Harvesters, Kodiak, 
Alaska, follows:]

    Statement submitted for the record by Linda Kozak, Consultant, 
          Crab Group of Independent Harvesters, Kodiak, Alaska

    Madam Chair and members of the subcommittee, I would like to thank 
you for the opportunity to submit written testimony on the policy of 
catch shares. My name is Linda Kozak and I serve as a consultant for 
the Crab Group of Independent Harvesters, whose membership includes 
Bering Sea and Aleutian Islands crab fishermen who hold crab quota 
share. I also work closely with fishermen who are quota share holders 
in the halibut and sablefish IFQ catch share program. My past 
experience on catch shares includes representing fishermen during the 
creation and implementation of both the halibut/sablefish IFQ and crab 
rationalization programs. I was a charter member of the IFQ 
Implementation Team for halibut/sablefish, as well as serving on North 
Pacific Fishery Management Council and Alaska Board of Fisheries 
committees for crab rationalization. I was a member of the West Coast 
panel for the National Academy of Sciences study on individual fishing 
quotas, which resulted in the publication in 1999 of ``Sharing the 
Fish''. Additionally, I participated in several workshops and panels 
including the 2002 National Marine Fisheries Service ``Individual 
Fishing Quota and Community Programs''. My background also includes 
past ownership in a halibut and sablefish quota brokerage with offices 
in Alaska and Washington where for three years the majority of all 
quota share sales occurred.
    My comments will reflect primarily on the Bering Sea and Aleutian 
Islands (BSAI) crab rationalization program, which is acknowledged to 
be the most complex catch share program in the nation. With allocations 
of harvesting and processing quota providing for fishing cooperatives 
and binding arbitration, as well as regional landing requirements, the 
adaptation into the program has been at times difficult. As the program 
is nearing its fifth year since implementation, it is good to take a 
look back and review the crab catch share program.
    The Bering Sea and Aleutian Islands crab catch share program did 
not evolve overnight. The process began in 1992 when at the request of 
industry, the North Pacific Fishery Management Council approved a 
moratorium on new vessel entry into the fishery, and it became 
effective in 1995. The Council took further action in 1995 to approve a 
license limitation system and this was put into place in 2000.
    Both the moratorium and LLP system were necessary due to the 
excessive number of vessels racing to catch crab in the fisheries of 
the Bering Sea and Aleutian Islands. During this time, there was a 
downturn in crab stocks for the major fisheries and with the crab 
fisheries operating under strict catch limits, there was little 
flexibility for the vessel owners other than to race even harder. This 
race for crab contributed to several tragic accidents which resulted in 
loss of life in this deadliest fishery.
    It became clear to harvesters, processors and communities that a 
different management structure was needed and in 1999, at the request 
of industry, the North Pacific Council formed the first BSAI Crab 
Rationalization Committee. As this committee began to meet, one of the 
foremost concerns was that of over-capitalization in the crab fleet. As 
a result of an industry initiative, the Consolidated Appropriations Act 
of 2001 established a license and vessel buyback program for the Bering 
Sea and Aleutian Islands crab fisheries in order to reduce fishing 
capacity. This buyback program was implemented in 2004 and resulted in 
the buyback of 25 crab licenses and vessels, which are prohibited from 
ever participating in any commercial fishery in the United States.
    The legislation providing for the Buyback Program also required the 
North Pacific Fishery Management Council to begin analyzing options for 
rationalizing the BSAI crab fisheries and to report back to Congress on 
the results of that study. This was supported by a majority of the crab 
harvesting sector because the Buyback Program only partially addressed 
the over-capitalization problem. Many vessel owners were on the verge 
of bankruptcy and a graceful exit was needed.
    After many committee and Council meetings, at the June 2002 
meeting, the North Pacific Council voted on a report to send to 
Congress. This report recommended harvester catch quotas with the 
ability to form cooperatives in order to become more efficient. 
Additional elements included the controversial 90/10 processing share 
component along with regional landing requirements as a form of 
community protection.
    In January of 2004, Congress amended the Magnuson-Stevens Act 
through the Consolidated Appropriations Act of 2004 requiring the 
Secretary of Commerce to approve the BSAI crab rationalization program 
by January 1, 2005. Embedded in this law, was a requirement for the 
North Pacific Council to conduct a three-year and five-year 
comprehensive review of the crab program. Within a month of the 
Congressional action, the North Pacific Council voted unanimously to 
prepare an analysis specifically on the issue of the 90/10 processing 
share component and deliver that analysis 18 months after the program 
began. This began a series of Council discussions on the issue of 90/
10.
    Crab rationalization has been an issue on the North Pacific Council 
agenda at many Council meetings since February 2004. As with the 
halibut/sablefish IFQ program, the complexities of the crab catch share 
program have required a substantial amount of discussion and 
consideration for modification. Issues dealing with processing shares, 
emergency relief from regional landing requirements, cooperative 
leasing, crew compensation, and binding arbitration have been addressed 
and continue to be addressed by the Council.
    The Congressionally mandated five-year review of the crab 
rationalization program is scheduled for review by the North Pacific 
Council in October 2010. This review will cover a wide range of topics 
requested by the Council and is expected to be very detailed in scope. 
It is expected that the Council will consider further changes to the 
program at that time.
    The crab rationalization program was not perfect when implemented. 
There are still areas which will be addressed and we expect to continue 
working in the foreseeable future to make this program better. However, 
even with the concerns expressed by the Crab Group of Independent 
Harvesters as well as other groups or communities, the catch share 
program is a distinct improvement over the destructive practices of too 
many vessels racing for too few crab. We are working to make the 
program better, but strongly believe that BSAI crab catch shares have 
achieved many of the goals addressed during the development of the crab 
rationalization program.
    The members of the Crab Group of Independent Harvesters agree with 
several of those testifying at the hearing on March 16th that the 
design of a catch share program is most important. By attempting to 
create a program that will accomplish specific goals and have a clear 
vision of where the program and participants should be in five, ten or 
even 20 years, the catch share program will be better designed and able 
to achieve those goals. However, regardless of how much attention or 
effort is put into trying to make the program as perfect as possible, 
you will find that some unexpected consequence will occur and 
adjustments to the program need to be considered.
    I would briefly like to address some of the positive elements of 
the BSAI crab catch share program that we believe have occurred in the 
last four seasons.
Conservation of the Resource and Habitat
      The BSAI crab fisheries have operated under science-based 
catch limits for 30 years. However, prior to the catch share program in 
the race for crab, on some occasions, agency managers did not react 
quickly enough to close the fishery before catch limits were exceeded. 
Under the catch share program, those harvest limits have not been 
exceeded even a single time.
      Crab harvesters have utilized biodegradable cotton thread 
in escape panels since the 1970's and this eliminated the possibility 
of crab pots ``ghost fishing''. Since the race for crab ended with 
catch shares, many vessels have added larger mesh to their pots, which 
allow for female and sub-legal crab to escape long before the pot is 
pulled for harvest. This reduction in handling is very beneficial for 
the future of the resource.
      Under the catch share program and a result of the 
elimination in the race for crab, vessel owners have the ability to 
allow their pots to soak longer to maximize catch rates of adult male 
crab. The catch per pot rate has more than doubled in certain 
fisheries.
      While the BSAI onboard fisheries observer program has 
been in place since 1988, all vessels began using a vessel monitoring 
system (VMS) under the catch share program. This ensures that vessels 
do not fish in areas that are closed.
      Fewer pots are used in the crab fisheries under the catch 
share program and the environmental footprint as been reduced by half, 
while still prosecuting the fishery throughout the entire range of 
adults. This eliminates concerns about localized depletion, while 
experiencing a minimal impact on the marine habitat.
      The carbon footprint has also been reduced by half since 
the implementation of the catch share program. This has been possible 
due to the cooperative fishing efforts by the fleet and less fuel being 
burned.
Safety at Sea
      Sadly, 26 BSAI crab vessels sank from 1991-2005, 
resulting in 77 deaths--50 times the overall U.S. worker fatality 
rate--earning the fleet the title, ``deadliest job in America''. Since 
the crab catch share program was implemented in the fall of 2005, not a 
single vessel has been lost to the sea.
      One of the benefits under the cooperative fishing 
provision in the catch share program is that those vessel owners with 
less sea-worthy vessels have not been forced to send their boats out to 
fish, while still having the ability to be part of a fishery that many 
have participated in for decades.
      Another safety benefit is that with the race for crab 
something of the past, vessel owners no longer feel the need to stack 
too much gear on deck, which led to instability, particularly in icing 
conditions. The need to have as much gear in the water as possible in 
order to maximize the catch has been eliminated. With every vessel 
harvesting a pre-determined amount of the quota, the fishery is no 
longer frenzied and reason prevails.
Reducing Fleet Over-Capacity
      A major concern for fishery managers and the crab 
industry when developing the crab catch share program was that of fleet 
over-capitalization. For years many vessel owners were at the edge of 
losing their business after the downturn of the crab stocks due to 
ecosystem shifts. The Council's Problem Statement clearly identified 
that crab catching capacity far exceeded available resources.
      While the crab license and vessel Buyback Program helped 
provide a graceful exit for 25 vessel owners, others who were not 
selected to be part of that program were left to wait for 
rationalization. Many of those vessel owners continued to operate in a 
marginal manner.
      The cooperatives, which were designed in the BSAI crab 
rationalization program, provide for a buffer and allow for fewer 
vessels to harvest the crab, especially in these years of lower harvest 
limits. As harvest limits increase, the number of vessels in the 
fishery will also increase. There are approximately 50 vessels, many of 
whom are currently working on science and research charters, or acting 
as fish tenders for processing companies in other fisheries, that plan 
to re-enter the fishery as crab stocks continue to improve.
      Many quota share holders who had marginal operations 
prior to the crab catch share program being implemented are now able to 
participate in the fishery through the vessel cooperative program, and 
have been able to realize some benefit.
Skipper and Crew Compensation
      The crab catch share program initially allocated 3% to 
eligible crab crew members and many of those are continuing to expand 
their quota holdings. The incremental investment in quota share allows 
a crew member to enter the fishery in a cost-effective way over time.
      Prior to catch shares, the investment of a boat and 
license were cost prohibitive, but now that crew can buy into the 
fishery over time, this benefits their progression into the fishery. 
Recent appropriations by Congress provide for $8 million in loan funds 
for crab crew members to acquire quota. We have encouraged National 
Marine Fisheries Service to quickly implement the regulations allowing 
them to begin utilizing that loan program.
      The North Pacific Council's analysis found that prior to 
the catch share program being implemented, most crew members were not 
making enough money in the crab fisheries to provide for them and their 
families throughout the year and they had to supplement their income 
with other jobs. With catch shares, the average crew share has risen 
dramatically and now there are more full time crab crew members than 
before the catch share program was implemented.
      While there are a few instances of vessel owners paying 
poorly under the catch share program, the majority of the fleet is well 
paid and the crew members are satisfied that they are receiving fair 
and equitable compensation.
      As the crab stocks increase and more vessels return to 
the fishery, crew member jobs will be created and these jobs will be 
stable and provide more certainty than in the years before 
rationalization.
Community Development Program
      A major element of the crab catch share program was to 
provide a royalty of 10% of the annual allocation of each crab 
fishery's catch limit to six regional community organizations 
representing 65 Western Alaskan communities, as well as the Aleutian 
Islands community of Adak. The purpose is to assist these communities 
in long-term economic development.
      Each CDQ organization has partnered with crab fishermen 
for the harvest of the crab resource.
      CDQ organizations have added to their crab investments by 
purchasing additional crab catch shares at a value estimated to be over 
$230 million.
      Several CDQ communities have invested in processing 
facilities and processing quota.
Crab Catch Shares and Alaskan Communities
      Communities adjacent to the Bering Sea and Aleutian 
Island waters are important to the success of the crab catch share 
program, as well as communities in other areas of Alaska.
      Crab catch shares are held by Alaskan residents in 16 
communities from Nome to Petersburg.
      Crab landings occur primarily in St. Paul, Adak, Dutch 
Harbor/Unalaska, Akutan, King Cove, and Kodiak.
      Dutch Harbor has the largest number of landings and most 
of the Bristol Bay red king crab processing effort, while nearly 50% of 
the Bering Sea snow crab is processed at St. Paul Island, one of the 
most remote communities on earth.
      In the Aleutian and Pribilof regions, where nearly all of 
the crab is delivered to a shoreside facility, seafood processing jobs 
account for 65% of all jobs.
      Crab fishery taxes are an important source of local 
revenues. These include fisheries business taxes, landing taxes, 
property taxes, and sales taxes.
      Community benefits include purchases of fuel and 
groceries, vessel maintenance and repair, gear fabrication and repair, 
and a variety of support services.
      Some crab vessel owners who traditionally took their 
vessels to Washington or Oregon during the off-season, now are keeping 
their boats in Alaskan ports, contributing further to the Alaskan 
coastal community economy.
    The Bering Sea and Aleutian Islands crab catch share program is not 
perfect, as stated earlier. However, the good things far outweigh the 
negative and the members of the Crab Group of Independent Harvesters 
are committed to keep working to make the program better for the 
resource, catch share participants, coastal communities, and the owner 
of the resource--the people of the United States.
                                 ______
                                 
    [A statement submitted for the record by James A. Odlin, 
Commercial Fisherman, Portland, Maine, follows:]

         Statement submitted for the record by James A. Odlin, 
                 Commercial Fisherman, Portland, Maine

    Thank you for the opportunity to provide my personal perspective on 
catch share management.
    I have been a commercial fisherman vested in the New England 
groundfish fishery for over 35 years and have served on the New England 
Fishery Management Council for the last seven years. I have experienced 
derby fishing under hard quotas, days at sea management, and will soon 
experience catch share management as the New England groundfish fishery 
transitions to catch share management in May 2010.
    From 2001 to 2007 the number of active vessels in the New England 
groundfish fishery has shrunk from nearly 1100 to 574, and in 
Massachusetts, from which the largest percentage of vessels has 
historically hailed, the number of active vessels declined from 629 to 
300. In Maine, less than 75 boats remain in the fishery and groundfish 
landings have plummeted from 30 million pounds annually to 6 million 
pounds. The current system of day's at sea clearly has not protected 
the community or the industry, it has promoted huge discards of dead 
fish and left millions of dollars of fish in the ocean that could have 
been sustainably caught providing jobs.
    In the past I have been an opponent of catch shares, but I have now 
come to the conclusion that, under the current mandates of the 
Magnuson-Stevens Act, and facing the alternative of only 20 allowable 
days to fish, that catch shares management must be tried in New England 
groundfish.
    However, if catch share management of New England groundfish is to 
succeed, we need more frequent stock assessments and appropriate 
monitoring of the fishery.
    A buyout is crucial to lessening the negative impacts of Amendment 
16 to the New England groundfish plan. A buyout would remove excess 
capacity, give those who wish to leave the industry a dignified way to 
exit, and allow those who remain to increase allocations at minimum 
cost. Buyouts have preceded the implementation of catch shares in the 
North Pacific crab fishery and the west coast groundfish fishery, and 
have provided increased profitability for fishing businesses and 
stability for fishing communities.
    Congress must provide the funding necessary for a buyout, or 
advance an industry-funded buyout proposal.
    Congress must remove the referendum requirement for implementation 
of Limited Access Privilege Programs (LAPPs) in New England. Without 
the ability to move to LAPPs, the industry is burdened with high and 
unnecessary management costs of ``sectors''.
    Congress must amend the Magnuson-Stevens Act in a way that clearly 
articulates the flexibility necessary for fisheries managers to restore 
fisheries resources while preserving fishing communities. In 
particular, Congress must rescind the ridged 10 year rebuilding 
requirement.
                                 ______
                                 
    [A statement submitted for the record by Mark Phillips, F/V 
Illusion, Greenport, New York, follows:]

        Statement submitted for the record by Mark S Phillips, 
                   F/V illusion, Greenport, New York

    To the House Subcommittee on Insular Affairs, Oceans and Wildlife,
    I would like these comments added to the hearing on Catch Shares on 
March 16, 2010.
    The comments by new NMFS Eric Schwaab that most fishermen are in 
favor of catch shares is a distortion of the facts. Nothing could be 
farther from the truth, and I know of no fisherman in NY who is for 
this. He is taking the fact that most fishermen joined a ``sector'' as 
an indication that we wanted catch shares.
    The fact is, NMFS gave us a choice between joining a ``sector'' or 
staying in the common pool, but neither was any good. Shooting yourself 
in the head or stabbing yourself in the heart are choices too, but the 
outcome is still the same--you are dead.
    The problems with catch shares are:
    1)  NMFS' data is not ready to implement catch shares and cannot be 
fixed until 2011 or later. This is NMFS' own admission.
    2)  Catch shares have never been done on a multi-species format 
before. This is an experiment with unprecedented consequences if it 
fails.
    3)  NMFS touts science as the fix all for overfishing, yet they 
want to gut cooperative research to fund catch shares. Cooperative 
research's science has shown NMFS's science is less than accurate.
    4)  Calling the catch shares program ``sectors'' is NMFS' way to 
try to get around calling them ITQs ( what they really are),which need 
a 2/3 referendum by all affected participants if they are to be 
implemented, as stated in Magnuson-Stevens Act.
    5)  We have one ITQ system on the east coast already it has not 
been very good for anyone but the one man that owns 70 + percent of the 
surf clam/ocean quahog resource. We also have a multi state catch share 
system in fluke, and because of bad data NY recreational and commercial 
fishermen have fared terribly. Even though NMFS admits the data was 
faulty, it has never been corrected.
    6)  Catch shares are an economic tool not a conservation tool.
    I am writing to request an East Coast hearing on catch shares by 
both the House Subcommittee on Insular Affairs, Oceans and Wildlife, 
and the Senate Commerce Committee. Also, that these hearings call for 
at least a 1 year freeze on this program, as has happened on the West 
Coast.
    With the problems inside NMFS concerning Dale Jones' shredding of 
documents while under investigation by Inspector General Todd Zinser, 
fishermen feel that NMFS service should get its own house in order 
before it rams an unwanted program down our throats that will put many 
of us (50-70 percent) out of business, along with the infrastructure 
that supports us.
    Again, I know of no fisherman in NY that is for this catch shares 
program.
    Thank you.
                                 ______
                                 
    [A statement submitted for the record by Edward Poulsen, 
Executive Director, Inter-Cooperative Exchange Policy Advocacy 
Committee, follows:]

    Statement submitted for the record by Edward Poulsen, Executive 
    Director, Inter-Cooperative Exchange Policy Advocacy Committee, 
                         Shoreline, Washington

    Madam Chairwoman and Members of the Subcommittee, I appreciate the 
opportunity to submit written testimony regarding catch share policy. 
My name is Edward Poulsen and I am Executive Director of the Inter-
Cooperative Exchange Policy Advocacy Committee (ICEPAC), which 
represents approximately 70% of the Bering Sea crab harvesters. All 
members of ICEPAC hold quota share as part of the Bering Sea/Aleutian 
Islands (BSAI) crab rationalization program in the North Pacific Ocean. 
My comments will be limited to our experiences with this catch share 
program.
    It is widely acknowledged that the BSAI crab catch share program is 
one of the most complicated catch share programs in the United States. 
This is precisely because of the broad goals of the program as well as 
issues and stakeholders that had to be balanced during the design and 
implementation of the crab catch share program. An important point 
about the crab catch share program is that it was a ``bottom up'' 
effort supported by industry including representatives from vessel 
owners, crewmembers, processors and affected communities. We are also 
fortunate to have strong leadership and staff from the North Pacific 
Fishery Management Council, Alaska Region National Marine Fisheries 
Service, and Alaska Department of Fish and Game which helped industry 
move forward to address the goals and identify issues while providing 
an open forum for all stakeholders.
    The three main goals of the program were to improve safety, address 
resource conservation issues, and improve the financial stability of 
the industry. It has been successful on all three fronts.
    First, the old derby fishery created tremendous stress in a 
dangerous environment. Crab fishing was the most dangerous occupation 
in the United States. The derby days are now gone and so is the 
incentive to push the envelope. We are pleased there have been no 
sinkings under the crab catch share program. The fatality rate has been 
reduced to 0.2 per year under catch shares, from 5.1 fatalities per 
year during derby fisheries (1991-2005).
    Second, conservation of the resource has improved in many ways. 
With more fishing time allowed, increased soak time allows the crab 
pots to screen small crab out while on the ocean floor thereby reducing 
bycatch. Additional fishing efficiencies include better sorting tables, 
overboard chutes, and better gear that all have helped to reduce 
bycatch mortality. We expect this trend to continue in the future. The 
crab quota share holders, now direct stewards of the resource, have 
formed a successful research association, along with crab processors 
and crab dependent communities, funded collaboratively by the crab 
industry and NMFS to better understand our resource.
    Third, the financial footing of the fleet has also been stabilized 
through the crab catch share program. 2005, the last year of crab 
fishing prior to the crab catch share program, resulted in a grand 
total of just 7 days of fishing time for the Bering Sea crab fleet to 
catch opilio and red king crab combined. Nearly everyone was losing 
money. Vessel owners couldn't pay their vendors let alone a mortgage. 
Owners were forced to defer repair and maintenance simply because there 
was not enough money to go around, further exacerbating the safety 
situation. Crewmembers could not support themselves or their families 
on crab incomes alone. With the crab catch shares program, the industry 
has financially stabilized even though we continue to fish at very 
conservative levels. On average, vessels are profitable and crew now 
make more per day than prior to the catch share program. The bottom 
line is that a financial crisis was afflicting the industry and 
everyone knew the way out was massive bankruptcies, a government 
bailout, or a catch share program. We chose a catch share program, 
following a modest, industry-funded vessel retirement program.
    Issues identified during the design and implementation process 
included: consolidation, community protection, price negotiation, 
stakeholder allocations and management fees. During the recent catch 
share hearings, consolidation and community protection concerns were 
brought up several times. During the design of the crab catch share 
program, both of these topics received considerable discussion as well. 
To prevent consolidation in ownership of quota share (QS), both 
harvesters and processors have ownership caps to prevent excessive 
consolidation. On the vessel level though, caps were intentionally not 
implemented so that efficiency gains and consolidation could be 
achieved. The crab harvesting sector was massively overcapitalized. In 
addition, it was necessary to allow flexibility in the contraction and 
expansion of capacity, in response to environmentally-induced changes 
in the crab Total Allowable Catch (TAC) and the legal requirement to 
achieve Optimum Yield on a continuing basis. We would expect that our 
snow crab rebuilding plan, which includes very conservative management 
measures, plus recent favorable environmental factors, will result in 
higher crab TACs in the future and more crab vessels fishing. If this 
does not happen though, the fleet has the flexibility to consolidate to 
a level where profitability, conservation, and safety can be 
maintained.
    Community protection measures are also very important in the design 
of the crab catch share program. Upon implementation of the crab catch 
share program, the Community Development Quota Communities (CDQs) were 
provided an additional 2.5% of the entire TAC resulting in a total of 
10% directly allocated to them. In addition, a regional landing 
requirement was put in place to ensure the historical dependence of the 
communities of St. Paul and St. George was maintained. Processing quota 
was tied to communities in a way that provided a ``Right of First 
Refusal'' (ROFR) to allow the processing quota and the associated crab 
landings to remain where they had been historically. So far, there has 
been little disruption to the historical crab landings to each 
community based on the years the Council set as the baseline for 
determining historical participation.
    Price negotiation became a very serious issue as part of the crab 
catch share program mainly because processing quota (PQ) was part of 
the design of the crab catch share program. The concern was that if 
harvesting quota had to be delivered against processing quota, how 
would there ever be fair market competition? Again, through a bottom up 
approach, industry came up with an arbitration system that has proven 
to work very well to maintain a historical distribution of revenue 
between harvesters and processors.
    As with any catch share program, stakeholder allocations are one of 
the biggest issues to tackle. The crab catch share program created a 
``3 pie allocation'' to harvesters and crew, processors, and 
communities. The crab catch share program was the first catch share 
program in the United States to initially allocate a portion of the 
quota shares to qualified crew, in this case 3% to skippers who met 
certain participation requirements. The remaining 97% of the quota 
share was allocated to owners of harvesters based on specific 
qualifying years. Approximately 90% of harvester quota share must be 
delivered against processing quota which was awarded to processors 
based on their historical participation during specified years, while 
the remaining 10% could be delivered to any processor. Communities are 
not granted quota per se, but the processing quota share is linked to 
communities through ROFRs and therefore provides reasonable assurance 
that historical dependence will be maintained. This 3-pie system has 
allowed the protection of all three sectors' historic dependence on the 
fisheries.
    Finally, the crab catch share program resulted in some increased 
management and enforcement costs for both the National Marine Fisheries 
Service and the Alaska Department of Fish and Game. Industry agreed to 
help defray these costs with an annual fee deducted on each delivery. 
Both harvesters and processors are assessed a combined maximum of 3% of 
the landed value of the crab fisheries.
    In conclusion, I have presented goals and issues that the 
stakeholders and relevant agencies wrestled with in devising and 
implementing the BSAI crab catch share program. This discussion is not 
meant to push our model on any other fishery; we know each fishery is a 
unique situation necessitating a unique solution. This testimony is 
simply meant to provide a background of where we have been and why we 
are grateful for the catch share program that we have.
                                 ______
                                 
    [A statement submitted for the record by David E. Preble, 
Narragansett, Rhode Island; Rhode Island Representative, New 
England Fishery Management Council, follows:]

 Statement submitted for the record by David E. Preble, Narragansett, 
    Rhode Island; Rhode Island Representative, New England Fishery 
Management Council (NEFMC), U.S. Commissioner to the Northwest Atlantic 
                     Fisheries Organization (NAFO)

    A prominent politician once told me that of all the issues he dealt 
with, the most difficult and contentious was marine fisheries, and 
nowhere is that more true than in New England. New England, more than 
any other region, is steeped in its traditions and its myths. John 
Kennedy recognized this when he said, ``The great enemy of the truth is 
very often not the lie--deliberate, contrived and dishonest--but the 
myth--persistent, persuasive and unrealistic.'' We must look past our 
myths to find the truth, to ferret out the facts. For the truth is that 
in fisheries management today's problems will only be solved by 
adhering to the facts, not by misreading the past.
    The facts are really rather straightforward. From early colonial 
times, the ocean-based portion of New England's economy was mostly 
based upon free harvest open to all. But a free and open-access fishery 
could only work when human population was smaller and harvest 
technology more primitive. By the second half of the 20th century 
neither was still true, and open harvest had become over-harvest--the 
``tragedy of the commons'' had come to pass for the fish. Commercially 
important species had become the buffalo and passenger pigeon of a 
century earlier, and local fishing economies began a steady decline. It 
had, in the end, become necessary to manage these public resources 
through the agencies of government. As modern fishery management began, 
New Englanders clung to the ``free and open'' myth, long after all 
other natural resource industries had abandoned such thinking. To keep 
management as free and open as possible they tried to control fishing 
effort, step by unsuccessful step, finally by limiting the number of 
days a boat could fish and the amount that could be caught per day. The 
approach originally seemed fair to all, but ``days at sea'' (DAS) with 
``daily trip limits'' multiplied average daily operating costs, 
required the discarding of fish caught above the daily limit, closed 
recovered stocks to protect weaker ones, and lead to micromanagement of 
fishing businesses by government agencies.
    The DAS system is economically inefficient and has provided no 
incentive for harvesters to protect the resource. Furthermore, New 
England's fishery management and stakeholder groups have become rife 
with resentment and conflict. Fish stock population sizes and the food 
web are now severely unbalanced, and the New England groundfishery 
yields less than 20 percent of its economic potential while fishermen 
go broke. DAS backed up with daily trip limits has failed miserably 
because it is both static and rests upon false assumptions about fish 
and about fishermen. These are the facts.
    One solution to this mess has been found in several other U.S. and 
foreign fisheries, and is really rather simple in concept. As in other, 
successful land-based resource extraction industries, limited harvest 
rights to the resource must be assigned prior to the actual harvest. In 
fisheries, this concept is called ``catch-share management.'' Under 
catch shares, fishermen or groups of fishermen, known as ``sectors,'' 
are assigned a percentage of the total quota for each species, usually 
based upon their prior catch history. They are then free to harvest 
their shares in whatever way maximizes business efficiency and overall 
profit.
    Here are some more facts. The NEFMC has spent several years 
designing a sector program to replace DAS and to place management back 
in the hands of fishermen. My first assignment on the Council was to 
join the Sector Management Committee, chaired by the late John Nelson, 
long before anyone around here had ever heard the name ``Lubchenco'' or 
the term ``catch shares''. It was no rush job and all of the meetings 
were completely open. We knew it was a huge step and we wanted to get 
it right. There were several public hearings and the full Council 
deliberated the minutest details over many public meetings. Contrary to 
what has been written and implied, there were no back room deals with 
enviros or politicians or mysterious big-money financiers. If anyone 
seriously thinks some big city money types are going to move in and 
turn a quick profit in the New England groundfishery I sure wouldn't 
want him managing my retirement portfolio. In fact, the entire New 
England groundfishery currently has a much lower annual gross income 
than the drugstores alone do in just my one small state. Dr. Lubchenco 
did come to the NEFMC after her appointment last spring to give us a 
pep talk, but the sector plan was already mostly completed and neither 
she, nor any environmental NGO's, nor the current administration had 
anything at all to do with it.
    Here is another fact. The claim that we are ``privatizing a public 
resource'' is ridiculous, since we already privatized access to the New 
England groundfishery years ago with limited entry in Amendment 5. If 
you don't have a permit you can't fish, and permits are both limited in 
number and expensive. ``Privatization'' by limited access is not the 
same thing as ``property rights''. In fact, no action by the NEFMC or 
NMFS can create property rights to fish before they are harvested 
because it is against the law. The Magnuson Act, Sec 303A, is very 
clear on that point. It totally prohibits property rights to fish 
before they are harvested.
    Management of the New England groundfishery has been a third of a 
century of failure. The sector system of catch shares could also fail, 
but if we do nothing we are certain to fail. Catch shares could fail if 
we continue to manage single species instead of the entire twenty-stock 
complex. They could fail if we continue to have a plethora of multiple 
fishery management plans for overlapping fisheries that use different 
management methods and often don't even start their management year on 
the same day! Doing a separate EIS for each of several simultaneous 
actions in nearly a dozen different plans that cover the same piece of 
ocean is just plain nuts! Catch share management by sectors is certain 
to have some unforeseen and unintended consequences that will require 
adjustment, and if we can't make that process more efficient sectors 
could fail, not because the idea itself is wrong but because of our own 
inefficiency.
    The sector management plan in Amendment 16 was designed in an open 
process by the New England Fishery Management Council in a good-faith 
effort to bring back a devastated regional industry that most of us 
have been a part of and that all of us care about. It is time to 
implement the plan. It is time to finally move forward.
                                 ______
                                 
    [A letter submitted for the record by Britton Shackelford, 
President, North Carolina Watermen United, follows:]

March 29, 2010

Madeleine Bordallo, Chairwoman
Subcommittee on Insular Affairs, Oceans & Wildlife

Chairwoman Bordallo,

    Enclosed is a copy of the letter the North Carolina Watermen United 
sent to North Carolina's Governor Perdue to request state support for 
No Catch Shares and for support for the U.S. Congressional Senate Bill 
1255 and House Resolution 1584--Flexibility in Rebuilding American 
Fisheries Act of 2009. The letter is dated November 25, 2009.
    Today, March 29, 2010, we are still opposed to Catch Shares and are 
working for the passage of the Flexibility in Rebuilding American 
Fisheries Act. We believe that flexibility would allow the time for 
accurate Stock Assessments which could be used for making Fishery 
decisions based on the Best Science, not the Best Available, which is 
often incomplete and inaccurate.
    With Good Science, we would have no need for Catch Shares which has 
proven to limit catches regardless of the Stock numbers and to put 
fishermen out of their jobs--in a time when it is important to keep 
jobs. Fishermen are not asking for hand-outs or ``Stimulus Money;'' 
they are only asking to be allowed to continue fishing.
    We ask for support from you and your Committee to oppose Catch 
Shares.

Yours truly,

Britton Shackelford
President
North Carolina Watermen United

Enclosure
                                 ______
                                 
November 25, 2009

Dear Governor Perdue,

    The North Carolina Watermen United is respectfully requesting the 
North Carolina Governor's Office and our North Carolina Congressional 
Delegation to join other East Coast Atlantic states, along with the 
Gulf States, to see the inherent flaws in Catch Shares and Limited 
Access fishery programs which denies the traditional users--commercial 
harvesters, charter/headboat operators, recreational fishermen and 
seafood consumers--access to our fishery resources.
    Your Office and the North Carolina U.S. Congressional Delegation 
have already received letters from the North Carolina Watermen United 
and others asking for your support of H.R. 1584 (S. 1255)--[Flexibility 
in Rebuilding American Fisheries Act of 2009] which will allow 
flexibility within the time frame for rebuilding fish stocks.
    History has borne out that Catch Shares and Limited Access programs 
do not allow the most fundamental responsibility of the Magnuson-
Stevens Fishery Conservation and Management Act--to maximize the net 
economic value from the use of a public resource.
    The North Carolina Watermen United look forward to working with you 
and a coalition of other Atlantic coastal states so that we can keep 
our fishery resources available for all its consumers while maintaining 
healthy stocks.

Yours truly

Britton Shackelford
President
North Carolina Watermen United
[email protected]

cc:  Tate Johnson, Director, Eastern Governor's Office
    North Carolina Congressional Delegation
    State Senator Marc Basnight
    State Representative Tim Spear
    Dare County Board of Commissioners
    Dare County Commission for Working Watermen
                                 ______
                                 
    [A statement submitted for the record by The Honorable 
Simeon Swetzof, Jr., Mayor, City of Saint Paul Island, Alaska, 
follows:]

  Statement submitted for the record by The Honorable Simeon Swetzof, 
             Jr., Mayor, City of Saint Paul Island, Alaska

    Madam Chair, members of the committee, my name is Simeon Swetzof, 
Jr., and I am the Mayor of the City of Saint Paul Island, Alaska. I am 
also a commercial halibut fisherman, which is how I make my living, and 
a subsistence hunter. I appreciate having the opportunity to offer 
comments to the Subcommittee on our experiences with catch shares as a 
Bering Sea community. This is an extremely important issue to the 
community of Saint Paul Island, as it is thanks to the catch share 
program known as the Bering Sea Aleutian Island Crab Rationalization 
Program that Saint Paul continues to survive today.
    Saint Paul is a unique community located in the middle of the 
Bering Sea whose history is intricately tied to the history of Alaska. 
Saint Paul's 450 residents are mostly Aleut Natives and it's known as 
the largest Aleut community in the world. Since time immemorial, the 
Aleut people have depended on the bounty of the Bering Sea for their 
survival and have lived in harmony with its abundant resources. Pelts 
of northern fur seals were harvested on Saint Paul and Saint George 
islands (known as the Pribilof Islands) from the days of Russian 
colonizers. This operation was so profitable that it spurred U.S. 
interest in acquiring Alaska in 1867. For over a century, Saint Paul 
was not allowed to develop a commercial fishing industry due to the 
exclusive federal management of the fur seal harvest. The fur seal 
harvest was phased out by the federal government in the 1980s, and the 
community of Saint Paul was forced to scramble for alternative means to 
survive. Since oil and gas exploration were not an option at the time 
the logical choice was to develop a fisheries-based economy.
I.  Saint Paul's Dependence on the Bering Sea Snow Crab Fishery
    Because most of the Bering Sea fisheries were already capitalized 
by this time, one of the few fisheries that Saint Paul could 
participate in was the snow crab fishery. The federal, state, and local 
governments, as well as the private sector poured tens of millions of 
dollars into Saint Paul Island to develop a harbor and the 
infrastructure necessary to become a viable port for the Bering Sea 
crab fishing industry. The infrastructure necessary to support the 
development of a fisheries-based economy included a fuel farm, a power 
plant, water storage facilities, a landfill, and other utility 
upgrades. Saint Paul became one of the most highly indebted communities 
on a per capita basis in Alaska.
    These investments, however, paid off. With its proximity to the 
fishing grounds and the investments in infrastructure, Saint Paul 
thrived as the port of choice in the derby-style snow crab fishery of 
the late 1980s and 90's. Saint Paul-based processors came to process 
close to 40% of the Bering Sea's snow crab. Processors based on 
neighboring Saint George processed another 10%, and most of the 
remainder was processed in Unalaska/Dutch Harbor. Together these three 
communities processed over 90% of all the Bering Sea's snow crab. In 
the cases of Saint Paul and Saint George, these two communities are 
almost entirely dependent on crab processing, unlike other communities 
with a diversified fisheries and economic base.
II.  The Collapse of the Snow Crab Fishery
    In the year 2000, the snow crab stocks suffered a collapse of about 
85% from levels close to 200 million pounds to 25 million pounds. This 
collapse meant that from one year to the next, 85% of Saint Paul's 
economy vanished. Jobs were lost, processing facilities were shuttered 
up, and longtime residents, particularly youth, left the island. The 
community of Saint Paul faced economic, demographic, and cultural 
extinction. In recognition of the situation, the Secretary of Commerce 
declared a commercial fishery failure in the Bering Sea snow crab 
fishery due to the resource disaster. The Secretary declared Saint Paul 
an affected fishing community under the Magnuson-Stevens Fishery 
Conservation and Management Act which entitled Saint Paul and other 
affected communities to federal assistance. In addition, a vessel 
buyback program was put into place to help ease the dislocation that a 
collapsed fishery would necessarily cause on the industry.
III.  Efforts to Save the Community
    In order to save the community, community leaders worked together 
with a coalition of harvesters, processors, and other key crab 
dependent communities such as Unalaska and Saint George to develop a 
management program that would protect the investments that all sectors 
had made in the snow crab fishery. Through these efforts and the wise 
leadership of the Alaska Congressional Delegation and the State of 
Alaska, the Bering Sea Crab Rationalization Program was born. 
Understanding the clear benefits of the program to the various 
stakeholders, the NPFMC voted unanimously to adopt the program in 2002. 
Congress approved the program in January of 2004.
IV.  Community Protections in the Bering Sea Snow Crab Catch Share 
        Program
    From a community perspective, the Crab Rationalization Program 
includes a number of protections that ensure the continued 
participation of communities in the snow crab fishery. In a collapsed 
commercial fishery, consolidation of the crab fishing fleet and other 
crab-related infrastructure was inevitable. This would have potentially 
led to the demise of some crab-dependent communities. The program also 
sought to protect the considerable federal, state, and municipal 
investments made on Saint Paul that proved invaluable in developing a 
commercially successful crab fishery in the Bering Sea.
    One of the unique adaptations of the program is the concept of 
regionalization. This concept is intricately intertwined with the 
protections granted to other sectors. Harvesters, processors, and 
crewmembers are issued shares in recognition of their investments and 
stake in the fishery. A percentage of these shares are then subject to 
regional delivery requirements that are based on communities' historic 
participation in the fishery. Saint Paul is located in the so-called 
Northern Region. As a northern region community, Saint Paul therefore, 
is assured of a continued flow of required deliveries to processors 
that are based on the island.
    The other main protection extended to crab-dependent communities 
under the Bering Sea Crab Rationalization Program are rights of first 
refusal (ROFR) on certain transfers of processor quota shares (PQS) 
derived from processing in a particular community. A ROFR is triggered 
in favor of an eligible community if the current PQS holder engages in 
a transaction that will remove the PQS from its community of origin. In 
this manner, a community has the opportunity to acquire the PQS 
involved in the potential transaction, preventing its removal and the 
associated economic activities from migrating elsewhere.
    One of the main weaknesses of ROFRs in this program is that 
communities may not have the financial wherewithal to exercise a ROFR 
in a multimillion dollar transaction. The North Pacific Fishery 
Management Council (NPFMC) is considering modifications that will 
strengthen a community's ability to respond to a ROFR. In addition, 
with the support of the NPFMC, the five primary crab-dependent 
communities in the program have reached out to the U.S. Congress and 
the Administration to develop a loan program that would enable 
communities to more effectively exercise their ROFRs. Such a loan 
program would be consistent with the Administration's efforts to 
increase community participation in the nation's commercial fisheries. 
Notwithstanding these weaknesses, ROFRs are still a valuable tool for 
communities and they strengthen the sense that the residents of a 
fishing community have about their stake in the surrounding fisheries.
V.  Implications for Saint Paul's Broader Economy
    The activities of the processing facilities and the crab fleet on 
Saint Paul Island, which are made possible by the Crab Rationalization 
Program, generate local jobs and demand for local goods and services, 
and air transportation. Local enterprises are partnered up with the 
processing companies as landlords and in other business ventures. In 
addition, between 300 and 400 non-residents work at the shore-based 
processing facility during the crab season thereby contributing greatly 
to local economic demand. The city government for its part receives 
fisheries business tax and sales tax revenues related to the sale of 
fuel and other services that are key to the municipal budget, continued 
infrastructure investments in the community, and the salaries of local 
employees. There is no question that Saint Paul has benefitted greatly 
from the program, even though the community's revenues are still at 85% 
of what they were in 1999.
    The local halibut fishery in which local fishermen such as me 
engage in also depends indirectly on crab processing. Without the 
levels of crab deliveries and processing guaranteed by regionalization, 
the processors would have closed their facilities a long time ago. This 
would have left local fishermen with no place to deliver halibut for 
processing and packing, as halibut fishing by itself is insufficient to 
generate the revenue necessary to keep a processing operation viable on 
Saint Paul. The sixteen active Saint Paul halibut fishermen are the 
primary family-owned small business operations based on the island. 
Each fisherman employs between three to six people including 
crewmembers, baiters, and babysitters. Their donations of subsistence 
halibut to the elderly and other disadvantaged residents is an 
important source of sustenance for many on Saint Paul. Their 
disappearance, therefore, would wipe out the main small business 
activity on the island and constitute a severe loss to many residents.
    In addition, without crab processing, the community would be unable 
to attract investment in the infrastructure and other upgrades 
necessary to diversify into other commercially valuable species such as 
pollock and cod, which have potential to be processed on Saint Paul, 
and to survive in the long term.
    Today, the snow crab stock levels continue to be low in relation to 
the levels witnessed in the 1990s. The total allowable catch for this 
past season was set at about 48 million pounds. As such Saint Paul 
continues to face economic difficulties. However, by ensuring 
deliveries of crab to Saint Paul, the Bering Sea Crab Rationalization 
Program has allowed the community to survive. The program has also 
provided Saint Paul with the opportunity to continue diversification 
efforts into other fisheries. And, finally it has allowed the community 
to continue to hope for a future on this unique island.
    The City of Saint Paul Island thinks that there are valuable 
lessons to be shared with other fishing communities in our successful 
experience with a catch share program. Thank you for this opportunity 
to offer comments to the Subcommittee on our experiences with catch 
shares in the Bering Sea.
                                 ______
                                 
    [A statement submitted for the record by Stephen Taufen, 
Groundswell Fisheries Movement, Kodiak, Alaska, follows:]

         Statement submitted for the record by Stephen Taufen, 
             Groundswell Fisheries Movement, Kodiak, Alaska

    Dear Chairwoman Madeleine Z. Bordallo and Subcommittee members:
    Congress should call for a three-year moratorium that firmly stands 
down the Secretary of Commerce's ability to approve Dedicated Access 
Privilege (DAP) programs (``Catch Share'' allocations) until more is 
known about their actual effects. Revisions in the Magnuson-Stevens Act 
are needed to preserve Constitutional due process, equality (Equal 
Protection Clause), economic sovereignty and other rights.
    I'm Stephen Taufen, an Alaska fish industry insider who blew the 
whistle on the illicit accounting practices of processing corporations 
who--acting as ``resource vultures''--use product laundering to control 
the means of production, product mixes, and move profits across 
national borders. These tax avoidance tactics and revenue shifting 
strategies (abusive Transfer Pricing) gravely harm our Nation.
        A `transfer price' is the price charged by one company to a 
        related company whenever they allocate income and expenses 
        among themselves. The bottom line is whether or not the U.S. 
        (host nation) company properly reflects income attributable to 
        its operations in the U.S., or whether its foreign parent is 
        using illicit accounting and pricing strategies to avoid higher 
        effective U.S. taxes--and to transfer profits offshore and jobs 
        to home and foreign nations. Refer to: U.S. Internal Revenue 
        Code section 482 Transfer Pricing, and related code.
    Allocation of fishery quota rights to transnational firms grants 
them ``plenary power'' over our fisheries economy, creating job losses 
and negative shocks to economic multiplier benefits that belong in the 
USA.
    The conversion of the public's common resource privileges to catch 
shares for fish vessel owners can also foster fleet cooperative 
agreements with such processors in a way that supports price-fixing, 
rewards certain competitors instead of competition itself, and 
establishes restraints of trade. In Alaska, all of this has occurred 
through the species-by-species march of rationalization regimes: 
pollock, crab, and rockfish.
    In effect, all of these privatization regimes are coercive 
monopolies--in violation of market theory and tenets of competition--
that only governments have the power to wickedly form. ``Once 
commodified, fishing rights are alienable.''--Courtney Carothers, 
``Rationalized Out''
    For 18 years, I've cooperated with federal law enforcement agencies 
in uprooting these harms and to aid the removal of Ted Stevens (R-AK) 
from the U.S. Senate. Only with this corrupt senator gone is it now 
possible for Congress to take back its powers over our nation's 
fisheries laws and assist fishermen in correcting the flaws of the 
Magnuson-Stevens Act. Your renewed efforts are greatly appreciated.
    Directed Access Privilege (DAP) ``catch shares'' programs--
especially those ``privatizing regimes'' that establish ``tradable'' 
(asset commoditized) fishery allocations--have the following negative 
consequences:
    1.  DAPs threaten economic sovereignty.
         a.  Home and insular territories are negatively affected re 
        rights of U.S. citizens for reciprocity in the conduct of trade 
        and indigenous peoples' rights to self-determination.
    2.  DAPs resulted in a Resource Curse in Alaska--``the Paradox of 
Plenty'' can also occur elsewhere.
         a.  A few strong players link with corrupt politicians to 
        secure high rents for themselves, while destructing the 
        development of a wider economic middle class.
    3.  DAPs have violated WTO treaty rights and NAFTA/CAFTA trade 
agreements.
         a.  In Alaska, Pollock and crab (and soon the rockfish) 
        processor rights largely flow to Foreign-controlled 
        Corporations (FCCs) who have been granted corporate resource 
        acquisition, food manufacturing and distribution rights, in 
        perpetuity: no longer available to other nations' firms.
         b.  A WTO challenge to this exclusivity--allowed only to 
        certain foreign-owned multinational enterprises--would likely 
        be upheld. The USA could face WTO sanctions, imposed on other 
        products or economic segments.
    4.  DAPs lead to directive and control by non-participants outside 
fishery dependent coastal regions.
         a.  Using market and financial powers superior to fishermen 
        and coastal communities, DAPs allow a combination of FCCs, 
        large food conglomerates (e.g. WalMart and other hypermarts), 
        and investor class (hedge fund and mutual fund groups), as well 
        as environmental non-government organizations (ENGOs) to gain 
        control in perpetuity over U.S. fishing quotas to secure cheap 
        sources of high volume supply at the expense of our fishery 
        dependent communities and economy.
    5.  DAPs in Alaska have allowed a Closed-Class of Processors to 
avoid Value-added production.
         a.  USA jobs have been lost as the increased market powers 
        granted FCCs who received processor quotas and linkage rights 
        to supplies have failed to generate the promised increases in 
        value-added production in our host nation, exacerbating 
        deficits in the net national balance of trade in fisheries. 
        Coercive monopolies control the means of production and 
        determine markets.
         b.  This goes hand-in-hand with the illicit purposes of 
        creating and operating ``hollow subsidiaries'' in our host 
        nation, as value-added failures lower U.S. side revenues and 
        revenues on the seller (fisherman) level, too. American 
        consumer choices are subjugated to corporate paradigms.
    6.  DAPs foster Global Tax Evasion and Restraints of Trade via 
FCCs' Hollow Corporations.
         a.  Using abusive (illegal) accounting practices as part of 
        global strategies to evade U.S. taxes, in violation of Internal 
        Revenue Code Sec. 482 Transfer Pricing and related regulations, 
        FCCs who operate ``hollow subsidiaries'' within the USA (host 
        nation) manipulate operating profit. Again, this allows a 
        ``closed-class of large processors'' to practice restraints of 
        trade and horizontally fix prices against U.S. sellers 
        (fishermen) on the ex-vessel (seller) level.
              i.  The Seattle IRS-CID and International divisions can 
            advise Congress on the harms to the Treasury, and discuss 
            their limited enforcement and audit efforts to date, and 
            estimated shortfalls to the net U.S. balance of trade. But 
            it is important to note that tax recoveries (low settlement 
            compromises) do not recover the net-of-tax majority of 
            profits product laundered or correct the multiplier 
            benefits lost.
         b.  A proportionally low percentage of the full value of fish 
        products is paid out on the seller side (ex-vessel). This 
        places great risk on the Nation in cases where a fishery might 
        collapse and the social and economic costs then must provided 
        for by government assistance and bankruptcies. The UN-FAO and 
        World Bank recognize the increasing trend to lower supplier 
        segment ratios as similar threats to governments around the 
        globe.
    7.  DAPs have caused Regulatory Capture of Regional Fishery 
Management Councils.
         a.  Councils become so dominated by corporate special 
        interests that the historical rights of active participants--
        such as Alaska's crab and groundfish crewmember--are unable to 
        be recognized in the process of allocation amendments, options 
        and elements.
    8.  DAPs have abrogated Crewmembers' maritime law ``Lay Share'' 
contract rights, as exorbitant Lease fees are extracted by quota 
Sealords. In legal terms, this is unjust enrichment. It ignores the 
lifetime boots-on-deck investments of crewmembers, which is equally 
important to the amortized (recovered) financial expenditures and 
government subsidized vessel procurements. Future opportunities to work 
one's way up to the wheelhouse and to eventual vessel ownership end 
once privatization giveaways begin.
        ``Labor is prior to, and independent of, capital. Capital is 
        only the fruit of labor, and could never have existed if labor 
        had not first existed. Labor is superior to capital, and 
        deserves the much higher consideration.''--Abraham Lincoln
        Interference by quota Sealords who extract exorbitant leases 
        (high rents) off-the-top before doing normal Trip Settlements 
        results in third-party exploitation and contradicts contract 
        bargaining rights of skippers and crew.
        In Alaska, the Council ``Crab Ratz'' privatization process 
        proceeded without proper consideration of one of the most 
        applicable U.S. laws, 46 U.S.C. Sec. 10601 (and Sec. 11107) on 
        Lay Share rights for crews contracted to fish on vessels over 
        20 gross tons. The upcoming Gulf of Alaska Rockfish 
        Rationalization regime contains plans to similarly ignore the 
        30% to 40% historical rights of crewmen.
               i.  Section 10601 states, in relevant part:
                  1.  Before proceeding on a voyage, the owner, 
            charterer, or managing operator, or a representative 
            thereof, including the master or individual in charge, of a 
            fishing vessel, fish processing vessel, or fish tender 
            vessel shall make a fishing agreement in writing with each 
            seaman employed on board if the vessel is at least 20 gross 
            tons and on a voyage from a port in the United States.
                  2.  The agreement shall--(1) state the period of 
            effectiveness of the agreement; (2) include the terms of 
            any wage, share, or other compensation arrangement peculiar 
            to the fishery in which the vessel will be engaged during 
            the period of the agreement; and (3) include other agreed 
            terms.
              ii.  46 U.S.C. Section 11107 states, in support of 
            Sec. 10601 that
                  1.  An engagement of a seaman contrary to a law of 
            the United States is void. If the engagement is void, the 
            seaman can recover ``the highest rate of wages at the port 
            from which the seaman was engaged or the amount [of] agreed 
            [wages]...at the time of engagement, whichever is higher.''
         b.  Coercion of crewmembers who attempted to give public 
        comment also occurred by their vessel owners and skippers 
        during NPFMC sessions.
              i.  The FBI and NOAA-OLE were asked to investigate this 
            coercion (see Addendum A for an article on the problem, and 
            a link to part of the actual evidence of vote-rigging 
            etc.).
             ii.  The Crewmembers Association has been long awaiting a 
            reply from past NOAA Administrator James Balsiger about 
            what the Inspector General's office is doing.
         c.  Hundreds of millions of dollars are extracted in high 
        rents by quota Leases, across a collection of major species--
        and Congress should first quantify these economic extractions 
        (exorbitant rents) and the role of bankers (seeking interest 
        income) before proceeding on future DAPs.
              i.  This is an inherent requirement to guarantee that 
            DAPs do not become modern ``letters of marquee and 
            reprisal'' (privateer grants) or act in the Insular 
            territories as if ``Deeds of Economic Maritime Cession'' to 
            foreign interests (a non-USA Thalassocracy--regime of the 
            sea).
    Ex-Senator Stevens regularly used propaganda such as criticizing 
factory trawlers as foreign-owned (by Norwegians, who had already 
converted to American ownership) while ignoring his legislative 
shifting of rights to FCCs (from Japan and Korea) in the ill-named 
American Fisheries Act (Pollock privatization).
    However, Stevens' hypocrisy was regularly exposed by disingenuous 
but responsibly sounding statements on the Senate podium that his 
legislative acts then failed to uphold; a primary example being:
        ``I'm worried about the IFQ's from the point of view of having 
        another piece of paper that must be purchased by an entrant to 
        the fishery, to the point where only the corporations or the 
        very wealthy can become real participants in the fishery.''--
        Senator Ted Stevens
    However, speaking such a paramount truth is only as good as the 
legislation that actually backs it up.
    Congress should ask these serious questions before initiating more 
DAPs:
        ``If we could not prevent Alaska's major ports from becoming 
        economic branches of foreign nations, stop the Transfer Pricing 
        abuses bleeding off billions of dollars per year and prevent 
        the Resource Curse and Regulatory Capture of the NPFMC, then 
        how can Congress justify further `Catch Share' regimes 
        elsewhere in the nation and its Insular regions?''
        ``If quota Sealords can extract high rents of up to 70% or more 
        right off the top of ex-vessel revenues (the seller segment 
        cutoff)--a `kleptocracy' transferring hundreds of millions of 
        dollars annually away from regional fishing economies--then do 
        DAP initiating arguments of `overcapitalization' and pending 
        bankruptcy hold any water as driving reasons; or are they 
        merely dishonest rationales to convert (through quota 
        giveaways) privileges to use public commonwealth to create 
        private property rights that only benefit a few select 
        carpetbaggers?''
SOLUTIONS:
      A three-year moratorium on developing or implementing 
further ``catch share'' programs.
      Independent research and analysis, including economic 
Impact studies, on all existing DAPs.
      Scientific and economic studies on the relative 
efficiencies and consumer benefits (traceability, quality) between 
small-scale and industrial (large-scale) fishing and processing 
operations.
      Treasury, Justice Department and Federal Trade Commission 
reviews of tax, antitrust and restraint of trade harms, as well as 
effects of Regulatory Capture and Resource Curse problems.
      Quantification of Abusive Transfer Pricing losses, 
resulting deficits in net national balance of trade.
      Quantification of losses due to Resource Curse ``high 
rents'' extraction by quota sealords.
      Assess States Rights and the coordinating compliances 
required to ensure regional economies do not fall prey to national 
policies that unjustly shift revenues, taxes and profits from states.
      Legislative debate and changes to MSA to define the 
parameters for economic management, and ensure all applicable laws 
(e.g. Lay Share statutes) are part of due process.
      Legislative changes to ensure stakeholder due process 
(GAO 06-0289 recommendations) and guidelines for scientific and legally 
justified Problem Statements and National Standard reviews before DAP 
amendments proceed.
      Increased protection through new legislation on 
``prohibited acts'' to prevent undue foreign influence, and to 
strengthen prosecution of abusive profit transfers and avoid tax 
losses.
    The above solutions and clarifications and legislative corrections 
should occur before ending the stand down (moratorium) on developing 
and implementing new Directed Access Privilege programs. Until then, 
allowable catch limits, bycatch mitigation measures, and other 
traditional fishery management tools can be used to better manage 
national fisheries.
        Bear in mind, as Robert F. Kennedy, Jr. of the Natural 
        Resources Defense Council reminded us, ``trespassing on common 
        property--is a form of subsidy that ought to end.'' And as 
        Peter Barnes, author of ``Capitalism 3.0'' states, ``...it's 
        possible to propertize a natural inheritance without 
        privatizing it... [as] Privatization goes further and assigns 
        property to corporate owners....[for] to whom are they 
        accountable for commons-based performance?... The basic idea is 
        to turn pieces of the commons into common property rather than 
        corporate property.''
    I appreciate your efforts in learning more about the real truths 
and complexities of ``Catch Share'' privatization regimes as 
implemented to date in the Alaskan region. Improving ``economic 
efficiency'' from a limited bundle of resources to benefit of consumers 
and maintain coastal communities is far superior to wrongfully 
``reframing'' needs of the Commons as ``productive efficiencies'' for 
corporate players hell-bent on solely maximizing profits.
    Rationalization schemes have been around for over 120 years as 
means of corporate takeovers of resources. One definition of 
``rationalization'' is, ``the cognitive process of making something 
seem consistent or based on reason.'' The truth lies in that 
definition, as DAPs only seem to be rational, when in effect they only 
convert and selectively ``ration'' ownership of the Public Commonweal 
to specific private entities. This disenfranchisement of living persons 
in no way serves the actual participants and the fishery dependent 
communities they live in.
    In closing,
        ``Earth has resources for everyone's needs, but not for 
        everyone's greed.''  --attributed to Mahatma Ghandi
Sincerely,
Stephen R. Taufen, founder of the Groundswell Fisheries Movement
_______________________________________________________________________
    Addendum: Crab Rationalization ``Damage Control'' Conspiracy 
article with link to evidence file.
    Must read: ``Enclosing the Fisheries: People, Places, and Power'' 
by Marie E. Lowe and Courtney Carothers, American Fisheries Society 
Symposium 68,--2008; 223 pgs.; ISBN 978-1-934874-05-09.
    U.S. Government Accountability Office report GAO 06-0289, February 
2006; ``FISHERIES MANAGEMENT: Core Principles and a Strategic Approach 
Would Enhance Stakeholder Participation in Developing Quota-Based 
Programs''; http://www.gao.gov/cgi-bin/getrpt?GAO-06-289 [See also: GAO 
GGD-95-101 & GGD-99-39.]
    Re ATP, see: Stephen Taufen's public comment to U.S. Commission on 
Ocean Policy, Seattle, WA, June 2002; which includes two papers, ``The 
WTO & Fisheries: An Issue of `Accountability and Transparency'--A Case 
of Global Production and Transfer Pricing Strategies versus Citizen-
Taxpayer Rights'' (1999 WTO Seattle; web published by the Institute of 
Agriculture and Trade Policy), and ``Transfer Pricing Affects Fish 
Catch and Sales Prices'' (published 1995 in the ``AIFMA Leader''); copy 
available on the Web at: http://oceancommission.gov/publicomment/
northwest
comments/taufen_comment.pdf
 Addendum: Evidence of ongoing plot against Crewmembers released for 
        first time.
    Crab Rationalization ``Damage Control'' Conspiracy is a Reality
    Anchorage, AK--December 11, 2008 (revised)--Disenfranchised crab 
crewmembers have sought since 2004 to restore the historical share of 
the individual transferable quotas (ITQs) that were taken from them in 
the Bering Sea and Aleutian Islands crab fisheries.
    At the North Pacific Fisheries Management Council (NPFMC) meeting 
here this weekend, crewmembers will try again to get a separate 
placeholder on the agenda--a Crew Reallocation Amendment to the 
Fisheries Management Plan (FMP) for Crab Rationalization (CR).
    National standards support that it is a ``fair and equitable'' goal 
to reallocate as much as $400 million of the initial $1.1 billion worth 
of Individual Transferable Quotas (ITQs) to all ``vessel operators''--
i.e. skippers and crew. Yet the Council persists in steering things 
towards violating federal Fisheries Acts that clearly establish no 
compensation needs to be made to existing ITQ holders, instead of 
taking the reallocation amendment course. Apparently, there is a reason 
why.
    The evidence attachment (see locator below for CrabConspiracy.pdf) 
surfaced in August of 2006, and speaks for itself. Crewmembers are 
obviously the target of this deliberate ``damage control'' plan that 
outlined how to continue defrauding them of permanent rights to access 
crab.
    Crab crewmembers should calmly remember that a tide must reach its 
lowest point before it begins to advance. Now the prudent option for 
crew is to channel justifiable anger into joining the Bering Sea Crab 
Crewmen's Cooperative--to obtain their historical rights back, and 
ensure Lay Share laws are followed.
The Conspiracy in 3 Nutshells:
    In short, three key elements were proposed to keep crewmembers at 
bay forever, and others were added when needed to keep any damage under 
uncompromising control.
    The first element was to combine two insurmountable hurdles of (1) 
allowing no motion for reconsideration or reallocation; and if that 
were to fail, then (2) to hold six council votes in opposition, in 
order to reject reconsideration. Inherent to such subjugation was that 
it might involve all voting Council members, save one, in order to 
ensure no motion was ever seconded by another member.
    The second element was to deliberately deny crewmembers the chance 
for equitable change ``by insisting on a minimum five-year trial run'' 
of crab privatization before modifications could be made. This 
roadblock flies in the face of the legal fact that the CR program could 
be changed at any time, without making any compensation to existing 
quota privilege holders.
    Meanwhile, processors and ITQ-holders have continually pressed the 
Council, successfully, to change the CR program to overcome their 
problems. The ``damage control'' plan helps explain why only token 
images of reciprocity were given crew concerns.
    The third element was to ``quiet angry voices with a prudent 
delay'' by ensuring that the Economic Data Report (EDR) information not 
be timely shared with crewmembers, so that they could not calculate 
historical participation rights using official data sources.
    NPFMC actions to date strongly indicate coherence with the 
conspiracy's blueprint. What clearer evidence is needed than the April 
2008 ``strong six'' voting record of the Council, data report delays, 
ITQ-holders' testimonies, and records of phone calls strong-arming crew 
into not voicing public comments that they had moments before signed up 
to give on the federal record? [Or the 2009 manipulations of the crew 
(and lease) discussion paper, that got tabled until the 5-year review 
process comes back up in October 2010?]
    The current Council approach of using a modifying motion that would 
merely lock crew into buying quota, from existing ITQ-holders if and 
when it ever comes up for sale, looks like the addition of ``a fourth 
element'' to the racket in progress.
    Be assured, federal law enforcement has been seriously looking into 
this for quite awhile. According to federal guidelines, ``Once 
existence of a conspiracy has been established, only a slight 
connection to the conspiracy is necessary in order to convict any one 
defendant of knowing participation.''
    Consider for example surveillance on January 28, 2004 that reveals, 
with crewmembers absent, the ``Distant Waters Committee'' met in 
Seattle before the February NP council meeting. Some attendees openly 
discussed how favorable it was for them to be in possession of most of 
the data necessary for scientists and economists to fully evaluate the 
CR program, and they gleefully talked of leaving it out of required 
impact reports: before the program even became law.
Lay Share Contracts Ignored:
    So, given such intents, it's no surprise that the award of ITQs 
blatantly disregarded ``lay share'' maritime contracts, required under 
46 U.S.C. Sec. 11107 and Sec. 10601 as amended, that should have 
certified the pre-rationalization level of historical skipper and crew 
participation rights.
    Instead, harvesting quotas were misallocated 97% to ``vessel 
owners'' and a meager 3% was given to skippers. Yet skippers 
historically got a ``lay share'' between 10 and 17% of harvest 
settlements, and the handful of crewmembers typically onboard each 
vessel historically split another 20 to 25%. But if they got 40% 
before, then why shouldn't they get 40% today--quotas or not?
    To resolve this requires a separate reallocation Amendment, 
particularly because crewmembers will keep facing these issues, 
nationwide for many species.
    Consequently, the recent 9th Circuit Court's pro-prosecution ruling 
on the Weyhrauch indictment's fraud charges may offer perspective about 
the ``honest services'' owed by public officials and agency decision-
makers.
States' Responsibility is Obvious:
    Former Alaska Governor and U.S. Interior secretary Walter Hickel 
said, ``If you steal $10 from a man's wallet, you're likely to get a 
fight, but if you steal billions from the commons, co-owned by him and 
his descendants, he may not even notice.''
    Moreover, when the government becomes extremely biased toward 
privatization of the public commons for special interests, then the 
eventual losers beyond taxpayers and consumers are the ecosystem and 
future generations who lose opportunities to exercise privileges to 
fish.
    Yet it is easy to redefine fixing Crab Rationalization as a moral 
imperative, with practical solutions. First, the State needs to get the 
crew reallocation Amendment in place. Second, it must end high lease 
rents on ITQs.
Squashing any Demagogue:
    If some of Alaska's NP council members were squarely in on the 
``damage control'' plan, then there's a good chance that Governor Sarah 
Palin is being deliberately blindsided by those inside connivers.
    The mastermind behind the ``confidential (sic) communication'' 
recommending damage control clearly expressed, ``Our final concern is 
that someday a newly-appointed NPFMC voting member from Alaska could 
mount a serious political crusade on behalf of Alaskan coastal 
communities and their resident local businessmen to `do the right 
thing' and `make things right for crab skippers and crewmen'--as it 
would be the unwelcome rise of a ``grass roots demagogue [who] could 
stress the political system in Alaska sufficiently to prompt a 
reallocation--to the detriment of our clients' interests.''
    Could someone explain just why protecting crewmembers would be 
considered ``a serious political crusade''--instead of the expected 
conduct of business for Alaska's federal council members?
    Is it possible that the successful implementation of this 
conspiracy also tainted the recent choice of a new Washington State 
representative to the NPFMC? Is the State of Alaska even aware of the 
federal lobbying dollars that key processors spent to influence the 
choice of who just got that position?
    Yes, Mr. Secretary, Congress, and Governor Palin, you will be asked 
to keep bowing before these resource kleptocrats--until you find the 
courage to stand up, execute the moral imperative, and stop this 
racketeering.
    We leave crewmembers with one final thought, from Mahatma Gandhi, 
``First they ignore you, then they ridicule you, then they fight you, 
then you win.''

