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[Senate Hearing 106-1087]
[From the U.S. Government Publishing Office]

                                                       S. Hrg. 106-1087
 
   REAUTHORIZATION OF THE MAGNUSON-STEVENS FISHERY CONSERVATION AND 
                             MANAGEMENT ACT
=======================================================================

                              FIELD HEARING

                               before the

                  SUBCOMMITTEE ON OCEANS AND FISHERIES

                                 OF THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                            JANUARY 18, 2000

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation

                       U. S. GOVERNMENT PRINTING OFFICE
77-954                          WASHINGTON : 2002
___________________________________________________________________________
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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                     JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska                  ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana                DANIEL K. INOUYE, Hawaii
SLADE GORTON, Washington             JOHN D. ROCKEFELLER IV, West 
TRENT LOTT, Mississippi                  Virginia
KAY BAILEY HUTCHISON, Texas          JOHN F. KERRY, Massachusetts
OLYMPIA J. SNOWE, Maine              JOHN B. BREAUX, Louisiana
JOHN ASHCROFT, Missouri              RICHARD H. BRYAN, Nevada
BILL FRIST, Tennessee                BYRON L. DORGAN, North Dakota
SPENCER ABRAHAM, Michigan            RON WYDEN, Oregon
SAM BROWNBACK, Kansas                MAX CLELAND, Georgia
                       Mark Buse, Staff Director
                  Martha P. Allbright, General Counsel
               Kevin D. Kayes, Democratic Staff Director
                  Moses Boyd, Democratic Chief Counsel
                                 ------                                

                  SUBCOMMITTEE ON OCEANS AND FISHERIES

                   OLYMPIA J. SNOWE, Maine, Chairman
TED STEVENS, Alaska                  JOHN F. KERRY, Massachusetts
SLADE GORTON, Washington             DANIEL K. INOUYE, Hawaii
KAY BAILEY HUTCHISON, Texas          JOHN B. BREAUX, Louisiana

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held January 18, 2000....................................     1
Statement of Senator Snowe.......................................     1
Statement of Senator Stevens.....................................     4

                               Witnesses

Asicksik, Eugene, President and Executive Director, North Sound 
  Economic Development Corporation, prepared statement...........   128
Benton, Dave, Deputy Director, Alaska Department of Fish and Game    19
Blackburn, Chris, Alaska Groundfish Data Bank....................    40
    Prepared statement...........................................    41
Barrett, Thomas J., Rear Admiral, Commander, Seventeenth Coast 
  Guard District.................................................    22
    Prepared statement...........................................    24
Burch, Al, Executive Director, Alaska Draggers Association.......   109
    Prepared statement...........................................   110
Bush, Jeff, Deputy Commissioner, Department of Community and 
  Economic Development, Alaska...................................    76
Christiansen, Freddie, Chairman, Gulf of Alaska Coastal 
  Communities 
  Coalition......................................................    78
    Prepared statement...........................................    80
Cotter, Larry, CEO, Aleutian Pribilof Island Community 
  Development 
  Association....................................................    69
    Prepared statement...........................................    72
Crow, Morgan, Coastal Villages...................................   121
Dalton, Penelope, Assistant Administrator, National Marine 
  Fisheries Service, National Oceanic and Atmospheric 
  Administrator, Accompanied by Steve Pennoyer, Alaska Regional 
  Administrator..................................................     6
    Prepared statement...........................................     8
Gauvin, John, Director, Groundfish Forum.........................   120
Hyde, Michael, President, Pollock Conservation Cooperative.......    53
    Prepared statement...........................................    56
Iani, John, Vice President, Unisea, Inc..........................    50
    Prepared statement...........................................    52
Lauber, Richard B., Chairman, North Pacific Fishery Management 
  Council........................................................    14
    Prepared statement...........................................    16
Lloyd, Mark, Executive Director, Alaska Sea Life Center..........   125
McGee, Charles, Commercial Fisherman, Anchorage, Alaska..........   124
Nelson, Hazel, Vice President, Bristol Bay Economic Development 
  Corporation....................................................   117
O'Leary, Kevin B., Member, North Pacific Fishery Management 
  Council........................................................    42
    Prepared statement...........................................    45
Phelps, Jack E., Executive Director, Alaska Forest Association...    87
    Prepared statement...........................................    89
Schrader, Tammy, small boat halibut fishman......................   126
Seaton, Paul, Member, Board of Directors, Alaska Marine 
  Conservation 
  Council........................................................    98
    Prepared statement...........................................    99
Smith, Thorn, North Pacific Longline Association.................   122
    Prepared statement...........................................   123
Stern, Jack, Attorney, Trustees for Alaska.......................   127
Stewart, Beth, Director, Natural Resources Department, Aleutians 
  East 
  Borough........................................................    47
    Prepared statement...........................................    49
Thomson, Arni, Executive Director, Alaska Crab Coalition.........   118
    Prepared statement...........................................   119

                                Appendix

Bristol Bay Economic Development Corporation, prepared statement.   135
Poulsen, Kris, Owner and Manager, three crab vessels, prepared 
  statement......................................................   135
Letters written to Hon. Olympia J. Snowe and Hon. Ted Stevens:
    Chuck Greene.................................................   139
    Gordon Ito...................................................   138
    Fred K. Phillip..............................................   140
    Pete Schaeffer...............................................   138
    Dennis J. Tiepelman..........................................   139
Response to written questions by Hon. Olympia J. Snowe to:
    Rear Admiral Thomas Barrett..................................   141
    Dave Benton..................................................   151
    Chris Blackburn..............................................   149
    Al Burch.....................................................   143
    Jeffrey W. Bush..............................................   143
    Freddie Christensen..........................................   153
    Larry Cotter.................................................   153
    Penelope Dalton..............................................   150
    Michael J. Hyde..............................................   155
    John Iani....................................................   152
    Richard Lauber...............................................   144
    Kevin B. O'Leary.............................................   148
    Jack Phelps..................................................   153
    Paul Seaton..................................................   144
    Beth Stewart.................................................   151
Response to written questions by Hon. John F. Kerry to:
    Kevin B. O'Leary.............................................   155

                    REAUTHORIZATION OF THE MAGNUSON-
            STEVENS FISHERY CONSERVATION AND MANAGEMENT ACT

                              ----------                              

                       TUESDAY, JANUARY 18, 2000

                               U.S. Senate,
              Subcommittee on Oceans and Fisheries,
        Committee on Commerce, Science, and Transportation,
                                                     Anchorage, AK.
    The Subcommittee met, pursuant to notice, at 9:04 a.m. at 
Anchorage Museum of History & Art, 121 West Seventh Avenue, 
Auditorium, Anchorage, Alaska, Hon. Olympia Snowe, Chairman, 
presiding.
    Staff members assigned to this hearing: Sloan Rappoport, 
Republican Counsel; Stephanie Bailenson, Republican 
Professional Staff; and Margaret Spring, Democratic Senior 
Counsel.

           OPENING STATEMENT OF HON. OLYMPIA SNOWE, 
                    U.S. SENATOR FROM MAINE

    Senator Snowe. Good morning. The hearing will now come to 
order. First of all, I want to thank Senator Stevens for 
inviting me and the Subcommittee to Anchorage to discuss the 
future of our Nation's fisheries, and specifically those off 
the coast of Alaska.
    Senator Stevens was kind enough to bring this Subcommittee 
to my home State of Maine back in 1995, when we were discussing 
these very issues in a reauthorization process, so I thought it 
was only fair to reciprocate by coming to your beautiful State, 
Senator Stevens. I felt right at home when I came in last 
night. In fact, it was warmer here than it was in Maine when I 
left yesterday morning.
    I think it is appropriate that we hold this field hearing 
here in Anchorage. When it comes to the issues that we will be 
discussing, Senator Stevens quite literally helped write the 
book. As one of the driving forces behind the Magnuson-Stevens 
Act in the first year of this Subcommittee, his institutional 
knowledge about our fisheries is unparalleled in the Congress.
    Indeed, there is no one among our colleagues who has had 
such a meaningful and profound impact on our fisheries policy 
in this country. As chairman of the Appropriations Committee, 
he has brought a strong, able, and a no-nonsense approach to 
the allocation of more than $500 trillion. You are very 
fortunate to have such an able voice in the U.S. Senate, and 
along with Senator Murkowski I can tell you they never forget 
the people of Alaska, and they never let us forget the people 
of Alaska, either.
    I also want to welcome our witnesses who have taken the 
time to express their views on this very important issue. This 
the most significant issue to come before the Subcommittee in 
this Congress. It affects you directly, and your feedback is 
essential to the decisionmaking process, as we consider changes 
to the act.
    We are here to get your answers to some very important 
questions: what has worked, what has not worked, what requires 
improvements, what are your concerns? You are the people on the 
front lines, and so it is important to understand exactly how 
the changes in the act have impacted you over the last few 
years.
    As you all know, the Magnuson-Stevens Act is the major and 
principal act governing our fisheries in America. It is 
administered by the National Marine Fisheries Service and the 
eight regional management councils, which establish the rules 
under which the fishing industry operates. They determine the 
harvest quota, season length, gear restrictions, and license 
limitations. These are decisions which have serious 
implications for those of you who fish and work in Alaska. That 
is why the difficult management decisions cannot be made in a 
vacuum. You are the ones whose livelihood is at stake. Your 
voices must be heard in this process, and as such it is 
critical that all sectors of the fishing community receive fair 
and balanced representation.
    In July, in Washington, we held a kick-off hearing to 
examine a broad array of fisheries management issues. Mr. Rick 
Lauber, chairman of the Northern Pacific Fishery Management 
Council, provided us with an overview of the topics that we 
will discuss here today, and I am pleased he will also be part 
of the panel this morning.
    The Subcommittee also held hearings in my state of Maine, 
in New Orleans, and tomorrow the Subcommittee will be in 
Seattle. It is my hope and my intention that we hear from as 
many people as possible, to develop a broad consensus on how to 
ensure healthy fisheries for the future. After all, can there 
be any doubt that fisheries are vital to our States and to the 
Nation as a whole?
    In 1998, commercial landings by U.S. fishermen were over 
9.2 billion pounds of fish and shellfish, worth $3.1 billion. 
Further, the recreational fishing catch was 195 million pounds. 
In Maine, fishing is more than a job, it is a way of life. We 
have the second longest sea coast in the country. Alaska, with 
33,000 miles bordering the ocean, is the only State where Maine 
could suffer from any envy of coastline. All along the rocky 
shore are communities with long and rich fishing heritages.
    As a result of my work with Senator Stevens on the Commerce 
Committee, I know the same can be said of Alaska, which 
produces more seafood than any other State. In fact, Alaska is 
responsible for one-half of the volume and one-third of the 
value of the entire U.S. catch.
    In 1998, this State had the first and third-ranked ports in 
the country. Dutch Harbor is on the top of the list, and last 
year's landings exceeded 597 million pounds worth over $110 
million. Kodiak, the third largest, increased its total 
landings by about 80 million pounds from the year before, and 
its value was over $78 million. Of course, the other ports like 
Ketchikan, Petersburg, Cordova, and Seward were certainly 
providing major sources of revenue and jobs throughout the 
entire fishing industry.
    While many regions of the country are dependant on 
commercial and recreational fisheries that are strong and 
robust, others have not fared as well. Their fish stocks have 
declined, and fisheries in those regions are feeling the 
economic impact. Throughout the reauthorization process we will 
examine ways to again bring about healthy fisheries and healthy 
fishing communities.
    As you know, one of the overall goals of the Magnuson-
Stevens Act was to provide a mechanism to determine the 
appropriate level of catch to maximize the benefit to the 
Nation, while at the same time protecting the long-term 
sustainability of the resource. It is a balancing act, to be 
sure, among competing interests.
    We will also hear about the need for participation of 
nonfishing interests when managing public resources. The 
Sustainable Fisheries Act of 1996 reflects significant changes 
to the goals of the Magnuson-Stevens Act. Proper implementation 
of these provisions is of great concern to many different 
groups. Accordingly, there is considerable interest in the 
activities of both the regional councils as well as the 
National Marine Fisheries Service.
    The most substantial change under the act was the mandate 
to stop overfishing and restore overfished fish stocks. The 
councils were given a timetable to achieve that goal, and 
today's witnesses will be giving us first-hand reports about 
the level of success the North Pacific Council has had in 
meeting that goal.
    The councils and the National Marine Fisheries Service were 
also told to increase their emphasis on the socioeconomic 
impacts that regulations have had on fishing communities. 
Clearly, Congress intended to preserve the fishermen as well as 
the fish.
    The Sustainable Fisheries Act also imposed a moratorium on 
the creation of new individual fishing quotas, or IFQ's, in 
which a percentage of the annual catch is held privately. As 
you well know, IFQ's were a divisive issue in 1996, and I know 
from my work with Senator Stevens how much it means to those of 
you who fish off the coast of Alaska.
    Today's witnesses will offer recommendations to address 
IFQ's in the future. We will also hear about community 
development quotas, or CDQ's, and how they have worked in 
Western Alaska.
    The final policy shifts in the Sustainable Fisheries Act 
are the provisions to minimize bycatch and protect fish 
habitat. Based on concerns that certain fish stocks have 
declined due to their loss of surrounding habitat, the act 
established a national program to facilitate long-term 
protection of essential fish habitat. Many have argued that 
these provisions have not been implemented properly, and we 
will be discussing this problem as well with our witnesses 
today.
    During my trips home to Maine, I have had the opportunity 
to discuss many of these issues with fishermen and the people 
who live in fishing communities. I have heard over and over 
again how they have been affected by the law because it has 
been implemented improperly, and that--contrary to its 
mandate--the best science is not being used in the management 
and development of policy.
    I know that some of these same concerns will be expressed 
by many of the witnesses here today. I am looking forward to 
hearing your testimony, because I think we have to develop ways 
in this process to make sustainable fishing and good management 
the norm and not the exception. The reauthorization of this act 
is an opportunity for us to take into account what everybody is 
saying all over the country, and to try to craft a sensible and 
balanced plan that affects all sides in this most important 
debate.
    Senator Stevens.

                STATEMENT OF HON. TED STEVENS, 
                    U.S. SENATOR FROM ALASKA

    Senator Stevens. Well, thank you very much, Senator Snowe. 
I am delighted that you have come to Alaska, and I thank you 
for coming in the winter time. I tell people that I think our 
best friends come and visit us in the winter time, and you are 
no stranger to our climate, but you are a stranger to Alaska, 
so we are delighted that you have come.
    I have always believed that field hearings are the best way 
to get into issues such as this, because if we had set this 
hearing in Washington, as you know, with the bells ringing and 
people coming in from all over the country, Alaska would be 
fortunate to have 15 or 20 minutes of a series of hearings. 
This way, through your leadership, we are able to have a record 
made of the Alaska point of view, and it will be available not 
only to us but to anyone who wants to review the record, and 
particularly to those who are involved in the regulation of our 
fisheries nationally.
    And it is nice to see--I think of the old movie, where we 
have rounded up the usual cast of suspects here.
    [Laughter.]
    Senator Stevens. I am particularly pleased that Penny 
Dalton is with us. She used to be here on the podium with us 
when we held these hearings, and I am glad to see you here, 
Penny.
    I really think that you have gone through most of the 
things that are before us, and I do not see any reason to be 
redundant. I do applaud our regional council, which I think is 
ahead of most of the councils in its fishery management plans, 
and as you say, Chairman Lauber was before us already on this 
subject last July. There are people here, too, who believe that 
the National Marine Fisheries Service and the councils have not 
implemented the 1996 amendments in a timely or appropriate 
manner. Some of that delay I think is our own fault in 
Congress. The AFA required substantial amounts of time and 
effort from the council and from the agencies during the period 
that those actions should have been taken, and part of it is 
the result of our being unable to prevent the courts from 
inserting themselves into these issues.
    We know just recently, again, the Stellar sea lion 
litigation has come to a focal point, and the agency and the 
council now are going to be busy for some time to come. Those 
delays really, I think, lead the reasons for the untimely 
action, or the fact that we have not had timely action under 
the AFA, but as chairman of the Appropriations Committee I hope 
you all realize that since 1995 Congress has increased the 
Fisheries Service budget by 57 percent, and Congress in my 
judgment has never devoted more resources to marine 
conservation and fisheries management than it does today, and 
we have done that during a period of, a time when Congress was 
retrenching in order to balance the budget, so I think it is 
safe to say that it is going to be very difficult to continue 
the expansion of these programs at that rate, but we will 
certainly do our best.
    I think the unique issues, particularly those of Stellar 
sea lions and the existing programs really need review, and I 
am pleased to be able to participate in that review. I do 
encourage the National Marine Fisheries Service to think more 
about long-term research. I am sure that they are on that 
course already, but I hope that the agency plans to continue in 
much of the resource that Congress has funded this year. That 
is an expansion--that money I talked about is aimed primarily 
at increasing our knowledge of the subjects we are trying to 
regulate.
    And as you say, the IFQ issue is still before us. I hope 
these hearings give us additional knowledge as to how to deal 
with that. When the moratorium expires I think that is going to 
be a central issue for Alaska in terms of the reauthorization, 
and we need to know more from the witnesses in terms of their 
attitudes there.
    We are also, as you said, going to hear about the community 
development quotas. I think that program has been very sound, 
and I do not know if you know it, but the Norton Sound Group 
recently paid $10,000 in dividends to each of the 15 
communities in this region as a result of that program, which 
is a substantial thing, and the National Science Research 
Council found that the CDQ program was successful and should be 
continued.
    I do have some questions about the whole question of 
essential fish habitat. It is a good idea, and I think we need 
to get re-involved and get more understanding of what the 
agency intends to do under that program. I certainly did not 
mean it to become another Endangered Species Act. I do think 
that there has to be some sort of a trigger in that before we 
decide that every acre of land under salt water in the United 
States needs a new Federal process.
    I do think there are substantial areas that need that now, 
and the actions under the ESA should not be diluted by having 
it be applied across the whole spectrum of land that is under 
salt water.
    But I am not going to prolong my opening statement. I think 
I have already. We set 20 minutes for the beginning, and we 
have taken that. I thank every one of you for coming. I will 
say, last, I thank all of the witnesses who gave us their 
statements in advance, because I literally read them all coming 
up here yesterday, and that is a luxury that we normally do not 
have, is to get the statements far enough in advance that we 
can really study them before the hearing, but I look forward to 
the hearing, and having you chair it, Senator Snowe.
    Senator Snowe. Well, thank you, Senator Stevens.
    Senator Stevens. I am glad to be sort of a spectator at 
this one.
    Senator Snowe. A spectator--yeah.
    [Laughter.]
    Senator Snowe. Who believes that in this audience?
    Well, before I welcome members of the first panel I just 
want to introduce our staffs. Sloan Rappoport, Stephanie 
Bailenson, and Margaret Spring are here from the Subcommittee 
staff in Washington. Dave Russell from Senator Stevens' D.C. 
staff, Bill Wolf from Senator Murkowski's office, and Jean 
Bumpus from Senator Gorton's staff are also here.
    So now I would like to welcome the first panel. Ms. Penny 
Dalton is the Assistant Administrator of the National Marine 
Fisheries Service. She is accompanied by Mr. Pennoyer, the NMFS 
Alaska Regional Administrator. We also have Mr. Rick Lauber, 
chairman of the North Pacific Council. Nice to see you again. 
The next witness will be Mr. Dave Benton, Deputy Director of 
the Alaska Department of Fish & Game, and our final witness 
will be Admiral Tom Barrett, who is the commander of the 
Seventeenth Coast Guard District. I thank you all. Ms. Dalton, 
we will begin with you.

 STATEMENT OF PENNY DALTON, ASSISTANT ADMINISTRATOR, NATIONAL 
  MARINE FISHERIES SERVICE, NATIONAL OCEANIC AND ATMOSPHERIC 
ADMINISTRATION, ACCOMPANIED BY STEVE PENNOYER, ALASKA REGIONAL 
                         ADMINISTRATOR

    Ms. Dalton. Good morning. I am Penny Dalton, Assistant 
Administrator of NOAA Fisheries. It is a pleasure to be here 
today to participate in the committee's continuing review of 
Senator Stevens' namesake act, the Magnuson-Stevens Act, and to 
discuss North Pacific fisheries.
    Senator Stevens. : Penny, could you pull the mike forward a 
little bit?
    Ms. Dalton. Sure.
    Senator Stevens. Thank you.
    Ms. Dalton. With me is Steve Pennoyer, Alaska Regional 
Administrator.
    With 34,000 miles of tidal marine coastline and 70 percent 
of the U.S. continental shelf, Alaska plays a central role in 
our Nation's fishing economy. In 1998, fishermen in Alaska had 
landings accounting for 52 percent of total U.S. seafood 
catches. The fishing industry is the largest private sector 
employer in the State of Alaska, providing 47 percent of basic 
employment, ahead of oil and gas production, mining, forest 
products, and tourism. Recreational fisheries are also 
important. In 1997, anglers spent about 2.6 million days to 
catch 22.3 million salmon and 673,000 halibut.
    Under the Magnuson-Stevens Act, the North Pacific Council 
and NOAA fisheries have implemented five fishery management 
plans in Alaska, the Bering Sea, and Aleutian Islands 
groundfish, Gulf of Alaska groundfish, Bering Sea crab, 
scallops, and Alaska salmon. The council focuses much of its 
attention on the two groundfish plans, because routine 
management under the other three is done in large part by the 
State.
    The Alaska region has achieved remarkable success in 
preventing overfishing. Relative to other regions, North 
Pacific fishermen have enjoyed sustained yield due to good 
stock assessments and conservative management measures. None of 
the 36 groundfish stocks covered by the groundfish plans is at 
or below a level of abundance that is considered to be 
overfished. However, three species of Bering Sea crab, Tanner, 
Snow, and St. Matthew blue crab are overfished. The council and 
the State have completed a rebuilding plan for Tanner crab and 
are developing plans for the other two.
    With respect to a possible industry buyback program for 
this fishery, regulations have been prepared and are under 
review by the Department and OMB. We expect an interim final 
rule to be published soon.
    In recent years, we have placed a high priority on efforts 
to reduce fishery impacts on endangered marine species in 
Alaska, particularly Stellar sea lions. In 1990, after severe 
declines throughout the Gulf and Aleutian Islands regions, 
Stellar sea lions were listed as threatened. Since then, 
numbers have continued to drop, and the western population was 
reclassified as endangered in 1997.
    Because the pollack fisheries are likely to compete with 
Stellar sea lions for food, NOAA fisheries concluded in a 1998 
biological opinion that measures were necessary to prevent 
jeopardy to the western population and adverse modification to 
critical habitat. Since then, we have worked closely with the 
council to develop management measures that disperse the 
fisheries in time and space and preclude fishing in critical 
rookery areas.
    One change in Alaska fisheries over the last decade has 
been allocation of the catch among industry sectors, and limits 
to fishery access. Pollock and Pacific cod were allocated 
between in-shore and off-shore sectors in 1992, along with the 
establishment of community development quotas.
    In 1995, we implemented council recommendations for 
individual fishing quotas for Pacific halibut and sable fish. 
These programs have allowed us to obtain the benefits of a 
market-based allocation system, protecting interests of small-
scale fishermen and fishing communities, and address regional 
concerns in the program design about consolidation, 
transferability, and equity.
    Among the most challenging issues in recent months is 
implementation of the American Fisheries Act that was enacted 
in October 1998. This new law is having a profound effect on 
the Bering Sea groundfish fisheries, revising in-shore/off-
shore allocations, reducing off-shore fishing capacity through 
a buy-out funded in part by fees on in-shore harvests, 
establishing fishery co-operatives, increasing monitoring, and 
applying the harvesting processing restrictions that are 
commonly known as side boards to fishery participants who 
receive direct AFA benefits.
    The council and NOAA fisheries have worked hard to complete 
interim AFA rules for the opening of the fishery this week. The 
next task will be to complete final rules. While the work load 
has been enormous, we look forward to the fishery management 
opportunities that the statute is making available.
    Another key element of the groundfish management system is 
the North Pacific groundfish observer program. The Alaska 
Fishery Science Center, in co-operation with the industry, 
administers the program under which private companies contract 
directly with fishermen to provide observers. NOAA fisheries 
pays for program administration and the industry pays for 
direct observer costs. The program annually deploys about 350 
observers on over 400 vessels and processing plants, providing 
30,000 observer days of real-time data to NOAA fisheries, the 
council. and industry, through an extensive electronic 
reporting system.
    Another Magnuson-Stevens priority is minimizing bycatch. 
Despite low bycatch rates, the enormous volume of the 
groundfish fisheries produces large bycatch quantities. In 
1998, we approved and implemented a full retention requirement 
for pollack and Pacific cod, which will be extended in 2003 to 
other species.
    Biodegradable pinholes are required for pot gear to 
minimize ghost fishing. Industry co-operation is essential, and 
we are working with groups like the Groundfish Forum to study 
new bycatch reduction methods and gear. In addition, the IFQ 
and CDQ programs and fishery co-operative are contributing by 
slowing the pace of fishing and allowing more selective 
practices that reduce capture of unwanted species, increase the 
recovery rate, and reduce the amount of lost gear.
    Another factor in Alaska management is increased emphasis 
on conserving and enhancing fisheries habitat. Large areas of 
the North Pacific have been closed to groundfish trawling and 
scallop dredging to reduce impacts of these fisheries. Habitat 
area closures encompass about 30,000 square miles in the Bering 
Sea and an additional 47,000 square miles in the Gulf of 
Alaska. Other small closures are Sitka and Cook Inlet.
    To address nonfishing activities, NOAA Fisheries has 
conducted about 400 consultations in Alaska to date with 
Federal agencies whose actions may adversely affect EFH. These 
reviews integrate EFH consultations into existing environmental 
review processes to minimize impacts on the public.
    In closing, NOAA fisheries is still working to implement 
the changes made to the Magnuson-Stevens Act in 1996, and would 
not propose major changes at this time. However, we have 
identified revisions that may improve the management proces and 
resolve relatively minor problems. These are summarized in my 
written testimony.
    We look forward to working with congressional Members on 
high priority policy issues such as observer programs, 
individual fishing quotas, and funding and fee authorities.
    This concludes my testimony. Thank you.
    [The prepared statement of Ms. Dalton follow:]

