[Senate Hearing 112-299]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-299

  HOW IS NOAA MANAGING FUNDS TO PROTECT THE DOMESTIC FISHING INDUSTRY

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


                                HEARING

                               before the

                FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT
                   INFORMATION, FEDERAL SERVICES, AND
                  INTERNATIONAL SECURITY SUBCOMMITTEE

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                 FIELD HEARING IN BOSTON, MASSACHUSETTS

                               __________

                             JUNE 20, 2011

                               __________

         Available via the World Wide Web: http://www.fdsys.gov

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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware           SCOTT P. BROWN, Massachusetts
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana          RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri           ROB PORTMAN, Ohio
JON TESTER, Montana                  RAND PAUL, Kentucky
MARK BEGICH, Alaska                  JERRY MORAN, Kansas

                  Michael L. Alexander, Staff Director
               Nicholas A. Rossi, Minority Staff Director
                  Trina Driessnack Tyrer, Chief Clerk
            Joyce Ward, Publications Clerk and GPO Detailee
                                 ------                                

 SUBCOMMITTEE ON FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, 
              FEDERAL SERVICES, AND INTERNATIONAL SECURITY

                  THOMAS R. CARPER, Delaware, Chairman
CARL LEVIN, Michigan                 SCOTT P. BROWN, Massachusetts
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
CLAIRE McCASKILL, Missouri           RON JOHNSON, Wisconsin
MARK BEGICH, Alaska                  ROB PORTMAN, Ohio

                    John Kilvington, Staff Director
                William Wright, Minority Staff Director
                   Deirdre G. Armstrong, Chief Clerk










                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Carper...............................................     1
    Senator Brown................................................     5
Prepared statements:
    Senator Carper...............................................    47
    Senator Brown................................................    50

                               WITNESSES
                         MONDAY, JUNE 20, 2011

Hon. John F. Tierney, a Representative in Congress from the State 
  of Massachusetts...............................................     8
Todd J. Zinser, Inspector General, U.S. Department of Commerce...    12
Eric C. Schwaab, Assistant Administrator for Fisheries, National 
  Oceanic and Atmospheric Administration.........................    14
Lawrence Yacubian, Retired Fisherman.............................    32
Larry Ciulla, Proprietor, Gloucester Seafood Display Auction.....    35
Stephan M. Ouellette, Attorney at Law, Ouellette and Smith.......    37
Vito Giacalone, Chairman, Northeast Seafood Coalition............    38
Brian J. Rothschild, Ph.D., Montgomery Charter Professor of 
  Marine Science and Technology, University of Massachusetts-
  Dartmouth......................................................    40

                     Alphabetical List of Witnesses

Ciulla, Larry:
    Testimony....................................................    35
Giacalone, Vito:
    Testimony....................................................    38
Ouellette, Stephan M.:
    Testimony....................................................    37
    Prepared statement...........................................    83
Rothschild, Brian J.:
    Testimony....................................................    40
    Prepared statement...........................................    98
Schwaab, Eric C.:
    Testimony....................................................    14
    Prepared statement...........................................    71
Tierney, Hon. John F.:
    Testimony....................................................     8
    Prepared statement...........................................    58
Yacubian, Lawrence:
    Testimony....................................................    32
    Prepared statement...........................................    79
Zinser, Todd J.:
    Testimony....................................................    12
    Prepared statement...........................................    61

                                APPENDIX

Questions and responses for the Record from:
    Mr. Schwaab with attachment..................................   102
    Mr. Ouellette (failed to answer questions submitted for the 
      record)....................................................
    Mr. Rothschild...............................................   220
Chart referenced by Senator Brown................................   225

 
  HOW IS NOAA MANAGING FUNDS TO PROTECT THE DOMESTIC FISHING INDUSTRY

                              ----------                              


                         MONDAY, JUNE 20, 2011

                                 U.S. Senate,      
        Subcommittee on Federal Financial Management,      
              Government Information, Federal Services,    
                              and International Security,  
                      of the Committee on Homeland Security
                                        and Governmental Affairs,  
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10 a.m., in 
Faneuil Hall, Boston, Massachusetts, Hon. Thomas R. Carper, 
Chairman of the Subcommittee, presiding.
    Present: Senators Carper and Brown.

              OPENING STATEMENT OF SENATOR CARPER

    Senator Carper. Well, I understand, Senator Brown, when Sam 
Adams held forth here, they did not have a public address (PA) 
system, but I am also told they did not need it.
    Everyone, welcome to Faneuil Hall, your hall and in a way 
America's hall. My wife, Martha, who is sitting in the back of 
the room, she and I were here yesterday and came up from 
Delaware on Saturday. We have a son who graduated from one of 
the schools over in Cambridge last year. It does not start with 
an ``H.'' It is that other one that goes by its initials. He is 
off into the world and has a younger brother who is going to be 
a senior at William and Mary and who is actually working here 
in the financial district this summer. So we have had a long 
and abiding interest in this State and in this city.
    Congratulations to--I do not know if we have any Bruins 
fans, but you have done well and you ought to feel very proud. 
Also, the way the fans handle themselves here as compared to 
some other places where they did not handle themselves quite as 
responsibly should be applauded.
    But I want to thank Senator Brown who serves on the 
Subcommittee, for suggesting that we have this hearing and for 
suggesting that we hold it here today.
    Ours is a small Subcommittee, but we have learned over time 
to maximize our effectiveness by partnering with, among others, 
the Office of Management and Budget (OMB), with the Government 
Accountability Office (GAO), with the Inspector Generals (IGs) 
throughout the Federal Government. All of the Federal 
departments have Inspector Generals and we have especially 
enjoyed partnering over the years with Todd Zinser, who is here 
with us today and will speak on our second panel. And we 
partner with government watchdog groups across the country, 
too, in order to leverage and increase our effectiveness.
    For the past half-dozen years or so, this Subcommittee has 
been singularly focused on how we can achieve better results 
for less money, and if not better results for less money, at 
least better results for not more money. And through the years, 
we have focused on issues like disposing of billions of dollars 
of surplus Federal properties that really are not used by the 
Federal Government as well as on eliminating $125 billion in 
improper payments and to also eliminate some $400 billion of 
major weapons system cost overruns. This hearing today 
continues with that theme, albeit on a smaller scale.
    Our primary job on this Subcommittee, as Senator Brown 
knows well, is to try to ensure that taxpayers' dollars are not 
wasted. There have been some who have wondered why the Federal 
Financial Management, Government Information, Federal Services, 
and International Security Subcommittee (FFM) of the Homeland 
Security and Government Affairs Committee (HSGAC) would be 
holding a hearing about a National Oceanic and Atmospheric 
Administration (NOAA) program. Why would we be holding that 
hearing? That is a pretty good question. I have explained to 
those who have asked, though, that poor financial management is 
an unfortunate theme that runs throughout our Federal 
Government and all of us have an obligation to do something 
about it.
    Let me note, however, that the point of this hearing is not 
to try to adjudicate the laws of the ocean or discuss what is 
right or wrong about how NOAA polices our fisheries. Those 
issues are the jurisdiction of the Senate Commerce Committee. 
What we are concerned about and what we are going to be 
focusing on here today is ensuring that the monies collected 
and spent by NOAA are managed effectively and in accordance 
with the law. This is not a hearing about fisheries management. 
This is a hearing about sound financial management.
    And at a time when we are facing a massive Federal budget 
deficit and considering cuts across a broad range of Federal 
programs, we need to look into every nook and cranny of every 
agency, large and small, to find ways to make the most out of 
our scarce resources. We need to move our Federal Government 
away from what I call a culture of spendthrift toward a culture 
of thrift. And as Senator Brown has heard me say more than a 
few times, it is like turning the aircraft carrier. I am an old 
Navy guy. He is a not-so-old Army guy. But we are trying to 
turn an aircraft carrier here and it is not easy. But we know 
from my experience in the Navy, if you try hard enough long 
enough, you can turn an aircraft carrier, and what we need to 
do and want to do is change this culture from a culture of 
spendthrift toward a culture of thrift.
    The money in NOAA's Asset Forfeiture Fund (AFF) is supposed 
to be used to protect our valuable natural resources and 
support the fishing communities that are vital to this region 
and, frankly, to our Nation. Our Subcommittee wants to help 
make sure that is what happens.
    In June 2009, the Administrator of NOAA, Dr. Jane 
Lubchenco, first requested that the Office of the Inspector 
General (OIG) at the Commerce Department look into NOAA's 
enforcement activities in the handling of the Asset Forfeiture 
Fund. Since that time reports have been issued describing 
oversight and management of NOAA's National Marine Fisheries 
Asset Forfeiture Fund that too often have been abysmal.
    For example, until recently--NOAA did not know the balance 
in the fund. They had trouble tracking how much money was 
coming into and going out of the fund. And the fund apparently 
was also being used to pay for things that it should not have 
been used to pay for. Cars were purchased when they should have 
been leased, for example. In addition, I understand that the 
Inspector General reported that NOAA actually purchased more 
cars than they had employees to drive them.
    These problems are longstanding. In fact, I am told that 
this record of poor management goes back some 15 years, maybe 
more, and up until this past year, very little was done to set 
things right.
    In the past year, however, the Department of Commerce and 
NOAA have taken important steps to address the concerns raised 
by the Inspector General and by many within the fishing 
industry. The Department and NOAA appear to have finally gotten 
a handle on the funds' day-to-day management. Clear guidelines 
have been set for how the money contained in the fund may be 
spent. And just as importantly, maybe more importantly, rules 
have been implemented making clear how funds are not to be 
spent from that fund.
    For example, I am told that NOAA no longer allows monies in 
the fund to be spent on cars, boats, or cell phones. In 
addition, any fund expenditure over $1,000 from the fund now 
has to be approved by the NOAA Comptroller. NOAA apparently is 
also working to rightsize its vehicle fleet, a welcome example 
that probably could be followed in a number of other agencies 
across the Federal Government.
    The fund's balance and accounting methods are also more 
transparent. Last week, I am told, the independent audit firm 
Clifton Gunderson, is one of the top 15 independent accounting 
firms in the country, gave the Asset Forfeiture Fund an 
unqualified clean opinion. In the accounting world, that is the 
Good Housekeeping Seal of Approval.
    I might add that, as Senator Brown knows, we have been 
beating on the Department of Defense (DOD) for years to get 
them to get a clean audit from the Department of Defense, or 
even for the Navy, or for the Army, or for the Air Force. They 
are still years away from coming up with a clean audit and we 
have one here, at least on this fund as of last week. And 
again, that might serve as an example to the folks who run our 
Department of Defense and the separate services that are part 
of it.
    I might also add, in addition, the independent auditor has 
confirmed that the fund's balance as of last week or so was 
$7.5 million.
    All this progress would not have happened without a chorus 
of complaints from citizens like those that are gathered here 
today. In fairness, this progress probably would not have been 
made without the request made 2 years ago by Dr. Lubchenco for 
an investigation by the Inspector General and the tireless 
efforts since that time by the IG and the IG's staff. I believe 
that NOAA also deserves some credit for taking steps to address 
many--not all, but many of the problems that the Inspector 
General has identified.
    And while a number of needed steps have been taken over the 
past year, the auditor has also identified several other areas 
of concern that NOAA still needs to address. Specifically, the 
auditor believes that some problems remain with the way 
liabilities and expenditures are tracked from the fund. I know 
that Senator Brown has heard me say this more times than he 
wants to remember, but I am going to say it again. Everything I 
do, I know I can do better. I think that is true for everybody 
in this room, probably everybody in this State and everybody in 
this country. That is probably true for all of us, and also, 
that includes NOAA. I like to say, if it is not perfect, make 
it better. And I would strongly encourage the folks from NOAA 
that are here today and those that are not to continue doing 
just that. If it is not perfect, make it better as we go 
forward.
    I understand that NOAA's recent budget submission makes 
proposals that might further improve the management and 
oversight of this fund. I want to hear some more about that 
today and to learn what we in Congress can do to help.
    Before I close, I should note that the Department of 
Commerce has also made a commitment to get to the bottom of 
what has gone wrong with the fund. Secretary Gary Locke 
appointed a Special Master to examine cases identified by the 
Inspector General that may have been mishandled. Finding flaws 
in some of them, the Secretary is worried that some $650,000 be 
given back to the fishermen who were affected.
    Now, one could argue that previous Secretaries of Commerce 
should have taken these steps years ago. They did not. I think 
Secretary Locke should be recognized for his commitment to 
right the wrongs of the past and to try to make them better.
    With that, I will turn it over to Senator Brown. Let me 
just say, before I do that, I understand that--correct me if I 
am wrong, but I think Secretary Locke has also directed that 
his staff go back to as far as, I think, 1994, before the 
period covered for the $665,000 that has been paid back. But he 
said, go back to 1994 and let us look all the way back there to 
see if there are not other examples of instances where funds 
were taken from fishermen, from the fishing industry, and to 
see if we should not turn those funds over, as well.
    With that, I am going to turn it over to Senator Brown. I 
want to thank you, for inviting us to come here today, giving 
us a chance to spend this Father's Day here on a beautiful 
weekend, to get here at the end of a huge celebration of the 
Bruins' victory, and have a chance to see our youngest son, 
Ben, and to enjoy one of the most beautiful weekends I can 
remember in a long time, and to be here with all of you in this 
very special place today. Senator Brown, thanks so much.