Stephen Taufen, Groundswell Fisheries Movement--Website:
http://groundswellalaska.com

Locator for Original Article:
http://alaskareport.com/news1208/x61838_crew_conspiracy.htm

Locator for evidence attachment:
http://alaskareport.com/pdf/CrabConspiracy.pdf
                                 ______
                                 
    [A letter submitted for the record by James and Shirley 
Zuanich, Bellingham, Washington, follows:]

March 15, 2010

Subcommittee on Insular Affairs, Oceans and Wildlife

To Whom It May Concern;

    Quota shares seem to have become the latest panacea for fisheries 
resource problems both real and perceived.
    While the `Q' of IFQ is necessary biological management, the `IF' 
is largely social and economic.
    If a reasonable scientifically supported quota is determined and 
enforced, it is in most cases immaterial, from a biological standpoint, 
whether that quota is harvested by individual shares or in an open 
access fishery. IFQ fisheries will generally be somewhat safer for 
participants and can significantly increase ex-vessel value, but it is 
hard for me to see where they have much biological impact in the 
fisheries I am familiar with.
    Halibut and black cod IFQ regimes created broad based ownership of 
the resource. They provided for the sustainability of small ``blocked'' 
share that have been instrumental in allowing crew men to acquire 
assets in the fishery. They made an especially dangerous fishery safer, 
provided a steady stream of product to the market, and have increased 
the value of the fishery substantially.
    Crab IFQ's have also made that fishery safer. They have made the 
fishery more lucrative, but not necessarily for fishermen. Crab IFQ's 
have concentrated ownership in the hands of a few and made the limited 
number of owners extremely rich. They have eliminated well over half 
the jobs in the fishery without making the remaining jobs any better 
paying. In fact, creating competition for the few remaining jobs while 
limiting boats, has actually made the remaining jobs substantially less 
lucrative.
    If created at all (and most often they should not be,) it is my 
observation that IFQ fisheries need to be designed with great care. 
They will not automatically, if at all, lead to more sustainable 
harvest. They can create fisheries in which a small handful of quota 
share owners reap fortunes while jobs and small businesses are 
destroyed. They can destroy the economic basis for communities.
    Fishing people generally love their work and the culture of 
fishing. In spite of the cold and wet, and the absences from home, 
generally fishing families feel privileged to be a part of this world. 
You would have to be there to understand, but it is true.

Sincerely,

James and Shirley Zuanich Bellingham, Washington
                                 ______
                                 
To the Committee of Insular Affairs, Oceans and Wildlife;

    I keep thinking about this issue of catch shares, and the over 
arching problem for me is this; a few people and organizations will 
enjoy fantastic power and wealth because of catch shares. I need not 
recite to people in Washington DC what our country has recently endured 
because of too much power and wealth in the hands of the few and the 
subsequent cozy relationship with the government regulators who were 
supposed to be checking them. State of Alaska fisheries management was 
referred to by the National Geographic as ``State of art,'' in 
fisheries management. The hallmark of Alaska fisheries management, 
(outside of halibut and crab) has been broad `ownership' of those 
resources by many, many independent small businesses, whose store front 
happens to be a boat. Catch shares may seem like the silver bullet for 
fisheries management, but I promise you, as fewer and fewer people get 
wealthier and wealthier by the catch share system (and this will 
happen) fisheries biologists will lose their scientific autonomy to 
undue political pressure. On a personal note, knowing about the 
'heavyhitters' in our industry, like any other industry, generally, but 
not all of these folks are not nice people, whose main interest is 
their own interest.
    PLEASE, USE WISDOM! Walmart is a heavy contributor to the 
Environmental Defense Fund. What is their motive? Environmental groups 
(and I am largely a Democrat)) are as subject to charlatans and 
charismatic nut cases as any other group-type.

Sincerely,

Shirley Zuanich

                               * * * * *


    OVERSIGHT HEARING ON ``A COMMUNITY PERSPECTIVE ON CATCH SHARES''

                              ----------                              


                        Thursday, April 22, 2010

                     U.S. House of Representatives

          Subcommittee on Insular Affairs, Oceans and Wildlife

                     Committee on Natural Resources

                            Washington, D.C.

                              ----------                              

    The Subcommittee met, pursuant to call, at 10:07 a.m. in 
Room 1324, Longworth House Office Building, Hon. Madeline Z. 
Bordallo presiding.
    Present: Representatives Bordallo, Kildee, Pallone, 
Christensen, Capps, Shea-Porter, Kratovil, Inslee, Brown, 
Cassidy.

  STATEMENT OF HON. MADELINE BORDALLO, A DELEGATE IN CONGRESS 
                   FROM THE TERRITORY OF GUAM

    Ms. Bordallo. The oversight hearing by the Subcommittee on 
Insular Affairs, Oceans, and Wildlife will come to order. 
Today, we will hear testimony on ``A Community Perspective on 
Catch Shares.''
    Rebuilding fisheries has clear ecological and economic 
benefits for fish, fishers, and the fishing communities. To 
achieve these benefits, fisheries must be managed using the 
best available science and a suite of management tools, 
including, but not limited to, catch shares. Catch share 
programs are one fishery management tool in which fishermen, 
cooperatives, or communities are allocated a specific portion 
of a total allowable fishing quota.
    Management of fisheries using catch shares has thus far 
been limited in the United States with only 15 existing 
programs that have had mixed results. However, under the Obama 
Administration, the National Oceanic and Atmospheric 
Administration has taken steps to actively promote the use of 
this particular tool through a draft policy and a Fiscal Year 
2011 budget request of $54 million for a national catch share 
program.
    If funded, this would more than double the catch share 
budget at the agency. Given the clear drive toward this one 
fishery management tool, the Subcommittee held a hearing in 
March on the need to carefully design and implement the catch 
share programs to ensure their success as a conservation and 
management tool.
    At the hearing, there was common ground on the need for 
better data and monitoring to make management decisions and 
community involvement in setting goals. However, there was 
limited agreement on the prioritization of catch shares over 
other fishery management tools. Proponents argued that catch 
share programs reduce bycatch and increase efficiency, while 
opponents are concerned about fleet consolidation and the costs 
of implementation.
    What was clear was that once a catch share program is put 
into place, it is very difficult to go back and address any 
unintended consequences. Although these consequences are 
difficult to predict, it is critical that we continue to 
discuss the potential social and economic impacts of 
implementing catch share programs. Today's hearing, therefore, 
focuses on the individual community's experiences and concerns 
related to the adoption of this fishery's management tool.
    So, I look forward to hearing from our witnesses today to 
gain a better understanding of fishing communities' 
apprehensions and aspirations regarding catch share programs. 
As we all know, in celebrating the 40th anniversary of Earth 
Day today, stewardship of our resources begins locally. In 
order to conserve our nation's fisheries, it is imperative that 
the National Marine Fisheries Service consider the concerns of 
the people who call our fishing communities home.
    And I now would like to recognize Mr. Brown, the Ranking 
Republican Member of the Subcommittee, for any opening 
statement that he may have.
    [The prepared statement of Chairwoman Bordallo follows:]

     Statement of The Honorable Madeleine Z. Bordallo, Chairwoman, 
          Subcommittee on Insular Affairs, Oceans and Wildlife

    Rebuilding fisheries has clear ecological and economic benefits for 
fish, fishers, and fishing communities. To achieve these benefits, 
fisheries must be managed using the best available science and a suite 
of management tools, including, but not limited to ``catch shares''. 
Catch share programs are one fishery management tool in which 
fishermen, cooperatives, or communities are allocated a specific 
portion of a total allowable fishing quota.
    Management of fisheries using catch shares has thus far been 
limited in the United States, with only fifteen existing programs that 
have had mixed results. However, under the Obama Administration, the 
National Oceanic and Atmospheric Administration has taken steps to 
actively promote the use of this particular tool through a draft policy 
and a Fiscal Year 2011 budget request of $54 million for a National 
Catch Share Program. If funded, this would more than double the catch 
share budget at the agency.
    Given the clear drive towards this one fishery management tool, the 
Subcommittee held a hearing in March on the need to carefully design 
and implement catch share programs to ensure their success as a 
conservation and management tool. At the hearing, there was common 
ground on the need for better data and monitoring to make management 
decisions, and community involvement in setting goals.
    However, there was limited agreement on the prioritization of catch 
shares over other fishery management tools. Proponents argued that 
catch share programs reduce bycatch and increase efficiency, while 
opponents are concerned about fleet consolidation and the costs of 
implementation.
    What was clear, was that once a catch share program is put into 
place, it is very difficult to go back and address any unintended 
consequences. Although these consequences are difficult to predict, it 
is critical that we continue to discuss the potential socio-economic 
impacts of implementing catch share programs. Today's hearing, 
therefore, focuses on the individual communities' experiences and 
concerns related to the adoption of this fisheries management tool.
    I look forward to hearing from our witnesses today to gain a better 
understanding of fishing communities' apprehensions and aspirations 
regarding catch share programs. As we all know, in celebrating the 40th 
anniversary of Earth Day today, stewardship of our resources begins 
locally. In order to conserve our nation's fisheries, it is imperative 
that the National Marine Fisheries Service consider the concerns of the 
people who call our fishing communities home.
                                 ______
                                 

  STATEMENT OF HON. HENRY E. BROWN, JR., A REPRESENTATIVE IN 
           CONGRESS FROM THE STATE OF SOUTH CAROLINA

    Mr. Brown. Good morning, Madame Chair, and Happy Earth Day.
    Ms. Bordallo. Thank you.
    Mr. Brown. Now, Madame Chair, as I mentioned in my 
statement in the last catch share hearing, thousands of 
recreational, charter, and commercial fishermen came to 
Washington, D.C., in February to air their concerns about the 
direction fishery management has taken in this country. Rarely 
do we see all of these fishery sectors speaking with one voice, 
but in this case, we did.
    At a Subcommittee hearing on catch shares in March, we 
heard a number of themes that were echoed by Members on both 
sides of this dais--that better science is needed before 
fishery managers can make good decisions; that more, not less, 
funding for stock assessment is necessary; and the 
Administration should not take funding away from important 
science functions of the agency to fund a new catch share 
initiative. While there may still be disagreements about 
whether catch share management systems can or should be used in 
certain areas of this country, I believe it is fair to say that 
any effort to create catch share systems should not be dictated 
from Washington, D.C.
    If fishermen decide they are interested in some form of 
catch shares, they should work within the Regional Fishery 
Management Council system and within the existing rules in the 
Magnuson-Stevens Act. However, before any catch share systems 
are put in place, it is important that the agency has basic 
information on the fishery. Some people like to forget that 
NOAA is a resource management agency, and the agency has a duty 
to fund the science that is necessary for these resource 
management responsibilities.
    Madame Chair, I know at the Subcommittee budget hearing, we 
requested a breakdown on how the $17 million for catch share in 
2010 is being spent and how the agency intends to spend the $54 
million in Fiscal Year 2011. I don't believe we have received 
that information yet, but I would also like to ask the agency 
to provide us with how their Fiscal 2011 budget proposal will 
be used to keep the Red Snapper Fishery open next year.
    The Red Snapper Fishery is a clear example of management 
decisions being made without adequate science, and those faulty 
management decisions are having a huge impact on coastal 
communities, including those of my congressional district.
    Finally, Madame Chair, I would like to welcome all of our 
witnesses, but in particular I would like to recognize Jim 
Donofrio and Jeff Angers. I work with those two gentlemen on a 
number of fishery-related issues and am pleased that they are 
here today. With that, I yield back. Thank you, Madame Chair.
    [The prepared statement of Mr. Brown follows:]

  Statement of The Honorable Henry E. Brown, Jr., Ranking Republican, 
          Subcommittee on Insular Affairs, Oceans and Wildlife

    Good morning, Madam Chairwoman, and Happy Earth Day.
    Madam Chairwoman, as I mentioned in my statement at the last catch 
shares hearing, thousands of recreational, charter, and commercial 
fishermen came to Washington, DC in February to air their concerns 
about the direction fisheries management has taken in this country. 
Rarely do we see all of the fisheries sectors speaking with one voice, 
but in this case, we did.
    At the Subcommittee hearing on catch shares in March, we heard a 
number of themes that were echoed by Members on both side of the dais--
that better science is needed before fishery managers can make good 
decisions; that more, not less funding for stock assessments is 
necessary; and that the Administration should not take funding away 
from important science functions of the agency to fund a new catch 
shares initiative.
    While there may still be disagreement about whether catch share 
management systems can or should be used in certain areas of the 
country, I believe it is fair to say that any efforts to create catch 
share systems should not be dictated from Washington, D.C. If fishermen 
decide they are interested in some form of catch shares, they should 
work within the regional fishery management council system and within 
the existing rules in the Magnuson-Stevens Act. However, before any 
catch share systems are put in place, it is important that the agency 
has basic information on the fishery.
    Some people like to forget that NOAA is a resource management 
agency and the agency has a duty to fund the science that is necessary 
for those resource management responsibilities.
    Madam Chairwoman, I know at the Subcommittee's budget hearing we 
requested a break-down of how the $17 million for catch shares in 
FY2010 is being spent and how the agency intends to spend the $54 
million in FY2011. I don't believe we have received that information 
yet, but I would also like to ask the agency to provide us with how 
their FY2011 budget proposal will be used to keep the red snapper 
fishery open next year. The red snapper fishery is a clear example of 
management decisions being made without adequate science and those 
faulty management decisions are having a huge impact on coastal 
communities--including those in my Congressional district.
    Finally, Madam Chairwoman, I would like to welcome all of our 
witnesses, but in particular, I would like to recognize Jim Donofrio 
and Jeff Angers. I have worked with these two gentlemen on a number of 
fishery-related issues and I am pleased they are here today.
    Thank you, Madam Chairwoman.
                                 ______
                                 
    Ms. Bordallo. I thank the gentleman from South Carolina, 
Mr. Brown. And I would now like to recognize our first panel of 
witnesses to testify. Our witnesses include Captain David T. 
Goethel, Fishing Vessel Ellen Diane; Julian Magras, Chairman of 
the Board, St. Thomas Fishermen's Association; Captain Wayne 
Moody, Fishing Vessel Capriccio; and Jefferson Angers, 
President of the Center for Coastal Conservation.
    I would like to thank our witnesses for being here today. 
And as we begin, I would note that the red timing light on the 
table will indicate when five minutes have passed and your time 
has concluded. We would appreciate your cooperation in 
complying with these limits. Be assured, however, that your 
full written statement will be submitted for the hearing 
record.
    And now, Mr. Goethel, welcome back to the Subcommittee, and 
you may begin your testimony.

            STATEMENT OF CAPTAIN DAVID T. GOETHEL, 
                   FISHING VESSEL ELLEN DIANE

    Captain Goethel. Thank you, Madame Chair. Thank you for the 
invitation to testify on community perspectives on catch 
shares. I am the owner/operator of a 44-foot dragger, the Ellen 
Diane, of Hampton, New Hampshire. I am also a member of the New 
England Fisheries Management Council, but I am speaking today 
as a member of the New Hampshire commercial fishing community, 
and not on behalf of the Council.
    The number one priority our communities would like to see 
established is our ability to continue to exist. As currently 
constructed, Amendment 16 leaves not one vessel in New 
Hampshire able to cover short-term operating expenses with the 
quota they have received. In short, the effects of Amendment 16 
on New Hampshire's fleet are predictable, catastrophic, and 
unnecessary.
    The reasons for this are many and varied. First, NOAA 
Fisheries continues to define fisheries on a single-species 
basis, rather than using the definition of a fishery in the 
Magnuson-Stevens Act, which states the term ``fishery'' means 
one or more stocks of fish which can be treated as a unit for 
the purposes of conservation and management, and any fishing on 
those stocks.
    Thus, in New England, each fisherman has received an 
individual allotment of each of the 12 species comprising 19 
stocks of the multi-species ground fish fishery. All of these 
fish swim together and cannot be caught in the prescribed 
allotments. The practical implications of this are that catch 
shares will result in massive under-harvesting of most species, 
as people are forced to stop fishing when they have harvested 
the species for which they have the lowest allocation, even 
when that species may be a fully rebuilt stock, such as 
haddock.
    Second, the Council failed to fairly and equitably allocate 
the fish, both between user groups--commercial and 
recreational--and within the commercial fishery. By choosing a 
straight catch history-based system and a time period in which 
small boats were effectively shut out of the fishery by rolling 
and permanent closures, differential counting of days at sea 
and inshore areas, and were thus unable to establish catch 
history, the Council effectively ceded control of the fishery 
to large vessels, which could establish a history outside of 
these inshore areas.
    While I protested these actions vigorously at the Council 
meetings, NOAA Fisheries, through its regional administrator, 
Ms. Kurkul, and acting head of NOAA Fisheries, Dr. Balsinger, 
sat silent and said nothing to remind the Council of its 
responsibilities under National Standards 4 and 8 of Magnuson-
Stevens.
    Finally, in response to my dissenting opinion filed with 
the Secretary of Commerce in June of 2009, Mr. Schwaab, on 
behalf of NOAA, responded with a letter, which arrived in my 
mailbox two hours after notice of the availability of the final 
rule for Amendment 16 on March 31, 2010, rendering further 
discussion of their response useless. If allowed to stand 
unchallenged, this will render National Standard 4 meaningless. 
Thus, the small boat fishing communities of New Hampshire and 
other regions are left to seek fair and equitable treatment 
under the law through this committee and in lawsuits filed with 
the courts.
    For those boats that survive the initial consolidation, the 
long-term costs of running sectors, once returned to the 
fishermen, will ultimately cripple them. NOAA is proposing to 
spend nearly $50 million on implementation of catch shares in 
New England. The most recent ex-vessel value of the fishery is 
$60 million for the fish proposed to be managed in Amendment 
16. Thus, it is plainly apparent that absent long-term 
government subsidies for monitoring costs, those costs render 
the entire fishery non-viable.
    Congress might also wish to consider that with the 150 to 
200 new people being hired, combined with the existing staff at 
the regional office, there are now more bureaucrats at NOAA 
Fisheries than fishermen actively fishing. It is without a hint 
of irony that I suggest NOAA should consider assigning each 
fisherman his own personal bureaucrat who would do the catch 
monitoring, observing, enforcement, VMS submissions, log books, 
and other myriad requirements of sectors. This would increase 
the viability of the program while dramatically lowering the 
cost to both taxpayers and fishing communities.
    As you can see by the aforementioned information and the 
lack of consolidation controls in Amendment 16, my main concern 
for the fishing communities in New England is their ability to 
avoid consolidation long enough for Congress or the courts to 
intervene. As Dr. Julia Olson of NOAA Fisheries stated in her 
paper, which I have provided and urge the committee members to 
read, the effects of consolidation, quote, ``range from 
employment loss, decreased income, decreased quality of life, 
changing relations of production, structural disadvantages to 
smaller vessels and firms, dependency and debt patronage, 
concentration of capital and market power, inequitable gains, 
regulatory stickiness, reduced stewardship, decreased community 
stability, loss of cultural values, and so on.''
    Dr. Olson continues, ``Thus the question of capacity 
reduction is ultimately not simply an issue of economic 
efficiency, but a question of what values to promote and what 
the future of the fishery and its fishing community should look 
like.'' Catch shares are primarily an economic tool to force 
consolidation. They do not, despite the millions of dollars 
spent on public relation campaigns by major environmental 
NGO's, necessarily produce better biological results than other 
systems of management.
    They do, however, radically reshape fishing communities if 
adequately safeguards, such as consolidation caps and 
allocation caps, are not made to ensure the viability of small 
boat communities. NOAA Fisheries and the Regional Councils must 
be ordered to provide these caps before the implementation of 
catch share programs. Catch shares are set to begin May 1, 
2010, in New England, with consolidation and the negative 
social consequences to follow soon thereafter.
    If you wish to preserve a way of life that has existed in 
New Hampshire for over 400 years, iron men in small ships 
putting little strain on the resource, but supplying a 
relatively large number of jobs, it is time for NOAA Fisheries, 
Congress, and the courts to fish or cut bait. Thank you.
    [The prepared statement of Captain Goethel follows:]

        Statement of Captain David T. Goethel, Owner/Operator, 
                     Fishing Vessel ``Ellen Diane''

    Dear Madam Chairwoman,
    Thank you for the invitation to testify on community perspectives 
on Catch Shares. My name is David Goethel and I am owner operator of 
the 44 foot dragger the Ellen Diane of Hampton, New Hampshire. I am 
also a member of the New England Fishery Management Council but I am 
speaking today as a member of the New Hampshire Commercial Fishing 
Community and not on behalf of the Council.
    The number one priority our communities would like to see 
established is our ability to continue to exist under a catch share 
program. As currently constructed, Amendment 16 to the Groundfish plan, 
leaves not one vessel in New Hampshire able to cover short term 
operating expenses with the quota they have received. In short, the 
effects of Amendment 16 on New Hampshire's fleet are predictable, 
catastrophic and unnecessary.
    The reasons for this are many and varied and I can only highlight a 
few in the time allotted. First, NOAA Fisheries continues to define 
fisheries on a single species basis rather than using the definition of 
a fishery in the Magnuson-Stevens Fishery Conservation and Management 
Act (99-659,101-627(13) A) which states, ``The term ``fishery'' means--
    A.  one or more stocks of fish which can be treated as a unit for 
purposes of conservation and management which are identified on the 
basis of geographical, scientific, technical, recreational, and 
economic characteristics; and
    B.  any fishing for such stocks.''
    Thus in New England each fisherman has received an individual 
allotment of each of the twelve species, comprising nineteen stocks of 
the multispecies groundfish fishery. All of these fish swim together 
and cannot be caught, in the prescribed allotments. The practical 
implications of this are that catch shares will result in massive under 
harvesting of most species as people are forced to stop fishing when 
they have harvested the species for which they have the lowest 
allocation, even when that species may be a fully rebuilt stock such as 
haddock. Second, the council failed to fairly and equitably allocate 
the fish both between user groups, commercial and recreational, and 
within the commercial fishery. By choosing a straight catch history 
based system and a time period in which small boats were effectively 
shut out of the fishery by rolling and permanent closures, and 
differential counting of DAS in inshore areas, and thus unable to 
establish catch history the council effectively ceded control of the 
fishery to large vessels which could establish history, outside of 
these inshore areas. While I protested these actions vigorously at the 
council meetings NOAA fisheries through its Regional Administrator Ms. 
Kurkul, and acting head of NOAA Fisheries Dr. Balsinger sat silent and 
said nothing to remind the council of its responsibilities under 
National Standard 4 and 8 of Magnuson-Stevens. Finally, in response to 
my dissenting opinion, filed with the Secretary of Commerce in June 
2009, Mr. Schwaab, on behalf of NOAA, responded with a letter which 
arrived in my mailbox two hours after notice of the availability of the 
final rule for Amendment 16, on March 31, 2010 rendering further 
discussion of their response useless, except through the courts. If 
allowed to stand unchallenged this will render National Standard 4 
meaningless also. Thus the small boat fishing communities of New 
Hampshire and other regions are left to seek fair and equitable 
treatment under the law through this committee and in lawsuits filed 
with the courts.
    For those boats that survive the initial consolidation the long 
term costs of running sectors, once returned to the fishermen, will 
ultimately cripple them. NOAA is proposing to spend nearly 50 million 
dollars on implementation of catch shares in New England. The most 
recent ex-vessel value of the fishery is 60 million dollars for the 
fish proposed to be managed in Amendment 16. Thus, it is plainly 
apparent, that absent long term subsidization of monitoring costs, 
those costs render the entire fishery nonviable. Congress might also 
wish to consider that with the 150-200 new people being hired, combined 
with the existing staff at the regional office, there are now more 
bureaucrats at NOAA Fisheries then fishermen actively fishing. It is 
without a hint of irony that I suggest NOAA should consider assigning 
each fisherman his own personal bureaucrat who would do the catch 
monitoring, observing, enforcement, VMS submissions, log books and 
other myriad requirements of sectors. This would increase the viability 
of this program while dramatically lowering the cost to both tax payers 
and fishing communities.
    As you can see by the aforementioned information and the lack of 
consolidation controls in Amendment 16 my main concern for fishing 
communities in New England is their ability to avoid consolidation long 
enough for Congress or the Courts to intervene.
    As Dr. Julia Olson, of NOAA Fisheries Northeast Fishery Science 
Center states in her paper, which I have provided and urge the 
committee members to read, the effects of consolidation, ``range from 
employment loss, decreased income, decreased quality of life, changing 
relations of production, structural disadvantages to smaller vessels 
and firms, dependency and debt patronage, concentration of capital and 
market power, inequitable gains, regulatory stickiness, reduced 
stewardship, decreased community stability, loss of cultural values, 
and so on.''
    Dr. Olson concludes that same introductory paragraph with, ``Thus 
the question of capacity reduction is ultimately not simply an issue of 
economic efficiency, but a question of what values to promote and what 
the future of the fishery and its fishing communities should look 
like.''
    Catch shares are primarily an economic tool to force consolidation. 
They do not, despite the millions of dollars spent on public relations 
campaigns by major Environmental NGO's, necessarily produce better 
biological results, than other systems of management. They do, however, 
radically reshape fishing communities if adequate safeguards such as 
consolidation caps and allocation caps are not made to ensure the 
viability of small boat communities. NOAA Fisheries and the Regional 
Councils must be ordered to provide these caps before the 
implementation of catch share programs. Catch shares are set to begin 
on May 1, 2010 in New England with consolidation and the negative 
social consequences to follow soon thereafter. In fact the 
consolidation has already begun. If you wish to preserve a way of life 
that has existed in New Hampshire and New England for over 400 years, 
iron men in small ships putting little strain on the resource but 
supplying a relatively large number of jobs, it is time for NOAA 
Fisheries, Congress and the Courts to fish or cut bait.
    [NOTE: A paper by Dr. Julia Olson, NEFSC, entitled ``Social Impact 
Assessment Literature Review: Leasing and Permit Stacking'' dated 
August 5, 2009, submitted for the record has been retained in the 
Committee's official files.
                                 ______
                                 

  Response to questions submitted for the record by David T. Goethel, 
                  Captain, Fishing Vessel Ellen Diane

Questions from Congressman Jay Inslee (D-WA)
1.  This is the second hearing that we have had on catch share fishery 
        management programs, so there has been a lot of discussion 
        about catch shares. But I'm not sure we have heard from many 
        witnesses that actually have participated in catch share 
        programs. Can you tell me your experience fishing in a catch 
        share program? Do you have a federal permit to fish in a catch 
        share managed fishery?
    Answer from David Goethel: I am participating in the catch share 
program and I am a member of NH Sector XII. However I have not left the 
dock yet (gone fishing since the system went into effect on May 1, 
2010) because I have so little white hake and winter flounder 
allocation, that in one day of fishing I could exceed my yearly quota 
of these species and would be shut down and potentially fined if no one 
within my sector has fish to cover the overage. I also only have 1600 
pounds of haddock, a fully rebuilt stock, despite having over 50,000 
pounds of cod. There is currently no trading mechanism between sectors 
and other members of my sector have less allocation than I do. Until I 
can buy some of these species from some other sector or until some 
other remedy is offered I cannot fish. NMFS was supposed to have the 
trading and purchasing mechanism up and running before the sector 
program went into effect on May 1st. As of today May 16, 2010 there is 
no effective way to allow the trading or purchase of allocation. The 
National Marine Fisheries Service has decided through its 
administrative rules for sectors that even when the trading mechanism 
is in place that no one in a sector may trade or purchase allocation 
unless every member of a sector (active or inactive) have submitted 
their logbooks for that week. This will tie boats to the dock possibly 
for months until it is straightened out. (See enclosure provided)
    I have one federal fishing permit which I fished as actively as 
possible throughout the qualification period. In addition, I have two 
permits I purchased before the idea of catch shares. They turn out to 
have virtually no catch history rendering them almost worthless despite 
having a fairly large number of Days at Sea from the old program. Thus 
I am hampered from purchasing quota under the new system (when a 
mechanism is finally put into place) because I am still paying for now 
worthless Days at sea from the old system.
    Finally, the Regional Office should be credited with putting this 
incredibly complex program together in a very short period of time. 
This has not allowed any pretesting of the components prior to 
implementation. As with any complex system, bugs are occurring 
regularly which only add to participant's anger and frustration.

2.  You wrote a letter to the New England Fishery Management Council 
last June in which you stated that Amendment 16 to the Groundfish FMP 
is ``vital to ongoing efforts to rebuild New England groundfish 
stocks.'' But you took issue with the qualifying periods used to 
allocate the TAC to the various sectors, a situation you stated ``could 
have easily been remedied by establishing a common, fair and equitable 
baseline of 1996-2006 for all user groups.'' Would you therefore have 
voted in favor of Amendment 16 if it used the qualifying period you 
suggested to allocate TAC for all user groups?

    Answer from David Goethel: At that time I would have voted for 
submission if we had established an equitable period to divide the 
commercial and recreational fishery and provided the commercial fishery 
fair currency exchange between A days at sea and stocks landed. From 
the industries perspective this was the most critical element of the 
change in management strategies and the most important in maintaining 
continuing community access. As such, allocation formulas require 
extreme transparency so that the public can see that council members 
have represented all the public not just their own or their states 
special interests. In my opinion, the New England Council failed in 
this critical situation.
    If, however, the vote had been held after we understood the 
monetary costs of this program, combined with the impossibility of 
making it work on a single species basis I still would have cast a vote 
against submission.
Questions from Republican Members
1.  Dr. Rothschild predicts that there will be a 50% drop in employment 
        due to the new sector system Do you think he's accurate?
    Answer from David Goethel: I believe the number will be more like 
80% of captains and crew if this program is not revised. When you 
figure in the number of dockside monitors, observers, sector managers 
and bureaucrats hired from outside the fishing industry to run sectors, 
the net employment loss may be 50%.
2.  Some have argued that the New England fishing fleet is too large to 
        be economically viable and that even without a change to a 
        sector system, a large number of fishermen will go out of 
        business. Do you think a reduction in the fishing fleet was 
        inevitable and if so, what effect on the coastal communities 
        would this have? If not, why not?
    Answer from David Goethel: The fleet has shrunk from 1800 boats at 
the start of limited entry to 550 which currently have a VMS and thus 
are allowed to land groundfish. I believe the fleet would have 
continued to contract slowly to around 450 boats if we had continued 
with DAS. I believe this is a sustainable number of vessels if the 
vessel size distribution is maintained. However, no one including NMFS, 
has a clear idea of a sustainable fleet composition. I think the fleet 
under sectors will contract to 100-200 primarily large vessels in large 
ports. Small ports will lose all of their vessels because many do not 
have enough fish allocated to be viable and any that are left will not 
be able to pay to keep the infrastructure in place. If we had provided 
a straight conversion of A days to stocks landed most of the smaller 
vessels as well as many of the larger vessels would be more likely to 
survive in the short term. However, since sectors are all about 
economics and not biology, ultimately a handful of wealthy large 
players will emerge.
3.  Dr. Rothschild expresses a concern about ``wasted'' bycatch'' that 
        is thrown overboard rather than landed. That raises an 
        interesting dilemma on how to reduce wasted bycatch without 
        encouraging targeting bycatch species. How do you propose NMFS 
        deal with this?
    Answer from David Goethel: I have always felt that zero, or very 
low possession limits i.e. below what people can reasonably stay away 
from when targeting other species, are counterproductive. Littering the 
ocean with dead fish solves nothing and probably hinders rebuilding. 
However this is a strategy favored by NMFS because it is easily 
enforced. I favor low trip limits that will not encourage targeting the 
species and thus waste as little as possible. There are usually clear 
breakpoints in the landing data that indicate bycatch amounts versus 
directed trips. With zero possession limits you have an added 
scientific problem of insufficient catch for sampling to do required 
analysis for stock assessments.
    Finally it is ironic that the chief selling point of sectors, the 
elimination of regulatory discards, will be largely negated by the 
creation of choke species by single species ACL's. Fishermen have been 
given a very positive economic incentive to discard species for which 
they have very little quota in order to achieve overall maximum 
utilization of their multispecies TAC;s.
4.  The changes to the Magnuson-Stevens Act which require individual 
        fishery accountability were an effort to change the balance 
        between ecological concerns and economic concerns. Do you think 
        the language in Magnuson went too far? If so, what should 
        Congress look at to correct this balance?
    Answer from David Goethel: The problems are not necessarily with 
Magnuson but with NMFS interpretation and the guidelines they produce 
for the councils. The chief problem in New England is that NMFS insists 
on managing a multispecies fishery on a single stock basis. I believe 
the definition of a fishery under Magnuson already exists. (please 
reference my written April 22 testimony) If NMFS can be ordered to use 
this definition as written with a letter that is the simple solution. 
If not, then Magnuson will have to be amended to say that a 
multispecies fishery will be managed using multispecies ACL's and AM's 
and a multispecies TAC.
    The second area of Magnuson that needs clarification is the Limited 
Access Privilege Program (LAPP's) NMFS interpretation that sectors are 
not LAPP's flies in the face of common sense. Congress should clearly 
state that anytime you allocate fish, in any way, on an individual 
vessel basis, that it is a LAPP and requires a referenda. This will 
force councils to allocate fish fairly, and burden the industry with 
minimal costs in order to secure a positive vote. My suggestion, if 
NMFS refuses to deal with these issues, with a letter from the 
committee, would be to add the corrective language to a bill already in 
Congress and amend Magnuson, rather than begin a full scale 
reauthorization.
    It has become apparent to many of us involved in fishery management 
that there is no effective feedback loop between the oversight 
authority of Congress and the guidelines published by NMFS after 
passage of Magnuson. Congress needs to clearly assert its oversight 
authority so that NMFS guidelines do not subvert or modify the will of 
Congress as expressed in Magnuson. The easiest way I can see to 
accomplish this is through Congressional hearings on proposed 
guidelines prior to publication as final rules.
5.  Some fishermen have complained about the new accountability 
        measures being implemented by NMFS. Do you also have concerns, 
        and if so, what are your specific concerns? What suggestions 
        would you give Congress to correct these concerns?
    Answer from David Goethel: I do not have major concern with 
accountability measures other than a preference for ratcheting down 
both commercial and recreational fisheries as ACL's are approached. As 
always NMFS prefers administratively simple solutions such as a fishery 
opening or closure. I prefer measures such as changing the differential 
counting rate of days in DAS for the commercial fishery or descending 
bag limits in recreational fisheries that keep the fisheries open, but 
on a reduced scale, throughout the year. My greater concern is the 
amount of fish being taken off the table in the ACL setting process for 
science and management uncertainty. I believe ACL's should be set just 
slightly below the OFL and that NMFS should direct less money to 
administrative issues and more to reducing scientific uncertainty.
6.  It seems that all of the panelists today would agree that prior to 
        implementing a catch share management system, NMFS must have 
        good data on the status of the fishery, the ecological needs of 
        the fishery, and the economic needs of the fishery. Does NMFS 
        have this type of information on New England groundfish? If 
        not, how can they effectively implement a totally new system?
    Answer from David Goethel: The problem with sectors in New England 
was the ``fire, ready, aim'' approach used in their creation. What 
should be done is, when considering a new approach to management, is to 
assess what data will be required, and determine if it is available in 
useable form. If not, audit, update and correct the data before 
proceeding. In New England, because of the rush to pass Amendment 16, 
this was not done. Instead major flaws such as, assigning catch history 
from a faulty landings data stream, and forcing vessels to live with 
it, have been exposed. This has caused hardship, anxiety and anger.
    The economic and social data, which is used to determine effects on 
communities, needs major updating. First it is set up to produce 
aggregate information on community averages. Communities are made up of 
individuals who often have no relation to the average what so ever. 
This will require administrative changes within NMFS so that economic 
and social scientists can have access to individual vessel data. 
Currently we cannot even get aggregate information on harbors with less 
than three vessels. These are usually the communities most severely 
impacted by changes in management.
7.  According to a NOAA document, they are suggesting that there are 8 
        potential catch share programs that may be developed or 
        implemented in the next two fiscal years (not including the 
        groundfish multi-species fishery). These include: sea scallops 
        general category, monkfish, whiting/hake, sea scallops sectors, 
        herring, dogfish, mahogany quahogs, and skates. Do you have any 
        comments on this list or the fact that NMFS believes catch 
        shares would work in these fisheries?
    Answer from David Goethel: NMFS is irrationally consumed with catch 
share fever at the moment. The council, on the other hand has received 
an intervention after hitting rock bottom with New England groundfish, 
and is currently suffering withdrawal. Absent, virtual unanimous 
approval of sector management as a preferred way of management by a 
fishery, I doubt the council will impose sector management on that 
fishery. Fisheries such as monkfish, herring and scallops, that had 
expressed an interest in sectors several years ago, have told the 
council in no uncertain terms that they want nothing to do with sectors 
after seeing what happened with groundfish. This is unfortunate because 
the concept could work in some fisheries with a careful, methodical, 
well conceived management plan that is voted on by industry in a 
referendum. Instead because New England was rushed to please the boss 
and pass a poorly thought out program they have rendered sectors toxic 
to an entire generation of fishermen across all New England fisheries. 
New England has a memory like an elephant. We had to wait 30 years for 
an entire generation of fishermen to move through the groundfishery 
after a poorly thought out and executed quota system was adopted in the 
1970's. I hope we have not created a similar situation with sectors.
                                 ______
                                 
    Ms. Bordallo. Thank you, Mr. Goethel, for a very 
interesting testimony and for further explaining how 
consolidation can occur under catch share programs.
    Before we begin with the next witness, for those standing 
in the back of the room, if you would care to sit, there are 
seats around the lower table here. This may be a long hearing. 
You are more than welcome to be seated here.
    Mr. Magras, it is good to see you again as well, and you 
may begin with your testimony.

 STATEMENT OF JULIAN MAGRAS, CHAIRMAN OF THE BOARD, ST. THOMAS 
                    FISHERMEN'S ASSOCIATION

    Mr. Magras. I testify before you today on the response of 
the St. Thomas fishing community to pressures to implement 
catch shares by the National Marine Fisheries Service and the 
Caribbean Fishery Management Council.
    We do not support the application of catch shares in the 
Virgin Islands, as we believe that they would simply be another 
device to build justifications for further Draconian catch 
reductions by agencies that have already used their own 
failures over past decades as justification for punishing 
Virgin Islands fishermen.
    The St. Thomas Fishermen's Association is an entirely 
voluntary, not-for-profit corporation organized in 2005 under 
VI law. It was established for the purpose of involving VI 
fishermen in the management process and created greater 
understanding by fishermen on the matter of fishery management. 
A secondary purpose was to increase understanding of Virgin 
Islander fisheries by fishery managers.
    Our first response when the idea of catch shares was put 
forward was positive. We felt that a cohesive group of 
fishermen in the STFA had already demonstrated a willingness to 
take responsibility for management of their resource. For 
example, in the past five years, we have formed the STFA, 
attending every CFMC meeting, many technical meetings, and 
participated actively in the management process. We carried out 
pioneering studies of bycatch from all fisheries and created 
information for the first time regarding bycatch rates, 
species, and mortalities.
    We carried out a pilot study for the development of escape 
vents from fish traps. In association with NOAA's biogeographic 
program, we are carrying out a study on trap loss, ghost 
fishing, and possible retrieval of lost traps. We have just 
been awarded funding from NMFS' co-active resource program to 
finalize escape-vent design.
    STFA members on their own initiative have begun an effort 
to reduce the number of traps being used in the fishery. In 
other words, the STFA has become a force for sustainable 
management, which could effectively take responsibility for 
management of its own resource base. In addition, STFA members 
dominate local fisheries, so actions taken by the association 
could effectively control effort within those fisheries.
    At the April Council meeting, we stated that the STFA views 
management of our resources as a partnership, where we 
participate with the Council in setting standards for 
performance within our fisheries and are then responsible for 
meeting those standards. At the same meeting, we clearly saw 
that we are the only ones who view the management process as a 
partnership, as the NMFS regional office introduced sweeping 
conceptual changes in the ACL process, and the CFMC simply 
rubber-stamped the new proposals without any attempt to justify 
or understand the need for such changes.
    Our own requirements for in-season landings data were 
simply ignored. Our partnership, then, is one where the 
regional office makes the decisions, which opted for three 
years for data analysis, and then punishes the fishermen with 
accountability measures. For us, this is the problem with catch 
shares. It represents a partnership with someone we know to be 
untrustworthy.
    Madame Chairwoman, a second problem arises from the fact 
that catch shares almost always leads to consolidation within 
the fishery. Virgin Islanders have been fishing here for nearly 
four centuries. Local seafood was the only source of protein 
for much of that time, and generations of Virgin Islanders have 
built a culture and cuisine around a highly diverse resource 
base.
    Currently, there are both commercial and subsistence 
elements to the fishery. Consolidation could lead to the exit 
of these traditional fishermen and create a public health risk 
for the community. It could also lead to imports, which could 
displace the local industry entirely.
    The cultural relationship between the populace and the 
fishermen is strong, as evidenced by petition response and 
continuous interaction. Consolidation within the fishery would 
inherently damage the relationship, unless a totally local 
entity was managing the catch share program.
    In summary, if there is to be any chance for catch shares 
in the Virgin Islands, there must be a considerable effort to 
strengthen the possibility for partnership, and we ask this 
community to create some impetus for this strengthening. I 
again thank you for your consideration of these concerns.
    [The prepared statement of Mr. Magras follows:]

          Statement of Julian Magras, Chairman of the Board, 
                   St. Thomas Fishermen's Association

    Madame Chairwoman, Members of the Subcommittee, I greatly 
appreciate the opportunity to testify before you today the response of 
the St. Thomas fishing community to the National Marine Fisheries 
Service (NMFS) and the Caribbean Fishery Management Council. (CFMC) to 
pressures to implement catch shares.
    The manner in which these actions are being taken show a 
significant disregard for the Virgin Islands culture and community, 
disregard for facts on the ground, and (we believe) are simply 
attempting to build justification for further draconian catch 
reductions by agencies who have already used their own failures over 
past decades as justification for punishing Virgin Islands fishermen.
St. Thomas Fishermen's Association
    The St. Thomas Fishermen's Association is an entirely volunteer 
not-for-profit corporation organized in 2005 under Virgin Islands law. 
It was established for the purpose of involving Virgin Islands 
fishermen in the management process and creating greater understanding 
by fishermen on the matter of fishery management and by fishery 
managers of Virgin Islands fisheries. In addition, the STFA has carried 
out a number of federally funded studies addressing bycatch and trap 
fishing as a means to involve our member fishermen in all aspects of 
the management process, including data acquisition, development of 
management recommendations from study data and involvement of those 
recommendations in the management process.
    We raise funds to support member attendance at fishery management 
meetings by holding raffles, dances and our annual ``Fishermen's Fun 
Day'' event. The STFA is not an opposition organization but one seeking 
intelligent and sustainable management of Virgin Islands fishery 
resources.
    The STFA has broad community support. A petition circulated prior 
to the 2005 SFA Public Hearing was signed by over 6000 Virgin Islands 
citizens. Our Delegate to Congress Donna M. Christiansen, Governor John 
P. deJongh Jr. and local Senators regularly act in support of the 
issues facing the Association and our efforts have been covered by both 
local and national media. Actions taken by the STFA and by our 
supporters can be found at http://www.stfavi.org/CurrentIssues.html .
    Until about a year ago, our relationship with the CFMC and NMFS had 
been one of collaboration and cooperation. However as the 2010 Magnuson 
deadline for ACL establishment began to approach, NMFS and the Council 
became less interested in a collaborative relationship and began a 
unilateral effort to impose their uninformed view of Virgin Islands 
fisheries. For our part, we began an active effort to resist such an 
approach and return to the climate of productive cooperation which 
existed in the past.
Catch Shares: Initial Response
    Our first response when the idea of catch shares was put forward 
was positive. We felt that the cohesive group of fishermen in the STFA 
had already demonstrated a willingness to take responsibility for 
management of their resource. For example, in the past five years we 
have:
    1.  Formed the STFA and attended every CFMC meeting, many technical 
meetings and participated actively in the management process.
    2.  We carried out pioneering studies of bycatch from our fisheries 
and created information for the first time regarding bycatch rates, 
bycatch species and mortality rates.
    3.  We carried out a pilot study for development of escape vents 
from fish traps.
    4.  In association with NOAA's Biogeography Program we are carrying 
out a study of trap loss, ghost fishing and possible retrieval of lost 
traps.
    5.  We have just been awarded funding the NMFS' Cooperative 
Research Program to finalize escape vent design.
    6.  STFA members, on their own initiative have begun an effort to 
reduce the number of traps being used in the fishery.
    In other words, the STFA has become a force for sustainable 
management which could effectively take responsibility for management 
of its resource base. In addition, STFA members dominate local 
fisheries so actions taken by the Association could effectively control 
effort within those fisheries.
Catch Shares: Concerns
    At the April Council meeting we stated that ``the STFA views 
management of our resources as a `partnership' where we participate 
with the Council in setting standards for performance within our 
fisheries and are then responsible for meeting those standards.''
    At the same meeting we saw clearly, that we are the only ones who 
view the management process as a partnership as the NMFS Regional 
Office introduced sweeping conceptual changes in the ACL process and 
the CFMC simply rubber stamped the new proposals without any attempt to 
justify or understand the need for such changes. Our own requirements 
for in-season landings data were simply ignored. Our ``partnership'' 
then is one where the Regional Office makes the decisions, waits up to 
3 years for data analysis and then punishes fishermen with 
accountability measures.
    For us, this is the problem with catch shares-it represents a 
partnership with someone we know to be untrustworthy. We will provide 
more discussion on this matter.
    Madame Chairwoman, a second problem arises from the fact that catch 
shares have invariably led to consolidation within the fishery.
    Virgin Islanders have been fishing here for nearly 4 centuries. 
Local seafood was the only source of protein for much of that time and 
generations of Virgin Islanders have built a culture and cuisine around 
a highly diverse resource base.
    The cultural relationship between the populace and the fishermen is 
strong as evidenced by petition response and continuous interaction. 
Consolidation within the fishery would inherently damage that 
relationship unless a totally local entity were managing the catch 
share program.
    Currently there are both commercial and subsistence elements to the 
fishery. In addition, St. Thomas has ciguatera fish poisoning in some 
areas and consumers rely on fishermen (who market directly to their 
customers) to protect them from risk because of their knowledge and 
expertise. Consolidation could lead to the exit of these traditional 
fishermen and create a public health risk for the community. It could 
also lead to imports which could displace the local industry entirely.
    In summary, if there is to be any chance for catch shares in the 
Virgin Islands there must be a considerable effort to strengthen the 
possibility for partnership. We ask that this committee create some 
impetus for this strengthening.
Who's going to partner in a Catch Shares Program?
    The entire Council process has been corrupted and cannot, at 
present, suggest that it could be trusted as a partner in a catch share 
program.
    1.  We have already described how the Regional NMFS Office simply 
determines the agenda for the Council. Council members just vote as 
directed.
    2.  NMFS Southeast Fishery Science Center discarded nearly 40 years 
of Virgin Islands landings data despite the fact that it was they who 
were responsible for funding, managing and monitoring the program.
    3.  The Council itself discriminates against the Virgin Islands 
despite the fact that 89% of its jurisdiction is in Virgin Islands 
waters.
    4.  Last year for every hotel room filled in the Virgin Islands, 
five were filled in Puerto Rico.
    5.  There have only been two persons with ties to the Virgin 
Islands employed by the Council throughout the past 34 years.
    6.  Because Puerto Rico has a 9 mile Territorial Sea and the Virgin 
Islands only has a 3 mile limit, Council Regulations mainly affect 
Virgin Islands fishermen.
    7.  Recently the Council Chairman, slandered our Chief Scientist 
and lied about the Virgin Islands Conch Quota to the Scientific and 
Statistical Committee on the record.
    8.  Illegal payments have been made to ``State'' government 
employees and NMFS and the DOC IGs office are apparently attempting to 
cover this up.
    We could continue on, with data mistakes by the Virgin Islands 
Division of Fish and Wildlife, the Southeast Fishery Science Center but 
the list is already longer that it should be.
    We cannot enter into a catch shares arrangement with people like 
this. We view such a relationship where we would be provided with 
misleading information by people waiting for us to fail and who would 
eventually close the entire fishery, ending centuries of careful 
fishing by Virgin Islands fishermen.
Summary:
    All of these points have been raised with NMFS, CFMC and the SEFSC 
and subsequently ignored. In fact, NMFS seems to be determined to 
manage Virgin Islands fisheries by remote control with as little input 
from the Territory as possible.
    In the past year alone, STFA members have spent around 7 man months 
attending various NMFS and CFMC meetings, mostly at our own expense. At 
no point, has any of our input been considered or affected any decision 
coming from the meetings. In large part, NMFS and SEFSC participants 
come to these meetings with their conclusions already determined.
    The Virgin Islands is fortunate that our Delegate Donna M. 
Christiansen and Governor John P. deJongh Jr. have taken an active and 
advocative interest in our situation. The Delegate has attended many of 
the CFMC meetings and spent time with the fishermen on all of the 
Virgin Islands. Recently she applied for designation of the Virgin 
Islands as ``Fishing Communities'' under the Magnuson Act. Such 
designation would provide a requirement that the CFMC consider 
community and socio-economic impacts fully when implementing management 
measures. This would be a small step, but a significant one in 
requiring that our concerns be considered. We wish to note that the 
Regional Director broached such designation at the April Council 
meeting.
    It is our hope in providing this testimony; that NMFS can begin to 
realize that government should serve the public and the resource users 
not simply impose its will through setting arbitrary standards for 
inconvenient data sets. The best management decisions will come from 
collaboration between fishery managers and stakeholders.
    We do not support application of Catch Shares in the Virgin Islands 
until such time as systemic problems within the NMFS/CFMC/Territorial 
Government nexus are resolved and we could be involved in a 
relationship with a trustworthy partner in guaranteeing sustainable 
management of Virgin Islands Resources.
    Thank you for this opportunity to address the Committee today.
                                 ______
                                 

   Response to questions submitted for the record by Julian Magras, 
       Chairman of the Board, St. Thomas Fishermen's Association

Questions from Congressman Jay Inslee (D-WA)
1.  This is the second hearing that we have had on catch share fishery 
        management programs, so there has been a lot of discussion 
        about catch shares. But I'm not sure we have heard from many 
        witnesses that actually have participated in catch share 
        programs. Can you tell me your experience fishing in a catch 
        share program? Do you have a federal permit to fish in a catch 
        share managed fishery?
    Answer: There are no catch share fisheries in the Virgin Islands. 
Also, because we do not trust NMFS/NOAA we are unlikely to enter in to 
any such agreement.
Questions from Republican Members
1.  What fisheries do your members fish in and what types of gears do 
        they use?
    Answer: St. Thomas Fishermen's Association members fish for reef 
fish, small pelagics, lobster and some queen conch. The primary gear 
are West Indian fish traps and plastic lobster traps with handlines and 
a small unique seine fishery making up the remainder.
2.  How does NMFS collect data in your fisheries to determine harvest 
        levels?
    Answer: Data are provided through a mandatory catch reporting 
system and through port sampling. Both of these are funded by NMFS but 
implemented by the Territorial Division of Fish and Wildlife. Data has 
been collected since 1974 and reviewed annually by NMFS' South East 
Fishery Science Center. In 2009, the SEFSC decided that the data could 
not be used in setting ACLs and that local fishermen should be punished 
for ``data uncertainty'' by reductions in ACL values. It is our 
contention that any data uncertainty is the result of SEFSC and DFW 
failures as fishermen have met every requirement for reporting for 
nearly four decades. We are requesting your Subcommittee to investigate 
how agency failures can be translated into punishing fishermen.
3.  Are any of your fisheries considered overfished? If so, do you 
        agree with the determination?
    Answer: In the 2005 Sustainable Fisheries Act Amendment a number of 
species were determined to be ``overfished'' and management actions 
taken (area closures and closed seasons) to address this supposed 
overfishing. No data from the Virgin Islands was used in this 
determination and ``informed judgment'' (read that as unsubstantiated 
opinion) was the supposed ``process'' used to make these determination. 
In every case, the ``overfished'' determination was intended to address 
a specific fishery issue including spawning aggregations, a Puerto 
Rican fishery for deep water snappers, conch and a St. Croix net 
fishery for parrot fish. All of these fisheries have been closed now 
for 3-5 years and yet the CFMC has taken no effort to reevaluate 
status. Our position is that the 2005 actions addressed overfishing and 
that these fisheries are no longer overfished (if they ever were in the 
first place).
    In the April 2010 CFMC meeting NMFS' Regional Director unilaterally 
changed the entire management scenario and included all groupers, 
snappers and parrot fish into single management units even thought the 
bulk of affected species were not included in the ``overfished'' 
species units. In essence he co-opted and over rode five years of 
Council deliberations and decisions. The document was only provided to 
Council members at the meeting and they acceded to his scheme.
    The only exception to this is the St. Croix conch fishery where 
serious overfishing led to a Territorial quota in 2007. To date, the 
CFMC has not implemented a compatible closure in Federal waters and 
this has seriously compromised Territorial efforts to manage this 
fishery.
4.  Some fishermen have complained about the new accountability 
        measures being implemented by NMFS. Do you also have concerns, 
        and if so, what are your specific concerns? What suggestions 
        would you give Congress to correct these concerns?
    Answer: Since ACLs are not in place, we have yet to see 
Accountability measures. However, the current management scenario 
involves a 3 year delay by the SEFSC in analyzing Virgin Islands data 
so that fishermen will not have an opportunity to alter their fishing 
practices during any given season and avoid the need to accountability 
measures. Since we continue to see arbitrary and unfettered 
manipulation by the Regional Director, we expect that he will find an 
excuse to implement accountability measures as soon as he can justify 
action.
    Additionally, current efforts to ``improve'' data collection have 
excluded fishermen from providing input and there is a very distinct 
likelihood that NMFS will find justification to discard future data, 
thereby leading to implementation of accountability measures.
    A final comment. It is our position that the best management of 
Virgin Islands resources will come from collaboration between fishermen 
and fishery managers. We make this position at every opportunity but 
are rebuffed and insulted. The Virgin Islands community has strong 
cultural ties to local seafood and local fishermen and NMFS and the 
CFMC can look forward to a long and acrimonious struggle in the Virgin 
Islands until they wake up and change course.
                                 ______
                                 
    Ms. Bordallo. Thank you, Mr. Magras, for your testimony and 
explaining your concerns with catch shares in the Caribbean. 
Mr. Moody, please begin your testimony, and thank you for being 
here.