    Prepared Statement of Penelope Dalton, Assistant Administrator, 
  National Marine Fisheries Service, National Oceanic and Atmospheric 
                             Administration
    Madame Chair and members of the Subcommittee, thank you for 
inviting me to Anchorage to testify on the implementation and 
reauthorization of the Magnuson-Stevens Fishery Conservation and 
Management Act (Magnuson-Stevens Act), and to speak on issues of 
concern to fishermen in the North Pacific Ocean and Bering Sea off 
Alaska. I am Penny Dalton, Assistant Administrator for Fisheries for 
the National Oceanic and Atmospheric Administration.
   building a foundation for sustainable fisheries - alaska fisheries
    With 34,000 miles of tidal marine coastline and about 70 percent of 
the total U.S. continental shelf area, Alaska is a state where fishing 
is a dominant aspect of life. In 1998, for example, commercial 
groundfish landings in Alaska totaled about 5 billion pounds with a 
wholesale value of about $1.2 billion. These landings accounted for 52 
percent of the total commercial landings in the United States. The 
commercial fishing industry is the largest private-sector employer in 
the State of Alaska, providing 47 percent of basic employment, ahead of 
oil and gas production, mining, forest products and tourism.
    While the commercial fishing industry dominates the overall use of 
living marine resources off Alaska, recreational fisheries also are 
important to State residents and visitors alike. In 1997, recreational 
fishermen spent about 2.6 million angler days to catch over 2.3 million 
salmon and 673,000 halibut.
    The North Pacific Fishery Management Council (Council) is primarily 
responsible for the development of fishery management plans (FMPs) and 
amendments under the jurisdiction of the Magnuson-Stevens Act. 
Currently, NOAA Fisheries has five FMPs implemented, one each for 
groundfish fisheries in the Bering Sea and Aleutian Islands (BSAI) area 
and Gulf of Alaska (GOA), respectively, for the BSAI crab fisheries, 
the scallop fisheries and salmon fisheries in the EEZ. The Council 
focuses much of its attention on the two groundfish fishery FMPs 
because routine management under the other three FMPs has been 
undertaken for the most part by the State of Alaska.
    None of the 36 groundfish species or species groups covered by the 
two groundfish FMPs is at or below a level of abundance that is 
considered to be overfished. Three species of crab in the BSAI, Tanner 
crab, snow crab, and St. Matthew blue king crab, however, are 
overfished. The Council has developed in conjunction with the State a 
rebuilding plan for the first species and is developing plans for the 
other two species that will facilitate the long-term potential yield of 
these highly cyclical species.
    Ensuring that our fisheries do not negatively affect species 
protected under the Marine Mammal Protection Act and the Endangered 
Species Act (ESA) is a high priority for NOAA Fisheries. Here in 
Alaska, two species of particular concern are the Stellar sea lion and 
the short-tailed albatross. The Stellar sea lion was listed as 
threatened in 1990. The listing followed severe declines of the species 
throughout the Gulf of Alaska and Aleutian Islands region, which was 
the center of its range in the North Pacific. During the 1990s, the 
species continued to decline and, since the late 1970s, counts of 
Stellar sea lions in this region have dropped by more than 80 percent. 
In 1997, NOAA Fisheries recognized that the Stellar sea lion consisted 
of two distinct populations, and reclassified the population west of 
144 W. longitude as endangered.
    A number of factors are either known to have contributed to the 
decline, or are suspected of having done so. The leading hypothesis has 
been that sea lions have declined due to factors causing nutritional 
stress, which adversely affects the growth and condition of animals, 
and their probabilities of reproduction and survival. In December 1998, 
NOAA Fisheries issued a Biological Opinion that concluded that the 
pollock fisheries in the GOA and BSAI were likely to jeopardize the 
continued existence of the western population of Stellar sea lions and 
modify adversely their critical habitat. To reduce competition between 
the pollock fisheries and Stellar sea lions, NOAA Fisheries has worked 
closely with the Council to develop management measures that disperse 
the fisheries in time and space and preclude fishing from critical 
rookery and haulout areas.
    We have made similar advances in protecting the short-tailed 
albatross from direct interactions with fisheries. This species, 
believed to be extinct in 1949, has been slowly increasing in abundance 
to approximately 1,200 birds in the world today. In 1997 we issued 
rules requiring the GOA and BSAI hook-and-line groundfish fisheries to 
use seabird avoidance measures, and in 1998 similar measures were 
implemented for the halibut fisheries off Alaska. The Washington Sea 
Grant Program and the fishing industry currently are conducting a 
Federally funded study to test the efficacy of these new rules. We are 
implementing a new rule regarding the use of blue-dyed bait in the 
Hawaiian longline pelagic fishery, and perhaps other such innovations 
could be employed in Alaska to lessen the attractiveness of bait to 
seabirds.
    Fishing industry requests for allocations of the total allowable 
catch (TAC) among industry sectors and for limiting access to the 
fishery resources have grown over the past decade. Allocations of 
pollock in the BSAI and pollock and Pacific cod in the GOA began in 
1992, along with the unique Community Development Quota (CDQ) program. 
In 1995, we implemented the Individual Fishing Quota (IFQ) Program 
recommended by the Council for the Pacific halibut and sablefish 
longline fisheries. Both of these programs are making significant 
progress toward their respective goals for Alaskan fisheries. They 
provide a useful model for attaining some of the benefits of a market-
based allocation scheme while protecting the interests of small-scale 
fishermen and fishing communities, and integrating regional 
sensitivities about consolidation, transferability and equity into 
program design.
    Some of the most challenging TAC allocation issues we have had to 
deal with recently are those raised by the American Fisheries Act (AFA) 
passed in October 1998. Implementing the AFA has had a profound effect 
on the groundfish fisheries in the BSAI and, to a lesser extent, the 
groundfish and crab fisheries in the GOA. Basically, the AFA 
established a new inshore-offshore allocation scheme for the BSAI 
pollock fisheries; reduced fishing capacity through a buyout of nine 
pollock catcher/processor vessels; established a fee on the inshore 
harvests of pollock to repay a $75 million loan used for the buyout; 
and listed vessels or specified criteria for the participation of 
fishing vessels and processors in the BSAI pollock fisheries. The Act 
also provided for the creation of, and TAC allocation to, fishery co-
operatives; increased observer coverage and scale requirements for 
pollock catcher/processors; required harvest restrictions (commonly 
known as "sideboards") on fishermen and processors who receive 
exclusive harvesting and processing privileges under the AFA; and 
directed the Council to develop excessive share harvesting limits for 
BSAI pollock processing and the harvesting and processing of other 
groundfish. The Council and NOAA Fisheries made implementation of the 
AFA a top priority and have worked hard to develop interim AFA rules 
that we plan to make effective this week. The next task will be to 
complete final implementing rules. We look forward tothe fishery 
management opportunities that this statute has made available.
    The sophisticated management regime in effect for the BSAI and GOA 
groundfish fisheries would not be possible without the North Pacific 
Groundfish Observer Program, which is administered by the Alaska 
Fisheries Science Center in co-operation with industry. The program has 
responsibility for training, debriefing, data management, data 
analysis, and observer provider oversight. Observers are procured 
through private companies that contract directly with the fishing 
industry. NOAA Fisheries pays for program administration while the 
industry pays for the direct costs of hiring and deploying observers. 
The program annually deploys approximately 350 fisheries observers on 
over 400 vessels and processing plants. A variety of fisheries are 
observed and data are collected to meet multiple agency needs. The data 
are provided to end users in real time through an extensive electronic 
reporting system. The result is a system which annually provides over 
30,000 observer days of readily available quality data to NOAA 
Fisheries, the Council, and industry.
         implementation of the sustainable fisheries act (sfa)
    As we enter the 21st Century, we are at a crucial point in 
fisheries management, with considerable work ahead of us. In the 23 
years since the enactment of the Magnuson-Stevens Act, we have seen the 
complete Americanization of fisheries in federal waters (most 
dramatically in the case of Alaska), the expansion of the domestic 
fishing industry, declines in many fishery resources, and the rise of 
public interest in fisheries issues. We have seen some successes from 
our management actions, including rebuilding of Spanish mackerel, the 
initial rebound of a few depleted stocks like Gulf of Mexico red 
snapper and Georges Bank haddock, and the continued strong production 
of fish stocks off Alaska. However, as of 1999, 11 percent of U.S. 
living marine resources are overfished or are approaching overfished, 
14 percent are not overfished, and there is another 75 percent whose 
status is unknown. In Alaska, about 1 percent of living marine 
resources are overfished or are approaching the overfished status, 12 
percent are not overfished, and there is another 87 percent whose 
status is unknown. We at NOAA Fisheries are working to rebuild fish 
stocks to levels that could sustain fisheries of greater economic 
value. From a national perspective, scientists estimate that we could 
increase U.S. fishery landings up to 6.8 billion pounds by rebuilding 
all fisheries and maintaining harvests at optimal yields.
    The Magnuson-Stevens Act provides the national framework for 
conserving and managing the wealth of fishery resources found within 
the 197-mile-wide zone of Federal waters contiguous to the United 
States (except for the coastal waters for Texas and the Gulf of Mexico 
coast of Florida where state waters extend out to 9 nautical miles). In 
1996, Congress ushered in a new era in fisheries management, making 
significant revisions to the Magnuson-Stevens Act in the Sustainable 
Fisheries Act (SFA). The SFA addresses a number of conservation issues. 
First, to prevent overfishing and rebuild depleted fisheries, the SFA 
caps fishery harvests at the maximum sustainable level and requires 
fishery management plans to rebuild any overfished fishery. NOAA 
Fisheries now reports annually on the health of marine fisheries and 
identifies fisheries that are overfished or approaching an overfished 
condition. Second, the SFA refocused fisheries management by 
emphasizing the need to protect fisheries habitat. To enhance this 
goal, the SFA requires that management plans identify habitat that is 
necessary to fish for spawning, breeding, feeding, or growth to 
maturity. The new law also clarifies our existing authority to comment 
on Federal actions that affect essential fish habitat. Third, to reduce 
bycatch and waste, the SFA adds a new national standard requiring that 
conservation and management measures minimize bycatch and the mortality 
of bycatch that cannot be avoided. It also calls for management plans 
to assess bycatch and to take steps to reduce it.
    The most immediate and direct effect of any commercial or 
recreational fishery management regulation is on fishermen, their 
families and communities. To address this concern, the SFA establishes 
a new national standard 8 that requires, consistent with conservation 
objectives, that fishery management plans provide for the sustained 
participation of fishing communities and minimize adverse impacts to 
the extent practicable. In addition, a national standard has been added 
to promote the safety of human life at sea. Finally, the SFA provides a 
number of new tools for addressing problems relating to the transition 
to sustainable fisheries, including amendments to provide for fisheries 
disaster relief, fishing capacity reduction programs, vessel financing, 
and grants and other financial assistance.
    NOAA Fisheries takes seriously its mandates under the SFA. We are 
working to ensure that SFA requirements are implemented, and that 
conservation and management measures fully protect the resource and 
provide for the needs of fishing communities and the Nation. A great 
deal of work remains to be done. We are laying a solid foundation for 
future fisheries management. The benefits of the changes made by 
Congress in 1996, however, will take years, perhaps decades, to 
realize. In addition, the management decisions that we face are 
becoming ever more complex and contentious, and good solutions are hard 
to come by. We need to direct resources and effort to the scientific 
and technical aspects of our work. We also must build consensus with 
the public and among various stakeholders to facilitate progress in 
developing management programs that will move us toward the goal of 
healthy and sustainable marine resources.
    The SFA imposed a deadline of October 11, 1998, for amendments to 
each of the 39 existing fishery management plans to implement its 
changes. Despite the Councils' best efforts, there were some proposed 
amendments that did not satisfy the requirements, for which the 
analyses were inadequate, or that did not minimize socioeconomic or 
environmental impacts to the extent possible and achieve management 
objectives. NOAA Fisheries disapproved or partially approved those 
amendments and is working closely with the Councils to improve them, 
particularly in the areas of improving our social and economic 
analyses, rebuilding overfished stocks, minimizing bycatch, identifying 
and protecting fish habitat, and improving the scientific basis for 
management. I will outline some of the work we are doing in each of 
these areas:
    Social and Economic Analyses: One of NOAA Fisheries' highest 
priorities is to improve our social and economic analyses. These 
analyses are required by a number of laws in addition to the Magnuson-
Stevens Act, including the Regulatory Flexibility Act, the National 
Environmental Policy Act (NEPA), and Executive Order 12866. The 
requirement of the Magnuson-Stevens Act to include a fishery impact 
statement, and the new standard on fishing communities, also make clear 
our mandate to consider the social and economic impacts of any 
management program. This consistently has been an important part of the 
decision-making process and has affected our choice of fisheries 
conservation and management actions. For instance, when we implemented 
a full retention requirement for pollock and Pacific cod in 1998, we 
delayed the effectiveness of a similar requirement for flatfish until 
2003 to allow development of new markets and gear technology that could 
minimize the costs of this requirement.
    To strengthen our social and economic analysis capabilities, we are 
issuing revised Regulatory Flexibility Act guidelines to our employees, 
hiring more economists, sociologists, and anthropologists, and working 
with other Federal agencies and states to improve our data collection. 
As a result, economic, social, and biological considerations will be 
better integrated to assist fisheries managers in making the best 
possible decisions to balance conservation, the fishing industry, and 
community needs.
    Rebuilding Overfished Stocks: I would like to point out the 
remarkable success that has been achieved in preventing overfishing of 
most of the important commercial stocks in the North Pacific. The 
conservative and scientifically based TACs that have been used in 
recent years have contributed significantly to the continued production 
of groundfish stocks. With the exception of the crab species I 
previously mentioned, fisheries management by the State of Alaska under 
the crab, scallop, and salmon FMPs also has prevented these species 
from becoming overfished. Rebuilding plans are being developed for the 
three species of crab in the BSAI that have been found to be 
overfished. Relative to fishery stocks in other regions: however, those 
in the BSAI and the GOA have enjoyed sustained yields due to the 
scientifically based stock assessments by the Alaska Fisheries Science 
Center and the conservation and management measures recommended by the 
Council. On the subject of buybacks, regulations have been prepared and 
are under Department of Commerce and Office of Management and Budget 
(OMB) review. We expect that an interim final rule will be published 
shortly, and that public comment on an additional referendum will be 
solicited. We can operate under the interim final rule once OMB has 
cleared the regulation.
    Minimizing Bycatch: Minimizing bycatch continues to be a very high 
priority for NOAA Fisheries in Alaska. Despite low bycatch rates in the 
groundfish fisheries, relative to similar fisheries around the world, 
the large volume of these fisheries produces a large poundage of 
bycatch. Existing prohibited species catch limits and closed areas in 
the groundfish fisheries, however, effectively move fisheries out of 
areas of high bycatch of non-groundfish species. Improvements in 
bycatch control can still be made. We have been working closely with 
the Council and industry to make steady progress on reducing bycatch 
and discards. In December, we published a proposed plan amendment that 
would establish a framework to reduce the annual trawl bycatch limit 
for chinook salmon. Also in December, we published another proposed 
plan amendment that would prohibit non-pelagic trawling in a directed 
pollock fishery. Other potential bycatch reduction actions we are 
working on with the Council include development of a halibut mortality 
avoidance program. In 1998, we approved and implemented a full 
retention requirement for pollock and Pacific cod, which will be 
extended to rock sole and yellowfin sole in the BSAI and shallow water 
flatfish in the GOA in 2003. Biodegradable panels are required for pot 
gear to minimize the unseen bycatch of lost or so-called ghost fishing 
gear.
    Industry co-operation has been critical in reducing bycatch. We 
have issued a number of experimental fishing permits, and are working 
with various industry groups, including the Groundfish Forum, to study 
new bycatch reduction methods and gear. In addition, the IFQ and CDQ 
programs and fishing co-operatives are contributing to bycatch 
reduction. Although minimizing bycatch was not their primary purpose, 
by slowing the pace of fishing under these regimes, they have allowed 
for more selective fishing practices that reduce the capture of 
unwanted species, increase the recovery rate and product quality of the 
targeted species, and provide for significant reductions in the amount 
of fishing gear used and lost. Care in the deployment of fishing gear 
is particularly prevalent in the CDQ fisheries in which most all 
bycatch of non-target species is counted against a specified CDQ 
allocation. This induces CDQ fishermen to focus on maximizing the value 
of all species harvested instead of maximizing the volume harvested of 
any one species as in non-CDQ fisheries.
    Essential Fish Habitat (EFH): The SFA substantially increased the 
emphasis in the Magnuson-Stevens Act of conserving and enhancing 
fisheries habitat. Off Alaska, we have a long history with the Council 
in protecting important areas of bottom habitat. The productivity of 
the sea floor habitat has long been recognized as an essential 
component of an ecosystem-based fishery management regime and 
regulations have been implemented to protect specific areas of 
important sea floor habitat. Large areas of the North Pacific have been 
closed to groundfish trawling and scallop dredging to reduce impacts of 
these fisheries on bottom habitat and protect juvenile crabs. In the 
BSAI, habitat area closures encompass about 30,000 square nautical 
miles, more than twice the area of Georges Bank off the East Coast of 
the United States. The GOA closures encompass an additional 47,000 
square nautical miles, but most of this area is off the continental 
shelf. In addition, the Council has proposed, and we are reviewing, an 
additional closure of about three square miles around the Cape 
Edgecumbe pinnacles in the southeastern GOA off Sitka. If approved, 
this action would prohibit all fishing activities in this area that is 
recognized as habitat particularly important for the spawning, breeding 
and growth of a variety of commercially important fish species. An 
additional closure to trawling in Cook Inlet also is under 
consideration.
    To address non-fishing activities, NOAA Fisheries has conducted 
close to 2,500 consultations to date with Federal agencies whose 
actions may adversely affect EFH, including about 500 in Alaska. These 
reviews have been accomplished largely by integrating EFH consultations 
into existing environmental review processes as a way to minimize 
regulatory impacts on Federal action agencies and the public. We expect 
the number of consultations to increase as outreach efforts with 
Federal agencies continue to build awareness of the EFH statutory 
requirements. However, it is important to remember that even prior to 
the designation of EFH, most Federal actions affecting the habitat of 
marine and anadromous species were subject to review by NOAA Fisheries 
under other legal authorities. EFH has provided more emphasis and 
structure to these reviews, and we are working closely with affected 
agencies and industries to ensure the EFH consultation process is 
efficiently implemented. For example, in Alaska, we have reached 
agreement with the Corps of Engineers to combine EFH consultations with 
the existing permitting process for dredge and fill activities, and we 
are beginning discussions with the U.S. Forest Service to build EFH 
consultations into their environmental analyses under the National 
Environmental Policy Act.
    Improving Scientific Information: NOAA Fisheries is committed to 
using the best possible science in the decision-making process, and to 
incorporating biological, social, and economic research findings into 
fisheries conservation and management measures. Meeting our 
responsibilities under the Magnuson-Stevens Act and other applicable 
laws requires collecting a considerable amount of data. In the Alaska 
Region, NOAA Fisheries is continuing to augment a wide range of data 
collection activities. The frequency of groundfish surveys in the BSAI 
and GOA is being increased to improve monitoring and prediction of 
commercial stock status and distribution. The first new Fisheries 
Research Vessel is planned for deployment to Alaska. Coordination and 
co-operation with industry, academia and State agencies in a wide range 
of fishery-marine mammal interaction research is being expanded and 
pilot research on the impacts of fishing is underway in the BSAI and 
GOA. The North Pacific Groundfish Observer Program is continuing to 
work with industry and the Council to improve the quality and 
timeliness of the data it collects. Notwithstanding these exciting 
developments, we will continue to support a precautionary approach in 
the face of scientific uncertainty.
              magnuson-stevens act reauthorization issues
    We are still working to understand and effectively implement the 
changes to fishery management policies and procedures made by the SFA. 
Consequently, we would not propose major changes to the Magnuson-
Stevens Act at this time. However, we have identified some revisions of 
existing provisions that may be useful to make the management process 
more efficient and to resolve some relatively minor problems. We 
currently are reviewing various issues raised by the task force, the 
Councils, and some of our stakeholders. Among the issues identified are 
the following:
    Review process for fishery management plans, amendments and 
regulations: The SFA attempted to simplify and tighten the approval 
process for management plans and regulations. However, one result of 
that effort has been two distinct review and implementation processes -
- one for plans and amendments and another for implementing 
regulations. This essentially uncouples the review of plans and 
amendments from the process for regulations, and as a result, the 
decision to approve or disapprove a plan or amendment may be necessary 
before the end of the public comment period on the implementing 
regulations. We are considering amendments that would modify the 
process to address this issue.
    In addition, the Committee may wish to consider reinstating the 
initial review of fishery management plans and amendments by the 
Secretary. Considerable energy and staff resources are expended on 
plans or amendments that are ultimately disapproved because of serious 
omissions and other problems. At present, two to three months must 
elapse before the Secretary makes his determination, and if the 
amendment is then disapproved, it can be months or longer before the 
Council can modify and resubmit the plan or amendment. While the 
initial review was eliminated by the SFA to shorten the review process, 
reinstating Secretarial review may actually provide a mechanism to 
shorten the time it takes to get a plan or amendment approved and 
implemented.
    Restrictions on data collection and confidentiality: The Magnuson-
Stevens Act currently restricts the collection of economic data from 
processors. Removal of this restriction could improve the quantity and 
quality of information available to meet the requirements of the laws 
requiring social and economic analysis. In addition, the SFA changed 
the term ``statistics'' to ``information'' in the provisions dealing 
with data confidentiality. The change has raised questions about the 
intended application of those provisions, particularly with respect to 
observer information, and Congressional clarification would be useful.
    Coral reef protection: Special management areas, including those 
designated to protect coral reefs, hard bottoms, and precious corals, 
are important commercial resources and valuable habitats for many 
species. Currently, the federal government has the authority to 
regulate anchoring and other activities of fishing vessels that affect 
fish habitat. However, we remain concerned with threats to those 
resources from non-fishing vessels. We intend to work with other 
federal agencies to suggest amendments to the Act to clarify, 
consolidate, and strengthen the federal government's authority to 
regulate the actions of any recreational or commercial vessel that is 
directly impacting resources being managed under the Magnuson-Stevens 
Act.
    Caribbean Council jurisdiction: The current description of the 
Caribbean Council limits its jurisdiction to Federal waters off Puerto 
Rico and the U.S. Virgin Islands. As a result, the Council cannot 
develop fishery management plans governing fishing in Federal waters 
around Navassa Island or any other U.S. possession in the Caribbean. 
Jurisdiction of the Caribbean Council could be expanded to cover 
Navassa Island, by including ``commonwealths, territories, and 
possessions of the United States'' within the description of that 
Council's authority.
    Council meeting notification: To meet the notification requirements 
of the Magnuson-Stevens Act, Councils spend tens of thousands of 
dollars a year to publish meeting notices in local newspapers in major 
and/or affected fishing ports in the region. By contrast, fax networks, 
mailings, public service announcements, and notices included with 
marine weather forecasts are much less expensive and could be more 
effective in reaching fishery participants and stakeholders. The 
Committee may wish to consider modifying notification requirements to 
allow Council use of any means that will result in wide publicity.
    We look forward to working with Congressional members on high-
priority policy issues such as observer programs, individual fishing 
quotas, and funding and fee authorities, although, at this time, we 
have no specific recommendations for changes in the Magnuson-Stevens 
Act to address these issues. We will continue to work closely with the 
Alaska delegation, the Council and our various stakeholders to resolve 
problems affecting Alaska fisheries.
    Madame Chair, this concludes my testimony. Thank you for the 
opportunity to discuss the implementation and reauthorization of the 
Magnuson-Stevens Act. I am prepared to respond to any questions you and 
members of the audience may have.

    Senator Snowe. Thank you, Ms. Dalton.
    Mr. Lauber.

STATEMENT OF RICHARD B. LAUBER, CHAIRMAN, NORTH PACIFIC FISHERY 
                       MANAGEMENT COUNCIL

    Mr. Lauber. Good morning, Senators. Thank you for the 
invitation to testify again before this committee. I will cover 
additional material, relying on the record for my previous 
testimony.
    We have all heard that fisheries are doing poorly around 
the Nation and the world. For the most part, resource managers 
have not received very good marks. From my experience as 
council chairman for almost 10 years, and many, many more years 
in Alaskan fisheries, I think that we have good, sound, 
sustainable fisheries management here in Alaska.
    We have put the Magnuson-Stevens Act to use, but to make 
the Magnuson-Stevens Act work requires a considerable dose of 
political will to restrain the fisheries so the fish can 
flourish but still keep industry viable. We have achieved a 
balance that maintains Alaska as the United States leader in 
fisheries production, as previously mentioned, with over 50 
percent of the Nation's landings here. We have limited entry 
into our fisheries, and have initiated the largest IFQ 
experiment in the United States for our sable fish and halibut 
fisheries. We allocate many species by sector, and tightly 
control bycatch and waste of nontarget species.
    I am proud that our industry has been willing to shoulder 
the cost of this highly regulated regime, as well as an 
expensive observer program to ensure the long-term 
sustainability of our resource.
    Now, I want to focus on several key issues that are 
currently before the council. The Stellar sea lion protection 
has required much of our time since late 1998. Last year alone, 
fully 20 percent of our council meeting time was spent on sea 
lion protective measures. We responded directly to advice from 
the National Marine Fisheries Service in approving many 
restrictive measures that will place a severe economic burden 
on local fishermen. We need more research and experiments 
carried out to help us learn more about the impacts of fishing 
and adaptive management. We only hope that our actions will 
help the sea lions rebound.
    The American Fisheries Act was a groundbreaking piece of 
legislation. It has consumed roughly 35 percent of our council 
meeting time and 30 percent of our staff time. I sense that in 
the long run we will conclude that the AFA provided a very 
innovative approach to addressing overcapacity in the pollack 
fisheries and its use of co-operatives may provide a good 
template for other fisheries as well. It may have many 
advantages over the IFQ system.
    For the year 2000, the off-shore and in-shore co-operatives 
will be up and running, and we have appropriate side boards in 
place to limit their impacts on non-AFA fisheries. Groundfish 
processor side board caps and excessive shares are up for final 
action this April. Our fisheries such as Gulf of Alaska pollack 
and Bering Sea crab are considering the use of co-operatives. 
we will present a full performance report to you in October.
    Restricting halibut charter boat activities is a big issue 
that we will address this coming next meeting in February. We 
are considering guideline harvest levels not to close the 
charter boat fishery, but to trigger future fishing constraints 
to keep the overall harvest within the guideline harvest range. 
They will apply only to the charter fleet, but I am sure you 
will hear from unguided sport fishermen as well and the 
commercial fleet no matter what we do.
    Overfishing definitions may be considered in the upcoming 
reauthorization. I noted earlier that we have generally robust 
groundfish stocks. We also realize that individual stocks can 
fluctuate wildly over time. Somehow, we must balance the need 
for protective overfishing measures with these natural changes 
in abundance. Let us be precautionary in our management, 
especially when the stock is low, but reasonable in our 
approach.
    On essential fish habitat we have added descriptions to our 
fisheries plans and imposed measures to minimize fishing 
impacts on habitat. All in all, we have closed about 30,000 
square miles of the Bering Sea to trawling, an area larger than 
Maine, and more than twice the size of George's Bank.
    We have banned bottom trawling in some areas of the State. 
The Gulf of Alaska has closures as well, and I believe Congress 
should take a hard look at our habitat requirements and be more 
specific about defining essential fish habitat. Let us protect 
the habitat that really counts. The broad perspective current 
legislation and the NMFS guidelines just opens the door for 
wide types of lawsuits and criticisms.
    Subsistence has come to the forefront because of the 
Federal take-over of fisheries in Alaska, but at the current 
time the council is only working with subsistence halibut 
issues. We quite likely will become more involved in the 
subsistence issue as this evolves.
    Last, I want to touch on the Russian fisheries and our 
pollack stocks. Our pollack viability may hinge to some extent 
on how much is harvested in Russian waters. U.S. stocks mix 
with Russian pollack off Cape Naveran, and we are hit hard off 
our maritime boundary in the northern Bering Sea. We can expect 
even more intense pressure along the boundary, because their 
stocks are declining.
    The situation further aggravated by the Russian State 
Committee on Fisheries licensing vessels from five or six 
countries to fish pollack for hefty fees, and recent reports of 
factory trawlers moving from Mermansk to the Far East.
    We appreciate your support for scientific exchanges of 
information and increased patrol activities by the United 
States Coast Guard along the boundary and the donut hole. This 
problem needs our continued attention and resolution.
    Thank you very much.
    [The prepared statement of Mr. Lauber follow:]

   Prepared Statement of Richard B. Lauber, Chairman, North Pacific 
                       Fishery Management Council
    Good morning, Senators. As always, it's an honor for me to appear 
before you, particularly with my esteemed colleagues from NMFS, the 
State of Alaska, and U.S. Coast Guard. It's a good time to have a 
hearing. We all made it through the end of the century, and appear to 
be Y2K compliant, and I think now is an appropriate time to take stock 
of how we're doing in fisheries management. The really good news to me, 
from my vantage point of over a quarter century being involved in 
Alaska fisheries, and almost ten years as the Council chairman, is that 
I believe we may be onto ``sustainable fisheries management'' for most 
of our fisheries up here. That can be a very illusive goal, as we all 
know from our collective experience in other regions of the U.S. and 
around the world.
    For the most part, resource managers have not received very good 
marks. And it's not for lack of strong legislation such as the 
Magnuson-Stevens Act, which with all its myriad provisions and 
amendments, provides a very sound foundation for sustainable 
management. Rather, the vital ingredient that seems to be missing in 
many areas is a political will to establish effective management 
constraints so that fish stocks can flourish, while still allowing for 
an economically viable fishing industry.
    We have achieved a balance up here that has allowed Alaska to 
remain the U.S. leader in fisheries production. Over 50% of the 
nation's landings come from Alaska stocks, and we are proud of that. We 
have strong support from NMFS and the State of Alaska, in providing 
comprehensive stock assessments, and we have constrained harvest levels 
through firm season closures once the harvest is taken. Last month our 
scientists again informed us that our groundfish stocks continue to be 
in good health, with Bering Sea pollock stocks rebounding with a very 
strong 1996 year class. That's good news for the industry and hopefully 
for the sea lions. Our flatfish stocks seem to have topped out for now 
and are cycling downward. Each of our stocks has its own unique cycle 
and we cannot keep all of them high all the time. But for the most 
part, the fisheries remain healthy off Alaska as we head into this next 
decade.
    On the fishing capacity side of the equation, the North Pacific 
Council over the past ten years has limited entry into every fishery 
under its jurisdiction, and moved beyond that for the sablefish and 
halibut longline fisheries, to the use of individual fishing quotas, 
the largest such experiment in the U.S. to date. Overlaying most of our 
fisheries is a complex array of allocations of target species by 
industry and gear sector. Additional regulations control bycatch and 
waste of non-target species.
    This complex management system, of course, comes at a high cost and 
is not without burden to industry. I am proud to say that our industry 
has been willing to shoulder those costs, as well as an expensive 
observer program, to ensure long term sustainability of the resource. 
You will be hearing from industry today, and I hope they share my view 
that the promise of sustainable fisheries is worth the pain inflicted 
by our management system.
    When I appeared before Senator Snowe and the Senate Subcommittee 
last July, I conveyed various recommendations on amendments to the Act 
developed by the eight Council Chairmen at their meeting in June in 
Rhode Island. Also, I summarized our Council's progress on implementing 
the Sustainable Fisheries Act of 1996. I submitted extensive 
documentation on our actions and will not repeat it here today. 
Instead, in my remaining remarks, I want to focus briefly on several 
key issues that have required considerable attention this past year, 
and where we are heading on them.
                      stellar sea lion protection
    The first one that stands out above the rest is the protection of 
Stellar sea lions. Even though we've been working on various measures 
since 1990 to protect sea lions, our involvement increased by orders of 
magnitude when NMFS issued its Biological Opinion in early December 
1998, prodded along by the lawsuit filed by several environmental 
groups the previous April. We spent significant time on sea lions at 
our November and December 1998 meetings, and even more in 1999. In 
fact, in our five Council meetings last year, fully 20% of our time was 
spent considering sea lion protective measures. In some meetings it was 
much more, roughly 47%, for example, at the June 1999 meeting when we 
debated and then approved longer term measures for 2000. We certainly 
hope that the time spent and the resulting protective measures 
facilitate their recovery.
    Our Council actions responded directly to advice from NMFS, though 
it should be noted that NMFS has added additional protective measures 
around rookeries and haulouts near Kodiak that could place a severe 
economic burden on local fishermen. I anticipate that you will hear 
more about this in the other panels. I believe we have done about all 
we can do for the time being, given our state of knowledge to protect 
sea lions. We have overlain a very complex management regime with even 
more complexity. We would like to see more research conducted on 
Stellars and some experiments carried out to help us learn more about 
the impacts of fishing and perform adaptive management.
    Before leaving this topic, I do want to commend NMFS for including 
us in its decision making on measures to protect sea lions. Though we 
have never been able to convince NMFS to give us much of a hand in 
reviewing their draft biological opinion, they did a good job of 
bringing proposed measures to us for approval, mainly at the urging of 
the Regional Administrator, Steve Pennoyer. I think we have been very 
responsive to their needs, and hope the measures work to rebuild the 
sea lion populations and bring them out of jeopardy from any fishery.
                         american fisheries act
    A second big issue is the American Fisheries Act. I know that AFA 
is not the focus of this hearing, but it is pretty tough to keep it in 
the background. It was a groundbreaking piece of legislation. With all 
its trappings, it has posed a tremendous challenge to the Council. 
Consider for the moment that we really did not even have it on our 
tasking list as we approached the fall of 1998, and yet in 1999 it 
consumed roughly 35% of our Council meeting time and 30% of our Council 
staff time between meetings. That amounts to almost 3000 hours of staff 
time solely on AFA, and I don't even have an estimate of the amounts of 
time put in by NMFS and ADFG staff, though I know it is very 
significant.
    So, I want you to know that we are very grateful for your 
successful efforts to send additional funds our way to defray costs of 
these AFA activities. The funds are sorely needed and will be spent 
over the coming year or two (if we can get an extension) on contracts 
for analysis of AFA amendments, and in developing a comprehensive 
benchmark study of the status of Alaska's fishing industry in the year 
2000. I would hasten to add that, while the AFA was a huge burden on us 
and the industry, I sense that in the long run, we will conclude that 
it was a very effective and innovative approach to addressing 
overcapacity in the pollock fisheries, and its use of co-operatives may 
provide a good template for other fisheries as well. I would also note 
that the development of co-operative structures in the pollock 
fisheries has somewhat muted the heretofore urgent pleas for IFQs to 
rationalize the fisheries. I know that the extension of the IFQ 
moratorium may be up for consideration in the next reauthorization of 
the Act. I am not sure how important that really is to us off Alaska 
for the time being while AFA shakes out, and will be very interested in 
what others have to say.
    For 2000, the offshore and inshore pollock co-operatives will be up 
and running, and we have appropriate sideboards in place to limit their 
impacts on non-AFA fisheries. In April, the Council will take final 
action on groundfish processor sideboard caps and excessive shares for 
pollock processors. Other fisheries, not envisioned within AFA, also 
are considering the use of co-operatives. This includes the Gulf of 
Alaska pollock and Bering Sea crab sectors. In October, we are 
scheduled to provide you with a full performance report on the AFA.
                    halibut charterboat restrictions
    A third big issue, restrictions on halibut charterboat activities, 
will be before the Council in February and I can imagine you will be 
hearing a lot about it from both sides, regardless of how the chips 
fall. The charter catch off Alaska has grown significantly the past few 
years, and because it has been taken off the top before the commercial 
quota is set, uncontrolled charter growth could take a significant bite 
out of the commercial quota, now fished under an IFQ system.
    We are considering a proposed Guideline Harvest Level (GHL) for the 
charterboat fishery. We have listened closely to that industry and they 
do not want to be shut down in season. So the GHL will be designed not 
so much to close the fishery, as to trigger restrictive management 
measures in future years to bring the charter harvest within the GHL 
range. One of the measures our analysis has shown would be most 
effective, is to reduce the bag limit from two fish to one fish. The 
charter fleet is not happy with this approach, of course, because they 
believe their clients would not come for only one fish.
    We will take final action next month in Anchorage and I have heard 
that there will be well over 300 people there to testify. This is our 
Council's first big foray into the classic commercial-recreational 
struggle that has played out for years elsewhere in the nation. I'm not 
sure what the outcome will be, but whatever restrictions we choose, 
will only apply to charter boat fishermen. Unguided sport fishermen 
will not be impacted by the restrictions. But I'm sure you'll hear from 
everyone.
                              overfishing
    As I noted earlier, we have been very fortunate in the North 
Pacific in that our stocks are robust and in good shape. One groundfish 
stock, Pacific ocean perch, was depleted by heavy Japanese and Soviet 
fisheries in the 1960s and early 1970s. It remained in low abundance 
for years despite little in the way of catch. We approved a rebuilding 
plan in 1993, and were very fortunate that some good year classes came 
along shortly thereafter and the stock has recovered nicely.
    Our shellfish resources have not been so lucky. Three stocks, 
Bering Sea bairdi and opilio Tanner crab and St. Mathew blue king crab, 
have declined sharply despite the best efforts of ADF&G and very sound 
science provided by researchers such as Dr. Gordon Kruse. We approved a 
rebuilding plan for the bairdi stock last October, and will approve 
plans for the other two stocks next June . Its very difficult to 
predict if the stocks will come back according to schedule, but we will 
be making every effort to protect them.
    We will be watching with great interest, any proposed changes to 
the Magnuson-Stevens Act concerning overfishing definitions. Somehow we 
have to ensure that we balance the need for protective overfishing 
measures with the natural tendency of stocks to fluctuate widely over 
time. Just because a stock takes a cyclical bounce to low abundance 
levels as a result of environmental shifts, does not necessarily mean 
that we should drop everything else we are doing to establish a 
rebuilding plan right away. I fully agree that we need to be 
precautionary and conservative in our management, especially when a 
stock is low, but we need to be reasonable and methodical in our 
approach, and not shut everything down as some environmental groups 
would have us do.
                         essential fish habitat
    A few brief comments on essential fish habitat: Our Council 
responded quickly to the SFA amendments of 1996 to add descriptions of 
EFH to our fishery management plans. We fully understood that within 
the same 24-month timeline for the descriptions, the SFA also called 
for concurrent measures to minimize fishing impacts on habitat to the 
extent practicable. Because of the workloads involved, we chose a 
deliberate two-step approach. First we worked at identifying EFH and 
adding those descriptions to our plans by June 1998. Then we 
established a process for considering the fishing impacts, and are now 
concentrating on identifying habitat areas of particular concern, based 
on ecological function and vulnerability to man-made impacts.
    This is not to say that we have not acted to protect habitat. We've 
closed a unique pinnacle area off Sitka to bottom fishing. We've banned 
non-pelagic trawling for Bering Sea pollock. We've closed about 30,000 
square nautical miles in the Bering Sea to trawling, an area larger 
than Indiana or Maine and more than twice the size of Georges Bank off 
the east coast of the U.S. Additional large areas on and off the 
continental shelf in the Gulf of Alaska are closed to bottom trawling.
    Despite these efforts, a recent lawsuit has placed us and other 
councils under the gun to take additional actions to protect habitat. I 
am beginning to believe that Congress needs to take a strong, second 
look at our habitat requirements and give them more focus on exactly 
what is meant by ``essential'' fish habitat, rather than using the 
rather broad perspectives in the current legislation and NMFS 
guidelines. I believe we need to protect habitat, but the open-ended 
definitions now being used just leave too many hooks and handles for 
litigation in what is already a very litigious environment. These views 
closely parallel similar views raised by other Council chairmen.
                              subsistence
    As you know, Senator Stevens, subsistence management reached a 
milestone this past year when it was turned over to the Federal 
Government. Our Council has been involved with the issue only 
peripherally, mainly with halibut on the Bering Sea coast. I have been 
involved with some of the higher level State-Federal planning bodies in 
the past year, and we will work closely with the U.S. Department of 
Interior, ADF&G, and the Alaska Board of Fisheries to resolve any 
management issues. As subsistence management evolves, we will keep you 
posted on our involvement.
                       russia far east fisheries
    The last issue I want to briefly touch on, is the potential impact 
of Russian fisheries on our pollock stocks. I noted earlier that our 
Bering Sea pollock stocks are rebounding. Their long term viability, 
however, will depend to some extent on how they are fished on the 
Russian side of the maritime boundary in the northern Bering Sea. The 
extent of intermingling of our stocks and theirs off Cape Navarin 
varies year-to-year. For example, our scientists estimate that eastern 
Bering Sea pollock made up from 47-61% of the pollock catch off Cape 
Navarin in 1990-1994. More recently, they are estimated to make up only 
2-7%. Regardless of the exact amounts, we know that there is 
considerable pressure on the pollock resource in the immediate vicinity 
of the maritime boundary.
    Acoustic surveys have shown heavy concentrations all along the 
line. As I am sure the Coast Guard will show you in their presentation, 
their patrols detect numerous foreign vessels within 5 nm of the 
boundary all summer. These vessels are a mix of Russian fishermen, 
Russia-flagged foreign ships, and vessels from Japan, South Korea, 
Poland, China and elsewhere, licensed by the Russia State Committee on 
Fishing. Pollock stocks in the Western Bering Sea and in the Sea of 
Ohkotsk are faltering, so we can expect even more intense pressures 
along the boundary.
    I have been privy to most negotiations on the boundary and on the 
Donut Hole. The moratorium on fishing in the Donut Hole seems to be 
durable for the time being, but we have not made much headway along the 
boundary. I and others in industry and government appreciate the funds 
that were made available to upgrade the hydroacoustic surveying 
capabilities of the Professor Kaganovsky a year or two ago, and 
certainly our scientists have been working co-operatively with the 
Russian biologists. It is apparent, though, that we need to be able to 
get our scientific vessels like the Miller Freeman, into their zone to 
work alongside the Russian survey vessels to determine the extent of 
the intermixing of our pollock.
    We also will need to continue the cultivation of our Coast Guard 
contacts with enforcement types on their side, so that we do not run 
into the types of situations that developed last August when our Coast 
Guard cutter HAMILTON was surrounded by 19 Russian factory trawlers to 
obstruct the Coast Guard's effort to seize the factory trawler GISSAR 
for illegally fishing in the US EEZ. It's my understanding that RADM 
Barrett has initiated meetings with high level officers in the 
Northeast Region of the Federal Border Service, and that we are now 
providing them twice weekly with reports of vessel names, locations and 
activities of Russian and other fishing vessels operating within the 
1.5 to 5 nm buffer zones along the boundary.
    We appreciate your support of our efforts to strike a reasonable 
understanding with the Russians on coordinated management of Bering Sea 
pollock. Hopefully our efforts will bear fruit in the long term, though 
it may take awhile for the political system to settle down on their 
side. Certainly your continuing support will be needed, both in terms 
of funding for research and enforcement, and for any international 
agreement that may result from our efforts to establish a sustainable 
fisheries management regime in the northern Bering Sea.
    In closing, I want to express my appreciation to you for holding 
this hearing up here in Alaska, especially considering that it is not 
the best time of year to be outdoors, though it is always beautiful, 
snow or sunshine. I would be happy to respond to any questions you 
might have, and I look forward to working with you on any forthcoming 
changes to the Magnuson-Stevens Act.