               OPENING STATEMENT OF SENATOR BROWN

    Senator Brown. Thank you, Mr. Chairman. I am honored that 
you are here, as well. I know you and your family have very 
close ties here in Boston. It is good to see your wife again.
    I appreciate you taking the opportunity to hold this 
hearing and trying to address a lot of the things we have 
talked about, which is the waste, fraud, and abuse, and how to 
do it better, as you have noted. And I want to thank Mayor 
Thomas Menino for allowing us to hold this hearing in such an 
historic venue. Also, I would like to obviously thank you and 
your team. They have been very zealous and gracious in dealing 
with me and my staff and trying to zero in on this very 
important issue.
    I have said publicly many times, I commend your 
bipartisanship in Chairing this Subcommittee. There has never 
been a time where we felt that we have not been getting a fair 
shake. And through the hearings that we have had, we have done 
a tremendous amount to change the culture in Washington in 
forcing many of these entities to do it better.
    As you know, protecting our national fish stocks from over-
fishing is a national imperative that requires good management 
backed by consensus science. Today, I will try to provide a 
voice to the many fishermen throughout New England and echo the 
voices of many other elected officials in this State, including 
Congressman Barney Frank and John Tierney. I know Congressmen 
Tierney is going to speak in a moment. Mayor Scott Lang is 
here. I know Mayor Carolyn Kirk is coming. Senator Bruce Tarr, 
Representative Ann-Margaret Ferrante, and many others who have 
worked tirelessly in bringing attention to us the plight of the 
New England fishermen and the abuses of the Washington agency, 
NOAA, in dealing with some of these issues.
    As you all know, fishing is a centuries-old Massachusetts 
tradition, but more importantly, it is a home-grown modern 
industry that employs thousands of hard-working people who put 
food on America's tables. NOAA's history of overzealous 
enforcement in the New England fisheries has come at the cost 
of fishermen's trust and their livelihood, and many of them 
tell me that the folks in Washington regard them as criminals 
instead of a legitimate and valued regulated industry.
    While I want to emphasize that our fishing regulations must 
be enforced, we must not forget that fishing is about catching 
fish, where 96 percent of the violations are, in fact, civil 
matters. The tone and tenor of enforcement must reflect this. 
For example, Washington sanctioned agents to carry guns and 90 
percent are criminal investigators. So we have a situation 
where armed criminal investigators are primarily enforcing non-
criminal regulations, essentially issuing tickets. The Federal 
Aviation Administration (FAA), for example, Mr. Chairman, which 
regulates an industry where an error can lead to a large-scale 
disaster, has zero criminal investigators. That is none. And if 
they do not need them, I have to wonder why they are being used 
so prominently in the fishing industry.
    So it is clear to me that some of the abuses we will hear 
about today, which have been discussed long before I got 
involved, incentivized NOAA to fill the coffers of the Asset 
Forfeiture Fund, which uses the proceeds from enforcement 
activities to fund further enforcement action. The AFF was 
treated like a piggy bank, almost. We have seen this before in 
other agencies, by the Washington headquarters and overseers of 
the NOAA Office of Law Enforcement (OLE) and the Office of 
General Counsel for Enforcement Litigation (GCEL), which had 
accounting practices that would have made Enron and other 
entities blush. In fact, the KPMG review found the fund to be 
in disarray, with no one at NOAA able to explain how it worked.
    And predictably, NOAA's law enforcement officers and 
attorneys went on a spending spree funded by the hard working 
fishermen. For example, as you referenced, they purchased more 
than 202 vehicles, and yet only had an enforcement staff of 
172, and a luxurious boat,\1\ which you can actually see right 
here, at a cost of $300,000. CBS News says it was used for 
fishing. We know about the credit card abuse that was 
referenced in the report. And while we have asked for many 
documents, Mr. Chairman, for this hearing, we have only 
received about 20 percent, and the documents we actually 
received came late Friday.
---------------------------------------------------------------------------
    \1\ The chart referenced by Senator Brown appears in the appendix 
on page 225.
---------------------------------------------------------------------------
    I am encouraged, also, by the audit that was done. But 
remember, they only went from April 2010 to March 2011. They do 
not take into account the $96 million that have come in and the 
$49 million that have gone out. Where is the rest of the money? 
I think it is very important, as we do in every other hearing, 
with every other entity, that we have these hearings, to find 
out where that money is and how it is being used.
    And you would think a fund like this would have tight 
supervision over the years, but it was only 16 months ago that 
the NOAA Comptroller was given control of this fund, which 
draws fines from many statutory sources established decades 
ago. And despite the unyielding exactness that NOAA used in 
collecting these fines, they could not tell the Inspector 
General the balance of the fund, except for the recent time 
period that you were referencing, or even a definition of the 
fund until last Thursday. So, finally, after ignoring the 
problem for decades and only when facing intense congressional 
scrutiny, not only by the House but by the Senate as well, was 
NOAA able to subject its AFF financial statements to an audit.
    And as you referenced, I am encouraged by some of the steps 
that have been taken by NOAA and I want to continue to, as we 
have done in the past, provide any guidance or help that they 
need to do it better. I am hopeful that we will be able to 
continue to work with them in the future.
    However, the fact that NOAA's Washington leadership is 
celebrating the absolute bare minimum of financial 
transparency, just by the lack of documentation that they 
provided our office, some very basic things, tells me just 
about where they are coming from. I feel it is incumbent upon 
NOAA to rebuild the trust of fishermen and the elected 
officials that represent them. To do that, NOAA must account 
for the money paid by the fishermen's fines and examine if it 
has been used properly, and we must do more, as you have 
referenced.
    I know I will followup and will continue to followup in 
order to find out exactly where the monies are and how they are 
going to be spent and what we can do to do it better.
    And I will add for the record that I requested and gave 
NOAA 3 weeks to produce documents, as I referenced, and not a 
single page was produced until Friday afternoon, right before 
the Father's Day weekend. I cannot help but wonder whether NOAA 
would tolerate the same kind of behavior out of a Massachusetts 
fisherman if they were asked to provide the same type of 
documentation.
    We have seen stonewalling like this before, Mr. Chairman, 
in Congress with other entities. It is even more concerning 
given NOAA's history of making documents disappear. And you 
have read, in November 2009, while facing litigation and an 
Inspector General review, NOAA's Chief Law Enforcement Officer 
directed the shredding of 75 to 80 percent of the files in his 
office. So when we talk about going back to help other 
fishermen, I am hopeful we can do that despite the shredding of 
many of those documents.
    The Inspector General also confirmed nine complaints 
against NOAA involving false information in an affidavit, entry 
into a facility for other than authorized purposes, excessive 
fines, and steep assessed penalties in the Northeastern region 
to basically deter respondents from taking the cases to a 
hearing.
    I also reference, as you do, that Secretary Locke has 
appointed a distinguished retired Federal judge as a Special 
Master to review a lot of these cases, and in two cases, he 
found that NOAA, in fact, abused its power. We have the case of 
Captain Lawrence Yacubian. The Special Master found that the 
NOAA lawyers had unduly pressured him by unfairly delaying the 
sale of his vessel and extracting an oppressive penalty. And 
then, in turn, he had to sell the family farm, and I know you 
will hear that testimony and I am looking forward to it.
    There are many other stories, Mr. Chairman, and I 
recognize, as you do, we are not here to talk about fishing per 
se. We are here to talk about the money that was collected, 
where it is, where it is going, what it is doing, and we need 
to find a way to do it better. We have to reestablish that 
trust between the Washington bureaucrats who deal in this issue 
and the fishermen. It is very important to do that, and I feel 
if we do not, Mr. Chairman, we are going to be in deep trouble.
    So I want to thank you once again for your hearing about 
changing the culture in Washington. You say it many times and I 
take it to heart. Thank you for your leadership, and I do 
appreciate you taking time to come out and visit our fine city 
and look forward to the remaining part of the hearing. Thank 
you.
    Senator Carper. Thanks very much for that statement, 
Senator Brown, and again for helping convene us here today.
    We have three panels. The first panel will be one person, 
and he is the Congressman from the Sixth District. Let me just 
add, what district do you live in, you and your family live in?
    Senator Brown. My old State Senate district is actually 
split between Congressman Barney Frank--I used to have 
Congressman Stephen Lynch--and we also have Congressman James 
McGovern.
    Senator Carper. But who is your family's actual 
Congressman?
    Senator Brown. Congressman McGovern.
    Senator Carper. Congressman McGovern. OK. Well, if he had 
been your Congressman, I would just say, well, a lot of times 
in the Senate, when you have Committee testimony and you have 
somebody from a Committee Member's home district, we actually 
ask the Senator to make the introduction. I will just make some 
brief comments, and Senator Brown, if you want to add to that--
--
    Senator Brown. Yes, I will.
    Senator Carper [continuing]. Feel free. But Representative 
John Tierney, whom I have had the pleasure of knowing for a 
while--I did not get to serve with him in the House before I 
was Governor. I had left to go off and become Governor, I 
think, just about the time that he was getting there, so I did 
not have a chance to serve with him. As I recall, he was born 
in Salem, Massachusetts. Is that true?
    Mr. Tierney. Right.
    Senator Carper. OK. And I believe that among the places 
that are included in his district, the Sixth District, are 
Gloucester and Cape Ann and a bunch of other places. I 
understand that the issues that are before us today that 
Senator Brown has urged us to examine are of great interest to 
him. We are just delighted that you could be here, grateful for 
your testimony, and ask you to proceed.
    Mr. Tierney. Thank you.
    Senator Carper. Thank you.
    Senator Brown. Thank you. I just want to say a thank you 
for your effort on this issue. It is something that you and 
Congressman Frank have been working very hard on, along with 
Senator John Kerry, to try to bring these issues up, and as a 
result of the congressional hearing you have had and what we 
are doing and what the Commerce Committee is doing, hopefully, 
we will be able to bring these issues to light and do it 
better. So thank you, Congressman, for being here today.

   STATEMENT OF HON. JOHN F. TIERNEY,\1\ A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF MASSACHUSETTS

    Mr. Tierney. Well, thank you. Thank you both, Chairman 
Carper and Senator Brown. Frankly, I think most of us do not 
care how it is you got the jurisdiction to have the hearing. We 
are just pleased that you are focusing some light on this 
issue, as we have been trying to do for some time. And this has 
been a bipartisan effort, and Senator Brown, we have really 
welcomed your attention to it. We knew when you brought Vito 
Giacalone on board that you were really focusing like a laser 
beam and making sure that we are all on the same page.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Tierney appears in the appendix 
on page 58.
---------------------------------------------------------------------------
    I see a lot of familiar faces out in the audience today 
that were at the hearing that we held in Gloucester a little 
over a year ago. I know Mayor Kirk and Representative Ferrante 
and Senator Tarr and all of the others that have been so 
involved in this issue are pleased that you are here, and they 
deserve a large part of the credit for actually inducing Dr. 
Jane Lubchenco Under Secretary of Commerce for Ocean and 
Atmosphere and NOAA Administrator to originally ask for an 
Inspector General's report. It took quite a bit of agitation 
from the community, from elected officials, through people 
working in the industry, to make sure that happened.
    I am disappointed that Dr. Lubchenco is not here today, as 
I am sure you are. I am not surprised, unfortunately, given the 
reactions that we have had. I think it shows an attitude that 
we have experienced throughout, right up and including the 
recent alleged apologies that were made. I think they could 
have been done entirely better and more effectively on that. 
But it lends me to continue to question whether or not she is 
the right person to head NOAA going into the future on these 
important issues.
    But I appreciate everybody that is here today that is going 
to testify. I want to thank the Inspector General Todd Zinser 
and his team for having done such a good job on this, showing 
their dedication and their interest in making sure that we get 
to the bottom of a lot of these very important issues.
    We are now in the second year of the catch-share program 
and it has really caused a lot of agitation and concern to 
members of the community. They are enduring numerous challenges 
and economic hardship, and so when we know the individual 
fishing men and their family are suffering this, but it also 
goes beyond to related industries, and repair and maintenance, 
fuel and boats, ice to preserve the catch, just to name a few.
    And I think of just three of those, the Gloucester Marine 
Railways, a Massachusetts Shipyard that used to have 40 boats 
in its yard at any given time now has about six. They have been 
in business since the Civil War. We have Cape Pond Ice Company 
that started as a Gloucester company in 1848. It used to do 350 
tons of ice for the fleet. Now its capacity is down to 200, but 
they are actually doing only five tons for the fleet at any 
given time. And so those are concerns on that.
    But the third is the Gloucester Seafood Display Auction. I 
think that they have, probably as much as anybody, suffered as 
a result of the overregulation of the fish stocks, but more so 
the overzealous action of the Office for Law Enforcement on 
that. I know Larry Ciulla is, I think, going to testify here 
later today and I think that we would do well to listen to his 
experience and the company's experience and the people that go 
there for a fair deal, being able to buy and sell their 
product, including right through, Senators, if you would, the 
recent appearance by Dr. Lubchenco and the so-called apologies 
and reparations on that. I think it would be an interesting 
discussion.
    But I know the focus of this hearing is, in fact, on the 
Asset Forfeiture Fund, and we tended to that a bit a little 
over a year ago when Inspector General Zinser and his group 
filed a report that evidenced the materials Senator Brown was 
pointing out here, the improper accounting, the lack of 
accountability, the improper expenditures on that, and I think 
that it has been helpful for us trying to get the most recent 
audited report that covers that short period of time that 
Senator Brown mentioned. But it had weak internal controls. 
They had difficulties in a number of other areas, and followed 
by a report last July on the fund. Even then, it found that 
NOAA had administered the Asset Forfeiture Fund in a manner 
that was neither transparent nor conducive to accountability, 
thus rendering it susceptible to both error and abuse.
    Now, I know they have taken some correction. I agree with 
Senator Brown on this. I think they need to do a lot more, and 
that is why it is good that you are having this hearing and 
that Mr. Zinser and others will be able to discuss just what 
more they might be doing.
    But I pose to the Senate panel a fundamental question that 
I hope they ask today and then delve into a little bit further 
when you get the documents that have been requested. Should 
this fund even exist? Should this fund exist, or is it not a 
perverse incentive for an agency that has been shown to be out 
of control to actually go out and increase its own resources by 
affecting forfeitures and collecting assets and cash and then 
turning them into an asset that they can use in their 
investigations?
    Nobody disputes what I think Mr. Eric Schwaab said when he 
talked about the people that commit violations should pay for 
some of the enforcement, if not all of it, if you could do 
that. I do not think that is the question. I think the question 
is whether this Asset Forfeiture Fund has been run so poorly, 
has been so unaccountable, and has been used as such a vehicle 
in the way it has, whether or not we ought to just collect 
those fines, forfeit the assets, and turn them into cash and 
then put it in the Treasury and have the Department come 
through NOAA every year and get an appropriation for what they 
want to spend so that we do not have this perverse incentive 
out there and a concern that people are being abused for the 
betterment or the enhancement of the enforcement on that.
    Last year, we were trying to give them an opportunity--NOAA 
an opportunity--to clean up their own house. We filed 
legislation. I filed legislation that would have done some of 
that. It would have taken away their ability to reward persons 
who provide information leading to arrest, conviction, civil 
penalty assessments, or forfeiture of property. We thought that 
was an inducement that might be going the wrong way. It would 
have stopped them from paying the expenses directly related to 
the investigation, again, thinking that would be a bad 
inducement for them. It would have left them the ability to 
reasonably and necessarily pay for costs for primary storage 
and those matters, valid liens and mortgages, claims of parties 
that the property is being disposed of, and reimbursement for 
Federal and State agencies that they brought on to help.
    But I think that one or the other. Either we take a look 
and just say, this fund should not exist and the money should 
go directly to the Treasury and people should come in and make 
sure they get an appropriation, or at least limit it so that we 
take away that perverse incentive for them to maximize the 
receipts that they get in order to continue on in that basis.
    The other reason legislation may be warranted on this is 
the provision we put in that legislation that would allow for 
some of those assets to be spent for reparations and for 
attorneys' fees and costs. Even after the apology of more 
recent days was made, some people that were involved in this 
did not feel as though they got the reparations they deserved, 
and certainly even after reparations, others, there were out-
of-pocket attorneys' fees and costs of substantial amounts, 
leaving them, besides the heartache and the emotional trauma 
and the agitation that they have gone through, leaving them 
with sizable amounts of money that they are out of pocket that 
impacted adversely on their businesses, but also on their 
personal life and their family support systems on that.
    So I would hope that this Subcommittee would give some 
consideration to those aspects on that, and I know that, going 
forward, we have to have a renewed commitment about this Asset 
Forfeiture Fund and how it is operated, but also about all the 
other issues on catch-shares and reasonable law enforcement.
    And I am glad that you are here. I am thrilled that you are 
going to get those documents that we can look into making sure 
that we get this done thoroughly, complete, and in a manner 
that restores some professionalism to the Department and 
hopefully the confidence of the people that are being regulated 
by the agency, as well.
    I thank both of you again for being here and for doing this 
work and we look forward to working with you in any way that we 
can. Thank you.
    Senator Carper. I just want to say, thanks so much for 
making the time to join us today and for providing really an 
excellent statement. It is obvious that you have spent a lot of 
time on this issue and know it well.
    We are not going to ask, I do not think, unless Senator 
Brown would like to ask a question----
    Senator Brown. No.
    Senator Carper. I just would like to note, my understanding 
is that in their budget submission to Congress from the 
President from NOAA, I think they have asked for additional 
monies that previously they would have used--drawn monies from 
the fund to pay for. And given the new stipulation that has 
been issued, I think, as part of this ongoing investigation by 
the IG, I believe that there are a number of expenditures which 
previously had come from the fund, including the purchase of 
cars, boats, and stuff like that, from now on, basically, you 
cannot do that. And I think that comes from an internal 
directive.
    But I understand, at the same time, the agency will be--
instead of taking monies from that fund, will be asking us to 
consider providing monies through the budgetary process, which 
is a more appropriate way to do that. So I think that is where 
we are going and I hope that is the case. We will have an 
opportunity to ask our witnesses when they come up.
    Mr. Tierney. I hope it is, as well. Thank you again.
    Senator Brown. Thank you, Congressman.
    Senator Carper. Thanks so much. All the best.
    And with that, we invite our second panel to come forward, 
Mr. Zinser and Mr. Schwaab.
    Our first witness on our second panel is the Hon. Todd 
Zinser, good morning, who serves as the Department of 
Commerce's Inspector General, no stranger to this Subcommittee, 
no stranger to us in the Senate, either. Prior to his 
appointment as Inspector General, Mr. Zinser spent 24 years as 
a civil servant, including a long tenure at the Department of 
Transportation (DOT), where he was named Deputy Inspector 
General in 2001. We thank you for being here today. We thank 
you for your service to our country very much.
    Our next witness is Eric Schwaab, Assistant Administrator 
for Fisheries at NOAA. He is responsible for the management of 
NOAA's National Marine Fisheries Service (NMFS). Mr. Schwaab 
spent the majority of his career at the Maryland Department of 
Natural Resources, and they are our neighbor right across the 
line there, and we have had an opportunity to work with him in 
that previous role. I think he may have begun his service as a 
Natural Resources Law Enforcement Officer. And he served as 
Deputy Secretary of that Department until his appointment to 
serve at NOAA.
    So we thank you both for joining us today. I am going to 
ask you to try to keep your testimonies to about 5 minutes or 
so. You have an opportunity to summarize your statement if you 
wish and the rest of it will be made a part of the record, and 
then Senator Brown and I will ask you some questions.
    Please proceed, Mr. Zinser.