               STATEMENT OF CAPTAIN WAYNE MOODY, 
                    FISHING VESSEL CAPRICCIO

    Captain Moody. Thank you. Good morning, Madame Chairwoman, 
honorable Members of Congress, fellow witnesses, and 
distinguished guests. My name is Wayne Moody, and I feel 
privileged to be here today to give testimony on catch shares 
from a community perspective.
    I started commercial fishing out of Port San Louis, 
California in 1974. Our present boat is a 53-foot fiberglass 
trawler that my wife and I fish out of Morro Bay for salmon and 
albacore. I am on the board of the directors of the Morro Bay 
Commercial Fishermen's Organization. I hope to give the 
Subcommittee an understanding of Morro Bay's perspective 
regarding catch shares and our community's recommendations for 
critical elements of the West Coast trawl individual 
transferable quota, or ITQ, program that are necessary to 
address our concerns.
    In 1985, approximately 15 million pounds of seafood 
products were landed in Morro Bay and its sister harbor, Port 
San Louis, 12 miles to the south--mostly groundfish, with an 
ex-vessel value of almost $19 million. By 2006, landings had 
dropped to 1.2 million pounds, with an ex-vessel value of 
approximately $2.9 million. In 2005, the Nature Conservancy, or 
TNC, entered into discussion with local trawlers and ended up 
purchasing their permits and idling them.
    Without trawl landings, the new $900,000 icehouse we just 
built, our one fuel facility, and our fish dock, we are losing 
money. Our port infrastructure was about to collapse. Morro Bay 
was getting a preview of what consolidation of the trawl 
groundfish industry might do to small coastal communities. 
Realizing our plight, TNC, along with fishermen and community 
leaders, started working together putting the permits back to 
work in and for the community.
    The Central Coast Groundfish Project was started to 
establish a community-based fishing group to provide for long-
term economic and ecological sustainability of the Morro Bay/
Port St. Louis groundfish fishery. An exempted fishing permit, 
or an EFP, was obtained to use some of the permits with fixed 
gear that historically had been used. More importantly, the EFP 
tested out important elements for the then-underway West Coast 
trawl ITQ program by working with fishermen on gear switching, 
share and observer costs, improving log book performance, and 
testing of electronic monitoring systems.
    I would be remiss in my obligation to my community if I 
didn't mention some of their real concerns about catch shares. 
Besides the concern about cost and availability of the permits, 
or the shares, and fleet consolidation, there is a concern of 
catch share owners scheduling and catching their groundfish 
around other fisheries in order to maximize their participation 
in those other fisheries. And once catch shares are allocated, 
then traded, leased, and sold, it will be very hard to change 
the program, especially in reference to ownership of the 
shares. It is basically a one-way street, and there is not much 
room to turn around.
    We recognize the need to reduce fishing effort on weak 
stocks and to concentrate on the healthy stocks, and this is 
exactly what the EFP gear switching portion was meant to do--
target specific healthy stocks while avoiding those of concern. 
Small ports needs the flexibility to anchor quota in 
communities with historic landings. Community fishing 
associations, or CFAs, can provide that protection and halt 
those communities from losing landings, port revenues, and 
employment in the transition to rationalization.
    The huge costs in the West Coast ITQ program is the use of 
100 percent observer coverage. The cost of $300 to $600-plus 
per day for an observer can only be paid by the larger vessels. 
One method proven in other countries, at one-third the cost of 
human observers, is the use of cameras. To make the West Coast 
trawl catch share program work for fishermen and small coastal 
communities, National Marine Fisheries needs to encourage and 
help facilitate at least these three things.
    Number one, CFAs need to be properly formed, and 
regulations put in place in order for them to owe more than the 
individual quota share limits. This would allow them to 
stabilize their fishery economies. Number two, develop, 
certify, and appropriate funds for cost-effective, onboard 
electronic monitoring systems to be used by the small boat 
fleet. And number three, set aside adaptive management 
allocations and provide flexibility in catch share programs to 
allow for community impacts.
    Thank you for allowing me to speak for my small coastal 
community.
    [The prepared statement of Captain Moody follows:]

         Statement of Wayne Moody, Member, Board of Directors, 
             Morro Bay Commercial Fishermen's Organization

    Good morning, Madam Chairwoman, Honorable Members of Congress, 
fellow witnesses, and distinguished guests. My name is Wayne Moody and 
I feel privileged to be here today to give testimony on Catch Shares 
from a Community Perspective.
    I started my commercial fishing career out of Port San Luis, 
California in 1974 and have fished for sea urchins, abalone, crabs, 
rockfish, salmon, and albacore. Our present boat is a 53' fiberglass 
troller that my wife and I fish out of Morro Bay, California for salmon 
(regulations permitting) and albacore. I currently sit on the board of 
directors of the Morro Bay Commercial Fishermen's Organization, with 
approximately 90 members.
    I hope to give the members of the Subcommittee an understanding of 
Morro Bay's perspective regarding catch shares and our community's 
recommendations for critical elements of the West Coast Trawl 
Individual Transferrable Quota (ITQ) program that are necessary to 
address our concerns.
    I would like to begin by providing some background regarding Morro 
Bay's fishing community.
    In 1985 approximately 15 million pounds of seafood products were 
landed in Morro Bay and its sister harbor, Port San Luis, with an ex-
vessel value of almost $19 million. Much of the seafood delivered into 
Morro Bay and Port San Luis was groundfish that was harvested by 
smaller vessels using highly selective fixed gear.
    During the 1980s, trawl fishing effort in our region increased, in 
part because of government subsidies that encouraged fishermen to 
increase their harvesting capacity. Trawlers displaced our local small 
boat groundfish fleet, and our fishermen either started trawling or 
moved into other fisheries. By the time of the Federal groundfish 
emergency declaration in early 2000, our ports were supported almost 
completely by trawl landings, and our local fleet had undergone 
dramatic consolidation. The severe reductions in groundfish allocations 
that followed were devastating. By 2006, landings had dropped to 1.2 
million pounds with ex-vessel value of approximately $2.9 million.
    In 2005, The Nature Conservancy (TNC) entered into discussions with 
some of the local trawlers on how to develop some new and sustainable 
approaches to the trawl fisheries. They petitioned the Pacific Fishery 
Management Council (PFMC) for the protection of 3.8 million acres off 
the California coast that would be set aside as Essential Fish Habitat 
(EFH) and where no trawling would be allowed. At the same time, TNC 
purchased the federal trawl permits and most of the vessels from local 
fishermen wishing to retire from the local trawl groundfish industry, a 
total of seven. Eventually, there were no local owner operated 
groundfish trawl vessels in the Morro Bay/Port San Luis area and TNC 
became a large holder of groundfish permits on the West Coast.
    Morro Bay had just finished building a new $900,000 ice facility. A 
local fish dock had been sold to the city and leased to the Morro Bay 
Commercial Fishermen's Organization (MBCFO). But fish offloading in 
Morro Bay Harbor was drastically reduced and, despite receiving grants, 
the MBCFO was operating the dock at a loss. Dock workers were reduced 
to part time and on an as needed basis. Ice from the new ice house was 
being dumped periodically to keep the refrigeration equipment 
operational and in working order. The local fuel dock threatened to 
close because of lack of business. It became immediately obvious; the 
local Morro Bay community would suffer tremendously without the 
landings of groundfish from these vessels. This would have a ripple 
effect not only on the other groundfish gear types, but the entire 
community. The infrastructure that the fishing community depended on 
was on the verge of collapse. Morro Bay was getting a preview of what 
consolidation of the trawl groundfish industry might do to the small 
coastal communities.
    Rather than just hold the federal groundfish trawl permits, TNC 
decided to lease them back to the community, with the condition that 
they would use more species selective gear to target certain stocks and 
reduce habitat impacts. Local fishermen, a conservationist NGO, and 
community leaders decided to do something different and we started 
working together on mutual goals. The Central Coast Groundfish Project 
was started as an effort to establish a community based fishing group 
to provide for the long term economic and ecological sustainability of 
the Morro Bay/Port San Luis region groundfish fishery. This wasn't, and 
still isn't, always easy. We went to the PFMC together and obtained an 
Exempted Fishing Permit (EFP) to use some of the permits in ``gear 
switching'' back to the type of fixed gear that historically had been 
used and which TNC considered environmentally preferred. More 
importantly for the subject today, the EFP tested out important future 
elements for the then underway west coast trawl ITQ program, by working 
collaboratively on gear switching, sharing observers costs, improving 
log book performance and testing electronic monitoring systems, a vital 
element for small boat fleets who simply can't afford or accommodate 
100% human observers. We also put one trawl permit back to work 
trawling under a modified habitat and gear plan, which is now being 
used in an innovative experiment to test trawl impacts on habitat.
    Things are better now in Morro Bay but we are still in critical 
care. The increased quota for open access for the Conception area has 
really helped the Central Coast small boat fleet in the past year. The 
quota for sable fish in the Conception area went from 220 metric tons 
to 1300 metric tons, and the weekly allowable open-access landings went 
from 600 pounds to 1500 pounds. This increase in landing limits made it 
worth the approximate 40 mile round trip to the fishing grounds. 
However, this allocation can change with changes in the stock 
assessment. While in general West Coast fishing stocks are in recovery, 
recent petrale stock assessments appear to threaten the very viability 
of the existing trawl operation. We have recognized that changes need 
to occur, and are moving forward.
    I would be remiss in my obligation to my community if I didn't 
point out some of their real concerns about catch shares. Many of our 
fishermen and our fishing community have some well-justified fears and 
concerns about our traditional fishing communities moving to catch 
shares.
    There's the concern that quota or shares will be given to those 
``free of charge'' who may at some time put them up for sale, or lease, 
to the highest bidder. Already, in the West Coast ITQ program, many who 
have been notified of their quota share, are looking for buyers or 
lessees. No longer will a fisherman be able to gain access to a fishery 
without purchasing quota at a large expense and then, only if it's 
available
    These shares or quota will most likely be sold to those who already 
have shares, consolidating the fishery amongst a smaller select group. 
It has been estimated that in the proposed West Coast ITQ program that 
most of the shares will be held by 40-60 vessels. These vessels will 
most likely operate close to the few remaining processing plants 
causing more pressure on the ``local'' groundfish resources. While it 
might be necessary in some cases to accumulate share or quota in order 
to make operations more cost efficient, it will also have the negative 
impact of forcing out smaller operators. And what happens when the 
entire resource gets back to Maximum Sustainable Yield; will the entire 
West Coast trawl quota be in the hands of 40-60 owners?
    While proponents of catch shares speak of the value of fishermen 
being able to plan on catching their quota to maximize the value of 
their catch, it also creates another concern. They can now schedule 
their groundfish season ``around'' other fisheries in order to maximize 
their participation in those other fisheries. Also, the proponents say 
that as the fishery becomes more efficient, fewer boats and gear are 
needed. Those once productive groundfish boats don't just disappear, 
they look for other fisheries to enter. Fishermen want to be productive 
members of their communities.
    We hear the stories of fishermen turning into sharecroppers even if 
they are able to hold on to their own boats, paying out up to 70% of 
their landings proceeds to the holder of the fish allocation. I was 
recently told of one Canadian vessel that paid a lease fee based on the 
current fish price only to have the price drop when they delivered, 
thus losing money. Crew income declines because of leasing overhead 
expense; and many fishermen are forced to leave their native coastal 
communities because of lack of employment opportunity.
    The Draft NOAA Catch Share Policy states that ``Councils should 
periodically review all catch share and non-catch share programs. The 
intent is to ensure that management goals are specified, measurable, 
tracked and used to gauge whether a program is meeting its goals and 
objectives.'' Once catch shares are allocated, then traded, leased, and 
sold, it will be very hard for the councils to change the program, 
especially in reference to ownership of the shares. It's basically a 
one-way street and there's not much room to turn around.
    We recognize that until some West Coast groundfish stocks are 
rebuilt, we need to reduce fishing effort on those stocks and 
concentrate on the healthy stocks. And this is exactly what the EFP 
gear switching portion was meant to do, target specific healthy stocks, 
while avoiding those of concern. Catch shares create a market that 
removes excess capacity from the fleet on a compensated basis, which 
helps achieve that goal. However, that very transition awards the value 
of the fishery to initial catch share recipients, and can make it more 
difficult and expensive for others to enter the fishery.
    To address this problem, we need strong and enforceable 
accumulation limits that restrain consolidation and maintain diversity 
in the fishery. The PFMC has adopted quota share use limits that could 
result in as few as 40 or so vessels participating in the non-whiting 
groundfish fishery. We need effective regulations to prevent persons 
with access to capital from directly or indirectly obtaining control 
over the fishery in excess of those limits. We also need room within 
those limits for Community Fishing Associations (CFAs) or cooperative 
arrangements to hold the amount of quota necessary to stabilize their 
fishery economies and support their costs of operation in smaller 
traditional groundfish harbors and coastal communities.
    Catch shares can result in landings migrating from ports that have 
a history of engagement in and reliance on the fishery to those that 
have infrastructure or market access advantages. To address this 
problem, we need a method for anchoring quota in communities with a 
history in the fishery. CFAs can provide that anchor, and protect those 
communities from losing landings, port revenues and employment in the 
transition to rationalization.
    Catch shares can result in fishermen being individually accountable 
for their share of the fishery, which gives them the incentive to be 
good resource stewards. However, the cost associated with monitoring 
each fisherman's harvest can be a very heavy burden, especially for 
small, fixed gear boats. Already, all boats that harvest groundfish 
must carry a Vessel Monitoring System that periodically transmits their 
position to National Marine Fishery Service (NMFS). The cost of this 
service is paid by the vessel and runs about $50-$60/month. However, 
the huge cost in the West Coast ITQ program is the use of 100% observer 
coverage. At present there is the ``proposal'' for the federal 
government to pay for 90% of the observer coverage for the first year, 
but we are very concerned about what happens after that period. The 
cost of $300-$600/day for an observer can only be paid by larger 
vessels. While human observer coverage creates jobs, there needs to be 
some common sense used and other options explored. One such method is 
the use of cameras that would be in operation while the vessel is 
actively engaged in fishing, hauling gear, and landing fish. It is 
estimated that the use of cameras for onboard monitoring could reduce 
the cost to 1/3 of human observers.
    So the real question is will the West Coast catch share program, 
which is on the verge of implementation, work for fishermen and 
communities that rely on these family owned businesses for identity and 
economies.
    To make it work the NMFS needs to encourage and help facilitate at 
least these three things:
    1.  Community Fishing Associations need to be properly formed and 
regulations put in place in order for them to hold more than the 
individual quota share limits. This would allow them to stabilize their 
fishery economies.
    2.  Develop, certify and appropriate funds for cost-effective on-
board electronic monitoring systems to be used by the small boat fleet.
    3.  Set aside adaptive management allocations and provide 
flexibility in catch share programs to allow for community impacts.
    Thank you.
                                 ______
                                 

City of Morro Bay
HARBOR DEPARTMENT
1275 Embarcadero
Morro Bay, CA 93442
Ph: (805) 772-6254
Fax: (805) 772-6258

January 27, 2010

The Honorable Jane Lubchenco
Undersecretary and Administrator
National Oceanic and Atmospheric Administration
1401 Constitution Ave. NW
Room 5128
Washington DC. 20230

Dear Dr. Lubchenco:

    The City of Morro Bay highly values the cultural and economic 
benefits derived from local sustainable fisheries. As you know we have 
been striving to work with new partners on innovative ways to preserve 
our working waterfronts and promote healthy fisheries and ocean 
environments. We are also very proud of our fishermen's role in 
providing healthy and high-quality food options for the U.S. consumer.
    Thank you for taking the time on Saturday, October 24, 2009 to meet 
with the partners in the Central Coast Groundfish project in Monterey, 
California. We can only imagine how intense the demand for your time 
is, and in this community we have noted your interest in our work and 
commitment to transitioning our fisheries into the future.
    Small working harbors on the West Coast are in crisis. The 
regulatory framework for fish will ultimately lead to even more healthy 
fish stocks in our country, but we do not have the right pieces on the 
board now to ensure another generation of professional fishermen or 
continuation for our small working harbor infrastructures.
    We are encouraged by your December 9, 2009 marine spatial planning 
interim framework in hopes that this is a step to secure sustainable 
and predictable access to our healthy fish stocks so that our 
businesses can plan for the future and attract a new generation of 
commercial fishermen. Frankly we are a little frightened too, since we 
see that it will take monumental leadership on both sides to forge a 
better way to manage fisheries than constantly restricting access based 
on overfished species stock assessments that often seem to have little 
relevance on regional stocks.
    The kind of leadership that you and The Nature Conservancy are 
demonstrating. Hopefully more and more of us can set aside our fears in 
the future and concentrate on the opportunities in change. We want to 
take just a minute to support the points outlined in the attached 
letter from The Nature Conservancy to you of November 2, 2009 regarding 
the West Coast Trawl IFQ program. A Safe Harbor provision in the West 
Coast Trawl IFQ program for Community Fishing Associations that are a 
legitimate community stability effort is a tool that is needed. Also 
creating affordable alternatives to human observers for groundfish 
fishermen is paramount to our survival, indeed no matter what else is 
done, the West Coast Trawl IFQ program will be a failure in our 
communities if small boats do not have an economically sustainable 
regulatory framework. We have committed to work on these issues. Please 
let us know if there is anything we can do to help you. We wish you 
well in your difficult voyage, and you have a standing offer of the 
grand tour of Morro Bay harbor any day, any time.

Andrea Lueker
City Manager

Rick Algert
Harbor Director

cc:  Honorable Lois Capps
    Frank Lockart
                                 ______
                                 

City of Morro Bay
Morro Bay, CA 93442
(805) 772-6200

March 8, 2010

Honorable Lois Capps
1707 Longworth Building
Washington, DC 20515

Re:  Funding for West Coast Groundfish Catch Share Management Program & 
Key Issues for Local Fishing Communities

Dear Lois:

    The City of Morro Bay is a partner in the Central Coast Groundfish 
Project (CCGP), an effort by our local fishing industry, community and 
conservation interests to reform our traditional groundfish fishery to 
more economically and environmentally sustainable practices. Our non-
traditional partnership has put aside past differences to focus and 
work together towards shared objectives, specifically:
    1.  Preserve heritage and economic contribution of local fishing 
industry.
    2.  Retain access to resource and create stable economically viable 
fishing opportunities.
    3.  Develop fishery practices that protect marine habitats and 
reduce bycatch & waste.
    In November of 2008, The Pacific Fisheries Management Council 
(PFMC) voted to transition this fishery to Individual Fishing Quota 
(IFQ) management. This fundamental change in management will have large 
impact on the future of this important and traditional fishery for 
Morro Bay and many other California fishing communities. The CCGP 
partnership is making changes to the harvest and marketing model of our 
fishery to help it adjust and remain viable within the new IFQ 
management structure.
    It is crucial for the CCGP, as well as all other interests in this 
fishery, that the new IFQ management structure be designed and 
implemented properly, which will require the resources and effort of 
both the federal government and fishery stakeholders. The CCGP 
partnership has been deeply engaged with the PFMC to encourage the 
adoption of key IFQ terms and conditions that are critical to the 
ability of our community and partnership to achieve its goals. While we 
have made significant progress and our unique partnership has developed 
a strong voice within the PFMC, there are still critical IFQ management 
terms that have not yet been adopted. Those include:
    1.  Electronic Monitoring for non trawl boats--given our port's 
loss of large processing facilities, changes in the seafood market and 
our interest in improving the environmental performance of the fishery, 
we have transitioned a significant portion of our traditional bottom 
trawl fishing effort to hook & line and traps. These lower volume/
overhead fishing operations allow us to harvest fish in a premium 
quality condition and access higher value markets. IFQ management will 
require full catch accountability and reporting. Our partnership and 
other interests in the industry are encouraging the use of electronic 
monitoring (video cameras) for hook & line and trap vessels. This type 
of monitoring has proven effective in other fisheries and its lower 
cost is essential for our new fishery model to be economically viable. 
In addition, many of the family owned fishing businesses in Morro Bay 
simply do not have physical room on their vessels to adequately 
accommodate crew and human observers. Now is the time when available 
funding must be used to restart an experimental electronic monitoring 
program our partnership began two years ago but had to drop due to cost 
considerations.
    2.  Community Fishing Associations (CFA)--the CCGP partnership is 
encouraging the IFQ management structure to allow qualifying community-
based entities to hold quota in amounts higher than the individual 
ownership cap. This would allow such an entity to anchor quota in small 
port communities that are most vulnerable to the market forces of quota 
consolidation.
    It is clear to our partnership that the development of the new IFQ 
management program that includes these important community and 
conservation design elements will necessitate appropriate federal 
funding. For this reason, the City of Morro Bay requests that you 
support allocations from federal funding appropriations set aside for 
the establishment of catch share fishery management to the West Coast 
Groundfish Trawl IFQ. Furthermore, we respectfully request that we 
begin a dialogue between your staff and CCGP representatives to 
identify ways in which we can work together to encourage the National 
Marine Fishery Service and the Pacific Fisheries Management Council to 
adopt the above-identified IFQ management terms that will help protect 
small fishing community interests and transition the fishery to greater 
economic and environmental sustainability. For example, we stand ready 
to work with NMFS on electronic monitoring to ensure survival of small 
boat fleets and traditional coastal fisheries in California 
communities. As always, thank you very much for your time and 
consideration in this critical matter.

Sincerely,

Janice Peters
Mayor
                                 ______
                                 

City of Morro Bay
Morro Bay, CA 93442
(805) 772-6200

October 29, 2007

Mr. Donald K. Hansen, Chairman
Pacific Fishery Management Council
7700 NE Ambassador Place, Suite 101
Portland OR 97220-1384

RE:  TRAWL RATIONALIZATION ALTERNATIVES--REQUEST TO RETAIN THE ADAPTIVE 
MANAGEMENT TRUST OPTION FOR THE GROUNDFISH TRAWL FISHERY

Dear Chairman Hansen and Members of the Pacific Fisheries Management 
Council,

    Morro Bay, California (population 10,000) is a coastal community 
with long and deep ties to fishing. Our local fishing industry is 
constantly exploring proactive ways to improve fishing methods and 
maintain viability for this industry in response to on-going changes in 
regulations.
    With this in mind, in the upcoming DEIS for the groundfish trawl 
fishery, we ask you to retain for analysis the adaptive management 
trust option, which could help meet adaptive management and public 
trust objectives. This mechanism, which would be funded by holding back 
a small portion of the quota, will serve as an insurance policy for the 
program and will help to enable the social and conservation goals to be 
met.
    While adoption of an individual quota program may create 
significant economic benefits, we are seriously concerned about 
potential negative economic impacts to the viability of small ports and 
harbors if trawling activity were consolidated to a few ``buyer's 
markets'' or offshore.
    We are also concerned about unanticipated impacts that arise 
whenever there is a major shift to a new management system. An 
alternative capable of addressing known concerns, as well as remedying 
unanticipated impacts that the current alternatives are unprepared to 
address, would help ensure that the transition to the quota system 
creates tangible benefits for the greatest number of people.
    Please retain for inclusion in the analysis this alternative 
capable of meeting adaptive management and public trust purposes, which 
will enhance the program's ability to meet important social and 
ecological objectives.

Sincerely,

Mayor Janice Peters
City of Morro Bay

cc:  Morro Bay City Council
    City Manager
    Environmental Defense
                                 ______
                                 

Response to questions submitted for the record by Captain Wayne Moody, 
                        Fishing Vessel Capriccio

Questions from Congressman Jay Inslee (D-WA)
1.  This is the second hearing that we have had on catch share fishery 
        management programs, so there has been a lot of discussion 
        about catch shares. But I'm not sure we have heard from many 
        witnesses that actually have participated in catch share 
        programs. Can you tell me your experience fishing in a catch 
        share program? Do you have a federal permit to fish in a catch 
        share managed fishery?
    Answer: No, I do not participate in a ``Catch Share'' managed 
fishery. The fisheries on the west coast have never been managed under 
this type of plan. And looking at the current cost of approximately 4-8 
times the value of the fish product to buy into other ``Catch Share'' 
fisheries (Alaska halibut and sablefish), I doubt I will ever be able 
to participate in one. Our community has historically depended on 
groundfish for local jobs and support of our marine dependent 
businesses. The Trawl sector in West Coast Groundfish is scheduled to 
go under a ``Catch Share'' program on Jan. 1, 2011. Because securing 
access to plentiful groundfish stocks in our area is critical to being 
able to maintain infrastructure and the economic/cultural value of our 
working waterfront, community representatives, trawl permit holders and 
groundfish fishermen have been actively involved in the development of 
the West Coast Trawl ITQ program for over five years. We have 
investigated examples of ``Catch Share'' programs in Alaska and 
internationally and feel that concerns about community stability need 
to be considered in making sure that future catch share programs are 
well designed.
Questions from Republican Members
1.  You note in your testimony that you fear the groundfish fishery may 
        be made up of only 40-60 vessels under the IQ plan. How many 
        currently are in the fishery and at the current quota levels 
        what would be the optimum number of vessels for all of the 
        vessels to be economically viable?
    Answer: The answer to this question would depend on the size of the 
vessels that are involved. their type and cost of operation, and if it 
was owner operated. The Pacific Fishery Management Council/National 
Marine Fishery service staff has projected that west coast trawl 
vessels will go from approx. 120 active trawl operations (there are 
actually about 170 trawl permits on the west coast, but many are 
inactive currently) to 40-60 under the trawl ITQ program on the west 
coast. Six of the over eighty commercially harvested groundfish species 
are currently listed as overfished, and management of those overfished 
species under the precautionary principle drives a very restrictive 
management system on the West coast: for example to protect certain of 
those overfished species a Rockfish Conservation Area (RCA) prohibits 
Fishing in 30 to 150 fathoms from Mexico to Canada. Unfortunately, with 
these spatial closures and the current 60 day quotas set using the 
precautionary principle, again driven by the need to rebuild a few 
``overfished '' or ``species of concern'' the current management system 
cannot support even the existing active permitees. One benefit of the 
West coast trawl ITQ program is that some fishermen may be able to 
obtain Quota Pounds and target certain healthy stocks with gear other 
than trawl, which may allow many of the currently inactive trawl 
permits to be used. Under this ``gear switching'' scenario we could see 
up to 150 separate fishing operations being supported on a seasonal 
basis in the West coast trawl ITQ program, if the program is well 
designed with allowance for cooperative arrangements in community 
fishing associations, and using electronic monitoring instead of 100% 
human observers.
2.  What do you suggest should be added to the trawl IQ plan to ensure 
        more favorable community protections? Were community protection 
        concerns raised and dealt with during the Council 
        deliberations?
    Answer: The PFMC needs to support the 10% holdback of quota pounds 
for community stability issues, and develop the details of that program 
so that it is effective in providing mechanisms for new entrants, and 
tying Quota pounds to historical groundfish ports to avoid 
consolidation out of those ports. The PFMC needs to develop and approve 
and implement the Community Fishing Association concept so that groups 
now forming in places like Morro Bay can work within the rules in 
attempting to tie quota to our area. NOAA needs to budget for and 
support cost effective electronic monitoring systems so small boat 
fleets can be economically viable in the Trawl ITQ program.
3.  You and Mr. Dooley both note the costs associated with the 100% 
        observer coverage required in the trawl IQ plan. Why did the 
        Council determine that 100% coverage was necessary? Is this 
        level of coverage necessary for the life of the program or will 
        this level of coverage be reduced as time goes on?
    Answer: The goal is full accountability, and since human observer 
programs are already in place NOAA has assumed the default position 
that the only known system for full accountability is 100% human 
observers. Electronic monitoring systems are in place and effective in 
Canada, and if Canada can do it so can we. We are not unsympathetic 
with NOAA's personnel who have a huge workload in implementing this 
catch share program on a very ambitious schedule, and are resistant to 
a ``new'' system, but this point is critical in the survival of small 
boat fleets historically operated out of smaller west coast 
communities.
4.  The Magnuson-Stevens Act allows for regional fishery associations 
        which sound very similar to your suggestion of Community 
        Fishing Associations. Did the Pacific Council examine this 
        authority for use in the trawl IQ plan?
    Answer: RFA's and CFA's have been discussed and investigated to 
some extent by the Pacific Council, however at this time finalizing 
action on creating a RFA/CFA program description is not even formally 
on their agenda this year. We are asking the PFMC to put this item on 
their agenda for their Sept. 2010 meeting, but we are not yet assured 
that it will be. The biggest challenge is that we support strong and 
effective control limits/ownership caps in Catch share programs to 
avoid consolidation and excessive market control, BUT, by their nature 
a community fishgig assoc. represents a group of people cooperatively 
managing Quota, which probably violates any strong control limit. We 
have worked with The Nature Conservancy on a suggested program 
description in an effort to assist the PFMC and attached for your 
information is a white paper ``control Rule and Collective 
Arrangements'': that was submitted to the PFMC at a CFA agenda item 
discussion in March of 2010. We will continue to work with the PFMC to 
adopt an effective CFA/RFA trailing amendment, but it must be done this 
year, before the actual Catch share program is implemented.
                                 ______
                                 
    Ms. Bordallo. I thank you very much, Mr. Moody, for being 
here today and to help us understand Morro Bay's perspective 
regarding catch shares.
    Mr. Angers, you may now begin your testimony.

           STATEMENT OF JEFFERSON ANGERS, PRESIDENT, 
                CENTER FOR COASTAL CONSERVATION

    Mr. Angers. Good morning, Madame Chairwoman, Mr. Brown, and 
members of the committee. My name is Jeff Angers. I am the 
president of the Center for Coastal Conservation. I am a native 
Louisianian and a recreational fisherman. My testimony this 
morning is presented on behalf of my organization, the American 
Sport Fishing Association, the Coastal Conservation 
Association, the International Game Fish Association, the 
National Marine Manufacturers Association, and the Bill Fish 
Foundation.
    In the toolbox of fishery management tools, catch shares 
are a tool. Implementing catch shares, as we are talking about 
this morning, in commercial-only fisheries can be a useful tool 
for managing harvest. But catch shares are an inherently 
inappropriate tool for recreational fisheries. In mixed use 
fisheries, where there are both recreational and commercial 
components, such exclusive fishing rights proposals maximize 
benefits to the commercial fishing industry while ignoring the 
participation, conservation value, and economic contribution of 
recreational fishing.
    NOAA's Draft Catch Share Policy currently lacks the 
necessary guidance to protect the recreational sector from 
adverse impacts associated with the implementation of any catch 
share policy. With the cascading impacts of fishery 
restrictions and closures across the country currently underway 
in key fisheries, the protection of the recreational sector 
should be a priority for the Congress, and for NOAA Fisheries 
as it develops any new overarching policy on catch shares.
    At a very minimum, NOAA should ensure, number one, that 
vital socioeconomic information on recreational fisheries is 
gathered prior to the issuance of any policy; number two, that 
they undertake a reevaluation of allocations prior to 
implementing a commercial catch share system; and number three, 
that they allow inter-sector transfers of catch shares through 
mechanisms that ensure equitable access to the recreational 
sector.
    According to NOAA Fisheries, the recreational fishing 
sector contributes over $82 billion in sales, $24 billion in 
income, and provides 534,000 jobs. Compare this to domestic 
commercial landings of fin fish in the U.S.: $28 billion in 
sales, $12 billion in income, and 423,000 jobs. The 
recreational sector is as significant in the commerce mission 
of NOAA as the commercial fishing sector, although it is at 
substantially lower environmental costs.
    Our economic contribution is provided with much less impact 
on the resource. Recreational harvests account for only 3 
percent of fish harvested. Commercial harvests account for 97 
percent of fish harvested.
    I want to speak to reallocation for a moment. The Councils 
and NOAA Fisheries have a long and unfortunate history of not 
addressing sector allocation. However, if one of this 
Administration's national policies will be to promote a system 
that provides the commercial sector with an inherent advantage 
to accessing a fishery, it can no longer be business as usual. 
NOAA must face the allocation challenge head on through its 
catch share policy. Otherwise, the existing allocations 
guarantee inequitable and harmful treatment of the recreational 
sector.
    I might call your attention to the comments of Dr. Jane 
Lubchenco offered Friday at NOAA's recreational fishing summit. 
She said, quote, in speaking to the recreational sector, ``You 
have pointed out that changes in demographics and economics 
should be fairly considered in allocations, and that no one 
sector should be guaranteed a specific, permanent allocation. I 
agree,'' she said. We thought those were very hopeful remarks, 
as we view--as we anticipate a final policy forthcoming. 
Without a meaningful reevaluation of existing allocations for 
fisheries considered for catch shares, our organizations must, 
and will, strongly oppose the implementation of the policy.
    As to inter-sector transferability to ensure the minimal 
adverse economic impact on the recreational sector, any formal 
policy should provide for inter-sector access to catch share as 
a way of reallocating and ensuring free market access. The 
clear assumption of NOAA's draft policy is that this portion of 
the quota is dedicated to the commercial sector for a time 
uncertain, regardless of any economic or demographic changes. 
This puts the recreational sector at an immediate disadvantage 
that we believe must be remedied. Consideration of inter-sector 
transfers ought to be a mandatory part of any analysis.
    One final comment. Many believe that catch shares are a 
panacea. Some will convince you that they will solve all 
problems, perhaps even bring about world peace. Listen 
carefully to their arguments. For instance, you might be 
tempted to believe that catch share systems in the Gulf red 
snapper fishery increase the total allowable catch by 30 
percent in just one year. When you hear such assertions, remind 
the blind loyalists to catch shares of other tools in the 
toolbox, like reductions in shrimp trawl bycatch from the use 
of better technology. Remind them of hurricanes named Katrina, 
Rita, and others that devastated the Gulf fishing fleets, both 
recreational and commercial. Catch shares are a tool in the 
toolbox, nothing more and nothing less.
    Thank you again, Madame Chairman, for the opportunity to 
comment this morning.
    [The prepared statement of Mr. Angers follows:]

    Statement of Jefferson M. Angers, President, Center for Coastal 
    Conservation, on behalf of the Center for Coastal Conservation, 
 American Sportfishing Association, Coastal Conservation Association, 
  International Game Fish Association, National Marine Manufacturers 
                Association, and The Billfish Foundation

    Good morning Madame Chairwoman. My name is Jeff Angers, and I am 
the president of the Center for Coastal Conservation. I am native 
Louisianian and a recreational fisherman. I would like to thank you for 
this opportunity to address the Committee as it discusses community 
perspectives on catch shares.
    My testimony today is presented on behalf of my organization, 
American Sportfishing Association, Coastal Conservation Association, 
International Game Fish Association, National Marine Manufacturers 
Association and The Billfish Foundation.
    Our organizations appreciate that implementing catch shares in 
commercial-only fisheries can be a useful tool for managing harvest, 
however they are an inherently inappropriate tool for recreational-only 
fisheries.
    We have serious concerns about the potential impact of commercial 
catch shares on the recreational sector in mixed-use fisheries (in 
which there are both recreational and commercial components). Our 
organizations respectfully submit that the Draft Policy Catch Share 
Policy of the National Oceanic and Atmospheric Administration under 
consideration lacks the necessary guidance to protect the recreational 
sector from adverse impacts associated with the implementation of a 
catch shares policy in mixed-use fisheries.
    Given the cascading and substantial impacts of fisheries 
restrictions and closures currently underway in a number of key 
recreational fisheries, the protection of the recreational sector 
should be a priority for the Congress--and for NOAA Fisheries as it 
develops any new overarching policy on catch shares. At a minimum, NOAA 
should ensure that vital socio-economic information on recreational 
fisheries is gathered prior to the issuance of any final policy; 
undertake a re-evaluation of allocations prior to implementing a 
commercial catch share system, and allow inter-sector transfers of 
catch share quota through mechanisms that ensure equitable access to 
the recreational sector.
    In mixed-use fisheries where there is a large and growing 
recreational sector, exclusive fishing rights proposals maximize 
benefits to the commercial fishing industry while ignoring the 
participation, conservation value and economic contribution of 
recreational fishing, which totals $80 billion and provides over half a 
million jobs--an economic impact equal to or greater than commercial 
fishing economic impacts.
    Catch shares in mixed-use fisheries are viewed by recreational 
fishermen as permanently setting quotas, which in sustainable fisheries 
impedes and ultimately retards growth for the recreational sector. 
Freezing fisheries participation is directly contrary to sustaining 
recreational fishing development and encouraging a greater conservation 
ethic.
    We recommend that the following principles should be included in 
the national catch share policy.
Thorough Economic Impact Analysis on Recreational Sector
    The implementation of a catch share system is intended to make 
significant changes in the operation and benefit distribution in the 
commercial sector of the fishery. By its very nature it will have an 
impact on every other sector of the fishery. As part of its advocacy 
for the increased use of catch shares, NOAA Fisheries frequently points 
to a very laudable goal--achieving the full economic value of the 
commercial sector. However, the goal should not come at the expense of 
the recreational sector. Instead it should be the policy of NOAA to 
maximize the economic potential of an entire fishery, including the 
recreational sector. According to NOAA Fisheries, recreational fishing 
contributes about $80 billion to the nation's economy annually, which 
is roughly equal to the commercial sector, while accounting for 54% of 
the jobs (in domestic fin fishes) and only three percent of the catch. 
NOAA Fisheries needs to recognize this contribution and place equal 
investment in thoroughly analyzing the economic impacts of catch shares 
on all the sectors in the fishery prior to the initiation of a catch 
share system.
    NOAA's Draft Catch Share Policy states that, ``Instances where such 
impacts are reasonably foreseeable, Councils and NOAA should evaluate 
the effects of catch shares on all sectors associated with the fishery, 
regardless of whether they are in the catch share program'' (p. 5). 
However, a full-fishery evaluation should be undertaken regardless of 
whether or not the councils reasonably foresee an impact on the 
recreational sector. This analysis should include the economic 
contribution of industries directly related to a recreational fishery 
and relevant downstream economic impacts, including boat sales, marina 
activity, boat construction and repair, fishing gear and tackle sales, 
hotels, restaurants, grocery stores and other peripheral businesses and 
industries.
Updated Sector Allocation Prior to Catch Share System
    Once councils and NOAA Fisheries have the necessary economic 
information, councils should then undertake a review of current 
allocations for any mixed-use fishery under consideration for a catch 
share program. Catch share systems are put in place using a 
``snapshot'' of the economic contribution and catch history of a 
fishery. It is incumbent upon the regional council and NOAA Fisheries 
to ensure that this snapshot is up-to-date and equitable prior to 
moving forward with a catch share program. Rather than relying on a 
snapshot of the past, we believe NOAA Fisheries has a stewardship 
obligation to position these resources to provide a better future.
    Any final policy should include guidance requiring regional 
councils to review the current allocations to determine if it is 
consistent with the best use of the resource for the nation as a whole. 
If the allocation is deemed not to be in the best interest of the 
nation as a whole, a reallocation should be conducted by the regional 
council.
    The councils and NOAA Fisheries have a long and unfortunate history 
of not addressing sector allocation. However, if one of the 
Administration's national policies will be to promote a system that 
provides the commercial sector with an inherent advantage to accessing 
a fishery, it can no longer be business as usual. NOAA must face the 
allocation challenge head-on through its Catch Share Policy otherwise 
the existing allocations guarantee inequitable and harmful treatment of 
the recreational sector.
    If a meaningful reevaluation of existing allocations is not 
undertaken for fisheries considered for catch shares, our organizations 
will strongly oppose the implementation of the policy.
    The catch share policy should include a requirement that periodic 
reviews (not to exceed three years) of the allocation should be part of 
the design of the catch share system to ensure that the fixed 
regulatory allocation reflects the best interests to the nation of the 
use of the resource.
Provisions for Inter-Sector Transferability
    Our final recommendation to ensure minimal adverse economic impact 
on the recreational sector is to provide for inter-sector access to 
catch share as a way of reallocating and insuring free market access. 
The clear assumption of NOAA's Draft Policy is that this portion of the 
quota is dedicated to the commercial sector, for a time uncertain, 
regardless of any economic or demographic changes. This puts the 
recreational sector at an immediate disadvantage that must be remedied.
    Consideration of inter-sector transfers ought to be a mandatory 
part of any analysis.
    There are many key components that should be part of inter-sector 
transferability. First and foremost, commercial quota holders should 
not be permitted to lease quota for the long-term or permanently. Such 
a scenario would equate to a commercial fisherman retiring off the 
benefits acquired from a common property resource. Fishermen should be 
required to either fish their quota for the long-term or sell it to a 
party willing to take advantage of the opportunity.
    In addition, NOAA should provide guidance to councils on how to 
permit state-established entities to purchase quota on behalf of their 
citizens. States have a long history of fishery management and, on the 
whole, a trusted relationship with recreational anglers. Providing them 
with the ability to purchase quota on behalf of their angling public 
will help to maintain public access to a public resource, while 
promoting sound fisheries conservation. In addition, recreational 
fishing data collection could be improved through the states. Such a 
mechanism will help alleviate any inherent negative impacts on the 
recreational sector, especially if the councils and NOAA Fisheries are 
unwilling or unable to achieve sector reallocation that most accurately 
reflects the full economic value of a fishery.
    Should a state be allowed to purchase commercial quota on behalf 
the recreational fishing community, a process should be established to 
provide transparency to recreational anglers. Transfers to states for 
recreational fishing should be managed under the same regulations that 
otherwise apply to the recreational fishery. It must also ensure 
fairness among all anglers to avoid further allocation fights regarding 
the state-held quota. We recommend that NOAA undertake pilot projects 
in the Gulf of Mexico and Southeast Alaska to test the merits of inter-
sector transferability.
    Thank you again for the opportunity to comment on community 
perspectives on catch shares. It is our goal to ensure that any 
forthcoming policy recognizes and protects the economic contribution of 
the recreational fishing and boating industries. We would like to work 
with the Subcommittee toward that end.
    Madame Chairman, that concludes my testimony, and I would be happy 
to take questions.
About our organizations...
    The Center for Coastal Conservation (Center) is a coalition of the 
leading advocates for marine recreational fishing and boating. It is 
dedicated to promoting sound conservation and use of ocean resources by 
affecting public policy through the political process.
    The American Sportfishing Association (ASA) is the sportfishing 
industry's trade association, committed to looking out for the 
interests of the entire sportfishing community. We invest in long-term 
ventures to ensure the industry will remain strong and prosperous as 
well as safeguard and promote the enduring economic and conservation 
values of sportfishing in America. ASA also represents the interests of 
America's 60 million anglers who generate over $45 billion in retail 
sales with a $125 billion impact on the nation's economy creating 
employment for over one million people.
    The Coastal Conservation Association (CCA) is a national 
recreational fishing membership organization of some 100,000 members 
and is organized to do business is 17 States on the Atlantic, Gulf of 
Mexico and Pacific Coasts. It has been actively involved in the 
majority of the nation's marine resource debates since its inception in 
1977. Its membership is composed of recreational fishermen who fish for 
every important marine recreational fish available in the EEZ. CCA 
brings not only an educated perspective on how to fish, but a 
conservation ethic which recognizes the value of recreational fishing 
as a pastime and obligation to take care of the resource and use it to 
the best benefit to the nation.
    The International Game Fish Association (IGFA), is a 70 year old 
world renowned not-for-profit organization committed to the 
conservation of game fish and the promotion of responsible, ethical, 
angling practices through science, education, rule making and record 
keeping. IGFA accomplishes its mission by enlisting the voice of over 
300 official IGFA representatives in nearly 100 countries, and more 
than 15,000 angler-members around the globe.
    The National Marine Manufacturers Association (NMMA), the nation's 
leading marine industry trade association, represents nearly 1,600 boat 
builders, engine manufacturers, and marine accessory manufacturers who 
collectively produce more than 80 percent of all recreational marine 
products made in the United States. The U.S. recreational marine 
industry contributes more than $30 billion in new retail sales and 
300,000 jobs to the economy each year.
    The Billfish Foundation (TBF) is dedicated to conserving and 
enhancing billfish populations around the world. The non-profit 
organization is an effective advocate for international change, 
synthesizing science and policy into fishery management solutions. By 
coordinating efforts and speaking with one voice, TBF is able to work 
for solutions that are good for billfish and not punitive to 
recreational anglers.
                                 ______
                                 

  Response to questions submitted for the record by Jefferson Angers, 
               President, Center for Coastal Conservation

Questions from Congressman Jay Inslee (D-WA)
1.  This is the second hearing that we have had on catch share fishery 
        management programs, so there has been a lot of discussion 
        about catch shares. But I'm not sure we have heard from many 
        witnesses that actually have participated in catch share 
        programs. Can you tell me your experience fishing in a catch 
        share program? Do you have a federal permit to fish in a catch 
        share managed fishery?
    I have never been a participant in a catch share program.
Questions from Republican Members
1.  A number of witnesses have discussed the need for better data 
        collection. The 2007 Magnuson-Stevens Act reauthorization 
        requires NMFS to develop a better data collection program for 
        recreational fisheries. Do you believe this effort will yield 
        better recreational harvest data?
    I am hopeful that it will ultimately yield better, more accurate 
data. I am disappointed that the congressionally mandated deadline of 
January 2009 came and past without the new data collection system in 
place. It is still not in place.
2.  NOAA lists four stocks in the Gulf of Mexico that are overfished 
        and which are experiencing overfishing (red snapper, greater 
        amberjack, gag, and gray triggerfish). Do recreational 
        fishermen participate in these fisheries and what percentage of 
        the harvest is caught by recreational fishermen? Do you agree 
        with NOAA's determinations that these fisheries are overfished? 
        What would actions are being taken to address these fisheries 
        and do you agree with the actions being taken?
    While the four species are overfished and have not recovered 
completely, actual overfishing has stopped and the appropriate annual 
catch levels are being used to allow for a timely recovery. The best 
science indicates these species are overfished, although that science 
is always based on catches from several years in the past. The bag 
limits, size limits and seasons seem appropriate measures to manage the 
fishery.
3.  Do you agree with the concept of each sector in a fishery being 
        accountable for its harvest level and if overfishing takes 
        place, that the sector should be required to ``pay back'' that 
        overage?
    I believe the commercial and recreational sectors should stay 
within their allowed harvest levels. Because the data collection for 
the recreational sector is flawed and often has high margins of error, 
it is best if recreational overages and underages are averaged across a 
three to five year period and adjusted accordingly.
                                 ______
                                 