    Senator Snowe. Thank you, Mr. Lauber.
    Mr. Benton.

STATEMENT OF DAVE BENTON, DEPUTY DIRECTOR, ALASKA DEPARTMENT OF 
                          FISH & GAME

    Mr. Benton. Thank you, Madam Chair.
    Madam Chairman, I would like to welcome you again to the 
State of Alaska, and thank you for coming up here, and on 
behalf of the State I would like to express our appreciation 
for the efforts of yourself and Senator Stevens to understand 
the implications of the Magnuson-Stevens Act on our State. I 
would like to just touch on a couple of key issues that are 
highlighted more fully in my written testimony and answer any 
questions you might have.
    As we have already heard, the Magnuson-Stevens Act really 
represented a major change on national policy from its very 
beginning. It instituted a regime that took hold worldwide to 
establish the 200-mile zones and led the way for conservation 
and management around this country and in many ways throughout 
the world, and I think that is a record that the Congress of 
the United States should be very proud of.
    The amendments in 1996, as you pointed out, constituted a 
major policy shift in the act and in the direction that 
fisheries management was going in our country. Those amendments 
acknowledged the need to be more proactive on conservation 
measures and preventing overfishing. It included new standards 
to protect fishing communities, and that is something that is 
very important in this State, and it is something that is very 
important around the country.
    The measures for essential fish habitat have caused some 
consternation in some quarters. They are overly broad in some 
ways. But the council in our part of the world is really just 
beginning to try and come to grips with how we are going to 
address essential fish habitat.
    As Chairman Lauber pointed out, we have a large number of 
areas that are protected now. We have spent a lot of time 
looking at criteria, and the broad policies that you would use 
to identify essential fish habitats, and we have got a lot of 
work in front of us. As has been pointed out, we have 34,000 
miles of coastline and over two-thirds of the Nation's 
continental shelf, and that is a big area and a lot of work, 
and in many ways that is true for a lot of the measures in the 
1996 amendments to the Magnuson-Stevens Act. We have been 
trying to implement that act. It is a very large task, and as 
Senator Stevens and yourself pointed out, other events have 
overtaken us. Stellar sea lions have taken up a lot of our 
time. The American Fisheries Act has taken up a lot of our 
time.
    A couple of the amendments that I think are important from 
the State's perspective for you to think about first off is how 
the act has affected State and Federal relations. Section 306 
went a long way to answering some problems that this State had 
working with the Federal Government on basically who is in 
charge of what species or what fisheries, and it was a great 
step forward and has solved a number of our problems.
    The act has provisions in it that require the States and 
the Federal Government to work together on research and 
monitoring and fisheries management programs, and I have to say 
that from my perspective we have an excellent working 
relationship with the National Marine Fisheries Service in 
Alaska. That does not mean we always agree. It does not mean it 
always goes smooth. We have our bumps in the road, but over all 
we have a very good working relationship with the National 
Marine Fisheries and NOAA and are very appreciative of that.
    Section 401 was one area where we have some differences 
this year. It pertains to fishery monitoring and reporting. 
National Marine Fisheries Service was under the gun to develop 
an electronic reporting system for the fisheries off our coast. 
The State of Alaska also has management responsibilities in a 
number of those fisheries, and we were working with the 
National Marine Fisheries Service to develop what we call the 
Alaska Fisheries Information Network, a joint fishery 
information program between Federal and State agencies, but 
NMFS went off on sort of a tangent with their electronic 
recording program and was developing that independently.
    After a lot of back-and-forth, sometimes friendly, 
sometimes not-so-friendly, we managed to resolve that. We are 
working together I think very well now, and I am hopeful that 
in the not-too-distant future we will have a combined State-
Federal system that will work and will be of great benefit to 
the industry and reduce the cost to both the State and the 
Federal Government.
    The other section of the act that has been of great help to 
us in terms of strengthening State and Federal relations is 
section 312, Fisheries Disasters. That has played a big role in 
the Western Alaska fishery problems that we have had. It again 
showed we are working with National Marine Fisheries Service 
and NOAA very closely. The State has been able to address some 
unique problems up here, and we are greatly appreciative of 
their efforts in working with us on that.
    The one problem with that that I would like to call your 
attention to is that there is a requirement for a three-to-one 
match, which for many of those very small remote rural 
communities has caused some difficulties and is something that 
we would like to try and work with the Congress to address in 
the future.
    I would like to mention just one other item, and I will 
close, and that is an issue that is coming before the Congress 
very quickly, and that is the moratorium on individual fishing 
quotas. Alaska has, through our council up here has the largest 
IFQ program in this country and possibly the world. It has been 
largely a success, but that did not come without great pain, 
and it was a program that was in many ways a simplistic 
program, in that it is basically two species and one gear type.
    At the time that the Congress was considering the 
amendments to the 1996 act, we were looking at potentially 
putting IFQ's in place for multiple species and multiple gear 
types, and fortunately, at least from our perspective, the 
Congress did say, take a minute, slow down, let us have the 
National Research Council look at IFQ's and provide us with 
some advice before we go much further down that road. I think 
that was a very wise decision. There were big issues in front 
of the country and a lot of big issues in front of our council.
    The moratorium will expire in the not-too-distant future. 
Many of those very large issues have yet to be addressed, 
issues such as consolidation, effects on communities, how much 
limitation there should be on ownership, what do you do about 
transferability, what happens to small boat fishermen versus 
big corporations, and how do you encourage or account for 
allowing entrance into a fishery that is closed with an IFQ 
program for people that are new entrants, people that want to 
get into the fishery, young people that do not really have the 
resources yet to buy in a major way.
    Those all need to be addressed if we are going to allow IFQ 
programs to go forward. I am not saying do not allow them to go 
forward, and I am not saying that they are the greatest thing 
since sliced bread, but I am saying there are some issues that 
need to be addressed, and that allowing the moratorium to 
expire is not an insignificant action.
    With that, I will close. Thank you very much.
    Senator Snowe. Excuse me? What was your final sentence 
there?
    Mr. Benton. Pardon me?
    Senator Snowe. You said, allowing the moratorium to 
expire----
    Mr. Benton. Is not an insignificant action. In other words, 
Madam Chair, if the moratorium is allowed to expire, those 
issues and many others are going to surface that will need to 
be addressed, and we will need congressional guidance, I 
believe, in some of those before we can put an IFQ program in 
place. That is really what I am saying.
    Senator Snowe. Thank you, Mr. Benton.
    Admiral Barrett.

    STATEMENT OF REAR ADMIRAL THOMAS J. BARRETT, COMMANDER, 
                SEVENTEENTH COAST GUARD DISTRICT

    Admiral Barrett. Good morning again, Madam Chairman and 
Senator Stevens. Thank you for inviting the Coast Guard to 
appear before you this morning.
    Let me begin with an update on Coast Guard operations this 
morning. We have two cutters, the STORIS and the JARVIS on 
patrol in the Bering Sea. They were originally positioned to 
provide search and rescue response for vessels in the State 
Opilio crab fishery, the most dangerous in the United States. 
However, the State recently delayed this fishery until April 
because of advancing ice. However, this month we still have 
major pollock and cod fisheries going on. Indeed, the Bering 
Sea pollock fishery is one of the largest commercial fisheries 
in the world.
    Coast Guard personnel are also conducting voluntary 
commercial fishing vessel safety exams in Western Alaska, and 
providing training to fishers on stability and damage control. 
A third cutter, the ACUSHNET, is en route to the Aleutians to 
monitor the active mackerel fishery and enforce no-fishing 
areas around 37 Stellar sea lion rookeries.
    Air Station Kodiak is assisting the cutters with C-130 
overflights to locate the fleets, identify boarding contacts, 
and assist with the closed area enforcement.
    All of these units are positioned and prepared to respond 
to any type of search and rescue case that may arise, which is 
particularly critical in winter, when bitter cold temperatures 
and frequent heavy weather dramatically reduce survival times 
even for those with exposure suits.
    The Coast Guard's primary role in fisheries management is 
to enforce the regulations that make the various management 
plans work. We have traditionally provided at-sea enforcement 
in the form of cutter and aircraft patrols, and at-sea 
boardings. Our fisheries enforcement operations in Alaska 
emphasize four areas. First, we patrol the North Pacific beyond 
our EEZ, protecting U.S. salmon stocks from illegal high seas 
driftnet operations.
    Because of the great distances involved, this is a mission 
suitable only for our largest cutters and most capable 
aircraft. It involves a co-operative international effort, 
under the auspices of the North Pacific Anadromous Fish 
Commission, with the countries of Japan, Russia, and Canada. In 
1999, this international team detected 10 illegal vessels and 
apprehended three. We will be out there again this spring.
    Our most resource-intensive mission is the U.S.-Russia 
maritime boundary in the Bering Sea. This past year we saw an 
aggressive Russian fleet pushing the line with more vessels for 
longer periods of time. Coast Guard flights in August detected 
over 170 foreign factory trawlers within 50 miles of our 
boundary, and over 100 of those vessels within 5 miles of the 
line.
    This pressure required a nearly constant presence of high 
endurance cutters and C-130 flights. Although pollock is the 
target, the issue is also one of sovereignty and the security 
of our maritime boundaries.
    The Russian Border Service has tried to help us by 
enforcing a so-called ``buffer zone'' on their side of the 
line. However, I understand that recently a Russian court 
dismissed penalties assessed by Russian authorities, and this 
will only exacerbate the situation on the maritime boundary, 
and will be a concern for the 2000 season.
    Concerning domestic enforcement, we monitor over 200 time, 
area, and species openings and closings. The Coast Guard 
ensures vessels are fishing where they ought to be, when they 
ought to be, and that federally required observers are free to 
collect their data.
    The IFQ fishery is perhaps the largest IFQ in the world. 
Providing enforcement presence requires more resources for us 
than what was required under the old Derby system. On the plus 
side, IFQs let fishermen better take weather conditions into 
account, something not possible under the old regime.
    Finally, we provide surveillance of extensive rookery and 
no-trawl areas created in response to the decline of the 
endangered Stellar sea lions.
    Overall, I think Federal fisheries management under the Act 
is working well in Alaska. Stocks are healthy, there is a 
commitment to the resource, and a culture of science and 
conservation guides the North Pacific Council and resource 
stakeholders.
    The Act provided nonvoting council seats to the Coast 
Guard. I take that responsibility very seriously, and am 
pleased to report, in my view, the process works very well in 
the North Pacific. The Coast Guard is a partner in Council 
actions. Our input is often solicited and very carefully 
considered.
    Fishing regulations are also increasingly complex. Though 
not a direct action under the Act, the resources that Congress 
with the support Senator Stevens and others provided to 
establish Coast Guard Regional Fisheries Training Centers has 
been critically important in helping our personnel stay abreast 
of the regulations. One of the largest of these facilities, 
which is in Kodiak, last year trained over 1,100 Coast Guard 
personnel.
    Commercial fishermen help us review course content, speak 
to classes, and help our people better understand the industry 
we regulate. This dialog has gone a long way in improving our 
credibility and our effectiveness. With regard to the Act, I 
have no suggested improvements to improve the effectiveness or 
the efficiency of the Coast Guard's law enforcement mission.
    Although not a direct subject of this hearing, I also want 
to briefly comment on Coast Guard readiness, a challenge 
complicated by the extreme weather and distances that are a 
part of life in this great State in the North Pacific. 
Throughout the area of responsibility of the Coast Guard's 
Pacific Area command, we are stretched thin to meet the 
challenge posed by growth missions in counternarcotics, migrant 
interdiction, as well as fisheries. I am feeling the impact in 
Alaska, and am trying my best to respond by ensuring our 
resources are directed at our most serious problem.
    To the extent that our services are important to the proper 
stewardship of our Nation's fisheries resources, Madam 
Chairman, the area within your oversight, I ask your continued 
support for the Coast Guard. In Alaska, operational excellence 
in the air, in our ports, and on the water define what we are 
about. We are committed to providing the public with the best 
Coast Guard services possible. We will respond to search and 
rescue cases. We will enforce our fisheries laws, protect our 
natural resources, and prevent and respond to pollution 
incidents, and with continued effective partnership and your 
committee's support, we will continue to be successful.
    Thank you, and with your permission I will submit my 
written statement for the record.
    [The prepared statement of Admiral Barrett follow:]

   Prepared Statement of Rear Admiral Thomas J. Barrett, Commander, 
                    Seventeenth Coast Guard District
    Good morning, Madam Chairman and distinguished members of the 
Subcommittee. I am Rear Admiral Thomas Barrett, Commander of the 
Seventeenth Coast Guard District. On behalf of the Commandant, thank 
you for the opportunity to appear before you today to discuss the Coast 
Guard's efforts with regards to the Magnuson-Stevens Fishery 
Conservation and Management Act (MSFCMA).
    The Coast Guard is firmly committed to providing at-sea enforcement 
in support of the MSFCMA. The Coast Guard recognizes that the economic 
and biological health of our fisheries is of significant national 
concern. Our fisheries provide a livelihood for the commercial 
harvesting industry, a product for consumption by the American public, 
and enjoyment for millions of recreational fishing enthusiasts. The 
MSFCMA embodies the principle that we all have a collective 
responsibility to exercise good stewardship over these valuable 
resources.
    The Coast Guard's role goes beyond enforcing fishery management 
regulations to minimizing the loss of life from fishing. In Alaska's 
harsh environment, this is a major challenge. Seventeen Alaska fishers 
lost their lives in 1999. We are working hard to ensure the vessels 
engaged in Alaska fisheries are safe, and that our cutters, aircraft, 
and crews are ready to assist should fishers get in distress. Our 
ultimate goal is for all fishers to operate their vessels safely and in 
compliance with the fisheries management regulations. The Commercial 
Fishing Vessel Safety Act and other safety initiatives have helped 
reduce the loss of life from commercial fishing by almost 50 percent 
over the last 10 years (from losing an average of 34 persons annually 
in Alaska in the 1980's to 16 in the 1990's). However, fishing in 
Alaska is still the most dangerous occupation in the United States. We 
have strategically positioned our cutters and helicopters during 
openings of the most hazardous fisheries to improve our search and 
rescue readiness posture. We are also expanding our fishing vessel 
safety program and focusing at-sea boardings and dockside exams on 
vessels engaged in high-risk fisheries. For example, we recently 
initiated Operation ``Ready for Sea,'' a fishing vessel safety program 
focused on the top ten safety items designed to mitigate known risks 
and help ensure a vessel's safe return to port. If these vessels are 
truly ``Ready for Sea,'' they should be able to survive the heavy 
weather we routinely face in Alaska.
Coast Guard Living Marine Resource Enforcement
    We are deeply committed to the stewardship of living marine 
resources through an effective law enforcement program. We have 
developed a long-range strategy called OCEAN GUARDIAN to provide 
effective enforcement in support of the national goals for fisheries 
resource management and conservation. This strategy includes four key 
objectives:

         Prevent illegal encroachments of the U.S. Exclusive 
        Economic Zone (EEZ) and territorial waters by foreign fishing 
        vessels.
         Ensure compliance with domestic living marine resource 
        laws and regulations within the U.S. EEZ by U.S. fishers.
         Ensure compliance with international agreements for 
        the management of living marine resources.
         Ensure the development of viable enforcement schemes 
        designed to protect, conserve, and manage living marine 
        resources.

    To prevent illegal encroachments of the U.S. EEZ, Coast Guard 
cutters and aircraft in Alaska patrol both the U.S./Russian Maritime 
Boundary in the Bering Sea and the U.S./Canadian Maritime Boundary in 
Dixon Entrance. Both borders call for near full-time Coast Guard 
presence during peak activity periods that may last several months. Of 
the two boundaries, the U.S./Russian Maritime Boundary is significantly 
more resource-intensive to enforce due to its remote location, extreme 
weather conditions, and high levels of activity. As many as 120 vessels 
from many different nations routinely operate within 50 nautical miles 
of the boundary from May through December. In 1999, this foreign fleet 
became very aggressive in "pushing the line" and in one case 
intentionally obstructed Coast Guard enforcement efforts. The number of 
detected illegal encroachments increased from the previous annual 
average of 12 to more than 90 encroachments in 1999. In response to 
this increased activity, the Coast Guard diverted cutters from other 
missions to provide nearly constant high endurance cutter presence and 
almost daily HC-130 flights. During the higher threat periods, the 
Coast Guard had two high endurance cutters patrolling the line. This 
mission is not just about protecting pollock, but also one of national 
sovereignty and the security of our maritime boundaries.
    In Alaska there are over 300 Federal time, area, and species 
openings and closings in a given year. The Coast Guard ensures vessels 
are fishing where they ought to, when they ought to, and how they ought 
to. The Coast Guard in Alaska also enforces the largest Individual 
Fishing Quota (IFQ) fishery in the world. In 1995, halibut and 
sablefish management shifted to an IFQ system, and individual fishers 
were each given their own annual quota that could be taken at a time of 
their choosing during the season. The halibut season went from two 24-
hour openings to an 8-month long season. The Coast Guard is committed 
to providing a law enforcement presence throughout the 8-month season 
both to ensure compliance with regulations and to be in position to 
respond to vessels in distress. IFQs allow fishers the opportunity to 
make their own choices as to when they fish, allowing them to take 
weather conditions into account without economic penalties, something 
not possible under the previous derby system. Another large part of 
domestic enforcement is patrolling rookery and no-trawl areas created 
to protect endangered Stellar sea lions. Rookeries and haulouts, and 
the closed areas that protect them, are spread throughout the Alaska 
region and are often found adjacent to historical fishing grounds. The 
Coast Guard patrols these closed areas with cutters and aircraft.
    Coast Guard cutters and aircraft also patrol areas outside the U.S. 
EEZ to monitor compliance with international agreements for the 
management of marine resources by both U.S. and foreign fishing fleets. 
Important examples include monitoring the Central Bering Sea (commonly 
referred to as the ``Donut Hole'') to protect U.S. straddling stocks, 
and patrolling the North Pacific Ocean in support of the United 
Nations' moratorium on large-scale high seas pelagic drift net (HSDN) 
fishing. HSDN vessels targeting salmon in the North Pacific are of 
particular concern, especially in light of the importance of the salmon 
fishery to the state of Alaska. The Coast Guard works closely with the 
North Pacific Anadromous Fish Commission (NPAFC) to coordinate 
international enforcement efforts throughout the HSDN high-threat area 
in the northwest corner of the Pacific Ocean. Due to the remote 
location of this vast area, only our largest cutters and long-range 
aircraft can patrol it effectively. In 1999, Coast Guard and Canadian 
aircraft detected ten vessels using large-scale drift nets in this 
area. A Coast Guard cutter, with the assistance of a People's Republic 
of China (PRC) shiprider, later boarded three of these vessels. Two 
vessels were identified as Russian and were turned over to a Russian 
Federal Border Service vessel for prosecution. The PRC government 
refuted the third vessel's claim to PRC registry, and the vessel was 
assimilated to statelessness, seized, and brought into the port of 
Adak. Analysis conducted by National Marine Fisheries Service (NMFS) 
indicated that many of the salmon that were seized from this vessel 
came from Alaska stocks. The Coast Guard is currently working with the 
NPAFC to coordinate enforcement plans for 2000.
    Effective living marine resource management and enforcement 
requires a team effort. In Alaska, the Coast Guard has an excellent 
relationship with the North Pacific Fishery Management Council (NPFMC), 
NMFS, National Oceanic and Atmospheric Administration, the United 
States Attorney, Alaska Board of Fish, Alaska Department of Fish and 
Game, and the fishing industry. To improve foreign fishing vessel 
compliance with U.S. and international regulations, the Coast Guard has 
developed good working relationships with NPAFC, Northeast Border 
District of the Russian Federal Border Service, Fisheries Agency of 
Japan, Canadian Department of Fisheries and Oceans, and the PRC Bureau 
of Fisheries. These international relationships, developed in 
partnership with the Department of State, help improve the Coast 
Guard's effectiveness on the fishing grounds.
MSFCMA
    From the Coast Guard's perspective, the fisheries management system 
is working well in Alaska. Federally managed stocks appear to be 
healthy, and there is a commitment to the resource by all stakeholders. 
The Fishery Management Councils develop plans to conserve and manage 
fisheries resources, and a growing part of this process involves 
allocation. The Coast Guard needs to remain neutral to allocation 
issues and to specific conservation and economic objectives. Our role, 
rather, is to aid fisheries managers in choosing among various 
management alternatives by providing them expert advice on the 
operational realities of at sea-law enforcement and vessel safety. 
Nevertheless, the Coast Guard can and does influence the development of 
regulations we are asked to enforce. Our participation as a nonvoting 
member on Fishery Management Councils is critical and is one of the 
foundations of effective enforcement.
    The original MSFCMA wisely recognized that enforcement is needed 
for effective management; the Coast Guard and NMFS were tasked to 
provide that enforcement. The Coast Guard is dedicated to ensuring that 
enforcement is impartial, fair, consistent, and effective, and is also 
perceived as such. By necessity, fisheries regulations are increasingly 
complex, so in 1993 the Coast Guard conducted a comprehensive study on 
fisheries enforcement, the trends in the fisheries and fisheries 
management, and Coast Guard requirements to meet the challenges of this 
complex task. As a result of that study and implementing actions: (1) 
we have increased the training and expertise of our enforcement 
personnel; (2) we have developed a closer relationship with the fishing 
industry and other stakeholders; (3) we have provided higher quality 
information to the regional fisheries management councils; and (4) we 
have improved co-operation and coordination with the National Marine 
Fisheries Service and state enforcement agencies.
    Although not a direct action under the MSFCMA, the resources 
appropriated during fiscal year 1994 to establish five regional 
fisheries training centers has been critically important in ensuring 
Coast Guard enforcement personnel remain professional and stay current 
with the ever-changing and complex nature of fisheries regulations. One 
of the largest of these centers is located in Kodiak, where over 1,100 
Coast Guard people were trained last year. One of the reasons training 
is so effective is because commercial fishermen and fishery resource 
managers are included in the operation of the school. They make 
important contributions by participating as guest speakers and 
reviewing course materials. The net result is boarding teams that more 
effectively enforce regulations because they have a better 
understanding of the fishing industry they regulate and the 
conservation goals of the fishery management plans.
Enforcement Challenges
    The Coast Guard sees several challenges to effective fisheries 
enforcement now and in the future. As foreign fisheries continue to 
decline, there will be an increase in the threat to fisheries over 
which the United States has jurisdiction. As pollock stocks continue to 
fall in the Sea of Okhotsk, more and more foreign vessels will look 
towards the fishery along the U.S./Russian Maritime Boundary. Illegal 
HSDN activity in the North Pacific has increased in recent years, and 
although fleet sizes are nowhere near the size of fleets that legally 
fished prior to the moratorium, the Coast Guard will need to continue 
our enforcement efforts in this area. Also, if pollock stocks recover 
sufficiently to open up the ``Donut Hole'' in the Central Bering Sea, 
the Coast Guard will again be called on to ensure the integrity of our 
maritime boundaries surrounding this area.
    With the enactment of the Sustainable Fisheries Act (SFA), the 1996 
reauthorization of the MSFCMA, an increased emphasis has been placed on 
the conservation and sustainability of fish stocks. New mandates 
regarding essential fish habitat, bycatch, and overfishing have led to 
a significant increase in the number of fisheries regulations that 
require Coast Guard enforcement. In many cases these new mandates have 
prompted the establishment of closed areas, marine protected areas, and 
other management regimes requiring additional at-sea presence. In 
addition, fisheries managers, resource users, and others expect the 
Coast Guard's knowledge, expertise, and effectiveness in fisheries 
enforcement to keep pace with the rapid changes in regulatory regimes.
    The Coast Guard, as a multimission service, is required to meet 
many national mandates and to counter an array of threats to national 
security. In the Coast Guard's Pacific Area there has been a 
significant increase in drug smuggling activity and illegal alien 
migration. Some of the assets used to respond to these threats also 
help to execute our living marine resource mission in the North 
Pacific. The environment in which our cutters and aircraft operate in 
the Pacific is also particularly daunting. Vast distances between 
operating areas means cutters may need to transit for more than ten 
days just to be in position to respond to these threats. Add to this 
the harsh weather conditions common to the North Pacific, and we find 
that our cutters and aircraft are pushed to the limits of their 
endurance. Another challenge of note in Alaska is the limited number of 
ports and airports where our units can resupply. As a consequence, we 
are constantly challenged to apply our resources against the most 
critical threats in support of national policy objectives.
    To meet some of these challenges, we need to incorporate the use of 
new technologies, such as improved sensors on our cutters and aircraft, 
and Vessel Monitoring Systems (VMS), to help us be more effective and 
efficient in applying our cutter and aircraft resources. Although VMS 
will greatly assist in the monitoring of closed areas, it is not a 
panacea. VMS does not ensure compliance with many other management 
measures such as gear and catch restrictions and, therefore, cannot 
replace the need for at-sea boardings. It also cannot replace an 
enforcement platform that is available to respond to incursions or to 
conduct critical search and rescue.
    We must also focus on Coast Guard readiness. We, like all of the 
military services, face significant readiness challenges and these 
challenges are impacting our ability to meet all mission requirements. 
I cannot allow my people to go in harm's way, as they do with 
regularity in the harsh Alaskan environment, without ensuring they have 
the proper training and that the equipment they use is properly 
maintained. In the past, the Coast Guard has been able to mitigate the 
impacts of some of these readiness challenges by leveraging 
flexibility, managing increased risk, and, quite frankly, by asking our 
people to work ever harder. We have reached the point that these 
problems can no longer be addressed this way. The Coast Guard is 
focused on maintaining our ability to respond to the most emergent 
needs of this nation.
    In Alaska, this means taking the steps necessary to ensure first 
and foremost that we are able to answer the call when fishing vessels 
find themselves in distress. Why must we do this? There are numerous 
reasons and many examples, but none tells the story better than the 
readiness problems we are facing with our HC-130 aircraft. The HC-130 
is the long-range ``workhorse'' in Alaska that is used to protect our 
fishing fleet and provide coverage of the U.S./Russian Maritime 
Boundary, the ``Donut Hole,'' and HSDN areas. HC-130 availability is at 
an all-time low. We have older aircraft, we have worked them extremely 
hard, we have dwindling supplies of spare parts, and we have a less 
experienced team of mechanics. Unfortunately, most of these issues 
cannot be fixed overnight and we are taking steps to better understand 
these types of problems and develop the right long-term fixes.
    Readiness is the foundation of all Coast Guard operations and we 
must ensure we remain ``Always Ready,'' not only in the near term, but 
in the future as well. People are the backbone of the Coast Guard and 
we must be able to recruit, train, and retain those people who we ask 
on a regular basis to go into the ``storm'' or to endure the brutal 
conditions of the Bering Sea protecting our fisheries resources and 
those that rely on these fisheries for their livelihood. We must be 
able to maintain the equipment and facilities required to meet national 
objectives and we must give our people the right equipment to do their 
jobs safely and effectively. The fiscal year 2000 budget provides 
nearly $50 million in additional funds to improve readiness. 
Modernization concerns are being addressed by the Coast Guard through 
an innovative Deepwater Capability Replacement Project. This project is 
designed to ensure timely acquisition of a system of assets that will 
leverage technology to meet the demanding mission needs in the offshore 
environment, such as the large and sometimes very harsh North Pacific.
Conclusion
    Protecting and sustaining this nation's fisheries resources and the 
marine environment is critical, and the Coast Guard plays a vital role 
in this process. The Coast Guard is unique in that it is the only U.S. 
agency with the expertise, assets, flexibility, and law enforcement 
authority to meet the nation's offshore needs for the protection of 
living marine resources. The Coast Guard believes that the Magnuson-
Stevens Fishery Conservation and Management Act contains the elements 
and authorities necessary for effective enforcement. The Coast Guard's 
fisheries enforcement mission, more than any other, crosses several 
critical national policy concerns: economic, environmental, and 
sovereignty. We remain challenged to respond to a growing number of 
maritime threats and national policy demands, including fisheries 
protection. Finally, our recently developed strategic plan, OCEAN 
GUARDIAN, lays out the framework for us to meet national goals for 
living marine resource conservation and management for the next 5 to 10 
years.
    Thank you for your continued leadership and support of the Coast 
Guard, and for providing the opportunity to discuss these important 
fisheries issues with you today. I will be happy to answer any 
questions you may have.