    STATEMENT OF TODD J. ZINSER,\1\ INSPECTOR GENERAL, U.S. 
                     DEPARTMENT OF COMMERCE

    Mr. Zinser. Mr. Chairman, Senator Brown, and Members of the 
Subcommittee, thank you for inviting us to testify today.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Zinser appears in the appendix on 
page 61.
---------------------------------------------------------------------------
    Over the past 2 years, beginning in June 2009, we have 
carried out a review of NOAA's Fisheries Enforcement Program at 
the request of Under Secretary Lubchenco. Our review resulted 
in three publicly released reports.
    Our first report, in January 2010, included findings and 
recommendations concerning NOAA's overall enforcement program.
    Our second report, in July 2010, included findings and 
recommendations concerning NOAA's Asset Forfeiture Fund. The 
Asset Forfeiture Fund is authorized by the Magnuson-Stevens 
Fishery Conservation and Management Act (MSA). It allows NOAA 
to retain fines and penalties collected as a result of 
enforcement actions for violations of the Act and other 
statutes.
    Our third report, in September 2010, included findings and 
recommendations related to 27 specific cases brought to our 
attention, in which there were allegations against NOAA's 
Office for Law Enforcement or General Counsel for Enforcement 
and Litigation concerning how those offices conducted their 
enforcement activities.
    In all, our review of NOAA's enforcement program led to 28 
recommendations for improving the transparency and 
accountability of the program. In addition to Under Secretary 
Lubchenco, our findings and recommendations have received the 
attention of Secretary Locke. The reforms directed by the 
Secretary and the Under Secretary have been responsive, 
substantial, and--if effectively implemented--will go a long 
way toward fixing the mismanagement and other problems 
identified in our review. Many of our recommendations are now 
the responsibility of Assistant Administrator Schwaab to 
implement.
    Mr. Chairman, my testimony today will focus on our findings 
with respect to NOAA's Asset Forfeiture Fund and can be briefly 
summarized in three points.
    First, the fund and its operation are very complex. A major 
finding is that, for years, the fund's purpose and proper usage 
were not well defined, and the fund received very little 
attention from NOAA's senior management. NOAA enforces over 37 
different statutes related to conservation and protection of 
marine resources and is authorized to retain proceeds from 
other statutes in addition to Magnuson-Stevens. However, we 
found that it was not clearly defined as to which enforcement 
proceeds were being deposited into the fund and which were not. 
We also found that no one person at NOAA had central authority 
or an overall understanding of the fund. As a result, 
calculating the revenues, expenditures, and balance of the fund 
proved very problematic.
    For example, NOAA reported to us in December 2009 that the 
balance of the fund was approximately $8.4 million. But the 
audit firm we hired reported in July 2010 that it had 
calculated revenues of the fund over the previous 5 years 
amounting to $96 million and expenditures of $49 million, 
suggesting that the balance of the fund could be significantly 
higher. NOAA has since retained its own accounting firm to 
render an opinion on the fund's financial statements, and we 
will be reviewing the audit report to understand what makes up 
the fund's balance.
    In addition to the complexity surrounding the definition of 
the fund and its balance, other complexities include the 
decentralized nature of the internal controls and management of 
the fund.
    My second point, Mr. Chairman, is that there is no argument 
that the fund was severely mismanaged. The fund did not receive 
the careful management you would expect and that is 
characteristic of such funds maintained at other Federal 
agencies. For example, despite the sensitive nature of the fund 
activities, it had not received a stand-alone audit in all its 
years of operation. This stands in stark contrast to the annual 
audits required of similar funds at the Treasury or Justice 
Department.
    We also found a serious lack of internal controls, 
including a disturbing lack of uniform procedures, 
documentation to support expenditures from the fund, and 
documented approvals for expenditures. As noted, our July 2010 
report goes into greater detail about these issues.
    My third point, Mr. Chairman, is that the reforms initiated 
by NOAA for managing the fund, if effectively implemented, 
should provide greater confidence that the problems found in 
the fund's past management and use will not be repeated in the 
future. Upon receiving our report, the Secretary and Under 
Secretary ordered some immediate actions, including placing 
restrictions on the use of the fund and transferring 
responsibility of the fund from the Office for Law Enforcement 
to NOAA's Chief Financial Officer (CFO). NOAA is continuing to 
implement the 13 recommendations we made specifically 
concerning the operation of the fund, and we are following up 
to track the progress of their efforts.
    Mr. Chairman, Senator Brown, that concludes my statement. I 
would be happy to answer any questions.
    Senator Carper. Thanks very much for the statement, Mr. 
Zinser, and thanks even more to you and your team. Is anybody 
here from your team, the Inspector General's Office? Is anybody 
here?
    Mr. Zinser. I have two folks sitting behind me, sir.
    Senator Carper. Would you raise your hand, please, those of 
you with the IG? No? Nobody raises their hand. Thank you. Just 
convey our thanks to those with whom you work for the good work 
that has been done. All right. Thanks.
    Mr. Schwaab, you are recognized. Please proceed.
    Mr. Schwaab. Good morning, Chairman Carper.
    Senator Carper. I was afraid that maybe nobody wanted to be 
recognized as part of your team but in this case, they can be 
proud of it, so----
    Mr. Schwaab. The acoustics--I do not know if you have 
noticed--are really hard to hear what you are saying over here.
    Senator Carper. No kidding.
    Mr. Schwaab. Yes.
    Senator Carper. What did you say? [Laughter.]
    We can hear you just fine. All right.
    Mr. Schwaab. So, if you would like me to introduce the 
folks with me----
    Senator Carper. Yes, please do.
    Mr. Schwaab. Alan Risenhoover, who runs our Office of 
Sustainable Fisheries but for the last year has been serving in 
an acting capacity as the Director of our Office for Law 
Enforcement, and Stephanie Hunt, who is with our Legislative 
Office.
    Senator Carper. Welcome.
    Mr. Schwaab. Thank you, sir.
    Senator Carper. Please proceed.

 STATEMENT OF ERIC C. SCHWAAB,\1\ ASSISTANT ADMINISTRATOR FOR 
   FISHERIES, NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION

    Mr. Schwaab. Good morning, Chairman Carper, Ranking Member 
Brown. It is a pleasure to be here with you this morning.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Schwaab appears in the appendix 
on page 71.
---------------------------------------------------------------------------
    The fishing industry is, of course, an important part of 
the Nation's culture and economy. Nowhere is that more evident 
than here in Massachusetts. Gloucester is America's oldest 
seaport, and Boston, New Bedford, and other coastal towns have 
fishing industries that have supported families, businesses, 
and communities for hundreds of years. According to our most 
recent estimates, nationwide, commercial and salt water 
recreational fisheries support almost two million jobs and 
generate more than $160 billion in sales.
    Making sure that there are enough fish to sustain those 
fishing industries is a part of NOAA's job. Another part of 
NOAA's job is to make sure that fishermen have a level playing 
field so that their businesses are not compromised by others 
who choose to violate the rules. Fishermen want a level playing 
field and regulations that are easy to understand and fairly 
enforced. They also want to know that if others break the 
rules, they will be caught.
    Following the Department of Commerce Inspector General 
reports, this Administration conducted a top to bottom review 
of NOAA's enforcement program and instituted sweeping reforms 
to ensure that the program is both fair and effective. Some of 
the highlights of those reforms include new enforcement 
leadership at headquarters and in the New England Regional 
Office; transfer of authority to issue charges and settle cases 
from the field staff to supervisors in headquarters; a new, 
more transparent penalty policy that ensures consistency in 
charging decisions nationwide and provides greater clarity for 
fishermen and fishing businesses; revised regulations that now 
place the burden on NOAA rather than a fisherman to justify the 
proposed penalty and permit sanctions in hearings before 
Administrative Law Judges.
    We are also reshaping our enforcement workforce by 
increasing the number of enforcement officers to emphasize 
compliance, dockside problem solving, and enhanced 
communication with fishermen. These actions will increase our 
dockside presence and also enhance already effective 
enforcement partnerships with the States.
    NOAA has also instituted a number of important reforms to 
our Asset Forfeiture Fund. We instituted greater oversight of 
fund expenditures, and now the NOAA Fisheries Chief Financial 
Officer must approve any expenditure of $1,000 or more from the 
fund. We implemented a new policy for use of the fund. The 
policy prohibits approximately half of the fund's historical 
uses, including the purchase of vehicles and vessels. The new 
policy eliminates even the appearance of conflict of interest 
with respect to use of the fund.
    NOAA has also, as you have heard, initiated a financial 
audit of the fund by an independent auditing firm. We received 
the results of that audit last Wednesday and I am pleased to 
say that we received an unqualified, or clean, opinion, the 
best type of audit one can receive. In issuing their clean 
opinion on the financial statements, the auditors confirmed the 
fund's overall balance at $7.5 million as of March 31, 2011.
    NOAA has also contracted with the same independent 
accounting firm to test fund transactions more susceptible to 
fraud, waste, and/or abuse. The firm is directly testing 
purchase card transactions and travel vouchers for fiscal years 
(FY) 2005 through 2010. This special transaction review is 
scheduled to be completed by July 15, 2011. Should this review 
find any misuse of funds, the agency will take appropriate 
action.
    Also, I want to note that after requests from fishermen and 
elected officials, Secretary Locke appointed a Special Master 
to review past cases identified by the Inspector General. On 
May 17, 2011, the Secretary announced remittance of $650,000 in 
penalties to 11 fishermen in the first set of cases under 
review. A second set is also now under review.
    Also at the request of the Secretary, NOAA is now looking 
at one final matter regarding closure days in some of those 
penalty actions. These are just a few of the many reforms 
underway to create a more effective and transparent enforcement 
program.
    I would like to turn now briefly to the issue of funding 
for the transition to groundfish sector management. For many 
years, the New England groundfish fishery has been 
underperforming, both ecologically and economically. Under 
sector management, a group of fishermen are allotted a portion 
of a fish stock's total allowable catch. This provides greater 
flexibility about where and when to fish, allowing fishermen to 
maximize capture of healthy stocks and avoid or minimize the 
capture of weaker stocks. Although it is still early and not 
everyone has seen gains, the sector system is showing promise.
    Additionally, in 2011, catch levels have gone up for 12 
groundfish stocks over the past fishing year. This is, of 
course, a part of or reflective of the rebuilding process that 
is underway.
    To aid the transition to sectors, NOAA has allocated more 
than $47 million, which, among other things, is supporting 
research with the fishing industry on developing more selective 
fishing gear, for the fishery to avoid weaker stocks. This 
investment also helped to defray startup costs for sectors and 
is supporting the development of permit banks that provide 
fishing opportunity for small-scale fishermen.
    Fishermen are the lifeblood of so many of our coastal 
communities, and America's fishermen support vital jobs in our 
coastal communities. Effective management and enforcement 
ultimately protects the business interests of fishermen as well 
as the marine environment.
    Thank you again for the opportunity to be here today. I 
welcome your questions.
    Senator Carper. And I am going to suggest, Senator Brown, 
that we use maybe 7 minutes----
    Senator Brown. Sure.
    Senator Carper [continuing]. Take turns every 7 minutes and 
do, maybe a couple of rounds with this panel.
    First of all, thank you both very much for what I thought 
was excellent testimony. I want to lead off with you, Mr. 
Zinser. This fund was a mess, and what I think happened, just 
as someone looking at this from the outside, is you had a 
diminished amount of trust between the community, the fishing 
community, and NOAA, the administrator, because of the view 
that monies were being taken into this Asset Forfeiture Fund in 
ways that were inappropriate and unfair, expended in ways that 
were inappropriate, too, and it helped undercut whatever trust, 
diminish whatever trust might have existed.
    Senator Brown and I work in an environment in Washington 
where we are trying to deal with these huge budget deficits, 
and one of the things that is most important is that Democrats 
and Republicans in the Senate and in the House find a way to 
trust each other again, and out of that trust hopefully will 
emerge a consensus of how, what combination of spending cuts 
across the board, or maybe not across the board but in domestic 
spending, defense spending, entitlement spending, tax 
expenditures, but maybe with that trust restored or being 
restored across the aisle, we can actually get something done.
    I used to serve on the Merchant Marine and Fisheries 
Subcommittee in the House before I was Governor and these 
fishery issues, fisheries management issues are very difficult. 
Change is difficult. And to try to do that change or implement 
that change, even if it is thoughtful and the right thing to do 
in the long term, if you do not have the trust between, in this 
case, the commercial fishermen and the agencies whose job it is 
to oversee it, you make that change all the more difficult.
    So that is why this is, I think, such an important hearing, 
and I am pleased that Senator Brown suggested that we hold it.
    Let me just ask of the Inspector General, how did this get 
so messed up? Why was something not done 10 years ago, 15 years 
ago, to fix it? Why did it take so long?
    Mr. Zinser. When this allegation first came to us, sir, it 
was one of a nest of issues about fisheries enforcement, and I 
thought that we would just go in and tell people what the fund 
was used for and look at the accounting for it and that it 
would be very transparent. That is what I expected.
    And very quickly, we learned that transparency and 
accountability were not there, and the best explanation I can 
provide for your question is that when the fund was authorized 
early on, it had very limited purposes. It was to pay for 
storage of fish that were seized or for rewards for people 
providing information. And then there were amendments to the 
Act in 1990 that expanded the authorized use of the fund or the 
proceeds to support investigations.
    I think that the handling of that, the accounting of that, 
was just delegated too far down in the organization, and it was 
delegated to people who, frankly, were investigators or folks 
of that background and not financial managers. And then as we 
proceeded through time, the leadership that came into the 
fisheries enforcement organization were also law enforcement 
people who did not come from a Federal background--they came 
from a State background--and this whole idea of strategic 
planning and knowing how to maximize the use of resources was 
totally lost.
    The operation of the fund remained decentralized. Different 
divisions had different procedures. We have an astounding lack 
of documentation for these expenditures. And even the 
expenditures where we have some documentation, there are 
missing approvals, and it is, sir, quite a challenge to go back 
and try to determine the appropriate use--whether all these 
funds were appropriately used.
    Senator Carper. We have a term in Delaware, maybe you do 
here in Massachusetts, for a situation like the one that you 
uncovered and have investigated and tried to straighten it out. 
We call it a dog's breakfast. That is what we call it, a dog's 
breakfast.
    When you look at what is being done, the reforms that are 
being adopted and changes being made, what are some of the--
three or four most important ones?
    Mr. Zinser. Well, I think in terms of the Asset Forfeiture 
Fund, the things that they are doing are very important and 
right on the money. The idea of setting up a separate code for 
the fund, to elevate the centralized control of the fund, to 
clarify the authorized uses, I think those are all right on the 
money.
    Senator Carper. In terms of the changes that are still to 
be adopted and implemented, would you mention a couple of those 
that are still a work in progress?
    Mr. Zinser. Well, I think the biggest thing, and this 
applies not only to the Asset Forfeiture Fund but the other 
aspects of the enforcement program that we have made 
recommendations on and that NOAA is working on, is that the 
political leadership is on board. Under Secretary Lubchenco and 
Mr. Schwaab, the Secretary, of course, the General Counsel's 
Office, the political leadership is on board. I think the more 
difficult thing that has to be done is to convince the career 
management that these are important reforms to implement and to 
forget about the acrimony or the defensiveness that comes with 
an IG investigation--forget about that and get on with making 
sure that these reforms are in place, because they will, if 
properly implemented, fix these problems.
    Senator Carper. In terms of what our responsibilities are, 
as Senator Brown knows certainly as well, maybe better than me, 
but we play an oversight role. Our job is to poke in every nook 
and cranny of the Federal Government, looking at what is going 
on and asking IGs, asking OMB, asking a number of interested 
parties what is going well here and what is not. And in this 
case, there is bad behavior, misbehavior that is being 
addressed, and part of our responsibility and our oversight 
role is to positively enforce the good behavior, the kind of 
behavior that we think and you think is appropriate, and to 
make sure we put a spotlight on that.
    The other thing that we need to do and seek to do in 
hearing after hearing is to put a spotlight on bad behavior. 
And just a great example of this, and I mentioned in my opening 
statement and Senator Brown knows we have been trying for years 
to get the Department of Defense to give us audited 
financials--for years. They miss deadline after deadline after 
deadline. The Government Accountability Office holds them out 
as a very poor example in terms of missing their 
responsibilities in conducting in a fiscally appropriate 
manner. Now, we are told by the Department of Defense they are 
not going to give us audited financials until maybe 2017, and 
they may not be able to make it by then.
    And I am encouraged that we have what looks like a clean 
audit out of a real independent auditing firm. We did a little 
bit of a background check and found that this firm is actually 
real. They do all kinds of audits. They are one of the top 15 
in the country. They do a lot of audits for Federal agencies, 
so they are somebody that apparently we can trust.
    In terms of their additional work and work that has to be 
done by the agency in response to that audit, are there any 
other points that you want to mention in terms of a work in 
progress or the ``to do'' list? I would ask either of you to 
respond to that. Do you want to take it first, Mr. Zinser, and 
then Mr. Schwaab?
    Mr. Zinser. Well, specifically on the Asset Forfeiture 
Fund, I think the continuing audit by Clifton Gunderson to look 
into some of the specific transactions. There were thousands of 
individual transactions over the last 5 years that will undergo 
some further investigation by Clifton Gunderson to determine 
whether the documentation is there, appropriate use. Those 
types of reviews will also provide some recommendations about 
internal controls that are needed, and so I would look forward 
to the results of that to identify not only any kind of misuse, 
but also internal controls that might be important but that are 
not in place yet.
    I think that the definition of authorized use, there is 
still some ambiguity, for example, on what type of training and 
travel should be paid for out of the fund, and, for example, 
even if a training course is authorized, does the statute 
authorize the travel associated with that training to be paid 
for? So there are some ambiguities that are still present. 
Although the Department has done a good job defining authorized 
use, I think it could probably use another iteration.
    Senator Carper. OK. My 7 minutes has expired, so Mr. 
Schwaab, I will just ask you to hold in abeyance. We will come 
back--no, that is OK. I want to be respectful of my colleague.
    But I do want to say, one of my favorite saying is, the 
road to improvement is always under construction. Think about 
that. The road to improvement is always under construction. 
This is a road to improvement, and I think we are hearing today 
a lot of improvement has been made, but there is a lot of 
construction that lies ahead, so thanks very much. Senator 
Brown.
    Senator Brown. Thank you, Mr. Chairman.
    It is good to see you again, Mr. Zinser. I appreciate the 
previous hearings you have testified at. When you were doing 
your investigation, did you find that the shredding that took 
place has hurt your ultimate determination as to what was right 
and what was wrong? Did that hinder your investigation and 
reporting?
    Mr. Zinser. I would say that by nature, it hindered the 
reporting, because we will never know what was in those 
documents. So, we will never know what was in those documents. 
We reconstructed a list of what the files were--what the file 
labels said--but we do not know what documents were in those 
files, so we do not really know.
    We did not find that the Director had an intent to obstruct 
our audit in doing the destruction, and some people have 
questions about, well, how could that be? But my response is, 
the fact that leadership would destroy his records in the 
middle of an investigation is kind of consistent with the way 
the place was managed in general. It really suffered from very 
unsophisticated management.
    Senator Brown. And, Mr. Schwaab, what was actually done 
with that person that shredded? Was he fired or disciplined in 
any way?
    Mr. Schwaab. Senator, as I think you are well aware, I 
cannot speak specifically to individual personnel actions 
because of Privacy Act considerations. I can speak to the 
position that he once held and the position that he holds now, 
but I cannot speak to----
    Senator Brown. Is he in that position now?
    Mr. Schwaab. He is not.
    Senator Brown. So he has been relocated?
    Mr. Schwaab. He is in a different position today.
    Senator Brown. Mr. Chairman, also, just for the record, we 
only received about 20 percent of our documents. For the 
record, and I would like to keep my request open for the 
completion of my document request and I also will have 
questions as we traditionally keep the period open to ask 
additional questions so we can continue getting the 
information.
    Senator Carper. Senator Brown, I think we will leave it 
open for the next couple of weeks----
    Senator Brown. Yes, that is all, just a couple of 
questions.
    Senator Carper [continuing]. For you and I to offer our 
questions, and we just ask for a prompt response. Thanks.
    Senator Brown. Yes, just so we have the appropriate 
documents so we can see if there is anything that we missed. 
And unfortunately, Administrator Lubchenco is not here today, 
yet in March 2010, she testified before the House Subcommittee 
prior to release of the IG's report that was referenced 
earlier, found that NOAA's Office for Law Enforcement lacked 
policy authorization for purchasing approximately 200 vehicles 
at a cost of $4.6 million, predominately with the Asset 
Forfeiture Fund monies, and that the vehicles exceeded its 
staffing of 172 personnel. Also, NOAA's OLE lacked policy 
authorization for acquiring 22 vessels at a cost of $2.7 
million, including a luxurious $300,000 boat. I have a chart 
here that references a lot of the spending that took place.
    In addition, the independent Special Master found that 
there was credible evidence that money from sanctioning 
fishermen was a motivating objective in NOAA's past enforcement 
objectives. Mr. Schwaab, do you agree with Administrator 
Lubchenco's March testimony concerning the AFF and that there 
is an appearance of perverse incentives operating here?
    Mr. Schwaab. I am not--again, the acoustics are a little 
tough here. So you are asking me if I agreed with----
    Senator Brown. Yes. Do you agree with her testimony that 
there was an appearance of perverse incentives operating in 
that situation?
    Mr. Schwaab. I think it is very clear that the way the fund 
was managed previously left open that possible interpretation, 
and taking steps to foreclose on many of those uses of the fund 
is intended to remove that appearance. Yes, sir.
    Senator Brown. Do you think that the purchases identified 
by the IG of all the cars and boats and everything, in your 
opinion, is the proper use of taxpayer funds?
    Mr. Schwaab. The previous interpretation was that was 
consistent within the law and that using the fund for that 
purpose----
    Senator Brown. There was no----
    Mr. Schwaab [continuing]. Was acceptable. I do believe and 
agree, sir, with the Secretary's new policy that substantially 
restricts the use of the fund, particularly as it pertains to 
use for the purchase of vehicles and vessels. So I agree that 
is a much better place for us to be.
    Senator Brown. Well, there was no policy. That is why we 
got into this mess. There was no policy authorizing it, 
according to the IG's report. There was no policy authorizing 
any of these purchases. And, as a matter of fact, the Magnuson-
Stevens Act requires that AFF expenditures be directly related 
to investigations or criminal enforcement proceedings. So there 
really was not a policy before. There is a policy now, and that 
is one of the things that we have commended you publicly for, 
is establishing that. So there was not a policy before. That is 
why we are in this mess, is that not right?
    Mr. Schwaab. I think the lack of policies and procedures is 
a big part of why we got to where we are, and putting those 
policies and procedures in place is a big part of moving 
forward more effectively.
    Senator Brown. Do you think that the new policy that you 
have in place now will eliminate a lot of the things that we 
have come to note in the past?
    Mr. Schwaab. Yes, sir.
    Senator Brown. And Mr. Zinser, the $109,000 trip to Norway, 
I guess, 15 people including the contractor were actually 
brought there. Did you note that in your report as to 
questioning whether, in fact, that was an adequate use of the 
forfeiture fund and taxpayer money?
    Mr. Zinser. We did not make a judgment on whether that was 
an appropriate use of the fund. We did note that the funds were 
used for that purpose and tried to understand rationale for 
using Asset Forfeiture Funds for that trip. What was reported 
to us is that the trip involved a conference about 
international fishing treaties, that the NOAA staff who 
attended did so for the purpose of making presentations at that 
conference, and again, the difficulty for us is the absence of 
any kind of legal opinion from the Department or from NOAA as 
to what the authorized use of that is. This kind of an 
interpretation of the statute just did not exist.
    Senator Brown. Well, your report actually found nearly 
$580,000 in international travel that was charged to the fund 
and only 17 percent of that travel was directly related to 
specific investigations or enforcement proceedings. And as you 
also noted, Magnuson-Stevens requires that the expenditures be 
directly related to investigations or criminal proceedings. 
Does NOAA's new policy on the use of the AFF meet the specific 
prescriptions of the law mentioned in your report?
    Mr. Zinser. Well, I think one of the benefits of our work 
is that we finally do have an opinion from the Department's 
General Counsel. That opinion defines ``directly related'' very 
broadly and provides a legal analysis as to why that language 
can be interpreted very broadly. That is why I suggested that 
there is some ambiguity in there and that some further 
clarification may be needed.
    Senator Brown. Well, it is interesting, because we look at 
Magnuson-Stevens and to the letter of the law, we apply it to 
the fishermen. Yet when we have the language which says it is 
supposed to be directly related to investigations and criminal 
enforcement proceedings, it is like it is loosey-goosey all of 
a sudden.
    Mr. Schwaab, I know that there have been new policies in 
place, but how do you justify taking--and I know there is going 
to probably be an argument, well, we use it to deal with other 
countries with treaties and this and that so we can come up 
with enforcement. But you are taking money, hard-earned money 
from fishermen, using it to send 15 people over to Norway in 
that previous instance with really no real oversight at all. I 
mean, is that still the policy? Is that something that you plan 
on still doing, is using money--I understand that you are still 
going on international trips with fishermen's money. Is that 
still happening?
    Mr. Schwaab. No, sir. So we now use other sources of funds 
to pay for general trips of that nature--admittedly important 
trips in many cases, because achieving parity internationally 
in the way that fisheries are enforced is another large 
objective that we share and it is one that benefits our 
domestic fishermen. But as it relates to the use of travel 
funds, we only use travel funds--we only pay for travel out of 
the Asset Forfeiture Funds now related to specific cases, and 
the case number has to be identified in that paperwork.
    Senator Brown. Well, the new policy I have, it says that 
attendance at international and domestic bi or multi-lateral 
meetings and negotiations to discuss enforcement-specific 
agenda items is still allowed. It is still allowed pursuant to 
the policy that you folks provided us with. So which is it?
    Mr. Schwaab. I am sorry. Mr. Risenhoover just clarified for 
me that we do still under the policy allow bilateral 
engagements with specific countries under the forfeiture fund.
    Senator Brown. So you still use fishermen's money to go 
overseas for these trips?
    Mr. Schwaab. For particular bilateral engagements, yes, 
sir.
    Senator Brown. Well, what does that mean for the average 
listener, bilateral?
    Mr. Schwaab. Country to country----
    Senator Carper. Just give us some clear examples. Just be 
real specific. Give us some clear examples of how these monies 
can be used for foreign travel. Please, just be very specific. 
Clear it up.
    Mr. Schwaab. Country-to-country engagements as opposed to 
conferences and larger training venues.
    Senator Brown. OK. Mr. Zinser, in 2010, your office issued 
a report on the Office of General Counsel, the GCEL, which 
found that inattention by their management to completing 
performance appraisals, a pass-fail system contrary to the 
Department of Commerce's five-level system, and all attorneys 
currently employed were rating ``meets'' or ``exceeds'' 
performance levels. In Secretary Locke's May 17 decision memo 
on the Special Master, he cites that there was little 
management or supervision, which contributed to the overly 
aggressive conduct toward fishermen. Does your December 10 
finding about weaknesses in the GCEL Performance Management 
System support Secretary Locke's contention?
    Mr. Zinser. Yes, it does. The reason we looked at the 
performance appraisals to begin with was to see whether or not 
the attorneys were doing what their bosses wanted them to do, 
because we could not criticize the attorneys for the way they 
conducted themselves if their performance appraisals said that 
was good performance. And what we found was a serious lack of 
executed appraisals. In many cases the employee did not sign 
their appraisals. In other cases, the supervisors were not 
signing them. It was a pass-fail system.
    As a result of a pass-fail system, there were very few 
appraisals that provided any record of the work products that 
the attorneys worked on. So we felt it was important as part of 
these reforms to bring that to the attention of the Under 
Secretary to try to institute some reforms, and I believe they 
are running into some issues with the fact that the attorneys 
for NOAA are part of a collective bargaining unit and that this 
is caught up in their collective bargaining agreement, the way 
they get their performance appraisals.
    Senator Brown. Great. I had 10 minutes. I will turn it back 
to you, Mr. Chairman.
    Senator Carper. Thanks, Senator Brown.
    I just want to come back one more time on the travel issue, 
which really grates on people. In some cases in this country, 
folks do not get to take a vacation at all this year. If they 
do not have a job, they do not get to take a vacation, and the 
idea that trips to a place like Norway and Malaysia have been 
taken that cost a lot of money and a lot of people get to go.
    So what I want to do is come back and say what we have been 
told is between January 2005 and June 2009, some $580,000 was 
charged to the Asset Forfeiture Fund for international travel, 
almost $600,000. I am told that just under 20 percent of that 
cost for this travel was directly related to specific 
investigations or to enforcement proceedings. Seventy percent 
of the cost for this travel was directly related to specific 
investigations or enforcement proceedings. And what I would 
like to hear is some assurance that going forward, we are not 
going to see this kind of money be used for those kinds of 
trips, and that the trips that will be taken, if there is 
foreign travel in the future, it would have to relate to 
specific investigations or to enforcement proceedings. I need 
that assurance. We need that assurance.
    Mr. Schwaab. Yes, sir. Under the current policy, we will 
not use Asset Forfeiture Fund proceeds to pay for travel to 
conferences such as the two that you described. As I indicated, 
we will use it for followup on specific cases, and in some 
cases country-to-country engagements around specific management 