    Ms. Bordallo. I thank you, Mr. Angers, for being here 
today, and I will now recognize Members for any questions they 
may wish to ask, beginning with myself.
    My first question is for you, Captain Goethel. In your 
view, what specific changes could be made at this point to 
remedy the unfair and inequitable allocations between 
recreational and commercial fishers, and amongst commercial 
fishers in the New England groundfish fishery?
    Captain Goethel. Quite frankly, I think what needs to be 
done is it needs to be remanded back to the Council with clear 
guidance from the National Marine Fisheries Service to observe 
National Standard 4, and put everybody on a common baseline. It 
is quite obvious to me. I think the other thing that needs to 
be done is that they need to be reminded that there is National 
Standard 8, and that these allocations have a big effect on 
communities.
    One thing in New England, if we had had an IFQ program, it 
would have required a referenda, and in order to get people to 
vote for the referenda, you have to get 80 percent of the 
people that catch 20 percent of the fish to get enough fish to 
feel like it is in their best interest to vote for it. In New 
England, this was a straight resource grab, nothing more, 
nothing less. Eight percent of the people here are probably 
going to be made instant millionaires on May 1st, and 92 
percent of the people are going to be virtually thrown out of 
the fishery.
    That wouldn't have happened if they had to have a 
referenda. So, by NOAA declaring that this was not a lap, that 
it didn't require a referenda, they almost sealed the fate of 
all of these small boats.
    Ms. Bordallo. Thank you. My next is for Julian Magras from 
St. Thomas. Today and in the past, you have characterized NMFS 
has having a lack of understanding of the Virgin Islands 
culture and a disregard for the fishing community. How do you 
think basic communications can be improved to remedy this 
situation?
    Mr. Magras. Well, I think one of the keys to the whole 
process is when they are setting rules and guidelines, that the 
stakeholders, which are the fishermen, need to be in the 
process from the beginning. We have been involved with them for 
the last five years. We sit down with real concerns to the 
table. They say yes to everything, ``Oh, we are going to fit it 
in.'' And then when you see proposals come forward, a lot of 
our ideas that we have presented are not there.
    A perfect example is the annual catch limit process. We 
have been looking at a document for the last two years, and the 
document has been about 25 pages long. And at this last April 
meeting, they produce the final draft to go to public hearing 
of the ACL document, and it was 315 pages long. And it was 
given to us just a week before the meeting. That was very 
difficult for the association to sit down and go through and 
analyze everything that they added to the process. And while at 
that meeting, they sat down and went through it, and the 
Council members didn't understand, because they didn't have 
access to the document until the same time that we did, which 
was a week. They went ahead and approved the document to move 
forward to public hearings. And that creates a big problem in 
the Virgin Islands.
    Ms. Bordallo. Thank you. Thank you very much. Captain 
Moody, your community's concerns about moving to catch shares 
are familiar to us now, including fears about consolidation of 
quota amongst the highest bidders, and the financial hurdle 
facing new entrants into the fishery. Why is it so important to 
anchor quota in fishing communities?
    Captain Moody. Thank you, Madame Chair. I think that with 
this deal we have been going through with the Nature 
Conservancy, when they came in and purchased the trawl permits 
from the local trawlers, and we saw that all of a sudden our 
local infrastructure was in trouble--and even though we were 
getting some grants to fund some of the fuel dock and unloading 
dock, we still were not able to get enough fish across the dock 
to keep those pieces of the infrastructure viable. And so we 
realized that we have to have groundfish landings in our harbor 
in order for our infrastructure to be viable.
    One of the reasons to anchor quota in our community, 
especially if we can anchor it there by some community fishing 
association or permit bank, then that would stay in the 
community in perpetuity. It would not have the chance to be 
balled up by some speculator in some other community and moved 
out of the community.
    Ms. Bordallo. Thank you. And my final question is for Mr. 
Angers. What types of socioeconomic information on recreational 
fisheries should be collected? Is NOAA collecting any of that 
data already, and why is this data important in the development 
of catch share programs?
    Mr. Angers. Yes, ma'am. Sadly, NOAA's data collection 
functions are woefully lacking, not just in fisheries stock 
assessments, not just in angler data, but also in socioeconomic 
data. Recently, the South Atlantic red snapper fishery was 
closed in January of this year. Part of the requirement that 
the agency was faced with was to analyze the socioeconomic 
impacts to coastal communities. They didn't have any of the 
data, and so they reported, we don't have the data, so we are 
just not going to consider it, and they proceeded with the 
closure.
    That was a particular disappointment to the thousands of 
businesses, from North Carolina to Cape Canaveral, who were 
drastically affected. And one of our friends at the American 
Sport Fishing Association decided that if the agency was 
incapable of collecting the data, then ASA would collect it 
themselves. And they sent out surveys to 3,200, 3,200 small 
businesses in coastal communities from North Carolina to Cape 
Canaveral to ask them to assess what the economic impact of the 
red snapper closure was going to be.
    It would seem like when the agency is statutorily required 
to consider the data, and they don't, that is a problem for us.
    Ms. Bordallo. Thank you very much. And now I would like to 
recognize the Ranking Member, Mr. Brown, for any questions he 
may have.
    Mr. Brown. Thank you, Madame Chair, and thank you, 
gentlemen, for being here today. And I hope that we can bring 
some resolve to this issue before it is too late. Didn't you 
say the deadline is like May 1st?
    Captain Goethel, Dr. Rothschild predicted that there will 
be a 50 percent drop in employment due to the new sector 
system. Do you think he is accurate?
    Captain Goethel. I think he is optimistic. I think it is 
going to be greater than that. I think the first year, a number 
of people are going to try to kind of hang on for a year to see 
if somebody straightens this mess out. But by year two, I think 
you can see more like 80 percent.
    Mr. Brown. I think in your analogy, you said that when you 
are fishing, you don't just fish for one species; you are 
fishing for a goodly number. And what happens when you reach 
the quota in one? Do you stop fishing, or what do you do then?
    Captain Goethel. Yes, we have to stop fishing. You can 
trade with other people, either within your sector or 
secondarily outside of your sector. But the problem is there 
are what we call choke species. They are species that everybody 
seems to have very little of, and so nobody wants to trade 
them. So, there is going to be no trading, none to speak of. 
Basically, in my case, as an example, I have 50,000 pounds of 
cod, which is kind of the signature species of New England, but 
I only have 190 pounds of white hake. So, when I catch 191 
pounds of white hake, if I can't find somebody to give more 
white hake, I am done for the year, even if I have only caught 
5,000 pounds of cod.
    Mr. Brown. Is it true that you can barter your quota with 
somebody else?
    Captain Goethel. There are complex rules surrounding the 
transferability of quota. You can--well, first of all, it is 
not quota. We shouldn't say that. It is percent sector 
contribution.
    Mr. Brown. OK. That sounds like a good word.
    Captain Goethel. Well, a ``quota'' means you own it, and we 
don't own it. That is one of the problems.
    Mr. Brown. I see, OK.
    Captain Goethel. So, you can trade, you can barter. The way 
the sector rules are set up, at least in my sector, you have to 
offer it to members first. The problem is, as I said, this fish 
all swim together. So, let us say 30 people in my sector, they 
go out, and everybody goes fishing, and somebody has a big tow 
of something. Then under the rules of engagement here, I don't 
have any choice. If he needs it, I have to give it to him 
because the sector is jointly and severally liable for not 
going over.
    So, there is a chance as an individual I might not ever get 
to fish at all.
    Mr. Brown. So, what do you think the motive behind this is?
    Captain Goethel. What do I think the motive is? I think the 
motive is to force people off the water. I think the head of 
NOAA has very clearly stated that there are too many boats, and 
she wants a bunch of them gone, especially in New England. And 
I would respond that, at least for me, my job is pretty 
important to me. There aren't a lot of job opportunities, as 
you folks are well aware of, right now.
    Mr. Brown. What is the unemployment up there?
    Captain Goethel. About 10 percent. And as an example, my 
crewman, he graduated from the University of New Hampshire, has 
a degree in engineering. He can't find a job. I have an 
engineer on the boat as a deckhand cutting codfish. There is a 
guy waiting to take his place that has an MBA from Cornell. He 
is about my age. He has been out of work for almost two years, 
can't find a job. His unemployment benefits have run out.
    So, I guess what I am saying is that we can do the same 
thing here if we spread it out over a little longer period of 
time. We end up with the same results. It would just take 
longer to get there, and we could still keep these jobs.
    Mr. Brown. But nobody is listening.
    Captain Goethel. It certainly--well, you folks are 
listening. You are here today. But quite frankly, I think NOAA 
is tone deaf.
    Mr. Brown. Thank you. Mr. Angers, a number of witnesses 
have discussed the need for better data collection. The 2007 
Magnuson-Stevens Act reauthorization required NMFS to develop a 
better data collection program for recreational fishermen. How 
is this effort working so far?
    Mr. Angers. Not so well, would be the short answer. The old 
data collection system was known as MRSS, the Marine 
Recreational Statistical Survey something. And MRSS had 
inherent problems--so much so that the National Academy of 
Sciences called it fatally flawed.
    The new system that was authorized by the 2007 
reauthorization of Magnuson is called MRIP, the Marine 
Recreational Information Program. I would note that the 
initials are M-R-I-P, like ``rest in peace,'' which can be 
disconcerting to some. The goal of MRIP, though, was to lessen 
the errors of MRSS, not so much so to provide the agency with 
the opportunity to have good, solid data that they can use to 
make in-season adjustments so that fishermen--so that managers 
can actually manage fisheries instead of manage crises.
    We did discuss quite a lot about MRIP and all of the data 
gathering by the agency at the NOAA summit this past weekend. I 
think that they have made some progress, but they still have a 
long way to go.
    Mr. Brown. I guess that goes to my next question. I 
apologize for running out of time. But NMFS hosted the 
recreational fishing summit last weekend. Did any positive 
development come out of this summit?
    Mr. Angers. Yes, sir. I would say that it was broadly a 
positive experience. There were about 170 recreational fishery 
leaders from all over the country, and this summit was a 
fulfillment of a commitment made by Dr. Lubchenco in September 
of last year that she was going to gather everyone together and 
have an open conversation.
    We had a pretty doggone open conversation. The agency has a 
number of shortcomings. To the extent that they were not aware 
of some of those shortcomings, I think that the 170 of us that 
were there made sure that they were going forward. We had folks 
from CEQ there and from throughout NOAA to have what I think 
was a pretty good conversation.
    I am cautiously optimistic, more so than I have been in 
many years, about where this Administration can bring us. But 
still, the topic of catch shares particularly was on the minds 
of all of the participants in the conference this weekend.
    Mr. Brown. Thank you very much. And I hope that we find 
some resolve.
    Mr. Angers. Me too.
    Ms. Bordallo. I thank the Ranking Member from South 
Carolina, Mr. Brown. And now I would like to recognize the 
gentlelady from New Hampshire, Ms. Shea-Porter.
    Ms. Shea-Porter. Thank you. And I would like to thank all 
of the witnesses for being here. And I would like to say that 
we certainly are listening, and I appreciate you coming here 
again, Captain, and you have been just terrific for the voice 
of the New Hampshire, and indeed the New England, fisherman.
    So, my first question has to do with my concern--and you 
know that we sent a letter. I am happy to report that the many 
Members of New England and elsewhere are sending letters about 
these issues. And, of course, Congressman Frank had one calling 
for some pretty important changes right now. But the question 
that I wanted to ask is--it has been a concern, and it is 
stated in this letter as well, that what we will see is 
consolidation, that we will indeed see the small fisherman 
pushed out.
    As a matter of fact, I just got an e-mail today that said 
that a large number won't even try because of the fiscal 
impossibility of being able to make a living. Would you like to 
comment on that? Do you think this really is the death of the 
small fisherman, and that the consolidation will harm not just 
New England, but elsewhere, that we will see larger as better?
    Captain Goethel. That is correct. Because of my position on 
the Council, a number of fishermen have come up to me and 
showed me their letters from NOAA, their percent sector 
contributions, usually with a, you know, throw it down on the 
table, look at this, followed by a stream of obscenities. And 
so I have seen--you know, these are confidential documents, but 
I have seen a fair number of them. I can guarantee you that a 
number of fishermen don't have enough to even remotely bother 
untying the lines. And they have already begun the process of 
consolidation.
    As I said, I think most people will hang on for a about a 
year in the hopes that either the courts or you folks will 
straighten this out. But most people don't have big financial 
resources here. They can't hang on forever with no job. As far 
as the consolidation issue goes, yes. I mean, we are already 
seeing it. The people that are relatively well off--and believe 
me, nobody is well off under this system, but the people that 
are relatively well off are already going around offering to 
buy your quota. And again, they misuse the word, but the haves 
are already buying up the have-nots, and we haven't even 
started yet.
    Ms. Shea-Porter. I think we both know how fiercely 
independent we are in New England, and in particular the 
fishermen. So, we have to make sure that they can earn their 
livelihood while still protecting the environment. And I 
believe that we can do this.
    Now, we have other problems there, as you know. I have 
heard from many fishermen about their individual allocations. 
In some cases, fishermen have lost thousands of pounds of fish 
because of poor recordkeeping. And it wasn't their poor 
recordkeeping, as you know, but it was done by the dealer 
submitting their information to NMFS.
    You also pointed out in your dissenting opinion on 
Amendment 16 that there is a serious inequity when determining 
allocations between previously existing sectors--the 
recreational industry and the rest of the commercial fleet. Can 
you speak to how those allocations have positioned New 
Hampshire's fishermen under Amendment 16?
    Captain Goethel. OK. To the first issue of the data, that 
surfaced when we first started talking about catch history. We 
never really realized that nobody had ever done an audit of the 
data. So being on the Council, I took my own information and 
went through it, and I found a number of errors. I think, on 
987 days worth of trips, I had about 70 errors, and some of 
them were quite substantial.
    A number of reasons. We work with NOAA; they have done--the 
person in charge, Vic DiVecchio, has done an excellent job of 
trying to get to the root of the problems. A number of them 
have been identified. But again, nobody ever bothered to check 
prior to doing this. So, obviously, the data should have been 
checked before we even went down this road.
    To the second issue of the inequitable allocation, as I 
said, if people had known two things--one is that they were 
going to at some point be judged on their catch history; and 
second of all, if they had been able to establish catch history 
in an equal fashion--in other words, there hadn't been all 
these import controls over the entire period that disadvantaged 
people, especially off New Hampshire, where we have a year-
round closure, and we have the largest rolling closure, three 
months, which is the three months you could catch fish.
    But NOAA said we couldn't go back in the record prior to 
the import controls; we couldn't use that data. It was too 
faulty. I don't know it was really any worse than what we are 
using right now. So, the result is that boats in New Hampshire 
were particularly disadvantaged by using a straight catch 
history formula. If we had gone and converted--the currency 
into time has been A days, which were the days that you could 
fish for multi-species. And most boats had on the order of 48 
days.
    If we had just done a straight conversion of A days to 
pounds, then you would have seen a very different picture. You 
would see a very different distribution of the allocation, and 
you would have a very different set of winners and lowers. You 
would have more fish in these communities and less fish on some 
of these larger vessels, which have established very big catch 
histories during the past 10 years when they could fish outside 
all these restricted areas.
    Ms. Shea-Porter. OK. Thank you. Do I have one more second 
for follow-up, or is that----
    Ms. Bordallo. You are over.
    Ms. Shea-Porter. I am over. OK. Thank you. I yield back.
    Ms. Bordallo. Thank you very much to the gentlelady. And 
now I would like to recognize the gentleman from Louisiana, Mr. 
Cassidy.
    Mr. Cassidy. Thank you. Mr. Magras, you mentioned in your 
testimony how Puerto Rico has a 12-mile state limit. The Virgin 
Islands have only a three-mile, and so inherently that biases 
the process toward that with a larger amount of state waters. 
Can you give me--you have obviously thought about this. So, 
what would be a potential solution to that issue? Do you just 
toss out the whole system or, no, you can compensate for it in 
a certain way?
    Mr. Magras. Well, I think the Congresslady for the Virgin 
Islands has a bill before Congress to try to establish our 
territorial sea at the same distance as the Puerto Rican sea, 
and that would be able to justify the fairness. But for right 
now, we have 88 percent of the jurisdiction of any rule set in 
Federal waters falls within the Virgin Islands. And Puerto 
Rico, for the smaller percentage that they have, there is a 
very small area that they can do any fishing at all in Federal 
waters. So, setting the rules in place would really be 
discriminatory against us. And we feel that, number one, we 
would like to see the islands separated as St. Croix, St. 
Thomas, St. John, Puerto Rico in setting any kind of limits 
from catch limits to annual catch shares because it is totally 
different fisheries.
    One island fishes for a different type of fish; the next 
island fishes for a different type of fish. It is what the 
people prefer.
    Mr. Cassidy. But I presume that your boats could go over 
there, and their boats could come over to you, and you could 
each catch the type of fish that your particular population is 
more likely to purchase, correct?
    Mr. Magras. Well, I disagree on that. The size of our fleet 
ranges from 17 feet long to 25 feet. That is more than 85 
percent of the size of our boats. And the other 15 percent 
would fall where we have a couple of 36-footers. But we are 
fishing in our waters, and whatever is--like, for example, 
whatever is caught in St. Thomas/St. John stays on St. Thomas/
St. John. We don't do any export at all. The same for St. 
Croix. The only thing that St. Croix would maybe send over to 
St. Thomas is conch.
    But we don't send anything outside of there, so we don't 
venture into Puerto Rico. Puerto Rico might venture into our 
waters, but we don't have any reports on that happening right 
now.
    Mr. Cassidy. OK. Mr. Angers, you had mentioned--I was 
struck that the recreational harvest is only 3 percent. Is that 
only for Federal waters? Is it that the recreational fishermen 
are taking a greater catch within state waters?
    Mr. Angers. Well, clearly, the management regimes are 
different. But those statistics that I gave you earlier were 
only for Federal waters. I mean, state waters, that is going to 
be a different story, depending on the particular fishery.
    Mr. Cassidy. Now you had mentioned--now as I am thinking 
carefully about your testimony, and at first your concern 
regarding the applicability of catch shares to mixed use 
fisheries, but then you mentioned inter-sector transfer. But in 
a sense, to have inter-sector transfer, that would be within 
the catch share system, correct?
    Mr. Angers. Yes, sir. You know, the simplest way to look at 
it is in a commercial-only fishery, there are certain economies 
that you can achieve by using this tool that is in the tool box 
of catch shares. In a recreational-only fishery, catch shares 
don't make any sense. But where the two sectors do mix, there 
are going to be some substantial problems.
    We already have some catch shares in place, for instance, 
the Gulf red snapper fishery, now for three years. And there 
are inherent problems when we have a management system that 
views the allocation discussion as rusted shut. Although 
Magnuson----
    Mr. Cassidy. What do you mean by ``rusted shut''?
    Mr. Angers. Let me explain. Magnuson requires the Councils 
to look at allocation between the commercial and recreational 
sectors, for instance, in red snapper. We do not find that the 
Councils, nor the agency, have the political will or interest 
to look at reallocating from one sector to another.
    So, the point of my testimony was to say that if we are 
going to have catch shares in mixed use fisheries, there are 
certain things that have to be accounted for--lest we have this 
static allocation.
    Mr. Cassidy. So, what I am gathering from you is that even 
if the recreational people had the wherewithal to go to the 
commercial guys and say, listen, I am going to buy your 
allotment, your whatever, your permit----
    Mr. Angers. Right.
    Mr. Cassidy.--and that would be 10 percent of, say, the 
total commercial share, that currently that would not be 
allowed. You can pull that 10 percent over to the recreational, 
but that is not allowed by the statute or by the Council?
    Mr. Angers. That is currently not allowed by the Council.
    Mr. Cassidy. In the Gulf. Is that true all around or just 
for the Gulf?
    Mr. Angers. I believe so. I believe so, yes, sir.
    Mr. Cassidy. OK. So, that is a local rule that could be 
theoretically overwritten by a political decision of the 
Council or by a statute modification of Congress.
    Mr. Angers. Well, and by a make-up on the various Regional 
Fishery Management Councils that would have the political 
courage to address it because, although they are allowed to 
reallocate, they never do.
    Mr. Cassidy. OK. Thank you very much. I yield back.
    Ms. Bordallo. I thank the gentleman from Louisiana. Now I 
would like to recognize the gentlelady from the Virgin Islands, 
Ms. Christensen.
    Ms. Christensen. Thank you, Madame Chairman. Thank you for 
holding this second hearing on this really important issue and 
complex issue. Before asking a few questions, I want to take 
the opportunity to welcome all of our panelists, but especially 
Mr. Julian Magras, a 22-year full-time commercial fisherman, 
founding member of the St. Thomas Fishermen's Association, a 
member of the Caribbean Fisheries Management Council Advisory 
Panel, and also, as you have heard, Chairman of the Board for 
the St. Thomas Fishermen's Association. Julian, I appreciate 
your taking the time to be here, and all of the other witnesses 
as well for traveling from far and near to give testimony on 
behalf of our fishing communities.
    I guess you had--and in answering the Chairwoman's question 
on the relationship between NOAA and our fishing community in 
the Virgin Islands. As you know, we talked a lot, we have 
worked a lot together, and I share your concerns on the 
management of the USVI fisheries and will continue to work with 
you to address those concerns. But can you offer some 
additional insights in how you see our efforts to designate the 
U.S. Virgin Islands as a fishing community under the Magnuson 
Act helping communities in the territory? And in particular, do 
you see that as a way that might help to improve the 
relationship between NOAA and our fisheries?
    Mr. Magras. Thank you, Delegate Christensen. Actually, at 
the April meeting, the regional director for NMFS put on the 
record that at the next Council meeting, which will be taking 
place in August, they are recommending that the Virgin Islands 
become designated fishing communities. Now I personally feel 
that me and my group, the Fishermen's Association, that they 
realize that this is not going to make a big impact in setting 
the rules and regulations through the ACL process and the catch 
shares. So, they are throwing this out to us to try to make us 
feel that, oh, we are going to become fishing communities. The 
only thing that they are going to be looking at is the 
socioeconomic impact of us being fishing communities.
    So, it can help in one way if they really sit down and look 
at the impact that it is going to be. But I strongly believe 
that it is not going to make much of a difference. I think what 
they need to do is really look over how they are doing the 
entire process. We want to set all of these new rules and 
regulations in place, but we still haven't come up with a way 
of collecting the data correctly.
    Without the data, setting rules and regulations doesn't 
make any sense. The only people that will suffer, which we are 
suffering from right now, are the fishermen. We submitted 36 
years of data, and now they are telling us that they can't use 
the 36 years of data. So, we want to come up with this whole 
new catch report, which they said that they were going to 
involve the fishermen, the stakeholders, in the development 
process. Well, that has not happened.
    They are keeping a meeting next month in Puerto Rico at the 
Ponce Hotel. They invite us to come to the meeting. They pay 
for everyone else to attend the meeting. Over 36 people, they 
stay at this five-star hotel, and they refuse to pay for one 
member of the St. Thomas Fishermen's Association to attend this 
meeting. I have a serious problem with this because millions of 
dollars are dumped into the different Councils for outreach and 
education, and they say that they can't set any of these rules 
and regulations without the stakeholders' input. Well, we need 
to be at these meetings. Everyone else gets paid a salary to be 
there. When we attend these meetings, we don't get paid a 
salary to be there. We give up our own personal time, fishing 
time, to be at these meetings.
    Ms. Christensen. Is anyone else on the panel in a place 
that is designated as a fishing community? No? Yes? Mr. Moody, 
you are----
    Captain Moody. We in Morro Bay are considered a fishing 
community, and a small fishing community.
    Ms. Christensen. And has it helped or not? Has it made a 
difference?
    Captain Moody. I am not--could you rephrase your question, 
please?
    Ms. Christensen. The issue was the relationship between the 
fisheries and NOAA, and whether the communities have more input 
into how the regulations are designed and implemented.
    Captain Moody. Thank you. It is real hard for--on the West 
Coast, the Pacific Fishery Management Council goes from the 
Mexico border all the way up to the Washington border with 
Canada, and they have meetings in Boise, Idaho, Seattle. It 
makes it really hard for the local fishermen to attend a lot of 
these meetings. Thank you.
    Ms. Christensen. OK. Could I get in one more question? 
Just, Julian, like many in the room today, you and I are 
strapped to the belief that there is not one approach to every 
fishery. What type of fishery do you think catch shares would 
be most appropriate in, and what management do you think would 
be most effective in the Virgin Islands?
    Mr. Magras. Well, if we can get the relationship with the 
NMFS, the Caribbean Fishery Management Council, our territorial 
Fish and Wildlife, and the fishermen--if we could get that 
communication going where it needs to be, and everybody is on 
the same page, I think that the first area that we would see a 
chance for setting catch limits would be in the trap fishery. 
The reason for that, the St. Thomas Fishermen's Association, 
with its membership, after doing analysis, we have 87 percent 
of the trap fishery as members. And that is in the fish trap 
fishery. And we have 95 percent of the lobster fishery as 
members of the association.
    So, we feel that in the future, if we could get the 
relationship working where it needs to be, we can attempt to 
try doing catch shares in that industry. But how I would like 
to see the catch share program work, if we decide to, is I 
don't want to see the little boats get kicked out of the 
industry at all because, if that is what is going to happen, 
well, then we would always be against catch shares because in a 
small community, as the Virgin Islands is, fishing has had such 
an important role in the Virgin Islands.
    And right now, the young ones coming up don't want to 
invest the time and the money to go into the fisheries because 
of all of the new rules and regulations that are coming down. 
So, they are waiting to see what the outcome of the entire 
process is going to be. So, that is where we stand.
    Ms. Christensen. Thank you. And thank you for your patience 
in allowing me the extra questions.
    Ms. Bordallo. I thank the gentlelady from the Virgin 
Islands. And now I would like to recognize the gentlelady from 
California, Ms. Capps.
    Ms. Capps. Thank you, Madame Chair, especially for having 
this hearing on Earth Day. I want to thank each of our 
panelists for being here to share your views on catch shares. I 
particularly want to welcome Wayne Moody, who is a commercial 
fisherman from Morro Bay, which is in my district. He is joined 
in the audience by Jeremiah O'Brien, who is the president of 
the Morro Bay Commercial Fishermen's Organization.
    As he said, Wayne has spent over 30 years fishing along the 
West Coast. He has been using--he has been a real steward of 
the sea, and only fishes using hook and line methods, catching 
one fish at a time. Along with his wife, Wayne sells his 
premium hand-packed albacore tuna to local restaurants. If 
anybody here wants to try some delicious, sustainably caught 
seafood, you can purchase some from his web site at 
eatalbacore.com. And with the little commercial here, on the 
container is the picture and name of his vessel, the Capriccio, 
and the same statement, ``Caught hook and line, one at a 
time.''
    So, I want to focus my questions on the impacts on local 
fishing communities, our historic working waterfronts, if their 
fishery transitions to catch shares. And I do this with the 
understanding that catch shares can be beneficial, even though 
they are not a panacea. They must be part of a comprehensive 
approach that supports communities and creates jobs and 
strengthens conservation. If properly designed, catch shares 
could help achieve these important goals.
    We all know that the Pacific Fishery Management Council is 
designing, and will be implementing, a catch share program for 
Pacific groundfish trawl fishery by 2011. This design will 
affect fishing jobs and coastal communities. It will also 
impact fishery resources and the environment. As we learned at 
last month's hearing, we must get this policy right to ensure 
vibrant fishing communities and healthy ocean ecosystems.
    So, Mr. Moody, small fishing businesses, which are family 
owned, like those in Morro Bay and others in California, stand 
to be the most affected if catch share programs are not 
designed properly. You would agree that catch share management 
may not be appropriate for every fishery, right?
    Captain Moody. Thank you, Congresswoman Capps, and thanks 
for the nice ad. Yes, ma'am, I would have to say that we have 
to really use a lot of care with catch share management design. 
And I will let you know that we are really concerned in our 
community about how catch shares will be implemented.
    Ms. Capps. Now you would agree also that if a catch share 
program is being developed, it needs to be tailored to meet 
specific community goals upfront, and before it is implemented.
    Captain Moody. Yes, ma'am, most definitely.
    Ms. Capps. What are some of the economic, social, and 
conservation goals of the Morro Bay fishing community?
    Captain Moody. First off, we need to make sure that we 
preserve our fishing heritage and the economies of the 
community. We need to make sure that we do it sustainably. And 
we also want to make sure that we retain access to the stocks, 
to the local stocks, by our local fishermen for the local 
community.
    Ms. Capps. I want to get into the ways to make the Pacific 
trawl catcher program work for individual fishermen and their 
communities, as you are an example of that. Our Chairwoman 
asked about the anchoring quota in the community, a question. 
And you explained really very well the reason for an anchoring 
quota in communities with historic landings, and why this is an 
important design feature.
    Could you expand just briefly on why these communities are 
so vulnerable to market forces?
    Captain Moody. Well, as we have heard, quota, when it is 
individual, transferable quota, it is a market commodity. And 
when that commodity is sold, it can leave the community, never 
to return again. Then when consolidation happens, the market 
forces build up, and it makes it tough for that to come back. 
So, we need to make sure we anchor some quota in the local 
communities for our local fishermen.
    Ms. Capps. Thank you. That is so important. So, when 
designing the Pacific trawl catch share to allow community 
fishing associations to hold quota, this is going to help the 
fishing communities like Morro Bay to achieve its goals, right?
    Captain Moody. Yes, ma'am. It will protect us from losing 
jobs, landings, and the infrastructure.
    Ms. Capps. So, as you know, the Pacific trawl catch share 
program includes design features requiring every boat--this is 
a sticking point now I am going to get into--and I beg your 
indulgence. I know we are already in the yellow light. Could I 
continue this chain of questions with my constituent, who has 
come all the way from California? This feature requiring every 
boat to carry an observer to account for the harvest, this is a 
very big concern for small boats like those in California, 
right? And this is something you have now been doing for over 
two years.
    Captain Moody. Yes, ma'am. It is a real concern. It almost 
seems like this ITQ West Coast trawl program has been designed 
for the larger boats. When you have to look at $300 to $600 a 
day for an observer, a lot of our small boats cannot 
financially pay that price, and it will force them to sell 
their quota.
    Ms. Capps. Let me ask you, since you have been forced to do 
this for over two years, what has the result been?
    Captain Moody. There has been no bycatch, none at all.
    Ms. Capps. Absolutely no bycatch, and you are already 
demonstrating that. Yet you continue to be required to carry 
these observers on board.
    Captain Moody. Yes, ma'am.
    Ms. Capps. Do you have any designs or recommendations to 
improve this design feature?
    Captain Moody. It has already been shown in other countries 
at one-third the cost of human observers that electronic 
monitoring would be sufficient.
    Ms. Capps. Especially when you do one at a time over the 
edge of the boat. It is very easy to observe that with a 
camera.
    Captain Moody. Total retention, yes, ma'am.
    Ms. Capps. OK. Now in Morro Bay--just a couple of more 
questions, Madame Chair. In Morro Bay, several groundfish trawl 
permits are working under a PFMC-approved exempted fishing 
permit that allows these vessels to access the groundfish 
resource using hook and line and trap gear. What has been the 
record over the last two years? You already mentioned this, but 
I want to make sure this is in the record--over the last two 
years using these methods, which you have done in order to 
comply with the requirements. What about the bycatch?
    Captain Moody. There has been none. They have been able to 
target the species of--the healthy species.
    Ms. Capps. So, your willingness to adopt this method has 
really resulted in the environmental goals of Pacific Coast, 
also of the environmental community in doing so. I have one 
last question, Madame Chair. I beg your indulgence. One of the 
take-home messages for me in the last hearing we held on catch 
shares was the need for flexibility in the design. And one of 
the items under consideration now is setting aside an 
allocation for adaptive management. Would you explain what you 
interpret that to mean? And why would that be so important for 
small communities like Morro Bay?
    Captain Moody. This is where we are really concerned. This 
adaptive management in the West Coast ITQ trawl program has a 
10 percent set-aside, and that is to go to the small coastal 
communities who would have problems once there is 
consolidation. And there will be consolidation; it has already 
been said that it is possible for the whole West Coast trawl 
ITQ to be owned by 40 to 50 vessels--the whole coast. And we 
need this adaptive management set-aside, 10 percent, for CFAs 
or community fishing associations, and that needs to be 
guaranteed.
    There is real concern, even in NOAA, that that will never 
come back to our coastal communities.
    Ms. Capps. So, you would say as a recommendation to this 
committee and also to NOAA and to the Pacific Coast Fishing 
Council, find some way to guarantee that that 10 percent stays 
in the community. Would you like to rephrase that for us so we 
really get it right?
    Captain Moody. We need the assurance of the National Marine 
Fisheries that that 10 percent set-aside, which is supposedly 
going for the first two years to the trawl sector, will never 
come back to the coastal communities--we need to make sure that 
that 10 percent set-aside comes back to the communities, small, 
affected, negatively affected, coastal communities.
    Ms. Capps. And that would be that guarantee that you need 
to be assured that the way of life that you are adapting to is 
going to be there for your children and grandchildren and for 
the fishing community itself to be maintained.
    Captain Moody. Yes, ma'am.
    Ms. Capps. I thank you very much, and I now----
    Ms. Bordallo. I thank the gentlelady from California. I 
would like to remind--I think we have votes in a few minutes. 
So, we are going to try to get the second panel on, but before 
we do, I would like to recognize Mr. Cassidy for a second round 
of questions.
    Mr. Cassidy. Step up to the mike, buddy.
    Mr. Angers. Yes, sir.
    Mr. Cassidy. You mentioned on several occasions--you have 
testified here before. You have expressed strong concerns 
regarding the NOAA system of acquiring data as it relates to 
recreational fishermen. And I have had several meetings, if you 
will, in my office with folks to discuss this. And they say, 
well it is not great, but there is a strong correlation. We 
think that as bad as it is, it nonetheless correlates with a 
trend, if you will. So, if we do a phone survey, and we find 
out that--of course, people always lie about their fishing, but 
nonetheless, we adjust it down 50 percent, and we come up with 
something that reflects a trend in populations.
    First, what would you comment about that? And second, if 
you disagree with its usefulness, what would you propose in its 
stead? And keeping in mind financial constraints, so it has to 
be reasonable.
    Mr. Angers. Yes, sir. Excuse me. First of all, there are 
three different types of data that I think we want the agency 
to be acquiring. First is stock assessments. We want to know 
how many fish are out there. No fisherman wants the ocean to be 
barren of fish, but we have to know how many fish out there to 
start.
    The second kind of data is the socioeconomic data that 
shows the impact of fishing management on the local communities 
that we have been talking about today. So, we have biological 
data. We have socioeconomic data. And then we also need the 
data about the anglers.
    The old data system, the big joke about MRSS, which I 
mentioned earlier, was that in their statistically perfect way 
to do intercepts dockside, to ask people what they caught, and 
then supplementing with a national phonebook, that a 
grandmother in Kansas could receive a phone call and be asked 
how many goliath grouper did you catch when you were 
recreationally fishing saltwater today. I mean, it was utter 
foolishness.
    We know that the National Marine Fisheries Service, through 
the various science centers, is capable of getting an 
incredible amount of data, both on fish and on people. We know 
that because in the Pacific Northwest, one of the other big 
jokes is it seems like NOAA has named every single salmon 
because they know so much about the fish in the Pacific 
Northwest.
    Mr. Cassidy. But salmon come onshore, but they go offshore 
as well. I presume that must be easier if you have a tollgate, 
and they are saying, hey, there goes Sam, there goes Betty, 
there goes Ruth.
    Mr. Angers. Right, true. No. That is a----
    Mr. Cassidy. Whereas if they are way out in the ocean it is 
like they are off at college. You don't know what is happening.
    Mr. Angers. Well, good analogy, good analogy. But the 
reality is that in gathering the data in the Southeast, for 
instance, it is a lot more difficult because--let us just take 
our home State of Louisiana. Everyone who lives on the water, 
or everyone that lives on a tributary that can get you to 
saltwater--or to freshwater for that matter--they are a 
potential landing dock. And in the Pacific Northwest, it is 
not----
    Mr. Cassidy. But how is that difficult--yes. So, I agree. 
Every Cajun that lives on a bayou can go out and fish and come 
back to her backyard. So, how do you do it? What would be your 
better way of doing it, knowing that we have a different setup 
in the marshes than they do in the Pacific Northwest?
    Mr. Angers. Well, I will tell you first, Mr. Cassidy, how I 
would not do it. Currently, in the Gulf of Mexico, there are 44 
species in the reef fish complex, that is, red snapper, yellow 
snapper, vermillion snapper, lane snapper, gag grouper, yellow 
grouper, red grouper--all of the different colors and all of 
the----
    Mr. Cassidy. The yellow light is on, man. Hurry.
    Mr. Angers. Thirty-four of the 44 species of fish in the 
Gulf reef fish complex, the agency has no data. Thirty-four of 
the 44.
    Mr. Cassidy. Now is that because they are not endangered or 
because they just don't want to do it?
    Mr. Angers. It is a question of if they have the will to do 
it or not. But I will tell you, by next year, the agency is 
required to certify to the Congress that over-fishing is not 
occurring on species that as of today, in mid-2010, they have 
no data on whatsoever. That is not how a science agency should 
be conducting itself.
    Mr. Cassidy. OK. So, we are almost out of time. So, how 
would you do it?
    Mr. Angers. Learn lessons from the successes in the Pacific 
Northwest. They do it, they do it properly, not just because 
Norm Dicks cares so much about fish in the Pacific Northwest, 
but because there is a culture there and the science and the--I 
am not a scientist, clearly. But the processes have been 
developed, they have been established, and that is transferable 
technology that can come to the Gulf, that can come to the 
South Atlantic, Mid-Atlantic, throughout the entire country.
    But the way to not do it is what they are doing today, 
shortchanging all anglers, all commercial fishermen, from one 
coast to the other.
    Mr. Cassidy. So, what you are telling me is that even 
though the salmon come onshore, the portion of the technology 
that refers to the fish that are out there, so to speak, is 
transferable.
    Mr. Angers. Yes, sir.
    Mr. Cassidy. And that is equally efficacious, even though 
the fish do not come upon shore in the Gulf.
    Mr. Angers. That is correct, yes, sir. And, of course, 
there are a number of fish in the Gulf, for instance, redfish 
that spend some time in the inshore marshes and state waters 
and sometimes in the offshore marshes. So, it is somewhat 
analogous to the salmon situation.
    Mr. Cassidy. OK. Thank you very much. I yield back.
    Ms. Bordallo. I thank the gentleman from Louisiana, and I 
thank the witnesses on the first panel for their testimony and 
for being here today. And I now call up our second panel of 
witnesses.
    [Pause]
    Ms. Bordallo. I would like to welcome the witnesses on the 
second panel. They include Mr. James Donofrio, Executive 
Director of the Recreational Fishing Alliance; Mr. Bob Dooley, 
President, the United Catcher Boats; Dr. Brian Rothschild, 
Montgomery Charter Professor of Marine Science and Technology, 
University of Massachusetts and Dartmouth; and Captain Terry 
Arnold Alexander, Fishing Vessels Jocka and Rachel T.
    I would like to welcome our second panel of witnesses and 
thank them for appearing before this Subcommittee. And again, I 
would like to note that the red timing light on the table will 
indicate when five minutes have passed and your time is 
concluded. We would appreciate your cooperation in complying 
with these limits. Be assured, however, that your full written 
statement will be submitted for the hearing record.
    Mr. Donofrio, welcome back to the Subcommittee, and please 
begin your testimony.

 STATEMENT OF JAMES DONOFRIO, EXECUTIVE DIRECTOR, RECREATIONAL 
                        FISHING ALLIANCE

    Mr. Donofrio. Thank you, Madame Chair. Good morning, and 
good morning, Mr. Brown and members of the committee. Mr. 
Brown, I appreciate your comments this morning. They were very 
thoughtful.
    Madame Chair, my name is Jim Donofrio, Executive Director 
of the RFA. I appreciate the opportunity to appear before you 
today to discuss the application of catch shares or other 
limited access privileges programs in the recreational fishing 
sector. Today I have the distinct privilege of representing the 
Marine Retailers Association of America, the Fishing Rights 
Alliance, United Boatmen of New Jersey, United Boatmen of New 
York, the Maryland Saltwater Sportsmen's Association, 
Conservation Cooperative of Gulf Fishermen, the National 
Association of Charter Board Operators, the Southern Kingfish 
Association, New York Sport Fishing Federation, and the New 
York Fishing Tackle Trade Association.
    These groups represent the interests of millions of 
saltwater anglers and tens of thousands of jobs in the 
saltwater fishing industry from Maine to Alaska. All of the 
aforementioned groups, including the RFA, are adamantly opposed 
to any catch share program in the recreational fishing sector 
that comprises the traditional open-access of season size 
limits and bag limits. And to our surprise, NOAA and the Obama 
Administration have diverted millions of dollars of resources 
from cooperative research and other scientific programs toward 
the implementation of catch shares. And the results from 
fisheries where catch share programs were implemented should 
spark serious trepidation for the commercial and recreational 
sector.
    The facts certainly do not support the lofty, unfounded 
status the Administration has afforded to catch share 
promotion. The application to catch shares in the recreational 
sector would completely destroy the open access structure of 
the fishery and substantially affect fishing-related tourism in 
coastal states, as Mr. Brown has pointed out before in the 
other hearing.
    It is apparent from NOAA's actions that the overall health 
of the recreational fishing industry is not a priority for the 
agency when enforcing Magnuson mandates and crafting management 
policies. NOAA has indicated that no fishery or sector is 
obligated to adopt catch shares, and that the final decision 
will be left up to the consideration of the Regional Fishery 
Management Councils.
    However, the RFA finds no comfort in this stipulation. As 
you all know, there are numerous politically appointed 
personnel within the upper administration of NOAA that worked 
with pro-catch share environmental organizations prior to their 
employment with NOAA. NOAA has established a precedence of 
superseding the Regional Councils on matters of fisheries 
management, even when conservation is not a primary concern. 
The 2011 NOAA budget included a massive increase in funding for 
the development of catch share programs. And finally, in 2009, 
there were six appointments made to the Regional Councils where 
the candidates were affiliated with non-fishing interest groups 
that supported the use of catch shares.
    This leads us to believe they were purposely appointed to 
help advance a pro-catch share agenda. RFA firmly believes that 
all anglers are entitled to equal right to access to 
recreational fisheries. The very definition of catch shares 
contained in Magnuson includes the use of limited access 
privilege programs, which are fundamentally incompatible with 
traditional open-access of our fisheries.
    In many recreational fisheries, it is impossible to equally 
divide annual recreational harvest limits among its 
participants because there are so many more anglers than 
numbers of fish, and clearly Congress should be aware of that 
limitation. Some groups have suggested limiting the number of 
recreational anglers to those individuals with financial 
resources to pay for access, thereby creating free markets for 
catch shares.
    RFA hopes Members of Congress share our disgust with this 
notion of selecting recreational participation based on a 
criteria of money. RFA finds this approach to be in complete 
violation of the public trust doctrine established when our 
nation was founded to protect its citizens from the ownership 
of natural resources. The public trust doctrine states that the 
public rights are superior to private claims and private 
rights. The idea of providing the exclusive rights of free-
swimming fish to a selected few is in complete contradiction to 
this law. And in fact, the Supreme Court, in 1842, declared 
that wildlife resources are owned by no one and ought to be 
held in trust by the government for the benefit of present and 
future generations.
    Furthermore, RFA is very much concerned about the 
collateral damage to the recreational sector when commercial 
catch share programs are implemented. In a sense, commercial 
catch shares would memorialize allocations that are not 
necessarily consistent with the current or traditional 
magnitude of the corresponding recreational component in that 
fishery. The allocation of every single fishery with a 
commercial and recreational component needs to be considered 
before any commercial catch share program is implemented.
    And again, Madame Chair, I thank you for the opportunity. I 
am happy to answer any questions today.
    [The prepared statement of Mr. Donofrio follows:]

          Statement of James A. Donofrio, Executive Director, 
                     Recreational Fishing Alliance

    Madam Chairwoman and Members of the Committee, my name is Jim 
Donofrio, Executive Director of the Recreational Fishing Alliance 
(RFA). The RFA is a national 501(c)(4) non-profit political action 
organization whose mission is to safeguard the rights of saltwater 
anglers, protect marine industry jobs, and ensure the long-term 
sustainability of our Nation's marine fisheries. The RFA represents 
individual recreational fishermen, recreational fishing boat 
manufacturers, party and charter boat owners and operators, bait and 
tackle businesses, marina operators and other businesses dependent on 
recreational fishing.
    I appreciate the opportunity to appear before you today to discuss 
the application of catch shares or other limited access privilege 
programs in the recreational fishing sector. Today I have the distinct 
privilege of representing the Marine Retailers Association of America 
(MRAA), Fishing Rights Alliance, United Boatmen, United Boatmen of New 
York, Maryland Saltwater Sportsmen's Association (MSSA), National 
Association of Charterboat Operators (NACO), Southern Kingfish 
Association (SKA), Conservation Cooperative of Gulf Fishermen (CCGF), 
New York Sportfishing Federation, and New York Fishing Tackle Trade 
Association. These groups represent the interests of millions of 
saltwater anglers and tens of thousands of jobs in the saltwater 
fishing industry from Maine to Alaska. All of the aforementioned 
groups, including the RFA, are adamantly opposed to any catch share 
program in the recreational fishing sector, in any way, shape or form. 
This is a fact that cannot be compromised. We do not want any 
discussion on any program that compromises traditional open access of 
seasons, size limits and bag limits.
    The RFA operates under the premise that recreational fishing is 
good for the Nation. It is a traditional activity which brings families 
and friends together, enhances the quality of life for millions of 
Americans, provides tremendous economic benefits for the country in 
terms of jobs and tax revenues, and has a low impact on our marine 
resources. In fact, NOAA estimates the total recreational saltwater 
economic value exceeds $30 billion annually. Based on the profound 
benefits recreational saltwater fishing provides to our Nation, RFA 
believes proper management is absolutely necessary.
    Recreational fishermen were among our Nation's first 
conservationists and continue to be at the forefront of pushing for 
appropriate marine conservation measures because our businesses and our 
quality of life depend on healthy marine fisheries. Those who 
experience all that saltwater fishing has to offer often develop a 
sense of responsibility and desire to pass on the experience to younger 
generations and want to do their part to ensure that there are healthy 
resources for future generations to enjoy. This strong conservation 
ethic has played a significant role in the tremendous rebuilding 
progress made in many important recreational fisheries since the 
passage of the Sustainable Fisheries Act (SFA) in 1996 and amendments 
to the Magnuson Stevens Fishery Conservation and Management Act 
(MAGNUSON) in 2007. Currently, 81% of our nation's fisheries are not 
overfished and 76% are not experiencing overfishing. These statistics 
represent significant progress and a cooperative effort between 
fishermen and regulators.
    Unfortunately, many in the recreational fishing public and fishing 
related businesses are not realizing the benefits of rebuilding and 
maintaining fish stocks at sustainable levels and are being denied 
accesses to some of the most important recreational fisheries. This 
adverse situation illustrates that the rationale offered to fishermen 
by NOAA that short-time pain in way of reduced access will result in 
long-term benefits when stocks are rebuilt is invalid. We now know that 
the absolute size of a fish stock is not the most vital component 
necessary to support a healthy recreational fishery. What has emerged 
as the most vital component in the post SFA and 2007 MAGNUSON 
reauthorization regime is access to fish stocks. The lack of reasonable 
access at times of high abundance is a cause for the general mistrust 
of NOAA and the general management framework of MAGNUSON. RFA believes 
this approach defies the very spirit and intent of domestic fisheries 
management when Magnuson was penned by Congress in 1976 Of additional 
concern is that this dysfunctional management approach threatens to 
compromise recreational anglers' willingness to be active players in 
future rebuilding efforts.
    RFA has identified three major challenges facing our sport and 
industry; 1) stability in the recreational fishing industry, 2) 
preserving traditional access and participation, and 3) inadequate 
monitoring and/or assessment of recreational fisheries. Accountability 
measures and annual catch limits mandated by the MAGNUSON 2007 
reauthorization result in mid-season closures that disrupt fishing 
activities, cause charter boats to cancel trips and leave tackle shops 
straddled with unsold inventory. These management practices create a 
very unstable business environment. In addition, anglers are dealing 
with some of the most restrictive regulations in fisheries that are 
either rebuilt or at historic high levels of abundance. Many of the 
2007 MAGNUSON reauthorization amendments, including accountability 
measures and annual catch limits, demand a vastly improved recreational 
data collection system which currently does not exist. We believe that 
addressing these problems through minor changes to MAGNUSON is 
necessary to ensure a vibrant future for the industry. We only make 
this point because NOAA and the Obama Administration seem to be moving 
forward with catch shares in a panicked state.
    NOAA and the Obama Administration have diverted million of dollars 
and resources from cooperative research programs towards the 
implementation of catch shares. They claim that such a management tool 
will solve all the problems currently being experienced in both the 
commercial and recreational fisheries and will promote more sustainable 
and profitable fisheries--a magic bullet. RFA must respectfully 
disagree with this overly optimistic assessment of catch shares. The 
results from fisheries where catch share programs were implemented 
should spark serious trepidation for commercial and recreational 
fishermen. The facts certainly do not support the lofty and unfounded 
status the administration and NOAA have afforded to catch shares. The 
underlying objective of any catch shares or limited access privilege 
program is to reduce capacity or the number of participants in a given 
fishery. The application of this objective in the recreational sector 
would completely destroy the open access structure of the fishery and 
collapse the influx of new participants that are necessary for a 
vibrant recreational fishing industry. Furthermore, catch shares would 
substantially affect fishing related tourism in coastal states.
    There is no question that the recreational sector can be managed 
better. Based on the current management, it is understandable why the 
recreational fishing community is apprehensive towards the 
implementation of a catch shares programs administered by NOAA. It is 
apparent through NOAA's actions that the overall health of the 
recreational fishing industry is not a priority for the agency when 
enforcing MAGNUSON mandates and crafting management policies. Most 
glaring, is the failure to fully implement important sections of 
MAGNUSON that would improve recreational data collection programs. 
These improvements were deemed necessary by the fishing community and 
the National Research Council. Yet, it has been 3 years since the 
reauthorization and NOAA has done very little to make the improvements. 
During that time however, NOAA have moved forward with implementing 
management tools that demand an improved data collection system. This 
illogical approach will result in significant damages to the 
recreational sector. If NOAA cannot be trusted to implement MAGNUSON in 
a fair and balanced manner, how can the recreational fishing community 
be expected to trust NOAA with a catch shares programs.
    NOAA has indicated that no fishery or sector is obligated to adopt 
catch shares and that the final decision will be left up to the 
consideration of the regional fishery management councils. However, the 
RFA finds no comfort in this stipulation for several reasons. First, 
Dr. Lubchenco, NOAA Administrator, served on the Environmental Defense 
Fund board of directors. Environmental Defense is probably one of the 
most vocal proponents of catch shares. There are numerous other 
political appointed personnel within the upper administration of NOAA 
that worked with pro-catch share environmental organizations prior to 
their employment with NOAA. Second, NOAA has established a precedence 
of superseding the regional councils on matters of fisheries management 
even when conservation is not the primary concern. Third, the 2011 NOAA 
budget included a massive increase in funding for the development of 
catch share programs. And finally, in 2009, there were 6 appointments 
made to the regional councils where the candidates were affiliated with 
non-fishing interest groups that support the use of catch shares. The 
fact that these candidates were not supported by the commercial and 
recreational fishing communities and that they all had ties to 
environmental organizations pushing catch shares leads one to believe 
that they were purposefully appointed to help advance a pro-catch 
shares agenda. Many of the people taken off the councils were 
incumbents doing a fine job representing the fishing interests. It is 
clear that NOAA has a political agenda with this Administration like 
none seen before. This is a very troubling situation and one that does 
not provide the recreational fishing community with much confidence 
that their collective voice will be given due consideration.
    RFA firmly believes that all anglers are entitled equal right to 
access recreational fisheries. The very definition of catch shares 
contained in Magnuson includes the use of limited access privilege 
programs which are fundamentally incompatible with the traditional open 
access of recreational fisheries. Open access has already been 
identified as a primary factor that sustains the overall health of the 
recreational fishing industry. There has been a precedence set in the 
commercial sector where catch share programs have been implemented, 
where a share is based on past activity in the fishery. In many 
recreational fisheries it is impossible to equally divide an annual 
recreational harvest limit among its participants because there are 
many more anglers than numbers of fish. In red snapper, each angler 
would have to be allocated less than one fish. Therefore, participation 
must be reduced in order for a recreational catch share to be 
successful. Clearly NOAA should be aware of this limitation.
    Some groups have suggested limiting the number of recreational 
anglers to those individuals with the financial resources to pay for 
access, thereby creating free markets for catch shares. RFA hopes 
members of the Committee share our disgust with this notion of 
selecting recreational participation based on the criteria of money. 
RFA believes this approach would set a profound precedence of forcing 
anglers to pay for fishing access, creating the very real possibility 
of turning sportfishing into a privatized luxury for the elite. As 
market factors drive the cost for each fish, the recreational fishery 
would become cost prohibitive for many anglers to engage the fishery. 
The result would be a fishery reserved exclusively for the wealthy and 
those financially privileged enough to afford to fish.
    RFA finds this approach to be in complete violation of the Public 
Trust Doctrine established when our nation was founded to protect its 
citizens from the ownership of natural resources. The public trust 
doctrine states that the public rights are superior to private claims 
and private rights. The idea of providing the exclusive rights of free 
swimming fish to a selected few is in complete contradiction to this 
law. The U.S. Supreme Court ruled in 1842 that wildlife resources are 
owned by no one and are to be held in trust by government for the 
benefit of present and future generations. This interpretation is the 
very basis of the traditional, open-access currently seen in U.S. 
recreational saltwater fisheries.
    RFA believes such an approach would violate the Magnuson Stevens 
Fishery Conservation and Management Act (Sec. 301 (a)(4) and (5) that 
state ``If it becomes necessary to allocate or assign fishing 
privileges among various United States fishermen, such allocation shall 
be (A) fair and equitable to all such fishermen.'' Section (5) 
continues to state that ``no such measure shall have economic 
allocation as its sole purpose.'' RFA contends that catch shares and 
limited access privilege programs based on market value would not be 
fair and equitable to all fishermen and that by reserving fish for 
those who can pay the most, violates Magnuson. RFA believes everyone 
should have the right to fish, not just those with the financial 
standing to buy their right.
    RFA believes it to be poor public policy to allocate marine 
resources to an individual based on that individual's economic 
situation. It is clear that under such an approach, certain 
demographics and communities would be disadvantaged and adversely 
affected. This approach would make it burdensome for new entrants into 
the fishery. Without new fishermen coming into the fishery, the very 
progression of new participants that tackle shops and other fishing 
related businesses depend upon would collapse. This also goes against 
the multimillion dollar marketing campaigns funded by federal excise 
taxes on fishing products to attract new fishermen. Furthermore, as 
illustrated in the commercial red snapper fishery where price per pound 
increased 15% in the first year of the IFQ system, market demands in a 
recreational IFQ/catch share program would accelerate attrition as 
costs rise. Such a proposal would quickly lead to a small scale, 
boutique recreational fishery only accessible by elite fishermen. RFA 
envisions and hopes the future of recreational fishing is far different 
from this potential view.
    It appears that in rolling out their plan to implement catch shares 
in U.S. fisheries, the Obama Administration and NOAA have failed to 
recognize some very basic characteristics of the recreational fishing 
community. Each angler is driven by different motivations when engaging 
the fisheries and the dynamics of the fishing community vary greatly by 
region and time. For example, some recreational fisheries are almost 
entirely catch and release while in other fisheries harvest is the 
primary motivation. Tackle shops and the for-hire sector often speak of 
the importance of anglers that decide to engage the fishery on impulse. 
These impulse fishermen can account for a substantial part of a fishing 
business's annual income and yet these fishermen may only fish one or 
two times a year or every other year. Failure to recognize these basic 
characteristics of the recreational fishery indicate that the effort to 
advance catch shares in the recreational sector is agenda driven as 
opposed to being driven by legitimate concern to address the real and 
pressing problems of the recreational sector.
    Finally and with regard to the implementation of catch shares in 
the commercial fisheries, the RFA does not intend to take a position on 
their use in this sector. However, RFA is very much concerned about the 
collateral damage to recreational sector when commercial catch shares 
programs are implemented. The definition of catch shares and limited 
access privileges included in MAGNUSON describe catch shares as an 
amount of fish to be harvested based on the total allowable catch of 
the fishery that may be held for the exclusive use by the permit 
holder. The consequence of granting exclusive rights to commercial 
fishermen under the new annual catch limit regime of the 2007 MAGNUSON 
reauthorization would result in a permanent loss of potential harvest 
for the recreational sector. In a sense, commercial catch shares would 
memorialize allocations that are not necessarily consistent with the 
current or traditional magnitude of the corresponding recreational 
component in that fishery. RFA has challenged the commercial/
recreational allocations in many important recreational fisheries such 
as New England groundfish, summer flounder, tilefish and some species 
in the snapper/grouper complex. For example, commercial fishermen of 
the summer flounder fishery were allocated 60% of the annual landing 
limit based on sector specific landings performance during a subjective 
timeframe. The timeframe was selected by the Mid Atlantic Fishery 
Management Council. At the time, the council had more commercial 
members and therefore voted for a timeframe that favored the commercial 
sector. Despite historical and current records that support a more 
equitable recreational allocation, recreational fishermen are denied 
their traditional portion of the summer flounder fishery. The RFA and 
United Boatmen challenged this allocation in federal court and the Mid-
Atlantic council has not properly disposed of the issue. The allocation 
of every single fishery with a commercial and recreational component 
needs to be considered before any commercial catch share program is 
implemented.
    In conclusion, the recreational fishing community is dealing with 
some of the most adverse management in recreational fishing history 
which ironically comes at a time when many fish stocks are rebuilt or 
well on their way to being rebuilt. Anglers have been restricted to 
unprecedented levels and even completely excluded from important 
fisheries. It is unfortunate that the recreational fishing community is 
in a depressed state due to broken promises made by NOAA of benefits to 
the recreational fishing community when stocks reach rebuilding 
targets. NOAA continues to fail to recognize that access to the marine 
fisheries is one of the most important problems the recreational 
fishing community faces. Heavy handed management and inconsistent 
implementation of the 2007 MAGNUSON reauthorization has caused extreme 
mistrust of NOAA. NOAA cannot be trusted to administer or oversee a 
catch shares program in the recreational fisheries. The use of catch 
shares in the recreational sector would destroy the traditional open 
access structure and collapse the entrance of new participants in the 
fishery.
    I thank you Madam Chair for the opportunity to provide the position 
of the RFA and the above mentioned groups before this committee. We all 
agree that there are significant problems facing our industry but we 
firmly believe that catch shares in the recreational sector are not the 
answer. I will be happy to answer any questions.
                                 ______
                                 

 Response to questions submitted for the record by James A. Donofrio, 
           Executive Director, Recreational Fishing Alliance

1.  Can you tell me your experience fishing in a catch share program? 
        Do you have a federal permit to fish in a catch share managed 
        fishery?
    Fortunately, no domestic recreational fisheries have been subjected 
to a limited access privilege program or catch share program. For this 
reason, I have not participated in a recreational catch share program. 
However, I have been professionally involved with the traditional open 
access recreational fisheries for over 25 years. It is undeniable that 
a recreational catch share program would completely destroy the 
principles and business model upon which this fishery is based.
2.  Do you believe the traditional fishery management is failing 
        recreational fishermen? What proposals does your industry have 
        to improve the situation and ensure the long-term viability of 
        federal fisheries?
    It is fair to say that recreational fishermen are spending less 
time on the water. For the most part, this is not a consequence of 
depleted fish stocks or a lack of availability of fish to the 
recreational sector but excessively restrictive regulations prompted by 
inflexible mandates contained in the Magnuson Stevens Fishery 
Conservation and Management Act (MSA). Mandates that jeopardize the 
future of our sport without achieving any legitimate conservation 
objectives. RFA is actively working with members of Congress to correct 
the flaws in MSA so we can enjoy longterm sustainability of our 
nation's marine resources along with a vibrant recreational fishing 
industry.
3.  Can you give an estimate of the number of recreational fishermen in 
        the U.S. and the number of recreational fishing vessels in the 
        U.S.?
    There are two commonly accepted estimates for the number of 
saltwater anglers produced by the U.S. Department of the Interior and 
the National Oceanic and Atmospheric Administration (NOAA). These 
federal agencies estimate the number of saltwater anglers to be 9.1 
million and 24.7 million, respectively. This significant variation 
between the two agencies is a result of the different methodology 
employed. Based on the number of boat registrations in coastal states 
and applying an assumed percentage that 43.5 of all boats are used in 
saltwater fishing, a fair minimum estimate of the number of 
recreational saltwater fishing boats in the U.S. is 2,621,926.
4.  Do you believe the efforts to improve recreational data collection 
        will yield better recreational harvest data?
    MSA mandated improvements to MRFSS should improve the efficiency of 
the survey design. Specifically, the phone survey component will be 
linked to active fishermen identified through license and registry 
programs. Efficiency does not always correlate to accuracy or 
representativeness. Furthermore, the new approach may create biases 
that have not been quantified yet. RFA supports the MSA requirements to 
make improvements to recreational data collection programs but is 
cautious about the magnitude of any realized improvements.
5.  Can you give us an example of an unreasonable rebuilding target?
    The process of setting a stock's rebuilding target and other 
biological reference points is driven by the amount and quality of the 
information available to the stock assessment scientists. Thus if the 
data is poor, the rebuilding target will carry the same level of 
uncertainty and likely be artificially high due to the precautionary 
approach. In the summer flounder fishery, the rebuilding target has 
been lowered 3 times as stock assessment improved. Likewise, many 
question the red snapper rebuilding because of the profound flaws and 
imprecise data incorporated in the red snapper stock assessment.
6.  How much of the recreational fishing effort in the U.S. takes place 
        on charter boats?
    This varies greatly from fishery to fishery and by region. However, 
NOAA estimates that in 2009, there were 66,602,781 total recreational 
fishing trips of which 2,001780 were taken on charter boat. This 
represents 3 percent of the total recreational effort.
7.  Do you have thoughts on how managers can track recreational catches 
        with a similar degree of certainty and timeliness? How should 
        recreational catch-and-release mortality be quantified for each 
        fishery and factored into the scientific processes?
    It is unlikely that the recreational fishing sector can be 
monitored with the same mechanisms as the commerical sector where 
nearly every fish that is passes through a fish house can be counted. 
MRFSS is good for estimating trends in fishing activity but management 
demands a much more immediate assessment of fishing that is simply not 
possible with MRFSS as designed. A much more robust sampling program 
with a considerable budget and staff would be needed to attain the same 
level of monitoring confidence as seen in the commercial sector. A high 
level of timeliness can be achieved in the for-hire sector. Those 
vessels fishing under federal permits are required to complete vessel 
trip reports (VTRs) upon completion of each fishing trip. Copies are 
then mailed to NOAA and state agencies. Some states are converting this 
paper based reporting system to an electronic one which obviously 
improves timeliness. However, as mentioned above, the for hire sector 
only represents a small fraction of the overall recreational fishing 
effort. Of greater concern, for hire VTR are rarely even looked at by 
NOAA. From an assessment or science standpoint, mortality associated 
with discarding should be treated no differently than mortality 
associated with harvest. A dead fish is a dead regardless of its final 
disposition. From a management standpoint, discard mortality needs to 
be addressed on a fishery by fishery basis.
8.  Can you tell me your experience fishing in a catch share program? 
        Do any of you have federal permit to fish in a catch share 
        managed fishery?
    During my 25 years of professional experience in the recreational 
fisheries, there were no catch share programs in place. Currently, 
there are no federal permits issued for recreational catch share 
programs. Since the colonists first engaged in recreational fishing in 
this country, it has been managed in a traditional open access manner 
consistent with the Public Trust Doctrine. It does not require 
experience in a catch share fishery to know that such a program would 
destroy the open access recreational fisheries.
9.  Do you think it is reasonable to have some restrictions -either on 
        new entrants into a fishery or some limits on effort--in 
        fisheries where rebuilding is necessary?
    Limiting the participants is unnecessary. Traditional management 
tools including adjustments to seasons, size limits, and bag limits 
have the ability to effectively control effort in rebuilding fish 
stocks. Many of the most important recreational fisheries have seen 
marked rebuilding success based on this approach.
10.  Do you also have concerns, and if so, what are your specific 
        concerns regarding accountability measures. What suggestions 
        would you give Congress to correct these concerns?
    RFA is concerned about the use of accountability measures in the 
recreational sector. In fact, accountability is already the standard 
when seasons, size limits, and bag limits are set in response to the 
previous fishing seasons performance relative to the harvest target. 
RFA contends that no additional accountability is needed in the 
recreational sector. Furthermore, accountability measures must rely on 
MRFSS for which is was never intended or designed to be used for. 
Congress should exempt the recreational sector from accountability 
measures included in MSA because current practice already satisfies 
this mandate.
                                 ______
                                 
    Ms. Bordallo. Thank you very much, Mr. Donofrio, for 
further explaining the impacts of catch shares on recreational 
fishers.
    Mr. Dooley, thank you for being here with us today, and you 
may proceed with your testimony.