    Senator Snowe. Thank you. All of your statements will be 
included in the record.
    Thank you all very much for your testimony here this 
morning. Let us start off with the IFQ's, because obviously 
that is going to be one of the areas that we will be focusing 
on in the Subcommittee. I heard the same in the testimony that 
was received in Louisiana, in the hearing that was held in 
December.
    Ms. Dalton, I would like to hear from you in terms of the 
IFQ's. Now, the National Academy of Science did a study 
examining all the issues relating to IFQ's. The National 
Research Council recommended lifting the moratorium on the 
IFQ's and giving the regional councils the flexibility to 
tailor a program on a fishery-by-fishery basis. What would your 
recommendation be with respect to the IFQ's, especially because 
the National Research Council did do an analysis. Obviously, 
you talked about the numerous advantages and said that there 
are some issues that should be addressed in the event that we 
do lift the moratorium, sort of what Mr. Benton was talking 
about. It may be more complex than just lifting the moratorium.
    Should we establish standards for conservation monitoring? 
Eliminate the accumulation rights in terms of excessive shares. 
What about taxing issues because it is a public resource? There 
are a number of recommendations made by the council in 
conjunction with lifting the moratorium.
    Ms. Dalton. I believe we would like to work on a process to 
get answers to the problems. What happened in 1996 was that we 
had a great deal of information coming in. We could not quite 
work out what the ground rules for IFQ's should be as a matter 
of legislation.
    We certainly have supported IFQ's as a tool. The issue now 
is, we have this large academy report that has a great deal of 
information in it. The question is, what needs to go into the 
statute in terms of guidance, what can be done as a matter of 
national policy, and what should be done at that council level, 
and one of the things that we have talked about internally is 
doing some sort of an announcement or proposed rulemaking, or 
beginning some sort of public hearing process to try to go 
through and begin to sort out those issues. What we would like 
to do is work with you to develop them in conjunction with the 
reauthorization process.
    Other than feeling that IFQ's should be a tool that is in 
the fishery, we have not taken a position on exactly how they 
should be implemented.
    Senator Snowe. Do you think they have been effective?
    Ms. Dalton.  Yes. I think they have been implemented with 
greater and less ease in different fisheries, and there are 
different issues that you have in them. A fishery like the rec 
fish fishery in the Southeast was very, very easy to do. 
Halibut and sable fish is very complicated. There also are 
issues of funding, consolidation issues, ownership limitation 
issues, the role of the processors in this, that we really have 
not addressed to this point, and the councils have struggled 
with it to greater and lesser success in developing them.
    Senator Snowe. Mr. Lauber.
    Mr. Lauber. Yes. I was a member of the North Pacific 
Council when we labored through the halibut/sable fish IFQ 
program, and I have a button that I wear occasionally that 
irritates a number of people and, of course, other people 
cheer, and it says, Don't blame me, I voted no on IFQ's. It is 
probably the vote I lost but the vote I am most proud of on the 
council, certainly one of those I am most proud of.
    The reason for that--well, I do not deny that IFQ's have 
been beneficial in some areas, and in some ways have made 
management easier, some ways more difficult, and the law of 
unintended consequences, of course, is alive and well, but the 
thing that I objected to was, not the management of the 
resource so much as the harm that it did to people, and it was 
significant harm.
    We hear a lot about windfall profits. I was disappointed in 
the fact that IFQ's oftentimes went to people who had not been 
in the fishery for years, but the way it was set up in 
qualifying years they got quota shares, yet people who had been 
fishing for 6 or 7 years received far less than what they had 
normally caught in previous years.
    The people out of the fishery living in Maui opened an 
envelope and found that they had 50,000 pounds of halibut quota 
shares, while a person that was currently fishing likewise 
found that he had 50,000 pounds of quota shares, while a person 
that was recently fishing was catching 100,000 pounds.
    Now, the person that has the 50,000 pound quota, that they 
need 100,000, had to go out and buy the additional 50,000 
pounds. That cost them upwards or close to a $\1/2\ million, 
$500,000 in some cases, yet the person in Maui can sell that. 
That was wrong. We hurt a lot of people in the way we did it.
    I think that Mr. Benton's comments are very appropriate. 
Before we open this up, I suggest that there be some guidelines 
for the councils that are laid down so that these types of 
things are minimized. Note in my experiment--I mean, in my 
testimony, that I use the term experiment. And by the way, that 
I almost choked before I said IFQ's, that really did not have 
anything to do with my opposition. It just--my throat was dry.
    Senator Snowe. Just for emphasis?
    [Laughter.]
    Mr. Lauber. But it truly is an experiment, and I would hope 
that Congress would take our experiment, the benefit as well as 
the wrongs and the harms that we did, into consideration.
    I do not know that under the current Magnuson-Stevens Act, 
the requirement that coastal communities be taken into 
consideration, that we could have passed, or what we had passed 
been approved by NOAA and the Department of Commerce. That 
would be--I think we did a tremendous amount of harm to some 
coastal communities as well as individuals, obviously, living 
in those communities.
    So I think you should take a look. As a member of the 
council chairman's group, the group suggested lifting the 
moratorium. I was representing the council, and I felt at the 
time it probably--the balance would be people wanting the 
moratorium lifted. Had it been my own personal opinion, I would 
not say that it should be lifted until there are some 
guidelines established by Congress that would prevent other 
councils from making the same mistakes that we made.
    Senator Snowe. Do you think the fear of consolidation of 
this industry into the hands of a few large companies is a real 
possibility?
    Mr. Lauber. Well, certainly it is a possibility. The whole 
idea of IFQ's, those proponents, particularly those with any 
kind of an economist background, that is the ideal for them. If 
you recall, in one of our fisheries they wanted to go in place 
of the ideal would be from--going from, I do not know, 
hundreds, if not a thousand vessels, down to 55, so you are 
obviously going to have consolidation.
    Now, the economists have the luxury of efficiency without 
taking into consideration the harm that is done. A person that 
supports IFQ's reminds me of a friend of mine who had a 
beautiful Cape Hatteras boat, with twin 671 diesel engines in 
it, and he asked me and my wife to go out one evening to roast 
some hamburgers in a cove, and so we did, and this boat would 
send up a wake that made the Alaska ferry system look like it 
was a row boat, and he was merrily, on a beautiful evening on a 
flying bridge, sailing along and passing by fishing boats and 
small craft and so forth, looking straight ahead and having a 
wonderful time, and meanwhile I am looking back and people are 
hanging on and banging around, and he is swamping boats and so 
forth.
    I liken that to IFQ's. As long as you just look ahead and 
say, look, this is making our management easier, and it is 
wonderful and so forth--IFQ's are wonderful, but if you ever 
look back at the people that you have ruined, you are not proud 
of that.
    Senator Snowe. Thank you.
    Mr. Benton.
    Mr. Benton. Well now, that is a hard act to follow, isn't 
it?
    [Laughter.]
    Mr. Benton. It is always the case, though. Well, Madam 
Chair, I highlighted a number of the matters that I think have 
to be dealt with. When the council was considering IFQ's, first 
the council did the halibut and sable fish program and, as I 
said, that is a complex program, but it was relatively simple 
in that you had two species and one gear type, and a fairly 
designed cast of players.
    After that, the council was moving in a direction to put 
IFQ's on all the rest of the fisheries in the North Pacific, 
and that is an extraordinarily complex task.
    Currently, we are as a matter of the American Fisheries Act 
we are trying to establish and implement the side board 
provisions in that act that are designed to sort of protect all 
the players and the other fisheries from the economic benefits 
that are going to come out of the co-op structures for the 
pollack fishery, and that requires a level of management and 
precision that I think the National Marine Fisheries Service is 
finding difficult, and believe me, I think implementing a 
multi-species, multi-gear type IFQ program in Alaska is going 
to be even more difficult, because there, under the AFA, it is 
basically an aggregate cap. You have a group of vessels and you 
say, OK, you can only catch up to so much, and you monitor that 
on an aggregate, and that is a tough job, but when you are also 
monitoring a catch vessel by vessel, and it has contractual and 
financial implications on a vessel-by-vessel basis, that is 
going to be a very complicated and costly program, and I think 
we need to think about how that unfolds.
    The kinds of issues that we were dealing with then, were 
issues of foreign ownership, consolidation, the impacts on 
coastal communities, and I note that in testimony I think you 
may get in Seattle from someone who was involved with helping 
put together the IFQ program for halibut and sable fish, that 
person cites the CDQ program as being the way that coastal 
communities were addressed, and I would just point out that the 
CDQ program met a lot of opposition from a lot of those folks 
during the creation of the IFQ program and before that, when 
the CDQ program was initially put together on pollack, in that 
even though it was implemented, it only covers one part of our 
State, and there are a lot of communities in the gulf that the 
halibut and sable fish program had a big impact on.
    You do not hear from a lot of those people now that back 
then were very upset about that IFQ program. They have moved on 
in life. They have had to. The crew that were displaced, and 
skippers that did not have any employment any longer, they are 
gone. They are off doing other things, and that is the way that 
program was supposed to work.
    But it is just--the only point being that allowing the 
moratorium to lift without addressing these kinds of issues I 
think is going to cause a lot of problems, and really I think 
it is not making the best use of the period of time that 
Congress afforded us to look at the nature of IFQ's and to pick 
up on a lot of the suggestions in the NRC report. They said 
lift it. They also had a lot of issues in there that needed to 
be addressed, and I think we should take the time to do that.
    One other thing I want to point out, and you mentioned it, 
is the issue of taxes and rents. It is a public resource, and 
it is worth a lot of money. It is going to cost a lot of money 
to implement a program to manage an IFQ regime. In halibut and 
sable fish we are just now getting around to implementing, I 
think, the fee program, even though it was put into statute in 
the 1996 amendments.
    I recall--and I was sitting in the audience at the time. I 
was not sitting at the counsel table. Mr. Lauber was, and he 
may have a better memory about this than I do, but I recall a 
lot of statements being made about how the IFQ fishermen were 
going to pay their own way, and pay for the program, and there 
would be no extra burden on the U.S. Treasury and the taxpayer, 
and the fact of the matter is, we have not implemented a fee 
program. It is just now coming about. I think it will go into 
place, I think this year, and it is not projected to cover all 
the costs, so it is something that I think, again, that will 
require legislation, and the Congress really needs to deal 
with.
    Is it a useful tool? It can be. It is not the only tool, 
and it is certainly not a panacea for all the problems facing 
our fisheries.
    Senator Snowe. Thank you.
    Admiral Barrett, you mentioned in your statement that you 
intend to reduce some routine operations because of limited 
funding. Could you elaborate on that reduction and how it will 
affect your enforcement ability, especially as illegal 
encroachments have skyrocketed over this last year?
    Admiral Barrett. Yes, ma'am. I think that is an issue we 
constantly face, measuring the risk and allocating our 
resources against the highest perceived threats that we face. 
For example, this past year, to meet the situation on the 
maritime boundary we dropped our domestic enforcement boarding 
efforts substantially, because we moved the platforms out to 
the Bering, and I would see that type of allocation and 
emphasis continuing if we have to confront that type of 
situation, so we are going to always move against what we 
perceive is the highest threat with the assets we have.
    Senator Snowe. Can you explain why foreign fishing 
encroachment has increased significantly this last year?
    Admiral Barrett. I think Chairman Lauber alluded to that, 
too. I think the Russian fishing is poor. They have had 
closures on their side. The catch rates that we were seeing on 
the Russian side were as low as one-tenth the rates in the U.S. 
areas, so I think they are moving as close as they can to where 
the fish are, and that is going to continue pressure on that 
boundary because of the nature of the stocks.
    Senator Snowe. You have mentioned that the foreign vessels 
have been far more aggressive--in and around that boundary?
    Admiral Barrett: Yes. And I think it is because of the 
fish.
    Senator Snowe. Is that comparatively speaking? Is it worse 
now than in the past? How would you compare it to previous 
years?
    Admiral Barrett. Certainly historically we have seen more 
vessels up there more aggressively pushing the boundary. We had 
a situation this past summer with one of our cutters, the 
HAMILTON, the fishing vessel GISSAR, and some Russian factory 
trawlers, which was really unprecedented, and so I think we are 
going to see continued pressure there, but it is clearly a 
level of activity and a level of aggressiveness that we had not 
encountered before up there.
    Senator Snowe. Are these increased demands one of the 
reasons you are reducing routine operations?
    Admiral Barrett. Yes, ma'am. We are shifting the effort to 
areas such as the maritime boundary.
    Senator Snowe. Senator Stevens.
    Senator Stevens. Well, thank you very much. I am going to 
limit my questions in the hopes that we will be able to hear 
more people here, and I do hope I will be able to submit some 
questions to get answers in writing for the record on some 
specifics that I would like to deal with.
    But Ms. Dalton, as I indicated in the opening, I think the 
essential fish habitat problem is one that worries me most. 
Could you tell me, do you think that the act that created that 
program is specific enough to limit the scope of that activity 
to those areas that are actually threatened, as opposed to 
being just a broad coverage of all of the marine areas of the 
United States?
    Ms. Dalton. I think this is another evolutionary process. 
The definition in the act is very broad, and it has been 
interpreted by the agency fairly broadly, too, so we do have 
large areas identified.
    There are two things that are going on, though, that I 
think mitigates that. One is that we are identifying habitat 
areas of particular concern in many fisheries, and those are 
where the attention is being focused in terms of comments and 
consultations. So I think as we work through this, there is no 
way that we can deal with it from an agency standpoint if we 
are talking about the entire coastline of the United States. As 
we learn more and get better information, then we are focusing 
more on the areas that I think we expected to be identified 
when we did the law.
    Senator Stevens. I should not repeat history, because I 
would not like to see it repeated, because on the Endangered 
Species Act, I worked with Senator Jackson on that act, and we 
fully intended that the action required of the Federal 
decisionmakers would be based upon advice that was received 
from other entities. The courts subsequently held, you know, 
that it was an absolute condition, and imposed severe 
restrictions upon the policymakers' decisionmaking capability.
    It seems to me that this broad coverage of the essential 
fish habitat statute by the agency so far is inviting the 
courts to come into that area and make the determination in the 
first instance that there is something that has to be 
protected. I think there should be a trigger in there somehow, 
as I indicated, for action under the essential fish habitat 
legislation, and that the broad coverage of that act, as 
interpreted by your regulations, means that the protection that 
we intended is going to be diluted by having the agency 
everywhere looking for problems, rather than addressing the 
specifics, where there are problems.
    Now, I do not know how we are going to work that out, but I 
do not believe we should have another situation where the 
courts of the United States are getting involved in every 
single possible claim of danger. It has to be triggered by some 
specific finding of danger, or requirement for protection, as 
far as the agency is concerned.
    How that is going to be worked out, I do not know, but I do 
not believe it is--for a series of industries that are so 
oppressed, as they are right now, to have these industries face 
another series of hurdles that get ever and ever higher based 
upon court interpretations and misinterpretations of the 
statute, I think would be wrong.
    Ms. Dalton. But if you look at the clear face of the law, 
the section 7 process is very, very different from the 
essential fish habitat provisions. There you have a jeopardy 
finding that is binding on the Federal agencies. What we have 
in the Magnuson-Stevens Act is a consultation requirement, and 
there is no further obligation on the part of the Federal 
agency than to try to work with us whenever there is problem.
    Senator Stevens. I invite you to look at the original 
Endangered Species Act. That is what was in there, too. There 
was no requirement for absolute control by that process over 
the decisionmaking. Today, it is absolute. Once there is an 
indication, as interpreted by the courts, that there is a 
species that is endangered, that is it, and the courts make 
those determinations much more than the agencies do.
    I do not think this is the time to debate it, but I do 
think we ought to make that statute specific, and not allow a 
court decision to come along and turn it into an Endangered 
Species Act concept.
    Ms. Dalton. Just to let you know, we have done about 400 
consultations in Alaska now, and have not had any problems, at 
least that I have been told about or am aware of. We have done 
about 2,500 Nation-wide.
    So the process right now does not seem to be creating major 
problems, and it is done as part of other consultation 
requirements under the Fish & Wildlife Coordination Act, under 
the Endangered Species Act, under NEPA. So what we have tried 
very hard to do is to not increase the burden on the entities 
that are required to have permits by these Federal acts.
    Senator Stevens. Do not misunderstand me, I think the fish 
habitat that is essential should be protected. That is the 
basis of our statute. But to have the courts deciding what area 
requires protection, in my judgment, is wrong. For an area that 
has 80 percent of the outer continental shelf, and the off-
shore mining activities that we have going on right now, I 
think it is not the fisheries that in jeopardy right now, I 
think it is the off-shore mining that is in jeopardy, and if 
there is a conflict between fish habitat and that off-shore 
mining, I believe the agency should protect the fish habitat, 
but I do not think we should see off-shore mining put in 
suspension while the courts determine whether that is the case, 
so I hope we can work together.
    Ms. Dalton. We will be happy to work with you.
    Senator Stevens. On the IFQ's, I really believe the 
difficulty is, if that expires there is going to be a period of 
a race to IFQ's that we just cannot countenance. We have got to 
find some way, if IFQ's--the moratorium is to be terminated, to 
put in place some mechanism whereby we restore the power of the 
councils to determine what types of organizations, whatever you 
want to say, whether co-operatives or IFQ's, or whether there's 
really areas where the old Derby system should be allowed to 
function.
    I believe that the councils should have that discretion, 
but under the situation if that moratorium expires, I do not 
think it would be fair to councils, who have already so many 
burdens, to be forced to turn and look at the merit of IFQ's 
that they are going to face.
    I do hope that you will help us by coming up with some 
suggestions, and I think our State has that responsibility, 
particularly in our area, since we have such a vast portion of 
this coastline, as to how you would like to see that come into 
effect, and Rick, I think your council should give us some 
guidance how much time it should take before that authority of 
the council should be suspended in the period after the 
moratorium expires, and whether or not the council does have 
the discretion to use other tactics and decide not to put into 
effect IFQ's in any particular fishery.
    So I hope that you can give us some guidance. Would you do 
that?
    Mr. Lauber. Yes, sir.
    Senator Stevens: And Admiral, I am disturbed that we do 
have this reduction in effort on the domestic side because of 
the pressures from the international side, and I do not know 
that we have got an answer to that specifically.
    I know that one Member of Congress told me once that the 
person opposed Federal expenditures to protect the fisheries, 
other than from foreign intrusion, so you have both a domestic 
law enforcement area, and you have really a protection under 
the essential fish habitat concept now, and you have, of 
course, the law enforcement activities beyond that.
    I think somehow or other we have to get some understanding 
of, if there are to be fees that come along from the IFQ's and 
other such activities, how that money is funneled into the area 
that has--your service that has the greatest burden from the 
laws we passed, so I would like to work with you to see if we 
can do that.
    We have been earmarking other funds as they come in lately, 
and although chairmen of Appropriations Committees do not like 
to see funds earmarked and set up in funds, I think in this 
instance, when they are coming from the ocean activities, they 
should at least have the priority of being expended for the 
type of activities that you handle. I think you ought to help 
us on that one, too, and see what we can work out.
    Admiral Barrett. Thank you, Senator. Certainly, we will. 
The other comment which you are certainly familiar with, and 
Senator Snowe is, too, what makes it a little more difficult 
here is simply the distances. In order to operate successfully 
out there we have got to have the large platforms, we have got 
to have the capable aircraft. Getting out there can take us 3 
or 4 days sometimes, just to move the asset from one place to 
another, so the resource, the fact that we are stretched thin 
everywhere in the Pacific is even more of a problem than it is 
in some other areas because of the distances involved.
    Senator Stevens. Lastly, Mr. Chairman, can you give us 
anything--I am not asking for it right now--that would document 
this looking back theory of yours? I think the trouble is we do 
listen to the economists, who tell us how great it is going to 
be if we have IFQ's, and no one is really looking at the impact 
upon the people and the communities involved.
    I am particularly worried, as I stated once before in 
hearings, about future generations' ability to enter these 
fisheries once the IFQ goes into effect, because they have to 
get a permit, they have to get a boat, and now they would also 
have to buy a portion of the IFQ, so there is an additional 
capital requirement for the coming generations to get involved 
in fisheries that did not exist back in the Derby days.
    Now, I understand the economists say that that is no 
problem, but I do think some of the things you indicated ought 
to be in the record so that people here can see what really did 
happen in those areas where the IFQ's went into effect.
    Mr. Lauber. Senator Stevens, the State of Alaska soon after 
the implementation--the first year, I believe--did a study. 
However, it was somewhat limited, particularly in the area I 
believe you are specifically talking about, where it impacts on 
individuals, but it did verify the information, for instance, 
that I mentioned regarding fishermen who received quota shares 
who had not been recent participants in the fishery, receiving 
windfalls, and in fact some cases I recall it was upwards in 
some areas close to, or about 50 percent.
    But most of the information that we have received as to the 
harm and so forth quite frankly has either come from private 
conversations, and much of it has come to the council through 
public testimony, maybe even on other subject matters, where 
people have indicated that they are in distress, and why they 
need some relief and so forth, because of IFQ's and the impacts 
that it had. It had significant impacts in coastal areas, 
coastal communities. There is a group in the Gulf of Alaska 
that one of the main problems was created by that.
    I know of no overall study that was done. I personally and 
the council collectively have received information through 
public testimony, but the most that we really have done was 
that early study. After, I believe, the first year, the State 
did a study, and we could make that available to the committee, 
but we have no plans to do any.
    The thing that this, like so many things, and why I think 
it is important that we move throughout the United States as 
well as Alaska cautiously with IFQ's, once they are there, they 
are there forever, for all practical matters, because, as Mr. 
Benton mentioned, the people that were displaced have moved on.
    I mean, you are not going to ever hear from them. They may 
be in other fisheries, but they may be working in a tire plant 
in Dayton, Ohio, or tending bar in Phoenix, Arizona, or 
whatever. They are gone, and they are no longer in 
organizations, and now you have IFQ's. We are hard at work 
trying to make our IFQ program work. It is the will of the 
council, it is in law, and we are trying to make it work, and 
it currently is working very well. I am saying--I am looking 
ahead, and we are doing a very good job. Looking back, I can 
see the havoc that we wreaked on people.
    Senator Stevens. Well, that is true, but I joined others on 
putting a moratorium on it so you could not create any new 
ones, and I thought that the study that we mandated would cover 
both the effects of the IFQ on those that were harmed and the 
beneficial effects on the fisheries, or on the management 
plans. I think the council, research council's report covers 
the latter but did not touch the former, and we really do not 
know what the impact was.
    Penny, do you disagree?
    Ms. Dalton. I think the NRC report does cover some of it. 
We also have some information that we would be happy to work 
with you on, to look at it retrospectively as well.
    Senator Stevens. Well, I will go back and look again. I did 
not think the council had really covered the impact of these 
two that we had in effect here in terms of what happened to the 
people that did not get any ability to participate in the 
fishery after the IFQ went into effect.
    Steve, do you disagree?
    Mr. Pennoyer. Mr. Chairman, no, not completely, because as 
Chairman Lauber said, there is a difficulty in knowing exactly 
what happened to people who did not get IFQ's. We, I think, 
know who was fishing, we know who is now fishing, and we know 
what the changes have been over the years. We actually had 
funded a study to at least track the data on what has happened 
in the fishery, the amount of consolidation.
    Senator Stevens. Is there one undergoing now? Have you got 
one going now?
    Mr. Pennoyer. Yes, we do.
    Senator Stevens. When will that be finished?
    Mr. Pennoyer. Well, it has been an annual process of 
reporting the data. It is not consolidated anywhere, and the 
analysis part that the chairman is referring to has not 
actually been undertaken. We have not done an overall analysis 
of it, but we have been monitoring the data annually. It is 
available, and we will try to bring together what we can for 
you for your consideration.
    Senator Stevens. Well, as much--I am from the school that 
sort of agrees with the chairman here, Mr. Lauber, about IFQ's, 
but they are here now, and they are coming more, and I think 
the pressure is going to be great on us to allow them to come 
into effect in some areas and with some conditions at least.
    I do believe we ought to have the advantage of some 
analysis of that so that by the time we do permit the councils 
to start using this as a management tool, but at their 
discretion, we have some standards for how that authority can 
be used, or at least some--I like that word hurdle, hurdle that 
they have to go over to show that it is justified to use this 
tactic, the IFQ approach, in spite of what the impact would be 
upon those who might be harmed by the process, but I do not see 
that, unless we take some action.
    Mr. Pennoyer. Mr. Chairman, I guess I agree with that. I 
think the IFQ system unfortunately has been viewed as a 
monolith, and I do not think it is. I think the word has 
generated what Chairman Lauber envisioned as the economist's 
nirvana, which I do not think anybody really is trying to get 
to, ultimate consolidation, the ultimate whatever it happens to 
be.
    There are social concerns that have to be taken into 
account, and right now in your area we are doing everything 
from co-ops to the IFQ system, so there is a broad range of 
things that could be looked at and used, and I believe that 
most of us probably do hopefully learn from the mistakes we 
made, and the halibut-sable fish IFQ I think was, in comparison 
to the system that was in place at the time, a vast 
improvement, but there are obviously ways we could have chosen 
initial participants differently, cash history credits, a lot 
of things that could have been done.
    We will help the National Marine Fisheries Service put 
together what we have on this fishery and present that for your 
use. We have tried to update the data annually, and I think we 
do have a pretty good feeling for how the permits have flowed, 
consolidation, whether they have left communities, small 
communities going to large communities--for example, most of 
them, a far greater proportion has remained in Alaska that went 
outside.
    Alaska has benefited overall, but the benefits have 
actually migrated somewhat to larger communities from smaller 
communities, and those are the type of things I think we can 
give you the examples of, and we would be pleased to do that.
    Senator Stevens. Well, it is just a statement. I do not 
know whether under the Constitution we could do it, but I think 
the IFQ ownership should be limited to those who are actually 
participating in the fishery, and not end up on Wall Street, 
and the investor-owned concept without any connection with the 
fishery I think, in the long run, would be very harmful for the 
fishery.
    People have to have some knowledge of their impact on, if 
nothing else, on the reproductive capability of the fish they 
are involved in, in terms of making decisions as to utilization 
of the IFQ's, and it is going to be a very difficult thing to 
do constitutionally, or even getting approval, even if it is 
constitutional, to put limits on investor activities, but I 
clearly think this is one of the areas where the national 
interest is in assuring the reproductive capability of these 
fisheries ahead of assuring of the full transferability of 
investment in a portion of the IFQ.
    Now, somewhere there is an answer that will give us the 
ability to use the management tools at the discretion of the 
councils, but with some restrictions from Congress as to when 
those tools can be used in a particular fishery by setting some 
conditions, not the least of which is the protection for the 
traditional fishery community.
    You mentioned that, and I think that protection has got to 
be in the forefront, because, as the chairman has mentioned, in 
terms of the two IFQ's that we put into effect, damage to some 
communities can occur. I feel the net result of the IFQ's, 
unless there are conditions and hurdles, will just be the 
consolidation of IFQ's through the investor activity. As a 
result, the council's ability to regulate those fisheries will 
be diluted to a great extent.
    So a key provision to me is the essential habitat problem 
as far as the reauthorization of this bill.
    Ms. Dalton. Rick characterized the halibut-sable fish IFQ 
as an experiment. We are doing another experiment right now, 
and that is with the implementation of the American Fisheries 
Act, and I guess part of the thing that we are discovering from 
that is that there are alternatives to IFQ's, and if we look at 
it as one in a series of alternatives rather than the ultimate 
goal of every fishery in the United States, I think it may be 
easier to meet your goal of trying to come up with criteria to 
select which particular way of managing the fisheries is 
appropriate.
    Senator Stevens. Well, I agree with you, but respectfully I 
say that decision ought to be made by the councils, and not be 
made in Washington.
    The utilization of these tools ought to be done by the 
people who are most familiar with the area, and are going to 
have the continued oversight responsibility on a day-to-day 
basis.
    You have one thing left. I had better quiet down here.
    Mr. Benton. Thank you, Senator.
    The relationship between the moratorium on IFQ's and the 
implementation of the American Fisheries Act is something we 
really have not touched on here, but I think it is something 
that does need to be highlighted a bit, and that is that if the 
moratorium on IFQ's were to expire absent guidance from 
Congress on how to implement IFQ's and deal with some of the 
issues we are discussing, that would happen right at the time 
that the American Fisheries Act co-ops are just really getting 
up and running.
    And I, for one, think that--and it's oftentimes difficult 
and certainly not wise to make predictions, but I have some 
concerns that what would happen is that attention would 
immediately shift from trying to make the co-op structures 
work, which, as has been pointed out here, may be a good 
alternative to a full-blown IFQ program.
    Attention would shift from that to, how can I ensure that I 
am going to get my IFQ, in terms of the individual involved in 
the fishery, and a lot of effort and a lot of energy that has 
been put toward making the co-ops work will then be diverted 
off into pursuing the possibilities of getting individual 
quota, and that could have some unpleasant and unintended 
consequences as well, and it is something I think we need to 
think about. That is why I think that allowing the IFQ 
moratorium to expire or go away without some guidance from the 
Congress would be an error in our part of the world, at least.
    Senator Stevens. Well, I do not know. My last comment would 
be, I am not sure I would like to see the co-operative 
management tool be transitioned into IFQ's without some real 
requirement of a substantial, overwhelming consensus among 
those who are participating in the co-operative, and vice 
versa, but that is going to be up to the councils to figure out 
how to do that.
    But I do not think we ought to be able to shift from one 
generation of IFQ's to another generation of co-operatives and 
then shift back. That is sort of like going from apartments to 
condos and then going back to apartments again. There is a lot 
of tax consequences to that, and that again would come to the 
point where the fishery would be driven by tax consequences, 
rather than being driven by what is in the best interest of 
fisheries.
    Thank you very much.
    Senator Snowe. Thank you, Senator Stevens. It is clear that 
we are racing against the clock on this moratorium, which 
expires in October. Either we do it by default, or we take a 
proactive stance in trying to define an approach with respect 
to IFQ's. Clearly we have our work cut out for us, and Mr. 
Lauber, you make a very good point. We need to address those 
who have been left in the wake of the IFQ decisionmaking 
process.
    The National Research Council took a couple of years to 
respond to Senator Stevens' request for a study of IFQ's. We 
now have a short period of time in which to address the 
implications and the impact of this whole process, before we 
make any final decision.
    In Louisiana we heard testimony in favor of lifting the 
moratorium. The red snapper industry, for example, would like 
to have an IFQ. They designed one prior to the moratorium and 
are anxious to have one. So we have a lot of competing 
interests around the country, and this is going to be a major 
issue.
    Ms. Dalton, essential fish habitat is a critical issue 
which Senator Stevens raised. As you know, after attending all 
the hearings, the concerns we hear are either too broad or too 
narrow. In your testimony last month, you said the three 
regional councils--the Gulf, South Atlantic, and Caribbean--did 
an excellent job using available scientific information to 
identify areas that proved to be extremely important habitat or 
represent resources that are unique to or critical to 
sustaining the production of fisheries.
    Aren't those words--``unique, critical, and important''--
the words that should have been used to describe essential fish 
habitat? Yet you used those words to describe habitat areas of 
particular concern. That is why I think we have a problem here 
with overly broad implementation.
    It is questionable whether or not nonfishing interests 
should have been involved in this whole effort, and whether or 
not they are affected by the essential fish habitat 
decisionmaking and consultation processes triggered by your 
agency. Nevertheless, if it is having an impact, then we are 
getting into the Endangered Species Act spiral once again. Our 
State is facing this situation due to a listing of the Atlantic 
salmon on the Endangered Species List, and we are facing that 
whole catastrophic process over the next few months.
    So, I am concerned that you are looking at this issue in 
very broad terms when the original intent was to have a more 
narrow and precise implementation of what is ``essential 
habitat''.
    Ms. Dalton. And we are very happy to work with you to look 
at that issue.
    Senator Snowe. Well, OK, we will. Thank you all very much.
    We would like to welcome our next panel: Ms. Chris 
Blackburn, Alaska Groundfish Data Bank; Mr. Kevin O'Leary, 
member of the North Pacific Council; Ms. Beth Stewart, National 
Resources Director of the Aleutians East Borough; Mike Hyde, 
president of American Seafoods; and Mr. John Iani, who will be 
the final witness on this panel. Ms. Blackburn, we will start 
with you.

   STATEMENT OF CHRIS BLACKBURN, ALASKA GROUNDFISH DATA BANK

    Ms. Blackburn. Thank you, Senator Snowe and Senator 
Stevens. I appreciate the invitation to testify here. I have 
been in business as a consultant for trawl vessels in the Gulf 
of Alaska and Bering Sea and also processors for the last 15 
years.
    For this presentation, I am representing what we call now 
the Greater Kodiak Area of Alaska, and it takes in the areas 
that are fished by Kodiak fishermen in the gulf, and I want to 
point out that Kodiak fishermen fish not only in the gulf, live 
in the gulf, many of them also have a history in the Bering 
Sea, and ever since the American Fisheries Act I have been 
working with some of the vessels in the Bering Sea helping them 
get their catch history ready for this year, and in the gulf 
everybody is very anxious to have some equal consideration.
    It seems to us so very simple that the Gulf of Alaska 
fishermen should also have the same right, or ability, as the 
Bering Sea fishermen to co-op.
    Coops, we have been informed by NMFS, are like IFQ's, so 
that we have to wait for a moratorium, but in our mind they are 
much better than IFQ's. They do not give away their resource. 
They let you use it each year on your history based on how the 
co-op decides to work. There is not this huge, who-gets-what. 
Once you qualify for a co-op, you have your history, and the 
co-op decides within itself how people will fish, and where 
they will fish.
    The council has done a wonderful job with our fish. NMFS 
has done a wonderful job helping us with our fish. I cannot 
praise them enough for what they have done. But we are doing a 
lousy job managing our industry itself. The processors, I think 
they could process 10 times the fish that we have, just because 
they have to get bigger, faster, in order to get their share. 
The boats are rushing harder to get their share, and it is an 
endless cycle.
    I think we are at the point where we really do not just say 
we think that we are going to have bankruptcies. I think we are 
seeing them, just simply because the smaller you are, the less 
you can compete, and the independent fishermen, the resident 
fishermen is the one who is in trouble.
    I would like to see us have the ability to co-op. You get 
to use it for a year, your history. It does not lock you in. 
You do not sell it. You might lease it for that year, and it 
allows you to rationalize the fishery.
    There are many things that we want to do with our 
fisheries, and are trying to do. Reduce bycatch. How can you 
reduce bycatch if you have got a 4-day season and you are 
racing against 50 boats, and I can remember times when boats 
have called me and said, can we not have NMFS delay this 
opening? The halibut have not moved out yet. The answer is no, 
they cannot delay the opening, and the boats cannot stop 
fishing because they will lose their share.
    We have been very happy to hear that in the Bering Sea, the 
factory trawlers actually had a 20-percent increase in their 
recovery because they could slow down.
    I will stop there. I see my time is up, but I hope that you 
look to the co-op arrangement and to letting the gulf have the 
same abilities to co-op that the Bering Sea has, the same 
ability to limit processors, because too many processors are 
just as bad as too many boats.
    [The prepared statement of Ms. Blackburn follows:]

   Prepared Statement of Chris Blackburn, Alaska Groundfish Data Bank
    I appreciate the opportunity to testify to this committee. I am 
Chris Blackburn, sole proprietor of the consulting firm Alaska 
Groundfish Data Bank which represents trawl vessels and processing 
plants in the Gulf of Alaska and Bering Sea.
    In this presentation I am representing the portion of the Greater 
Kodiak Area of Alaska east of 157 degrees longitude west to 140 
longitude degrees west as shown on the map in your packet. For 
simplicity's sake I refer to this area as the Greater Kodiak Area. Beth 
Stewart who is also speaking today represents the East Aleutian Borough 
which is west of the Greater Kodiak Area. We support the East Aleutians 
Borough's proposal. It meets their unique circumstances which are 
different from the Greater Kodiak Area.
    During the fifteen years Alaska Groundfish Data Bank has been in 
business the harvesting of Alaska's marine resources has constantly 
changed. I remember when the foreign fleets caught Alaska's pollock and 
cod and flatfish, when U.S. vessels caught Alaska's marine resources 
and sold the fish to foreign processors, and the jubilation when all of 
Alaska's fisheries were harvested by U.S. vessels and processed within 
Alaska. Senator Ted Stevens helped with, if not initiated, each step in 
the evolution of Alaska's fisheries.
    Alaska is blessed with tremendous marine resources which have been 
well managed by the North Pacific Fishery Management Council. Alaska's 
fishing industry, as most fisheries in the U.S., is, with a few 
exceptions, an open access fishery. Open access is a polite name for 
``race for fish''. Alaska's fisherman take to heart need for 
sustainable fisheries, need to protect habitat, reduce bycatch, protect 
sea lions and bring to the dock or the deck of a factory trawler or 
mothership quality product.
    Fishing open access is totally at odds with sustainable fishing, 
with reducing bycatch, and producing quality products. Open access 
results in an ever tightening spiral in the race for fish and the 
evaporation of profits. For example, processors have had to freeze 
whole Pacific cod and send it to Asian markets for processing, simply 
because more cod was delivered than the processor could handle. Less 
than optimal fish may be delivered because the race for fish does not 
allow waiting until the fish school up or recover from spawning.
    As the race for fish intensifies, the fishing seasons shorten and 
small vessels, considered the most ecologically sound, are left waiting 
weather and perhaps losing the entire season for a species.
    The best science possible is used in managing Alaska's fish, but 
the management of the fishing fleet effort has remained Neolithic. The 
American Fisheries Act was a brilliant solution for rationalizing the 
Alaska pollock fishery. It allows the Bering Sea pollock fishermen to 
opt out of the race for pollock. The At Sea trawlers who fished as a 
pollock co-op in 1999 increased recovery (the amount of the fish used) 
by 20%.
    The benefits of co-ops are obvious. Unlike IFQ's co-ops do not 
privatize a national resource nor is a fisherman who wants to continue 
fishing open access have to co-op. Those who do choose to co-op receive 
the benefit of having their own quota as contractually arranged in the 
co-op so that they may fish at the times that are most suitable for the 
vessel and the processor.