issues.
    Senator Carper. All right. Good. Well, not all travel is 
bad. Senator Brown and I actually got to know each other on a 
congressional delegation trip to Afghanistan and Pakistan, and 
that was a good learning experience for both of us, and I think 
taxpayers' expenditures that were valuable to us and I hope to 
our colleagues in the Senate. So not all travel is bad. But the 
appearance can be more damaging sometimes than the actual trip 
itself, so continue to be vigilant in that area for us, if you 
would.
    I want to come back, if I could, I think to Mr. Schwaab and 
say, I understand, going back to what happened last week, the 
independent audit of the Asset Forfeiture Fund was released. 
There has been some discussion already, I think, back and forth 
with Mr. Zinser, but do you have any other comments about the 
audit findings? This would be for you, Mr. Schwaab. Do you have 
any other comments on the findings of the independent audit?
    Mr. Schwaab. Yes, sir. So, obviously, I would emphasize 
again the followup review of specific expenditures that is an 
important second component of this particular audit.
    In addition to that, as I think you have already heard 
indicated, one of the concerns raised was the lack of a 
specific line item in the Federal budget to account for the 
Asset Forfeiture Fund and its management. The President's 
fiscal year 2012 budget does include just such a proposal.
    The only other concern or issue that was raised by the 
auditors was a concern that in some cases, we were found to 
have not turned over overdue bills to the Treasury for 
collection in as timely a fashion as is called for under law.
    Senator Carper. And there has been a little bit of 
discussion on this already. I want to come back and just make 
it clear, at least for me. As I understand it, another audit is 
in the works and I am told that the independent auditor is 
looking at individual purchases. You may have just mentioned 
this, but I missed it, but individual purchases. Can you give 
us some thoughts--either one of you, actually--about when that 
audit is expected to be completed and the results released?
    Mr. Schwaab. July 15 of this year, sir.
    Senator Carper. OK. Good. And this is a question really for 
either of you. I understand that NOAA has put in place a 
procedure whereby, as I understand it, the Comptroller has to 
approve expenditures of $1,000 or more. Is that out of the 
Asset Forfeiture Fund? Is that correct? Just yes or no.
    Mr. Schwaab. Yes.
    Mr. Zinser. Yes, sir.
    Senator Carper. OK. Thank you. Mr. Schwaab, could you talk 
about how this new policy works and why it was put into place 
in the first instance. Why was it put into place? And, Mr. 
Zinser, once he responds, I am going to ask you for your 
thoughts on this new policy and whether it is the right move or 
not.
    Mr. Schwaab. As indicated by Mr. Zinser, one of the 
previous concerns was that there was significant 
decentralization of spending authority. What this process 
requires is that any single expenditure over $1,000 be approved 
centrally in NOAA headquarters. In addition to that, we do have 
a regular review of all expenditures in NOAA headquarters, much 
more regularly than would have existed previously.
    Senator Carper. Do you want to add anything to that, Mr. 
Zinser? You do not have to if you do not want to.
    Mr. Zinser. No, I think that Mr. Schwaab is right. The 
thing that policy was trying to correct was the over-
decentralization of purchasing authority. The only other thing 
I would add is on the audit--the audit report that Clifton 
Gunderson issued. I agree that it is progress.
    The other thing that I think NOAA should consider is more 
of a report, like an annual report, on what the money has been 
used for. You can read the financial statement audit and see 
that they have accounted for their revenues and their assets 
and their liabilities and that the two lines equal each other. 
But I think what would be helpful to people is to know exactly 
what kinds of things that money was used for.
    Senator Carper. Good. All right. I would just ask both of 
our staffs, both Republican and Democratic, to especially note 
that point and we will just come back to you for a followup on 
that.
    We had problems, actually across the range in Federal 
departments, with the use of credit cards for travel and other 
purchases by staff, in some cases honest mistakes, in some 
cases not. To what extent has this been a problem with 
purchases made by agency employees from this forfeiture fund? 
To what extent has that been a problem, the use of credit 
cards, travel cards, and misuse of those? Is that a problem? If 
it is, has it been addressed?
    Mr. Schwaab. So, Senator, we looked at a subset of 
transactions last summer following the initial report on the 
Asset Forfeiture Fund. One of the things that we found was that 
there were some procedural problems that emerged. They emerged, 
at least as characterized to us, at a rate and of a nature that 
was very similar to what you would find in a similar review in 
any agency or any subsection of the agency. So we did not find 
any particularly anomalous behavior. We did find procedural 
problems that merited additional training and counseling for 
particular employees.
    Senator Carper. OK. Just keep in mind, if it is not 
perfect, make it better. Thanks.
    I think I have used my 7 minutes. Senator Brown.
    Senator Brown. Thanks, Mr. Chairman.
    Mr. Zinser, in your opening statement, you said you found 
the fund complex, very little attention to the fund, no central 
authority. You noted that $96 million has come in, $49 million 
has come out. My question to you is where is the remaining $47 
million of hard-earned fishermen's dollars?
    Mr. Zinser. Yes, sir. The figures that I cited came from 
the report from KPMG, and the problem they had was in defining 
the fund. There are civil penalties and seizures that come in 
from a number of statutes that NOAA enforces, and some of those 
proceeds--civil penalties--are put into accounts that comprise 
the Asset Forfeiture Fund. It is kind of a misnomer. It is 
actually a civil penalty fund. And some of those proceeds from 
civil penalties do not.
    KPMG had such difficulty getting a definition from NOAA 
about exactly which of those proceeds constitute the Asset 
Forfeiture Fund that they provided basically a worst-case 
scenario. These are all the proceeds from enforcement 
activities that NOAA collected over those 4\1/2\, 5 years, and 
NOAA was not able to help us say which of those were actually 
part of the Magnuson-Stevens Asset Forfeiture Fund and which 
ones were just collected by NOAA and then remitted to the 
Treasury or put in some other account.
    Senator Brown. Mr. Schwaab, on the credit card issue, since 
the Chairman brought it up, how many credit cards are actually 
issued to employees? How many employees do you have, 172?
    Mr. Schwaab. We have just slightly over 200, all told, in 
the Office for Law Enforcement.
    Senator Brown. And how many of those have credit cards?
    Mr. Schwaab. I have those numbers here and I can pull it 
out for you momentarily. I can tell you this, that since the 
finding came out, we have drastically reduced the number of 
credit cards that are issued across the Office for Law 
Enforcement so that they are only issued to offices in a number 
that is needed to meet the requirements of those specific 
locations.
    Senator Brown. Yes, because what I noted in doing the work 
leading up to the hearing, I mean, there is an instance of a 
$2,500 cash withdrawal with no documentation. There was double-
billing by agents submitting expense reports in the beginning 
of the month and the end of the month. Have any of those 
overpayments or duplicate--and we deal with duplicate payments 
in this Subcommittee. We just had a hearing, $125 billion just 
in improper payments alone. Has anybody repaid the money, or 
have you recouped any of that money from any of those people?
    Mr. Schwaab. So not specific to credit cards, but I am 
aware that in some of the travel reviews, after issues were 
made aware to individual employees, that they did step forward 
and pay back discrepancies in travel payments.
    Senator Brown. Has all the money been paid back that has 
been found as being duplicative or incorrectly billed or 
whatever?
    Mr. Schwaab. To my knowledge, sir, anything that we are 
aware of that was incorrectly paid out has been rectified.
    Senator Brown. And in the body of your review and upcoming 
audits, if you find more, will you, in fact, seek reimbursement 
from those employees?
    Mr. Schwaab. Yes, sir.
    Senator Brown. In looking at the--Secretary Locke 
actually--I know we had this Special Master's report. The 
Special Master cited that some of the attorneys he found abused 
their discretion by extracting excessive monetary penalties, 
which in one instance led to a coerced settlement, and then 
noted that Secretary Locke's response to the Special Master's 
report. Specifically his statement in the decision memo, he 
found after his own legal review that none of the conduct 
described in the report undertaken by any individual lawyer 
warranted disciplinary action against any employee mentioned in 
Judge Charles Swartwood's report. Has anyone been disciplined 
or moved or anything related to that particular report and 
Judge Swartwood's comments on the excessive monetary penalties 
being given?
    Mr. Schwaab. Senator, I believe what the Secretary was 
getting at in his finding there was that this was largely a 
failure of procedure, a failure of policy to dictate standard 
approaches by which penalties would be applied for particular 
offenses across the country. And one of the important things 
that we have done since that time is put in place a standard 
penalty policy to prevent those kinds of things systematically 
from recurring and to provide the employees the kind of 
guidance that they need to avoid finding themselves in that 
situation.
    Senator Brown. And are there still Special Act or Service 
Award bonuses? For example, I know in one instance, it was 
referenced that someone got a $2,000 bonus and referenced in 
the award that it was a high-stakes game, and as a result, he 
received a $2,000 bonus. Are you still giving out these Special 
Act or Service Award bonuses?
    Mr. Schwaab. I am not familiar with the particular 
situation that you are talking about. There are service bonuses 
of that sort for----
    Senator Brown. There still are? So they get a salary and a 
bonus if they do something----
    Mr. Schwaab. There still are opportunities to provide that 
kind of a bonus. I think in the case of enforcement cases, one 
of the, obviously, challenges historically for lack of standard 
policy and procedure was to measure what you are measuring 
performance against, and I think the new policies and 
procedures will put us in a much better stead in that regard.
    Senator Brown. So they are getting a salary, and presuming 
the average salary is about $100,000, give or take, and then 
they are also getting a bonus on performance in enforcement and 
forfeiture, is that accurate?
    Mr. Schwaab. Well, I would not say necessarily it was 
specifically related to an enforcement action or a particular 
penalty or forfeiture. I would say that those bonuses are 
generally related to job performance over the course of a year.
    Senator Brown. So can the attorney still get a bonus? Is 
that policy still in place?
    Mr. Schwaab. Well, I can speak generally to Federal agency 
process in that regard. I honestly cannot speak specifically to 
the performance structure for the attorneys in the General 
Counsel Office.
    Senator Brown. Mr. Zinser, I see you shaking your head 
there. What are your comments on that?
    Mr. Zinser. I believe that the policy that enabled NOAA to 
make that Special Act Award is pretty much a Department-wide 
policy and that those policies are common in the Federal 
service. But I think that in this case, the case that you 
referenced, the award seemed premature because the case had not 
been finally resolved yet----
    Senator Brown. It had not even been signed off on yet?
    Mr. Zinser. And that is also why, when people wonder why 
employees are not disciplined or harsher action is not taken 
for bad management or bad performance--when they are given 
performance awards for that conduct or that performance--it is 
hard now for the management to come back and say, you should 
not have done that and we are going to discipline you for it.
    Senator Brown. Is it common around other agencies to have 
that type of payment for the high stakes, supposedly ``high 
stakes'' games? Are there other agencies? I have never heard of 
somebody getting a salary and then getting a bonus on top of it 
for basically closing down cases. Is that common?
    Mr. Zinser. The language that you are referencing was in 
the justification for the award. We thought that was 
inappropriate, and when we learned of it, we brought it to the 
attention of the Administrator. And, in fact, I think it came 
to our attention from somebody from the public who had a hold 
of that justification through a FOIA request. So it is actually 
public information.
    Senator Brown. So it is inappropriate, but they are still 
doing it, apparently, from what we just heard.
    Mr. Zinser. Yes. I should say that particular award was a 
number of years ago, but it was in connection with one of the 
cases the Special Master reviewed.
    Senator Brown. When you are looking at, Mr. Zinser, the 
type of enforcement folks--apparently, from what we have 
received, 90 percent are criminal investigators--the workforce 
consists of approximately 90 percent criminal investigators 
while its caseload was 96.4 non-criminal. The Office for Law 
Enforcement considers it appropriate to operate from a criminal 
investigative standpoint and apply techniques used for criminal 
investigations. In your opinion, how adequately has NOAA 
addressed your recommendations that determine whether it should 
continue that type of approach or do it differently? Are you 
satisfied with the actions that have been taken thus far?
    Mr. Zinser. I think the action NOAA has taken includes 
commissioning a study of their workforce, a workforce analysis, 
and I think that is the proper step to take. I think it has 
taken a long time, that it has been in the works for several 
months now. But I think the point we were trying to make in our 
report was not that criminal enforcement is unnecessary; we 
think criminal enforcement capabilities are necessary; we just 
think the criminal investigators ought to be used to conduct 
criminal investigations and non-criminal investigators or 
inspectors should be used to enforce regulations, and NOAA has 
mixed the two up. So we think the criminal investigators ought 
to be out investigating those provisions that have real serious 
criminal implications and that the Magnuson-Stevens regulations 
should be enforced by regulatory inspectors.
    Senator Brown. Mr. Schwaab, so what does it take to 
actually get fired at NOAA? [Laughter.]
    I have to tell you, watching the special that Dan Rather 
did, being on this for a year and a half now--I mean, some of 
the things we have heard, and I have not heard of one person 
being fired at NOAA. Is that going to change? Is there going to 
ultimately be somebody held accountable for some of these 
things?
    Mr. Schwaab. Well, as I said before, without speaking to 
individual cases, I think there is a distinction between 
whether someone has been fired and whether someone has been 
held accountable.
    To your question, what does it take to get fired at NOAA, 
pretty much the same thing as in many other agencies. There are 
two pathways. One is performance-based, and those are long-term 
failures to perform in the job indicated. That requires ongoing 
collaborations, discussions with the supervisor who sets forth 
corrective action plans, and if the person does not improve 
performance accordingly, then they can be certainly subject to 
termination under that process.
    Another direction, of course, is conduct-related. 
Obviously, the severity of a particular incident is held 
against a number of different standards in making a decision 
ultimately to terminate. There are any number of things that 
could, on a first offense, reach that level of severity, but in 
our individual investigations, those are the kind of things 
that we look at in particular cases.
    Senator Brown. And the Chairman is nice enough to wrap me 
up. I am still just shocked that based on everything that we 
have heard, that there has only been some shifting of people. 
They have taken a small reduction in salary. No one has been 
fired. There is a complete lack of accountability in saying, 
sir or ma'am? You messed up and we are going to have to let you 
go, or we are going to have to put you--there is no history of 
any type of counseling. There is nothing.
    So I am encouraged, as the Chairman is, that, based on the 
pressure we brought to bear, that you are doing it better, and 
I would once again just add in conclusion that I would hope 
that if there is something that you need us to do, if there is 
some type of clarification with the Magnuson-Stevens, let us 
know. We have a lot of good people who are willing to work on 
these types of things.
    So thank you, Mr. Chairman.
    Senator Carper. As a recovering Governor, I will say that 
in State Governments, it is not always easy to hold people 
accountable. It is not always easy to fire people who, frankly, 
should have been fired. But if people in Delaware really 
behaved egregiously, we tracked their records, tracked their 
performance and eventually built a case and we were able to 
remove them from service. But it is not easy, and it is not 
easy in the Federal Government, either, and part of it is to 
protect the rights of the individual.
    I think you mentioned that in several instances, employees 
who should have been held accountable have been held 
accountable, and I would just ask that as you go forward, that 
this continue to be the standard that is set, whether they are 
fired or not, but that they are held accountable in ways that 
are appropriate.
    The other thing I want to ask, and this is my last 
question, but after I ask this question, and I do ask you to 
respond fairly briefly, I am going to ask you to take maybe a 
minute or so apiece and just give us some closing comments. You 
gave an opening statement. I want you to give a brief closing 
statement, as well, before we turn it over and welcome our 
third panel.
    This will be, I think, a question probably for you, Mr. 
Schwaab. I understand that NOAA has allocated about close to 
$50 million to transition this region and perhaps others to 
catch-share fishing management systems. Just take maybe a 
minute to explain to us how that money is being spent and what 
it is being spent on, if you would.
    Mr. Schwaab. I am sorry, the last part of that again----
    Senator Carper. Yes. I would like for you to take a minute 
to explain how that money is being spent and what it is being 
spent on.
    Mr. Schwaab. Yes, sir. So just for your reference purposes, 
there is a table attached to my written testimony----
    Senator Carper. OK.
    Mr. Schwaab [continuing]. That describes that money and its 
use, and it speaks specifically to fiscal year 2009 and 2010. 
That money falls into essentially three main categories. One 
category is direct support for the industry and standing up 
sector-based management, grants to hire sector managers, funds 
to pay for some of the at-sea monitors and dockside monitors 
that are required under this new system.
    The second part is used by the agency specifically to stand 
up the infrastructure needed to put the system in place.
    And then there is a third part that really speaks to some 
continued attempts to innovate around things like gear so that 
fishermen can fish more selectively and we can capture a higher 
percentage of the available quota, particularly in the 
healthier stocks, and avoid running up against quota 
limitations in some of the weaker stocks.
    Senator Carper. All right. Thank you.
    Just take a minute and give us any closing thoughts you 
might have, please. Mr. Zinser, do you want to go first?
    Mr. Zinser. Yes, sir. First, I think that the oversight 
being applied is very important. I think it is going to 
continue to be important. Identifying the problems and 
solutions is a big part of it, but making sure that those 
recommendations and reforms are implemented and become 
institutionalized is really the key.
    For our part, what we plan to do is followup with our own 
audit staff to make sure that the things NOAA says it is doing, 
it is actually doing, and I think that if Congress were to also 
do that, it would be important.
    I do have a concern with respect to the Asset Forfeiture 
Fund that the recommendations are implemented. I know that the 
Appropriations staff, for example, put language in the 2011 
appropriation that was not enacted that basically said that the 
Asset Forfeiture Fund could not be used until the 
recommendations were implemented, and I know that Senator 
Barbara Mikulski has found our work important for them. I would 
just urge NOAA to follow through on the Asset Forfeiture Fund 
recommendations so that I am not put in the position of saying 
whether or not the recommendations are implemented. I want that 
to be clear so the appropriators feel free to authorize the use 
of that money.
    Senator Carper. All right. Thanks. A closing comment, Mr. 
Schwaab.
    Mr. Schwaab. Yes. Thank you, Senator, and thank you again 
for the opportunity to be here. I would just like to say that, 
as I think you have heard throughout the testimony today, we 
have identified failings, particularly in policy and procedure. 
We have appreciated the work of the Inspector General in 
helping to bring those to our attention. We have certainly 
appreciated the focus that congressional members have brought 
to bear on this issue, and I think that our actions to date, 
certainly under the leadership of Secretary Locke and Dr. 
Lubchenco, have, I hope, illustrated the seriousness with which 
we take these findings and these recommendations and our 
commitment to the task at hand.
    We certainly understand there is a strong need to work 
closely with fishermen, fishing communities, and other 
stakeholders to ensure that our efforts, both in management--
well, in management, in science, and in enforcement are open, 
transparent, accurate, and fair, and we are taking steps 
aggressively, both in the law enforcement arena as well as 
others, to redouble our efforts to make the case that is, in 
fact, true.
    In addition to the fishing communities, I also want to 
close by noting the hard work of many people throughout the 
Department of Commerce and NOAA to get us to the place where we 
are today. Certainly, as we indicated in some of my answers, 
oftentimes, the employees are caught up, as is everybody else, 
in failings of policy and procedure, and not only to the 
benefit of you, to the benefit of the fishing communities and 
other stakeholders, but to the benefit of our own employees, we 
owe to have the right policies and procedures in place to 
faithfully execute them so that we can all go forward fairly, 
effectively, and transparently. Thank you, sir.
    Senator Carper. And let me close by saying, a friend of 
mine likes to say, ``editorial writers are people who enter the 
battlefield when the fighting is over and shoot the wounded.'' 
We are not interested in entering the battlefield as a 
Subcommittee--or Committee--we are not interested in entering 
the battlefield when the shooting is over and shooting the 
wounded. This is a fight that should have been fought. This is 
a fight that should have been resolved years ago--in previous 
Administrations, with previous Secretaries, with previous IGs, 
with previous folks from NOAA, and it was not done.
    Good work is being done now. And the key is that good work 
provides a foundation on which even better work can be done to 
restore the trust that needs to exist between, in this case, 
the fishing community itself and those that are entrusted with 
the responsibility to oversee that community and make sure we 
have a healthy, vibrant fishing industry in this country and 
especially in this region.
    With that having been said, Senator Brown and I will have, 
I think, 2 weeks to provide additional questions, and we just 
ask that as we do that, you provide a prompt response to those 
questions.
    The other thing, our job is oversight. Our job is to back 
up the work that is being done, the appropriate work that is 
being done to make sure that continues to positively enforce 
that work and also to help find out if other work needs to be 
done, and that work is followed up on, as well. And finally, if 
there are things that we need to do, as Senator Brown has said, 
if there are things that we need to be doing to help make sure 
that the Legislative Branch of our government, that we are 
being responsive and supportive to this agenda, that we are 
doing that, that we are held accountable.
    Thank you very much for joining us today, for the work that 
you are doing, your teams are doing. Let us keep it up. Thanks 
very much.
    Mr. Zinser. Thank you.
    Mr. Schwaab. Thank you.
    Senator Carper. Let me invite the third panel to join us, 
please. We will now welcome our third panel, and I am going to 
ask Senator Brown just to lead off. I have a couple of brief 
comments to make about each of them, but, Senator Brown, why 
don't you make any comments--these are your folks.
    Senator Brown. Yes. Well, thank you, Mr. Chairman.
    Senator Carper. Please proceed.
    Senator Brown. I appreciate you inviting them and I will 
save introductions, but just note that they each have 
specialties in this area based on what we have been dealing 
with. I appreciate their time. I know, because of our time 
getting back to Washington, they are going to be very brief. I 
may submit the comments for the record. But with that, Mr. 
Chairman, I will turn it back to you.
    Senator Carper. Good. Thanks so much.
    Let us start with Lawrence Yacubian. I want to get the 
correct pronunciation of your last name, please.
    Mr. Yacubian. It is Yacubian, sir.
    Senator Carper. Yacubian, OK. Mr. Yacubian spent decades, I 
am told, as a commercial fisherman in New Bedford, 
Massachusetts, working his way up from apprentice deckhand to 
engineer to captain. As one Navy captain to another, I salute 
you. A native of Westport, Massachusetts, he now resides in 
Florida.
    Our next witness is Larry Ciulla, is that correct?
    Mr. Ciulla. That is correct, sir.
    Senator Carper. You guys do not make it easy on me to 
pronounce these names. But I understand you are the co-owner of 
the Gloucester Seafood Display Auction in Gloucester, 
Massachusetts, and that you and your sister started the 
business about 14 years ago, in 1997. The business sells New 
England fish to buyers around the world via live Internet 
auctions. That is pretty interesting stuff.
    The next witness is, I am told, Stephan Ouellette, partner 
at Ouellette and Smith in Gloucester, Massachusetts, and you 
specialize in fishing law.
    Mr. Ouellette. I do.
    Senator Carper. Our fourth witness is Mr. Giacalone. Mr. 
Giacalone is the Policy Director of Gloucester-based Northeast 
Seafood Coalition (NSC) and also has experience as a commercial 
fisherman.
    Last but not least, a name even I can pronounce, Dr. Brian 
Rothschild, Dean Emeritus and Montgomery Charter Professor at 
the University of Massachusetts-Dartmouth School of Marine 
Science and Technology. He is also Co-Director of the 
Massachusetts Marine Fisheries Institute. Dr. Rothschild worked 
with Senator Warren Magnuson on the drafting of the Magnuson-
Stevens Act at NOAA during the law's implementation.
    I have been handed a note by our staff that Eric Schwaab 
has had to leave in order, I think, for other travel 
arrangements. Members of his team are still here and will 
report back to him. We are pleased to hear that.
    Why don't we ask you to testify in the order you have been 
introduced. I would ask you to limit your comments to 5 minutes 
and any additional comments will be made part of the record. 
Your full statement will be made part of the record, and then, 
Senator Brown and I would like to ask you a couple of 
questions.
    But, Mr. Yacubian, why don't you lead off for us. Thank 
you.