              STATEMENT OF BOB DOOLEY, PRESIDENT, 
                      UNITED CATCHER BOATS

    Mr. Dooley. Chairwoman Bordallo and members of the 
Subcommittee, thank you for the opportunity to testify before 
you today regarding catch shares, and in particular the West 
Coast trawl rationalization program. My name is Bob Dooley. I 
live in Half Moon Bay, California, and have been a commercial 
fisherman for over 40 years.
    My brother John and I own and operate three boats that 
participate in Alaska and West Coast fisheries. I have been 
involved in fisheries prior to, during, and after the 
implementation of a catch share program, and therefore can 
provide you with this firsthand insight. One of the fisheries I 
participate in is the Bering Sea pollock fishery. A catch share 
was implemented in 1999 under the American Fisheries Act. I not 
only helped in the implementation of that program, but also 
have the unique perspective of having participated in that 
fishery since 1981.
    I have seen the problems an open-access race for fish 
creates and the resulting downward spiral, both economically 
and environmentally. I have witnesses firsthand the benefits to 
the health of the fishery, communities, crews, and environment 
a catch share fishery provides.
    In the early years, we took some big risks, ventured into 
unknown fisheries, built boats, found markets, and basically 
fished year-round. Over time, too many boats entered the 
fishery, and the seasons started getting shorter and shorter. 
In 1998, the pollock winter season had dwindled down to just 
one month. To try to make it, fishermen borrowed more money and 
invested in bigger boats with more capacity. But this became a 
race to the bottom.
    Small independent fishing companies were disappearing, and 
large multinational corporations were picking up the assets and 
consolidating the fishery. In the mid-1990s, Alaska fishermen 
and the coastal communities started talking about how to save 
the fishery. The outcome was a proposal by the Bering Sea 
pollock industry called cooperatives. Co-ops are a form of 
catch share that assign a quota to a group of fishermen and 
allow the co-op to decide how and when to fish that allocation.
    There is no doubt in my mind that the catch share co-op 
saved the pollock fishery and saved the independently owned 
fishing companies. By owning a share of a pollock cooperative, 
I am now able to work at minimizing my costs while increasing 
the value of my harvest. More importantly, the stability 
created by catch shares programs not only protects my 
investment, but also the investments of the related 
communities. In our co-ops, we work together to actively 
address fish stock challenges and provide solutions to 
environmental challenges in a quick manner.
    I would now like to talk to you about the catch shares 
program that the Pacific Council has recently recommended. This 
is the West Coast trawl rationalization program. This program 
has been designed from the ground up through a collaborative, 
open, public process over the past six years. I am looking 
forward to fishing whiting under a coop-style management for 
the very same reasons that have benefitted Alaska pollock 
fishermen over the past 12 years. I will have the tools 
necessary to deal with bycatch problems, rather than racing for 
bycatch. I will be able to work with my fellow co-op members to 
maximize the use of a fixed allocation of rockfish bycatch to 
achieve full utilization of the whiting quota.
    I am able to work with my processor to choose what time of 
year is best to fish, not based on when the season opens, but 
rather based on what time of year the bycatch rates are the 
lowest and the fish values and recovery rates are the highest.
    The points I have tried to address today through my 
personal experience are straightforward. First, catch shares 
need to be designed from the bottom up and tailored to the 
specific needs and characteristics of a particular fishery. 
Second, fishermen become directly engaged in management of the 
fishery in solving scientific challenges, and use their 
resources and knowledge to work with government to better 
manage fish stocks. Third, catch shares do not cause negative 
impacts to the communities. Poor fishery management does.
    Currently, thousands of tons of fish are discarded. As a 
result, a fishery that could be worth $70 million is currently 
only worth $25 million. Catch shares provide fishermen and 
communities with means to protect them against things like 
consolidation, corporatization, and the loss of fishing 
opportunity that you see today in open-access management.
    If I would leave you with one thought today, it is this. A 
lot of Federal money has been spent on bad management. This 
only leads to more fisheries disasters and more job losses. But 
an investment in implementing catch shares like the Alaska 
pollock and West Coast groundfish program will pay huge 
benefits to our fishing families and coastal communities. Thank 
you.
    [The prepared statement of Mr. Dooley follows:]

     Statement of Robert E. Dooley, President, United Catcher Boats

    Chairwoman Bordallo, Ranking Member Young, and Members of the 
Subcommittee; thank you for the opportunity to testify before you today 
regarding NOAA Catch Shares and, in particular, the West Coast 
groundfish rationalization plan. My name is Bob Dooley. I am the 
President of United Catcher Boats and co-owner of a commercial fishing 
company with my brother John.
    John and I have lived in Half Moon Bay, CA our entire lives and 
have been commercial fishermen for over 40 years. Our families have 
been active in commercial fishing and it's supporting businesses on the 
West Coast for over 70 years. We presently own and operate three 
vessels. Two participate in the Alaska Pollock fishery and the West 
Coast Pacific Whiting fishery and our third vessel fishes Dungeness 
crab off the West Coast.
    United Catcher Boats (UCB) is a trade association of 62 commercial 
fishing vessels that participate in the Alaskan Pollock, Alaskan crab, 
and West Coast groundfish fisheries. Our vessels are called catcher 
boats because that is all we do--we catch fish and deliver our catch to 
processing facilities. UCB members are very familiar with the benefits 
of catch share programs, participating in American Fisheries Act 
Pollock cooperatives as well as the Alaskan crab IFQ program, both of 
which were approved by Congress and developed through the North Pacific 
Fishery Management Council process.
    I am here today to express the strong support of both UCB and 
myself for Catch Shares programs in general and specifically for the 
West Coast Trawl Rationalization Program approved by the Pacific 
Fishery Management Council (PFMC). We also support the subsequent 
request for federal funding to help implement this new fishery 
management program that is presently in the President's FY 2011 draft 
Budget.
    I participate in the fully rationalized Bering Sea Pollock fishery 
in Alaska. That fishery was fully rationalized in 1999 through the 
provisions of the American Fisheries Act. I not only helped in the 
implementation of that program but also have the unique perspective of 
having participated in this trawl fishery since 1981. I have seen the 
problems an open access race for fish creates and the resulting 
downward spiral, both economically and environmentally. I have 
witnessed first hand the benefits to the health of the fishery, 
communities, crews and environment a rationalized fishery provides. 
This is what has been missing in the current and past management of the 
West Coast trawl fisheries.
    Over the past two decades the PFMC has struggled with finding a way 
to rebuild depressed fish stocks off the West Coast, implement an 
accurate catch accounting system both at-sea and at the dock, and 
structure the fishery so the trawl boat owners can once again be 
profitable and thus support the local communities that they live in and 
deliver their harvests to. During this time period, the federal 
government has declared the Pacific Coast ground fish fishery a federal 
disaster and the PFMC has implemented a license limitation program that 
did not control effort. The fishery has been managed via monthly trip 
limits that required regulatory discards and has a minimal observer 
program. Congress authorized and funded a vessel and license buyback 
loan program that failed to reduce overall effort in the fishery. My 
2009 Pacific Whiting Season lasted just three weeks. All of these 
measures have failed to rebuild the fishery and the value of the 
fishery continues to be at an all-time low. Six years ago, the PFMC 
embarked upon a project that would allow for ``rationalization'' of the 
West Coast Trawl fishery, otherwise known as a Catch Share program, and 
last year made their final recommendation to the Department of 
Commerce. This new management program is scheduled to go into effect 
just prior to the start of the 2011 fishery.
    The first point I would like to make is that this program was 
developed from the ground up with full participation of all 
stakeholders in the West Coast groundfish fishery from Southern 
California to Northern Washington. This is not an example of NOAA 
Headquarters in Washington, DC trying to impose catch shares on the 
fishery. The PFMC established a special stakeholders committee that 
included a broad membership of fishermen, processors, NGOs and 
community representatives. Out of this open process came a preferred 
option for an IFQ-based system for the shoreside groundfish and Whiting 
fisheries and a Co-op-based system for the offshore Whiting fisheries.
    The second point I want to make is that this new program will do 
two things that will have a dramatic positive effect on the health of 
the fish stocks and the value of the fishery. The first is that it will 
end the practice of ``regulatory discards''. Under the present trip 
limit style management fishermen are required to throw valuable fish 
overboard. This discard is subtracted from existing quotas under an 
assumed estimated discard rate thus contributing to the actual decline 
of the resource while no value is being added to the fishery or our 
communities. Under the new program, each fisherman will be allocated 
their own quota, or percentage, of the stocks of fish they catch and 
once they reach their assigned amount, will either have to stop fishing 
or find another fishermen to acquire fish from. This individual 
allocation allows each fisherman the opportunity to harvest their own 
fish when it is most valuable and the ability to utilize each pound of 
their quota to return the maximum benefit to themselves and their 
communities.
    The second thing that will occur under this new program is accurate 
accounting all fish that are harvested. Every boat will be required to 
carry a federal observer that will account for the harvest at-sea. 
There is also a requirement of a federal weigh-master at each 
processing or receiving plant to observe the delivery of fish and to 
check the weight of each delivery. These measures will result in 
accurate accounting of the fish that are harvested and delivered.
    My third point has to do with federal funding of this new Catch 
Shares Program. To implement this new West Coast program, NOAA is 
requesting about $12 million in the FY2011 budget. A large portion of 
this requested funding will go to help fishermen afford the cost of 
having a federal observer on board their boats (estimated at between 
$300 and $900 per day per observer).
    Note that this request of funding is not a request to subsidize the 
federal groundfish trawl fishery. In fact the federal government has 
the authority under the Magnuson-Stevens Act to assess fishermen a LAPP 
management fee of up to 3% of the value of the fishery. The fishermen 
participating in the program will pay an annual fee for the cost to 
manage the fishery. The $12 million request is for the start-up cost of 
the program in 2011.
    Some have said that this funding for implementation of our new 
Catch Shares program will take funds away from current collaborative 
fishery research and fishery science research. This is simply not true. 
Mr. Barry Thom, the Acting NMFS West Coast Regional Director, and Dr. 
Eric Schwaab, the newly appointed head of NMFS, both have stated 
recently that the new Catch Shares programs will not take federal money 
away from current research programs (Mr. Thom at the March 2010 PFMC 
Meeting in Sacramento and Dr. Schwaab at the previous House Resources 
Subcommittee hearing on Catch Shares on March 16, 2010.)
    Good management of a fishery requires accurate stock assessments of 
the fish populations, and a reliable system to determine the amount of 
fish that can be sustainably harvested all based on good science. Catch 
Share programs in other parts of the country and world have resulted in 
the stakeholders, namely the fishermen, demanding the best available 
science and research be used. The reason for this is under a Catch 
Share system the fishermen have a vested interest in the sustainability 
and health of the fishery resource.
    Catch Share programs also set up the opportunity for fishermen to 
find solutions to management problems without a government mandate, or 
regulation. Rather, fishermen work cooperatively to find creative, 
voluntary programs to solve real problems. Let me give you a couple of 
examples of what I am talking about by looking at the Bering Sea 
Pollock fishery. The first is the Pollock fleet's actions to address 
the problem of incidental salmon bycatch taken while we are fishing for 
Pollock. Under our co-op system, the boat owners developed and approved 
a voluntary program to close small, discrete areas on the fishing 
grounds for a limited duration when high rates of salmon bycatch are 
encountered. We call these areas Hot Spot Avoidance Areas. Unlike the 
government, we are able to close these areas to individual boats or a 
group of boats that have above average rates of salmon bycatch while 
keeping these Hot Spots open to boats that have low rates of bycatch. 
This fleet-sponsored bycatch avoidance program can only happen when we 
are operating under a Catch Share program. We are beginning the process 
of designing a rockfish bycatch avoidance and management program for 
the West Coast Whiting fishery when the Groundfish Trawl 
Rationalization program goes into effect. So what we did in the Alaska 
Pollock fishery due to AFA we will do in the West Coast Whiting 
fishery. Our goal is to harvest 100% of our allocation while at the 
same time stay under a bycatch cap for incidentally caught species. 
Government initiated regulations have failed to achieve this goal.
    The second example is the development of a salmon excluder device. 
Through a Pollock industry initiative, we designed, developed and 
tested a number of devices to put into our mid-water trawl nets that 
exclude the bycaught Chinook salmon. After four years of trials and 
testing we now have arrived at a device that over 60% of the Pollock 
fleet is now using ``without any government regulation requiring us to 
do so.
    As I mentioned in my introductory comments, I fish in both the 
rationalized Bering Sea Pollock fishery and the soon-to-be rationalized 
West Coast Whiting fishery. I can tell you that back in 1998 when 
Congress and the North Pacific Fishery Management Council were 
developing the American Fisheries Act, many of us out on the water 
fishing were very skeptical of this new program. Because of this, our 
concerns expressed at NPFMC meetings when they were developing the AFA 
regulatory provisions were very skeptical and there were a lot of boat 
owners that were quite nervous and in fact didn't support the program. 
You have to realize what we were going through in those days. Most if 
not all of the fishermen were just trading dollars and a number of the 
Pollock companies had gone bankrupt. In addition, many of the multi-
national, large fishing companies were acquiring a lot of the vessels 
and consolidation was happening. During a 10-year period, from 1989-
1999, the Pollock industry experienced three bloody sector allocation 
battles at the NPFMC. For me personally, the only reason I am still in 
the Pollock business is due to the provisions of the AFA that gave me 
and my brother a certain, known allocation of Pollock annually and the 
ability to get the most value out of our harvest of Pollock. The 
ownership and use caps in this law have protected the smaller fishing 
companies. I do not know a single participant in the Bering Sea Pollock 
fishery today that does not emphatically support the American Fisheries 
Act and the rationalized manner of the fishery.
    I can also tell you that the Whiting fishermen who also fish 
Pollock, like myself, were the first ones to go to the Pacific Fishery 
Management Council and ask for an AFA-style co-op management structure 
6 years ago, to address the very same problems we were experiencing in 
the Alaska Pollock fishery 15 years ago. Again, this is a ``ground 
up'', not ``top down'' built program and one that the fishermen who are 
dependant on this fishery are very excited about.
    Thank you very much for the opportunity to share my and UCB's 
perspective on catch shares.
                                 ______
                                 
    Ms. Bordallo. Thank you very much, Mr. Dooley, for 
explaining the perspective of the United Catcher Boats on catch 
shares. And now I would like to welcome back to the 
Subcommittee Dr. Rothschild. And you may begin your testimony.

   STATEMENT OF BRIAN ROTHSCHILD, PH.D., MONTGOMERY CHARTER 
   PROFESSOR OF MARINE SCIENCE AND TECHNOLOGY, UNIVERSITY OF 
                    MASSACHUSETTS DARTMOUTH

    Dr. Rothschild. Thank you, Madame Chairman. Members of the 
committee, thank you for the opportunity to testify before you 
this morning. I also chair the Mayor's Ocean and Fishery 
Council in New Bedford, Massachusetts, the largest port in the 
Nation in terms of value. Our Council is a sounding board for 
much of the Massachusetts fishing industry, and I bring you 
their greeting.
    In my testimony this morning, I want to provide background 
on the initiation of the catch share concept in New England, 
and point out structural and conceptual difficulties that make 
the catch share initiative an experiment, rather than an 
example of implementation of a well-thought-out policy.
    For over a decade, fishery management in New England has 
been wasteful and inefficient. Over-fishing and a failure to 
rebuild stocks have been widely cited. A less publicized aspect 
of waste are the hundreds of millions of dollars of fish that 
could have been caught without over-fishing that were not 
caught because of inflexible regulations. In addition, tons of 
valuable bycatch are thrown back in the ocean because of 
management regulations.
    The blame for over-fishing and failure of stocks to rebuild 
is often laid at the feet of a prevailing days at sea 
management system. In this effort-based system, only the 
effort, the days at sea, are precisely controlled. It was 
reasoned that instead of controlling effort, controlling catch 
would eliminate over-fishing and result in increased stock 
abundance.
    Controlling catch is called the quota system. For varying 
reasons, the quota system morphed into a sector system. The 
sector system in New England is being launched with mixed 
reception. The facts of the matter are that property rights 
systems such as sectors reduce the open access like wasteful 
imbalance between capital and the amount of fish that can be 
caught. However, they also change the social structure of the 
industry, reduce boats, reduce jobs, negatively affect 
shoreside businesses, as well as destroying the cultural fabric 
of fishing communities.
    The launching of the sector system in New England has been 
associated with a plethora of advice, most of which is 
unheeded. This advice contains nuggets, some of which come from 
NOAA, that relate to equity, taking time to conduct adequate 
planning, thinking about buy-back programs, providing a safety 
net for those who are disaffected, considering the fundamental 
issues associated with the transfer of public property to the 
private sector, and most of all, properly designing the 
management system.
    Many in the community do not believe that the New England 
catch share system is well designed, and that its operation and 
present configuration will unfairly disaffect existing 
fishermen and industries, who otherwise would not be 
disaffected if it were well designed.
    The people who have this view cite quotas are too risk-
adverse. With anticipated quotas, 50 to 75 percent of the fleet 
and thousands of jobs will be lost in a relatively short time. 
It is the failure to take into account the mixed species nature 
of the fishery in current management regulations. Unless this 
is changed, catch share management will only propagate and 
continue ongoing under-fishing and bycatch waste.
    Structural details in the exchange of quota shares or 
allocations do not make sense. Stock assessments are not 
current. Critical assessments will not be completed before the 
start of the fishing year. Mechanisms to address the needs of 
the disaffected are not in place. Allocations for scallop 
bycatch have not as yet been resolved. This is a very critical 
problem that concerns anywhere from tens to hundreds of 
millions of dollars.
    The intent of Congress, as expressed in the plain language 
of the Magnuson-Stevens Act, does not appear to have been taken 
into account, particularly with regard to National Standard 8. 
Most telling, there appears to be no users manual for fishermen 
newly engaged in the system. A users manual would explain the 
structure of the system and the day-to-day details of how it 
would operate. How in the real world would 20 sector managers 
control the flow of 20 species of fish, 400 possibilities in 
virtual real time?
    It seems that the approach to developing catch shares in 
New England has transformed the ready, aim, fire sequence into 
a fire, aim, ready sequence. This is not a good way to develop 
public policy. We cannot minimize the importance of the users 
manual and of conducting sufficient analysis to understand the 
fate and effect of this major Federal action.
    In my written testimony, I have made a number of 
suggestions, and the most important one appears to be that the 
Congress or Administration should form a task force, an ad hoc 
task force, to reform fisheries management in New England. This 
task force should consist of members of the fishing, science, 
environmental community, and work from the ground up. And we 
think that this will be a really good opportunity to move ahead 
in the future. Thank you very much.
    [The prepared statement of Dr. Rothschild follows:]

   Statement of Brian J. Rothschild, Montgomery Charter Professor of 
   Marine Science, University of Massachusetts Dartmouth, and Chair, 
                  Mayor's Ocean and Fisheries Council

    Madam Chairwoman and members of the Committee, thank you for the 
opportunity to testify before you this morning. My name is Brian 
Rothschild. I am the Montgomery Charter Chair of Marine Science at the 
University of Massachusetts Dartmouth. I also Chair the Mayor's Ocean 
and Fisheries Council in New Bedford, Massachusetts, the largest 
fishing port in the Nation in terms of value. Our Council is a sounding 
board for much of the Massachusetts fishing industry. I bring you their 
greetings.
    In my testimony this morning, I want to provide background on the 
initiation of the catch-share concept in New England and point out 
structural and conceptual difficulties that make the catch-share 
initiative an ``experiment'' rather than an example of implementation 
of a well thought out public policy. I conclude that it is necessary to 
1) maximize economic survival of participants during the first year by 
relaxing annual catch limits (ACLs) without overfishing; 2) facilitate 
and accelerate an independent coherent review of the status of the 
stocks in New England waters; 3) establish bold new and innovative 
scientific programs focused directly on the needs of fishery 
management; 4) establish a systems engineering/inventory management 
approach to day-to-day fisheries management; and 5) refocus budget and 
programs on the needs of fishery management. We also need institutional 
reform, including 1) making the New England Fishery Management Council 
an elected body; 2) institutionalizing a systems of checks and balances 
in the Agency; and finally 3) ``consulting with the people'' on how to 
reform fisheries management in New England by establishing an ad hoc 
New England Fishery Management Reform Commission.
    For over a decade, fishery management in New England has been 
wasteful and inefficient. Overfishing and a failure to rebuild stocks 
have been widely cited. A less publicized aspect of waste are the 
hundreds of millions of dollars of fish that could have been caught 
without overfishing but are not caught because of inflexible 
regulations. In addition, tons of valuable bycatch are thrown back in 
the ocean because of management regulations.
    The blame for ``overfishing'' and failure of stocks to ``rebuild'' 
is often laid at the feet of a prevailing days-at-sea (DAS) management 
system. In this effort-based system--only the ``effort''--the DAS are 
precisely controlled. It was reasoned that instead of controlling 
effort, controlling catch would eliminate overfishing and result in 
increased stock abundance. Controlling catch is called a ``quota 
system.''
    For varying reasons, the quota system morphed into a property 
rights system, or an individual-transferable-quota like system (ITQ). 
This then morphed into a sector system. The sector system, where groups 
of boats form sectors and each sector is allocated a ``share'' of the 
fish, is thought to be under the umbrella of ``catch share'' 
management.
    The sector system in New England is being launched with a mixed 
reception. The facts of the matter are that property rights systems 
such as ``sectors'' reduce the open-access-like wasteful imbalance 
between capital and the amount of fish that can be caught. However, 
they also change the social structure of the industry, reduce boats, 
reduce jobs, negatively affect shore side businesses, as well as 
destroying the cultural fabric of fishing communities.
    The launching of the sector system in New England has been 
associated with a plethora of mostly unheeded advice. This advice 
contains nuggets (some of which come from NOAA) that relate to equity; 
taking time to conduct adequate planning; thinking about buy-back 
programs; providing a safety net for those who are disaffected; 
considering the fundamental issues associated with the transfer of 
public property to the private sector; and, most of all, properly 
designing the management system.
    Many in the community do not believe that the New England catch-
share system is well designed and that its operation, in its present 
configuration, will unfairly disaffect existing fishermen and 
industries who otherwise would not be disaffected if it were well 
designed.
    They cite
      Quotas are too risk averse. With anticipated quotas, 50-
75% of the fleet and thousands of jobs will be lost in a relatively 
short time.
      There is a failure to take into account the mixed-species 
nature of the fishery in current management regulations. Unless this is 
changed, catch-share management will only propagate ongoing 
underfishing and bycatch waste.
      Important structural details in the exchange of quotas, 
shares, or allocations do not make sense.
      Stock assessments are not current. Critical assessments 
will not be complete before the start of the fishing year.
      There are limited mechanisms to address the needs of the 
disaffected.
      Mechanisms for scallop bycatch have not as yet been 
resolved. This is critical because the allocation of flounder bycatch 
to scallopers involves tens of millions of dollars, if not more.
      The intent of Congress as expressed in the language of 
the Magnuson-Stevens Act does not appear to have been taken into 
account, particularly with regard to National Standard 8.
    Most telling, there appears to be no ``user's manual'' for 
fishermen newly engaged in the system--a user's manual would explain 
the structure of the system and the day-to-day details of how it would 
operate. How in the real world would 20 sector managers control the 
flow of 20 different species of fish (20 x 20 = 400 possibilities) in 
virtual real time?
    It seems that the approach to developing catch shares in New 
England has transformed the ``ready-aim-fire'' sequence into a ``fire-
aim-ready'' sequence--not a good way to develop public policy. We 
cannot minimize the importance of a ``user's manual'' and of conducting 
sufficient analysis to understand the fate and effect of this major 
federal action.
BACKGROUND ON THE TRANSITION FROM DAYS AT SEA TO SECTORS
    Fishery management in New England has been wasteful and inefficient 
for over a decade. This negative view generally results from heavily 
publicized overfishing and failure to rebuild some groundfish stocks. 
This negative view would be accentuated if the public realized that in 
addition to overfishing and the failure to rebuild stocks, wasteful 
under fishing, bycatch, and unrealistic rebuilding requirements have 
been induced by management regulations. In addition, regulations have 
resulted in seemingly counterproductive ecosystem experiments (e.g., 
the explosion of the dogfish shark population).
    Regarding Underfishing--It is generally not realized that fishery 
management in New England over the last several years has limited 
landings to c. 25% of the scientifically allowable catch. This amounts 
to a 75% waste of the resource amounting to an ex-vessel (ex-vessel 
value means price at the dock--by the time the product exits the 
economy, its value increases by a factor of about three) loss at the 
dock of $300-400 million per year (a substantial amount of the loss 
relates to underfishing haddock, which have become stunted). It is 
important to recognize that the underfishing statistics are very 
difficult to interpret. (For example, the Gulf of Maine cod TAC in 
Fiscal Year 2007 was 10,000 tons. But landings amounted to only 4,000 
tons. In other words, 6,000 tons of cod disappeared. The 6,000 tons 
were either not caught, discarded, or not recorded.)
    Regarding Overfishing--It is important to acknowledge that it is 
very difficult to explain the concept of overfishing in a multispecies 
setting such as that which exists in New England. Because it is 
difficult to explain, it is difficult to produce credible regulations.
    Regarding Bycatch--Regulations in the current fishing year forced 
throwing overboard many species as bycatch. For example, 1.5 million 
pounds of yellowtail flounder were discarded at sea. This amounts to a 
waste of about $2.5 million ex-vessel.
    Regarding Unrealistic Rebuilding Schedules--Most ecologists would 
agree that a rigid 10-year rebuilding schedule does not make sense, nor 
would they agree that the carrying capacity of ecosystems would be 
sufficient to bring all fish populations to their historically maximum 
level at the same time. This lack of flexibility should change.
    Regarding Ecosystem Experiments--New England fishery management by 
itself has arguably modified the ecosystem and habitat to a greater 
degree than any other human activity by virtually eliminating fishing 
mortality on dogfish sharks so that this species of voracious predator 
is now one of the most abundant fish in the ecosystem.
    Any property rights system contributes to economic efficiency by 
tuning the capital in the fishery to the magnitude of the stocks. So a 
property rights or catch-share system can eliminate the situation where 
there are boats that fish only a score of days per year. But the sector 
system was advertised as a great advance in conservation: sectors will 
stop overfishing, stocks will rebuild, and the race to fish will be 
eliminated. These are however generally false claims. What is true is 
that the sector system will reduce the number of boats in the fleet, 
employment, and reduce the quality of many fishing jobs. While in the 
long run most shore side businesses--a key component of local 
economies--would be devastated. The negative aspects of the catch-
share/sector system is the reason it is being eschewed by the European 
Union (had quota system for many years); the United Nations; and Pew 
Charitable Trusts. Furthermore, for sectors to work, the structural 
problems that have been associated with the DAS system in New England 
need to be rectified. If they are not, and it does not appear that they 
are, then the only advantage induced by catch shares is an economic 
disruption of the fleet, which is specifically counter to the intent of 
Congress, as specified in National Standard 8.
COMMUNITY PERSPECTIVE
    With regard to community perspective, there is general 
dissatisfaction with the sector program. It is fair to say that the 
sector system is viewed with almost universal angst and suspicion; 
allocations of fish were unfairly or illogically developed; and there 
are glaring issues with the operational mechanism. Many fishermen at 
this point in time do not understand how they will be affected by the 
catch-share system.
    The catch share approach is insufficiently analyzed (what will be 
the economic effect of catch shares: fishermen say 50% reduction, but 
Amendment 16 refers to relatively small losses in revenue); poorly 
planned (no ``user's manual,'' policy statement not completed, stock 
assessments not completed, many unanswered questions, unfair 
allocations, unworkable operating principles); and insufficiently 
budgeted (see recent requests for more funds without giving priority to 
needs of fishermen and root scientific issues).
    Given this unhappy state, most claim that catch shares will result 
in a significant decline in the fleet and jobs. There appears to be a 
consensus that after the first of May the fleet and employment will be 
reduced by 50%.
    The lack of planning, analysis, and budgeting; the lack of what we 
might call responsible management, juxtaposed with the destruction of 
livelihoods and the culture of our coastal way of life, has given rise 
to two points of view.
    The first is to agree to move ahead with the seemingly flawed 
program on May 1 and take whatever community losses result from the 
program. The second is to postpone the inception of the program until 
the necessary planning can be executed--this approach is favored by 
many, including the mayors of Gloucester and New Bedford.
    Fishermen who favor moving ahead with a flawed program fall into 
two classes. In the first, are those few fishermen who have attained 
very large allocations of fish and will profit immediately. In the 
second, are fishermen who feel there is no legal or legislative option 
to halt the onset of the catch share program; they fear that any delay 
would return them very limited access DAS. Moving ahead at this time 
seems to categorize the catch-share system in New England as an 
``experiment.''
    Those who favor a delay, should it be possible, insist that a delay 
is only acceptable if quantities of fish were guaranteed in the interim 
so that fishermen would not lose income and that there would not be a 
draconian reduction in DAS until effective planning could be 
accomplished.
    Regardless of whether one favors the muddling-through approach or 
the delay, there is a general concern that issues related to the plain 
language of law--equity--illogical operating principal--not enough 
fish--and no plan for failure are serious constraints on the success of 
the program.
    THE PLAIN LANGUAGE OF THE LAW--Regarding the plain language of the 
law, the community does not understand the disconnect between the 
catch-share system and National Standard 8. It is generally agreed that 
the catch-share system is simply an economic reallocation of the fish 
stocks that in the medium and short run would completely change the 
economic and social fabric of fishing communities and generate huge 
welfare costs. Yet National Standard 8 is designed specifically to 
protect the economic and social welfare of the community. If National 
Standard 8 has no meaning, then why is it in the statute?
    EQUITY AND FAIRNESS--Regarding equity and fairness, there is a 
belief that the initial allocations of fish have been made unfairly. 
Some fishermen claim that over the years they were discouraged from 
trying to catch certain valuable species such as cod in order to 
achieve conservation goals. As a result of their good efforts to reduce 
fishing on cod, the catch of cod was reduced. So now when allocations 
are based on catch history, those who took advice to catch less cod are 
penalized by being allocated less cod.
    As another example, management regulations resulted in the industry 
catching only 10% of the haddock total allowable catch (TAC). So the 
few fishermen who caught haddock obtained a tremendous windfall of 
haddock allocation.
    Another sticking point is that in the Council process some 
allocations appeared to favor certain groups over others.
    Finally, what really bothers fishermen is the fact that they were 
given an option of either fishing in sectors or in the common pool. 
After they made there decision, which was not reversible for many, the 
Agency reduced the catch potential of the common pool, leaving 
fishermen stranded in an uneconomic position.
    It has to be remembered that for any management system to work, the 
disaffected need to be accommodated. It is important to realize that 
existent catch-share systems are heralded because the voices of those 
who benefit are widely publicized, while the voices of the disaffected 
majority are silent.
    ILLOGICAL OPERATING SYSTEM--With regard to unworkable operating 
principles, consider the following. The fundamental core of valuing 
catch versus valuing quota seems to be broken. To exemplify, a 
fisherman is allocated 50,000 pounds of fish by species. Suppose he is 
allocated 100 pounds of cod and 49,900 pounds of haddock. He fishes on 
the first day, and he catches 101 pounds of cod--1 pound greater than 
his quota. He has to return to port and buy 1 pound of cod allocation 
from another fishermen. If for some reason he cannot buy the 1 pound 
allocation, then he summarily can no longer fish during the remainder 
of the year. If he cannot find someone to sell him the 1 pound of cod 
allocation, then he must try and sell his 49,999 pounds of quota. 
Knowledgeable observers predict that he can only sell his quota for 
about 30 cents on the dollar, while the 1 pound of cod allocation will 
cost far more than the average price of cod. These numbers are of 
course exaggerated, but they convey in a clear way the disincentive of 
the operational scheme.
    UNDERFISHING AND EXTENSIVE RISK AVERSION--With regard to not enough 
fish, it is clear that the ACLs have been ratcheted down substantially. 
Most of the knowledgeable observers of the system as it now stands 
predict that it will result in dire economical consequences. However, 
they do point out that if the Magnuson-Stevens Act could be interpreted 
such that ACLs were defined at the overfishing level (OFL) less 10% to 
account for scientific uncertainty, sufficient fish would be available 
to at least give the catch-share system a fighting chance. There are 
two aspects of the ``not enough fish argument.'' The first is that the 
gross underfishing experienced in New England can be controlled; and 
the second is that the degree of risk aversion adopted by the Agency 
far exceeds that contemplated by Congress.
    With regard to underfishing, the root cause of underfishing and 
bycatch is the Agency's failure to adopt flexibility measures such as 
the mixed stock exception. It appears that the mixed stock exception is 
permitted under the plain language of the Magnuson-Stevens Act.
    The Magnuson-Stevens Act simply states that ACLs should be set at a 
level that overfishing does not occur. However, this is interpreted in 
National Standard 1 guidelines as setting the ACL to be sufficiently 
less than maximum sustainable yield (MSY) so that the MSY level is not 
exceeded. The guidelines advise that this is to account for scientific 
uncertainty. Guidelines further advise the Council to reduce the catch 
limits even further to account for management uncertainty.
    This degree of risk aversion is unnecessary, counterproductive, and 
not required by law. First, many of the stocks are managed not by MSY, 
but by MSY proxy. These proxies produce calculations that are already 
25% less than MSY. Second, while it is easy to define the probability 
of overfishing, methods for estimating the probability of overfishing 
are not well developed. Third, the reduction by 25% (this 25% is in 
addition to the 25% cited in the previous sentence) that is used for 
many of the New England fisheries is essentially arbitrary. Finally, 
because this regulation like other regulations does not have the force 
and effect of law and its application results in not obtaining the 
optimum yield, as specified in the plain language of National Standard 
1, it should be abandoned so that any management system could function. 
It is important to recognize that while ``overfishing'' is relatively 
easy to define on a species-by-species basis, it is difficult to define 
in a multiple species complex such as the New England groundfish 
fishery.
WHAT DO WE DO NOW?
    The haste in which the catch-share system was propagated in New 
England has caused a serious dilemma for the community. The community 
is cognizant that the Council is reported to be not working 
effectively, and it has also read the admonishments of experts in the 
conservation community that successful catch share programs need to be 
properly designed, need time to develop, and often require vessel buy-
back programs. The transition and early implementation appears to be a 
work in progress; there are suspicions that the operational mechanisms 
and motivations are not sound; the quantitative extent of vessel 
financial defaults along with concomitant job losses and shore side 
bankruptcies have not been calculated. What is the magnitude of costs 
in lost taxes and increases in welfare payments to communities like New 
Bedford, Gloucester, or Scituate?
    On one hand the community places high priority on any management 
system working properly and resulting in the greatest economic good 
while maintaining the social and economic fabric of the community. 
Putting the greater good as its highest priority, the community is led 
to an ineluctable conclusion that the best option is to postpone May 1 
start date and engage in the necessary planning, analysis, and 
budgeting to make the system work!
    On the other hand, an option to postpone the May 1 start date until 
adequate planning could be undertaken appears to have been foreclosed. 
Surprisingly, there appears to be little, if any, political will to 
postpone and engage in seemingly requisite analysis, planning, and the 
public discourse that is the American way of life.
    So with a lack of political support to properly design the catch-
share system, the community has no recourse but to choose the 
experimental muddling-through approach, under which a substantial 
fraction of the fleet will be lost without any plans, as far as we can 
see, to provide a safety net to the fishing industry and businesses 
that support the industry, let alone the communities that derive taxes 
from profitable fishing and are subject to welfare costs generated from 
unprofitable fishing and loss of jobs.
    Perhaps worst of all, is the lot of individuals who will be 
economically harmed or disadvantaged and who otherwise would not be 
harmed or disadvantaged if the Agency undertook the appropriate 
analysis that would guide it to more satisfactory solutions.
    While this is obviously a problem for New England, it is evidently 
also a problem for the rest of the Nation as evidenced by the March 16 
hearings held by your Subcommittee. While concerns need to focus on the 
folks most directly affected, they must also relate to the general 
public interest in public management and regulation of a privatized 
public natural resource. (Imagine an equivalent scenario where we wake 
up one morning to learn that the Secretary of the Interior has 
unilaterally privatized the National Park System without the sound 
analysis, planning, and debate that usually accompanies major federal 
environmentally related actions.)
    It appears that your Subcommittee is hearing a balanced view of the 
intent of Congress expressed in the plain language of the Magnuson-
Stevens Act and how it relates to the evolution of catch shares. It is 
realizing that catch shares are simply economic instruments that 
reallocate the wealth accrued from a public resource. They have by 
themselves little, if any, conservation impact. It is also learning 
that efficiency at the producing level may not be overall optimal. And 
a reorganization of the producing sector is likely to dissipate the 
centuries of cultural values associated with the fishery. (Do not 
forget the sacred cod that hangs from the ceiling of the statehouse in 
the commonwealth of Massachusetts.) It is also learning that the great 
success stories of catch shares emanate from the few that won 
allocations while the voices of the disaffected many are silent.
    The analysis that I have given you paints a picture of moving ahead 
at any cost. My personal view is associated with the need to slow down 
or postpone the May 1 implementation date until a reasonably proper 
design of the system can be certified. As this seems unlikely, we need 
to take steps to get fishery management back on track.
    Applying our experience with the New England ``experiment'' to the 
National good, it would seem that it would make sense to put a halt on 
the drive to new catch share approaches so that specifics can be 
analyzed and vetted and debated. It is important to remember that these 
discussions need to be related to real fisheries and need to take 
account of those who are disaffected as well as those that are winners. 
We cannot afford to have a massive transition of passing public 
property into private hands without requisite analysis, planning, and 
debate. Consider the New England experiment in the national analysis 
and debate. The New England experiment study would inform those in New 
England and the Nation on how to move ahead with fisheries management. 
It will be a real world, not theoretical, demonstration.
SUBSTANTIVE REFORMS
    1.  To develop the New England catch-share experiment, it is 
necessary to maximize the survival of participants in order to minimize 
economic loss. This will require relaxing ACLs, but not overfishing. 
For the experiment to work in a fair and equitable way, those that are 
most affected need to be protected. We need to protect individuals from 
economic collapse generated by the lack of analysis, planning, and 
debate. The Secretary needs to relax the overzealous precautionary 
approach limiting the catch of fish. We believe that this can provide 
enough fish to sustain the system until the requisite planning can be 
executed. This approach could be obtained without overfishing in the 
sense that the overfishing level would not be exceeded.
    2.  Facilitate and accelerate an independent coherent overview of 
the status of the stocks in New England. As we embark upon this 
experiment, the magnitude of the individual stocks and their 
``condition'' is not understood by the public in a comprehensive way. 
Some stock assessments are based upon 2007 analyses. Others are pending 
(e.g., pollack). Some do not make sense (e.g., skate). The public needs 
to have an overview of the status of stocks as they presently exist in 
order to move ahead with a management program.
    3.  Establish bold new and innovative scientific programs. Many of 
the contentious arguments that surround the fishing debate result from 
stock assessments. Many believe that there is little consistency 
between the abundance of fish predicted by science and the abundance 
observed by fishermen. Actually, the problem with stock assessments 
relates to the assumptions and knowledge underlying the assessments, 
rather than the assessments themselves. We need to establish a bold new 
program that engages in more realistic stock assessments (i.e., 
includes the ocean environment, the interaction among fish species, and 
develops a better understanding of the interaction of fishing boats and 
fish), develops a comprehensive understanding of the ocean ecosystem 
and fishing, and understands the role of climate and fishing. 
Cooperative research needs to be intensified to a considerable degree. 
While some of these activities are pursued, they are not at a critical-
mass level
    4.  Establish a systems engineering/inventory management approach 
to day-to-day fisheries management. This is the most efficient way to 
systematize the flow of management information and to use modern 
technology in fisheries management.
    5.  Engage in programmatic analysis. We need to focus budget 
allocations. Emergency funds need to be provided to disaffected 
fishermen and municipalities. Buy-back programs need to be considered. 
These may amount to c. $150 million. Retraining and permit banks need 
to be considered. It is necessary to understand how reprogramming of 
existing funds can result in programs that do a better job of managing 
contemporary problems associated without ocean resources.
INSTITUTIONAL REFORMS
    1.  Make the New England Fishery Management Council an elected 
body. The New England Fishery Management Council is not working well. 
It is disenfranchised from those that it serves. It is not always clear 
that decisions made by the Council are consistent with the intent of 
Congress. A Council member's job is a full time commitment. We should 
consider electing Council members to full time positions so they can 
optimize their performance. A smaller and more focused council of five 
to seven members might be about right.
    2.  Develop checks and balances in the Agency. A second 
institutional problem is that there are no checks and balances in the 
Agency. Because of this, there is no safety valve to deal with 
contentious issues; bold and innovative plans need to come from within 
the agency, and major initiatives like catch shares careen between a 
seeming common sense and infeasibility. For these reasons, it is 
important to establish institutional checks and balances in a model 
similar to the relationship between the Federal Aviation Administration 
(FAA) and the Civil Aeronautics Board (CAB).
    3.  Establish an ad hoc New England Fishery Management Reform 
Commission. A reasonable premise is that reform of fishery management 
in New England cannot be accomplished without considerable stakeholder 
input. Accordingly, a New England Fishery Management Reform Commission 
needs to be appointed by the Administration or Congress to take stock 
of the present state of management, determine how management should be 
reshaped, and provide advice on resources required to implement the 
plan. The Commission needs to comprise highly qualified stake holders--
leaders in the fishing industry, environmental representatives, and 
scientists. The Commission should have an 18-month life.
    Madam Chairwoman, I have tried to share with you the community 
perspective centered in New Bedford. I have attempted to provide some 
background on where we are and steps that we think bear important 
consideration as we move into the future.
                                 ______
                                 

  Response to questions submitted for the record by Brian Rothschild, 
 Ph.D., Montgomery Charter Professor of Marine Science and Technology, 
                 University of Massachusetts Dartmouth

Questions from Congressman Jay Inslee (D-WA)
1.  This is the second hearing that we have had on catch share fishery 
        management programs, so there has been a lot of discussion 
        about catch shares. But I'm not sure we have heard from many 
        witnesses that actually have participated in catch share 
        programs. Can you tell me your experience fishing in a catch 
        share program? Do you have a federal permit to fish in a catch 
        share managed fishery?
    The catch share program in New England did not begin until May 1, 
three weeks after the hearing, so I could not participate in the catch 
share program. I do not have a federal permit, but I am conversant with 
the view points of industry members throughout New England. We are now 
nearly two month into the catch share program. Studies by the Gulf of 
Maine Research Institute confirm the pessimistic views held by many 
people before the outset of the program.

2.  I understand that ``sector'' catch shares are going into effect in 
only a few short weeks in New England groundfish. Have any sector 
managers asked to delay implementation? And it sounds like you're 
saying that fishermen stick with status quo regulations rather than 
shift to sectors. If so, why have fishermen who collectively comprise 
98% of the available fish opted into sector management? Are you 
suggesting they don't know what they are doing?

    I do not know whether sector managers have asked to delay 
implementation, but many rank and file fishermen have. There were two 
choices for fishermen: 1) the common pool, or 2) sector management. The 
catches in the common pool were significantly more limited so that 
being in the common pool was uneconomic. Many fishermen did not want to 
join sector management, but they had to because of the way economic 
choices were structured.
Questions from Republican Members
1.  You cite a problem with the stock assessment situation in New 
        England. How could this be fixed and how much would it cost the 
        agency to implement your recommendations?
    This is a very complex question. One of the strategies would be to 
improve data collection by more extensive use of fishing vessels and 
port sampling. This is supposed to take place under the sector program, 
but I do not know whether it will be at a critical mass level. The 
Agency could reprogram funds from lower priority programs to this high 
priority critical need.
2.  You express a concern about ``wasted'' bycatch that is thrown 
        overboard rather than landed. That raises an interesting 
        dilemma on how to reduce wasted bycatch without encouraging 
        targeting bycatch species. How do you propose NMFS deal with 
        this?
    Wasted bycatch arises from a variety of sources. One source of 
wasted bycatch arises from trip limits. Suppose a fisherman has a 
10,000 pound per day trip limit. This would mean that at the end of a 
five-day trip that the fishermen would catch 50,000 pounds. The 
fisherman catches 10,000 pounds per day for the first four days 
amounting to 40,000 pounds. But on the fifth day he catches 25,000 
pounds, so he has to throw 15,000 pounds back into the ocean.
3.  Some have argued that the New England fishing fleet is too large to 
        be economically viable and that even without a change to a 
        sector system, a large number of fishermen will go out of 
        business. Do you think a reduction in the fishing fleet was 
        inevitable and if so, what effect on the coastal communities 
        would this have? If not, why not?
    A reduction in the fishing fleet was inevitable. The problem is 
that the catch share system will serve to reduce the fleet in such a 
way to maximize the pain to the coastal communities.
4.  You note that ``structural problems that have been associated with 
        the [Days At Sea] system in New England need to be rectified''. 
        Can you give us examples of these ``structural problems''?
    One of the biggest structural problems is the so called choke 
species problem. This is also called the mixed species exclusion. 
Failure to apply the mixed species exclusion has resulted in a loss of 
hundreds of millions of dollars of fish over the last several years. It 
is important to understand that these fish could have been caught 
without violating overfishing regulations.
5.  During the previous Administration, the position was that as long 
        as overfishing was stopped, rebuilding efforts and timetables 
        could be flexible. Do you agree with this position? If 
        overfishing in New England stopped, would stock rebuild fairly 
        quickly?
    I agree with maximum flexibility. All managers, whether they are 
managing a company or fish stock, seek flexibility to deal with 
contingencies. One of the difficulties regarding overfishing is that 
sometimes a stock is declared to be overfished and then it turns out 
that it is not overfished. Stocks are influenced both by fishing and 
the ocean environment. Some stocks would rebuild fairly quickly if the 
cause of their low numbers was fishing, but stocks would not rebuild if 
the cause of low numbers was the ocean environment.
6.  In your testimony you note that the gulf of Maine cod quota was 
        10,000 tons, yet only 4,000 tons were harvested. Why did that 
        happen and what can be done to change that situation?
    The cod quota was not caught because of constraints in the catches 
of other species. This can be eliminated by applying the mixed species 
exclusion.
7.  Many people argue for ecosystem management, but then refuse to 
        allow for the intentional ``fishing down'' of certain stocks 
        such a dogfish to allow for rebuilding of other stocks. Can 
        NMFS currently allow the intentional ``fishing down'' of 
        stocks? If so, why are they hesitant to do so?
    It seems to me that NMFS can allow intentional fishing down of 
stocks by interpreting the Magnuson-Stevens Act to allow this. I do not 
know why they are hesitant to do so. If we are serious about ecosystem 
management, then we need to look at the fishery as a whole, not look at 
the fishery species by species.
8.  How would your idea for an independent fishery reform commission 
        work? Is this something NOAA could create now or should 
        Congress look at authorizing something like this?
    NOAA of course could create a fishery reform commission, but I 
think that this commission needs to report to Congress. To me, this has 
high priority.
9.  If the sector system implementation is unlikely to be postponed, 
        are there any short-term things that could be done by NMFS to 
        help soften the impacts?
    There are many short-term things that could be done by NMFS to 
soften the impacts. One of these is to be flexible in the amount of 
fish that can be caught. It appears that this is happening with skate 
and pollock. How all of this will work out, I do not know.
10.  How many years would it take to get better stock assessments that 
        could lead to more realistic quotas? What should Congress be 
        telling NMFS to do to get better information?
    There are two parts to this. One is getting more data from fishing 
vessels, and the second is to use modern computer techniques and 
information systems to transmit the data to all users. It seems that 
this is a short-term problem.
11.  Do you think there should be minimum scientific information 
        available before a Council can consider a catch share 
        management system?
    I think it is fair to say that not only minimum scientific 
information but many other aspects of the catch share system were not 
in place at the time it was implemented. It was known that the dogfish 
shark was at a high level of abundance for some time, but this was not 
announced until two months into the catch share system. The pollock 
stock is supposed to be five times greater than previously reported 
according to press releases from conservation groups. The availability 
of pollock is critical to business decision making. Why do we need to 
wait months before the quota is set? Issues with skate are similar. I 
think it is fair to say that the system was not ready to go for a 
number of reasons, including minimum scientific information.
12.  You feel that the New England Council is dysfunctional. Other than 
        a complete change, what step should be taken to make the 
        Council process work better?
    I believe that the New England Council has become disenfranchised 
from the fishing industry. Doing a better job of working with the 
constituencies would improve matters materially. The Council Chairman 
wrote a letter to the Secretary citing concerns with the management of 
the Council, yet his concerns, to my knowledge, have never been 
publically addressed.
13.  Congress required that the Councils' Science and Statistical 
        Committees meet concurrent with the Council meetings. This was 
        done partly as a result of the disconnect between the 
        scientists and the fishing industry in New England. Has this 
        change made any difference in the New England Council and the 
        ability of fishermen to understand how scientific decisions are 
        made? If not, why not?
    I do not find that changing the meeting day has contributed to 
improving the understanding of fishermen regarding how scientific 
decisions are made. One of the reasons is simply a lack of 
communication. This lack of communication is physically reinforced by 
the fact that there are thousands of fishermen and it is difficult for 
a reasonably representative proportion of them to interact with the 
Science and Statistical Committees.
                                 ______
                                 
    Ms. Bordallo. I thank you very much, Dr. Rothschild. Mr. 
Alexander, you are the last to testify on the second panel. 
Please begin.

 STATEMENT OF CAPTAIN TERRY ARNOLD ALEXANDER, FISHING VESSELS 
                       JOCKA AND RACHEL T

    Mr. Alexander. Good morning. Members of the Subcommittee, 
thank you for the opportunity to testify regarding catch share 
management of commercial fisheries.
    I have been a commercial fishermen vested in the New 
England ground fishery for over 30 years. I am currently the 
president of the board of directors of the Sustainable Harvest 
Sector. We are over 100 groundfish permit holders--from Maine, 
New Hampshire, Massachusetts, Rhode Island, New Jersey, and New 
York--who have joined to fish under catch share management in 
New England groundfish beginning May 1, 2010.
    The management of New England groundfish, which includes 19 
different fish stocks, has produced extraordinary biological 
results over the past 20 years. Many of the stocks within the 
complex are at the highest levels since the 1980s. The status 
of others continue to perplex scientists, managers, and the 
industry. For example, during the last five years, commercial 
fishermen in New England have under-harvested scientifically 
based catch limits for some stocks by millions of pounds, only 
to be informed that retrospective patterns have reversed the 
positive projections of earlier stock assessments.
    These biological gains were achieved at the cost of 
hundreds of New England groundfish businesses and jobs. For 
example, from 2001 to 2007, the number of active vessels in New 
England ground fishery has shrunk from nearly 1,100 to 574. And 
in Massachusetts, from which the largest percentage of 
vessels----
    Ms. Bordallo. Mr. Alexander, could you please talk a little 
closer to the microphone, please?
    Mr. Alexander. Sorry.
    Ms. Bordallo. Thank you.
    Mr. Alexander. For example--where was I? Massachusetts, 
which has historically held the most number of active vessels, 
has declined from 629 vessels to 300. In Maine, less than 75 
boats remain in the fishery, and groundfish have plummeted from 
30 million pounds to 6 million pounds. The loss of these 
businesses and jobs came well before the implementation of 
catch shares. And make no mistake about it, with or without 
shares, more business and jobs will be sacrificed in New 
England because the continued job loss cannot be attributed to 
any particular management scheme but, instead, can be directly 
attributed to the stringent rebuilding requirements of the 
Magnuson-Stevens Act.
    Many Members of Congress have said that the intent of the 
Magnuson Act was to protect communities as well as fish 
populations, but that is not the outcome we have experienced in 
New England. Let me be perfectly clear, the Sustainable Harvest 
Sector is not embracing catch share management. We have been a 
long-term vocal opponent of catch shares, but we have now come 
to the conclusion that under the current mandates of the law 
and facing the alternative of only 24 allowable days to fish, 
catch share management in New England groundfish is the lesser 
of two evils.
    The catch share program for New England groundfish was 
developed over a three-year process with considerable input 
from stakeholders. We are not satisfied with all of the design 
details. In particular, we oppose the plan to shift monitoring 
costs to an industry that cannot afford the cost. Congress must 
provide the funding for the cost of the catch share monitoring. 
Projected costs for at-sea monitoring alone for New England 
groundfish sectors is close to $5 million annually.
    NOAA should prioritize funding for monitoring of the 
existing catch share programs before advocating for new or 
expanding catch share programs, a buyout that is crucial to 
lessening the negative impacts of the impending restrictions on 
the New England groundfish industry. We have known for decades 
that there is an over-capacity problem in New England 
groundfish. A buyout could remove that excess capacity, give 
those who wish to leave the industry a dignified way to exit, 
and allow those who remain to increase allocations at a minimal 
cost. Congress must provide the funding necessary for a buyout 
or advance the industry-funded buyout proposal.
    If catch share management of New England groundfish is to 
succeed, we need a greater investment in stock assessment 
science. It is clear that NOAA's budget request places priority 
on a catch share agenda over the goal of improving stock 
assessments. We would like to see improved science as a number 
one priority of NOAA.
    Fishery science at its best is guesswork. The stock 
assessment models are based on assumptions, and outputs are 
called projections. Yet the Magnuson Act continues to hold 
fisheries managers and industry to arbitrary time frames and 
unrealistic goals. The most important message I have to convey 
today is Congress must amend the Magnuson Act in a way that 
clearly articulates the flexibility necessary for fisheries 
managers to restore fisheries resources while preserving 
fishing communities. Thank you.
    [The prepared statement of Mr. Alexander follows:]

              Statement of Terry A. Alexander, President, 
           Sustainable Harvest Sector, Cundy's Harbor, Maine

    Chairwoman Bordallo and members of the subcommittee, thank you for 
the opportunity to testify regarding catch share management of 
commercial fisheries.
    I have been a commercial fisherman vested in the New England 
groundfish fishery for over 30 years. I am currently the President of 
the Board of Directors of the Sustainable Harvest Sector. We are over 
100 groundfish permit holders from Maine, New Hampshire, Massachusetts, 
Rhode Island, New Jersey, and New York who have joined to fish under 
catch share management in New England groundfish beginning on May 1, 
2010.
    The management of New England groundfish, which includes nineteen 
different fish stocks, has produced extraordinary biological results 
over the past 20 years. Many of the stocks within the complex are at 
the highest levels since the 1980s. The status of others continues to 
perplex scientists, managers, and the industry. For example, during the 
last five years, commercial fishermen in New England have under-
harvested the scientifically based catch limits for some stocks by 
millions of pounds, only to be informed that ``retrospective patterns'' 
have reversed the positive projections of earlier stock assessments.
    These biological gains were achieved at the cost of hundreds of New 
England groundfish businesses and jobs.
    For example, from 2001 to 2007 the number of active vessels in the 
New England groundfish fishery has shrunk from nearly 1100 to 574, and 
in Massachusetts, from which the largest percentage of vessels has 
historically hailed, the number of active vessels has declined from 629 
to 300. In Maine, less than 75 boats remain in the fishery and 
groundfish landings have plummeted from 30 million pounds annually to 6 
million pounds.
    The loss of these businesses and jobs came well before the 
implementation of catch shares--and make no mistake about it--with or 
without catch shares, more businesses and jobs will be sacrificed in 
the New England groundfish industry.
    The cause of continued job loss cannot be attributed to any 
particular management scheme, but instead can be directly attributed to 
the stringent rebuilding requirements of the Magnuson Stevens Act. Many 
Members of Congress have said that the intent of the Magnuson Stevens 
Act is to protect fishing communities as well as fish populations, but 
that is not the outcome we have experienced in New England.
    Let me be perfectly clear--the Sustainable Harvest Sector is not 
embracing catch share management. We have been long-time vocal 
opponents of catch shares--but we have now come to the conclusion that, 
under the current mandates of the law, and facing the alternative of 
only 24 allowable days to fish, catch shares management of New England 
groundfish is the lesser of two evils.
    The catch share program for New England groundfish was developed 
over a three-year process with considerable input from stakeholders. We 
are not satisfied with all the design details. In particular, we oppose 
the plan to shift monitoring costs to an industry that cannot afford 
those costs.
    Congress must provide funding for the costs of catch share 
monitoring. Projected costs for at-sea monitoring alone for New England 
groundfish sectors is close to $5 million dollars annually. NOAA should 
prioritize funding for monitoring of existing catch share programs 
before advocating for new or expanded catch share programs
    A buyout is crucial to lessening the negative impacts of the 
impending restrictions on the New England groundfish industry. We have 
known for decades that there is an overcapacity problem in New England 
groundfish. A buyout could remove that excess capacity, give those who 
wish to leave the industry a dignified way to exit, and allow those who 
remain to increase allocations at minimal cost.
    Congress must provide the funding necessary for a buyout, or 
advance an industry-funded buyout proposal.
    If catch share management of New England groundfish is to succeed, 
we need a much greater investment in stock assessment science. It is 
clear that NOAA's budget request places priority on a catch share 
agenda over the goal of improving stock assessments. We would like to 
see improved science as the number one priority of NOAA.
    Fisheries science, at its best, is guesswork--stock assessment 
models are based on ``assumptions'' and the outputs are called 
``projections''. Yet, the Magnuson Stevens Act continues to hold 
fishery managers and the industry to arbitrary timeframes and 
unrealistic goals.
    The most important message I have to convey today is this: Congress 
must amend the Magnuson-Stevens Act in a way that clearly articulates 
the flexibility necessary for fisheries managers to restore fisheries 
resources while preserving fishing communities.
                                 
