[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
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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
Printed for the use of the
Committee on Homeland Security and Governmental Affairs
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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
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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
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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
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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.
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\1\ The chart referenced by Senator Brown appears in the appendix
on page 225.
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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.
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\1\ The prepared statement of Mr. Tierney appears in the appendix
on page 58.
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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.
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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.]
A P P E N D I X
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