      STATEMENT OF LAWRENCE YACUBIAN,\1\ RETIRED FISHERMAN

    Mr. Yacubian. Thank you, Senator Carper. I understand it is 
customary to begin testimony by saying thank you to the 
Subcommittee for the opportunity to be here. Of course, 
considering why I am here, if I could rewrite history, none of 
this would have happened. To be honest, I would rather be out 
scalloping today. But these things did happen and I am here.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Yacubian appears in the appendix 
on page 79.
---------------------------------------------------------------------------
    Chairman Carper, I thank you for agreeing to hold this 
hearing.
    Senator Brown, thank you for your unwavering focus on our 
State's fisheries. Your predecessor, the late Senator Ted 
Kennedy, was a true friend of the fisherman. Your actions since 
your election to the Senate have upheld that legacy with honor. 
Thank you.
    I also thank the Commerce Department Inspector Todd Zinser 
and his staff for undertaking the investigation which exposed 
this corruption.
    I thank Commerce Secretary Gary Locke for his promise that 
these problems will end on his watch.
    And I further credit NOAA Assistant Administrator Eric 
Schwaab for releasing the highly critical reports on fisheries 
management in the Northeast conducted by Preston Pate and on 
science conducted by Dr. Michael Sissenwine and Dr. Brian 
Rothschild, who is here with us today. But more has to be done.
    During the darkest days of this long nightmare, I never 
imagined that one day, I would have the chance to sit face-to-
face with a cabinet member and tell him how his Department had 
wronged me. Thanks to Congressman Barney Frank, that happened. 
I never thought the Secretary of Commerce and the Administrator 
of NOAA would return fines and apologize to me. Thanks to 
Senator John Kerry, that happened. I am forever indebted to the 
men and women of the U.S. Senate and Congress who put policies 
aside and worked as catalysts across State and party lines to 
exonerate the many in my industry who were also wronged by a 
misguided regulatory system.
    I am a proud American. Despite what I have been through, I 
still love this Nation of ours. In 2004, when we sold the 
family farm in Massachusetts to pay the settlement, we boarded 
a plane to Virginia, where we saw our son, Captain Lawrence 
Yacubian, who is sitting right here today, leave to serve in 
Afghanistan. He later served in Iraq and was awarded the Bronze 
Star for meritorious service in combat. It is still hard for me 
to accept that unsupervised Federal employees working in a 
rogue agency could be allowed to run amok in this Nation that I 
love.
    The first reason that I am here today is to question why 
the National Marine Fisheries Service attorneys and judges have 
not been indicted. In fact, never mind indictments, none of 
them have even been fired. Apparently, it is not possible to be 
fired from civil service. Nearly every one of them is still 
working for the Federal Government today, despite the findings 
of the Office of the Inspector General's report and the Special 
Master's case review that these Federal employees operated with 
malicious ethics and biased prosecution.
    When Special Master Swartwood reviewed my story, he 
discovered what I have known all along, that justice was 
impossible and that the cards were stacked against me before my 
case began. The National Marine Fisheries Service enforcement 
system within NOAA was rigged by its own financial self-
interest, warped career ambition, and misplaced motives.
    There was none of the legal checks and balances that are 
granted by our Nation's legal system. The system violated even 
the most basic conflict of interest standards. Judges and 
prosecutors were allowed to maintain eerily close in-house 
relationships with little or no oversight during the 
prosecution of my case. It is difficult to feel you are having 
your day in court when the prosecution and the judge hearing 
your case are literally allowed to go to lunch together while 
the court is in recess. It is difficult to feel you are getting 
justice when the judge has been appointed by the prosecuting 
agency and will eventually be paid by fines of your conviction.
    With such clear conflicts of interest, this agency upheld 
its own motives, not justice. As Judge Swartwood concluded in 
his report, money was NOAA's motivating objective.
    The second reason that I am here today is to shed light on 
the abuse of the National Marine Fisheries Service Asset 
Forfeiture Fund. NOAA turned the Asset Forfeiture Fund into a 
cookie jar for its enforcement staff. The fines they seized 
from fishermen like me were lumped into one big account from 
which staff bonuses, company cars, international staff travel, 
luxury boats were financed with little to no oversight and no 
auditing. And as I noted a moment ago, this fund was used to 
pay the salaries of administrative law judges that heard our 
cases in their courtrooms.
    One of the Nation's top accounting firms, KPMG, at the 
request of the Inspector General, concluded the first audit of 
the Asset Forfeiture Fund last year and they could only account 
for a little more than half of it. Forty-seven million dollars 
still remained unaccounted for. This is not just lax 
accounting. It is a violation of the public trust.
    Was my $430,000 fine used to protect the fisheries? Did it 
go toward the purchase of 200 government vehicles for a staff 
of 172? Did it go toward a boat described as luxurious by its 
manufacturer that NOAA somehow thought was necessary for their 
work? Or was it perhaps used to finance all-expense-paid trips 
literally around the world for some of the NOAA employees who 
penalized my family to the brink of bankruptcy?
    I did not know----
    Senator Carper. Mr. Yacubian, You are about 6 minutes right 
now into your statement, and I am just going to ask you to go 
ahead and complete your sentence. Your whole statement will be 
made a part of the record. We just ask you to finish this 
paragraph, OK, and then I need to recognize the other 
witnesses. Please, just finish your paragraph.
    Mr. Yacubian. All right. In addition to my $430,000 fine, I 
had to pay in excess of $250,000 in legal fees in order to 
defend myself. When the lawyers on the other side worked for 
the only organization that can print money, legal bills add up 
quickly.
    But the damages go beyond that. Not only did my career 
disappear with that money, but my family's heritage and my 
children's inheritance did, as well. My wife's family farm in 
Massachusetts that was in her family for 350 years is gone. We 
had to sell it. Our hope of passing along the property and its 
story, which spans almost all of American history, is no more.
    The $649,000 in fines returned by Secretary Locke to 
several other fishermen like myself is a good start to 
restoring trust, but it by itself is not sufficient. For those 
of us who have been wronged, we have lost careers, years, and 
our legal fees and other costs we have incurred at the hands of 
corrupt Federal employees, are still unreimbursed.
    For those of us who are still in the fishing business, 
there is still much more to be done before our faith and trust 
in the government is restored.
    First, more needs to be done to restore the confidence of 
fishermen----
    Senator Carper. I do not mean to be rude, but you are about 
8 minutes into your statement.
    Mr. Ouellette. Senator, if it would help, I will take a 
shorter time if you could let him finish.
    Senator Carper. OK. But I need to ask you to please 
summarize----
    Mr. Ouellette. Thank you.
    Mr. Yacubian. I am almost done, Senator. First, more needs 
to be done to restore the confidence of fishermen in the 
regulatory system. Today, I ask the Senate to conclusively 
determine what NOAA did with the unaccounted half of the Asset 
Forfeiture Fund and the $430,000 in wrongly assessed fines that 
I was forced to pay.
    Second, an independent investigation of NOAA Fisheries 
rulemaking is critical. What Preston Pate and his colleagues 
achieved in the agency's internal report is commendable, but I 
suggest that an independent outside investigation conducted by 
Inspector General Zinser or the Government Accountability 
Office is warranted.
    Third, better oversight into the funding of science 
programs is crucial. Independent institutions that both 
scientists and fishermen trust must be funded. The institution 
Dr. Brian Rothschild helped to found, the University of 
Massachusetts School for Marine Science and Technology, is an 
example. Without him, there would not be a scallop industry 
today. Fishermen do not trust NOAA's internal grantmaking to 
fund outside science. In the past, what they have done is 
feather their own nests rather than direct the money to the 
most worthy institutions.
    Finally, I ask the Senate to hold accountable the 
government attorneys and judges that were the source of this 
injustice and who are still employed by the Federal Government. 
These individuals cannot be allowed to be reshuffled into the 
deck and be protected within the Federal system. They must be 
separated and terminated in order for justice and integrity to 
be restored into this agency of the United States.
    Thank you for listening.
    Senator Carper. Thanks very much for your testimony and for 
the passion and sincerity that underpins it.
    I would just ask the other remaining witnesses, please 
adhere to your 5-minute limit. Thanks so much.
    Please proceed, Mr. Ciulla.