GULF EXCLUDED FROM THE AMERICAN FISHERIES ACT

    The Greater Kodiak Area pollock fishery was not included in the 
final draft of the American Fisheries Act. The Greater Kodiak Area 
processors and fisherman request that this oversight be remedied.
    We ask that the Greater Kodiak Area pollock processors be limited 
as they were in the Bering Sea. This requires a Congressional Bill. 
Currently there are seven processors in Kodiak--Alaska Fresh Seafoods, 
Alaska Pacific Seafoods, Western Alaska Seafoods, Trident Seafoods, 
Ocean Beauty (aka Kodiak King Crab), International Seafoods, and Cook 
Inlet Seafoods. Outside of Kodiak the Cook Inlet Seafoods plant in 
Seward and the North Pacific Processors Cordova plant also process 
pollock.
    We also ask that the bill allow that co-ops be formed if 80% of a 
processors fleet (the vessels which fished for that processor in 1999) 
vote to co-op as was done in the Bering Sea.
    Because of the great diversity in vessel size and fishing patterns 
in the Greater Kodiak Area we ask that the qualifying years for vessels 
be 1995 thru 1999. To qualify as a Greater Kodiak Area co-op vessel, 
the vessel must have made at least one landing in each of two years. 
Catch history for the eligible vessels is proposed as the average of 
the three best years within 1995 thru 1999. Pollock discarded at sea or 
sent whole to a meal plant cannot be counted in a vessel's catch 
history. There are no tonnage or landing criteria.
    Vessels that are Bering Sea American Fisheries Act vessels may also 
qualify to co-op in the Greater Kodiak Area of Alaska.
    Processors need to be part of the co-op structure. This need was 
recognized in the American Fisheries Act which named the Bering Sea 
shorebased plants, motherships and factory trawlers eligible for co-
ops. If the processors are not limited they will continue to be 
overcapitalized which means less profit for the plant and for the 
vessels. The inevitable outcome will be fewer processors due to mergers 
or bankruptcy. Hardest hurt will be the small companies and family 
owned businesses.
    If diversity of processors, vessels and product forms are to be 
maintained in the Alaska coastal communities pollock co-ops must be 
available for all pollock processors and vessels. If the ability to 
develop co-ops in the Greater Kodiak Area is granted as we propose the 
coastal communities will have the economic stability necessary to 
survive.

    Senator Snowe. Thank you, Ms. Blackburn.
    Mr. O'Leary.

 STATEMENT OF KEVIN B. O'LEARY, MEMBER, NORTH PACIFIC FISHERY 
                       MANAGEMENT COUNCIL

    Mr. O'Leary. Yes. Madam Chair, Senator Stevens, my name is 
Kevin O'Leary, and I would like to thank the Commerce Committee 
for inviting me to present testimony today. I am a commercial 
fisherman from Kodiak, Alaska, and I have resided in Kodiak for 
over 25 years. I came here in the summer of 1975.
    I began as a crew member, a captain of a vessel, and now I 
am a multiple vessel owner in Kodiak. I currently am a member 
of the North Pacific Fishing Management Council and am 
beginning my fifth year of service on the council.
    I have been asked to focus my testimony on two issues 
related to the Magnuson-Stevens Act. Both issues I have been 
asked to address have a fisheries rationalization at the core, 
and I would like to tell you of my evolution of my thoughts in 
regard to rationalization of the fisheries. I was an opponent 
of attempts to rationalize the fisheries in the 1980's for 
halibut and sable fish. I believed, as many believed and still 
do in Kodiak, that as long as the fisheries are managed with 
the best scientific data available in a TAC-setting process for 
each year's harvest and the fish are prosecuted within those 
limits, that the health of our fisheries would be adequately 
ensured.
    The fundamental fears with rationalization, I guses the 
fear of the unknown, concerns over the equity of initial 
allocations, the effect of large-scale consolidation on 
fishery-dependent communities, and the efficacy and cost of 
management enforcement, are some of the important reasons why I 
was initially opposed and very skeptical of IFQ's in 
particular.
    Since the implementation of the halibut and sable fish 
program, the program is working for the participants in the 
fishery and working quite well. We have seen a significant drop 
in loss of life and injury at sea in those fisheries. We have 
seen a substantial rise in the ex-vessel value of the product, 
we have seen product quality substantially improved, and now 
there is nearly year-round availability of fresh halibut in the 
marketplace.
    The key element of the program--and I cannot stress this 
enough. The key element of the program, of any rationalization 
program, is the end of the race for fish between users. 
Stakeholders, once that takes place, can then refocus their 
efforts on safety, on conservation of the resource, and on 
product quality. With fishermen having spent millions of 
dollars since the implementation of the program to basically 
pay for their particular share of the fishery, they have a real 
incentive to be concerned with the long-term health of the 
resource.
    No longer competing for a share of the resource, while 
prosecuting the fishery, allows the Government the kind of 
flexibility they need to avoid nontarget species, avoid high 
bycatch. They also have the time and the flexibility to alter 
their fishing practices and their gear type so that they can 
minimize their impact, say, on the benthic community without 
fears of losing their particular share of the resource in the 
process.
    This refocusing of effort and concern is really the key to 
the future of our being able to meet the demands of things like 
the Endangered Species Act and habitat issues. If we do not, if 
we do not move in this sort of direction, our hands are 
essentially tied because we are competing with each other and 
all those other concerns that really we are getting hit over 
the head with as an industry by--and legitimate concerns by 
people with regard to public resource, and wise use of public 
resource. We are not going to have the tools we need.
    The North Pacific Council continues to have substantial 
challenge in managing our fisheries in the North Pacific, 
reducing impacts of commercial fishing on benthic habitat, 
bycatch reduction, and as our scientific knowledge grows, 
movement toward an ecosystem-based approach to fisheries 
management, these are goals we are currently working toward.
    If we are to achieve them, we will need the management 
regimes that provide flexibility for the managers and fishermen 
to respond to the challenges we face. Our experience in the 
halibut-sable fish IFQ program provides an empirical example of 
how this form of rationalization can make a significant 
contribution to management goals.
    The next iteration of Magnuson as you work toward 
reauthorization, I would urge you to provide your managers in 
the North Pacific Council and National Management Fisheries 
Service all the management tools that could be available to 
them. Certainly there are social and economic concerns, and we 
in the previous panel heard those voiced, and I, certainly as a 
former opponent, am appreciative of the wake that these kinds 
of programs create, but I feel we need to move forward.
    I will skip here and just say with regard to, our current 
circumstances in the crab fisheries in the Bering Sea are dire, 
and the future of most crab fisheries are in doubt. Bristol Bay 
Red King crab fishery, which in the 1970's and eighties was 
healthy, and the most lucrative crab fishery in the North 
Pacific, crashed, and the stocks have never recovered to the 
historical highs of that period. The Bairdi Tanner crab fishery 
has also been on a continual downward trend, with only modest 
periods of recovery in the early nineties.
    The North Pacific Council has worked to develop rebuilding 
plans for Bairdi and Tanner crab resource. In the mid-1980's, 
with large declines in King and Tanner crab fisheries, and the 
robust state of the Opilio stocks, the Bering Sea crab fleet 
became increasingly dependent on the Opilio fishery. Opilio 
Tanner crab became the mainstay that underpinned the economic 
viability of the crab fleet.
    Current projections indicate a severely curtailed fishery 
with the Opilio crab because of recent stock assessments that 
indicate severe declines. Causes of the decline in the 
fisheries are complex and commercial fishing is a component, 
although oceanographic conditions are the likely main reason, 
and we are going to face continued low abundance in crabs until 
we get some kind of a regime shift in the ocean with regard to 
the status of oceanographic conditions. These circumstances 
have prompted the crab industry to come forward and ask the 
North Pacific Council for help in facilitating discussions to 
develop co-op arrangements similar to those provided by the 
American Fisheries Act. Dr. Dave Fluharty and myself have been 
involved in this effort. Dr. Fluharty is a member of the North 
Pacific Council from Washington State.
    The current prohibition on the implementation of IFQ 
programs or quota-like share programs prevents the council from 
directly developing the kind of solution many members of the 
crab industry want. The very fact that the industry members are 
calling for this sort of solution is an indication that 
fishermen are coming to grips with the reality of 
overcapitalization and are seeking meaningful solutions to 
their problems.
    The formation of co-ops similar to those developed as a 
result of the American Fisheries Act is another valuable form 
of fisheries rationalization and capital reduction. Currently, 
formation of such co-ops are restricted by the Fisherman's Act 
of 1934, and the crab industry would need the direct help of 
Congress in order to act expeditiously and move forward to 
resolve its problems. Moreover, the excess of capital in the 
crab industry is so great that a direct reduction of capital 
through a buyback is likely necessary to facilitate the 
formation of co-ops.
    As you move forward in the process of reorganization I 
would ask that you provide the councils with the ability to 
consider and implement a variety of management options in order 
to fully rationalize the crab and ground fisheries of the North 
Pacific. Thank you.
    [The prepared statement of Mr. O'Leary follows:]

 Prepared Statement of Kevin B. O'Leary, Member, North Pacific Fishery 
                           Management Council
    Madam Chair, My name is Kevin B. O'Leary. I would like to thank the 
committee for inviting me to present testimony today. I am a commercial 
fisherman from Kodiak, Alaska. I have resided in Kodiak for over 
twenty-five years working in the commercial fisheries as a crewmember, 
captain, and vessel owner. I currently am a member of the North Pacific 
Fishery Management Council and am beginning my fifth year of service on 
the Council. I have been asked to focus my testimony on two issues 
related to the Magnuson-Stevens Act; my experience in the halibut and 
sablefish IFQ program and the need for prompt rationalization of the 
Bering Sea crab fisheries by the formation of co-ops using the American 
Fisheries Act as a model.
    Both issues I have been asked to address are related because they 
have fishery rationalization at their core. I would like to tell you of 
the evolution of my thoughts on fishery rationalization. I was an 
opponent of the attempts to rationalize the halibut and sablefish 
fisheries in the 1980's. I believed as many did and still do in Kodiak 
that as long as the fisheries are managed with the best available 
scientific data in setting Total Allowable Catch (TAC), for each year's 
harvest and fisheries are prosecuted within those limits, that the 
health of our fisheries would be adequately insured. Fears of the 
unknown, concerns over the equity of initial allocations, the effect of 
large scale consolidation on fishery dependant communities, the 
efficacy and cost of management and enforcement are some of the most 
important reasons for my initial skepticism and opposition to IFQ's. 
Since the implementation of the halibut and sablefish IFQ program, the 
program is working and working well. Loss of life and injury at sea are 
down significantly, ex-vessel value of product is up substantially, 
product quality is much improved, and there is now nearly year-round 
availability of fresh product.
    The key element of the program that allows for all these 
improvements is the end of the race for fish between users. Stake 
holders can now refocus their efforts on safety, conservation of the 
resource, and product quality. With fishermen having spent millions of 
dollars paying for their particular share of the resource since the 
implementation of IFQ's, there is a tremendous economic incentive for 
them to be very concerned with sustainable resource management. No 
longer competing for a share of the resource while prosecuting the 
fishery allows them the time to move from areas of high by-catch of 
non-target species. They also now have the flexibility to alter fishing 
practices and modify gear to address conservation concerns without fear 
of losing their share of the fishery.
    The North Pacific Council continues to have substantial challenges 
in responsibly managing all of our fishery resources in the North 
Pacific. Reducing the impacts of commercial fishing on benthic habitat, 
by-catch reduction of non-target species, and as our scientific 
knowledge grows, movement toward a more ecosystem based approach to 
fishery management are three goals we are currently working toward in 
the North Pacific. If we are to achieve them we will need to have 
management regimes that provide flexibility for both the managers and 
fisherman to respond to the challenges we face. Ending the race for 
fish is fundamental to providing the needed flexibility. Our experience 
in the halibut and sablefish IFQ program provides a empirical example 
of how this form of rationalization can make a significant contribution 
to achieving our fishery management goals.
    In the next iteration of the Magnuson-Stevens Act as you work 
toward reauthorization, I urge you to provide your managers at the 
North Pacific Council and at the National Marine Fisheries Service all 
the management tools that could be available to them. Certainly there 
are social and economic issues with regard to IFQ programs that are 
difficult to resolve. The current halibut and sablefish program is a 
good and successful first attempt at addressing them. What has been 
learned by all the participants in the public process through the 
development and implementation of the halibut and sablefish IfQ program 
is invaluable in the development of any future programs for other 
fisheries. The Council forum created by the Magnuson-Stevens Act is the 
best place to resolve these issues.
    There was more than just over-capitalization and the problems 
created by the race for fish that led the pollock industry to seek a 
legislative solution for their problems. To the extent that the North 
Pacific Council did not have all the rationalization tools at its' 
disposal, the industry had to have a legislative solution to solve the 
capitalization portion of it's problems. It is the timely 
rationalization of the pollock fishery through the formation of at- sea 
processor and shore based delivery co-ops as provided for in the 
American Fisheries Act, that has given both the management and fishery 
flexibility necessary to have a pollock fishery in the Bering Sea in 
2000 in the face of the Stellar sea lion situation and the exigencies 
of the Endangered Species Act. The lack of both management and fishery 
flexibility that rationalization could provide in the Gulf of Alaska 
makes responding to the Stellar sea lion situation much more difficult 
and the impact of the management measures potentially devastating to 
the Gulf communities.
    The current circumstances of the crab fisheries in the Bering Sea 
are dire and the future of most crab fisheries is in doubt. The Bristol 
Bay red king crab fishery, which through the 1970's and early 1980's 
was both healthy and the most lucrative crab fishery in the North 
Pacific, crashed and the stocks have never recovered to their 
historical norms for that period. The bairdi tanner crab fishery has 
also been on a continual downward stock trend with only a modest and 
brief period of recovery in the early 1990's. The North Pacific Council 
has worked to develop rebuilding plans for the bairdi tanner crab 
resource. In the mid 1980's with the large declines in king and bairdi 
tanner crab fisheries and the robust state of opilio tanner crab 
stocks, the Bering Sea crab fleet became increasingly dependant on 
opilio tanner crab as it's most lucrative fishery. Opilio tanner crab 
became the mainstay that underpinned the economic viability of the crab 
fleet and crab processors from the mid 1980's until now. This summer's 
survey work confirmed a tremendous decline in the biomass of opilio 
crab and that resource has now been declared overfished. Current 
projections indicate a severely curtailed fishery this year with the 
fishery likely being closed to commercial fishing in the year 2001. The 
causes of the decline of the crab fisheries are complex and commercial 
fishing is a component of the decline, although oceanographic 
conditions appear be the fundamental reason for crab stock declines. 
Until we get an oceanographic regime shift to conditions more conducive 
for crab we are likely facing continued low levels of crab abundance. 
Given the current status of the stocks in the crab fisheries we are at 
disastrously high levels of over-capitalization in both crab fleet and 
crab processing industry. This level of capitalization exacerbates the 
effort to manage the crab fleet effectively and promote recovery of the 
crab resource. These circumstances have prompted the crab industry to 
come forward and ask the North Pacific Council to help facilitate 
industry discussions to develop co-op arrangements which are similar to 
those provided by the American Fisheries Act. Dr. Dave Fluharty, a 
North Pacific Council member from Washington State and myself, have 
been involved in this effort.
    The current prohibition on implementation of IFQ programs or quota 
share-like programs prevents the North Pacific Council from directly 
developing the kind of solution many crab industry members want. The 
very fact that it is industry members calling for this sort of solution 
is an indication fishermen are coming to grips with the reality of 
over-capitalization and are seeking meaningful solutions to their 
problems. The formation of co-ops similar to those developed as a 
result of the American Fisheries Act is another viable form of fishery 
rationalization and capital reduction. Currently formation of such co-
ops is restricted by the Fisherman's Act of 1934 and the crab industry 
would need the direct help of Congress to act expeditiously to move 
forward to solve its' problems. Moreover the excess of capital in the 
crab industry is so great that a direct reduction of capital through a 
buyback is likely necessary to facilitate the formation of co-ops.
    As you move forward in the process of the Magnuson-Stevens Act 
reauthorization, I would ask that you provide the Councils with the 
ability to consider and implement a variety of management options in 
order to fully rationalize the crab and groundfish fisheries of the 
North Pacific.
    Let me thank you again for allowing me the opportunity to present 
my views.

    Senator Snowe. Thank you, Mr. O'Leary.
    Ms. Stewart.

    STATEMENT OF BETH STEWART, DIRECTOR, NATURAL RESOURCES 
               DEPARTMENT, ALEUTIANS EAST BOROUGH

    Ms. Stewart. Madam Chairman, Senator Stevens, I would like 
to thank you for the opportunity to testify today. My name is 
Beth Stewart, and I am Director of the Natural Resources 
Department for the Aleutians East Borough. The Aleutians East 
Borough includes the communities of Akotan, Cold Bay, Falls 
Pass, King Cove, Nelson Lagoon, and Sand Point.
    With the exception of Cold Bay, all of these communities 
are Eastern Aleut villages that depend entirely on commercial 
fishing to maintain local communities. Falls Pass, Akotan and 
Nelson Lagoon are on the Bering Sea side and participate in the 
CDQ program. Sand Point and King Cover fishermen are on the 
gulf side and have extensive histories of both State and 
Federal groundfish fisheries.
    The vessels owned and operated by local fishermen are 
almost all under 60 feet in length, and are built to 
participate in salmon, herring, halibut, crab, cod, and pollack 
fisheries. Local residents learned long ago that they must be 
able to remain diversified in order to maintain their families 
and their homes in this remote region.
    Although a few local fishermen did receive enough halibut 
IFQ to maintain their participation in the halibut fishery, 
most did not. Although halibut remains an important component 
of most fishermen's slate of possible fisheries, local people 
are now being forced to purchase quota to retain needed 
flexibility.
    The vast majority of local residents oppose IFQ's, 
sometimes referred to as ITQ's. They view IFQ's as a management 
tool that encourages single fishery dependency by rewarding 
those who have focused on a single fishery and making it more 
expensive, sometimes prohibitively expensive, to maintain a 
full suite of fishing options which will allow the vessel owner 
and crew to shift fisheries as stocks and markets fluctuate.
    Residents are also deeply concerned that IFQ's and the co-
op structure provided for under the AFA will result in the 
consolidation of quota on fewer and fewer vessels. Such 
consolidation has extremely negative impacts on crew 
employment. Crew jobs are a critical source of income, 
particularly during winter months. This is a fear expressed by 
the vessel owners who would be involved in receiving either IFQ 
or AFA benefit. It would be unwise for them to continue to fish 
all the vessels, and if they did that, they know they would be 
giving up jobs in the local communities.
    The recent formation of co-operatives under the AFA has 
created additional challenges for the small boat, diversified 
fishery-dependent locals. Aleutians East Borough is home to two 
shore-based processors, with plants in Akutan, King Cove, and 
Sand Point. From time to time, floaters have come into the area 
and our market competition has improved so that prices 
automatically went up.
    Local fishermen also desired the ability to establish 
additional markets for species for which the shore-based plants 
may not be able to provide a market. The idea of limiting entry 
for processors within the Aleutians East Borough is adamantly 
opposed by the local fleet. As mentioned above, the co-op model 
developed for the Bering Sea Aleutian Islands pollack fishery 
is viewed as unworkable by the local fleet.
    However, in the course of facing the reconstruction of the 
pollock fishery, in response to the current situation with 
Stellar sea lions, Aleutians East Borough proposed that NMFS 
set aside that portion of the pollack TAC taken by vessels 
under 60 feet in the Western Gulf of Alaska, area 610, and in 
that portion of area 620 in the Central Gulf east of 157, so 
that the small boat fleet could continue to fish in the haul-
outs around Sea Lion Rocks and Mitrofania Spitz Island. These 
are the only safe areas for the small boat fleet to fish during 
the extremely dangerous weather that occurs during the pollack 
fishery.
    We propose that NMFS establish a fishing schedule that 
would slow down the harvest and ensure that localized depletion 
of pollack was avoided in these areas. The Service is 
interested in pursuing this idea, and has come to think of it 
as a type of co-op.
    Aleutians East Borough views this type of management tool 
as being more like territorial user rights fishery Turf than a 
co-op. Individual vessel allocations are not made. Instead, the 
small boat fishery is managed in a way that does not require 
these vessels to participate in the race for fish against 
larger vessels. It stabilizes the amount of quota available to 
local fishermen and provides the necessary flexibility to 
maintain a diversified fishery portfolio and to find local 
solutions to local problems and retains a healthy environment 
for local employment.
    We realize that our situation is in many respects unique. 
Unlike Kodiak and some other gulf communities, we do not have 
access to a wide variety of processors. We are on the path 
between the Gulf of Alaska and the Bering Sea Aleutian Islands. 
We must maintain healthy local fisheries for the small vessels 
that are the most suitable vessels for our region and our 
economy. While we have no desire to dictate solutions for other 
components of the fishery, we believe that solutions developed 
for other areas are not necessarily suitable for our area.
    I had an interesting experience just after Christmas. I 
acquired a border collie. Now, this is a fine dog if you 
actually have cattle, but I have no cattle, and instead I am 
being forced to accommodate my life to create a job for this 
border collie so that he does not become destructive. We think 
that IFQ's may be the border collie for some fisheries, but we 
do not need a border collie in the Aleutians East Borough.
    Although most residents do not like any form of limited 
entry, the need to maintain a local fishing economy must 
accommodate its inevitability. Giving the North Pacific Fishery 
Management Council the tools to establish turf fisheries in the 
Western and that portion of the Central Gulf East of 157 would 
provide the most desirable alternative for these Native 
fishermen. Therefore, the Aleutians East Borough ask that this 
authority be established for the North Pacific Fishery 
Management Council.
    [The prepared statement of Ms. Stewart follows:]

    Prepared Statement of Beth Stewart, Director, Natural Resources 
                   Department, Aleutians East Borough
    The Aleutians East Borough includes the communities of Akutan, Cold 
Bay, False Pass, King Cove, Nelson Lagoon, and Sand Point. With the 
exception of Cold Bay all of the communities are Eastern Aleut villages 
that depend entirely on commercial fishing to maintain local 
economies.False Pass, Akutan and Nelson Lagoon participate in the CDQ 
program. Sand Point and King Cove fishermen have extensive histories in 
both the state and federal groundfish fisheries. The vessels owned and 
operated by local fishermen are almost all under 60, in length, and are 
built to participate in salmon, herring, halibut, crab, cod and pollock 
fisheries. Local residents know that they must be able to remain 
diversified in order to maintain their families and homes in this 
remote region.
    Although a few local fishermen did receive enough halibut IFQ to 
maintain their participation in the halibut fishery, most did not. 
Although halibut remains an important component of most fishermen's 
slate of possible fisheries, local people are now forced to purchase 
quota to retain the needed flexibility.
    The vast majority of local residents oppose Individual Fishing 
Quotas (IFQ's), sometimes referred to as Individual Transferable Quotas 
(ITQ's). They view IFQ's as a management tool that encourages single 
fishery dependency by rewarding those who focus on a single fishery and 
making it more expensive, sometimes prohibitively expensive, to 
maintain a full suite of fishing options which allow the vessel owner 
and crew to shift fisheries as stocks and markets fluctuate.
    Residents are also deeply concerned that IFQ's and the co-operative 
structure provided for under the American Fisheries Act (AFA) will 
result in the consolidation of quota on fewer and fewer vessels. Such 
consolidation has extremely negative on crew employment. Crew jobs are 
a critical source of income, particularly during the winter months.
    The recent formation of co-operatives under the AFA has created 
additional challenges for small boat diversified fishery dependent 
locals. Aleutians East Borough is home to two shore-based processors 
with plants in Akutan, King Cove, and Sand Point. From time to time 
floaters come into the area and the market competition improves prices 
for local fishermen. Local fishermen also desire the ability to 
establish additional markets for species for which the shore-based 
plants may not be able to provide a market.
    The idea of limiting entry for processors within the Aleutians East 
Borough is adamantly opposed by the local fleet. As mentioned above, 
the co-op model developed for the Bering Sea/Aleutian Islands pollock 
fishery is viewed as unworkable by the local fleet.
    However, in the course of facing the reconstruction of the pollock 
fishery in response to the current situation with Stellar sea lions, 
Aleutians East Borough proposed that NMFS set aside that portion of the 
pollock TAC taken by vessels under 60, in the Western Gulf of Alaska 
(area 610) and in that portion of the Central Gulf east of 157 degrees, 
so that the small boat fleet can continue to fish in the haulouts 
around Sea Lion Rocks and Mitrofania/Spitz Island. These are the only 
safe areas for the small boat fleet to fish during the extremely 
dangerous weather that occurs during the pollock fishery.
    We proposed that NMFS establish a fishing schedule that would slow 
down the harvest and insure that localized depletion of pollock was 
avoided in these areas. The service is interested in pursuing this 
idea, and has come to think of it as a type of co-op.
    Aleutians East Borough views this type of management tool as being 
more like a Territorial User Rights Fishery (TURF) than a co-op. 
Individual vessel allocations are not made. Instead the small boat 
fishery is managed in a way that does not require these vessels to 
participate in the race for fish against larger vessels. It stabilizes 
the amount of quota available to local fishermen, and provides the 
necessary flexibility to maintain a diversified fishery portofolio and 
to find local solutions to local problems, and retains a healthy 
environment for local employment.
    We realize that our situation is, in many respects, unique. Unlike 
Kodiak and other Gulf communities, we do not have access to a wide 
variety of processors. We are on the path between the Gulf of Alaska 
and the Bering Sea/Aleutian Islands. We must maintain healthy local 
fisheries for the small vessels that are the most suitable vessels for 
our region and economy. While we have no desire to dictate solutions 
for other components of the fishery, we believe that solutions 
developed for other areas are not suitable in our area.
    Although most residents do not like any form of limited entry, the 
need to maintain a local fishing economy must accommodate its 
inevitability. Giving the North Pacific Fishery Management Council the 
tools to establish TURF fisheries in the Western and Central Gulf (east 
of 157 degrees) would provide the most desirable alternative for these 
native fishermen.
    Therefore, the Aleutians East Borough asks that this authority be 
established for the North Pacific Fishery Management Council.

    Senator Snowe. Thank you very much.
    Mr. Iani.

      STATEMENT OF JOHN IANI, VICE PRESIDENT, UNISEA, INC.

    Mr. Iani. Thank you, Senator Snowe and Senator Stevens. For 
the record, my name is John Iani, and I am a vice president 
with UniSea, Inc. We are a seafood processing company that has 
been operating in Alaska for over 25 years. We operate a plant, 
Senator Snowe, about 800 miles west of here out at the Aleutian 
chain, and we certainly hope that on your next trip to Alaska 
you can get out there. In fact, I think if you found yourself 
out there a while, you cannot get to Maine from there, but on a 
clear day I think you can see Maine from there.
    I want to thank both you and Senator Stevens for giving us 
an opportunity to testify before you, and I would like to limit 
my testimony, or narrow my testimony to explain the dilemma 
that Mr. O'Leary touched upon regarding the Alaska crab 
industry.
    UniSea, like many other companies, in 1973 began as one of 
the pioneer crab processors operating in the Bering Sea and 
Aleutian Islands, and in partnership with some very courageous 
independent crab fishermen from Alaska, Washington, and Oregon, 
one of them being Senator Stevens' youngest son, we have been 
part of the development of the Bering Sea crab fishery into a 
dynamic and vibrant sector of the North Pacific seafood 
industry.
    Heretofore, the crab industry has been sort of the silent 
minority operating out in the Bering Sea, quietly sustaining 
storms and economic downturns, and always remaining viable. 
Crab products from Alaska, the Bering Sea, are sold and 
consumed in all 50 States, and virtually every corner of the 
globe. Unfortunately, our ability to continue quietly is 
seriously threatened by natural, ecological shifts in the 
Bering Sea that nobody was able to foresee.
    The backbone of our industry has been the Opilio or Snow 
crab fishery. This fishery developed as the mainstay of our 
fisheries on the sudden collapse of the King crab fishery 20 
years ago. The crab fleet, processors, coastal communities, 
have become dependent upon this winter fishery. The crab 
fishery employs thousands of fishermen, thousands of processing 
employees, and contributes an important component to the tax 
base of many Alaskan communities.
    Unfortunately for us, though, the new millennium has proven 
disastrous. Attached to my testimony and for the record is an 
announcement from the Alaska Department of Fish & Game stating 
that the Opilio quota had to be slashed in the year 2000 by 85 
percent, and putting the industry on notice that for the year 
2001 the chances of a fishery are very doubtful.
    Not only is that quote 85 percent reduction from the year 
before, but it represents almost a 93-percent reduction from 
its recent historical high. The reasons that the ADF&G had to 
cut the quota was not a case of overharvesting. It was simply 
that they were following the regulations promulgated by the 
National Marine Fisheries Service under the Magnuson-Stevens 
Act to protect stocks in a situation where their optimum yield 
had dropped below a certain level.
    NMFS interpreted the new congressional language extremely 
conservatively, as they should have, and in the final rules 
promulgated by NMFS the term, overfish, came out with two 
meanings. First, the common meaning of any stock that has been 
subjected to a defined rate of fishing mortality, or simply if 
we have overfished it, but second, as in the case of our Opilio 
fishery, the term is used to describe any stock or stock 
complex whose size is sufficiently small that a change in 
management practices is required. That is the case of what 
happened. When they surveyed the Opilio stocks they found the 
stocks to be at a certain level, that they had to act 
conservatively, and so they have decided to take the prudent 
course, and that is to cut the fishery down to nothing in a 
year from now.
    Unfortunately, many of us in the crab industry, harvesters 
or processors and communities, are facing extremely difficult 
economic decisions. Our own company had to shut down a 
processing operation for the foreseeable future, and will 
require the elimination of hundreds of jobs. You do not have to 
look any further than today's paper, Senator Snowe, to find out 
that one of our communities in Alaska is already facing 
emergency decisions regarding their budget, the city of St. 
Paul, out in the Bering Sea, because of the loss of revenue 
from the Opilio crab fishery.
    Because we are reeling from these recent events, we find 
ourselves on a dangerous death spiral. The crab stocks are 
simply not sufficient enough to provide an economic basis for 
the industry to rationalize itself through buyback. There is 
simply too much capital in the fishery for the economics to 
support the current number of participants.
    But the size of the crab harvest now and to be projected is 
so small that there is insufficient income to finance any sort 
of effective fleet reduction program as envisioned by the 
Magnuson-Stevens Act, so the Fishery Management Council system 
is the proper forum to design and maintain the rationalization 
plan, and the Alaskan crab fishery is no exception. The council 
system, however, lacks the ability to provide the necessary 
financial resources to reduce capacity. That help can only be 
provided by you and your colleagues in Congress.
    As was seen in the American Fisheries Act, the vision that 
was provided by the Senate and the House in allowing for a 
direct appropriation and a long-term loan has helped that 
fishery rationalize itself, and the council is now overseeing 
the co-operative structure and making sure that any unintended 
consequences are taken care of.
    So we believe that with your assistance in providing 
capital, coupled with the long-term industry obligation, we can 
help provide the stabilization the industry needs.
    Senator Snowe, since your long service in the House, and 
Senator Stevens, you have time and time again come to the aid 
of the fishing industry, and without your support, there is no 
question we would be truly lost. Like the farmers in the 
Nation's heartland, we in the fishing industry take pride in 
our role in providing food for our Nation's consumers. We are 
asking for your support once again.
    We are grateful for the opportunity to testify and look 
forward to working with this Subcommittee to solve this 
critical problem. I would be happy to answer any questions. 
Thank you.
    [The prepared statement of Mr. Iani follows:]