                                 ______
                                 

           Response to questions submitted for the record by 
  Captain Terry Arnold Alexander, Fishing Vessels Jocka and Rachel T.

Questions from Congressman Jay Inslee (D-WA)
1.  This is the second hearing that we have had on catch share fishery 
        management programs, so there has been a lot of discussion 
        about catch shares. But I'm not sure we have heard from many 
        witnesses that actually have participated in catch share 
        programs. . Can you tell me your experience fishing in a catch 
        share program? Do you have a federal permit to fish in a catch 
        share managed fishery?
    Response: I have been the President of the Board of Directors of 
the Sustainable Harvest Sector (SHS) for the past two years. The Board 
has developed the bylaws and the operations plan, reviewed the 
applications of individual sector members, hired a manager and we are 
now overseeing the manager's activities.
    I own two federally permitted multispecies vessels, and several 
federal multispecies permits that are enrolled in the SHS. Due to the 
low allocations made to each of my vessels/permits, I have had to 
retire one vessel and consolidate the allocations onto the remaining 
vessel.
    I have made one successful fishing trip under the SHS operations 
plan since May 1 2010. Other than the complicated and sometimes 
duplicative reporting required by the National Marine Fisheries 
Service, I am, to date, satisfied with my fishing experience under the 
SHS operations plan.
2.  I understand that ``sector'' catch shares are going into effect in 
        only a few short weeks in New England groundfish. Have any 
        sector managers asked to delay implementation? And it sounds 
        like you're saying that fishermen stick with status quo 
        regulations rather than shift to sectors. If so, why have 
        fishermen who collectively comprise 98% of the available fish 
        opted into sector management? Are you suggesting they don't 
        know what they are doing?
    Response: To my knowledge no sector managers have asked for delay--
certainly the SHS manager and the SHS Board have not asked for a delay.
    I believe you have misunderstood my comments: I did not say that 
fishermen want to stick with the status quo regulations. I said, in my 
testimony, that members of the SHS chose sector management as the 
lesser of two evils. I believe it would be fair to say that is why the 
majority of active fishermen (as defined as those with 98% of the 
allocation) chose sector management.
    It is important to reiterate that the alternative to sector 
management in the New England multispecies fishery is an allocation of 
24 allowable days to fish - that combined with very low annual catch 
limits, is likely to be a result in a very short derby fishery.
Questions from Republican Members
1.  Dr. Rothschild predicts that there will be a 50% drop in employment 
        due to the new sector system Do you think he's accurate?
    Response: I am not an economist.
    As stated above, I have had to retire one of my vessels, and had to 
lay off the crew, so in my own company, 50% of the crew is no longer 
employed by me. I do not know if they have obtained new jobs.
    As I said in my testimony, many jobs in New England multispecies 
fishery were lost prior to the implementation of sector management, and 
many more will be lost regardless of the type of management system that 
is used.
    The fundamental problems in the New England multispecies fishery 
are overcapacity and inflexible legislation.
2.  You apparently did not support the switch to a sector allocation 
        scheme, yet you are reluctant to continue the days-at-sea 
        management system. Are there any other alternatives?
    Response: The only way to make the New England multispecies fishery 
economically viable is to reduce capacity and to provide more 
flexibility to fisheries managers. Congress must authorize a buyout and 
clarify the Magnuson Stevens Act. If Congress would eliminate the 
referendum requirement for New England individual transferable quota 
(ITQ) programs, we could transition the multispecies sector management 
program to an ITQ. This would reduce cost and increase the 
accountability of individual participants.
3.  The changes to the Magnuson-Stevens Act which require individual 
        fishery accountability were an effort to change the balance 
        between ecological concerns and economic concerns. Do you think 
        the language in Magnuson went too far? If so, what should 
        Congress look at to correct this balance?
    Response: I disagree that the changes to the Magnuson Stevens Act 
were not made with the intent to ``balance . . . ecological concerns 
and economic concerns''. The latest changes to the Magnuson Act were 
advocated for by environmental organizations that have made a 
profession of securing unreasonable legal mandates, and then suing the 
government when fisheries managers fail to achieve unrealistic 
deadlines. The latest changes to the Magnuson Stevens Act added yet 
another deadline to ``end overfishing immediately''. While I would 
agree that ending overfishing should be the primary goal, there are 
circumstances in the New England multispecies management plan where 
overfishing has been ended over a 2-3 year timeframe with far less 
negative economic impact.
4.  Some fishermen have complained about the new accountability 
        measures being implemented by NMFS. Do you also have concerns, 
        and if so, what are your specific concerns? What suggestions 
        would you give Congress to correct these concerns?
    Response: It is unreasonable, in a multispecies fishery, to allow 
one or two problem stocks to control the entire fishery. For example, 
the most recent assessment of Gulf of Maine winter flounder was 
rejected by the peer reviewers, who also recommended not using the 
assessment to set management advice. However, the assessment was used 
to set an annual catch limit of roughly 150 mt. The combined annual 
catch limits for all other species found in the Gulf of Maine is 
several hundred thousand metric tons. So, in short, Gulf of Maine 
winter flounder could easily, and very quickly shut down the entire 
Gulf of Maine, resulting in loss of millions in fisheries revenue.
    I am neither a fisheries scientist nor a lawmaker, so my advice to 
Congress is limited to my common sense approach to fisheries management 
and the economic viability of my business. Therefore, I can only 
suggest that Congress should make it clear that in the case of 
multispecies fisheries, a combined annual catch limit should be set, 
rather than individual catch limits for each species.
5.  It seems that all of the panelists today would agree that prior to 
        implementing a catch share management system, NMFS must have 
        good data on the status of the fishery, the ecological needs of 
        the fishery, and the economic needs of the fishery. Does NMFS 
        have this type of information on New England groundfish? If 
        not, how can they effectively implement a new management 
        system?
    Response: If Congress expects NMFS to be able to set and monitor 
appropriate catch limits for a multispecies fishery, then Congress 
needs to invest a great deal more money into more frequent stock 
assessments and more money into catch monitoring. The cost of these 
essential activities cannot be borne by the industry.
6.  I understand that at least one component of the New England 
        groundfish fishery is still going to be managed under a days at 
        sea system. Why is that being done and how will this work?
    Response: My understanding is that the Northeast Regional 
Administrator now has the authority to make in-season adjustments to 
the days at sea system to reduce trip limits and adjust the days at sea 
counting rate. Since this portion of the fishery will not be monitored 
at the same high level as the sector management system, I expect that 
the RA will have to make projections that will result in reduced trip 
limits and high differential days at sea counting rates, which will all 
combine to quickly close the days at sea fishery.
7.  According to a NOAA document, they are suggesting that there are 8 
        potential catch share programs that may be developed or 
        implemented in the next two fiscal years (not including the 
        groundfish multi-species fishery). These include: sea scallops 
        general category, monkfish, whiting/hake, sea scallops sectors, 
        herring, dogfish, mahogany quahogs, and skates. Any comments?
    Response: The northeast Monkfish fishery is an essential component 
fishery to New England multispecies fishery and therefore it makes 
sense to transition monkfish to a catch share system so that fishermen 
do not have to operate under a dual system of days at sea and catch 
shares. However, before the NMFS goes much further with catch share 
management of fisheries other than monkfish, we need to give everyone 
some time to make the multispecies catch share system workable.
                                 ______
                                 
    Ms. Bordallo. I thank you, Mr. Alexander. And I will now 
recognize Mr. Frank Pallone from New Jersey for any questions 
he may have.
    Mr. Pallone. Thank you, Madame Chairwoman. I first want to 
thank you for holding this important hearing, and I do want to 
also thank Captain Alexander for his statement. I know it is 
not directly on point today, but your support for Magnuson 
flexibility and for more science and emphasis and priority on 
science and research I think is really important.
    But today, we are talking about catch shares. And I just 
wanted to express my concern with catch share plans and the 
process that is moving forward on them. Let me just express 
some of my concerns. First, will fishermen be priced out and be 
denied access? Will they create consolidation and force job 
losses? What will be the mechanism for adjusting allocations 
between recreational and commercial sectors, and will Councils 
have the ability to choose which management tool to use if 
needed funds only come with catch shares?
    Now these issues have grave consequences, and I am afraid 
that NOAA is moving forward with implementation without fully 
addressing these issues of great concern. And at the end of the 
day, my concern lies with my constituents. Will my constituents 
have fair access to a public resource that has served our 
community so well over the years? Our fisheries are not only an 
economic driver, but provide invaluable recreational enjoyment 
for the millions that use our nation's coastal waters.
    Now let me first thank you for including Mr. Donofrio from 
the RFA as one of the panel members today. I actually missed 
part of your opening there because my Health Subcommittee was 
meeting. But let me just get to a couple of questions, Jim, in 
the time that we have. You are aware that $54 million has been 
allocated for catch shares in NOAA's Fiscal Year 2011 budget 
request--an increase of 100 percent. NOAA repeatedly states 
that catch share implementation will be at the discretion of 
the Regional Councils. However, this seems to be a classic 
stick and carrot routine, where the Councils must implement 
catch shares to access the needed funds for the science and 
research.
    How do you see the Council process playing a role in 
implementation of catch shares? And are the Regional Councils 
being pressured into utilizing catch shares?
    Mr. Donofrio. Thank you. Good morning, Mr. Pallone. Good 
question, and as I said in my written testimony, as I said to 
the Chairwoman, we had a recreational fishing summit last week, 
as you are aware of. And I got a chance to talk to Dr. 
Lubchenco frankly about some of the things that happened the 
first five minutes of this Administration. As you know, the 
Administration came in and took sitting incumbents off the 
Councils, sitting incumbents that had a track record of showing 
up, attending other committee meetings, doing all of their 
homework, and replaced them with pro-catch share people that 
had no experience on the Council before. This is unheard of.
    As you know, over the years, incumbents normally, when they 
are doing a good job, they stay, whether they are recreational 
or commercial or environmental. If they are doing a good job, 
they stay. The Administration took a hostile position toward 
these people. And again, we are seeing them stack the deck. 
That is what it appears. They are running in a panic state here 
to get into catch shares without having the discussion with the 
user groups, including the commercial people. Some want it, 
some don't. But let them decide through their leadership rather 
than have it shoved down their throat. And that is how we feel.
    Mr. Pallone. Well, it disturbs me a great deal, Jim, 
because, historically, these Councils and the decisions have 
not been that political, have not been that ideological, and it 
really pains me to think that that is what happening now. And I 
think we really--it shouldn't be the way things are done.
    But let me issue a second question. I believe--I have said 
it is my constituents' right to fish and utilize public 
resources, such as summer flounder or black sea bass fishery. 
What effect do you anticipate these catch shares are having on 
the ability of recreational anglers being able to access public 
resources?
    Mr. Donofrio. I think it is going to almost shut us down 
completely. And as you know, we are already shut down in sea 
bass in a completely rebuilt fishery. So, I can imagine if we 
have a catch share, we are going to have no fish to divide 
amongst the boats and the private citizens they are actually 
targeting. We are going to have nothing left here.
    Mr. Pallone. And then I have heard from a lot of 
constituents that catch shares will hurt local businesses such 
as tackle shops and marinas. I have also heard from commercial 
fishermen, such as the Belford co-op in my district, that they 
have concerns over the implementation of catch shares.
    I know you are here today representing the RFA, but can you 
give me a sense of what the impact of catch shares may be on 
the fishing industry in general, and what you are hearing from 
some organizations other than the RFA, for example?
    Mr. Donofrio. Well, absolutely. As you may recall, on 
February 24th, when we were down here for our rally, catch 
shares was a big issue. And we had some conversations regarding 
state seafood and others in the commercial sector, and I 
believe they feel they want to discuss this amongst themselves, 
rather than have it forced down their throats. And that is 
exactly--they feel there is a political agenda here again with 
NOAA, and we see it. It is obvious. It is transparent. And I 
think this is where we come to you, Mr. Pallone, and the 
Chairwoman to help us.
    Mr. Pallone. I appreciate it. Thank you. And thank you, 
Madame Chairwoman, for having this hearing. I know we have a 
lot of time constraints today, and I appreciate your bearing 
with us.
    Ms. Bordallo. Thank you very much to the gentleman from New 
Jersey. And I do have a few questions here before we close out 
today. The first is a question for Mr. Donofrio. Can you 
envision a situation where the commercial side of a fishery is 
managed by catch shares, and the recreational allocation is 
open-access? Is that what you are suggesting for fisheries 
where catch shares are developed?
    Mr. Donofrio. No, not at all, Madame Chair. Our position is 
if it is a tool for the commercial sector, as it has been in 
certain fisheries in Alaska and others, the commercial sector 
needs to decide where it is. What we are hoping for, if NOAA is 
going to move rapidly and get into all of the East Coast 
fisheries here and Gulf fisheries, where there are multiple 
users, both commercial and recreational, before they decide, 
then we want to talk about allocation criteria because we want 
to revisit that again.
    For instance, we filed a petition for rulemaking with the 
courts to split the summer flounder 50/50. It is 60/40 now--60 
commercial and 40 recreational. And we failed on that level. 
But we would like to at least revisit those kinds of 
allocations before there is any catch share set in motion on 
the commercial sector.
    Ms. Bordallo. And the next question I have is for Mr. 
Dooley. Given your very positive involvement in catch share 
programs, how do you reconcile your experience with the 
concerns you have heard expressed here today?
    Mr. Dooley. I hear a lot of concerns about going into catch 
share programs. We had those very same concerns when they were 
first proposed to us and brought up through industry as a 
proposal. But once they were instituted and understood, how to 
maximize our catch and maximize the benefit, we soon learned 
that that was the way to go.
    One example of that and how it might pertain to the West 
Coast fishery is that you have--right now, you have a fishery 
that is constrained by catch limits, or your trip limits, and 
it is constrained by regulatory discards. That was my reference 
in my testimony to a fishery that is worth $25 million that 
should be worth $70 million. That fish is being either left in 
the water or thrown in the water, discarded, no value being 
taken out to the communities or the fishermen. That would be 
solved by catch shares.
    These fish would be allocated to the fishermen. And as I 
have experienced in my experience in Alaska, the challenge then 
is to the fishermen to figure out how to harvest it with the 
use of new gear technologies, new methods, and area management 
to be able to harvest fully this resource and maximize the 
benefit. Once you maximize the benefit, the cost, such as 
observer cost, become less significant because you are able to 
realize so much more value out of your product. The communities 
become much stronger because of that added value. You are able 
to pay your bills instead of having a part-time job. That is 
really important.
    I also hear concerns about consolidation. And consolidation 
isn't always bad. You know, the benefit of a catch share 
program is that it voluntarily lets a person with a quota, a 
permit holder, a vessel owner, to choose whether this is a 
season with enough catch in a quote to employ, like in my 
hometown, seven vessels, or would you just use four this year. 
Right now, those vessels are going out, maybe once every two 
months, to fish a very few days for these catch limits.
    They are not being able to have full-time jobs. They talk 
about job losses. Jobs that are a day or two every month are 
not a job. But a job that is a sustainable job, based on the 
resource and based on the added value, now that is a job that 
is a benefit to the community and the safety of the vessels.
    Ms. Bordallo. Mr. Dooley, I know you have a large vessel, 
or a big boat, whatever way you want to put it. What about the 
little guys?
    Mr. Dooley. Actually, that is a good question. I do have a 
big vessel, but I also came from a small town. And I have many, 
many relatives and friends that have worked for years. And I am 
concerned with them. I think that this program is critical to 
their livelihood. When they talk about this fishery being 
consolidated and taken over by a few owners or a few entities, 
that is what the West Coast rationalization program has 
addressed, and it has been addressed over a six-year program. 
This can't happen. There are control limits that are applicable 
to each fishery, whether it be the inshore groundfish fishery, 
non-whiting, or the offshore whiting fishery, or the inshore 
whiting fishery for that matter.
    These protect the character of the communities. They keep 
the fishery in the hands of individuals rather than huge 
corporations. They prohibit this consolidation and this 
monopolization of a quota. The way it is now, without the catch 
share program, that can happen right today, and is happening 
today. With the catch share program implemented as the Pacific 
Management Council has proposed, this won't happen. It 
prohibits--the social engineering has been figured into this 
plan.
    Ms. Bordallo. Another question for you. Your first point in 
your testimony is that the West Coast trawl rationalization 
program is not an example of NOAA headquarters trying to impose 
catch shares on the fishery. From your experience then, how can 
other communities ensure that any catch share programs 
involving them are developed from the ground up?
    Mr. Dooley. I really can't speak to the East Coast, and I 
hear their concerns. However, I can relate what has happened on 
the West Coast and in Alaska. Those programs were not mandated 
from on high. Those programs were built from industry, asked 
for by industry. Communities, fishermen, processors--everybody 
has had a seat at the table, gone through committee processes, 
opened public hearings and opened public process of the Council 
meetings, and many side committee meetings that ranged up and 
down the coast so people could attend these meetings to put 
their input into this program, over six years for the West 
Coast rationalization program. And I believe that is critical 
to this.
    Another critical part is that all the way through the 
process--now with the new deeming requirements the Pacific 
Council has taken on, industry, public, everyone has had the 
opportunity to view the regulations coming forward as they are 
being written and as they are being approved by the Council, 
before they are published. So, it is a really transparent, open 
process, and they have vetted many, many concerns.
    And I might add, I heard Mr. Moody talk about adaptive 
management. That is the Council's tool to take care of 
unforeseen problems with this program. And I think they have 
done a stellar job of putting this together and making sure 
that all of the concerns are being addressed. However, they 
also realize this will not be a perfect program coming out of 
the box. So, they have reserved 10 percent to take care of 
these unforeseen problems. I think it is a great job they have 
done.
    Ms. Bordallo. I would like to thank you for answering these 
questions, and I thank all of the witnesses for their 
participation in the hearing today. Members of the Subcommittee 
may have some additional questions for the witnesses, and we 
will ask you to respond to these in writing. In addition, the 
hearing record will be held open for 10 days for anyone who 
would like to submit additional information for the record.
    And if there is no further business before this 
Subcommittee, the Chairwoman again thanks the members of the 
Subcommittee and our witnesses for their participation here 
this morning. And the Subcommittee now stands adjourned.
    [Whereupon, at 12:06 p.m., the Subcommittee was adjourned.]

    [Additional material submitted for the record follows:]

    [A statement submitted for the record by Richard B. Allen, 
Commercial Fisherman and Fishery Consultant, Westerly, Rhode 
Island, follows:]

        Statement submitted for the record by Richard B. Allen, 
  Commercial Fisherman and Fishery Consultant, Westerly, Rhode Island

    I appreciate the continuing interest shown by the House of 
Representatives in the well-being of the New England fishing industry. 
History tells us that the second Act of the First Congress, passed on 
July 4, 1789, included a subsidy for the New England fishing industry, 
sponsored by Massachusetts' own Representative Elbridge Gerry of 
Marblehead. This bit of history offers more lessons than may be 
immediately apparent. At the time of the American Revolution, 
Marblehead was considered the premier fishing port in New England and 
held that position until it was surpassed by Gloucester in the mid-
1800s. Marblehead disappeared from the list of major U.S. fishing ports 
sometime in the distant past and appears to have no interest in 
regaining its former status. The fate of fishing communities, like 
other communities, has been, and will continue to be, determined by 
many factors, most of which have nothing to do with catch shares.
    Anyone reading the fishing news today might think that the history 
of the New England fishing industry was all sweetness and light until 
the New England Fishery Management Council decided to limit fishermen's 
future catches based on their catch history. The facts are that the 
Council has spent the last 30 years trying every conceivable idea for 
fixing a system that was failing both the fish and the fishermen. Each 
of those attempts was marked by frustration, controversy, and 
fishermen's protests that were at least as emotional as those that we 
see today.
    Those who protest the current changes in fishery management seem to 
ignore history and lack a workable alternative. The claim that catch 
shares will privatize our fisheries ignores the fact that almost every 
major fishery in the United States has operated under a system of 
limited, transferable permits for many years. These permits are not 
divisible and they are often expensive. The existing system of 
transferable permits poses more of a barrier to entry into the 
fisheries than will divisible quota shares. I have always opposed 
limited entry into fisheries because the number of permits in any given 
fishery is an accident of history, rather than a rational response to 
market forces. One of the reasons that I support catch shares is that 
catch shares make limited entry unnecessary, opening fisheries up to 
broader ownership opportunities, including crew members who may never 
have been able to buy an expensive permit. Ownership of catch shares by 
crew members is common in catch share fisheries, but is unheard of with 
limited permits.
    I began my fishing career in 1964, digging quahogs with hand tongs. 
I worked as a crewman on lobster boats and trawlers until I could 
afford the down payment on my own small boat. During the 1970s, when I 
bought my first boat, permits were not limited and permit fees were 
minimal to non-existent. Various government and private lending sources 
made it relatively easy for a fisherman to buy his first boat or to 
expand his fishing business.
    The ease of entry into the fisheries can be seen in the number of 
groundfish boats that entered that fishery during the 1970s and early 
80s. The number of vessels landing Northeast groundfish during the 
1960s and early 1970s, prior to the passage of the Magnuson Act with 
its 200-mile fishery jurisdiction, was relatively stable at 500-600. 
During the late 1970s and early 1980s the groundfish fleet doubled to 
more than 1100 boats. New boats continued to enter the fleet during the 
1980s, but vessel losses approximately equaled the new additions and 
the fleet remained relatively stable.
    The increase in vessel numbers coincided with a rapid increase in 
the catching capacity of each vessel. Prior to 1970, most New England 
groundfish boats were side trawlers, relatively inefficient compared to 
the newer stern trawlers that entered the fleet after 1970. The newer 
boats also tended to have higher horsepower, better winches, more 
sophisticated electronics and better nets. All this new equipment made 
it easier for fishermen to find fish and to catch them in areas that 
had not been accessible to older boats.
    While the passage of the 200-mile limit enabled the United States 
to exclude foreign fishing vessels from coastal waters, it also 
restricted the fishing grounds available to the boats that had 
historically landed the most groundfish in New England. In 1984, when 
the expansion of the New England groundfish fleet reached its peak, the 
stocks available to the groundfish fleet were further restricted by the 
World Court decision that established the U.S.-Canadian Maritime 
Boundary. That decision gave Canada exclusive rights to the rich 
fishing grounds on the eastern side of Georges Bank. The result of all 
of these developments was that the New England fishing industry came 
out of the 1980s with an expanded fishing fleet that was capable of 
catching far more than the limited stocks then available could produce. 
The contraction of the New England fishing fleet that has been seen 
since the mid-1990s was inevitable--the increase in catching capacity 
that occurred in the 1970s and 1980s was not sustainable. The local 
stocks suffered while the fishery management system struggled to bring 
the fishery under control. We are still in the process of adjusting to 
disruptions that occurred twenty to thirty years ago.
    Also during the 1970s, I helped to found a fishermen's organization 
and worked to protect fishermen from the threats facing the industry at 
that time: foreign fishing in local waters; offshore oil drilling; 
foreign imports; escalating insurance costs; and limited entry, 
including catch shares, which I was determined to thwart.
    In the 1970s and 1980s, the Bureau of Commercial fisheries and its 
successor, the National Marine Fisheries Service, along with many state 
fishery agencies, was pushing limited entry and catch shares. I was 
part of the opposition. In 1978 I told a National Conference on Limited 
Entry that there were too many bureaucrats chasing too few fishermen, 
suggesting that we would need to divide up the limited number of 
fishermen among the competing bureaucrats. At that time I would have 
agreed completely with those who are protesting against catch shares 
today.
    In the mid-1980s I became so angered by the fact that the National 
Marine Fisheries Service was putting the power of the federal 
government behind the push for limited entry and catch shares that I 
set out to prove that fisheries were essentially self-regulating, with 
no need for artificial limits on the number of fishermen or how much 
they could catch. My research, however, convinced me of just the 
opposite.
    One of the most important pieces of information that I gathered 
during my attempt to discredit limited entry and catch shares was an 
article by the late Francis Christy. Christy explained how traditional 
fishery conservation regulations work by making it too expensive for 
fishermen to catch too many fish. Closed areas make fishermen fish 
where the fish are scarce, trip limits force fishermen to waste fuel 
and time making multiple trips when they could land more fish in one 
trip, size limits and trip limits force fishermen to kill fish more 
fish for the same amount of income. I could see exactly what Christy 
was talking about in the regulations that we faced in New England.
    I remember one meeting of the New England Fishery Management 
Council's Groundfish Committee where a frustrated fisherman told the 
Committee: ``You know where we fish, close the area.'' The obvious, but 
somehow acceptable, result of closing the areas with the best catch 
rates was to make fishermen fish harder to catch the same amount of 
fish. This provided little benefit to the fish stocks and a great deal 
of economic harm to the fishing community. When the original closures 
proved ineffective at conserving the stocks, more areas were closed.
    Francis Christy not only explained the problem facing fishermen and 
fishery managers under traditional management approaches, he suggested 
a solution. In 1972 Christy proposed fishermen's catch shares as a way 
to achieve conservation while letting fishermen decide how to run their 
own businesses. Within a few years, fisheries around the world were 
experimenting with this new idea, most often called individual 
fishermen's quotas, or IFQs.
    In the United States, Wisconsin was apparently the first state to 
implement IFQs for a significant commercial fishery in 1979. That 
program was expanded in subsequent years and my contacts in Wisconsin 
tell me that the program continues to work well. In 1995, when I first 
met Charlie Henriksen, the President of the Wisconsin Commercial 
Fishermen's Association, he told me that the ITQ system had saved the 
Wisconsin commercial fishing industry from extinction. I have heard 
that same comment from fishermen in many catch share programs since 
that time.
    There is no question that New England fishermen and their families 
are mad right now. From my perspective, however, I would suggest that 
most of the complaints are directed at the new catch limits, not at 
catch shares per se. Most of the New England fisheries were faced with 
reduced catch limits as the result of NMFS interpretation of the 
required annual catch limits that were incorporated into the most 
recent reauthorization of the Magnuson-Stevens Fishery Conservation and 
Management Act. I believe that dissatisfaction with the resulting catch 
limits is the basis for most of the protests that have been organized 
by the fishing industry in recent months. If catch shares had been 
implemented without restrictive new catch limits, it is my opinion that 
catch shares would have received much more acceptance as a sensible way 
to manage our fisheries.
    The opposition to catch shares can't be fully understood without 
considering the implications of real limits on the total catch. New 
England groundfishermen have not operated under hard quotas since the 
first attempt at quota management was abandoned in 1982. Quota 
management was abandoned because New England fishermen didn't want to 
stop fishing when the quota was reached.
    New England opted to replace quota management with regulations that 
told fishermen how, when, and where they could fish. In the absence of 
strict quotas, every fisherman had an incentive to find a way to 
maintain or increase his catch despite regulations that were ostensibly 
designed to limit the total catch. The result was ineffective 
conservation and continual tightening of the rules. As Francis Christy 
had explained, the tighter rules made it more expensive to catch fish, 
reducing the profitability of fishermen who could not keep ahead of the 
rules. That ``race against the rules'' was not sustainable for either 
the fish or the fishermen. Not only were the rules tightened, but 
Congress also tightened the law as well, eventually requiring the 
fishery management councils to impose annual catch limits and 
accountability measures on all fisheries.
    Many New England fishermen believe that transferable catch shares 
will be necessary to provide fishermen with the flexibility to run 
economically viable fishing businesses in an era of hard catch limits. 
Fishermen will be accountable for their discards as well as their 
landings, another new challenge to New England fishermen. Transferable 
catch shares will make it possible for fishermen to adjust their quota 
holdings to their planned catch and to their realized catch. Most 
thoughtful fishermen who consider all of the requirements of the 
Magnuson-Stevens Act in its present form are likely to come to the 
conclusion that transferable catch shares are the only form of 
management that can meet those requirements while allowing a viable 
commercial fishery to exist. People who oppose catch shares do not seem 
to have any better suggestions for meeting the requirements of the 
Magnuson-Stevens Act in a way that will allow profitable fisheries to 
exist. Most of the opponents of catch shares seem to think that catch 
limits will go away if catch shares disappear. I'm not aware of any 
Congressional intent to eliminate the conservation requirements in the 
Magnuson-Stevens Act.
    The benefits of catch share management don't stop at greater 
flexibility for fishermen. The fact that the catch share program will 
entail new at-sea and on-shore monitoring programs means that fishery 
scientists will have better data with which to measure the impact of 
fishing on stocks. Better data will have at least two positive results 
for New England fishermen: the reductions applied to annual catch 
limits can be reduced as the level of uncertainty goes down; and stocks 
are more likely to rebound if catches stay within prescribed limits.
    It is my opinion that the opponents of catch shares in New England 
spent so much time just saying ``No,'' that they ignored catch share 
design features that might have met some of their concerns. Amazingly, 
the New England groundfish plan has never had any accumulation limits 
for either permits or catch shares. The New England Council will be 
meeting in the near future to consider such limits. Other design 
features might be added to the groundfish plan to address social and 
economic concerns.
    It has been almost 40 years since Francis Christy identified both 
the root cause of the chronic crises facing fishermen around the world, 
and the solution to that problem. Catch shares hold the potential to 
restore the flexibility that fishermen once enjoyed while maintaining 
an effective conservation program. I urge you to support the 
President's budget request for the support of catch share programs, 
including the necessary, continuing improvements in fishery science to 
establish appropriate catch limits.
                                 ______
                                 
    [A statement submitted for the record by Rick Bellavance, 
President, Rhode Island Charter and Party Boat Association, 
follows:]

        Statement submitted for the record by Rick Bellavance, 
       President, Rhode Island Charter and Party Boat Association

    For more than a quarter of a century, the ocean has been a central 
part of my life.
    I take paying customers out to fish a variety of species, including 
summer flounder, striped bass, cod, tuna and shark. I grew up on the 
sea and learned about the ocean from my father. When I was 10, he 
bought me my first 12-foot wooden skiff, which I motored around 
Narragansett Bay. My father was also a high-school science teacher who 
taught oceanography, biology and aquaculture. For him, the sea has 
always been about education and respect. Together we now operate a two-
boat charter fishing and diving business.
    For much of my career I kept my head down and focused on what I do 
best--fish. But, as a charter-boat operator, an important part of my 
job is education. After spending thousands of hours on the ocean, one 
lesson is becoming increasingly clear--the ocean is not limitless; nor 
is our current industry model sustainable.
    Fortunately, there is a solution that offers an alternative--the 
catch-shares system.
    Catch shares are a way of managing fisheries that allocates a 
percentage of the annual catch to participating fishermen and monitors 
and enforces those allocations while providing fishermen like me 
improved flexibility and control of our businesses. This means I decide 
when I fish and can provide my customers the excitement of fishing a 
run of summer flounder rather than limiting them to ever decreasing 
daily bag limits or seasonal closures.
    This flexibility is critical to our livelihoods. How many people 
are willing to pay me enough to make a living so they have the thrill 
of bringing home a couple of small fish?
    I've never participated in any formal conservation effort before, 
but our current system does very little to promote or encourage such 
efforts. Daily catch limits for the commercial fleet, which force the 
overfishing of many species and generate tremendous waste, will no 
longer be an issue under a catch-shares program. Illegal charters, 
which for years have ravaged our business through overfishing, will 
have a much tougher time operating under a catch-shares system that has 
more accountability.
    To successfully implement a catch-shares system, certain challenges 
must be resolved, including allocations, monitoring and funding. Share 
allocations must be fair so that fishermen can make a living. Effective 
monitoring is essential to ensure that everyone is operating under the 
same and equitable rules, as well as to limit illegal charters.
    Finally a funding system will need to be created that allows for 
the long-term existence of our industry. All of these concerns are a 
priority, and as someone who has been in the fishing industry for 25 
years, I know they must be addressed.
    But these challenges don't alter the fact that a catch-shares 
program will almost certainly be coming to our area because it has to. 
We can't keep operating under a system that has failed in every way. 
The charter-boat industry in particular struggles under the current 
system that uses seasonal closures, minimum size limits and bag limits. 
As a charter-boat operator, I give families and individuals the chance 
to experience the ocean and fish by boat. A collapse of our industry 
could eliminate their access to this experience.
    These changes may seem difficult, but the current reality of our 
industry is even harsher. When I was young, one of my father's goals 
was to teach me how to read water. Reading the ocean now, it's clear 
that our fishing will not survive forever with the way things are now. 
The days when fishermen could catch as much as possible without any 
limits have passed. Catch shares are the best option I've seen to date, 
one that with the appropriate implementation, will let our industry 
continue to thrive for years to come.
                                 ______
                                 
    [A letter submitted for the record by Gulf of Mexico 
Charterboat and Headboat Captains follows:]

April 2010

Subcommittee on Insular Affairs, Oceans and Wildlife
187 F3rd House Office Building
Washington, DC 20515

Dear Members of the Subcommittee on Insular Affairs, Oceans and 
Wildlife:

    As charterboat and headboat captains living along the Gulf of 
Mexico coast, we feel that it is important to convey our support of 
catch share programs in light of the hearing that the House 
subcommittee on Insular Affairs, Oceans and Wildlife is holding on this 
management system on Thursday April 22, 2010. Many cherished fish 
stocks in the Gulf of Mexico have been severely depleted, resulting in 
smaller bag limits and shorter seasons that threaten the future of our 
fishing heritage. Commercial catch share programs restore fish 
populations for a given fishery by taking a previously established 
allocation for commercial harvest, subdividing it among the catch share 
participants, and holding them accountable for fishing within their 
specified portion of that overall limit. These programs help end 
overfishing, while preventing, and even reversing, the collapse of 
fisheries in the commercial sector, and we believe these programs, with 
adequate planning can similarly be used to benefit the for-hire 
(charter and headboat) sector.
    We believe that a healthy marine resource is vital to the local 
economies of our coastal communities and is a significant contributor 
to the overall economy of each of our states. Catch share programs 
provide conservation benefits that result in more fish for everyone, 
and therefore more healthy and robust coastal economies. The catch 
share program currently in place for commercially-caught red snapper in 
the Gulf of Mexico has been extremely successful--it allows for 
fishermen to lower operating expenses, increases the price paid at the 
dock and meets high conservation standards, which has improved both 
economic performance and safety at sea.
    For example:
      Bycatch (accidentally-caught fish that must be thrown 
back in the water and often die); has been significantly reduced;
      Reliable and timely data systems verify landings and 
transactions on commercial catches which provide the data needed to 
keep the sector within their regulatory catch limits;
      The fishing season has been extended from a few months to 
year-round, which has allowed fishing to take place when weather 
conditions are safe and prices are higher;
      Fishing businesses are earning more for their fish and 
spending less to catch them, while consumers are receiving a higher 
quality product.
    Chronic overfishing is to blame for season closures which devastate 
the for-hire fishery and the amount of business it can receive. Catch 
shares are a tool that can end the overfishing, rebuildfish populations 
and help save fishing businesses, which will solidify the Gulfs 
reputation as a sportsman's paradise and keep fresh seafood in grocery 
stores and on restaurant tables.
    Anglers are conservationists at heart. Therefore, we support catch 
shares in commercial fisheries. Furthermore, many recreational for-hire 
captains have learned about the flexibility and increased profitability 
in fishing under commercial catch share programs. We feel that similar 
programs should be explored and developed to meet the unique needs of 
the recreational industry.
    Than t you for your commitment to a robust and healthy fishing 
industry.

                                Best regards,
            [GRAPHIC] [TIFF OMITTED] 55542.008
            

            .eps[GRAPHIC] [TIFF OMITTED] 55542.009
            

            .eps[GRAPHIC] [TIFF OMITTED] 55542.010
            
            .eps[GRAPHIC] [TIFF OMITTED] 55542.011
            
                                 .eps__
                                 
    [A letter submitted for the record by Mary Beth de 
Poutiloff, Scallop Fishing Family, F/V Patience Too, P.O. Box 
1101, Provincetown, Massachusetts 02657, follows:]

Mary Beth de Poutiloff
Scallop Fishing Family
F/V Patience Too
PO Box 1101
Provincetown, MA 02657
[email protected]
401-226-5955

April 30, 2010,

Greetings to the Members of the Catch Share panel,

    Our country's economy is in dire straits. One of every six jobs in 
the U.S. is marine-related. Over 1/3 of the Gross National Product 
originates in coastal waters. Our public resources are precious. We are 
about to lose them to privatization through Catch Shares. Catch 
Shares=Corporate Shares.
    The solutions to our FMP's (fishery management plans) depend on 
input from fishermen, scientists, environmentalists and regulators. The 
special interests, namely EDF (environmental defense fund) has 
infiltrated key positions in NOAA/NMFS and the Council.
    This imbalance has devastating effects on our environment, 
resources, fishermen and our communities. Fishermen are being ignored 
in the process of managing our resources. Cooperative research is also 
minimal.
    EDF with their skilled public speakers, lobbying power, strong 
media ties and endless supply of money from the mega-corporations is 
driving the Catch Share train-wreck. Millions and millions of dollars 
is being dumped into pr campaigns supporting Catch Shares.
    In some cases, news reports are being twisted beyond recognition. 
Recently, Mr. Wayne Moody, from Morro Bay, CA spoke to the committee 
against Catch Shares. The San Luis Obispo-Tribune's headline stated 
just the opposite. These media mishaps are happening too often to be 
coincidental.
    Catch Shares have to be carefully devised to meet the mandates of 
the MSA (Magnuson-Stevens Act). In the general category scallop 
fishery, Catch Shares did not promote fairness, use science or consider 
the damage to small boats and their communities. How will we provide 
access for future generation? The abundance of scallops makes severe 
consolidation from Catch Shares unnecessary.
    Catch Shares is discriminatory and the UN (United Nations) agrees. 
It is unfair to the fishermen who do not have access to capitol. Wealth 
is a prerequisite to fishing access.
    This contentious tool is far too complicated to be used fairly. In 
my opinion, the gifting of resources to the minority, while the 
majority suffers loss of jobs, boats, homes and futures should never be 
considered. Catch Shares is a feudal system.
    Fishermen are familiar with the oceans, the fish and our coastal 
communities. Why do we not have a seat at the management table? NOAA/
NMFS and the Council are not looking for solutions. Their science and 
management plans have become agenda-driven. Frankly, FMP (fishery 
management plans) are being designed to fail. This should be 
disturbing.
    Fishermen do NOT want Catch Shares. We are frustrated beyond belief 
through misrepresentation of our opinions by government agencies and 
the corporate- run media. We are at the point of having nothing left to 
lose. It is up to our elected officials to speak for ``we the people'' 
not'' we the corporations''.
    The US fish stocks are healthy. To punish us further for global 
overfishing is a betrayal. US fishermen are abiding by the strictest 
fishing regulations in the world. We have made sacrifices while our 
fish stocks rebuilt. Over 80% of the seafood consumed in this country 
comes from countries that do not practice sustainable fishing.
    Catch Shares will be bad for everyone (fish, fishermen and 
communities) except investors. Wall Street does not have the knowledge 
or inclination to protect and sustain our resources for generations to 
come. Public resources should not be sold.
    I respectfully, am asking each and every one of you to implore the 
Secretary of Commerce to pass a 2 yr. Catch Share moratorium. This 
would allow us time to delve into the dysfunction, corruption and 
conflict of interest of the current system.

Respectfully,

Mary Beth de Poutiloff
                                 ______
                                 
    [A statement submitted for the record by Shawn C. 
Dochtermann, Executive Director, Crewman's Association, 
F/V Isanotski, Kodiak, Alaska, follows:]

      Statement submitted for the record by Shawn C. Dochtermann, 
   Executive Director, Crewman's Association, F/V Isanotski, Kodiak, 
                                 Alaska

    Honorable Chairwoman Madeleine Z. Bordallo and Subcommittee 
members:
    We would like to comment on Catch Shares as the focus on individual 
communities' negative experiences and concerns related to the adoption 
of this inappropriate management tool.
    Catch Shares as a management tool are like a chainsaw that cuts off 
the access for most fishermen that actually prosecute the fisheries and 
rewards non-participants with the privilege to lease the fish back to 
the actual harvester.
    The Crewman's Association is an advocate for the protection of 
Alaskan fishermen. We believe the implementation of a Catch Shares 
system which privatizes publicly owned fisheries resource is 
destructive to local fishermen and coastal communities. The record 
shows that implementing Catch Shares does not necessarily protect 
fisheries resources. We believe there are other existing management 
tools which are less destructive.
    Kodiak has experienced two Catch Shares programs over the past 
twenty years. Halibut and sablefish (black cod) catch shares were 
implemented in the 1990s under a program called Individual Fishing 
Quotas. The IFQ program eliminated 13,000 jobs in Alaska. The original 
plan mandated that the owner be on board the vessel and that quota 
shares could not be leased. This plan was not adopted. The result is 
that the majority of the initial quota share recipients have leveraged 
more quota shares using their initial free quota as collateral.
    The second catch share program that has affected Kodiak and other 
coastal communities is the Bering Sea Crab Rationalization program, 
instituted in 2005. Before crab rationalization, sixty-four Kodiak 
vessels fished crab in the Bering Sea, primarily with Kodiak skippers 
and deckhands. Crab rationalization winnowed this fleet down to sixteen 
Kodiak vessels fishing crab in the Bering Sea. Those forty eight boats 
represent 264 crewmen jobs removed from our community.
    Also, access to the fisheries, the right to fish on a crab vessel, 
is now leased to vessel operators by the crab owners at rates between 
50% and 80% of the ex-vessel value of the crab. This is money which is 
taken off the amount from which crewmen are paid their percentages of 
the catch. This money, skimmed off the top, is estimated to be between 
$140 and $180 million over the past five years. Approximately $50 
million would have flowed into Alaska's coastal communities. Now it is 
removed from the communities by absentee owners, which has led to 
serious and harmful economic and social consequences for coastal 
Alaskan communities.
    These negative effects have occurred despite the assurances by 
former Chairman Dave Benton of the NPFMC that the concerns and 
interests of coastal communities would be addressed before catch shares 
programs would be implemented. In a letter to Congress on August 5, 
2002 Chairman Benton stated:
    ``Rationalization will improve economic conditions substantially, 
for all sectors of the industry. Community concerns and the need to 
provide for economic protections for hired crew will be addressed.''
    In June of 2006, one year after the implementation of catch shares 
in the Bering Sea crab fisheries, the North Pacific Fisheries 
Management Council, the body which administers fisheries regulations in 
Federal waters of Alaska, came to Kodiak to listen to the views of the 
public on the issue. The overwhelming majority who testified spoke 
against fisheries privatization. Many spoke of the loss of income and 
jobs. Others testified that crewmen's rights had been ignored in the 
process of awarding ownership of the public crab resource to only one 
small segment of the industry--the vessel owners. And some testified 
that by awarding processor shares and mandating that vessels deliver 
crab to specific processors, the crab rationalization program had 
caused ex-vessel prices to fall.
    With this negative experience of the privatization of fisheries in 
Alaska, the Crewman's Association views with alarm the imminent 
implementation of catch shares in the New England fisheries on May 1, 
2010. We share the concerns of the Governor of Massachusetts, the 
Massachusetts Congressional delegation, and the mayors of Gloucester, 
New Bedford, Massachusetts, Kodiak Island Borough, Aleutians East 
Borough, and the City of King Cove, Alaska about the harmful effects on 
coastal communities of fisheries privatization.
    Please carefully assess the effects of catch shares on coastal 
communities and on the men and women who fish in those communities 
before moving forward with new privatization programs. We also urge 
Congress and NOAA to examine the role of private investors and 
speculators in the fisheries privatization process. In order to provide 
time for these assessments to be made Congress and NOAA should 
establish a 2-3 year nationwide moratorium on the implementation of 
catch shares programs.
    We also request Congress amend the Crab Rationalization program so 
that its economic benefits are ``fairly and equitably'' distributed--in 
line with economic sharing in accordance with their historical 
participation--to all segments of the fishery, especially crewmen and 
new vessel entrants.
                                 ______
                                 

    [A letter submitted for the record by Food & Water Watch 
follows:]

                           Food & Water Watch

                        1616 P St. NW, Suite 300

                          Washington, DC 20036

Chairwoman Madeleine Bordallo and Subcommittee Members
Subcommittee on Insular Affairs, Oceans and Wildlife
The House Natural Resources Committee

April 30, 2010

RE:  April 22,2010 oversight hearing on ``A Community Perspective on 
Catch Shares.''

Dear Chairwoman Bordallo and members of the Subcommitee:

    Food & Water Watch (FWW) is a nonprofit consumer advocacy 
organization headquartered in Washington D.C. We work with grassroots 
organizations around the world to create an economically and 
environmentally viable future. Through research, public and policymaker 
education, media and lobbying, our Fish Program promotes safe and 
sustainable seafood for consumers while helping to protect the 
environment and support the long-term wellbeing of coastal and fishing 
communities.
    Last week you heard testimony on a community perspective on catch 
shares from the commercial and recreational fishing communities.
    FWW has a vision of healthy ecosystems supporting robust fish 
stocks that are both skillfully managed and sustainably used, in order 
to support the long-term socioeconomic wellbeing of coastal communities 
and the nation as a whole. Through research and policy analysis, we 
have worked to understand the root causes of previous global fishery 
management failures and models for reform, including the variety of 
catch share management programs.
    The result of this work has been an understanding of the many 
problems privatized catch share programs have caused and will cause, if 
they continue to be implemented in the United States. It has also 
resulted in our support of a Fair Fish, ``Cap-rent-recycle'' model of 
catch share management. This model supports public control of wild fish 
stocks, provides flexibility for management improvement over time, and 
creates an evenhanded business setting. The attached factsheet, ``Cap-
Rent-Recycle: Common Sense on Catch Shares'' provides more details on 
this approach.
    The Catch Shares model that is currently being pushed by Fishery 
Management Councils is more of a ``cap-giveaway-trade'' model, which is 
essentially a privatization mechanism that takes a public resource out 
of the public's control. As echoed by Jim Donofrio at the hearing, this 
model violates the federal government's responsibility to hold this 
resource in the public trust, and allocate it fairly between citizens. 
In the same vein, Chairwoman Bordallo captured well the logical 
consequence of loss of the public control through fishery 
privatization--that it is difficult to reverse once implemented, and it 
results in ``locking-in'' access for certain user groups.
    In fact, the lack of flexibility and failure to serve as a useful 
management tool over time has forced costly taxpayer-funded reform 
interventions in other regions. In 2007, the United Nations Human 
Rights Committee ruled that Iceland's privatized catch share systems 
violated international law, because the system forced fishermen to pay 
money to a privileged group of citizens who exclusively held the 
nation's fishing rights. After this ruling and repeated challenges in 
domestic courts, the newly elected government has proposed buying back 
all access units (catch-shares). They propose returning to a better 
management system by purchasing 5% of the quota each year over 20 
years, so that it can once again be properly managed and allocated 
under the government's jurisdiction. (Unfortunately, Icelandic 
taxpayers have to buy back the quota at exorbitant above market rates 
in order to convince the private owners to sell back to the 
government.) The government then plans to directly rent access units to 
private parties while allotting some access units to fishing villages 
to manage within a community-based system. The attached factsheet, 
``Illegal Catch Share Programs: Learning from Iceland's Mistake'' 
provides more information on this topic.
    The system that Iceland hopes to achieve is similar to what FWW 
believes the U.S. should implement from the start. We urge you to 
recognize the failure of privatization programs in other countries, and 
support a better program from the start.
    Congress included important provisions in the Magnuson-Stevens 
Fishery Management and Conservation Act to try to direct the design of 
limited access privilege programs toward balanced economic, social and 
environmental outcomes. By law, programs must include features to limit 
consolidation and control, and yet, in practice, these features are 
often weakened in regional programs as a result of special interests, 
resulting in high levels of consolidation; protections from competition 
through perpetual privileges; and poor transparency on control and 
privilege transfer. These problems have been evidenced on the west 
coast for the Pacific Coast Groundfish Fishery Management Plan 
Amendment (A20 & A21); in the Northeast for the Multispecies Fishery 
Management Plan Amendment 16; and in the Gulf Plan Amendment 29.
    Under privatized catch share programs, unfair allocation can 
prevent commercial fishing from being a viable economic activity for 
coastal communities. Many fishermen can lose their jobs, as well as the 
opportunity to respond to growing consumer demand for local, 
sustainably caught seafood from artisanal fishing and primary 
producers.
    As noted on ``FishingForaLiving,'' a website dedicated to 
commercial fishing in Key West, Catch Share programs have become the 
``single most effective tool for the elimination of small boat 
fishermen.'' Furthermore, it will ``place a limit on every fisherman's 
income and freeze out young people from ever entering the fisheries,'' 
\1\ essentially taking commercial fishing out of the community's hands 
and putting an end to traditional fishing. For other brief examples of 
where catch shares have harmed coastal communities both here and 
abroad, see the attached one-pager: ``FWW: Examples of failures with 
IFQs (catch share programs--Domestic and International.''
---------------------------------------------------------------------------
    \1\ Bade, Peter. ``Individual Fishing Quata's--Background.'' March 
18, 2010. Available at: http://fishingforaliving.com
---------------------------------------------------------------------------
    In addition to the grave detriment privatized catch share programs 
may cause to coastal communities, it is important to note that catch 
share programs do not necessarily improve ecological conditions, as 
noted by a study by the Lenfest Ocean Program of Pew Charitable Trusts 
published in the journal Proceedings of the National Academy of 
Sciences. The study, which analyzed impacts of catch share programs in 
North America, concluded that while these programs may make fisheries 
more predictable, they do not necessarily lead to more robust fish 
populations. This study disproved the common argument in favor of catch 
shares programs, that they supposedly benefit conservation and fishery 
sustainability. \2\
---------------------------------------------------------------------------
    \2\ T, Essington. ``Ecological indicators display reduced variation 
in North American catch share fisheries.'' Proceedings of the National 
Academy of Sciences. 2009.
---------------------------------------------------------------------------
    When developing a catch shares program, there is a choice. Systems 
can be privatized to benefit only a few, or they can benefit the public 
interest through fair allocation, and a flexible ``rental'' system. Our 
goal is to make the public more broadly aware of that choice, and to 
steer policymakers toward the latter option, and we hope you will join 
us in this work.
    The fish in the U.S. Exclusive Economic Zone (EEZ) ocean waters 
belong to all U.S. people equally and are part of the ocean commons: a 
living public trust asset to be passed from one generation to the next. 
We thank you for considering these comments, and the attached 
documents, and ask that you help protect these public resource for 
future generations by bringing oversight to the fragmented catch-shares 
implementation process that is occurring across the country, and 
steering plans in a ``cap-rent-recycle'' direction.
                                 ______
                                 

    [NOTE: An article entitled ``Cap-Rent-Recycle: Common Sense on 
Catch Shares'' has been retained in the Committee's official files.]
                                 ______
                                 
    [A statement submitted for the record by Troy Fussell, 
Morriston, Florida, follows:]

Troy Fussell,
Gulf of Mexico Reef Fish Fisherman
F/V Irma Lee
Morriston, FL
352-528-5667
[email protected]

Date: 04/26/2010

To: All Members of the Subcommittee on Insular Affairs, Oceans and 
Wildlife

Subject; Gulf of Mexico Grouper Tilefish IFQ (Catch Share) Program

Introduction
    This letter is intended to inform the members of the subcommittee 
of the effects the Gulf of Mexico Grouper Tilefish IFQ program has had 
on my operation. I have been following the development of the program 
and kept communications with Gulf Council members, advisory panel 
members and personnel of NMFS St. Petersburg over the years.
    In September of 2000 I bought the fishing vessel Irma Lee and 
permit together as a package. At that time I was new to the commercial 
reef fish fishery and intended to grow in experience to one day make it 
my full time occupation. That day came in late 2006 when my employer of 
many years went out of business. From that time until December of 2009 
I enjoyed moderate success and earned income from grouper fishing to 
support my family. Now the IFQ program is underway I have the boat 
hauled and sitting idle. In the following paragraphs I will explain how 
and why I was forced to make this decision.
Nature of Grouper Fishing
    When most people think of commercial fishing they think of big nets 
pulled along the bottom capturing anything and everything, or perhaps 
gillnets or traps. The shallow water grouper fishery is one of the most 
environmentally friendly fisheries in the U.S. Almost all swallow water 
grouper harvest is accomplished with hook and line, except for a small 
percentage of spearfishers. My fishing method of choice is simply a rod 
and reel (vertical line fishing). The gear is tended at all times and 
when a fish is hooked it is immediately brought to the surface. This 
method allows the fisher to quickly identify if it is a lawful species 
and size, if not it is immediately returned, with little or no harm.
Pertinent History
1990--First reef fish permits were issued
1992--Moratorium on issue of new permits
July 15, 2004--Red Grouper TAC dropped to 5.31MP
November 15, 2004--TAC of Red Grouper met
November 16, 2004--Announcement of October 15, 2004 as IFQ control date
March 3, 2005--10,000 lb trip limit set
October 10, 2005--TAC of Red Grouper met
January 1,2006--6,000 lb trip limits set
January 2007--Magnuson-Stevens Reauthorization Act Signed
February 7 2007--Grouper Traps removed permanently
January 2009--Grouper Tilefish Referendum Results Reveled
January 1, 2009--Commencement of Grouper Tilefish IFQ Program
Detailed Sequence of Events
    As observed from the pertinent history list the TAC (total 
allowable catch) for red grouper was reduced to 5.31MP on July 15, 
2004. For the first time in the fishery's history on November 15, 2004 
the TAC was met and by rule the entire shallow water grouper commercial 
fishery must be halted for the remainder of the year. The following 
year the TAC was met October 10, 2005 the fishery again closed until 
the first of the year. January 1, 2006 6,000 lb trip limits were 
instated the TAC was never reached again. These two closure events set 
into motion the NMFS push for a catch share program.
    In January 2007 the Magnuson-Stevens Reauthorization Act (MSA) was 
signed giving the Gulf Council and the Secretary of Commerce the 
authority to invoke a Limited Access Privileged Program (catch shares) 
if desired. The MSA contains very explicit guidelines and procedures 
detailing program initiation, initial allocation and cost recovery. 
These rules insure the small owner-operated vessels that currently 
depend on the fishery receive a fair and equitable initial allocation.
    In December 2008 NMFS held a referendum to determine if qualified 
grouper fishers approved of the IFQ program. 81 percent were in favor.
    Around October 5, 2009 I received a package from NMFS indicating 
the amount of my permit's initial allocation amount.
My Situation
    During August 2008 the Gulf Council determined who was eligible to 
vote in the December referendum. They decided to use catch histories 
from the years 1999-2004 as the qualifying years and an 8000 lb 
landings average per year as an additional voting qualification. Of 
about 1000 permits with grouper landings only 300 were eligible to 
vote. Approximately 69% of fishermen who held valid Reef Fish permits 
as of December 2008 were denied an opportunity to vote. I was denied 
the opportunity to vote.
    The following are quotes from the official referendum results 
bulletin.
        ``Of 301 ballots distributed, 273 (90 percent) were returned by 
        eligible voters, 23 ballots received by eligible voters were 
        not returned, and 5 ballots were not claimed by the 
        addresses.''