   STATEMENT OF LARRY CIULLA, PROPRIETOR, GLOUCESTER SEAFOOD 
                        DISPLAY AUCTION

    Mr. Ciulla. Senators, thank you for inviting me here today. 
Larry Yacubian has become a good friend of mine. He became a 
friend of mine--at first, I must say, I was afraid of him. When 
I first had charges put against me in 2009, I got a call from a 
gentleman I did not know. He was from Florida. One of the women 
in the office picked it up and said, ``I have a gentleman by 
the name of Larry Yacubian on the phone. I think he has been in 
trouble with NOAA agents and has lost his business due to some 
problems he had with the government.'' I was afraid to pick up 
the phone, because I thought maybe he did do something wrong. I 
know I had not done anything wrong, but I thought maybe this 
good gentleman had actually done something wrong, and at first, 
I backed away from even wanting to talk to him. And now, I am a 
little bit ashamed of it, because people did the same thing to 
me.
    Our family has been in a battle with NOAA law enforcement 
for close to 10 years now. Ten years of my life, fighting with 
them. And what did I do wrong? Nothing. I stuck up for my 
rights. We as a community stuck up for our rights, and we 
fought, and we did not fight just to be right. We fought for 
justice. We wanted to know what we were doing was the right 
thing.
    We would ask for help from NOAA and we would get ridiculed. 
And when we stuck up for our rights and won a case in our 
instance, more pressure was put upon us. We were abused. We all 
were abused. And this is not something you kind of get pushed 
around a little bit by a bully next door and you grow up and 
you are able to push him back. We are talking about the U.S. 
Government, a branch of the government. NOAA, an agency that 
has law enforcement agents that carry guns. We are dealing with 
fish, folks. We are dealing with seafood.
    Laws have to be upheld, but do you know what also has to be 
upheld? Our rights as people, not just as people of the United 
States, how about our human rights? We were ridiculed so much, 
our family did not want to come to work every day. My mother 
would sit in the car literally at 70-odd years of age and 
wonder if she can get through the day, because we know the 
presence of law enforcement was going to make us sick. The 
pressure to make a mistake within a quarter-of-an-inch of a 
fish size--and by the way, we handle millions of fish a day--
could possibly put us out of business.
    My father said to the Special Master before he left, he 
said, ``Your Honor, can I see you just for a moment? Can you 
talk privately?'' I did not even know he said this until 
recently. He said to him that he was sorry he lived long enough 
to see a United States agency such as NOAA do this to his 
family. That is what they have done to us.
    We have just tried to make a living in this community, in 
our community. Yes, we have been looked at as second-class 
citizens and we do not want to be that. We want to be people's 
equal. And still today, we are fighting, and maybe we can get 
into that a little bit later. But I have still attorneys hired, 
still fighting for my rights and the rights of other fishermen 
here in our community. We are fighting for attorney fees. We 
are fighting for the possibility of damages. And in my case, I 
still have permit sanctions against me. I am still fighting to 
keep our business open, and why?
    People like Larry Yacubian, a lot of small family 
businesses that unload at our facility and operate in 
Gloucester, are not being thanked for opening up the eyes of 
NOAA to what was wrong. We are being apologized to and they are 
shutting the door on us. They do not want to make up for what 
they have done wrong to the fishermen. They do not want 
anything to do with making them whole again and making them 
feel a part of their communities again. They do not want to 
help hold their heads up again. They would rather it just go 
away.
    Well, folks, we are not going to go away. And we are not 
fighting to win. We are fighting for justice, and we will not 
stop until we get it. That does not mean that I am going to be 
around to see it. It does not mean that my business will not 
fail because of it. But there are a lot of hard things in this 
world that we have to make decisions about and this is one that 
I have made. I am going to see this through to the end, until 
some justice comes of it and good people like Larry Yacubian 
are actually made whole again.
    Thank you.
    Senator Carper. Thank you very much for that statement.
    Mr. Ouellette, you have 5 minutes, please.

    STATEMENT OF STEPHAN M. OUELLETTE,\1\ ATTORNEY AT LAW, 
                      OUELLETTE AND SMITH

    Mr. Ouellette. Yes. Chairman, Senator Brown, thank you very 
much for having me here. As a resident of a coastal community, 
living around fishermen and for the last 15 years of my 
professional practice having had the honor, and I call it a 
distinct honor, of representing fishermen, boat owners, and 
working within this fishing community, I have become acutely 
aware of problems within NOAA and its management of both the 
fisheries and of the men and women involved in this industry.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Ouellette appears in the appendix 
on page 83.
---------------------------------------------------------------------------
    NOAA law enforcement, which I have been heavily involved 
with for the last 15 years, began to develop very disturbing 
characteristics in the mid-1990's, leading many of us to begin 
complaining to NOAA and eventually to our Congressman about how 
fisherman were being treated and how fines and penalties were 
being dramatically increased. At that point in time, initial 
attempts to determine what was going on with the Asset 
Forfeiture Fund were met with bills to the FOIA account of 
$10,000 to $15,000, which at that point nobody had money to 
pay. So we are very gratified, but at the same time 
exceptionally disturbed to see where all of the money taken 
from hard-working fishermen over the last 15 years has gone, to 
the extent that it can be accounted for.
    One might say that in the last 15 years, we have seen a 
different type of over-fishing, over-fishing by NOAA law 
enforcement. In the late 1980's and early 1990's, there were 
some significant violations which occurred. NOAA law 
enforcement dealt with them. But as we saw the number of 
fishermen diminish, the number of time spent on the sea 
decrease, and new enforcement measures like vessel tracking 
systems come online, the number of serious violations all but 
disappeared. There were a few, but now it seemed that NOAA law 
enforcement had to concentrate on the small fish and we started 
to see an increasing number of fines for routine violations 
like late log books, like misunderstanding of a complex 
regulation. So as we began to say, we had too many law 
enforcers chasing too few fishermen.
    We see that even today under the Joint Enforcement 
Agreements, which as I understand are funded out of the Asset 
Forfeiture Fund, there are large amounts being given to State 
enforcement agencies to chase our fishermen. For example, as 
related in my written testimony, one of our local fishermen was 
boarded 30 out of 45 days--30 out of 45 days--a two to 2\1/2\ 
hour boarding each time, to determine whether or not he was in 
violation of regulations. They found no violations.
    The local enforcement officer was exceptionally polite, and 
when later on I asked him about it, he said, ``Well, we have so 
much Federal funding under the Joint Enforcement Agreement that 
I have to board a boat every day, and he is the only Federal 
vessel fishing out of a port within 10 miles of my office and I 
am obligated to continue boarding him.''
    Similarly, one dealer in Boston has complained that for as 
long as 90 days in a row at a time, he has two full-time 
environmental police officers sitting outside his door. They 
are very polite, but they get in the way and they make mistakes 
and they spend a lot of time backtracking to figure out what is 
going on.
    Good enforcement is essential to the success of any 
regulatory program. I think somebody in Washington put it well. 
Without enforcement, regulations are nothing more than 
suggestions. But we have to have reasonable, rational 
enforcement and it should not be self-perpetuating. It should 
not exist for its own purpose, to fund itself and build a 
larger and larger system.
    And I will quickly alert you to a problem that we have seen 
developing up and down the East Coast. Suddenly, we have all of 
these criminal law enforcement agents who now are finding new 
and unique ways to bring cases to U.S. Attorneys to prosecute 
U.S. fishermen for what under Magnuson-Stevens are supposed to 
be civil violations.
    It is a greater problem than law enforcement and the Asset 
Forfeiture Fund. Despite what Mr. Schwaab said earlier, we are 
investing $50 million to implement a catch system in a fishery 
that is grossing about $100 million a year. That fishery is 
landing less than 30 percent of what the scientists say we 
should be landing. We are falling abysmally short. Literally a 
half-billion dollars in landings in the New England area alone 
are being lost due to mismanagement by this agency, fish their 
scientists say we can and should be landing. This may not be 
strictly accountability as to how they are spending the money, 
although I submit that $50 million on a catch-share program in 
a small fishery like this is a total waste of money. But we are 
losing a half-billion dollars a year in landings, $2 billion a 
year in economic activities, and tens of thousands of jobs.
    Congress needs to understand what NOAA is really spending 
this money for, because we have the most expensive aquarium in 
the world off our shores right now and it needs to be 
harvested. Thank you.
    Senator Carper. Mr. Ouellette, thank you very much for 
being with us and for your testimony.
    Next, Mr. Giacalone. Please proceed. Five minutes, please.

   STATEMENT OF VITO GIACALONE, CHAIRMAN, NORTHEAST SEAFOOD 
                           COALITION

    Mr. Giacalone. Thank you, Senator. Mr. Chairman, Members of 
the Subcommittee, thank you for this opportunity to testify 
before your Subcommittee. As an active fisherman and Policy 
Director for the Northeast Seafood Coalition, I have been 
deeply involved in the process of development and 
implementation of fisheries management frameworks and 
amendments affecting the Northeast multi-species fisheries 
since 2001. Recognizing that the list of witnesses testifying 
before you today includes two gentlemen who have endured 
tremendous personal and business stresses as a result of their 
experiences with fisheries enforcement in the Northeast region, 
I thought I would focus my testimony on another issue that may 
be of interest to you and within the influence of your 
Subcommittee.
    Most recently, our fishery has made a profound transition 
from an effort-controlled management system to a catch-based 
system of harvesting cooperatives called sectors. The Northeast 
Seafood Coalition is the sponsor of 12 of the 17 sectors in 
operation, with over 300 active vessels as members, operating 
in ports from Maine to New York.
    While the NSC is now both deeply invested and committed to 
making the existing sector system work as well as to seeking 
future improvements, sector-based management was not the 
preferred choice of the Northeast Seafood Coalition, nor were a 
number of key aspects of the current system. However, NSC could 
not ignore the reality that this was the direction that the New 
England Fisheries Management Council and the National Marine 
Fisheries Service were taking. This direction was further 
reinforced when the newly appointed NOAA Administrator attended 
a Council meeting to not only give a strong directive for the 
Council to complete and implement the sector system, but also 
to announce a NOAA commitment of at least $16 million to do so.
    For whatever reasons, the millions of dollars of NOAA funds 
committed to implement the new system remained largely with the 
government agency, even though it was abundantly clear that it 
was the fishing industry that was to be burdened with 
unprecedented burdens for the costs and development of the new 
policies, data collection and processing infrastructures that 
did not yet even exist, as well as the daily management of the 
fishery, once implemented.
    This latest round of top-down Federal policy has produced a 
profound shift of management, data collection, data processing, 
and enforcement burdens for the National Marine Fisheries 
service to the fishing industry. The monitoring requirements of 
the new management system, as adopted by the New England 
Fisheries Management Council and approved by the Secretary, 
will shift the entire cost of monitoring the fishery onto the 
fishing industry, beginning next year. This will certainly 
cause this complex and cumbersome system to collapse under its 
own weight, along with the industry now dependent upon it.
    Currently, the at-sea and dockside monitoring programs are 
being underwritten by NOAA funding, but these are annual 
allotments that are beholden to NOAA fiscal funding 
availability and cannot be depended upon in future years. It 
should be known that these monitoring programs are essentially 
functioning as third-party private sector enforcement. The 
combination of this newly implemented fisheries monitoring 
system--now virtually 100 percent of trips are monitored by 
third-party NOAA-certified contractors, either at sea or 
dockside, as compared to 3 to 5 percent prior to the sector 
system. The elimination of most all daily and trip possession 
limits and the contractual obligations, professional sector 
managers, and joint liabilities associated with sector 
operations has substantially reduced the role of NOAA 
enforcement in the Northeast groundfish fishery.
    Our industry cannot survive without a secure and long-term 
funding commitment to meet government-imposed monitoring and 
management requirements. Given the millions of dollars that 
have already been committed within the NOAA budget to implement 
these new management strategies, it is our hope that a thorough 
review of government limitations on providing funding to the 
fishing industry to meet these requirements be conducted to 
determine the real and/or perceived limitations on doing so. It 
is our hope that all potential sources of funding, including 
the Asset Forfeiture Fund, be considered for direct industry 
assistance.
    I want to take this opportunity to personally thank you, 
Senator Brown, for your leadership and continued support for 
our industry in Massachusetts and New England. I also want to 
thank the Members and staffers of this Subcommittee for coming 
to Boston and giving us this opportunity to give you our 
perspectives. I would be happy to answer any questions 
afterward.
    Senator Carper. Thanks.
    Dr. Rothschild, would you please.