     Prepared Statement of John Iani, Vice President, UNISEA, INC.
    Senator Snowe, Senator Stevens, and members of the Subcommittee, my 
name is John Iani. I am a vice-president for UniSea, Inc. We are a 
Seattle-based seafood processing company that has been purchasing and 
processing Alaska fish products for over 25 years. We are a component 
of the most dynamic fisheries in the United States. UniSea purchases a 
wide variety of fish species harvested by fishing vessels of every size 
and gear type.
    First, I want to thank you for giving me the opportunity to appear 
before you today. We have many important issues facing us as we begin 
the year 2000, but the one which I would like to focus on today 
involves the commercial crab fisheries of Alaska. My main purpose in 
today's testimony will be to explain the dilemma confronting this 
sector of Alaska's seafood industry, and to seek whatever help Congress 
and the Administration might be able to offer.
    UniSea began, in 1973, as one of the pioneer crab processors 
operating in the Bering Sea and Aleutian Islands. In partnership with 
some very courageous and independent crab fishermen from Alaska, 
Washington, and Oregon, UniSea has been part of the development of the 
Bering Sea crab fishery into a dynamic and vibrant sector of the 
overall North Pacific seafood industry.
    The crab industry has weathered many extreme challenges during its 
history, but has always managed to survive economic downturns to 
continue as a profitable fishery. Crab products from Alaska's Bering 
Sea are sold and consumed in all 50 states and virtually every corner 
of the globe. Unfortunately, our ability to continue to supply the huge 
market we have developed is now threatened by natural ecological 
changes that no one was able to foresee.
    The backbone of the crab industry since the early 1980's has been 
the opilio or snow crab fishery. This fishery developed as a mainstay 
of Alaskan fisheries after the sudden collapse of the king crab fishery 
twenty years ago. The crab fleet, processors, and coastal communities 
have become highly dependent on this winter fishery. The opilio crab 
fishery each year employs thousands of fishermen, thousands of 
processing employees and contributes an important component of the tax 
base of many Alaskan communities.
    Unfortunately, the new millennium is proving to be disastrous to 
the crab industry. Attached to my testimony is an announcement by the 
Alaska Department of Fish and Game announcing that the opilio quota for 
the year 2000 season is being slashed by 85 percent. In addition, the 
Department has put the industry and dependent communities on notice 
that in the year 2001 no commercial opilio fishery is likely to be 
allowed.
    The announced quota for 2000 represents a 92 percent reduction from 
its recent historical high and the projection for the year 2001 speaks 
for itself.
    The reasons that the Alaska Department of Fish and Game, in 
conjunction with the National Marine Fisheries Service, took such 
drastic actions are complex and necessary to understand.
    This is not a case of the industry overharvesting the resource to 
the point where fishery managers had to act. The managers and 
biologists agree that this downturn results from natural causes that 
the current state of ocean science was simply unable to predict.
    The Magnuson-Stevens Act has always stated that fishery management 
plans must prevent overfishing. National Standard 1 states that 
``conservation and management measures shall prevent overfishing while 
achieving on a continuing basis the optimum yield from each fishery for 
the United States fishing industry.'' The balance between overfishing 
and optimum yield contained in that National Standard was altered with 
the passage of the Sustainable Fisheries Act when language was added to 
require that all fishery management plans contain measures to 
immediately end any overfishing which is occurring and to rebuild 
overfished fisheries as quickly as possible, but in not more than ten 
years.
    NMFS has interpreted the new congressional language extremely 
conservatively. In the final rules promulgated by NMFS the term 
``overfished'' has two meanings. First, the term describes any stock 
that is subjected to a defined rate or level of fishing mortality.
    Second, as is the case in the opilio fishery, the term is used to 
describe any stock or stock complex whose size is sufficiently small 
that a change in management practices is required in order to achieve 
an appropriate level and rate of rebuilding. The second description 
really has nothing to do with harvesting at all. Any number of causes, 
such as regime shifts, environmental changes, or others will trigger 
conservative management measures.
    Faced with these new federal regulations and with the extreme 
uncertainty regarding the opilio stocks based on the best available 
survey information, the Alaska Department of Fish and Game really had 
no choice but to be extremely cautious in setting opilio quotas for the 
foreseeable future.
    The crab industry is reeling from these recent events and we now 
find ourselves on the brink of a dangerous death spiral. The crab 
stocks are not sufficient to provide an economic base for the industry 
to rationalize itself through buybacks and co-operative efforts.
    There is simply too much capital in the fishery for the economics 
to support the current number of participants, but the size of the crab 
harvest is now so small that there is insufficient income to finance 
any sort of effective fleet reduction program. In short, we need help.
    There are two major phases necessary to bring the crab industry in 
line with these new restrictive management measures. The first, and 
most important, is a capacity reduction effort. The Magnuson-Stevens 
Act contains specific language to create a Fishing Capacity Reduction 
Program in section 312(b). That section establishes a system for an 
industry funded buyback of capacity in the industry. The problem with 
utilizing this helpful tool is that the future of the opilio fishery 
will not allow the industry to underwrite such a buyback.
    Unfortunately, many of us in the crab industry; harvesters, 
processors, and communities are facing extremely difficult economic 
decisions as a result of this opilio disaster. Our own company must 
shut down a processing operation for the foreseeable future that will 
force the elimination of hundreds of jobs.
    Many of the crab vessels will have major difficulties meeting their 
financial obligations and their futures are extremely uncertain. The 
communities of St. Paul and Unalaska are heavily dependent on the 
revenue provided by the opilio fishery and are faced with very 
difficult questions and decisions regarding their future city budgets 
and their ability to maintain their infrastructure. Simply put, the 
industry is in no position to fund the amount necessary to effectively 
reduce capacity.
    The fishery management council system that you have created is the 
proper forum to design and maintain the rationalization plans for each 
of the nation's unique fisheries. The Alaskan crab fishery is no 
exception. The Council system, however, lacks the ability to provide 
the necessary financial resources to reduce capacity. You and your 
colleagues in Congress can only provide that succor.
    We believe that your assistance in providing seed capital, coupled 
with a long-term industry loan obligation, can provide the help the 
industry needs to move to a more stable and rational crab industry. 
This committee and its members have long been strong supporters of this 
nation's fishing industry and for that support we are extremely 
grateful. Like the farmers of the nation's heartland, we in the fishing 
industry take pride of our role in providing food for our nation's 
consumers. Senator Snowe and Senator Stevens, you have time and again 
come to the aid of our fishing industry and without your support we 
would truly be lost. We are asking for that support once again.
    As we have seen in other fisheries, Congressional assistance in 
capacity reduction has literally saved the participants from the brink 
of ruin. As a result, those fisheries are on the road to 
rationalization and long term stability. We in the crab industry are 
certain that the same result can be achieved in the North Pacific.
    We are grateful for the opportunity to testify and look forward to 
working with the Subcommittee to solve this critical problem. At this 
point I would be pleased to answer any questions you may have.

    Senator Snowe. Thank you very much.
    Mr. Hyde.

  STATEMENT OF MICHAEL HYDE, PRESIDENT, POLLOCK CONSERVATION 
                          COOPERATIVE

    Mr. Hyde. Thank you, Senator Snowe, Senator Stevens, for 
the opportunity to be here today. My name is Mike Hyde, and I 
am the president of American Seafoods Company. I am testifying 
today on behalf of the Pollock Conservation Cooperative, a fish 
harvesting co-operative that was established as a result of the 
American Fisheries Act in the catcher-processor sector of the 
Bering Sea pollock fishery.
    The PCC, which was created in December 1998, complements 
many of the policies and objectives of the Sustainable 
Fisheries Act, particularly those sections relating to reducing 
fishing capacity, improving management of marine resources, and 
providing economic and social stability for fishing 
communities.
    In light of the promising results to date of the PCC and 
the anticipated benefits of the newly formed in-shore pollock 
co-operatives, Congress should consider what legislative 
action, if any, is needed to expand co-op opportunities in 
other fisheries.
    What I would like to do today is provide a little bit of 
background on the Pollock Conservation Cooperative, and then 
highlight some of the benefits that we saw in the first year of 
operation.
    Eight companies operating 19 U.S. flag pollock catcher-
processor vessels comprise the PCC. The PCC was formed to end 
the ``race for fish'' which had resulted in overcapitalization 
and a failure to optimize utilization of the Bering Sea pollock 
resource. Like the catcher-processor co-operative in the West 
Coast Pacific whiting fishery, the purpose of the PCC is simply 
to apportion shares of the Bering Sea catcher-processor pollock 
quota among the eligible participants in the fishery. By 
agreeing among themselves to limit their individual catches to 
a specific percentage of the annual TAC, the fishery can be 
conducted at a more deliberate, rational pace. The PCC is not 
involved in matters relating to pricing or marketing of 
products.
    Participation in the co-operative is absolutely voluntary. 
However, it is unlikely that it could succeed without 100 
percent participation by the eligible participants in the 
catcher-processor sector. If a single, qualified entrant 
continued to engage in a race for fish, it would likely 
undermine collective efforts by the remaining fishing companies 
to rationalize their fishing practices.
    While the American Fisheries Act did not provide statutory 
authority for formation of a catcher-processor co-operative, 
the AFA made two key changes to the Bering Sea pollock 
management structure that facilitated formation of a co-
operative. First, the AFA created a three-sector allocation of 
the Bering Sea pollock fishery, providing a certain percentage 
of the overall directed pollock catch to the catcher-
processors, the mother ships, and the in-shore processing 
sector.
    Second, the AFA specified eligible participants in the 
catcher-processor sector. A co-op of current participants in a 
fully subscribed fishery would not be viable if nonpollock 
fishermen were free to enter or leave the fishery at will.
    We now have 1 year of operations under our belt, and we 
have provided a draft report to the North Pacific council on 
the success of those operations. That document highlights some 
of the benefits that can be achieved in a co-operative, and I 
would like to touch just briefly on a few of those benefits. In 
large part you will see that they are very consistent with the 
goals that were enunciated in the Sustainable Fisheries Act.
    The first was the goal of reducing overcapitalization in 
the fishery. The American Fisheries Act as a first step removed 
nine of the 29 vessels that had been participating in the 
pollock fishery, reducing the number of vessels that are 
allowed to participate to 20. Once we formed the co-op, we were 
able to further reduce the overcapitalization of the fishery by 
taking out excess capacity in each of our companies.
    If you look back at 1999 you will see that in the spring 
season, only 16 of the 20 eligible vessels fished, and by the 
fall season there were only 14 of the 20 eligible vessels that 
fished.
    Maybe more dramatically than that simple statistic is, if 
you look at what each of the companies has done in the past we 
were constantly pouring more money into each of our vessels to 
make ourselves more competitive in the ability to catch and 
process fish as fast as we can. Nobody makes those investments 
any more. Every investment that the companies make now, are 
investments to diversify our processing ability, to increase 
the recovery that we get from the fish, and to make a better 
quality product. We now have a means to extract a higher amount 
of value from each pound of fish that we catch.
    In addition, the co-operative did a variety of things that 
are very helpful from a management perspective. The first thing 
it did was spread out our fishery. Something that we have heard 
over and over again today, is how compressed our fisheries have 
become in the olympic fishery. That creates a variety of 
problems, from safety problems, to lack of utilization, to 
inability to avoid bycatch, and other things.
    If you look at the simple statistics of how our fishery was 
conducted last year, you will see that we lengthened our 
fishery by more than double for the relative amount of pollock 
that we were catching. This provided benefits for sea lions, it 
provided management benefits to the National Marine Fisheries 
Service and its ability to monitor our catch, and it also 
provided a variety of other benefits such as reduction of 
bycatch, increased utilization of our product, and stability 
for our vessel crews.
    I see the red light is on. I will hurry quickly to the last 
topic that I wanted to mention, which is the social stability 
that is brought about by the co-operatives. We have had a lot 
of focus today on some of the initial adverse impacts any time 
you limit entry to a fishery, and I think the comments that 
were talked about today are particularly true in an IFQ 
fishery, but they probably are true in any fishery in which you 
limit access. If you have a program like we have now got, a 
license limitation program, if you do not have a license, you 
have got to buy a license to buy in. There is no difference in 
an IFQ fishery as far as I am concerned.
    But what limiting entry has done is to greatly stabilize 
the life of the people that remain in the fishery. We had to 
reduce the size of our crews and our company substantially when 
nine of our vessels were taken out of the fishery, but if you 
talk to any of our crew members that are left in the fishery, 
the ability to predict what their lifestyle is going to be, the 
type of wages they can make each year, when they are going to 
be fishing, when they are not going to be fishing, has added a 
tremendous amount of predictability to their lives.
    We are now able to recruit in Alaskan villages, tell the 
people when they can fish, the kind of money they can make, 
provide good job opportunities for them, at a wage that will 
make this a lifestyle choice for a lot of the people here, so I 
think there is no doubt there are significant challenges to 
deciding how we can rationalize this fishery and move toward 
IFQ's or adopt more co-ops. There are tremendous allocation 
issues to be addressed, but there is no question that the 
system itself, once it is in place, is a benefit to management 
of the fishery as a whole.
    Thank you for listening today.
    [The prepared statement of Mr. Hyde follows:]

            Prepared Statement of Michael Hyde, President, 
                    Pollock Conservation Cooperative
    Thank you, Madam Chairman and Members of the Oceans and Fisheries 
Subcommittee for the opportunity to testify on the effect of the 
Sustainable Fisheries Act (SFA) on the Bering Sea pollock fishery and 
on reauthorization of the Magnuson/Stevens Fishery Conservation and 
Management Act.
    My name is Mike Hyde and I am the president of American Seafoods 
Company. I am testifying today on behalf of the Pollock Conservation 
Cooperative (PCC), a fish harvesting co-operative. The PCC, which was 
created in December 1998, complements many of the policies and 
objectives of the SFA, particularly sections relating to reducing 
fishing capacity, improving management of marine resources, and 
providing economic and social stability for fishing communities. In 
light of the promising results to date of the PCC and the anticipated 
benefits of the newly formed inshore pollock co-operatives, Congress 
should consider what legislative action, if any, is needed to encourage 
expanding co-op opportunities in other fisheries.

1. Background on the Pollock Conservation Cooperative (PCC).

    Eight companies, operating 19 U.S.-flag catcher/processor vessels, 
comprise the PCC. The PCC was formed to end the ``race for fish,'' 
which resulted in overcapitalization and a failure to optimize 
utilization of the Bering Sea pollock resource. Like the catcher/
processor co-operative in the West Coast Pacific whiting fishery, the 
purpose of the PCC is simply to apportion shares of the Bering Sea 
catcher/processor pollock quota among eligible participants in the 
fishery. By agreeing among themselves to limit their individual catches 
to a specific percentage of the annual quota, or total allowable catch 
(TAC), that is allocated to their sector, the fishery can be conducted 
at a more deliberate, rational pace. Once the apportionment is set, the 
PCC does allow for transfers of pollock quota among member companies. 
The PCC is not involved in matters relating to pricing or marketing of 
pollock products.
    Participation in the PCC is voluntary; however, it is unlikely that 
it could succeed without 100 percent participation by eligible 
participants in the catcher/processor sector. If a single, qualified 
entrant continued to engage in a race for fish, it would likely 
undermine collective efforts by the remaining fishing companies to 
rationalize fishing practices. It is instructive that the eight PCC 
members, which include both large and small companies, recognize that 
it is in their individual and collective best interests to eliminate 
the race for fish.
    While the PCC was not formed under any specific legislative 
authority, there is a strong precedent for formation of the co-
operative. In 1997, four catcher/processor companies requested a 
business review letter from the Department of Justice's Antitrust 
Division prior to forming the Pacific Whiting Conservation Cooperative 
(PWCC). In its business review letter, the Department of Justice noted 
that fish harvesting co-operatives could be expected to benefit 
consumers. The Antitrust Division's letter of May 20, 1997 to the PWCC 
stated, ``To the extent that the proposed agreement allows for more 
efficient processing that increases the usable yield (output) of the 
processed Pacific Whiting and/or reduces the inadvertent catching of 
other fish species whose preservation is also a matter of regulatory 
concern, it could have pro-competitive effects.'' The PCC has also 
requested a business review letter from the Justice Department and a 
response is expected soon.
    While the American Fisheries Act (AFA) did not provide statutory 
authority for formation of a catcher/processor co-operative, the AFA 
made two key changes to the Bering Sea pollock management structure 
that facilitated formation of a co-operative. First, the AFA created a 
three-sector allocation in the Bering Sea pollock fishery, providing a 
certain percentage of the overall quota to the catcher/processor, 
mothership and inshore sectors. The 1997 Justice Department opinion 
cited above made clear that existing law allowed a sector composed of 
vertically integrated harvesting and processing components to form a 
harvest co-operative. Second, the AFA specified eligible participants 
in the catcher/processor sector. A co-op of current participants in a 
fully subscribed fishery would not be viable if non-pollock fishermen 
were free to enter the fishery. The new participants would either race 
to catch fish, undermining efforts by co-op members to rationalize the 
fishery, or demand catch allowances in a fishery in which they had not 
previously participated.

2. The PCC--Reducing Fishing Capacity and Fishing Effort.

    Recognizing the chronic problem of over capacity in the Nation's 
fisheries, the SFA included a provision designed to ``achieve the 
maximum sustained reduction in fishing capacity...in a minimum amount 
of time.'' Patterned after the SFA provision on capacity reduction, the 
American Fisheries Act took the first meaningful step to addressing 
chronic overcapitalization in the pollock fishery. The AFA, which 
reallocated a substantial portion of the pollock quota away from the 
catcher/processor sector and to the inshore sector, established a fee 
on the inshore pollock sector to pay most of the cost of retiring nine 
catcher/processors from the fishery. (Consistent with U.S. government 
policies to promote sustainable fisheries by addressing the root 
problem of overcapitalization in many world fisheries, the AFA required 
the scrapping of eight of the nine catcher/processors being bought 
out.)
    Implementation of the co-operative was a vital next step for 
achieving further reductions in harvesting and processing capacity. By 
ending the race for fish, the co-op eliminates the incentive to employ 
fishing and processing capacity beyond what is needed to take the 
available harvest. As a result, in the winter/spring pollock seasons, 
16 of the 20 eligible catcher/processors fished. In the summer/fall 
fishing seasons, only 14 of the 20 pollock catcher/processors 
participated in the fishery. By and large, the idle vessels are owned 
and operated by multi-vessel companies that can catch their assigned 
quota without fishing all of their vessels. It is difficult for multi-
vessel companies to permanently retire the idled vessels since the 
allocation regime expires in 2004 and there is no assurance that a race 
for fish will not return. However, one of the 20 AFA-eligible catcher/
processors is being permanently retired from U.S. fisheries. Alaska 
Trawl Fisheries, which operates the F/T Endurance, recently announced 
that the vessel is leaving the fisheries and under the AFA is not 
permitted to regain its fishery endorsement. The vessel's assigned 
quota is being purchased, and will be distributed on a pro rata basis 
among the remaining PCC members.
    In addition to helping reduce the number of vessels actively 
fishing, formation of the PCC resulted in operational changes by 
participating vessels to slow fishing effort on a daily basis. A head-
to-head comparison of the daily catch rates of the 16 PCC vessels that 
fished the 1999 winter/spring pollock fishery with the same vessels' 
daily catch rates under the open access system from 1995-1998 shows a 
60 percent reduction in daily catch rates for the 16 PCC vessels. The 
16 PCC vessels made fewer tows per day and harvested fewer fish per tow 
than they did under the race for fish. Slowing the pace of the pollock 
fishery doubled the length of the catcher/processors' season from 75 
days in 1998 to 151 days in 1999.
    According to NMFS, slowing down harvesting activity by co-operative 
fishing provides an important conservation benefit. In 1999, the agency 
promulgated regulations to spread the pollock fishery out over a longer 
period of time to avoid any potential competition between pollock 
fishers and populations of Stellar sea lions foraging for pollock. A 
recent NMFS report summarizing the agency's actions to protect sea 
lions credits the PCC for significantly reducing fishing effort and 
furthering the agency's objective of temporally dispersing the pollock 
fishery.

3. The PCC--Improving Fisheries Management, Reducing Bycatch, 
Increasing Utilization and Conserving Marine Resources.

    The SFA included a section titled, ``North Pacific Fisheries 
Conservation,'' that directed regional fishery managers to take certain 
actions to improve catch measurement, reduce bycatch, and increase 
utilization of fishery resources. The North Pacific Fishery Management 
Council (the Council) and NMFS responded to Congress' mandate by 
developing and implementing regulations requiring certain vessels, 
including all pollock catcher/processors, to be equipped with flow 
scales to weigh all harvested fish. To reduce the incidental harvest of 
non-target species, the Council passed and NMFS approved a prohibition 
on bottom trawling for pollock. Vessels in the directed pollock fishery 
now use only mid-water trawl fishing gear. Finally, fishers must retain 
all pollock and cod harvested regardless of the target fishery in which 
they are participating. Historically, large amounts of pollock and cod 
were discarded by fishers who were targeting other groundfish species.
    It is important to point out that, notwithstanding specific SFA 
provisions intended to enhance conservation of the North Pacific 
groundfish fishery, it is a widely held view that the North Pacific 
groundfish fisheries are well managed. In particular, the Bering Sea 
pollock stock is healthy and abundant. Scientists estimate the Bering 
Sea pollock biomass at 7.7 million metric tons. Harvests of pollock, 
and other groundfish species, are strictly regulated by a system of 
quotas, and fisheries scientists and managers are conservative in 
determining the annual catch limits. A NMFS report recently stated 
that, ``Over the past 20 years, harvest rates could have been 20% or 
more higher if Alaska pollock stocks were managed using less 
conservative but acceptable harvest rates comparable to those currently 
used to manage similar gadid stocks elsewhere in the world.'' A 
comprehensive federal fishery observer program that includes 100% 
coverage on all vessels 125 feet in length and larger enhances in-
season management capabilities. (PCC member vessels carry two federal 
fishery observers at all times. In 1999, federal fishery observers 
sampled 4,704 of 4,797 pollock catcher/processor hauls, or 98% of all 
hauls.)

        a. Improving Fisheries Management.

    Monitoring and enforcement is a critical element of the PCC 
program. NMFS, of course, continues to tally total harvests by catcher/
processors in order to ensure fleet-wide compliance with sector 
allocations. However, the PCC contracts with a private sector firm, 
SeaState, to track daily NMFS' observer catch data to ensure that each 
PCC member stays within its agreed upon harvest limits. The PCC imposes 
significant financial penalties on any company that exceeds its 
assigned quota. In 1999, there were no enforcement actions taken 
against any PCC members. As noted above, catch measurement is precise 
because vessels are equipped with flow scales, which weigh the fish as 
it moves along conveyor belts in the factory. Another important facet 
of co-operative fishing is that SeaState also monitors NMFS' observer 
data on incidental catch. SeaState identifies for all PCC members 
fishing areas to be avoided, if vessel reports indicate that high 
levels of non-target species catch are being encountered.

        b. Reducing Bycatch/Economic and Regulatory Discards.

    The SFA defines bycatch as fish that are caught but not kept, 
including economic and regulatory discards. Because pollock swim in 
enormous, dense schools and generally congregate off the ocean floor, 
there is little incidental catch of non-pollock species in the fishery. 
In 1999, approximately 99% of the PCC members' catch in the pollock 
fishery were pollock. With the new increased retention requirements for 
pollock and cod and the advent of a co-operative that allows fishers to 
fish more carefully, we estimate that in 1999 our fleet's economic 
discard rate was less than three-quarters of one percent. In contrast, 
the United Nations Food and Agricultural Organization estimates that 
worldwide fishing fleet discard over 25% of their harvested catch. The 
overall discard rate in the Bering Sea groundfish fishery is just under 
10%.

        c. Increasing Utilization of Fishery Resources.

    Preliminary data comparing catcher/processors operating in both 
1998 and 1999 indicate that the amount of product made by PCC members 
from a given amount of pollock increased by more than 20 percent in 
1999. By ending the race for fish, the co-operative allows fishers to 
make smaller tow sizes that reduce bruising and damage to harvested 
fish, fostering increased utilization. The rational pace of fishing 
also allows vessel captains additional time to locate schools of 
larger-sized fish and fishers can use fishing nets with larger meshes 
that enable more, smaller-sized fish to escape. From a fish processing 
standpoint, the co-operative allows for more exacting processing 
techniques. The slower pace in the fish processing factory can help 
ensure more precise cuts and provide for other, more labor-intensive 
activities that increase utilization.
    In 1999, the rational pace of fishing also enhanced opportunities 
to make higher-value products and higher-grade products. PCC members 
significantly increased the proportion of high-valued ``deep-skin'' 
pollock fillets produced and there was a proportional decline of lower-
valued mince and fillet-block products. The fleet's ability to produce 
the high-grade fillet products for the domestic market, as well as 
surimi and roe products for export, boosts the U.S. industry's 
competitiveness in the world commodity market for whitefish products.

        d. Conserving Marine Resources.

    The PCC agreement includes a commitment to develop and fund 
research programs to promote conservation and management of marine 
resources. The PCC expects to spend $300,000 per year on marine 
research, including contributing $100,000 annually in 1999-2001 to the 
North Pacific Universities Marine Mammal Research Consortium. The 
Consortium conducts scientific research that seeks to determine the 
cause of the decline of Stellar sea lion populations and to discern 
what measures, if any, can be taken to aid in the recovery of the 
species. Furthermore, the PCC has contributed $25,000 to support marine 
mammal research projects at the Alaska Sealife Center in Seward, Alaska 
and has funded a project to catalogue research findings on the impacts 
of trawl fishing.

4. The PCC Provides Economic Stability in Fishing Communities, 
including the Western Alaska Community Development Quota (CDQ) Groups.

    Since the Bering Sea pollock fishery was fully Americanized in 
1989, the race for fish among domestic harvesters and processors 
spurred continued investments in capacity. By 1998, there existed three 
times more capacity than was needed to catch the available quota. 
Overcapitalization, and the attendant economic pressures of increased 
costs without increased benefits, sparked allocation disputes among 
sectors. Economic problems were exacerbated when the pollock biomass, 
which peaked in the late 1980's and early 1990's, declined and the TAC 
was lowered accordingly to ensure sustainable fishing levels. Revenue 
declined because production dropped and because a nearly decade-long 
recession in Japan resulted in steep price declines for surimi. Between 
1994 and 1998, half of the pollock catcher/processor vessels 
experienced financial difficulties that either resulted in bankruptcy 
or forced the sale of the vessel.
    The SFA emphasizes the importance of providing economic and social 
stability for fishing communities in the management of fishery 
resources. The PCC is helping achieve the SFA's goals by playing a key 
role in restoring economic opportunity for fishing companies as well as 
the 3,000 men and women employed in the pollock catcher/processor 
sector. Prior to 1999, employment opportunities were limited as the 
industry struggled with chronic overcapitalization, other economic 
inefficiencies caused by the race for fish, and low commodity prices. 
As a result of rationalizing the fishery under the co-op, crewmember 
compensation, often computed as a percentage of the value of the 
vessel's catch, has stabilized, if not increased. Increased 
utilization, combined with the flexibility to respond better to market 
demands, adds value to fish products and those gains are reflected in 
crewmember wages.
    The economic stability offered by co-operative fishing extends to 
Western Alaska Community Development Quota (CDQ) groups. The CDQ 
program, which was created in 1992, was established as a permanent 
program in the SFA. The co-op has enhanced Western Alaska CDQ groups' 
investments in PCC member companies and vessels. Presently, the Norton 
Sound Economic Development Corporation owns 50% of Glacier Fish Co., 
which operates two pollock catcher/processors. The Bristol Bay Economic 
Development Corporation and the Aleutian Pribilof Island Community 
Development Association own 20% of the F/T Arctic Fjord and the F/T 
Starbound, respectively. CDQ groups are also considering investing in 
American Seafoods Company, which operates seven catcher/processors.
    In summary, the PCC is proving to be an innovative and successful 
private sector initiative that is consistent with, and complementary 
to, many of the important goals and objectives of the Sustainable 
Fisheries Act. As the Oceans and Fisheries Subcommittee moves ahead in 
reauthorizing the Magnuson/Stevens Act, we are pleased to work with 
Members and staff to share our experiences and to promote the 
development of fish harvesting co-operatives in other fisheries.
    That concludes my testimony, Madam Chairman. I am pleased to answer 
any questions that Members might have.