        ``Of 273 votes cast, a total of 220 votes (81 percent) were in 
        favor and 50 (18 percent) were opposed. Three returned ballots 
        were declared invalid.''
    In my opinion the high average annual landings threshold was set to 
produce a predictable result. Those with lower landings would be more 
incline to vote no because their initial allocation would be relatively 
low. The MSA 16 U.S.C. 1853a (c)(6)(D)(i) states, ``For multi species 
permits in the Gulf of Mexico, only those participants who have 
substantially fished the species proposed to be included in the 
individual fishing quota program shall be eligible to vote in such a 
referendum.''
    The phrase ``substantially fished'' can have a very broad 
interpretation.
    The Gulf Council used the same qualifying years 1999-2004 as the 
initial allocation formula. Using these selected years gave no 
consideration to those who are currently dependant on the fishery as 
the MSA demands. The council used catch histories from 11 to 6 years 
before the implementation of the program, and obviously did not include 
catch histories as close to the program start date as possible.
    Below are excerpts from the MSA Reauthorization Act 2006.
MSA 16 U.C.S. 1853 (b)(6)(A-G).
        (6)  establish a limited access system for the fishery in order 
        to achieve optimum yield if, in developing such system, the 
        Council and the Secretary take into account--
                (A)  present participation in the fishery;
                (B)  historical fishing practices in, and dependence 
                on, the fishery;
                (C)  the economics of the fishery;
                (D)  the capability of fishing vessels used in the 
                fishery to engage in other fisheries;
                (E)  the cultural and social framework relevant to the 
                fishery and any affected fishing communities;
                (F)  the fair and equitable distribution of access 
                privileges in the fishery; and
                (G)  any other relevant considerations;
MSA 16 U.C.S. 1853a (c)(5)(A-E)
        (5)  ALLOCATION.--In developing a limited access privilege 
        program to harvest fish a Council or the Secretary shall--
                (A)  establish procedures to ensure fair and equitable 
                initial allocations, including consideration of--
                         (i)  current and historical harvests;
                         (ii)  employment in the harvesting and 
                        processing sectors;
                        (iii)  investments in, and dependence upon, the 
                        fishery; and
                         (iv)  the current and historical participation 
                        of fishing communities;
    As the MSA proclaims, present, current AND historical 
participation/harvest must be considered when developing and allocating 
IFQ programs and shares. The Gulf Council used historical only.
    Using historical only landings, as the initial allocation formula 
is the major factor that was most detrimental to my operation. After 
2006 my landings substantially increased due to my full-time 
involvement. During the years after 2006 my average yearly landings 
were about 15,000 lbs. In October 2009 I was officially notified of my 
initial allocation for 2010 of about 3,000 lbs, only 20% of my most 
recent years landings.
    The Gulf Council's and NMFS solution to this deficit is for me to 
lease or buy shares from someone. After talking with other shareholders 
some shares could be leased, but at prohibitive costs. The amount of 
shares needed to bring me back to viable levels are simply too costly. 
Currently the boat is hauled and sitting idle. I am presently working 
odd jobs to support my family and searching for permanent work.
    Another consequence of the program will be a forced relinquishment 
of my Reef Fish Permit. This will come about due to the fact that less 
than 50% of my income will come from commercial fishing, pursuant to 50 
C.F.R. 622.4(a)(2)(v). I simply do not have the resources to lease or 
buy shares.
    One would instinctively consider other species to supplement or 
replace Grouper. However Grouper and **Red Snapper are the most viable 
Reef Fish species in my area. Lesser viable Reef Fish species are 
naturally not as abundant within my vessel's range as in other areas of 
the Gulf. As you are quit aware Grouper and Red Snapper are currently 
managed under the new IFQ programs with many of the lesser Reef Fish 
species to soon follow. A control date of December 2008 has been 
announced.
    **My yearly allocation of Red Snapper issued in 2006 was/is 34lbs 
(thirty four pounds).
Solutions
    I am not opposed to the concept of IFQs I am opposed to the way the 
Gulf Council and NMFS bent the guidelines of the MSA and harmed a lot 
of fishermen. Below are some suggestions on how to fix the current Gulf 
of Mexico Grouper Tilefish IFQ program.
        1)  Put the current IFQ program on hold.
        2)  Redefine ``substantially fished''.
        3)  Conduct a proper referendum to include more of the current 
        participants.
        4)  If passed, base initial allocations on the most recent 
        landings data.
        5)  Make shares sales only, No leasing.
        6)  Shares can only be owned by fishermen with Permits. (the 
        current plan in 5 years will allow any U.S. citizen or legal 
        alien to buy shares without a permit).
        7)  Abolish the 50% income rule.
Closing
    I am not a fisheries management expert, but I am a small vessel 
owner operator that depended on the Grouper fishery. I was forced out 
with no viable alternatives, no exit compensation and not even a 
financial assistance opportunity (loan).
    I hope from my experiences and comments the committee can use it to 
help alleviate some of these problems for existing and future fisheries 
programs.
    Thank you for your attention on this matter.
Troy Fussell
                                 ______
                                 
    [A statement submitted for the record by Jim Gilmore, At-
sea Processors Association, follows:]

          Statement submitted for the record by Jim Gilmore, 
                     At-sea Processors Association

    The At-sea Processors Association (APA) submits this testimony for 
the hearing record for the Subcommittee on Insular Affairs, Oceans and 
Wildlife's second hearing on the use of catch shares as a fishery 
management option. APA member companies have experience with fish 
harvesting cooperatives--a type of catch share program--going back to 
the late 1990s. Hopefully, the Committee will find useful this 
reporting of our positive experience with fishing cooperatives in 
achieving conservation benefits, providing family-wage jobs, and 
promoting international competitiveness for our sector of the fishing 
industry. We also take this opportunity to share our thoughts on the 
promising draft catch shares policy issued by the administration in 
December 2009.
Background on APA
    APA is a fishery trade association composed of five companies 
that--among other commercial fishing and fish processing interests--own 
and operate 19 U.S.-flag trawl catcher/processor vessels. All 19 
vessels are eligible to participate in the nation's largest fishery, 
the Bering Sea/Aleutian Islands pollock fishery. Ten of the vessels are 
also licensed to participate in the catcher/processor sector of the 
west coast Pacific whiting fishery.
    APA members have worked together in both the Alaska pollock and 
Pacific whiting fisheries to implement fish harvesting cooperatives, 
which are catch shares-style programs. In 1997, members of APA created 
the Pacific Whiting Conservation Cooperative (PWCC). Two years later, 
following passage of the American Fisheries Act, APA members formed the 
Pollock Conservation Cooperative (PCC). As described below, both 
cooperatives have delivered significant conservation benefits and 
fostered economic stability in the industry.
Benefits of Catch Shares-Style Fish Harvesting Cooperatives
    Following passage of the Magnuson-Stevens Act in 1976, the Alaska 
pollock and Pacific whiting fisheries were among those west coast/
Alaska fisheries that transitioned from being harvested by foreign 
fishermen to being harvested and processed by U.S. fishermen and 
processors. U.S. fishery managers have done an excellent job over the 
past 30-plus years conducting stock assessments and setting science-
based annual catch limits for the Alaska pollock and Pacific whiting 
fisheries, among other groundfish fisheries in the region. The 
``Americanization'' of these fisheries created thousands of new jobs 
for fishermen and fish processing workers. By the early 1990s, however, 
the race among vessels to catch the available quota resulted in 
substantial overcapitalization of the industry. Regulations limiting 
licenses were not implemented until the overcapitalization problem 
existed, and limiting new entrants did not bar existing participants 
from continuing to invest in equipment designed to fish and process 
faster.
    APA members recognized the Hobson's choice: A fishing company could 
either join with most, if not all, of the other participants in 
borrowing more to purchase equipment to fish and process faster just to 
maintain its current share of the catch. Or a fishing company could 
stand pat but fall behind others in the race for fish. APA members' 
innovative solution was to advocate for limits on new entrants into 
already overcapitalized fisheries. Most importantly, APA members then 
agreed to form fish harvesting cooperatives among the eligible 
participants in which those participants agreed by private contract to 
divide the harvest quota based generally on each company's historical 
percentage of landings.
    With individual harvesting allocations in place, less efficient 
qualified vessels are generally not operated. The remaining vessels 
conduct fishing and processing operations in a manner that optimizes 
performance, helping the industry to reduce costs. The catcher/
processor sector is now producing about 50% more fish products per 
pound of fish harvested than the fleet was able to achieve under the 
race for fish format. In short, fish harvesting cooperatives have been 
effective in helping companies reduce operating costs while increasing 
the value of fish harvests. With crewmember wages often linked to the 
value of fish harvests, the benefits extend beyond company owners to 
all the men and women working in the harvesting and processing 
operations.
    The fish harvesting cooperatives are also delivering measurable 
conservation benefits. The Alaska pollock and Pacific whiting fisheries 
are notable for their low incidental catch of non-target species with 
only about 1% of the harvest consisting of non-target species. 
Notwithstanding such ``clean'' fishing, cooperative members have 
initiated voluntary incidental catch avoidance programs for each 
fishery to further improve conservation performance. Among other 
initiatives, cooperative members share catch information collected by 
federal fishery observers assigned to the catcher/processor fleet. 
Observer reports are transmitted electronically to NOAA Fisheries' 
observer program offices. Vessel owners retain a private company, 
SeaState, to collate and analyze observer data and to provide the fleet 
with real-time information that identifies any incidental catch 
``hotspots.'' Through terms of an enforceable private contract, fishing 
areas closures for cooperative members are instituted. This incidental 
catch avoidance program is an adaptive management approach that is 
difficult, if not impossible, to replicate in the federal fishery 
management regulatory process.
    APA members' positive catch shares experience is hardly unique. In 
the Alaska region alone, all sectors of the Alaska pollock fishery have 
formed fish harvesting cooperatives, flexible Individual Transferable 
Quota (ITQ) catch share programs have been designed for the halibut/
sablefish and crab fisheries, and additional fish harvesting 
cooperatives are being established in the multi-species non-pollock 
groundfish fisheries. Including west coast Pacific whiting, these 
fisheries account for about half of all seafood landed annually in the 
U.S. The success of these programs demonstrates that regional decision 
making that tailors catch shares to the specific elements of the 
fishery being managed can bring measurable benefits to fishing 
communities and the environment.
NOAA's Fishery Management Responsibilities and Catch Shares
    Many of the benefits of catch shares realized in the Alaska pollock 
and Pacific whiting fisheries, as well as other Alaska fisheries, have 
been replicated in catch shares programs around the U.S. and abroad. 
Our fish harvesting cooperative experience, for example, is consistent 
with the scientific analyses referenced in NOAA's catch shares policy 
report showing ``that fisheries managed with catch shares have 
demonstrated improved biological and economic performance relative to 
prior management using traditional tools.'' Given that track record of 
success, it is reasonable for NOAA to develop a policy that, among 
other things, encourages regional fishery management councils to 
consider catch shares at least as a management option to be analyzed by 
councils when addressing extant problems in U.S. fisheries. The NOAA 
policy to encourage consideration of catch shares programs is wholly 
consistent with the agency's commitment and responsibility to enhance 
fishery sustainability, including fostering economic and social 
stability for commercial fishing interests.
    Among other benefits, catch shares programs, where appropriately 
used, should effectively complement new annual catch limit requirements 
mandated in the 2006 Magnuson-Stevens Act amendments. We particularly 
agree with NOAA's finding that catch shares can complement annual catch 
limits (ACLs) by helping achieve additional economic and social 
objectives necessary to support sustainable fisheries. As our testimony 
noted earlier, science-based catch limits alone do not ensure a healthy 
fishing industry. In the case of the Alaska pollock fishery, fishery 
managers applied science-based ACLs for that fishery from the time the 
U.S. extended its jurisdiction to 200 miles in the late 1970s. The ACLs 
helped maintain sustainable fish stocks, however, annual catch quotas 
did nothing to prevent a race to catch the available quota, resulting 
in chronic harvesting and processing overcapitalization. 
Overcapitalization resulted in numerous bankruptcies in the industry in 
the 1990s. Economic and social stability eluded the industry until the 
advent of fish harvesting cooperatives in the late 1990s that ended the 
pernicious race for fish.
    While the 2006 Magnuson-Stevens Act amendments requiring ACLs and 
accountability measures represent an important step forward for further 
strengthening U.S. fishery management, it is appropriate to encourage 
the regional fishery management councils to consider catch shares 
programs contemporaneous with implementation of ACL and accountability 
measures. The catch shares policy properly reserves this responsibility 
for the regional councils and recognizes that successful implementation 
of catch shares programs depends on early stakeholder participation in 
the scoping process, goal development, and flexibility. Most 
importantly, one size does not fit all when it comes to developing 
catch shares, and the agency's proposal to commit resources to 
facilitate the sharing of experiences among different fisheries 
recognizes that critical point.
NOAA's Proposed Support for Councils and Stakeholders is Important
    Further to the point above, it is helpful that NOAA has enumerated 
the programmatic actions necessary to assist councils and stakeholders, 
including providing technical and administrative support, providing 
expertise, informing and educating stakeholders to increase 
understanding about the advantages and disadvantages of catch shares, 
and coordinating data collection to monitor the performance of catch 
shares programs. NOAA has thoughtfully articulated more than two dozen 
specific activities to accomplish the four proposed programmatic goals. 
NOAA's emphasis on assisting industry sectors to make the business case 
for instituting catch shares programs and providing tools for fishing 
communities to use in assisting with the design of new catch share 
programs is appropriate.
Conclusion
    In sum, rationalizing fisheries through catch share-style programs 
promotes science-based approaches to management, enhances conservation, 
and strengthens the economic vitality of fishing communities. APA is 
pleased that the Subcommittee is focusing on this critically important 
issue area and overseeing implementation of NOAA's catch shares policy.
    Thank you, for considering our views.
    For additional information, please contact Jim Gilmore, Director of 
Public Affairs of the At-sea Processors Association, 1225 I Street, NW, 
Suite 600, Washington, D.C. 20005. E-mail: [email protected]. Ph. 
206.669.6396. More detailed information about the Alaska pollock and 
Pacific whiting cooperatives can be found at www.atsea.org and 
www.pacificwhiting.org.
                                 ______
                                 
    [A statement submitted for the record by Dick Grachek, 
Stonington, Connecticut, and Point Judith, Rhode Island, 
follows:]

     Statement of Dick Grachek, Stonington, CT and Point Judith, RI

    The following is not an account of fisheries scientific theory or 
of management philosophy, or of legal chicanery, or one of debunking 
the Eco-NGO marketing talking point lies and misinformation. This is 
intended solely as a clear personal statement of fact concerning one 
small fishing business, comprised of one vessel, with one Multi-Species 
groundfish license. This is a local New England small business that 
employs 5 fishermen and supports 5 families with eight children. My 
wife and I have our life savings and retirement invested in it, as 
well.
    Our 73 foot groundfishing vessel was acquired in July of 2005. This 
vessel was an upgrade from a smaller vessel which, although well found 
and stout, was too small to safely fish offshore in the North Atlantic, 
full time, year round.
    The new vessel's hull and basic machinery were sound but neglected 
and needed a complete rehabilitation; so from July of 2005 through 
October of 2006 the vessel was laid up and totally refitted, deck, 
superstructure, electrical and machinery, rebuilt or replaced. These 
dates are significant because the only fishing trips that occurred 
under my ownership during the NOAA decreed ``qualification period'' for 
the allocation of catch shares, i.e. the fishing years between 1996-
2006, were the initial ``shakedown'' trips mostly to ascertain what 
upgrades were still needed on the vessel.
    In other words, the fish poundage allocation this vessel was 
assigned by NOAA was based solely on the catch history of the previous 
owner. I purchased the vessel when the ``currency'' for fishing 
allocation was in the form of Days-At-Sea; this license had the maximum 
days allowed at the time. The rules have changed recently to basing 
allocation on the total accumulated poundage of catch per license, per 
species, during the 1996-2006 fishing years period, and then measuring 
this poundage against the total poundage per species landed by all 
boats in that period.
    The previous owner of my boat and license fished three boats 
concurrently, so my vessel was fished only a portion of the available 
time, and not always for groundfish, but also for Squid, Whiting, Scup, 
and Fluke; species that are not counted as groundfish and would not 
appear in my current catch share allocation for groundfish.
    The result is that my vessel was allocated a very small percentage 
of the significant groundfish species, approximately 5% of the amount 
of fish that we have landed per year over the last 4 years and which 
are necessary for this operation to remain viable. In all likelihood 
our survival will be a matter of months under the current catch scheme.
    The New England Multi-Species stocks by The New England Fisheries 
Management Council's own figures are 80% rebuilt, 15 of the 19 species 
are completely rebuilt and overfishing is not occurring. The other 4 
stocks are on the rise and are on schedule to achieve healthy numbers. 
Only 25% of the amount of fish declared by government scientists, 
available to be safely harvested, was landed last year due to the 
inflexible regulations. Overfishing is not occurring in New England; 
the fish stocks are healthy. This is an abundant and healthy source of 
food. After 20years of sacrifice and downsizing, the fish are back in 
force; and a major restructuring is completely unnecessary and 
irreversibly destructive.
    The majority of local fishing operations are in similar straits to 
mine, some in worse predicaments, and some have already disappeared. 
The implementation of the Amendment 16 catch share sector scheme must 
be stopped before the few remaining boats like mine are gone; and we 
lose entirely this vital industry.
                                 ______
                                 

Dick Grachek, A Report for the AAFC
American Association of Fishermen and Their Communities
Mystic, CT
March 2010
           CATCH SHARES, CONSOLIDATION and THE TIPPING POINT
    Proponents claim Catch Shares will stop overfishing, restore the 
stocks, create high paying quality jobs, and make the fishermen 
profitable and safe. A closer look at Catch Share programs in place for 
decades shows no data to support these claims.
    Further consolidation or reduction of the commercial fishing fleet, 
a known consequence of Catch Shares and stated by NOAA during their 
push for implementation, will take the independently owned at sea 
fishing vessel operations and the dockside support businesses beyond 
their financial ``tipping point''. This will cause the small, family 
owned, independent fishing businesses and their communities to 
collapse.
                              CATCH SHARES
WHAT IS A CATCH SHARE?
    The New England Fishery Management Council is in the process of 
installing the Amendment 16 management scheme of Catch Shares or 
Individual Fishing Quotas (IFQ's), or Individual Transferrable Quotas 
(ITQ's). The various terms and acronyms for the program can all be 
defined by the concept of owned percentages of the Total Allowable 
Catch (TAC) by individuals, or groups, or corporations, or 
organizations, or cooperatives. A ``Sector'' is a cooperative of Catch 
Share holders.
    This Catch Share management approach is actually an idea of 
economics, claiming production efficiency, and not one of fishery 
conservation. It is the private ownership of the shares of a natural 
resource. Catch shares are an extension of the faulty deregulated free 
market theories of economists such as Milton Friedman, which in this 
case have evolved into the concept of Free Market Environmentalism 
which is the approach of ``ownership equals responsibility; or render a 
commodity profitable enough and somehow the owners and the mechanism of 
market capitalization will automatically stabilize and sustain that 
resource or industry. For a natural resource such as a fishery this 
thinking is based on the following principles:
      Private property rights encourage stewardship of 
resources
      Market incentives spur individuals to improve 
environmental quality
      Government controls and subsidies often degrade the 
environment
      Polluters should be liable for the harm they cause to 
others
    This information can be found at www.perc.org , Property and 
Environment Research Center, a ``think tank'' located in Bozeman, 
Montana, which proclaims itself as having ``...championed the 
successful approach [ITQ's] to eliminating overfishing (see 
www.ifqsforfisheries.org).''
    The Claim: Fish populations worldwide are imperiled from 
overfishing. The Remedy: Individual Transferrable Fishing Quotas will 
stop overfishing by making fishing operations more ``efficient'', 
therefore making fishermen more profitable, and therefore they will 
become more ``responsible stewards'', and therefore sustain the health 
of the resource.
A BRIEF HISTORY
    Individual Fishing Quotas have been in existence since 1976 in 
Iceland, since 1986 in New Zealand, and more recently in the US, 
Pacific Whiting and North Pacific Pollack since the late nineties, and 
Bering Sea Crab in 2005. New Zealand and Iceland are most often cited 
as being in the forefront of developing catch shares or ITQ's for their 
fishery; they've certainly been at it the longest and their programs 
will be looked at more extensively in the next section.
    The New England Groundfishery had a brush with catch shares in 
1995. The Staff of the New England Fisheries Management Council (NEFMC) 
concluded at that time that although these ITQ programs did improve the 
economic efficiency of some fisheries, there was little evidence that 
they improved the biological condition of the stocks. They specified 
that the Catch Share or ITQ scheme is not practical for the diverse 
multi-species nature of the New England Groundfishery. They also noted 
that groundfish stocks at that time were in trouble world wide, 
including those managed with ITQ's and fishing mortality targets. Also 
they found that the management costs for this type of program were 
enough to drive certain governments (e.g., The Netherlands) to move 
away from Catch Shares or ITQ's.
    In New Zealand fisheries failures occurred in three species under 
this scheme, and Canadian east coast Cod and their other groundfish 
populations collapsed after ten years of IFQ management.
    This information was enough so that in 1995 the National Marine 
Fisheries Service dropped promoting Catch Shares; but then resumed the 
push for them in 2005 which culminates today with the impending 
implementation of Amendment 16 Catch Shares/Sectors program. The 
question is: Why? Can any evidence for this renewed commitment by NOAA 
to Catch Shares be found in the stock assessments and TAC's of 
fisheries that have operated for decades under this type of regime?
A CLOSER LOOK
Do Catch Shares Rebuild the Stocks?
    A Review of Stock Assessments: The fisheries of Iceland, New 
Zealand, and U.S., which have operated in a Catch Share or ITQ program 
for at least 5 years.
    Fisheries often cited as a successful examples of the ITQ 
management scheme are Iceland, New Zealand, and in the US, Northwest 
Pacific Whiting, Alaskan Pollock, Alaskan Crab fishery, Alaskan halibut 
and groundfish.
    Certainty of successful stock rebuilding is professed when 
proponents are advocating Catch Shares and citing existing ITQ programs 
as examples; this paper will concern itself with a closer review of the 
TAC's of those countries' stocks to illustrate the effect (or lack of) 
that the ITQ's actually have on the fish stocks. It will also look at 
the effects of ITQ's on coastal fishing ports and communities.
    This is not to claim that ITQ's are necessarily a detriment to the 
stocks, although they could be; it is to claim that Catch Shares as a 
panacea for the fish and the fishermen is a marketing slogan more than 
a statement that is based on fact. It is therefore stated that ITQ's in 
themselves are not the answer to the problems experienced by the 
fisheries and to claim so is misleading.
Iceland
    (I am enclosing these Stats for Iceland because some are quite 
extreme and I didn't want the impact to be lost in consolidation.)
Timeline of ITQ Development:
    Introduced Individual Vessel Quotas for Herring in 1976; they were 
made transferrable in 1979.
    Introduced Individual Vessel Quotas for Capelin in 1980; they were 
made transferrable in 1986.
    Introduced Individual Transferrable Quotas for larger vessels for 
Demersal (Groundfish) 1984.
    ITQ system for all fisheries, (small vessels exempt) 1991.
    ITQ for small vessels as well 2004.
Landings of Icelandic Stocks for 2008/2009 and potential TAC's for 
        2009/2010 for 31 species:
    This information can be found at The Icelandic Ministry of 
Fisheries website:
    www.fisheries.is/ -- Go to ``Status of Marine Stocks'' from left 
side menu.
[GRAPHIC] [TIFF OMITTED] 55542.007

    .epsIn Iceland and in some other areas as well, Cod are holding 
their own; the exploitation rate of 40% in 2000 is now at 22%. Fishing 
mortality has declined by 40% yet productivity is considered impaired 
because the seven most recent year classes have been below average with 
poor recruitment and low weight at age, most likely due to lower 
capelin abundance.
    Most all other species for the 2009/10 fishing year have had the 
TAC significantly reduced, some drastically.
    An interesting side note illustrating a perspective on the fishing 
industry which is not hostile but supportive is a press release from 
Einar K. Guofinnsson, Icelandic Minister of Fisheries and Agriculture, 
on January 19, 2009, announcing an increase of 30,000 tons in the cod 
TAC, and by way of qualifying the increase wrote:
        ``This decision has been taken not least in view of the 
        economic difficulties facing the Icelandic nation, but also in 
        consideration of positive indications as to cod stock size 
        resulting from trawl service [surveys] of demersal species this 
        past autumn. Those assessments indicated that the overall cod 
        index was considerably higher than in preceding years.

    The cod TAC for the next fishing year is also expected to be at 
least 160,000 tonnes.

    Although rebuilding the cod reference and spawning stock biomass 
will be slower than planned, this decision is in line with declared 
objectives for sustainable fishing of cod and other commercial stocks 
in Icelandic waters.'' (Underline emphasis is mine)
    So the stock assessments look pretty good, and factoring in 
economic realities, they're going to slow down the rebuilding process, 
confident that the stocks are in the process of achieving 
sustainability. That is common sense governance that U.S. fisheries 
have been deprived of for decades. Also worthy of note: it is Fisheries 
and Agriculture; not Fisheries and International Commerce and Big 
Business, which is what the placement of the U.S. fisheries amounts to 
in the Department of Commerce.
    Cod seem to be on the rebound in all the fisheries reviewed; but 
they are alone; almost all TAC's for the Icelandic fisheries reviewed 
have been cut. It would seem that there are other factors governing the 
health of the stocks besides the allotment of Individual fishing 
quotas. If the ITQ's were solely responsible for any successes, than 
what about the rest of the fish under ITQ's, why haven't they 
rebounded? What is abundantly clear is that ITQ's promoted as a panacea 
for all that ails the fisheries is either a grossly ignorant 
oversimplification of a very complex set of circumstances which effect 
the health of the fish; or such statements have a predisposition 
because of some external agenda that has little or nothing to do with 
the actual health of the fish or the fishery.
    This is not to make the argument that ITQ's are causing the decline 
in the fish population, but simply put ITQ's are certainly not 
necessarily helping the stocks as they are purported to do.
New Zealand
    Fisheries statistical information was found at The New Zealand 
Ministry of Fisheries website: www.fish.govt.nz ``New Update for Status 
of Stocks'', September 2009
    The New Zealand fisheries have been under ITQ's or QMS's (Quota 
Management Systems as they are known in New Zealand), since 1986. The 
results are mixed concerning the sustainability and health of the fish. 
According to the Ministry of Fisheries' statistics out of the 117 major 
commercially harvested stocks evaluated that are in the QMS, 79 are 
near or above target levels while 38 are not. The report goes on to 
disclose that of the 117 the number of stocks depleted or overfished is 
18, not depleted, 77; while 8 stocks are collapsed and closed to 
fishing, orange roughy and scallops among them, and 19 stocks are 
overfished.
    The Orange Roughy Fisheries of New Zealand and Australia (a story 
by themselves) were on ITQ's since 1986 and 1989 respectively. By some 
accounts the stock is now at 10% of what it was estimated to be before 
a market developed for the fish, whether or not that figure is accurate 
is another question; but it's safe to say that the ITQ scheme did 
little to sustain the fishery. The brilliant ITQ strategists failed to 
take into account the fact that the fish for which they were advocating 
ITQ's have a lifespan of 120-150yrs and spawn at 30 years of age. As a 
species, they're just a bit sluggish on the rebound. Clearly there's 
more to management than marketing shares of the TAC; it also helps if 
something about the characteristics of the fish is known. Each fishery 
is unique, and some are more complex than others, such as the New 
England Multispecies Fishery where many regulated species inhabit the 
same area.
    They don't seem to greatly emphasize the ITQ system part of their 
management program; although it has been used for almost all their 
fisheries for the last 26 years. The New Zealand system is seen as much 
as an ``input controls'' system (i.e., restricting how, where, and when 
fishing is carried out, days at sea, and closed areas, etc) as it is an 
``output system'' (or limiting the amount of fish taken, TACs and 
ITQs). They use both; and do not make any claims of either being a 
panacea. In a comprehensive study titled, ``The historical development 
of fisheries in New Zealand with respect to sustainable development 
principles'', http://www.ejsd.org/ Archives, volume 1,issue 2, 
Sustaining the Seas, Dr. Mark T. Gibbs, the Stream Leader of Aquatic 
Resources Monitoring and Modeling at the Commonwealth Scientific and 
Industrial Research Organization, concludes that although he thinks 
that they are probably a good idea, after 26 years of ITQs in New 
Zealand he writes with a sense of honesty and reality in the 
conclusion, in fact, the very last paragraph of the paper on p31:
        ``It therefore appears that ITQ regimes as presently practiced 
        are neither a necessary nor a sufficient condition to ensure 
        sustainable development. However, at least in the case of New 
        Zealand, they have been a major milestone on the pathway that 
        ultimately hopes to achieve sustainable fisheries.''
    This, after 26 years of ITQ's, an honest appraisal can only offer 
the ITQ pathway as a ``hope'' to ultimately achieve sustainability.
U.S. Fisheries: Pacific Whiting, Alaskan Pollack, Crab, and Halibut
    The Pacific Whiting Fishery, in ITQ's since 1997, is essentially 
owned by four companies running ten vessels; their TAC for 2009 has 
been cut by 50% by the Pacific Fishery Management Council, alleging 
declining stocks.
    The North Pacific Pollack Fishery has been in ITQ's since 1999. A 
huge fishery in terms of landings, it accounts for 35% of all U.S. 
landings and is worth billions. The bottom line is that the fishery is 
in the hands of a powerful few and the TAC was reduced by 29% for 2009 
for alleged stock decline.
    Since 2005 the Bering Sea King and Opilio crab fishery has been in 
ITQ's, or ``Crab Ratz'' as the rationalization of the fishery is 
affectionately known to the fishermen involved. The TAC's for these 
fisheries have not increased in recent years.
    In Southeast Alaska the Red and Blue King Crab fishery did not open 
and the biomass is at its lowest level in sixteen years. Halibut 
fishermen in this area have seen their TAC decline by more than half in 
the last five years.
    It is not argued that ITQ's or catch shares are causing the decline 
in TAC for these species; or that a declining TAC is necessarily an 
accurate indication of declining fish populations. It is argued, 
however that there is no evidence in these assessments to indicate that 
Catch Shares or ITQ's have any demonstrable beneficial effect on the 
fish stocks. The Catch Shares or ITQ scheme is just that, an economic 
scheme to produce a new tradable commodity and a new path for economic 
expansion--wealth for a few investors with good timing (or 
connections).
    Any management program that uses Catch Shares or ITQ's still needs 
to use a Total Allowable Catch or TAC in order to manage the stock 
populations. The TAC's were cited above only to illustrate that the 
claim for ITQ's or Catch Shares as having a profound beneficial effect 
on the health of fish populations and therefore a benefit to the 
fishing community cannot be statistically supported; and the opposite 
seems true, most TAC's show a decline over the years. Fish populations 
have increased and declined over the years with apparent disregard for 
the management regime in place. What effects fishing mortality is TAC 
and trip and daily catch limits not who owns what percentage of the 
TAC.
    The report, ``Updated Status of New Zealand's fish stocks'', 
September 2009, begins with the statement:
        ``In New Zealand, setting and adjusting Total Allowable Catches 
        (TACs) and/or Total Allowable Commercial Catch (TACCs) to limit 
        annual catches is the primary mechanism for managing our 
        fisheries. This is generally thought to be the most effective 
        management method worldwide.''
    Do Catch Shares rebuild the stocks? NO. Additionally it is only 
common sense to understand that if the resource is owned by absentee 
investors (``sealords'') there will be far less good stewardship 
involved than with a publically owned resource, procured by local 
fishermen who are accountable to the local consuming community.
    Catch Shares are nothing but more faulty Milton Friedman free 
market economics. Consider what's already been privatized and 
corporatized and market capitalized: Schools, Prisons, Energy, War, 
farm food; and look at the corporate track record in those areas: 
Enron, Exxon Valdez, Halliburton, Blackwater, the U.S. has the largest 
prisoner population on the planet, Judges taking kick backs for 
populating juvenile prisons, e-coli and poison peanut butter, etc. 
After fish become tradable commodities, why would we think the 
fisheries resource would be handled with any more integrity and 
enlightenment by the corporate ``Funds'' investors that are licking 
their chops as we speak? (See Festa courts Milken, Gloucester Daily 
Times, June 30 '09)
    What will be the effect of being privatized, corporatized, 
commoditized, and derivitized on the ocean and its inhabitants (both 
finny and human)? Has free market, profit oriented, corporate 
stewardship improved the health of anything it has touched? Consider 
the current state of the world economy after the deregulated free 
market ``profit is all that matters, it will float all boats'' economic 
policies of the last decade were so vigorously and consistently applied 
to our financial institutions.
                             CONSOLIDATION
WHAT IS CONSOLIDATION?
Does Consolidation through Catch Shares Increase Profitability and 
        Safety for the Fishermen?
    Consolidation is fleet reduction; and is a known consequence of 
Catch Shares. In fact fleet reduction is a stated goal for the 
fisheries of the ENGO's and NOAA. Consolidation is their answer to 
their own sound bite, ``...too many boats, chasing too few fish''.
    Consolidation results from commoditizing a resource into individual 
quotas or Catch Shares because the allocation process is so flawed it 
can for instance, cut out single license holders from receiving a 
viable allocation. In addition the mechanics of the allocation such as 
the ``qualification period'' on which the percentage of the overall 
catch is based, might entail a period when the catch history of a 
license was in the hands of a previous owner who could have had a fleet 
of boats and fished each one at various times, but might not have 
accumulated a decent total catch history for any one of them. Accurate 
government agency record keeping in this process is crucial; NOAA/NMFS 
has admitted its allocation data is flawed.
    Of course if the overall TAC allotted by NOAA is not reasonable, 
then all but the largest allocation holders will go down the drain.
WHY CONSOLIDATION? WHAT IS THE RATIONALE?
    The claim: Fish populations worldwide are imperiled from 
overfishing. The remedy: Individual Transferrable Fishing Quotas or 
Catch Shares will stop overfishing by making the fisheries more 
efficient.
    Efficiency is a mainstay in the argument for consolidation through 
Catch Shares. Economists and the free market environmentalists talk 
about more efficient fisheries. What exactly do they mean by this? They 
mean cheaper production costs and more profit i.e., less people, less 
jobs, fewer boats, and more production,--usually fewer but larger 
factory vessels. In the case of aquaculture it entails the centralized 
raising and feeding or industrialized mass production of fish on fish 
farms.
    The World Bank's Global Program for Fisheries (PROFISH) has an 
ongoing study of the efficiency of the world's fisheries. It is called 
``The Rent Drain Project''. ``Rent'' is a term in economics which 
essentially means the profit or net economic benefit from a property or 
resource with the connotation of not being involved in the actual 
``hands on'' production process.
    The study also has the title of ``The Sunken Billions. The Economic 
Justification for Fisheries Reform'' in which the specific countries' 
fisheries are studied and advised as to their ``inefficiency'', usually 
citing excess fleet capacity as the culprit and recommending reductions 
of from 40% to 80% in the number of fishing vessels. This would 
increase consolidation, therefore efficiency, to the level where 
governments would not see their ``rent'' or profits from the resource 
being drained by small privately owned, community based ``inefficient'' 
fishing boats.
    In other words, by extracting rent from our local fisheries through 
consolidation, the allocations would pay dividends to individuals or 
funds that own, but don't enter into the hands on production.
    This is Wall Street investor mentality: exacting profit through 
buying and selling shares of production or catch without doing the work 
involved; without touching a fish. Catch Shares and this entire system 
have nothing to do with the health of the fish or the fishery. Wall 
Street is hungry for a new investment tool, a new derivative package.
    This system leads to overcapitalization in the fishery, not as 
money flows to the vessels and fishermen, but as it rattles around 
among the investors, and constantly increases the price of buying the 
right to catch a pound of fish, until eventually the undercapitalized 
fisherman is priced out of his own business.
    Catch Shares essentially render a fishing license worthless. They 
ultimately will allow outside or non-license holders to own and collect 
``rent'' from the fish poundage landed; and the license then becomes 
nothing more than the opportunity to do the back breaking work while 
someone else collects the rent or the profit.
    In the days-at-sea effort control system, fishermen can buy and 
sell each other's right to fish for groundfish species, but it all 
stays with the license holders. Catch Shares will open up the actual 
ownership of the pounds of fish to outside investors i.e., ``outside'' 
of the licensed fishermen.
    These Catch Share or ITQ concepts are based on academic theories of 
economics and business, written by the professors at universities such 
as University of Rhode Island, University of British Columbia, and 
University of Iceland. Many of these university departments are 
supported by grants from environmental organizations which are hostile 
to fishing, and doing the bidding of the funding parent corporations, 
which have various agendas all aimed at increasing their profit 
margins. Many of these economic theorists know little or nothing about 
sustaining the resource or the welfare of the fishing communities 
dependent on that resource.
    Some of these academics have the title of bio-economist, or 
resource economist, but it's clear from the sometimes devastating 
effects of these theories out in the world, that the theoreticians 
don't know much about the fish and even less about the fishing 
industry.
    In British Columbia fisheries leasing fees or the ``rent'' for 
catch shares (the privilege to catch the fish) can take up to 70 to 80 
percent of the value of the fish that come out of the fish hold.
    For a cogent statement of an Icelandic economist's ``interest'' in 
the fisheries, see Ragnar Arnason, Prof. Dept of Economics at the 
University of Iceland, ``Iceland's ITQ system creates new wealth'' 
http://www.ejsd.org/public/journal_article/9 .
SOME EXAMPLES OF CONSOLIDATION
    In New Zealand today Eight (8) Fishing companies own 80% of 
production and the value of the full fishery quota is $3.5bn. There are 
2200 individuals and companies that own quota, so if eight companies 
own 80% and even if each company holds several licenses, then at least 
2000 individuals and companies own the remaining 20%. That's some 
distribution of fish; and also makes one wonder about who will have the 
political clout and the price setting ability.
    In the North Pacific Pollack Fishery cooperatives were formed by 
large catcher processor vessels. They were exempted from the antitrust 
laws through the American Fisheries Act of 1998 (AFA). The offshore 
fish are caught by a handful of catcher-processor vessels (factory 
ships) and 3 motherships that handle product from 20 additional catcher 
vessels. The inshore fishery consists of 5 processing plants and 80 
catcher vessels delivering to the plants. It is not important to go 
into great detail regarding the many and complicated administrative 
difficulties and controversies of this type of arrangement, but just to 
name a few: the anti trust or monopolistic, and hence price setting 
nature of the factory ship cooperatives create inequalities between 
them and the independently owned inshore fishing vessels and processing 
plants; then comes government micro (mis)management, as usual, through 
regulations in the AFA, with inequities and market destroying 
consequences. The common pool fishermen's livelihoods are controlled 
through price manipulation by the large factory ship cooperatives and 
the relatively few processing plants. The bottom line is that the 
fishery is in the hands of a powerful few, with market destroying price 
setting powers.
    The Pacific Whiting Fishery, in ITQ's since 1997, is essentially 
run by four companies fishing ten vessels.
    The Bering Sea King and Opilio Crab fishery rationalization has 
shut down the fishing operations of 200 boats (there are 68 remaining) 
and has cost an estimated 1200 fishing jobs. Kodiak is said by the 
locals to be ``dying''.
    In Canada's halibut fishery it is estimated that since the 
installment of ITQ's, for every dollar that the boat earns 70 cents 
goes to the cost of leasing the quota for those fish caught. 
Essentially this triples the overhead cost to the vessel owner, the 
captain, and crew. Where is the increase in job quality, and 
profitably, and safety in that? The fleet was reduced by 50%.
    ITQ's do however have a profound effect on the fishing communities 
that have operated under such a regime. Vessel, captain and crew shares 
have decreased on average by 50%. When profit margins are decreased by 
that much, there is less incentive and funding for upkeep and 
maintaining vessel safety equipment.
    Our fishing regulation approach seems dominated by science, mostly 
economists and biologists; but there are people living amongst all 
these theories. Catch Shares or ITQ's do have an effect on the fishing 
community, on people, and the effect is negative. Catch Shares have 
nothing to do with the common good, or public purpose, security of the 
food supply, safety of those at sea, or the health of the resource.
Do Catch Shares increase profitability and safety for the fishermen? 
        NO.
                      COUNTERPOINT: THREE STUDIES
    Although there is a paucity of attention paid to the socio-impact 
of the Catch Share scheme, below are a few studies that provide some 
balance to the largely unsupported talking points of the proponents. 
The entire issue of Catch Shares or ITQ's should still be in the debate 
phase.
    Ecotrust Canada outlines eight potential trouble spots in a paper 
aimed at helping Obama's U.S. Task Force on Catch Shares avoid 
difficulties they've already experienced in their ITQ experiment,--our 
administrators don't seem to be listening.
    The British Columbia Fishery ITQ management regimen has been held 
up as a model of success by Catch Share proponents and has been in 
effect since the early 1990's. Here is a report by a Canadian 
Environmental NGO, Ecotrust Canada; they apparently have not been 
adulterated by corporate grants. They seem not to have lost their 
integrity as they report here on the realities that BC fishermen have 
faced over the years. Realities which run counter to the marketing 
pitch of Catch Share proponents' media campaigns. In the words of the 
report, ``A cautionary tale about ITQ fisheries'', http://
www.ecotrust.ca/fisheries/cautionarytale front page, 2nd paragraph:
        ``Debate about ITQ's is often polarized and fuelled more by 
        ideology than by reality. Proponents hail ITQ's as a solution 
        for both conservation and the financial ills plaguing the 
        fishing industry. However, too many people--including some 
        environmentalists--accept exaggerated claims about ITQ's 
        without clearly knowing the facts. Downplayed is the critical 
        role that sound science and good governance--that is, 
        inclusive, transparent, co-management between government, and 
        industry and stakeholders--plays in ensuring the sustainability 
        of fisheries.''
    The report discloses 8 lessons ``...learned from the practical 
experiences of designing, implementing and managing ITQ's in BC.''
    It is worth listing the 8 lessons here since they are in direct 
contrast to the latest talking points blog released by a principal 
proponent of the catch share scheme, the Environmental Defense Fund, 
www.edf.org titled ``NOAA's New National Catch Share Program: An 
investment that makes (dollars and) cents'' which contains the 
statement, ``Fishermen are increasingly embracing catch shares because 
they boost profitability, wages, and safety.''
    This shorter version of the 8 lessons can be found under 
``BACKROUNDER'' in the Ecotrust paper http://www.ecotrust.ca/fisheries/
study-cautions they are as follows:
    With refreshing facts and sobering analysis, Ecotrust Canada's 
Cautionary Tale describes eight lessons to be learned from BC's 
experience with ITQ fisheries since the 1990s.
      Lesson 1: ITQs promote quota leasing, not ownership. In 
1993, only 19 percent of the halibut quota was leased compared to 100 
percent in 2008. Lucrative leasing has caused quota purchase prices to 
soar, making ownership prohibitively expensive.
      Lesson 2: ITQs give fishermen a false sense of security. 
By allocating individual fishermen a defined share of the catch, ITQs 
can reduce a bit of uncertainty, but they by no means eliminate it and, 
in some cases, can exacerbate it. For example, quota lease fees 
negotiated pre-season can expose fishermen to increased financial risk 
if fish prices drop, fuel prices rise or foreign currency exchange 
rates change.
      Lesson 3: ITQs facilitate resource privatization. Fishing 
licenses and quotas are not property de jure, that is ``in law.'' 
Rather they are property de facto, that is ``in practice.'' ITQs create 
new forms of de facto property that can be divided, capitalized and 
transferred with even greater ease.
      Lesson 4: ITQs increase capitalization in fisheries. 
While ITQ systems can rationalize fleets, reducing capitalization in 
vessels and equipment, they can also lead to speculative buying and 
leasing which increases the capitalization in quotas themselves. Today, 
fishing quotas and licenses, or intangible assets, are worth $1.8 
billion or five times the value of all the vessels and equipment in 
BC's commercial fisheries. That means total capitalization in tangible 
and intangible assets has actually increased.
      Lesson 5: Quota leasing hurts the financial performance 
of working fishermen. Quota lease fees are as high as 75 percent of 
catch landed value in many BC fisheries, draining revenues from working 
fishermen. In BC's trawl fishery, as the amount of quota leased rises 
to 100 percent on a vessel crew shares decline by about 50 percent.
      Lesson 6: ITQs don't enhance science and monitoring. 
While ITQs fisheries usually require stricter monitoring because of 
high-grading problems, there is nothing about the nature of ITQ 
fisheries that inherently improves monitoring or scientific data 
collection.
      Lesson 7: ITQs have safety problems of their own. The 
high cost of buying and leasing ITQs bleeds income away from working 
fishermen, causing boats to go out with inexperienced or insufficient 
crewmen, which can lead to accidents. Anecdotal reports and safety 
statistics suggest that the groundfish trawl fishery has become less 
safe since ITQs were introduced in 1997.
      Lesson 8: Sound science and co-management underpin 
fisheries sustainability. ITQs don't guarantee sound science and good 
governance. They represent only one alternative, among many input and 
output controls, to responsibly manage fisheries
    The question is: have these eight points been adequately considered 
and addressed for the impending Catch Share system here in New England; 
no less, allotted the time and energy required in order to create their 
preventative remedies for our fishery, ``and will they ever be 
seriously dealt with?
    Dr. Julia Olson (July 1, 2009), ``Social Impact Assessment 
Literature Review: Leasing and Permit Stacking'', New England Fisheries 
Science Center, Woods Hole, MA writes,
        ``the primary social impacts that have been documented in 
        empirical cases involving consolidation (explained in greater 
        detail below) range from employment loss, decreased income, 
        decreased quality of life, changing relations of production, 
        structural disadvantages to smaller vessels and firms, 
        dependency and debt patronage, concentration of capital and 
        market power, inequitable gains, regulatory stickiness reduced 
        stewardship, decreased community stability, loss of cultural 
        values, and so on.'' (Underlines and parentheses are Olson's)
    Dr. Olson concludes that same introductory paragraph with,
        ``Thus the question of capacity reduction is ultimately not 
        simply an issue of economic efficiency, but a question of what 
        values to promote and what the future of the fishery and its 
        fishing communities should look like.''
    This broader perspective from Julia Olson's paper, (i.e., what 
about the people?) is found again in a paper that contains a great deal 
of common sense and knowledge of fishing communities by Seth Macinko 
and William Whitmore, Dept of Marine Affairs, Uni. of Rhode Island, 
Revised June 2009, A New England Dilemma: Thinking Sectors Through, 
Final Report to Massachusetts Division of Marine Fisheries.
    Sectors are the cooperatives that fishermen are required to join 
thus pooling their individual Catch Shares. Sectors are supposed to be 
self-governing and self-policing. This is an aspect that many feel to 
be so administratively costly and unwieldy, that it's a setup for 
failure.
    Macinko and Whitmore's relevant bullet points in the ``Executive 
Summary'' are as follows:

        ``The current push for sectors obscures the fundamental policy 
        decision at stake: whether to pursue catch shares via a model 
        that emphasizes ``privatization'' of public resources or a 
        model consistent with public ownership of fishery resources. 
        The privatization model carries with it known inequities while 
        the public ownership model could offer equity for all interests 
        involved. Sectors can occur via either route but there has been 
        no public recognition or discussion of this choice.''

        ``The current approach to sectors appears to be driven by an 
        extreme faith in privatization, deregulation, and devolution of 
        authority. Mere faith that private ownership promotes 
        stewardship will not contribute towards solving the monitoring 
        and enforcement challenges on which conservation truly depends, 
        and could spell disaster for sectors.''

        ``While arguments can be made either way, on balance the 
        available evidence suggests that sectors are likely to 
        accelerate the consolidation that is already happening in the 
        groundfish fleet. In addition to affecting sheer vessel 
        numbers, consolidation will likely have a geographic component, 
        shrinking the number of ports actively involved in the 
        fishery.''

        ``In view of the Council's [New England Fisheries Management 
        Council] expressed concern for adverse impacts on communities, 
        as well as the statutory mandate to reduce such impacts 
        (National Standard 8) [of the Magnuson Stevens Act], the 
        relationship between sectors and community benefits warrants 
        closer attention. Community benefits cannot be just assumed to 
        happen via a trickle-down process.''