STATEMENT OF BRIAN J. ROTHSCHILD, PH.D.,\1\ MONTGOMERY CHARTER 
   PROFESSOR OF MARINE SCIENCE AND TECHNOLOGY, UNIVERSITY OF 
                    MASSACHUSETTS-DARTMOUTH

    Mr. Rothschild. I will be very brief. I have been asked to 
address how NOAA's National Marine Fisheries Service is 
handling money allocated to assist New England fishermen 
transition to a new catch-share fishery management system.
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    \1\ The prepared statement of Mr. Rothschild appears in the 
appendix on page 98.
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    We are 1 year into the implementation of catch-shares, yet 
we do not have a careful analysis of what the catch-share 
system costs, how it is performing regarding producing food for 
the Nation, whether it is sustaining economic wealth, and 
whether it is maintaining jobs in the fishing industry. We were 
provided with revenue statistics, but these are virtually 
meaningless because there are no data costs.
    In terms of production of food for the Nation, the catch-
share system did no better than the days at sea system. From 
the point of cost effectiveness, it was worse because the 
catch-share system is costing roughly a nominal of $30 million 
more to manage than the days at sea system. This involves a 
tripling of observer costs, a quintupling of permit bank 
subsidies, and also large increases in enforcement, all for the 
same quantity of fish. Failure to monitor the economic progress 
of the catch-share system is not only bad public policy, it 
flouts the intent of Congress because taking an account of 
economic and social impacts is required by National Standard 8 
of the Magnuson-Stevens Act.
    In looking at the costs of management, we need to factor in 
the costs of gross under-fishing. Regulations promulgated by 
the agency under the catch-share system do not account for the 
mixed-species nature of the fishery and have resulted in 
hundreds of millions of dollars in waste. Instead of landing 
95,000 tons of fish last year, as deemed possible by NOAA's 
scientists, regulations caused the catch to amount to only 
33,000 tons. This is a waste of 62,000 tons of fish, which has 
a value of $200 million at the dock and $800 million by the 
time it reaches the consumer. So catch-share implementation has 
not only flouted the intent of Congress with respect to 
National Standard 8, it has also flouted the intent of Congress 
with respect to National Standard 1, which says that fisheries 
management shall produce optimum yield.
    These are only a few examples drawn from many, a whole 
tapestry of issues and problems. But they do suggest that we 
could do a better job of handling money. We could also 
implement programs that are more consonant with the intent of 
Congress.
    To do this, and this is what we need to do moving forward, 
we need a blueprint. We need a time-phased action plan focused 
on addressing shortfalls in fishery management. This plan needs 
to be developed with the buy-in of those that are most 
affected, the fishing industry. In my written testimony, I 
outline the issues in much more detail and make suggestions 
for, one, an ad hoc Fishery Management Commission to facilitate 
the action plan, and two, a National Fisheries Board to 
reinstitutionalize accountability in the agency, which other 
witnesses have pointed out has been going on for a long time.
    Thank you very much.
    Senator Carper. Gentlemen, thank you all very much.
    Senator Brown may have a question or two. Please proceed.
    Senator Brown. Thank you, Mr. Chairman.
    Mr. Yacubian, thanks for your story. Actually, I was 
disturbed by the Dan Rather report and hearing what happened to 
you. I note your son is here. He is an Afghanistan and Iraq 
veteran, is that true?
    Mr. Yacubian. Yes, sir.
    Senator Brown. Well, thank you for that service and thanks 
for coming.
    Based on some of your testimony, you criticized but you 
also praised and you indicated that certain things are being 
done. In your estimation, are the actions that have been taken 
in the last year, are they leading you to have some hope for 
the changes and reestablishing that trust between the fishermen 
and the governmental agency?
    Mr. Yacubian. Yes, Senator. I was in Washington in 
September and I met with Secretary Locke and he said to me, ``I 
was not here when this was going on,'' but, he said, ``it will 
end on my watch,'' and I believed him, and I think there have 
been some stops and starts, but I think they have made a good 
effort to do this. And I never thought that I would get a 
personal letter from Secretary Locke and----
    Senator Brown. And a check.
    Mr. Yacubian. And a check. And a lot of people think that 
was a big check, but that check did not even----
    Senator Brown. It did not cover the attorneys' fees and all 
the other stuff. Right.
    Mr. Yacubian. But it bothers me that the people who were 
described by Special Master Swartwood, who is a truly amazing 
man, that there were a lot of things done that were not 
correct.
    Senator Brown. Right.
    Mr. Yacubian. They are still working today.
    Senator Brown. Yes.
    Mr. Yacubian. Their positions may have been changed, but 
they are still there.
    Senator Brown. Just so you know, we are aware of that. That 
is another committee and another hearing. We are addressing 
that. We will talk offline.
    But, Mr. Ciulla, I know we have met and we have spoken. I 
visited your facility. In the last year only, have you noted 
some positive steps to resolving these issues?
    Mr. Ciulla. There have been steps. They appear to be 
positive.
    Senator Brown. And, Mr. Chairman, just for the record, I 
will have questions. I know we are under some time and 
pressure. I have some questions I will be directing directly to 
the panel and I would hope that you will take the time to 
answer them because they are very helpful.
    Mr. Ouellette, with the number of fishermen and vessels 
decreasing in New England--you noted that in your testimony--
and the administrative burden of compliance with the 
government's new regulatory scheme increasing, would it be a 
better use of the AFF funds to direct some of these funds 
toward alleviating the cost of compliance for fishermen, for 
example, directing some AFF funds toward aiding with the cost 
of at-sea observers or shoreside monitoring? The reason I ask 
is that I have a piece of legislation I am working on. You 
heard Congressman Tierney noting very similar pieces of 
legislation, because you also noted that is going to be borne 
by the fishermen fairly soon. What are your thoughts on that?
    Mr. Ouellette. Yes, Senator. Obviously, as the regulatory 
burden has increased, fishermen have had more difficulty 
complying. There has really been little outreach or attempt to 
help people stay in compliance, and certainly costs of 
compliance have gone up with things like observer costs. So it 
would seem quite appropriate to take money that is being 
assessed against fishermen who commit more serious violations 
and use it to help the honest people avoid making honest 
mistakes with often crippling results.
    Senator Brown. Is there an opportunity--I know in some 
agencies in years past, if you had a problem, you had a 
question, you say, ``hey, excuse me,'' call them up, have them 
come down to the boat, have them work on things together. Is 
that the attitude now after we brought it to everybody's 
attention? Is that happening or not?
    Mr. Ouellette. The short answer is the agency--and I am 
critical of the agency on many levels, but I have to say that 
the standard people who answer the phone and try to deal with 
these issues and work in the permit office and interact with 
fishermen do try their hardest to get the job done, and I do 
not mean to be overtly critical of everybody within the agency.
    But in terms of getting somebody to come down and assist 
you on a routine matter on a boat, most fishermen are still 
reluctant to do it because the agency has, over the last 15 
years, changed. In 1994, if you had a problem, law enforcement 
would come down and then an agent would look at it and say, 
``Geez, you made a mistake here. You had better do this and 
correct it.''
    Today, the fear--at least last year and probably today, the 
fear is that an agent will come down and look at you and say, 
``Yes, you are right. You have it wrong, and I am going to look 
through your log books and I am going have to charge you for 
every violation and we are going to send it up to the Office of 
General Counsel and you will see a half-million-dollar fine 
issued.'' So most fishermen are not out there--they are very 
reluctant to raise potential----
    Senator Brown. Out of sight, out of mind----
    Mr. Ouellette [continuing]. Concerns that may result in 
prosecutions, yes,
    Senator Brown. Dr. Rothschild, I note that we spoke earlier 
and we have met many times. You helped draft the Magnuson-
Stevens Act. My question is, when you are talking about 
taxpayer dollars and the use of the money from the fund, was it 
your opinion when you helped write it that they were able to 
use--and you have noted some of the trips and all these 
things--was it your opinion when you wrote it so that they were 
able to do those sorts of things?
    Mr. Rothschild. Well, I remember very clearly when we 
launched the implementation of the Act, Senator Magnuson was 
there and he said, ``At last, we have a system where the folks 
in the fishing industry have some say in their future and the 
conservation of the fish.'' So I would say that, looking at 
this boat, it is probably headed on a different course. By the 
way, I always wanted to see a picture of the boat.
    Senator Brown. There it is. [Laughter.]
    And as I noted, Mr. Chairman, I have other questions, and I 
know we have to get back to Washington, but I do have a 
question for Mr. Giacalone. As an active fisherman, could you 
describe for us in Washington your perspective on how the new 
regulations affect you? And the reason I ask that is because we 
are facing an enormous amount of national debt. Are we using 
the taxpayer dollars effectively and efficiently at this point, 
in your estimation?
    Senator Carper. And I am going to ask you just to summarize 
briefly, if you would, please. Thank you.
    Mr. Giacalone. Sure. I think if we could, as I said in the 
testimony, if we could figure out a way to relieve some of the 
limitations that appear to be either perceived or regulatory 
blocks that are keeping a lot of the funds that were committed 
to make this system work actually get to the private sector, 
which is where most of the new requirements were placed, if we 
were able to do that, then I think we could make excellent use 
of the funds. But right now, I would say not. I would say there 
has been an awful lot of money committed that is being parked 
in the agency for the agency to do new things, but not entirely 
different than what they have done before, and very little 
money going to the private sector, where they have an enormous 
new set of burdens to deal with--daily reporting now, then 
weekly reporting that needs to be submitted. Thank God, right 
now, they are not enforcing these things to the level that they 
were when, as Mr. Steve Ouellette had just talked about, 
because it is almost impossible right now for the complex set-
up that was put in the new regulations, for everyone to be in 
strict compliance. So it is really sort of ironic that we knew 
we had these difficulties before and then we raised the bar 
exponentially higher.
    Senator Brown. Thank you.
    Senator Carper. I am going to ask Senator Brown if you 
would just give a short closing statement. I will do that, and 
then we will call it a day.
    Senator Brown. Thank you, and I have a whole host of other 
questions. I know that the time on your end, we went a little 
longer on the first panel, and as I said, we do need to get 
back. But I want to just thank IG Zinser for doing his job. It 
is a tough job. And it is good to see many of my friends and 
colleagues here, Mayor Kirk, Mayor Lang, Senator Tarr, 
Representative Ferrante, everybody doing a good job getting the 
word out outside the fishing community. It is very important to 
note what is going on so people can understand and not just 
have one opinion.
    So your fight is our fight and I plan to be here as long as 
I am on this job, doing what we are doing to bring it to the 
attention so we can use those taxpayers' dollars wisely. As 
Senator Carper always says, we need to find a way to do it 
better. So I appreciate you all taking the time.
    Senator, I want to thank you for your courtesy in holding 
this hearing and look forward to our many other hearings in the 
Senate.
    Senator Carper. All right. Thank you so much. Thanks again 
for inviting us to come and helping us put a spotlight on what 
has been a sad history, a sad past, one that is being addressed 
in ways that I am encouraged about, but is a work in progress.
    I said at the beginning of our hearing that there were some 
who question whether or not we should be holding a hearing 
about a NOAA program, and I thought that was a pretty good 
question. My response was that the issue of financial 
mismanagement is one that is found throughout the Federal 
Government. Frankly, it is found throughout large 
organizations, businesses as well as governments, and all of 
us, and particularly those who are stewards and enjoy the trust 
of those that we represent, we have an obligation to try to do 
something about mismanagement of the finances for our country.
    But I want to reiterate again that the point of this 
hearing has not been, as I said earlier, to adjudicate the laws 
of the ocean or describe what is right or wrong with how NOAA 
polices our fisheries. Those issues are the jurisdiction of the 
Senate Commerce Committee, and you have from this State, a very 
senior member of that committee who I think understands these 
issues far better than I ever will, and I believe I have heard 
from witnesses here and talked to others who suggest that he 
has not been quiet about trying to make sure that the right 
thing is done.
    What we are concerned about is trying to ensure that the 
monies collected and spent by NOAA are managed effectively and 
in accordance with the law. And as I said earlier, it is not a 
hearing about fisheries management. This is a hearing about 
sound financial management.
    The point that I sort of walk away from here--that was just 
a reminder, and Senator Brown and I both mentioned the word 
``trust'' several times. In order for us--one of the reasons 
why we do not get more done in Washington these days is because 
of a lack of trust, across party lines, across the aisle. And 
to the extent that we can bridge those differences and rebuild 
the trust that used to be rather routine when Senator Kennedy 
was a pup down there and knew members--in fact, for decades, 
the kind of trust that existed, and we need to rebuild that.
    There has been trust understandably missing here between 
the fishing community and NOAA for a number of years. Our 
witnesses have mentioned apologies made by the Secretary of 
Commerce. To the extent that the Federal Government has not 
been diligent for years--for years--in making sure that we do 
the right thing in this regard, has been delinquent in not 
abiding by what I call the Cliff Notes of the New Testament--
that is the Golden Rule, and treat other people the way we want 
to be treated--to the extent that we have not adhered to doing 
what is right and, frankly, treating other people the way that 
we want to be treated, I also would apologize on behalf of our 
colleagues in the Senate.
    Having said that, you have somebody's attention, and not 
just anybody's attention. We are moving in the right direction. 
As a Federal Government, we are moving in the right direction. 
And the key is not to stop that movement. We want to continue 
to move in the right direction and to--we do not go away in our 
Subcommittee. We are not small--we are not large, rather, but 
we are pretty diligent. We are diligent and we are not going to 
go away on this, either.
    My hope is, out of our efforts, our collective efforts, 
that sense of trust will be restored and not only will that be 
restored, but so can the fisheries which a lot of people depend 
on for their livelihood.
    Thank you, and with that having been said, we will have 2 
weeks that myself, Senator Brown, and other Members of our 
Subcommittee may offer additional questions of you, and we 
would just ask, if we do that, that you respond to those 
questions.
    With that, thank you all for joining us and thank you for 
the hospitality at this hearing. Thank you.
    [Whereupon, at 12:24 p.m., the Subcommittee was adjourned.]




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