    Senator Snowe. Thank you all very much.
    It is obvious that you have diverse views on these issues 
concerning IFQ's and co-operatives. I would like to ask each of 
you to give your perspective on exactly what we should focus on 
when we consider changes to the management options that are 
currently available.
    I know, Mr. O'Leary, you are saying that Congress should 
provide an array of management options to enhance the 
flexibility of the councils. I would agree. What kind of 
guidance should be provided?
    We have heard diverse views here on co-ops, for example. 
Ms. Blackburn, you were saying you favor co-ops because it 
means you do not have to race for the fish. Ms. Stewart, you 
were mentioning you do not really like co-ops because it pits 
smaller boats against larger boats in a fight for fish. So how 
do we approach this? Do we give the options to the councils to 
make these kinds of decisions?
    We have seen the effectiveness of the co-operatives with 
respect to the pollock industry. Some would like similar 
treatment for the crab industry. Can they have a co-op, which 
works effectively without a buyback program?
    I would like to have you address that, Mr. Iani, if you 
think you can answer that question, and then I would like to 
have each of you address your various perspectives on what we 
should do to focus on these issues. It is a question of whether 
or not we lift the moratorium, take additional action on co-ops 
in other fisheries, or give that tool to the councils to make 
that decision.
    Mr. Iani. Thank you, Senator Snowe. To answer your initial 
question, in our particular Alaska crab fishery I do not think 
co-ops will work without some sort of decapitalization of the 
fishery. There are simply too many boats and processing 
entities around to allow for, given the small stocks that are 
available to us, to make a co-operative work, so that is why I 
think we need some help from Congress to get that initial cut 
made, and the councils certainly do not have the tools to do 
that in terms of appropriations or loan programs.
    But to answer your second question, I join Senator Stevens 
in feeling very cautious about future ITQ's, because the ITQ 
system is a permanent one, and once the toothpaste is out of 
the tube it is very difficult to get it back. However, allowing 
the councils to put together, I guess experiments are the words 
I would use, and these co-operatives, as Mr. Hyde has described 
to you, is an experiment, and so far the results have been 
good. But they are not permanent. The councils have a lot of 
say as to how these co-operatives are operating.
    In the shoreside sector, where we participate, the councils 
literally are going to be setting up a regulatory framework to 
make sure that, for example, in the pollock fishery that our 
boats participate in do not step on the toes of the cod fishery 
or the flatfish fishery, or the crab fishery, and literally, on 
a meeting-by-meeting basis, they are getting new and different 
information so that they can make changes.
    If an ITQ program had been put in place in pollack, the 
chances of making changes would be very difficult because of 
the amount of money that had changed hands, and the permanent 
nature of these rights, so my guess is that the Congress ought 
to be conservative and, as they allow the councils to 
rationalize fisheries, they need to be careful about the tools 
that they allow them to have, but I think the co-operative 
system, or like it, is an experiment that the councils can work 
with and, at least in the North Pacific's case, they are 
becoming rapidly familiar with how they work.
    Senator Snowe. Ms. Stewart.
    Ms. Stewart. Yes, Madam Chairman. I chaired the West Coast 
IFQ Advisory Panel and then chaired our joint meetings with the 
East Coast panel so got a lot of information from a lot of 
people around the country about IFQ's, and I think--it occurs 
to me that in some situations IFQ's may be the perfect 
situation, the right solution, and there is no reason why those 
folks should not be able to implement the solution that works 
for them.
    I think our concerns about IFQ's started several years ago, 
when under a previous administration National Marine Fisheries 
Service was actively campaigning to implement IFQ's as some 
kind of overall solution to everybody's problems, and hence by 
border collie analogy.
    Now, the Humane Society of America, not just the part that 
runs the shelters, has a little test for you to take before you 
get a dog, you know. Is this the right dog for you? Do you have 
small children, do you live in an apartment, do you have cattle 
for this dog to work with. These are the kinds of questions I 
think Congress needs to ask NMFS to use when they decide what 
kind of a tool they are going to adopt.
    IFQ's are not a perfect solution for every fishery. In 
Alaska, our fishery has multiple components. We have an 
industrial off-shore fishing fleet, and what works for them is 
probably different than what is going to work for Native 
village fishermen in King Cove and Sand Point, and we have no 
interest in dictating what is good for that side of the table. 
We do not want them to dictate likewise what is good for us.
    I think what we are very concerned about is the steamroller 
effect that any of these new tools seems to have. You know, it 
comes in, and all of a sudden the thinking changes, and OK, 
well, I had better start behaving this way because that is what 
they are going to do next, and we have a lot of people who fish 
for regulations at this point, people who are not fishing in an 
economically rational way any more because they are 
anticipating what the next regulatory regime might be.
    The halibut example is a good one for our area. People used 
to fish halibut and salmon. It was a good combination. But as 
halibut stocks decreased and the number of halibut fishermen 
increased, one of the first steps the Halibut Commission made 
was to make seasons simultaneous with salmon and halibut, so 
you had to choose.
    Well, in our area, if you were smart, you chose salmon 
because the price was better, but you knew that it would not 
always be that way, and you felt like at least you had halibut 
to go back to when salmon went down.
    Well, then IFQ's for halibut came in, and your earlier 
history did not count, and your most recent history, because 
you had had this problem with salmon and you had started 
fishing halibut again, which was economically the way you 
should behave, locked you out of doing that again, and now 
people are starting to think, OK, I had better go fishing for 
cod, and I had better go fishing for this, and I had better go 
fishing for that, even if I am not going to make a dime, even 
if it is a stupid thing to do, because I know, as a small boat 
fisherman in the Aleutians East Borough, I have to preserve my 
ability to be involved in any fishery for which there is a 
market, and for which I have the vessel I can use to fish for 
it.
    This is our current dilemma. We are behaving in foolish 
ways in anticipation of whatever regulatory system comes down 
the pike, but it is important for us to be able to maintain a 
stake in any fishery for which a market develops.
    I mean, there was a time when I was a kid that people used 
Tanner crab for bait. It was not something that you ate. It was 
not something that you sold to somebody. We would not have 
guessed back in the sixties that anybody was going to be 
interested in Tanner crab. Hell, now it is a big deal, and 
people are going bankrupt because it is running on down.
    Well, the Aleuts have been out in this region long enough 
to know that that happens all the time. The Eastern Aleut word 
for cod is roughly translated into the fish that are not there. 
They have been through this before.
    I guess we are asking that whatever you do, you insist that 
NMFS take a look at multiple solutions that address 
respectfully and appropriately the multiple layers of 
participants in these fisheries. We do not believe there is a 
one-size-fits-all formula that should be applied to everybody, 
because that is where you see people get hurt.
    Senator Snowe. Thank you.
    Mr. O'Leary and Ms. Blackburn, does anyone care to comment?
    Mr. O'Leary. Yes. I would just say, respectful of Beth's 
comments, that we are facing some tremendous challenges in 
terms of fisheries and fisheries management, and we have 
overcapitalization, and we have got to address it, and we need 
all the tools that we can possibly muster in doing that.
    I will come out and say to you that I believe that once the 
next iteration of Magnuson is passed by Congress, that there 
should be a lifting of the ban, of the moratorium on IFQ's. 
That having been said, I am not--I am mindful of the comments 
of Chairman Lauber and Mr. Benton.
    I think as you go through this process we need very sort of 
specific integration in the next iteration of Magnuson that 
specifically identifies, when these programs are considered and 
move forward, what criteria you use to address these social and 
economic consequences.
    I do not want to waste your time going into why certain 
people were hurt in certain ways, but we have learned an awful 
lot with the implementation of the halibut and sable fish 
program in the North Pacific. There are many aspects of it that 
are very, very beneficial, and certainly it is beneficial to 
the people, as Mike Hyde would point out, in his current 
program, or beneficial to those that remain.
    The fact is that we do have an overcapitalization problem. 
Reducing capital means that certain numbers of people are going 
to leave a fishery. How we do that in a way that is mindful of 
the impacts on them I think is very, very appropriate, but we 
also have issues in terms of fisheries management that we are 
not going to adequately address unless we further move down 
this road, because we are not going to get to the issues of 
habitat impacts and being able to mitigate habitat impacts and 
being able to mitigate problems with bycatch unless we have a 
more rational fisheries program.
    Senator Snowe. And you were previously opposed to IFQ's, is 
that correct?
    Mr. O'Leary. I was, yes.
    Senator Snowe. OK. Ms. Blackburn.
    Ms. Blackburn. Yes. Because I do not fish, I just help do 
our regulatory things, I watched the IFQ program go together, 
and frankly I could see it was hurting lots of people--it would 
hurt a lot of people. I do not think a lot of them recognized 
it when it happened.
    Our community really was split, and there were a lot of 
problems socially. We made it through that. It is done. It is 
gone. But--and it may not be a method that many people would 
want to use, or at least in our area. The co-op idea is 
terrific for them, particularly if it concludes the plans.
    Senator Stevens. Turn the mike around, Chris.
    Ms. Blackburn. I am sorry. The co-op idea, in the way we 
see it working in the Bering Sea, is very appealing. It does 
not say you have to buy this. This is your history, you can 
fish it, and it is just for the year, and next year everybody 
could say we do not want a co-op. It does not even force people 
to co-op, and if there is enough of them who want to fish open 
acces, they can fish open access on their share of the quota.
    The problem today is that there is no ability to do 
anything except open access, unless you have an IFQ, or unless 
you are in the Bering Sea, and for everybody else it is the 
dumping ground, for everybody who missed the Bering Sea, and we 
have already had overcapitalization problems, to the point, as 
I have testified earlier, that our small boats are really in 
danger of survival because they are small and because the 
seasons are short, and because the weather is bad, and I know 
how their shares have gone down over these years, and yet there 
is nothing they can do.
    If you have salmon come in through our area, and this has 
happened, we look at the National Marine Fisheries Service, can 
we close the season right now? We have got salmon running 
through on their migration, wherever. No, you cannot do that 
because it is in the regulation. With a co-op kind of thing, 
you could do that. You could agree.
    And so for all the reasons and things that we have worked 
for, for taking care of our fish, for taking care of our 
fishermen, all apply to having some way that they have some 
control over when they fish, where they fish, and how they 
fish, and no longer be lumped in like some mad long distance 
runners, and the last one standing wins.
    Senator Snowe. Thank you. Mr. Hyde.
    Mr. Hyde. I think I agree with what everybody on this panel 
has said, and what everyone on the panel before me said.
    There is no doubt that co-ops and IFQ's are probably 
variants of a similar animal that provide an ability to do 
things that you just can never do in an open access fishery, 
but it is tough to get there, and it is interesting hearing 
this discussion today. I hear certain words being used, and the 
words describe to some extent the same thing, but when one word 
is used it is in a negative context, when another word is used, 
it is in a positive context.
    One example of that is the phrase, reduction of 
overcapitalization. We think that is a good thing. The 
flipside, though, is, we use the word consolidation. Well, you 
simply cannot reduce overcapitalization without some degree of 
consolidation, so what that highlights to me is that we have 
got some real difficult issues in how we get to achieve some of 
the things that we think are positive without achieving the 
things that are probably negative in a lot of people's minds.
    What is important from my perspective is to make sure that 
the councils have the tools to do that, because if we are going 
to do the things like bycatch reduction, increase utilization 
of the fish, things like that, any fishery that is a race for 
fish is not going to be as effective as a co-op or an ITQ type 
fishery. What we need to do is make sure that whatever the 
tools are that the council needs within the framework that 
Congress thinks is important to make sure that they do not step 
so far out of line that they get these negative things that 
everybody agrees are concerns, that is the type of legislation 
I think we have got to look for going forward in the next 
session.
    Senator Snowe. Thank you. Senator Stevens.
    Senator Stevens. You know, my mind was going back to the 
times -- I see Trevor McCabe back there, and some of you were 
in our Appropriations Committee conference room when the 
overall agreement on the co-operative was worked out. My memory 
is, it took about 150 hours in that room to work out that 
agreement.
    Now, if we get to the point where we are going to use co-
operatives through council action, how is that going to come 
about? The IFQ's, as questionable as they are in my opinion, 
they are a mathematical formula that comes about. You set a 
series of criteria, and then you divide what the limit is going 
to be, and it is a fact.
    I like the co-oprative, but you guys tell me, how are you 
going to bring about what all of that hard negotiation brought 
about as to who was going to remain in the fishery, and what 
were going to be the basic terms that you would have to agree 
to if you became a member of the co-op? How is that going to 
happen on these individual fisheries that--cod, or whatever it 
might be, in the future.
    Go ahead, Chris.
    Ms. Blackburn. Well, I think a great deal of the 
negotiations back in D.C. had to do with the different sectors 
of pollock and how much they were going to get, how much did 
the mother ships get, how much did the factory trawlers----
    Senator Stevens. Yes, that was very complicated.
    Ms. Blackburn. Right. When we look at the gulf, (1) we had 
in-shore, off-shore, and the off-shore is off-shore, it is not 
in our area, so we do not have but one group of fishermen, 
which our shore-based fishermen, fishing our pollock, fishing 
cod, fishing flatfish, and we have two groups of rockfish. We 
have always worked together well.
    Senator Stevens. Yes, but if I can interrupt you, that 
means you are going to imply that the council could decide what 
the limits of on-shore, off-shore are, and what the allocation 
is between--if there is any overlap in terms of the species, 
right?
    Ms. Blackburn. Right. The council could do this, right, but 
I do not think--it cannot do a co-op now. It cannot do--unless 
there is 100 percent of the fishermen agree, and that will 
never happen in Alaska.
    Senator Snowe. Or any place, for that matter.
    Ms. Blackburn. Yes. But we can do it through the council. 
Our group in Kodiak has sat down for the last year and actually 
come up with a proposal, dates, the criteria dates. They really 
consider everyone.
    We are just about ready to launch it for everybody else's 
criticism who is involved, and I think that we can do this, and 
this is what--which vessel got how much in the Bering Sea, it 
was the vessel's history, and it was within the co-ops. The co-
op did the who got how much within that co-op and within that 
co-op's history. I do not see it as a big--as a problem, 
probably easier in a co-op than IFQ's.
    Senator Stevens. Do you all agree with that? Go ahead.
    Ms. Stewart. Mr. Chairman, I think what took us 150 hours, 
and it seemed longer to me sometimes, in Appropriations was not 
specifically co-ops. It was the bigger issues that were being 
dealt with, limited entry for shoreside processors or not, how 
many of the American Seafood boats were going, what could 
happen to them when they left. There were huge, huge issues 
there.
    The nice thing, and Chris pointed this out about co-ops, is 
the council does not have to make the internal rules for the 
co-op. They have to make very few rules compared to the kinds 
of things they have to do with IFQ's. They do not have to spell 
out who gets what in the co-op, or how the co-op decides to 
pass things out, and in the co-op we are talking about, we are 
not even going to the individual level.
    We are just saying, here is the block of fish, these are 
the eligible fishermen, which to some extent has already been 
decided by the LLP program and some, perhaps, past 
participation criteria. The council could say, well, you would 
have had to have fished sometime in the most recent 4 years or 
3 years or something, but after that, it really is the co-op's 
job.
    And I think that is kind of nice for the council. They do 
not have to sit down with Mike Hyde and the eight boats he has. 
He has to do that, and they work out whatever it is they are 
going to do, and they provide that information to the council, 
and that is it, which I think appeals to the fishermen in our 
area because it provides the opportunity for local control for 
local problems. It does not try to fit a one-size-fits-all mass 
solution to everybody.
    Senator Stevens. Kevin.
    Mr. O'Leary: There are a couple of issues I would like to 
address. Obviously, the Fisherman's Act of 1934 would have to 
be superseded by what you do in Magnuson in order to allow for 
formation of subgroups. Right now, as I understand that--and I 
am not an attorney, but the 1934 law, 100 percent of the 
participants in the fishery have to agree to join a co-op in 
order for the co-op to be formed, and that is not realistic, 
and it is one of the things you addressed in your actions with 
regard to the American Fisheries Act, so that is one specific 
issue.
    Senator Stevens. We can deal with that, too, in this one 
fairly easy, giving the council some ability to determine, as 
an amendment to the 1934 act.
    Mr. O'Leary. Also, one of the other issues with regard to 
the American Fisheries Act that I think is starting to get more 
rounded discussion at the council level, and yet as I recall 
the council process and hearing the discussion about it I have 
heard a comment that it really was not provided for in the 
current--well, with the moratorium it is a moot issue, but in 
the previous iteration of Magnuson-Stevens, what do you do 
about processors, you know, the two-pie system discussion.
    I think we probably need some--you, certainly, in the 
American Fisheries Act, recognized shore-based industry. I 
think we need some direction from you in the next iteration of 
Magnuson-Stevens how we are going to address that issue. You 
know, you did it, you handled it specifically in a way, under 
the American Fisheries Act. That is something that I think in 
this list of things, the criteria for developing this kind of 
rationalization, probably ought to be addressed head-on by you 
to give us some direction as to how we should proceed.
    Other issues, the social and economic impacts to local 
communities, I had not heard Beth's particular proposal before 
in terms of co-op formation, and when I say rationalization, I 
am--when I say lifting the ban on ITQ's, I mean lifting the ban 
on ITQ-like programs. I also think the co-operatives may be a 
more appropriate or elegant solution in some cases, so I am 
speaking generically about that form of rationalization 
program.
    Specifically, with dealing with the wake that is created by 
these things, direction in terms of how to mitigate those 
impacts and how to look after long-term interest of fishermen. 
One of the other potential solutions I see in terms of entry 
level fishermen would be some modification to the capital 
construction fund program, specifically with an eye toward 
allowing the use of capital construction fund moneys for entry-
level people. I think that could have some help.
    That does not mean--you know, we have got a capital 
construction fund program where quite honestly people that are 
successful in industry have tax-deferred, or taken tax benefits 
on moneys and have built up these great war chests. It is not 
going to do the little guy any good to allow these guys with 
huge capital construction funds to then go in and buy up the 
rest of ITQ's, or buy up the rest of another boat's co-
operative rights. However, that program might be tweaked in 
such a way that smaller individual operators could build funds 
and use those funds for entry-level participation in some kind 
of rationalized fishery.
    I mean, if you are asking for specific ideas as to things, 
approaches we need to take, that would be another one that I 
would suggest, but those are the things that occur to me right 
now.
    Senator Stevens. Good. I hope others have some suggestions. 
That is a good idea about capital construction funds. John.
    Mr. Iani. Yes.
    Senator Stevens. Let me put on the other hat. How much 
money do you need?
    [Laughter.]
    Mr. Iani. Well, I am not sure, Senator Stevens. I think 
that in the American Fisheries Act you and the committee 
provided for a loan program that the industry could access up 
to $100 million, in a pure loan program to be paid by the 
industry.
    I think that total figure would be the number that would 
help the crab industry rationalize itself down to a point where 
it could form a co-operative or a subset of co-operatives, but 
the industry itself is in no position to fund that much of a 
loan program without some sort of appropriation from Congress 
to kick-start it, and that was I think what helped the American 
Fisheries Act get off the ground, was that the catcher-
processors that Mike described were literally bought out by the 
remainders of the industry, in part through an appropriation 
from the Congress, and in part from a long-term loan obligation 
which we will start to pay back this year.
    So I think that number is probably the right number you put 
in the act for the crab industry, but I do not think that the 
industry is in a position to fund it themselves.
    Senator Stevens. It is not quite the same industry, though, 
because that was a situation with enormous vessels and enormous 
processing plants. You are dealing with a great many more 
boats.
    Mr. Iani. Correct.
    Senator Stevens. And you are dealing with fewer processors.
    Mr. Iani. Correct.
    Senator Stevens. So that you--I do not know how you are 
going to have the standing to really qualify for that kind of a 
loan.
    Mr. Iani. Well, the number of vessels that need to be 
purchased, or bought out, are substantially higher, but the 
vessels themselves are not as capital-intensive as a large 
factory trawler.
    Senator Stevens. What I am saying is, the remaining fleet, 
if you have got that kind of reduction, will not have the 
capacity to pay off a loan to take 80 percent of the fleet out 
of existence.
    Mr. Iani. That is correct. I do not think you need to take 
80 percent out, but I think that the remaining industry, if we 
are able to rationalize ourselves, should be able to finance 
that kind of loan package if there is enough in the front end 
to get the boats to leave, and that is going to be the real 
trick, and the difficult task for you in Congress to do, I 
think.
    Senator Stevens. Well, my memory is, when we had the crash 
in crab before we found out that for some reason they had gone 
way out off the end of the shelf and stayed there for a while, 
predators, whatever it might be.
    Now, we do not know what has caused this Opilio crash.
    Mr. Iani. No, we do not.
    Senator Stevens. Or near crash. We are trying to prevent 
it, and I do not have any real--from what you said, I guess you 
do not have any real criticism either, of what Penny and Steve 
have done.
    Mr. Iani. I think they have to act conservatively.
    Senator Stevens.But beyond that, the problem here is 
whether there is an future for the Opilio, and I hate to 
mention it, Madam Chairman, but it sounds to me like what you 
are really suggesting in part is that we go back to the concept 
we used to have in agriculture and we would pay some people not 
to fish for a while.I
    Mr. Iani. Well, I did not say it, Senator, but yes, I think 
that is probably the case.
    Senator Stevens. Some people would have to be bought out, 
and some people would have to be paid not to fish for a while. 
That is a program that would be harder than hell to get through 
Congress right now.
    Mr. Iani. Right, I understand that, and the difference 
between what is happening now and what happened when the King 
crab fishery crashed was, the boats did not go away, Senator. 
They simply went into bankruptcy and the banks sort of sold 
them for 5 cents on the dollar. There used to be a joke around 
Seattle that, you know, with your new checking account you 
could get a crab boat instead of a toaster, and I think that is 
what happened, and what would happen here is, if a vessel gets 
bought out, that vessel leaves the fisheries for good and 
forever, and does not come back in.
    Senator Stevens. Well, that is the two things we put in the 
American Fisheries Act.
    Mr. Iani. Correct.
    Senator Stevens. But you have not suggested it.
    Mr. Iani. Correct.
    Senator Stevens. But as a practical matter, having 
bankruptcies does not solve the capitalization. It just reduces 
the cost of getting in.
    Mr. Iani. That is right.
    Senator Stevens. I have to explore that. I have got one 
last question. I have got to retire my side here. But Mike, 
what has happened to those boats that came out? Were they 
really retired? Did the equipment come off those boats and get 
used in other boats? I wonder sometimes, we ought to have a 
little oversight what happened to those boats.
    [Laughter.]
    Mr. Hyde. Senator, if you remember, early on in the 
discussions, the Government was going to buy those boats and 
take responsibility for them. We then said that was a great 
idea if the government pays the right price. The government 
changed its mind and said no, we want you to keep those boats, 
you have got to scrap the hold and the superstructure, but 
anything you want to do with the equipment you can do to help 
mitigate the loss that you are taking here.
    All those boats that need to be scrapped--there are eight 
of them--are in the process. They are under contract to be 
scrapped. Seven of them, I believe, are in Hunter's Point, I 
think it is called, a naval shipyard down in Oakland. The other 
one is on its way to Portland right now under contract with a 
different party.
    The only thing we removed from those vessels before we sold 
them to the scrappers was the core processing equipment, the 
Baader machinery, and that is back in the industry somewhere. 
About half of it we kept for ourselves. Several of the 
machines, I think three of the machines are in John Iani's 
plant.
    One of the concerns of the American Fisheries Act was that 
with this much more fish going on-shore, that we would lose a 
lot of fillet production, so the shore plants were very 
interested in getting our fillet machines to be able to put 
into their operations.
    Three of them are on other pollock co-operative member 
vessels.
    So I think that is--they are spread around into the 
industry somewhere.
    Senator Stevens. OK. That answers me. I think that we 
anticipated some of that would happen, but if we looked at 
these other smaller boats, when we start taking them out of the 
fleet, it is going to be pretty hard to prevent them not become 
a pressure on the fisheries somewhere else in the United 
States. That is what we have got to find a way to deal with, 
and I do not know how to deal with that yet, and we constantly 
face requests for special acts to allow boats to come back in 
the fisheries. We are going to have to find some way to really 
put down a block against any that are bought out ever being 
used for fishing anywhere.
    Mr. Iani. I think the industry would agree to that.
    Senator Stevens. I just do not know how we can do that. The 
Constitution, again, there may be some barrier there. I will 
have to work that out.
    Senator Snowe. Mr. Chairman.
    Senator Stevens. Yes. I appreciate that, and I am through.
    Senator Snowe. In the New England groundfish industry we 
had a small vessel buyback program. It included a prohibition 
that they could not use the equipment to go into another 
fishery.
    Senator Stevens. Yes. Thank you very much.
    Mr. Iani. Thank you.
    Senator Snowe. Thank you.
    We are going to take a 10-minute break and begin the next 
panel at 11:50. Thank you.
    [Recess.]
    Senator Snowe. All right. Our first witness will be Mr. 
Larry Cotter, the CEO of APICDA Joint Ventures. Our next 
witness will be Mr. Jeff Bush, Deputy Commissioner, Alaska 
Department of Commerce and Economic Development. Our final 
witness for this panel will be Mr. Freddie Christianson, 
chairman of the Gulf of Alaska Community Coalition.
    Mr. Cotter, we will begin with you.

   STATEMENT OF LARRY COTTER, CEO, ALEUTIAN PRIBILOF ISLAND 
               COMMUNITY DEVELOPMENT ASSOCIATION

    Mr. Cotter. Thank you, Madam Chair. I would like to thank 
you and the members of your committee for inviting me to 
testify today. I would also like to thank the six CDQ 
organizations for allowing me to represent them in this 
hearing. It is an honor and a privilege.
    During the past decade, I have been fortunate to witness 
and participate in the community development quota program from 
its inception as a concept in the 1980's to its present state. 
When the program was first articulated, I was a member of the 
North Pacific Fishery Management Council. I was present during 
the deliberations and subsequent adoption of the program. After 
concluding my tenure on the council, I assisted several Aleut 
villages in forming a CDQ organization and establishing their 
program, and ultimately I became the CEO of the Aleutian and 
Pribilof Island Community Development Corporation, a position I 
hold today.
    The premise of the CDQ program is that communities and 
their residents should have a reasonable opportunity to benefit 
from the use of common property resources adjacent to their 
geographic location. In the Bering Sea Aleutian Islands, this 
was not the case prior to the establishment of the program in 
1992.
    Of the 65 eligible CDQ communities immediately adjacent to 
the Bering Sea in 1991 only two derived any measurable social 
or economic benefit from the utilization of our fishery 
resources in the EEZ. In the remaining villages and 
communities, unemployment was chronic, and social problems, 
including substance abuse and suicide, were rampant.
    A decade ago, the villages and their residents lacked the 
capital to invest in the industry. It is different today. The 
CDQ program has enabled Western Alaska villages and their 
residents to directly participate in the commercial fishing 
industry. On an annual basis, the CDQ program provides 
approximately 1,000 jobs for local residents. Over $30 million 
in wages have been generated, and millions more have been spent 
providing training and scholarships for vocational and higher 
education. Both the number of annual jobs and accompanying 
payroll are increasing each year.
    The six CDQ organizations have in excess of $100 million in 
assets. They serve as owners or joint venture partners in 
shore-side seafood processing facilities, at-sea catcher-
processing vessels, large and small, shoreside catcher vessels, 
seafood marketing companies, and a host of other businesses 
directly related to the commercial fishing industry. In many 
instances, these investments are located at the village level, 
where they generate local employment and wages and stimulate 
the local economy.
    The CDQ program is highly regulated. Each CDQ corporation 
must develop a comprehensive community development plan that 
outlines its entire program for the next several years. 
Detailed annual budgets must be submitted, proposed investments 
must conform to investment policies and procedures, quarterly 
reports must be submitted, comprehensive annual audits of each 
CDQ corporation are required.
    The CDQ corporations are prohibited from making investments 
outside the fishing industry, or ones that do not provide a 
measurable return to the CDQ communities. Virtually all 
activities of the CDQ corporations must be approved in one form 
or another by the State of Alaska and the Secretary of Commerce 
acting through the NMFS Regional Director. Any deviation of 
significance from the CDP or the annual budget must be approved 
in advance.
    The regulations can be troublesome, and they have generated 
some friction and concern in the past. A frequent complaint to 
the CDQ corporations is that we are hampered by the bureaucracy 
from acting as normal private sector companies. For example, if 
a CDQ corporation identifies an excellent business opportunity, 
and that business opportunity was not foreseen in advance and 
contained in the CDP, we have to go through an amendment 
process before we can take advantage of the opportunity. The 
amendment process may take as long as 30 days or longer, by 
which time the opportunity may have disappeared.
    Another example is limitation on our budgets. If we are 
going to deviate from our budget by $100,000 or more we have to 
do a substantial amendment, again taking 30 days or longer. 
This gets to be a problem, particularly when a CDQ group has 
invested in another company, where we own 50 percent or more of 
that company, and at that point in time we have to go through 
that amendment process before we can spend the money, which may 
make it impossible for the company to move forward and carry 
out its business functions as it needs to in order to remain 
competitive.
    The regulations all relate to the oversight of the CDQ 
program, which reflects the North Pacific Fishery Management 
Council's original intent that the program be closely monitored 
to ensure compliance.
    An issue of significance to at least one of the six CDQ 
groups involves so-called CDQ dollars. When, if ever, does a 
dollar of CDQ royalty stop being a CDQ dollar?
    The red light--Madam Chair, if the----
    Senator Snowe. That is all right. You can finish your 
statement.
    Mr. Cotter. Thank you.
    Senator Snowe. Go right ahead.
    Mr. Cotter. Clearly, when a CDQ dollar is derived from a 
royalty, it falls within the scope of the program. If the CDQ 
dollar is used to invest in a business, and the business 
generates a profit, is that dollar a CDQ dollar? If it is, and 
the CDQ Corporation owns 50 percent or more of that company, 
then all actions by that company are subject to the dictate of 
the CDQ program, which begins to generate some difficulty for 
that company, potentially.
    The six CDQ corporations compete against each other for 
allocations of the CDQ species. The allocation process 
generates controversy between the six organizations because the 
amount of the allocation will largely determine the amount of 
revenue available to each CDQ group. Making allocations, the 
State oversight team applies comprehensive list of criteria. 
Some of the criteria is objective, some of it is subjective.
    The allocation process is difficult for all involved. Some 
CDQ groups feel that they have been unfairly treated in the 
allocation process, and/or that the allocation process is used 
as a threat if they fail to adhere to State desires. A few 
alternatives have been suggested, but none have garnered 
significant support.
    To the extent that there is controversy between the CDQ 
corporations themselves, or the CDQ corporations in the State, 
they are really limited to the scope of the regulations, the 
allocation process, and State oversight. There has been a 
suggestion that the Federal Government take over the oversight 
and allocation responsibilities of the program. This is opposed 
by five of the six CDQ organizations.
    On issues of significance to the Magnuson-Stevens Act, all 
six organizations have the following comments. The last 
reauthorization contained a provision allowing a fee of up to 3 
percent of the value of CDQ allocations to be levied against 
the CDQ corporations to recover the oversight cost of State and 
Federal Government. The six CDQ groups have recently reached 
conceptual agreement with the State of Alaska to support 
legislation assessing a fee on our corporations to pay for 
State oversight expenses. We have approached NMFS with the same 
concept, and hope the Magnuson-Stevens Act will be amended to 
reflect our proposal.
    American Fishery Act ownership side boards. We have some 
concerns regarding the proposal that any company that owns 10 
percent or more of an AFA processor be limited in terms of 
their scope of operation. Three of the CDQ groups currently are 
invested in AFA processors. The other three are contemplating 
that. If that rule moves forward and includes CDQ's, it would 
have a significant adverse impact on our other investments.
    Federal loan funds. The AFA set aside $25 million for loans 
in fiscal year 1999 to assist CDQ corporations to acquire AFA 
vessels and processors. We would like to see this loan program 
extended and expanded to include other fisheries. This would be 
of great benefit to us.
    A couple of other issues of concern, and I will conclude. 
We have had fairly continuous problems with the observer 
requirements for CDQ fisheries. The current rules require that 
there be two observers on all catcher-processor vessels, 
regardless of size. These observers need to be specially 
trained. The same rules now apply to all the FAA vessels.
    There simply are not enough observers trained today to meet 
our individual CDQ or collective CDQ and AFA needs. This past 
summer, many of our CDQ organizations experienced a lot of 
trouble finding observers. In fact, one company went 45 days 
without finding an observer. As a result, they could not fish 
during that 45 days.
    Madam Chair, I think that I will conclude my comments by 
saying that despite touching on some of the problems that we 
have with the program, the program overall has worked 
wonderfully. In 7 years, the CDQ groups have evolved and grown 
from nothing to fairly significant corporations. There has been 
a very significant return to the villages and the residents. 
They have ownership in the industry now, and they participate 
in the industry, and they have a future.
    I would like to thank you for allowing me to testify----
    Senator Snowe. Thank you.
    Mr. Cotter. --and I am sorry I went over.
    [The prepared statement of Mr. Cotter follows:]