    It is clear from these three studies alone that the headlong rush 
into Catch Shares, ITQ's, IFQ's or whatever they are called is a 
disastrous vector for the fishing industry, the fishing communities, 
and the fish. They need to be in a moratorium until these issues are 
addressed at length.
                             TIPPING POINT
    Even during the best of times, because of unpredictable market 
forces, the illusive prey, and extremely high operating costs, fishing 
businesses do not have a very fat reserve account backing them up. They 
don't have a great cash flow margin of error. Their financial ``burn 
time'' is not impressive. Any irritant to these shallow financial 
margins, if sustained for any length of time, can be disabling and 
before too long will cause the business to shut down. This is true not 
only for the vessels that go to sea; but just as importantly, it is 
also true for the many shoreside support businesses that make a fishing 
operation possible. These dockside businesses have a point of ``no 
returns''. Currently, the majority of the boats and shoreside 
businesses are on the edge of going under financially due to the 
``Perfect Storm'' of the slow choking of landings revenues through 
overzealous regulation, and the even higher than normal overhead costs 
due to escalation in fuel price and insurance premiums, and low fish 
prices because of the poor economy and cheap imports.
    Fishing vessel operations have a mutually dependent relationship 
with their dockside support business counterparts; they need each other 
in order to exist. Vessels depend on ice suppliers; look to wholesalers 
to pack and sell their catch; and call on net makers, electricians, 
welders, and mechanics for immediate repairs which will enable them to 
return to sea without too much costly down time. Without these support 
services, the thin financial margins of vessel operations threaten the 
continued solvency of even the best boats. Similarly the support 
businesses are not publically owned corporations with unlimited 
resources. If the boats are not frequent enough or don't pay their 
bills, these shore side businesses, the foundation of the system, will 
be jeopardized and if they fold, the entire local fishing industry will 
collapse.
    There is a solvency tipping point where the number of vessels 
coming in for repairs, ice, fuel, groceries, net refurbishing, or with 
fish to pack out, i.e., the overall volume of transactions, is simply 
not yielding enough cash flow for these businesses to keep the doors 
open. It is the point where overhead overwhelms income and the business 
operates in the red, and will soon close.
    It is one thing for academic economists to theorize about the 
economic ``efficiency'' resulting from fleet consolidation; but the 
reality off-campus is that the 50% percent reduction of an already 
reduced and starved fleet will not be enough to keep the support 
businesses open; they will disappear. Then without the necessary 
dockside support, the fishing vessels will soon follow and easily slip 
down the same sinkhole as the dockside facilities. We will then see a 
complete 100% consolidation of the small boat fleet. In its place will 
be vertically integrated companies of self sufficient factory trawler-
processors, contracted directly to Wal-Mart and McDonald's, providing a 
cheap, uniform, and low quality product. See the Northwest Pacific 
Whiting Fishery for an example of the effects of ITQ consolidation.
    Consolidation or fleet reduction is a known consequence of the 
Catch Share management scheme. But when business ``tipping points'' are 
factored in, a ``domino effect'' comes into play. Further fleet 
reduction becomes a very real and immediate threat to the continued 
existence of the major fishing ports in New England, and throughout the 
entire industry, jeopardizing entire communities and thousands of 
livelihoods.
    Unrealistic fishing regulations and vessel consolidation have 
brought this industry, both at sea and at dockside, right up to the 
``tipping point''. Any further loss in the volume of working vessels 
due to consolidation from a Catch Share management regime will render 
the majority of the support businesses and consequently the entire 
fleet no longer viable. It will be the end of the independent family 
owned small fishing operation and the end of a dependable and safe 
national food supply.
JOBS:
Do Catch Shares Create High Paying Quality Jobs?
    In Alaska fishing provides more direct jobs than the oil, gas, 
mining, agriculture, forestry, and tourism, industries combined. Some 
54,000 at its height
    If Alaska employs 54,000 people in its fisheries, add in fishermen 
from the Southeastern States, the Gulf of Mexico, the Mid Atlantic 
States, and the New England Fisheries, plus the commercial aspect of 
the recreational fisheries then multiply that by 6.6 which is the 
University of Maine's multiplier for dependent land jobs for each 
fisherman at sea, and the number of fishing jobs is huge. There is a 
great deal at stake here for the economy in general and job loss is a 
direct result of Catch Shares and consolidation.
    According to a paper by Dr. Julia Olson (July 1, 2009), ``Social 
Impact Assessment Literature Review: Leasing and Permit Stacking'', New 
England Fisheries Science Center, Woods Hole, MA
        ``Employment in the Mid-Atlantic surf clam fishery dropped by 
        nearly 80% between 1990 and 1999 (from 155 to 34 employed crew 
        members) as the industry consolidated in the wake of ITQ's...''
    It is estimated that approximately 1200 jobs have been lost in the 
Bering Sea Crab fishery.
    Crew quality decreases with decreased crew pay and safety is 
compromised in extremely dangerous fisheries.
    Fishermen often turn to underpaid assembly line work on factory 
processor trawlers, or turn into sharecroppers even if they are able to 
hold on to their own boats, paying out up to 70% of their landings 
proceeds to the holder of the fish allocation. Crew income declines 
because of leasing overhead expense; and many fishermen are forced to 
leave their native coastal communities because of lack of employment 
opportunity.
    Catch Shares kill jobs.
                               CONCLUSION
CATCH SHARES: NOT A GOOD IDEA!
    Catch Shares do not help the fish.
    Catch Shares do not help the fishermen and the fishing communities.
    Catch shares were not put to the referendum vote as statutorily 
mandated by the MSA.
    Catch Share Sectors were not ``voluntarily'' joined by the majority 
of the fishermen. The common pool was not a viable option.
    The NOAA/NMFS allocation data is admittedly flawed and inaccurate.
    Catch Shares have been ``ramrodded'' without due deliberation or 
adequate planning.
    Finally catch Shares or ITQ's are just a tool like any of the 
others that have been tried; only if this one goes wrong, the fishery 
is gone forever. Fleet consolidation through ITQ's and the consequent 
collapse of shore side support facilities, possible factory ship 
cartels, (legal under the American Fisheries Act 1998), and the 
transfer of ``fishing rights'' into the wrong hands, are most likely 
irreversible consequences of this plan, and may be the end of the 
independent fisherman and their communities.
        ``Fisheries that begin with limitations on transferability can 
        quickly lobby to remove them given market pressures as in 
        Canada, Iceland, and Tasmania'' (Olson)
    Catch Shares don't boost small fishing business profitability, 
increase safety, help the fish stocks, or the communities. They destroy 
the independent small boat fishing operation in several ways, but 
essentially by putting the price of shares of a public resource beyond 
the financial reach of the small boat fisherman. Due to extracting 
``rent'' and open market trading, the costs associated with leasing or 
buying quota become prohibitive, especially for a financially strapped 
industry. The small independent fisherman is left out.
    European Union Fisheries Commissioner Joe Borg suggested scrapping 
their Catch Share Quota system for effort controls (Days-at-sea, etc.) 
after 25 years of experimenting with them.
A BETTER IDEA:
        ``...the critical role that sound science and good governance--
        that is, inclusive, transparent co-management between 
        government, and industry and stakeholders--plays in ensuring 
        the sustainability of fisheries.'' Ecotrust Canada (intro. to 
        ``A Cautionary Tale'')
    The fisheries can be successfully managed. With integrity, common 
sense, and clarity of purpose it can be done. Everyone involved knows 
that successful effective management is absolutely necessary for 
survival. The problems managing the complicated North East Multi-
Species Fishery have more to do with the huge and detached autonomous 
bureaucracy we've built and its unwieldiness, confusion, and 
ineptitude, than with uncooperative fish or rogue fishermen.
    Fishing cannot be managed from sound-bites or marketing slogans 
created by environmental organizations with a prejudice and an agenda. 
Good scientific observation, stock assessments and governance does not 
result if there is a predisposition or a given blind allegiance to the 
postulate that ``the fish are endangered due to illegal and immoral 
overfishing''.
    Fishing can also not be managed from an academic economist's or 
biologist's point of view only. Fishing is a multi-faceted issue and 
requires a multi-discipline approach, including sociologists, social-
psychologists, social-anthropologists, and social-historians, and 
especially must include the fishermen whose lives will be directly and 
sometimes drastically affected by the outcome of the regulation 
decisions. The words men and women, the humans, have to be put back and 
coupled with the term ``fishers'' (so favored by the detached anti-
fishing theorists).
    These issues and problems are not insurmountable; but there needs 
to be honest communication about the purpose and long term goals for 
the fisheries. There can't be hidden corporate agendas or personal 
ambition driven politics if the management endeavor is going to succeed 
at preserving the resource and the fishing dependent communities.
WHAT CAN BE DONE RIGHT NOW?
    Stay for now with the present system of effort controls. The days-
at-sea, governed by cooperative research, is actually working and the 
infrastructure is already established. THE FISH ARE BACK!
    Return to Framework 42 days-at-sea. Devote funding to cooperative 
transparent research and analysis in order to review and revise the 
assessments and current TAC's and closures of Winter Flounder, 
Yellowtail Flounder, Pollack and Fluke allocations, Sea Bass, Red 
Snapper, dogfish, etc.
    Employ scientists and analysts who know fish and who know the 
fishing industry and pair them with accomplished fishermen and their 
vessels. Employ accomplished fishermen who know how to set a net and 
who know whether it's tending bottom or not. For a start hire people 
like, Dr. Brian Rothschild, Kevin Stokesbury, Ph.D., Nils Stolpe, 
Ph.D., and Capt. Jim Rhule on the F/V Darana R., for an intelligent and 
accurate appraisal of the health of the stocks.
    Devote some funding to developing a management model based on a 
hierarchical concept of ecosystems, using a point system to direct 
catch effort away from vulnerable stocks as outlined in Apollonio and 
Dykstra, ``An Enormous, Immensely Complicated Intervention'': 
Groundfish, The New England fishery Management Council, And The World 
Fisheries Crisis.
    Allocate funding to develop even more selective gear innovations as 
a way to deal with the problems associated with the complex New England 
multi-species ground fishery (i.e., regulating to the weakest species 
etc.). Include fishermen and professional net designers in every phase 
of the process. Phil Rhule and Jon Knight accomplished building such 
gear which won awards, the ``Rhule Trawl'' has been sanctioned by NMFS. 
Jon Knight can be commissioned to continue with more such research and 
development.
    A fleet of many privately owned small boats have conservation 
systems and limits built in. They are restricted by weather and 
funding, market prices, fuel and mechanical repair costs; so they 
naturally spend down (non-fishing) time. Due to narrow financial 
margins and weather safety issues, they can only fish for the stocks 
that are plentiful and within reach of their ports. It is not 
financially viable for them to fish on depleted stocks. This coupled 
with intelligent management will secure the health of the resource and 
the fishery.
    A Fleet of many small ``inefficient'' boats will sustain the fish, 
preserve jobs, provide a vital healthy source of fresh food daily, and 
keep the traditional coastal fishing communities thriving.
                                 ______
                                 
    [An email submitted for the record by Brian Lewis, 
Clearwater, Florida, follows:]

                  Catch shares and oversight hearings

From: Brian Lewis ([email protected])

Sent: Mon 5/03/10 7:54 AM

To: Katherine Romans ([email protected]); Bill Young 
([email protected]); Troy Fuss ([email protected])

May 1st, 2010

Dear all,

    My name is Brian Lewis I own the fishing vessel Sandy-Em 2, which 
my son in law operates here in Clearwater fl.
    We have been supplying fresh grouper caught in the Gulf of Mexico 
for the last 5 years. Our grouper are caught one at a time on rod and 
reel which gives the fish a better chance of survival if it is an 
undersized fish or of a species that we can't keep. Our gear type is 
non destructive compared to other types of gear efforts and yet we are 
the ones being forced out, something is drastically wrong here.
    The way our economy is how can you allow small scale fishermen to 
be forced out of business, some of these guys have been doing this all 
of their lives and despite this we are depriving them of making a 
honest and decent living.
    On January 1st a catch share program known as amendment 29 to the 
fishery management plan became effective for the grouper- tile fish 
fishery here in the Gulf of Mexico.
    We did not get any catch shares because we were not fishing during 
the qualifying years [1999-2004] for a catch history
    A sham referendum for the grouper ifq was held but only 30 percent 
of the 1100 permit holders were allowed to vote on it based upon their 
catch history during these qualifying years.
    Due to these criteria I and many others was not allowed to vote on 
the referendum as well as not awarded any catch shares of grouper or 
tile fish.
    The way that the program works has cost us an additional 1500.00 
per trip than with our previous program.
    The people who possess the shares can now sit on the couch and not 
work while the guy like us has to do all the work and go broke in the 
process.
    A catch share program was not necessary, We had a 6000 lb trip 
limit for grouper that was working just fine there was no derby fishing 
occurring since 5 yrs ago . Since the trip limit had been 6000 LBs per 
trip the season remained open all year. This was fair and equitable to 
all fishermen but with catch share program it is not.
    The frame work used in developing catch shares is not the same for 
all fisheries and does not work in a multi species fishery, for example 
we throw back on the average 300 to 500 pounds of red snapper per trip 
directly because of the catch share program in which we can't keep 
because there is no catch shares available so how can we keep letting 
this happen. I seriously doubt that they all survive despite our best 
efforts and the gulf council wants catch shares for all reef fish.
    The only reason it was approved is because over 700 permit holders 
were not allowed to vote in which it allowed only the people that the 
program favored no wonder it passed. Imagine if we could eliminate 70 
percent of voters in November it would be real easy for whoever you 
wanted to win.
    The voting process was definitely not fair and equitable amongst 
all fishermen, in fact food and water watch conducted a survey and 90 
percent of the respondents would have voted no on the referendum for 
the Ifq program for amendment 29 had they been allowed to vote on it.
    I represent many other fishermen who are in similar situations 
including fishing families, communities, vessel builders and owners who 
are feeling the negative effects of this catch share program.
    THE CATCH SHARE PROGRAMS that are being implemented around the 
United States are not being used to conserve the fisheries it is being 
used to put the small business people out of business and with this it 
consolidates the shares so that only a select few own the shares.
    FACT: CATCH SHARE PROGRAMS ALLOW PRIVATE INVESTORS TO BUY UP THE 
QUOTA SO THAT IT CANT BE FISHED FOR, I ASK HOW CAN WE BE GOOD STEWARDS 
TO OUR FISHERY IF OTHER THAN FISHERMEN POSSESS THE SHARES, QUITE 
FRANKLY WE CANT.
    FACT: CATCH SHARE PROGRAMS ALLOW CONSOLIDATION AND PRIVITIZATION OF 
THE PUBLICS RESOURCE AND STRANGLES NEW ENTRY.
    FACT: CATCH SHARE PROGRAMS DO NOT FOLLOW THE MAGNUSSON STEVENS 
CONSERVATION ACTS INTENT ACCORDING TO NATIONAL STANDARDS [2], (4), [8]
    Conservation and management measures shall not discriminate between 
residents of different States. If it becomes necessary to allocate or 
assign fishing privileges among various United States fishermen, such 
allocation shall be (A) fair and equitable to all such fishermen; (B) 
reasonably calculated to promote conservation; and (C) carried out in 
such manner that no particular individual, corporation, or other entity 
acquires an excessive share of such privileges.
    As you can see these catch share programs are in direct violation 
of Magnuson Stevens Act, National Standard number 4 intent was not 
followed because the shares were not fairly distributed and there are 
individuals who have more shares than they need who aren't even fishing 
they are sitting back and leasing the shares and or selling at 
exorbitant prices that does not allow new entry or even keep most small 
businesses afloat, we take all the risk.
    We feel that the persons holding the shares should either be out 
using them to fish or lose them so that others who need them will be 
able to survive.
    If catch shares are here to stay then we need financial assistance 
to stay in business like a low interest loan for each fishery to help 
with the transition of these plans, right now there isn't any for 
fisheries that are undergoing overfishing or are overfished. Amendment 
29 needs to have congressional over sight based on the following 
national standards of the magnuson Stevens act page 58. s16 U.S.C. 1851 
MSA Sec. 301 58
TITLE III--NATIONAL FISHERY MANAGEMENT PROGRAM
SEC. 301. NATIONAL STANDARDS FOR FISHERY 16 U.S.C. 1851 CONSERVATION 
        AND MANAGEMENT
     (a) IN GENERAL.--Any fishery management plan prepared, and any 
regulation promulgated to implement any such plan, pursuant to this 
title shall be consistent with the Following national standards for 
fishery conservation and management: 98-623
     (1) Conservation and management measures shall prevent overfishing 
while achieving, on a continuing basis, the optimum yield from each 
fishery for the United States fishing Industry.
     (2) Conservation and management measures shall be based upon the 
best scientific information available.
     (3) To the extent practicable, an individual stock of fish shall 
be managed as a unit throughout its range, and interrelated stocks of 
fish shall be managed as a unit or in close coordination.
     (4) Conservation and management measures shall not discriminate 
between residents of different States. If it becomes necessary to 
allocate or assign fishing privileges among various United States 
fishermen, such allocation shall be (A) fair and equitable to all such 
fishermen; (B) reasonably calculated to promote conservation; and (C) 
carried out in such manner that no particular individual, corporation, 
or other entity acquires an excessive share of such privileges. 104-297
     (5) Conservation and management measures shall, where practicable, 
consider efficiency in the utilization of fishery resources; except 
that no such measure shall have economic allocation as its sole 
purpose.
     (6) Conservation and management measures shall take into account 
and allow for variations among, and contingencies in, fisheries, 
fishery resources, and catches.
     (7) Conservation and management measures shall, where practicable, 
minimize costs and avoid unnecessary duplication. 104-297, 109-479
     (8) Conservation and management measures shall, consistent with 
the conservation requirements of this Act (including the prevention of 
overfishing and rebuilding of overfished stocks), take into account the 
importance of fishery resources to fishing communities by utilizing 
economic and social data that meet the requirements of paragraph (2), 
in order to (A) provide for the sustained participation of such 
communities, and (B) to the extent practicable, minimize adverse 
economic impacts on such communities.
    In closing I want to be involved with the oversight committee on 
catch shares, I would like to be able to be allowed to borrow money to 
stay afloat .
    We need a low interest loan, asap so that we can buy some shares 
to[ 1] be profitable and [2] Be good stewards in our fishery or some 
kind of buyback program for the fallout on these catch share programs .
    NOAA, National Marine Fisheries service and the Gulf Council won't 
listen to us because I'm the little guy; we need someone to hear our 
cries for help.
    I want some of these violations of the Magnusson Stevens acts 
National Standards be reviewed as well as the voting process that was 
held.
    I need an invite to any of the oversight hearings that occurring in 
our country.
    What I would do differently if I was going to set up an individual 
quota program again is I would set up a loan program for displaced 
skippers, crew, and new entrants. I would be more inclusive in the 
initial allocation and I would study other quota systems prior to 
implementing one.
    Thank you for your consideration

Sincerely

Brian Lewis
102 south nimbus ave
Clw, fl 33765727-423-6950 or email me at [email protected] or 
[email protected]
                                 ______
                                 
    [A letter submitted for the record by Hon. Henry Mack, 
Mayor, City of King Cove, Alaska, follows:]

CITY OF KING COVE
P.O. BOX 37
KING COVE, AK 99612
(907) 497-2340 PHONE
(907) 497-2504 FAX

RE: Fisheries Catch Shares--letter to Congress

To: 111th U.S. House Committee on Natural Resources
Subcommittee on Insular Affairs, Oceans and Wildlife
187 Ford House Office Building (Oceans and Wildlife)
Tel: (202) 226-0200 Fax: (202) 225-1542

Honorable Chairwoman Madeleine Z. Bordallo and Subcommittee members;

    We would like to comment on the catch share proposals now before 
your committee.
    Based on the experience of the King Cove community, we believe the 
implementation of a Catch Shares system, which privatizes publicly 
owned fisheries resources, is destructive to local fishermen and 
coastal communities. We also believe the record shows that implementing 
Catch Shares does not necessarily protect fisheries resources, and that 
there are other existing management tools to accomplish this which are 
less destructive to communities and fishermen.
    King Cove has experienced two Catch Shares programs over the past 
twenty years. Halibut and sablefish (black cod) catch shares were 
implemented in the 1990s under a program called ``Individual Fishing 
Quotas.'' The IFQ program eliminated 13,000 jobs in Alaska, jobs which 
have never come back. The original plan mandated that the owner be on 
board the vessel and that quota share could not be leased. This plan 
was not adopted, with the result that the majority of the initial quota 
share recipients have leveraged more quota share using their initial 
free quota as collateral.
    The second catch share program which has affected King Cove is the 
Bering Sea Crab Rationalization program, which was instituted in 2005. 
Before crab rationalization ten King Cove vessels fished crab in the 
Bering Sea, primarily with King Cove skippers and deckhands. Crab 
rationalization winnowed this fleet down to zero King Cove vessels 
fishing crab in the Bering Sea. With an average of five and half 
crewmen per vessel those ten boats represent 50 crewmen jobs removed 
from the community.
    Also, access to the fisheries, the right to fish on a crab vessel, 
is now leased to crewmen by the crab owners at rates between 50% and 
80% of the ex-vessel value of the crab. This is money which is taken 
off the amount from which crewmen are paid their percentages of the 
catch. This money, skimmed off the top, is estimated to be between $8 
and $10 million over the past five years. The loss of that money, which 
used to be spent in King Cove and other coastal communities but is now 
removed from the communities by absentee owners, has had serious and 
harmful economic and social consequences for coastal Alaskan 
communities.
    These negative effects have occurred despite the assurances by 
former Chairman Dave Benton of the NPFMC that the concerns and 
interests of coastal communities would be addressed before catch shares 
programs would be implemented. In a letter to Congress August 5,2002, 
Chairman Benton stated:
    ``Rationalization will improve economic conditions substantially, 
for all sectors of the industry. Community concerns and the need to 
provide for economic protections for hired crew will be addressed"
    In June of 2006, one year after the implementation of catch shares 
in the Bering Sea crab fisheries, the North Pacific Fisheries 
Management Council, the body which administers fisheries regulations in 
Federal waters of Alaska, came to King Cove to listen to the views of 
the public on the issue. The overwhelming majority who testified spoke 
against fisheries privatization, Many spoke of the loss of income and 
jobs. Others testified that crewmen's rights had been ignored in the 
process of awarding ownership of the public crab resource to only one 
small segment of the industry--the vessel owners. And some testified 
that by awarding processor shares and mandating that vessels deliver 
crab to specific processors, the crab rationalization program had 
caused ex-vessel prices to fall.
    With this negative experience of the privatization of fisheries in 
Alaska, the King Cove City Council and Aleutians East Borough view with 
alarm the imminent implementation of catch shares in the New England 
fisheries on May 1,2010. We share the concerns of the Governor of 
Massachusetts, the Massachusetts Congressional delegation, and the 
mayors of mayors of Gloucester and New Bedford about the effects on 
coastal communities of fisheries privatization.
    We urge Congress and NOAA to carefully assess the affect of catch 
shares on coastal communities and on the men and women who fish from 
those communities before moving forward with new privatization 
programs. We also urge Congress and NOAA to examine the role of private 
investors and speculators in the fisheries privatization process. Tn 
order to provide time for these assessments to be made of the effects 
of catch shares on communities and fishermen, we ask that Congress and 
NOAA establish a 2-3 year nationwide moratorium on the implementation 
of catch shares programs.
    We ask Congress to amend the Crab Rationalization program so that 
the economic benefits are 'fairly and equitably' distributed--in line 
with economic sharing in accordance with their historical 
participation--to all segments of the fishery, especially crewmen and 
new vessel entrants.

Sincerely,

Mayor Henry Mack
                                 ______
                                 
    [A letter submitted for the record by The Honorable Stanley 
Mack, Mayor, Aleutians East Borough, follows:]

April 22, 2010

RE: Fisheries Catch Shares--letter to Congress
111th U.S. House Committee on Natural Resources
Subcommittee on Insular Affairs, Oceans and Wildlife
187 Ford House Office Building (Oceans and Wildlife)
Tel: (202) 226-0200 Fax: (202) 225-1542

Honorable Chairwoman Madeleine Z. Bordallo and Subcommittee members:

    We would like to comment on the catch share proposals now before 
your committee.
    Based on the experience of Aleutians East Borough, we believe the 
implementation of a Catch Shares system, which privatizes publicly 
owned fisheries resources, is destructive to local fishermen and 
coastal communities. We also believe the record shows that implementing 
Catch Shares does not necessarily protect fisheries resources, and that 
there are other existing management tools to accomplish this which are 
less destructive to communities and fishermen.
    The Aleutians East Borough has experienced two Catch Shares 
programs over the past twenty years. Halibut and sablefish (black cod) 
catch shares were implemented in the 1990s under a program called 
``Individual Fishing Quotas.'' The IFQ program eliminated 13,000 jobs 
in Alaska, jobs which have never come back. The original plan mandated 
that the owner be on board the vessel and that quota share could not be 
leased. This plan was not adopted, with the result that the majority of 
the initial quota share recipients have leveraged more quota share 
using their initial free quota as collateral.
    The second catch share program which has affected the Aleutians 
East Borough communities is the Bering Sea Crab Rationalization 
program, which was instituted in 2005. Before crab rationalization 
there were local vessels that fished crab in the Bering Sea primarily 
with local skippers and deckhands. Crab rationalization has diminished 
this local fleet and has dramatically declined the number of crab 
fishing jobs in our communities. Rationalization has cut into sales of 
some local businesses that sell to crab boats and crab fishermen such 
as pot storage, welding, marine supplies, taxis, and provisions. Also, 
harbor moorage fees collected by some Aleutians East Borough 
communities have declined. Residents have also indicated that the most 
important effects might be associated with a restriction on their 
option to participate in the crab fisheries.
    Also, access to the fisheries, the right to fish on a crab vessel, 
is now leased to crewmen by the crab owners at rates between 50% and 
80% of the ex-vessel value of the crab. This is money which is taken 
off the amount from which crewmen are paid their percentages of the 
catch. This money, skimmed off the top, is estimated to be between $8 
and $10 million over the past five years. The loss of that money, which 
used to be spent in Aleutians East Borough coastal communities but is 
now removed from the communities by absentee owners, has had serious 
and harmful economic and social consequences for coastal Alaskan 
communities.
    These negative effects have occurred despite the assurances by 
former Chairman Dave Benton of the NPFMC that the concerns and 
interests of coastal communities would be addressed before catch shares 
programs would be implemented. In a letter to Congress August 5, 2002, 
Chairman Benton stated:
        ``Rationalization will improve economic conditions 
        substantially, for all sectors of the industry. Community 
        concerns and the need to provide for economic protections for 
        hired crew will be addressed.''
    In June of 2006, one year after the implementation of catch shares 
in the Bering Sea crab fisheries, the North Pacific Fisheries 
Management Council went to King Cove, the Aleutians East Borough 
community most impacted by the decision, to listen to the views of the 
public on the issue. The overwhelming majority who testified spoke 
against fisheries privatization. Many spoke of the loss of income and 
jobs. Others testified that crewmen's rights had been ignored in the 
process of awarding ownership of the public crab resource to only one 
small segment of the industry--the vessel owners. Some testified that 
by awarding processor shares and mandating that vessels deliver crab to 
specific processors, the crab rationalization program had caused ex-
vessel prices to fall.
    Because of this negative experience of the privatization of 
fisheries in Alaska, the Aleutians East Borough view with alarm the 
imminent implementation of catch shares in the New England fisheries on 
May 1, 2010. We share the concerns of the Governor of Massachusetts, 
the Massachusetts Congressional delegation, and the mayors of 
Gloucester and New Bedford about the effects on coastal communities of 
fisheries privatization.
    We urge Congress and NOAA to carefully assess the affect of catch 
shares on coastal communities and on the men and women who fish from 
those communities before moving forward with new privatization 
programs. We also urge Congress and NOAA to examine the role of private 
investors and speculators in the fisheries privatization process. In 
order to provide time for these assessments to be made of the effects 
of catch shares on communities and fishermen, we ask that Congress and 
NOAA establish a 2-3 year nationwide moratorium on the implementation 
of catch shares programs.
    We ask Congress to amend the Crab Rationalization program so that 
the economic benefits are ``fairly and equitably'' distributed--in line 
with economic sharing in accordance with their historical 
participation--to all segments of the fishery, especially crewmen and 
new vessel entrants.

Sincerely,

Stanley Mack
Mayor
Aleutians East Borough
                                 ______
                                 
    [A letter submitted for the record by A. Pierre Marchand, 
President, Jessie's Ilwaco Fish Co., Inc., follows:]

April 20, 2010

Rep. Madeleine Bordallo
U S House of Representatives
Washington, D C 20515

Dear Representative Bordallo,

    These are my comments on the catch-share program. First, I am 
unalterably opposed to the program. There are several reasons:
    1. As proposed, the programs will freeze the younger generation out 
of the fish business as it makes it too expensive to get in. Because 
they will not be entering the fishery, eventually the fishery will 
cease to exist.
    2. This is a fundamental change in the way the U S does business. 
No longer will a person be able to enter into a business, work hard, 
save his money and get ahead. It will grant the ownership of a public 
resource to individuals with exclusive rights to that resource.
    3. The system, as proposed, will not work. The cost of management 
will become too high. It could make some fisheries uneconomical to do 
and not even the government will be able to pay their share of the 
management costs of these types of programs.
    4. It will not do what you say it's designed to do. We will see 
rapid consolidation of the fleet and of the processing sectors. There 
will be no new investments in boats or plants. Small companies like 
mine will probably be driven out of business as well as the small towns 
and ports that depend upon our businesses for support. Coastal 
infrastructure (docks, ice plants, unloading facilities, marine stores) 
will all begin to rapidly disappear.
    5. This idea was tried on ground fish in Western Canada and is not 
working. Boats have disappeared, plants have disappeared, jobs have 
disappeared and the industry is in the state of losing its viability.
    6. This whole process is taking money away from basic fisheries 
research and that money is being spent for the catch-share program. We 
have seen this happen in the archival tagging systems program which for 
25 years has been a joint operation between NOAA and the American 
Fishermen's Research Foundation. We were informed last week by the NOAA 
people that there would be no money available for the foreseeable 
future. This will end the best industry/government research program on 
Albacore tuna that has ever been done. This is wrong! I can see much 
more of this happening in all industry/government research projects.
    7. In the final analysis this is not fisheries management but 
social engineering at its worst.
    For all these reasons and many more, the whole catch-share programs 
should never be allowed to proceed.
    If you have any questions, please feel free to contact me at 360-
642-3773 or [email protected].

Sincerely,

A. Pierre Marchand, President
Jessie's Ilwaco Fish Co., Inc.
                                 ______
                                 
    [A letter submitted for the record by Brian Mose, Nanoose 
Bay, British Columbia, Canada, follows:]

April 20, 2010

Subcommittee on Fisheries, Wildlife and Oceans
187 Ford House Office Building
(202) 226-0200

Dear Chairwoman Bordallo, Ranking member Brown and members of the 
subcommittee:

    I write today in support of your efforts to help fishermen on the 
U.S. West Coast make the transition to sustainable fisheries using 
fully monitored catch share management. The commitment to a National 
Catch Shares Program supports a shift in fisheries policy that in my 
opinion will accrue benefits for conservation, fishermen, coastal 
communities, the oceans and the nation.
    I know first-hand that conventional fisheries management is a no-
win situation. I have been a multi-species trawl fisherman in British 
Columbia for more than 30 years. I have experienced open access olympic 
fishing, through to limited entry licensing and the setting Total 
Allowable Catch quotas (TAC's) for nearly all species. When landed 
catches began exceeding TAC's the Department of Fisheries and Oceans 
(DFO) started setting trip limits and limiting the number of trips. 
Over the same period fishery managers and industry representatives were 
applying dozens of restrictive rules in an attempt to maintain an 
annual fishery by limiting the expansion of fishing effort. As a result 
we sold into a vicious circle of ratcheting down the number of trips 
and trip limits for individual species and areas. This was a futile 
attempt to manage continuity of supply to market while failing to meet 
the conservation requirements to stay within assigned TAC's.
    We had serious problems. Discarding and misreporting were rampant 
as fishermen raced to catch the fish before the limits were ratcheted 
down further. Safety was compromised, markets glutted, quality and 
value were constantly eroded. Furthermore fishery managers and science 
had no way to know true mortality by species and stock from the 
fishery.
    In September of 1995 the fishery was closed for the balance of the 
year, the first time in our history. The fishery reopened a few months 
later with an observer on every vessel. DFO then engaged in a highly 
controversial discussion around catch shares in the multi species trawl 
fishery. DFO offered the stakeholders Individual Transferable Quota 
(ITQ) as the management tool and presented a process where the 
stakeholders could develop the social and economic objectives for the 
fishery. DFO's first objective was conservation and it was clear the 
fishery would be fully monitored and all catch would be accurately 
accounted for within the assigned TAC for each species and area. After 
an extensive process a comprehensive catch share management plan was 
implemented and continues to be improved upon consistent with stated 
objectives and new challenges.
    In 1995 I was opposed to both full monitoring and catch shares and 
was one of the many fishermen who lobbied to stop the process and 
failed. The first year was very difficult but by the third year my 
colleagues and I became advocates for a fully monitored ITQ program.
    Catch shares are only one of many management tools, and needs to be 
combined with other tools such as catch monitoring, to achieve maximum 
benefits. The appropriate management tools to use are largely based on 
your objectives. I believe a fully monitored catch share program has 
made it more possible for us to achieve our objectives.
    I must humbly admit, that if it were not for the strong leadership 
of DFO this fishery would look very different today and likely be 
limited by overfished species, poor data, low values, failing 
infrastructure and negligible benefits for all involved.
    I urge you to continue your leadership in supporting fishermen and 
fish by supporting the development and implementation of a fully 
monitored trawl catch share program for the U.S. West Coast.
    Thank you for your attention to this important matter.

Sincerely,

Brian Mose
3516 Goodrich Road
Nanoose Bay, British Columbia, Canada V9P 9K8
                                 ______
                                 
    [A statement submitted for the record by Bernard Norvell, 
Sr., F/V Donna J, et al., follows:]

 Statement submitted for the record by Bernard Norvell, Sr., F/V Donna 
 J; Michelle Tarantino-Norvell; Vince Doyle, F/V Verna Jean 3; Tom and 
Shelley Estes, F/V Tara Dawn; Brian Jourdain, F/V Blue Pacific; Richard 
   Kelley, F/V Miss Hailee, F/V Miss Kelley, F/V Miss Kelley II; and 
      Randall Schlect, F/V Northern Light, Fort Bragg, California

    Madam Chairwoman and members of the Subcommittee:
    Thank you for the opportunity to submit written testimony 
concerning ``A Community Perspective on Catch Shares.'' We are a group 
of long-time vessel owners operating out of Fort Bragg, California. 
Between us, we own eight trawl vessels that have fished for groundfish 
between Moss Landing to Cape Mendocino for over 25 years. Our families 
have been fishermen for many years and more than one generation, and we 
fully support conservation measures that lead to sustainable fisheries 
so that the next generation will also be able to earn a living fishing.
    We understand the theory behind catch shares and have heard the 
argument that these types of programs will assist in rebuilding 
depleted or overfished fish stocks. However, our experience with the 
development of the proposed catch share program for the Pacific 
groundfish fishery (Amendment 20 to the West Coast Groundfish Fishery 
Management Plan) has shown us that catch share programs are not a ``one 
size fits all'' solution to fishery management problems and that 
wholesale adoption of such programs across the nation has the very real 
possibility of making fishery management problems worse, not better.
    First, we cannot have a thoughtful dialogue about catch shares 
unless there is a shared recognition that catch share programs are 
ultimately about the allocation of the resource--they are not the means 
of ending overfishing. Instead, scientifically-based annual catch 
limits that are consistently and fairly enforced are the key to 
rebuilding fisheries. When catch shares are advertised primarily as 
conservation measures, economic outcomes and the potential for 
devastating social and community impacts often get pushed aside or 
minimized. This is the case with Amendment 20. Bad economic and social 
policy should not be blessed under the guise of conservation.
    Our experience with Amendment 20 demonstrates that catch share 
programs must be designed very carefully if they are to avoid having 
negative impacts such as consolidation of quota shares from individual 
fishermen to corporations or entities that will not actually fish, and 
the destruction of small traditional fishing communities such as Fort 
Bragg. Catch shares should only be used when the economic impacts of 
implementing a catch share program in a particular fishery have been 
fully evaluated in the design of the program and the potentially 
devastating impacts on fishermen have been mitigated before the program 
is implemented. We are finding out first hand that this is easier said 
than done, and that lengthy deliberations--over five years in the case 
of Amendment 20--do not necessarily mean that a program has been 
evaluated fully or insightfully, with an eye toward practical 
implications for small communities.
    NOAA states in its Draft Policy that catch shares are not always 
the ``best management option for every fishery or sector.'' For this 
reason, NOAA states that it intends to ``encourage the careful 
consideration of catch shares as a possible choice to best meet the 
conservation, social, and economic goals of fishery management.'' As we 
have followed the development of Amendment 20 by the Pacific Fishery 
Management Council, we are convinced that it is just such an example of 
an inappropriate use of catch shares. Catch shares are not appropriate 
to solve the problems in our shoreside groundfish fishery because the 
Council has been unable to design a program that will allow small 
shoreside vessels to continue to fish, and it does not have either the 
will or the funding to mitigate this result. Amendment 20 proves that a 
flawed catch share program is not better than no catch share program at 
all.
    Our experience leads us to be very concerned that NOAA's enthusiasm 
for catch shares may lead it to implement programs in fisheries where 
the economics of the program are not sustainable--and without 
performing adequate economic analyses of the impact of such programs. 
For example, the Pacific Council has not provided transparent or 
sensible cost estimates for Amendment 20, which will apparently be 
around $6.5 million in implementation, $8 million in agency costs, and 
between $6 to $20 million in observer/monitoring costs. The trawl 
fishing fleet from Fort Bragg cannot afford to bear the costs of this 
program if it has to pay the maximum 3% for agency administrative costs 
and 100% observer coverage. The Council has not addressed these issues 
through analysis or mitigation of economic consequences of Amendment 20 
on small fishing communities. Even though individual members of the 
Council will acknowledge that Amendment 20 is seriously flawed and 
should not be passed as is, we are being given the strong signal that 
it is a ``done deal'' because catch shares are the new national 
directive, so Amendment 20 will be passed now and supposedly fixed 
later. This is not the way to do business under the Magnuson Act and 
not what NOAA's policy should be.
    Although NOAA professes in its Draft Policy to not put ``catch 
shares first,'' its $54 million budget allocation devoted exclusively 
to the development of catch share programs makes us question whether 
NOAA's policy is really so neutral. If catch shares are truly just one 
tool in the tool box, then why are the Councils being given financial 
incentives only to develop catch share programs instead of incentives 
aimed at empowering Councils to design the best possible management 
measures for sustainable fisheries? Why are well-established limited 
access programs treated as if they must be automatically changed as a 
result of the Draft Policy? There should be no consequences to the 
Councils, either positive or negative, if they take the time to 
thoroughly evaluate the potential impacts of a proposed quota share, 
IFQ, or catch share program and then conclude that it is not a good fit 
for a fishery.
    We recognize that evaluating whether catch shares are appropriate 
for a particular fishery is an expensive, complex, highly technical, 
and time-consuming process. Having invested the effort in designing a 
program, the natural inclination is to pass it regardless of whether 
it's the right thing to do for the fishery--exactly what is about to 
happen with respect to Amendment 20.
    If catch shares generally, or Amendment 20 specifically, are 
designed to reduce capacity and overcapitalization and eliminate 
certain fishery participants, then NOAA and the Councils need to be 
upfront about that intent. Catch shares should not be promoted 
primarily as a conservation tool, and the negative impacts on 
communities cast as unintended but unavoidable consequences, if the end 
game is actually eliminating trawl fisheries from certain states. The 
human costs of Amendment 20 should not be treated as an afterthought. 
We want to continue fishing. But if the Agency and Council plan to make 
that impossible, then we and other long-time participants should be 
compensated fairly.
    Fishermen who question the design and implementation of a 
particular catch share program are not the enemies of good fishery 
management. Catch share and limited access programs can have grave 
consequences for us, our families, and our communities.
    Please do whatever is necessary to make sure that responsible, 
long-time fishermen can continue to fish and that small fishing 
communities like Fort Bragg do not disappear from America's coasts. If 
catch share programs with bad designs and inequitable allocations are 
pushed through as a result of the Draft Policy, in a very short period 
of time small fishermen such as ourselves will be gone, and only big 
vessels and big companies will be fishing out of a very few ports.
    Thank you for your consideration of our comments.
                                 ______
                                 
    [A letter submitted for the record by Giovanni (John) 
Pennisi, F.V. Irene's Way, follows:]

April 21, 2010

Subcommittee on Fisheries, Wildlife and Oceans
187 Ford House Office Building
(202) 226-0200

Dear Chairwoman Bordallo, Ranking member Brown and members of the 
subcommittee:

    I write today in support of your efforts to help fishermen in the 
Monterey / San Francisco region make the transition to sustainable 
fisheries using catch shares, where appropriate. Whereas conventional 
management is increasingly pushing fishermen off the water to control 
over fishing, catch shares is a solution that keeps fishermen fishing 
while fish resources recover. The commitment to a National Catch Shares 
Program supports a continuing shift in fisheries policy that will 
quickly accrue benefits to fishermen and the oceans.
    Current fisheries management is failing struggling fishermen and 
the oceans. Fisheries have declined, and thousands of fishing jobs have 
been lost as a result. Many valuable fisheries face huge closures or 
dwindling seasons, which will have devastating impacts on fishing jobs 
and coastal communities.
    I know first-hand that conventional fisheries management is a no-
win situation. I am a third generation trawl fisherman. Without more 
effective fisheries management tools, our livelihoods--and the 
resource--are increasingly threatened. I used to make a good living; 
now my fishing season continues to shrink, putting me out of business.
    I believe that catch shares are a better alternative. Rather than 
continued shrinking seasons and closures, which push fishermen off the 
water, catch shares can provide for continued fishing, even as stocks 
recover, while increasing full-time employment, wages, and safety for 
fishermen. Catch shares can provide fishermen like me the ability to 
adapt my operation to earn more money when prices are high or fish when 
the weather is good.
    Catch shares are locally-designed to meet economic, social, and 
conservation goals. Catch share management is not a one-size-fits-all 
approach; rather programs are designed to meet the specific needs and 
goals of each fishery. Today there are 14 different catch share 
programs managed by six different regional fishery management councils. 
Many more are slated for consideration and action around the country, 
including the West Coast Ground Fish Fishery region.
    I urge you to continue your leadership in supporting fishermen and 
fish by supporting the development and implementation of catch shares 
in the Western region where it makes sense.
    Thank you for your attention to this important matter. Your support 
will go a long way toward improving fishing jobs and ensuring healthy 
fisheries.

Sincerely,

Giovanni (John) Pennisi
F.V. Irene's Way
898 W. Franklin, Monterey, CA 93940
                                 ______
                                 
    [A letter submitted for the record by Citizens for 
Gloucester Harbor follows:]

                     CITIZENS FOR GLOUCESTER HARBOR

                         c/o M. Sunny Robinson

 20 Harvard Street  Gloucester, MA 01930  978-283-6049

March 18, 2010

Congresswoman Madeleine Z. Bordallo. Chairperson
The House Natural Resources Committee
Subcommittee on Insular Affairs, Oceans and Wildlife

Secretary of Commerce Gary Locke
U.S. Dept. of Commerce
1401 Constitution Avenue NW
Washington, D.C. 20230

Dear Congresswoman Bordallo and Secretary Locke,

    On March 16, 2010, the Subcommittee on Insular Affairs, Oceans and 
Wildlife held an Oversight Hearing on ``Catch Shares as a Management 
Option: Criteria for Ensuring Success''. While we share many of the 
concerns raised by Members of Congress and witnesses, we urge a second 
hearing to cover problems in the Northeast fisheries sector management 
program, which will begin on May P. This second hearing should review 
the policies and practices of the National Marine Fisheries Service as 
they have diverged egregiously from the intent of the Magnuson-Stevens 
Act. Recent National Marine Fisheries Service (NMFS) actions in the 
Northeast fisheries constitute an assault on the viability of local 
fishing fleets, shore-side infrastructure, fishing communities, and 
ultimately on the goals of long-term protection and restoration of 
ocean ecosystems and fisheries.
    Through this hearing, we are recommending clarification of the 
sector management program and alterations in the setting of fishing 
quotas/limits, on certain ``choke'' stocks, prior to May 1st. These 
measures would simultaneously support long-term recovery of fish 
stocks, sustainable fishing fleets, and economically viable fishing 
communities. These measures are all within the authority and 
jurisdiction of the Secretary of Commerce and do not require new 
legislation.
    A pattern of actions taken by NMFS in recent years has been 
directed at the consolidation of fishing fleets, in the guise of 
achieving greater economic efficiency in the pursuit of conservation 
goals. This single-minded focus is driving small, locally owned and 
operated boats out of business, and unless changes, are made will 
eliminate the industry as we know it. Policies and activities that we 
believe subvert the intent of the Magnuson-Stevens Act that need to be 
examined include:
      Passage last year of a sector management system, which 
will be implemented on May 1st, despite great concerns about its 
viability and necessity;
      Frivolous and excessively punitive enforcement measures 
(documented by the Department of Commerce Inspector General) that have 
forced boat-owners out of fishing;
      Inadequate and shifting science and models that have had 
a history of underestimating fishing stocks;
      Diversion of funds away from cooperative research;
      Failure to conduct adequate research and/or failure to 
properly utilize existing research results;
      Overly strict limits on fishing that exceed what is 
necessary for stock recovery;
      Emphasis on shutting down entire fisheries once an 
impractical rebuilding rate is missed for ANY ONE species in a mixed 
species fishery, although it is clear, that in practice, all species do 
not recover at the same rate.
    In particular, the sector approach, as currently planned, will 
inevitably lead to concentrated ownership. Larger vessels owned by 
outside investors will displace the smaller local family fishing 
businesses and local fisheries will be unable to compete. The effects 
on local fishermen, employment and economic activity in local ports, 
the safety of local fish stocks, and the long-term viability of ocean 
fisheries and ecosystems will be devastating.
    Especially in New England, it is the fish caught, only hours 
before, by our small inshore day fishing boats for which our 
restaurants and markets are famous that will be most greatly impacted. 
An intentional destruction of this industry and replacement by large 
industrial ships that stay further at sea for longer trips would result 
in replacement of our fresh fishery with fish stored for days in ice or 
brine or frozen at sea. The policy of increasing efficiency by 
replacing small fishing businesses, both at sea and in small harbors 
ashore by a few larger concentrated industrial operations in a few 
large ports seems ill-advised in the present national economic and 
under employment crisis and will not enhance the sustainability of 
fishing stocks.
    The history of economic rationalization, deregulation, and a 
singular drive for ``efficiency'' has had unintended and disastrous 
results in other economic sectors in the United States. The 
deregulation and subsequent collapse of financial markets is the 
foremost example of excessive reliance on free market ideology and 
``efficiency.'' Similarly, in agriculture, the ideology of free-market 
fundamentalism has led to devastated farming communities, unsafe and 
unhealthy food supplies, and toxic pollution.
    Properly designed sector management can restore ecosystems and 
fisheries, protect local jobs, and secure safe and local food supplies, 
but only if the approach is based on principles of community-based 
management. As Dr. Elinor Ostrom (2009 Nobel Prize in Economics) and 
others have demonstrated repeatedly around the world, community-based 
management assures long-term sustainability of environmental, economic, 
and social values.
    If perceived as a catch share system, as opposed to a temporary 
management measure, these goals will not be achieved. Therefore, we 
believe they ought to only be seen as a temporary management measure.
    We particularly call attention to the fact that the National Marine 
Fisheries Service chose not to establish the sector approach according 
to the policies and procedures set forth in section 303A of the 
Magnuson-Stevens Act governing Limited Access Privilege Programs 
(LAPPs). LAPP would have required a review of proposals that would have 
been subiected to a very comprehensive and deliberate set of standards 
and process, where the interests of all parts of the fisheries, 
including fishermen, port communities, and other public interests and 
benefits would have been reviewed. The deliberate decision by the North 
East Fisheries Management Council (NERMC) to develop a comprehensive 
fishery-wide Sector allocation and management system that is not based 
on or consistent with MSA section 303(A) was largely based on ill-
advised advice provided to it by the NMFS Northeast Regional Office.
    NOAA needs to recognize that potential sector contributions (PSC's) 
should not be considered quota shares for the purposes of buying, 
selling and trading with any mid-term or long-term value. Nevertheless, 
because of confusion over the long-term status of PSC's, there is a 
danger in artificially inflated permit values. Local fishermen may be 
unable to pay higher prices for permits when they have to compete with 
speculative outside investors who are misinformed about the duration of 
the sector allocation,
    In addition to the requested Congressional oversight hearing, we 
urge the Secretary of Commerce to take the following actions, before 
May 1st:
    1.  Issue a public notification stating that the non-LAPP status of 
Amendment 16 Sector Allocations and individual PSCs means the fishery 
is still open to allocation through a deliberate and free standing 
allocation amendment process. The statement should also make clear that 
PSCs are short term management currencies analogous to Days at Sea and 
have no long-term economic value. PSCs do not have the same effect as 
quota shares, unless NEFMC initiates a fully LAPP compliant amendment 
in strict compliance with the LAPP requirements in the Magnuson-Stevens 
Act.
    2.  Amend the sector management program by adding measures to 
prevent excessive consolidation and outside investment. Such measures 
should include: restrictions on the share of the sector that any 
individual fishing boat owner may hold (in the Alaska halibut 
fisheries, this share restriction is 1%); and a requirement that the 
owner-operator ()Idle PSC be on the boat when actively fishing at sea.
    3.  Increase the Total Allowable Catch (TAC) limits, particularly 
on species that would otherwise shut multi-species fisheries down 
unnecessarily, but not to exceed levels considered ``overfishing''. 
This increased flexibility would sustain the local fishing fleets 
through the next few years of the rebuilding of sustainable stocks.
    These actions are all within the discretion of the Secretary of 
Commerce.
    We thank you for your attention to these requests and look forward 
to hearing I) when an additional hearing to address these matters will 
take place and 2) what actions the Secretary of Commerce has taken.

Yours truly,

CITIZENS FOR GLOUCESTER HARBOR
Peter Anastas, Writer
Ann Banks, Board Member, Gloucester Maritime Heritage Center
Damon Cummings, PhD, Naval Architect
Henry Ferrini, Documentary Filmmaker
Jeanne Gallo, PhD, Social Ethics
Helen Garland, UN Representative of the World Forum of Fisherpeople
Jay Gustaferro, Lobster-man, Former Gloucester City Councilor
Marcia Hart, RN
Ann Molloy, Neptune's Harvest Organic Fish Fertilizer Company
Valerie Nelson, PhD, Economics
Steve Parkes, Coordinator, Cape Ann Fresh Catch--Community Supported 
Fishery
M. Sunny Robinson, RN
Angela Sanfilippo, Gloucester Fishermen's Wives Association
                                 ______
                                 
    [A letter and resolution submitted for the record by The 
Honorable Jerome M. Selby, Borough Mayor, Kodiak Island 
Borough, follows:]

Kodiak Island Borough
Office of the Borough Mayor
710 Mill Bay Road
Kodiak, Alaska 99615
Phone (907) 486-9310 Fax (907) 486-9391

April 19,2010

To: 111th U.S. House Committee on Natural Resources
Subcommittee on Insular Affairs, Oceans and Wildlife
187 Ford House Office Building (Oceans and Wildlife)
Tel: (202) 226-0200 Fax: (202) 225-1542

    The Kodiak Island Borough is home for one of the largest fishing 
fleets in the United States and the port of Kodiak has been one of the 
top three fishing ports in the United States for the past 30 years. Our 
economic base is fishing. Because of the damage we have experienced to 
our economy and people from the two catch share programs that have been 
implemented in Kodiak, we have serious concerns about the new Catch 
Shares policy that is being developed.
    This new policy should place a strong emphasis on using the lessons 
learned about negative impact on jobs and communities' economies to 
minimize these negative impacts in the future. Before any new policy 
goes forward, we would recommend that hearings be held in the largest 
fishing ports in New England, the Gulf Coast, the West Coast, and 
Alaska to allow direct input from the people and communities where 
lives and economies will be directly impacted.
    The Kodiak Island Borough previously adopted the enclosed 
Resolution No. FY2007-12 which identifies the framework that should be 
used in future fisheries policy. We are very interested in helping to 
develop future fisheries policy.
    Thank you for the opportunity to comment. We stand ready to help.

Sincerely,

Jerome M. Selby
Borough Mayor
Kodiak Island Borough,
                                 ______
                                 
             KODIAK ISLAND BOROUGH RESOLUTION NO. FY2007-12

 A RESOLUTION OF THE KODIAK ISLAND BOROUGH ASSEMBLY PROVIDING FURTHER 
  COMMENTS TO THE NORTH PACIFIC FISHERY MANAGEMENT COUNCIL ON GULF OF 
                         ALASKA RATIONALIZATION

    WHEREAS, the harvesting and processing sectors of the Kodiak 
fishing community are substantially engaged in and substantially 
dependent upon Gulf of Alaska groundfish fisheries; and
    WHEREAS, Kodiak's economic and social health is intimately 
dependent upon the community's sustained participation in all aspects 
of the Gulf groundfish fisheries; and
    WHEREAS, the Kodiak Island Borough has made substantial investments 
in support of and in reliance upon the Gulf groundfish fishery, such as 
water system improvement and expansion and port and harbor improvements 
and expansion; and
    WHEREAS, the North Pacific Fishery Management Council has developed 
a suite of fishery allocation alternatives for the Gulf of Alaska 
groundfish fisheries, and is working toward adoption of a preferred 
alternative for implementation; and
    WHEREAS, allocating exclusive harvesting and/or processing 
privileges promotes consolidation in the fishing fleet and the 
processor sector, which can improve efficiency, but which can also 
result In skippers, crew members and processing workers bearing costs 
of consolidation without fully sharing in the related benefits; and
    WHEREAS, while fishery rationalization may create opportunities and 
incentives to produce more and higher value products, it also changes 
the distribution of fishery revenues among participants with resulting 
disruptive effects on the communities in which they live; and
    WHEREAS, by awarding harvesting and/or processing privileges, 
fishery allocations make possible orderly harvesting and processing, 
but it also facilitates the migration of landings to communities with 
infrastructure advantages (such as road system access) and creates 
barriers to entry for later generations of fishery participants; and
    WHEREAS, as a result, it is essential that the potential adverse 
affects of Gulf groundfish rationalization be identified and analyzed 
and that adjustments be made to mitigate the potential adverse effects 
of Gulf groundfish rationalization on Kodiak prior to any program 
implementation;
    WHEREAS, it is the Kodiak Island Borough's intent that a full, and 
frank exchange of information and opinions concerning Gulf groundfish 
rationalization take place among the constituencies of the Borough that 
would be most directly affected by such program, if adopted; and to the 
extent possible, to encourage the development of consensus among these 
constituencies concerning the preferred elements and options of such 
program; and Kodiak Island Borough, Alaska Resolution No. FY2007-12
    WHEREAS, the City of Kodiak and the Kodiak Island Borough joined 
together to appoint a Gulf of Alaska Groundfish Rationalization Task 
Force to provide a forum for the full, and frank exchange of 
information and opinions concerning Gulf groundfish rationalization and 
an opportunity for the development of consensus on preferred elements 
and options of a Gulf groundfish rationalization program, should it 
move forward; and
    WHEREAS, while the Task Force is continuing to work, they have 
recently provided the Borough Assembly with a number of recommendations 
that the Borough Assembly is actively endorsing;
    NOW, THEREFORE, BE IT RESOLVED, BY THE ASSEMBLY OF THE KODIAK 
ISLAND BOROUGH THAT the North Pacific Fishery Management Council 
(NPFMC) suspend action on Gulf of Alaska groundfish rationalization 
until, at least, such time as the NPFMC has conducted its 18 month 
review of the Bering Sea crab rationalization program and the public 
has had an opportunity to evaluate and comment on the impacts of crab 
rationalization and to evaluate the NPFMC's adjustments (if any) to the 
crab rationalization program;
    BE IT FURTHER RESOLVED THAT THE ASSEMBLY OF THE KODIAK ISLAND 
BOROUGH requests that the NPFMC take the following Gulf groundfish 
management actions as soon as possible, notwithstanding the NPFMC's 
suspension of any further action on Gulf groundfish rationalization:
    1.  Initiate a discussion paper on an allocation of Gulf Pacific 
cod to ensure that it is fair and equitable participation among gear 
groups and all fishermen.
    2.  Initiate a discussion paper on phase-out of the offshore sector 
in the Gulf of Alaska.
    3.  Initiate a discussion paper on identifying and removing latent 
licenses from the Gulf groundfish sectors that are subject to the 
License Limitation Program.
    BE IT FURTHER RESOLVED THAT THE ASSEMBLY OF THE KODIAK ISLAND 
BOROUGH requests that the NPFMC is hereby requested to take the 
following actions in connection with its development of a Gulf of 
Alaska groundfish rationalization program:
    1.  Complete the Council's review of the Bering Sea crab 
rationalization program to enable the public to evaluate and comment on 
the impacts of crab rationalization and to enable the Council to make 
appropriate adjustments to the Gulf rationalization program in 
response,
    2.  Thoroughly analyze each alternative being considered by the 
Council before eliminating any of the alternatives, to provide the 
public with the opportunity to compare the effects of the various 
alternatives on harvesters (including skippers and crew members), 
processors (including workers), fishing support services, and Gulf 
fishing communities.
    3.  Include limits on harvesting consolidation through vessel use 
caps that apply without exemption, and that are calculated to sustain 
skipper and crew employment opportunities and compensation.
    4.  Develop and bring forward for consideration an additional 
alternative which includes no processor shares, linkages or privileges 
of any kind. For alternatives already being considered, include 
measures to maintain a diverse, competitive processing market, by 
providing a substantial pool of groundfish privileges for each sector 
that can be harvested without penalty and are not subject to processor 
linkage or processor closed classdelivery requirements. This should 
include phasing out of the off shore processing sector. Kodiak Island 
Borough, Alaska Resolution No. FY2007-12
    5.  If processing privileges are included, limit consolidation of 
such privileges through processor and facility use caps.
    6.  Designate Federal harvesting privileges by region to reflect 
landing patterns similar to those occurring prior to program adoption, 
and require that fish harvested under such privileges be landed in 
their designated region.
    7.  Include a reasonable groundfish allocation which may be 
harvested and processed without holding any Federal or State dedicated 
access privilege, subject to restrictions that the State of Alaska may 
deem necessary to maintain the entry level character of such 
allocation.
    8.  Include a community fisheries quota program that provides an 
opportunity for small Gulf coastal communities to enhance their 
residents' participation in the Gulf groundfish fishery, under the 
conditions that the allocation to such program does not disrupt other 
Gulf of Alaska fishery dependent communities by displacing their 
fishermen, is required to be harvested by residents of the eligible 
communities, and requires that harvests made under such program be 
delivered on shore within the region of their allocation.
    9.  Include a community purchase program that provides Gulf coastal 
communities with the opportunity to maintain participation by their 
residents in the Gulf groundfish fishery by acquiring harvesting 
privileges for use by their residents, under the conditions that the 
Kodiak Island communities are eligible communities, and such program 
includes reasonable limits on the amount of harvesting privileges that 
any single eligible community may hold.
ADOPTED BY THE ASSEMBLY OF THE KODIAK ISLAND BOROUGH 
        THIS NINTH DAY OF NOVEMBER 2006
KODIAK ISLAND BOROUGH
Jerome M. Selby, Borough Mayor
ATTEST:
Nova M. Javier, CMC, Borough Clerk
                                 ______
                                 
    [A letter submitted for the record by Capt. David Walker 
follows:]

April 14, 2010

The Honorable Alan B. Mollohan
Chairman
Subcommittee on Commerce, Justice, Science & Related Agencies
Committee on Appropriations
H-310 U.S. Capitol
Washington, DC 20515

The Honorable Frank R. Wolf
Ranking Member
Subcommittee on Commerce, Justice, Science & Related Agencies
Committee on Appropriations
1016 Longworth H.O.B.
Washington, DC 20515

Dear Chairman Mollohan and Ranking Member Wolf:

    Thank you for the opportunity to submit testimony in support of the 
President's Fiscal Year 2011 National Marine Fisheries Service (NMFS) 
budget request for the National Marine Fisheries Service, and 
specifically the $54 million request for its National Catch Share 
Program (NCSP). The Administration's requested funding for a NCSP is 
critical to developing and implementing catch share programs that have 
been under development, including the implementation of an IFQ for the 
grouper fishery in the Gulf of Mexico.
    Commercial fishermen, like me living in the Gulf region of the 
United States, have greatly benefited from the implementation of 
Individual Fishing Quota programs (IFQs), a catch share fishery 
management program, which have helped end overfishing while preventing 
and even reversing the collapse of fisheries. I urge you to support the 
Administration's requested funding for NMFS.
    I would like to provide the Committee with some real world insights 
on how a catch share program can help to both improve the economics of 
a fishery and facilitate the conservation of the resource. Red snapper 
fishermen in the Gulf of Mexico have for many years faced depleted 
stocks and an uncertain future. It was a rather stable fishery until 
the 1970s and 1980s, when demand for fish began increasing as the 
technology to catch fish was improving. When regulators stepped in to 
establish catch limits, fishermen began racing against one another to 
catch as much fish as possible before the limit was hit and fishing was 
shut down for the year. This ``derby'' style system resulted in large 
discards of dead red snapper, a decrease in fish prices, higher 
operating costs and dangerous fishing conditions, as fishermen risked 
their lives and boats in dangerous weather.
    To address the situation, the Gulf of Mexico Fishery Management 
Council began discussing management alternatives to rebuild and restore 
the fishery, and in 2007, the Council adopted an IFQ program, which had 
broad support from the commercial sector. Under IFQs, each fisherman is 
allotted a share of the total catch and is held individually 
accountable for adhering to that limit. Fishermen are able to fish 
throughout the year when it is good for business. Closures are not 
needed to effectively manage the fishery. Further, as commercial 
fishermen, we are able to deliver high-quality fish to market when 
consumer demand increases and the weather is suitable for fishing. 
Under an IFQ program, fishermen can lease or sell shares if they are 
unable to fish for any reason. Best of all, with an IFQ program, fish 
are not wasted but retained and counted against the individual quotas. 
Under previous rules, fishermen were forced to throw fish overboard to 
comply with management directives.
    The red snapper IFQ has empowered Gulf of Mexico commercial 
fishermen to be stewards of the resource and to run efficient 
operations and minimize the waste of fish. Furthermore, we have the 
ability to carefully target and market red snapper to earn more money 
with less fish. IFQs hold commercial fishermen accountable for their 
allocation and the health of the stock, and provide fishermen with an 
economic stake in the fishery.
    An August 2009 report from NMFS Southeast Region stated that ``two 
years after initial implementation of the red snapper IFQ program, 
progress has been made toward achieving [the] program's objectives ... 
[which] include mitigating derby fishing conditions and reducing 
overcapacity.'' \1\ The IFQ's benefits are ``numerous'' and ``include 
increasing flexibility for fishing operations; providing cost-effective 
and enforceable management of the fishery; reducing bycatch; 
eliminating quota overages; improving safety at sea; and optimizing net 
social, economic, and biological benefits from the fishery,'' according 
to the report. Importantly, since the end of 2006, the average exvessel 
value of red snapper has nearly doubled.
---------------------------------------------------------------------------
    \1\ 2008 Gulf of Mexico Red Snapper Individual Fishing Quota Annual 
Report, August 17, 2009. Southeast Region, National Marine Fisheries 
Service.
---------------------------------------------------------------------------
    The commercial red snapper fishery was open for an average of 88 
days--about one-quarter of the year--prior to the implementation of the 
IFQ program. During this period, fishermen were limited to either 200-
pound or 2,000-pound trip limits and 10-day fishery openings per month. 
Under the IFQ, fishermen are not constrained by fishery closures or 
trip limits; a fisherman is limited instead to his annual allocation or 
red snapper that he can catch throughout the year. Subsequently, the 
NMFS report states that ``the IFQ program has lead to greater 
efficiency for many red snapper IFQ program participants.''
    NMFS also cites the biological benefits resulting from the IFQ 
program, noting that in the first two years of the IFQ program 
``reported [commercial] landings have been below quotas.'' During the 
17 years of management prior to implementation of the IFQ, the 
commercial quota was exceeded nine times. Similarly, NMFS found that 
the ratio of landed to discarded fish has increased three to four times 
since 2007.
    Commercial catch share programs such as the red snapper IFQs in the 
Gulf of Mexico support good jobs in the seafood industry and throughout 
the broader economy. Catch share management results in more stable 
employment for fishermen, as well as their suppliers and buyers, 
lasting for longer periods of time. This stability is important to 
providing an economic environment that helps to sustain the long-term 
viability of communities that depend on the fishing industry.
    The IFQ program currently in place for commercially-caught red 
snapper in the Gulf of Mexico has been extremely successful, as it 
allows fishermen to lower operating expenses, increases the price paid 
at the dock, and meets high conservation standards, which has improved 
both economic performance and safety at sea. A recovering fishery is 
good for commercial, recreational and other fishing interests. Catch 
share programs can only be successful with appropriate federal funding 
for NMFS to properly design and implement catch share programs that 
work for the fishermen, the resource and the region and the community.
    I respectfully urge the Committee to support the Administration's 
budget request for NMFS, and specifically the $54 million requested for 
the NCSP. This funding is crucial to addressing the difficult fishery 
management problems facing the nation. It is also important to the 
development and implementation of the Gulf of Mexico reef fish IFQ.

Sincerely,

Capt. David Walker

                                 
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