   Prepared Statement of Larry Cotter, Ceo, Aleutian Pribilof Island 
                   Community Development Association
Madam Chair:
    I would like to thank you and the members of your committee for 
inviting me to testify today. I would also like to thank the six CDQ 
organizations for allowing me to represent them in this hearing. It is 
an honor and a privilege.
    During the past decade, I have been fortunate to witness and 
participate in the community development quota program from its 
inception as a concept in the 1980s to its present state. When the 
program was first articulated, I was a member of the North Pacific 
Fishery Management Council. I was present during the deliberations and 
subsequent adoption of the program. After concluding my tenure on the 
Council, I assisted several Aleut villages in forming their CDQ 
organization and establishing their program. Ultimately, I became the 
Chief Executive Officer of the Aleutian Pribilof Island Community 
Development Association (APICDA), a position I hold today.
    The premise of the CDQ program is that communities and their 
residents should have a reasonable opportunity to benefit from the use 
of common property resources adjacent to their geographic location. In 
the Bering Sea/Aleutian Islands, this was not the case prior to 
establishment of the program in 1992. Of the 65 eligible CDQ 
communities immediately adjacent to the Bering Sea and Aleutian Islands 
in 1991, only two derived any measurable social or economic benefit 
from the utilization of our fishery resources within our North Pacific 
EEZ. In the remaining villages and communities, unemployment was 
chronic and social problems--including substance abuse and suicide--
were rampant. The federal and state governments provided a variety of 
grants and other funding mechanisms to combat these problems, but they 
could not bridge the gap between the imposition of opportunity and the 
actual ownership of opportunity. That is a huge difference.
    A decade ago, the BSAI villages and their residents lacked the 
capital to invest in the industry. In many cases, the commercial 
fishing vessels were easily visible operating just offshore: 
harvesting, processing, and reaping the economic benefits of our world 
class groundfish, halibut and crab fisheries. It is different today.
    The CDQ program has enabled western Alaska villages and their 
residents to directly participate in the commercial fishing industry, 
either individually or through their CDQ organization. On an annual 
basis, the CDQ program provides approximately 1,000 jobs for local 
residents. Over $30 million in wages have been generated, and millions 
more have been spent providing training and scholarships for vocational 
and higher education. Both the number of annual jobs and accompanying 
payroll are increasing each year.
    The six CDQ organizations have in excess of $100 million in assets. 
They serve as owners or joint venture partners in shoreside seafood 
processing facilities, at-sea catcher processor vessels, large and 
small shoreside catcher vessels, seafood marketing companies, and a 
host of other businesses directly related to the commercial fishing 
industry. In many instances, these investments are located at the 
village level, where they generate local employment and wages, and 
stimulate the local economy. To the extent that investments are outside 
of the village, they generate revenue to the CDQ company for overall 
use within the program, serve to stabilize the CDQ corporation by 
diversifying investments, and are a key component in reaching long term 
self-sufficiency. They also provide significant employment and career 
path opportunities for local residents.
    The CDQ program is not race based. The program includes all 
residents of the eligible villages and communities, regardless of race. 
This is an important distinction.
    The CDQ program is highly regulated. Each CDQ corporation must 
develop a comprehensive community development plan (CDP) that outlines 
its entire program for the next several years. Detailed annual budgets 
must be submitted. Proposed investments must conform to each 
corporation's investment policies and procedures. Quarterly reports 
from each corporation, including a progress report on each project and 
milestone, must be submitted. Comprehensive, annual audits of each CDQ 
corporation are required. The CDQ corporations are prohibited from 
making investments outside the fishing industry, or ones that do not 
provide a measurable return to the CDQ communities. Virtually all 
activities of the CDQ corporations must be approved in one form or 
another by the state of Alaska and the Secretary of Commerce (acting 
through the NMFS Regional Director). Any deviation of significance from 
the CDP or the annual budget must be approved in advance.
    The regulations can be troublesome, and have generated friction and 
concern. A frequent complaint is that the CDQ corporations are hampered 
by the bureaucracy from acting as normal private sector companies. For 
example, if a CDQ corporation identifies an excellent investment 
opportunity at bargain basement prices, it must go through a 
substantial amendment process requiring approval from both the state 
and NMFS before it can take advantage of the opportunity--if the 
proposed investment was not foreseen in advance and included in the 
community development plan. The amendment process, including the time 
necessary to develop the accompanying paperwork, frequently requires 
thirty or more days. By that time, the opportunity may have disappeared 
because a CDQ corporation cannot commit to the opportunity without 
prior approval.
    Another example is the requirement that any deviation in a budget 
by more than $100,000 must be approved in advance by the state and 
NMFS. If, as is the current state definition, a CDQ ``project'' 
includes any investment in which a CDQ corporation owns a controlling 
interest (50% or more), a major corporation in which a CDQ corporation 
is an equal owner must foresee in advance all of their budget needs for 
the next year, or wait for approval from the state and NMFS before 
spending $100,000 in excess of their approved budget. This presents a 
major problem since companies cannot see with crystal clarity into the 
future and must, by competitive necessity, have the ability to operate 
their business.
    The state CDQ team and the six groups have been working this past 
year to address these and other similar issues. Most of the CDQ 
organizations believe these problems can and will be resolved without 
federal government intervention.
    The regulations all relate to oversight of the CDQ program, which 
reflects the North Pacific Fishery Management Council's original intent 
that the program be closely monitored to ensure compliance. 
Unfortunately, the laudable goal of oversight and compliance can 
conflict with the reality of the business world. A happy medium needs 
to be identified. Failure to positively address these issues will have 
a long term negative impact upon the CDQ corporations. Most potential 
partner companies will not accept CDQ corporations as equal investors 
because of the impact of the regulations on their ability to be 
flexible, thereby relegating CDQ corporations to minority owner status. 
In those cases where a CDQ group, or a combination of CDQ groups, own a 
controlling interest in a business, the business will operate at a 
competitive disadvantage until these issues are resolved.
    An issue of great significance to at least one of the six groups 
involves so called ``CDQ dollars.'' When, if ever, does a dollar of CDQ 
royalty stop being a CDQ dollar? For example, a royalty dollar 
generated from the lease of pollock CDQ is spent on a business 
investment within the scope of the program. Clearly, the royalty dollar 
was subject to the oversight provisions of the program. But what about 
the dollar in earnings generated by the business investment, the so 
called ``second generation'' dollars? If the dollar is returned to the 
CDQ group as profit sharing, is it a CDQ dollar again and subject to 
the program? If the dollar is spent by the business on a new investment 
instead of returned as profit sharing, is the dollar spent a CDQ 
dollar? If so, the new investment may be subject to the rules and 
regulations of the CDQ program. The current definition maintains that 
second generation dollars are CDQ dollars and subject to the scope of 
the program.
    This issue is particularly important when a CDQ corporation or 
corporations have a controlling interest in a business investment. If 
the dollar generated by the business is a CDQ dollar, the business 
would not be allowed to invest in any entity outside the scope of the 
CDQ program. The concern by the particular CDQ corporation is that 
their business investment(s) is not allowed to diversify and strengthen 
the corporation. In the meantime, the corporation remains subject to 
the scrutiny and potentially stifling regulations of the program.
    The contrary concern is that revenues generated by the CDQ program 
must be used to the maximum extent possible for the development of 
stable local economies in the CDQ communities: if second generation CDQ 
revenues fall outside the scope of the program, several CDQ groups fear 
that they may be spent on investments that provide little or no return 
at the village level. In such a case, these groups fear the program 
itself may be threatened.
    Four of the six CDQ corporations support the current definition 
regarding the use of second generation dollars. One corporation appears 
undecided. One corporation strongly supports a definition that limits 
the scope of the program to first generation dollars only.
    The six CDQ corporations compete against each other for allocations 
of the CDQ species. The allocation process generates controversy 
between the six organizations because the amount of the allocation will 
largely determine (absent returns from investments) the amount of 
revenue available to each CDQ corporation. Currently, approximately $30 
million a year in royalties are generated from the lease of CDQ 
allocations. The allocation process is managed by the state of Alaska. 
For the past several years, there has been at least one major 
allocation each year. Each allocation requires submission of a 
comprehensive community development program by each CDQ organization, 
and requires a substantial amount of work. We understand we are now 
moving to a longer allocation cycle.
    In making allocations, the state CDQ oversight team applies a 
comprehensive list of criteria when evaluating each CDQ corporation and 
their allocation request. The criteria--in no order of priority--
includes the proposed program, past performance, management expertise, 
contractual relationships with partners, population, compliance with 
CDQ rules and regulations, co-operation with other CDQ corporations, 
the extent to which proposed fishing plans conform with conservation 
objectives, and other factors. Some of the criteria is based on fact, 
while some is subjective.
    The allocation process is difficult for all involved. Obviously the 
allocation decisions themselves are subject to praise or ridicule, 
depending upon what a corporation receives. I do not think anyone is 
really happy with the process. Some CDQ groups believe they have been 
unfairly treated in the allocation process, and/or that the allocation 
process is used as a threat if they fail to adhere to state desires. A 
few alternatives have been suggested, but none have garnered 
significant support. It is interesting to note that the North Pacific 
Fishery Management Council consciously delegated the primary allocation 
responsibility to the state after contemplating the potential political 
nightmare associated with making allocations.
    To the extent that there is controversy between the CDQ 
corporations themselves, or the CDQ corporations and the state, they 
are limited to the scope of regulations, the allocation process, and 
state oversight. There has been a suggestion that the federal 
government take over the oversight and allocation responsibilities. 
This is opposed by five of the CDQ organizations. Despite intimations 
to the contrary, the majority of the CDQ corporations are generally 
pleased with the job being done by the state and believe the problems 
that do exist can and will be positively addressed in the near future.
    On issues of significance to the Magnuson-Stevens Act, all six 
organizations have the following comments:
    Fees: The last reauthorization of the Magnuson-Stevens Act 
contained a provision allowing a fee of up to three percent of the 
value of CDQ allocations to be levied against the CDQ corporation to 
recover the oversight costs of the state and federal governments. The 
six organizations have recently reached conceptual agreement with the 
state of Alaska to support state legislation assessing a tax on our 
corporations to pay for state oversight expenses. We have approached 
NMFS with the same concept, and hope the Magnuson-Stevens Act will be 
amended to reflect our proposals.
    American Fisheries Act Ownership Side Boards: The North Pacific 
Fishery Management Council is currently developing regulations that 
define which business entities will be subject to AFA side boards. One 
of the alternatives would include any company, and their affiliates, 
who own ten percent of more of an AFA processor. Three of the CDQ 
groups currently own ten percent of more of AFA processors, and the 
other three are contemplating such an investment. Inclusion of the CDQ 
corporations in this rule would have a significant adverse impact on 
the other investments made by the groups since those investments would 
then be limited in their harvesting and processing activities by AFA 
side boards. This appears contrary to the intent of the program (CDQ 
corporations are intended to invest and diversify their investments in 
the industry) and the intent of Congress in providing for $25 million 
in federal loans (American Fisheries Act) to CDQ corporations to invest 
in pollock vessels and processors.
    We hope that the North Pacific Fishery Management Council will 
exempt CDQ corporations from these provisions. If not, we would ask 
that the Magnuson-Stevens Act be amended to address our concerns.
    Federal Loan Funds: As mentioned above, the American Fisheries Act 
set aside $25 million for loans in FY 1999 to assist CDQ corporations 
to acquire ownership in AFA vessels and processors. We would like the 
loan program extended and expanded to include other fisheries. This 
would be of great benefit to us.
    On other issues of importance, we have encountered continuous 
difficulty with the National Marine Fisheries Service regarding 
observer requirements for CDQ fisheries. The NMFS requires that there 
be two observers on all catcher processor vessels, regardless of size. 
The observers must be specially trained. The same rules have now been 
extended to all AFA vessels participating in co-ops. There are simply 
not enough trained observers to meet our individual CDQ or collective 
CDQ and AFA needs. This past summer many of the CDQ corporations 
experienced significant problems locating observers so they could 
harvest their CDQ. One CDQ group went 45 days without locating the 
necessary observers. Without the required observers we are not allowed 
to fish. To the extent that the NMFS has indicated flexibility in this 
rule, the flexibility they offered limited the fishing time to the 
extent that the commercial fishing effort would not be economically 
viable.
    The NMFS has not been responsive to our problems in this area. It 
is a major problem.
    Another concern with observers is the variance between the observed 
catch as defined by the observer and the back calculated catch as 
defined by the products produced on board the vessel using NMFS product 
recovery rates. The variance in Pacific cod CDQ fishing, for example, 
has ranged as high as twenty percent or more, with the observer nearly 
always showing a higher number. We strongly support accurate accounting 
of catch, but we are not convinced that the current approach 
accomplishes the goal given the variance. For Pacific cod, the six CDQ 
groups jointly proposed to the NMFS that we implement an alternate 
system that would include using the observer to count fish that drop 
off before coming aboard and using product recovery rates (constantly 
monitored to ensure they are accurate) to determine the landed weight.
    Although the NMFS regulations allow for an alternate method of 
catch accounting, the resistance to the change, or possibly time 
restraints, have resulted in an unwillingness by NMFS to move forward 
to address this problem. In the meantime, we do not know if we are over 
harvesting or under harvesting. This has both biological and economic 
ramifications. The problem is not limited to cod. It needs to be 
resolved.
    A final issue that concerns us is the exactness required by the 
regulations in terms of harvesting our CDQ allocations. We are 
prohibited from exceeding any allocation for any species, a regulation 
that is not imposed on any other fishery. In some cases, our 
allocations are several thousand tons, in other cases only four tons. 
Fishing is not an exact science. There will be tows or sets where the 
catch is greater or less than desired or sought. This regulation 
greatly inhibits our ability to successfully harvest our allocations 
since we are extremely concerned with the ramifications of any excess 
harvest. All of the groups have excellent records of harvesting within 
the specified allocations, but the threat of violations is constantly 
hanging over our heads, particularly for species with extremely small 
allocations.
    The CDQ groups have proposed that the collective allocations from 
all groups combined serve as the cap, and that an individual group who 
exceeds their allocation for a particular species will not be penalized 
if they can secure additional fish from another CDQ organization before 
the end of the year to cover their overage. Again, due to time 
restraints this issue has not been resolved.
    Despite the problems identified in this testimony, the CDQ program 
has worked wonderfully. In seven years, the CDQ corporations have 
evolved and grown from nothing to fairly significant corporations. 
There has been a great return to the villages and their residents. They 
have ownership in the industry and they participate in the industry. 
They have a future in the industry, and they have goals and objectives 
as individuals and communities relative to the industry. None of this 
would have been possible without the CDQ program.
    Thank you again for providing me with the opportunity to testify 
today. I note that several of the CDQ organizations will be submitting 
their own written testimony, and hope you will give them the same 
attention that you have given me.

    Senator Snowe. No, that is fine, Mr. Cotter. Thank you.
    Mr. Cotter. Thank you.
    Senator Snowe. Mr. Bush.

  STATEMENT OF JEFF BUSH, DEPUTY COMMISSIONER, DEPARTMENT OF 
            COMMUNITY & ECONOMIC DEVELOPMENT, ALASKA

    Mr. Bush. Thank you, Madam Chair, and Senator Stevens. 
Thank you for the opportunity to testify here today. I am 
currently the Deputy Commissioner of the Department of 
Community & Economic Development, which is the lead State 
agency with respect to the CDQ program. We jointly manage the 
program with the Department of Fish & Game, but the staff is 
located, based upon a recent reorganization of the State 
government, within my department.
    Sixty five communities currently in Western Alaska 
participate in the program, which began in 1992. Those 65 
communities have approximately 27,000 residents. They 
participate through six CDQ groups, and these groups vary in 
size from one to 20 communities, and from approximately 550 
people up to about 8,750 people.
    The northern boundary of the program stretches as far as 
the Bering Straits, and it stretches south toward the Aleutian 
communities of Atka and Nikolski.
    The State's role in the oversight of a CDQ program is to 
ensure that the program is held accountable to its original 
mission of promoting fisheries-related economic development and 
providing ongoing opportunities for Western Alaska residents. 
This is done by working with the CDQ groups in the development 
of their plans and programs, monitoring their performance to 
ensure that they comply with the program, and to reward 
successful performance through the allocation process. We also 
as a State frequently represent the CDQ program and advocate on 
its behalf in both State and Federal arenas.
    The CDQ program is still relatively new, but by most 
measures, as stated by Mr. Cotter, it has been quite 
successful. It provides approximately 1,000 jobs annually for 
Western Alaska residents. It pays total wages, or has paid 
total wages of approximately $30 million, it has annual royalty 
returns to the various CDQ groups of approximately $30 million, 
and the six groups now have assets totaling approximately $100 
million.
    The goal of the program, as I stated, is to provide 
fisheries-related economic opportunities for Western Alaska 
residents. As the program has grown, we have seen increasing 
numbers of jobs provided. We have seen increasing numbers of 
opportunities, economic opportunities to the region as a result 
of the program. We are seeing more and more educational funding 
programs, and more and more training opportunities as a result 
of the program.
    We also are seeing, particularly in recent years, more and 
more interest in investment by the groups directly into the 
fisheries themselves, into the capital investment of the 
fisheries. Right now, according to our estimates, the CDQ 
groups own approximately 2 percent of the capital, the 
processing capital in the Bering Sea fisheries.
    I would like to next comment briefly on a few provisions of 
the Magnuson-Stevens Act. Under the Magnuson-Stevens Act 
reauthorization in 1996, it was provided that the CDQ program 
would -- that the Secretary of Commerce would institute a fee 
program up to a maximum of 3 percent of the ex-vessel value of 
the fish harvested by the groups, and this fee program would 
help support the program.
    To date, that particular fee program has not been 
instituted. Because of State funding issues, the State and the 
groups have worked together, and I am pleased to say have 
reached an agreement recently to attempt to implement a State 
CDQ fee system. We are introducing legislation in the current 
legislature to have this fee system instituted at the State 
level to cover the State management for the program, and that 
will hopefully remove the program from the vagaries of the 
State budgeting system, which have been a constant problem.
    The other thing that I would like to comment on regarding 
the act is that the act required the National Academy of 
Sciences to do a report on the CDQ program, which was released 
in 1998, and I would like to talk briefly about a few of the 
comments made in that report.
    The report found that the program is generally effective in 
accomplishing the goals of providing the communities with 
ongoing economic fishing activities and opportunities. They 
create employment, they attract capital, develop 
infrastructure, and generally promote social and economic 
conditions in the region.
    There were a few criticisms or recommendations out of the 
report. The report identified a problem relating to a lack of 
open and consistent communication between the groups and the 
communities. The State is very sensitive to this particular 
issue, and has responded through a regulations redraft just 
this past year that now requires the groups to actively work 
with their communities and to report back to us, and they are 
accountable to the State on that.
    I will be very brief, Madam Chair. Another issue related to 
the State's communication directly with the groups in the 
communities, and the State has also adopted a change in its 
internal structure to consolidate all of the CDQ staff members 
into one office, and now we are trying to implement more 
outreach from that office, because with more efficiencies we 
now have more time for staff to do that.
    One comment of the National Academy of Science report that 
has generated some interest and I know is of concern to the 
groups, and Mr. Cotter commented upon it, is relating to the 
flexibility of investments to be allowed by the CDQ groups, and 
to permit more flexibility in allowing them to make 
nonfisheries-related investments.
    The State is working very closely with the groups to try to 
work in that direction. We are very sensitive to that concern. 
We are also sensitive to the concern that oftentimes a 
particular group's interest in making a profit may not 
necessarily be consistent with the program's purpose of 
benefiting the region's residents, and so it is a tough balance 
for the State in looking at the investment flexibility issue.
    With that, Madam Chair, I would like to just say thank you 
again for coming to Alaska and for giving me the opportunity to 
testify.
    Senator Snowe. Thank you very much, Mr. Bush.
    Mr. Christiansen.

  STATEMENT OF FREDDIE CHRISTIANSEN, CHAIRMAN, GULF OF ALASKA 
                 COASTAL COMMUNITIES COALITION

    Mr. Christiansen. Thank you. I would like to thank both of 
you for allowing, Senator Stevens and Senator Snowe, for us to 
participate in this testimony.
    Senator Stevens. Would you pull that mike up close to you, 
please?
    Mr. Christiansen. My name is Freddie Christiansen. I am the 
chairman of the Gulf of Alaska Coastal Community Coalition.
    The Gulf of Alaska Coastal Community Coalition is an 
alliance of more than 30 communities stretching from Metlakatla 
in Southeast Alaska, around Prince William Sound, Cook Inlet 
and Kodiak and out to False Pass and the Eastern side of 
Aleutian Islands.
    Our purpose is to create fair and sustainable marine 
resource harvesting opportunities for smaller communities in 
the Gulf of Alaska. Our core values include the necessity of 
sustainable marine resource management. These are the same 
values that have been championed by you, Senator Stevens, and 
others, in the passage of the Sustainable Fisheries Act.
    In order to explain why many people in the Gulf of Alaska 
formed this coalition, I would like to tell you a little bit 
about my personal experience. I have lived in Old Harbor all my 
life, have been a commercial fisherman since I was 9 years old. 
From the implementation of State limited entry programs for 
salmon in 1973, I had observed a continual decline in my 
community's opportunities to participate in fisheries. Our crab 
and shrimp fisheries were lost because of resource problems, 
and individual fishing quota systems restricted access to 
halibut and black cod.
    As fishing jobs disappeared, Old Harbor experienced social 
problems, alcohol and substance abuse, population declines, and 
a sense of being cutoff from the roots as a fishing community.
    Section 301(a)(8) of the Magnuson-Stevens Fishery 
Conservation Management Act states that conservation and 
management measures shall take into account the importance of 
fishery resources to fishing communities in order to a) 
provide, to sustain participation of such communities, and b) 
to the extent practical, minimize the adverse economic impacts 
of such communities.
    Based on a letter of January 6, 2000, Subcommittee Chair 
Snowe, committee chairman McCain expressed their interest in 
views on community development quotas and other management 
alternatives. The CDQ program which has been employed in the 
Bering Sea Aleutian Islands may not be easily transferable to 
the Gulf of Alaska. However, some form of community-based 
access to fisheries is imperative if the small coastal 
communities are to remain viable.
    Last August, the coalition submitted a proposal to the 
North Pacific Fishery Management Council to modify the IFQ 
program to permit communities to purchase retention and fishing 
of halibut and sable fish IFQ's. The concept developed from the 
recommendations of the Ocean Studies Board of the National 
Academy of Sciences and the National Research Council in their 
1999 report to Congress called Sharing the Fish: Toward a 
National Policy on Individual Fishing Quotas.
    The NRC congressionally mandated report, consistent with 
the Magnuson-Stevens language, indicated that it had been an 
oversight not to allocate IFQ's to communities when the program 
was started, and recommended that regional councils, when 
designing IFQ programs, should be allowed to allocate quota 
shares to communities. Most importantly, the report stated that 
for existing IFQ programs councils should be permitted to 
authorize purchase-holding management and sale of IFQ's by 
communities.
    Some have suggested that the anticipated increased funding 
for the Federal IFQ loan program through the 3 percent program 
fee assessment could help meet the needs in our communities. 
While this approach may be beneficial to some individuals in 
our communities, it does not address the larger community need 
to have access and economic benefit from marine resources.
    Individual owners can easily come and go from a community, 
or simply sell their shares. In fact, the National Marine 
Fisheries Service reports that in the first 4 years of the IFQ 
program, individuals living in rural Alaska have mostly sold 
their IFQ shares.
    The Gulf of Alaska Coastal Community Coalition is very 
concerned about the continuing high levels of bycatch discards 
in several Gulf of Alaska fisheries, and the habitat 
alterations occurring from hard-on-bottom trawling. This is 
especially true with the recent substantial decreases in the 
halibut biomass estimates from the International Pacific 
Halibut Commission for the Gulf of Alaska and projected long-
term negative trends, yet relatively long-term constant levels 
of halibut wastes or bycatch continue to be authorized by the 
North Pacific Fishery Management Council.
    The GOACCC strongly urges the North Pacific Fishery 
Management Council to aggressively implement the existing 
provisions under Sustainable Fisheries Act to regulate 
fisheries by requiring fishing methods that substantially 
reduce bycatch and habitat alteration.
    In addition, the coalition remains deeply concerned about 
the gulf of Alaska crab stocks. As you know, there has not been 
a Red King crab season in the Gulf of Alaska since 1982, and no 
Tanner crab season since 1994. Despite elimination of fishing 
and even a reduction in allowable subsistence harvest, Gulf of 
Alaska crab stocks remain severely depressed.
    Finally, we want to raise with the Subcommittee some 
perhaps unintended but nevertheless detrimental impacts of the 
National Marine Fisheries Services newly instituted license 
limitation program, LLP, for cod, pollock, and flatfish 
fisheries in the Gulf of Alaska.
    The program assured fishing permits for a significant 
number of larger vessels, particularly in the Western Gulf, 
that had marginal fishing histories while at the same time 
limiting new participation in these fisheries by coastal 
community residents. Moreover, the program limits the vessel 
size of participation, thus permanently vests the larger 
vessels with a competitive edge, while prohibiting the natural 
evolution of improving fishing equipment for small boat 
fishermen. The LLP program is yet another barrier between 
residents, rural communities, and the marine resources in 
proximity to where they live.
    In addition, the North Pacific Fishery Management Council 
recently awarded a species allocation of Pacific cod fish in 
the Bering Sea to a single gear type and is considering a 
parallel proposal for trawl fishermen in the Gulf. If the 
proposal is approved, and a single gear type given a percentage 
of Gulf of Alaska Pacific cod fish quota, it will generate a 
frenzied scramble for all gear types to obtain specific 
allocations for all remaining fisheries. This accomplishes much 
of the same result as IFQ's program, despite the current 
constraints against new IFQ programs in Magnuson-Stevens, and 
despite the protective language for communities in the 
Magnuson-Stevens.
    The LLP and species allocation do not provide for sustained 
participation of our communities, and do not minimize adverse 
economic impacts on these communities.
    Thank you for the opportunity to testify about some of our 
concerns for the sustainability of the fisheries-dependent 
rural communities in the Gulf of Alaska. In summary, we believe 
that community ownership of IFQ's is consistent with the intent 
of the Magnuson-Stevens Act, and an excellent idea. We are 
concerned about bycatch fishery waste. Substantial regulatory 
changes need to be implemented to protect and rebuild crab 
stocks. And finally, the recently implemented LLP program 
possible quota allocations creates further access barriers for 
the Gulf of Alaska coastal communities.
    We are committed to working with your Subcommittee to find 
sensible and feasible remedies to challenges we face, some of 
which we have outlined in our testimony. The members of the 
Gulf of Alaska Coastal Community Coalition and the men, women, 
and children, both Native and non-Native, whose lives and 
future way of life are linked to your work here today are 
grateful to you for your commitment of time and energy to 
address these matters.
    Thank you.
    [The prepared statement of Mr. Christiansen follows:]

 Prepared Statement of Freddie Christiansen, Chairman, Gulf of Alaska 
                     Coastal Communities Coalition
    Chairwomen Snowe, Senator Stevens and members of the Subcommittee. 
Thank you for holding your hearing in Alaska and providing a forum for 
our views on the 1996 amendments to the Magnuson-Stevens Fishery 
Conservation and Management Act.
    My name is Freddie Christiansen and I am the Chairman of the Gulf 
of Alaska Coastal Communities Coalition (GOACCC). The GOACCC is an 
alliance of more than thirty-five (35) communities stretching from 
Metlakatla in Southeast Alaska around Prince William Sound, Cook Inlet 
and Kodiak out to False Pass in the Aleutian Islands. Our purpose is to 
create fair and sustainable marine resource harvesting opportunities 
for smaller communities in the Gulf of Alaska. Our core values include 
the necessity of sustainable marine resource management. These are the 
same values that have been championed by you, Senator Stevens and 
others, in the passage of the Sustainable Fisheries Act.
    In order to explain why many people in the Gulf of Alaska formed 
this coalition, I'd like to tell you a little about my personal 
experience. I have lived in Old Harbor all of my life and have been a 
commercial fisherman since I was (8) years old. From the implementation 
of the State's limited entry program for salmon in 1973, I have 
observed a continual decline in my community's opportunities to 
participate in fisheries. Our crab and shrimp fisheries were lost 
because of resource problems and the Individual Fishing Quota system 
restricted access to halibut and blackcod. As fishing jobs disappeared, 
Old Harbor experienced increased social problems, substance abuse, 
population declines and a sense of being cut off from our roots as a 
fishing community. Declining population impacts our schools and the 
opportunities for my children--fewer and fewer high school students 
remain in our village for high school or return to the village after 
attending high school elsewhere. As I traveled and talked with 
residents from other communities I discovered that their experiences 
paralleled mine. In fact, many communities have been almost entirely 
disconnected from fishing and resource related jobs. A number of 
residents of the Gulf formed the GOACCC to reconnect coastal 
communities with marine resources and to encourage better and more 
equitable management of these resources.
    Section 301(a)(8) of the Magnuson-Stevens Fishery Conservation 
Management Act states that ``Conservation and management measures shall 
... take into account the importance of fishery resources to fishing 
communities in order to (A) provide for the sustained participation of 
such communities, and (B) to the extent practicable, minimize adverse 
economic impacts on such communities.'' The Coalition's first 
initiative was founded on this directive.
    Based on the letter of January 6, 2000, Subcommittee Chair Snowe 
and Committee Chairman McCain expressed their interest in views on 
community development quotas and other management alternatives. 
Although CDQs as they have been employed in the Bering Sea are not 
easily or practically transferred to the Gulf of Alaska, some form of 
community-based access to fisheries is an imperative if the small 
coastal communities are to remain viable into the future.
    Last August, the Coalition submitted a proposal to the North 
Pacific Fisheries Management Council to modify the IFQ program to 
permit community purchase, retention and fishing of halibut and 
sablefish IFQs. The concept was developed from the recommendations of 
the Ocean Studies Board of the National Academy of Sciences and 
National Research Council in their 1999 report to Congress called, 
``Sharing the Fish...Toward a National Policy on Individual Fishing 
Quotas.'' The NRC Congressionally mandated report, consistent with the 
Magnuson- Stevens language, indicated that it had been an oversight not 
to allocate IFQs to communities when the program was started and 
recommended that regional councils, when designing IFQ programs, 
``should be allowed to allocate quota shares to communities ...'' Most 
importantly, the report stated that ``for existing IFQ programs, 
councils should be permitted to authorize the purchase, holding, 
management, and sale of IFQs by communities.''
    We envision that nonprofit entities, such as community development 
foundations, would be formed to purchase, hold and manage quota share. 
These shares would be held in perpetuity as a community endowment and 
provide fishing access to halibut and sablefish for successive 
generations of community residents. We anticipate that there would be 
limits on the total amount of shares purchased by communities and the 
amount of shares held by any single community. In addition there may be 
limitations on how many community quota shares any one individual will 
be able to fish.
    Some have suggested that the anticipated increased funding for the 
Federal IFQ loan program through the 3% program fee assessment could 
help meet the needs in our communities. While this approach may be 
beneficial to some individuals in our communities, it does not address 
the larger community need to permanently have access to, and economic 
benefit from, marine resources. Individual owners can easily come and 
go from a community or simply sell their shares. In fact, the National 
Marine Fisheries Service reports that, in the first 4 years of the IFQ 
program, individuals living in rural Alaska have mostly sold their IFQ 
shares and, if the trend continues, coastal communities will eventually 
lose access to economic benefit from these resources. When a village 
skipper sells his IFQ shares, two or three additional families in the 
community lose income opportunities as crewmen. Community ownership of 
the IFQs would guarantee that the quota shares remain available to the 
community and that fishing jobs would remain available to community 
residents.
    The Coalition's IFQ proposal is the first step along a path toward 
increased community benefit from marine resources. We seek your and 
your Subcommittee's assistance, Senator Stowe, and your assistance, 
Senator Stevens, in the reauthorization of the Magnuson/Stevens Act to 
provide additional regulatory support for smaller, fisheries dependent, 
Gulf of Alaska communities.
    Gulf of Alaska Coastal Communities are very concerned about the 
continuing high levels of bycatch and discards in several Gulf of 
Alaska fisheries and the habitat alterations occurring from ``hard-on-
bottom'' trawling. This is especially true with the recent, 
substantial, decreases in halibut biomass estimates from the 
International Pacific Halibut Commission for the Gulf of Alaska and 
projected long term negative trends. Yet, relatively constant levels of 
halibut waste through bycatch continue to be authorized by the NPFMC. 
The GOACCC strongly urges the North Pacific Fisheries Management 
Council to aggressively implement the existing provisions of the 
Sustainable Fisheries Act to regulate applicable fisheries by requiring 
fishing methods that substantially reduce bycatch and habitat 
alteration.
    In addition, the Coalition remains deeply concerned about Gulf of 
Alaska crab stocks. As you know, there hasn't been a red king crab 
season in the Gulf since 1982 and no tanner crab season since 1994. 
Despite elimination of fishing--and even a reduction in the allowable 
subsistence harvest--Gulf of Alaska crab stocks remain severely 
depressed. More aggressive implementation of the 1996 amendments to 
Magnuson-Stevens and an increase in ``essential'' habitat protection in 
federal waters for our crab along with vigorous efforts at minimization 
of impacts on the essential habitat are called for.
    Finally, we want to raise with the Subcommittee some perhaps 
unintended, but nevertheless detrimental, impacts of the National 
Marine Fisheries Service's newly instituted license limitation program 
(LLP) for the cod, pollock and flatfish fisheries in the Gulf of 
Alaska. The program assured a significant number of larger vessels, 
particularly in the Western Gulf, that had marginal fishing histories 
while, at the same time, limiting new participation in these fisheries 
by coastal community residents. Moreover, the program limits the vessel 
size of participation and thus permanently vests the larger vessels 
with a competitive edge while prohibiting the natural evolution of 
improving fishing equipment for small boat fishermen. The LLP program 
is yet another barrier between residents of rural communities and the 
marine resources in proximity to where they live that is in need of 
attention.
    In addition, the NPFMC recently awarded a species allocation of 
pacific codfish in the Bering Sea to a single gear type and is 
considering a parallel proposal for trawl fishermen in the Gulf. If the 
proposal is approved and a single gear type given a percentage of the 
Gulf of Alaska's pacific codfish quota, it will generate a frenzied 
scramble for all gear type to obtain specific allocations for all 
fisheries. This accomplishes much of the same result as an IFQ 
program--despite the current prohibitions against new IFQ programs in 
Magnuson- Stevens--and, despite the protective language for communities 
in Magnuson-Stevens. The LLP and the species allocations do not provide 
for the sustained participation of our communities and do not minimize 
adverse economic impacts on these communities.
    Thank you for this opportunity to testify about some of our 
concerns for the sustainability of fisheries dependent rural 
communities in the Gulf of Alaska and our desire to access the marine 
resources upon which they depend.
    Every month, every year that passes without the overriding problem 
of access to fisheries adequately addressed moves some Gulf of Alaska 
coastal communities closer to extinction. Without a viable rural 
Alaska, something absolutely unique in the world will be lost, aside 
from the economic stimulus a vibrant rural Alaska means to the urban 
areas of Anchorage, Juneau, and Fairbanks. Once lost, it is not likely 
to ever be restored. Therefore, we seek your help and intervention in 
developing a lifeline to the future.
    We are committed to working with your Subcommittee and anyone else 
to find sensible and feasible remedies to the challenges we face, some 
of which we have outlined in this testimony. The members of the GOACCC 
and the men, women and children (both Native and non-Native) whose 
lives and future way of life are linked to your work here today, will 
be deeply grateful to you for your commitment of time, energy and 
ingenuity to addressing the matters we have touched on in our 
testimony.

    Senator Snowe. Thank you very much. Thank you. How many 
communities does your coalition represent?
    Mr. Christiansen. 30.
    Senator Snowe. 30?
    Mr. Christiansen. 30.
    Senator Snowe. And so they want the ability to have CDQ's 
or IFQ's?
    Mr. Christiansen. Well, at this time it would be--I think 
that with the current regulations in place that that excludes 
the gulf, to the best of my knowledge. However, there would 
need to be something in place like that that would be able to 
help us accomplish that if at all possible, and the IFQ's is 
something, our proposal is something that we are trying to put 
forward before the North Pacific Fishery Management Council, 
and that will be the beginning of some of the solutions.
    Senator Snowe. I see. Mr. Bush, you referred to the 
National Research Council's report on CDQ's, and you addressed 
some of the issues that they had raised in their 1998 report. 
Did you address all four of them? Have you addressed some of 
the problems that they raised?
    Mr. Bush. Yes, we have addressed both of those. We are 
working still to this day on trying to address all of the 
concerns raised in the report.
    Senator Snowe. Did you agree with the concerns that they 
had raised?
    Mr. Bush. Yes, I think we did.
    Senator Snowe. You did?
    Mr. Bush. Generally speaking we agreed with them.
    Senator Snowe. Mr. Cotter, are you familiar with these 
concerns?
    Mr. Cotter. Yes, ma'am, I am, and generally I would concur 
with what Mr. Bush said.
    Senator Snowe. Have you made changes to improve the 
communication between the CDQ groups and their communities?
    Mr. Bush. Madam Chair, we have made some changes because we 
now use that as a criterion, in essence, in evaluating the 
performance of a group. The actual communication is something 
that obviously the groups have to implement at their level.
    Senator Snowe. So there is still more work to be done in 
that area.
    Mr. Bush. I would think there is always work to be done on 
the communication level.
    Senator Snowe. Which also goes to the issue of outreach.
    Mr. Bush. Correct.
    Senator Snowe. Now, has something been put in place for 
outreach?
    Mr. Cotter. Well, Madam Chair, the report was done a few 
years ago, and you know, things have really changed in the past 
few years. All of the groups have quarterly newsletters. Our 
group, for example, we have an annual meeting of all of the 
leaders from each of the villages.
    Each of the groups has some sort of contact person inside 
each village who is responsible for communicating with the 
residents to make them aware of employment and other type of 
opportunities. I think we have--as I said in my testimony, I 
think we have matured substantially since December 1992, and I 
think if they were to do their report again today they would 
not find the same concerns.
    Senator Snowe. How do you feel about allowing flexibility 
in CDQ investments in nonfisheries industries?
    Mr. Cotter. Madam Chair, I think that is very important. 
You know, what we are dealing with is a group of very small 
villages in very remote areas, and our charge in essence is to 
try and develop a stable local economy in those villages, and 
that is not an easy thing to accomplish, and by definition a 
stable economy is going to mean an economy that is diversified, 
and if the only thing that we pin our hat on is the fishing 
industry, that leaves us vulnerable.
    The other part of it is, as you start to develop a stable 
local economy--and I will give you an example in our region. 
The Village of Nikolski, we cannot put a harbor in there or a 
port because of the reef that is around the village, so in 
terms of helping the people go out and participate in 
commercial fishing, serious commercial fishing is just not an 
option, so we have looked at building a sport fishing lodge, 
and if we do a sport fishing lodge, then there is also ducks to 
hunt and, you know, anthropological sites to visit, and birds 
to watch.
    So by necessity, for the sport fishing lodge to be 
economically viable, it has to include these other type of 
activities, but then the next problem we face is, how do we get 
people to and from the sport fishing lodge, and you know, air 
travel is unreliable, and if people are going to spend a lot of 
money to travel to Nikolski, we need to try and provide them 
with some reasonable opportunity that they can get there.
    So then you begin to think, well, we need to buy a boat 
that we can move people from Analaska to Nikolski and back on a 
weekly basis, but if we buy a boat, to do that on a weekly 
basis, we cannot amortize the boat just by running back and 
forth. We also need to deploy the boat into some other field of 
economic endeavor in order to help pay for the boat, which 
leads us to the possibility of operating a ferry service.
    So in a way, rather quickly, if you do try and build a 
stable local economy in a community, in order to accomplish 
your goal you may be forced to diversify, otherwise your core 
investment is not going to be viable, and I would really like 
to see us given the opportunity in the region to be able to 
diversify beyond investments strictly in the fishing business.
    Senator Snowe. So you are obviously looking at that.
    Mr. Cotter. Yes, ma'am, we are, and frankly, in a community 
like Nikolski, it is the oldest continuously occupied community 
in the Western Hemisphere. It goes back 10,000 years of 
documented people living in the village, and now there is about 
32 people left, and they are getting old, and unless we can 
stimulate some local economy, it is going to die.
    Senator Snowe. One of the other issues the report raised 
was the fact that CDQ's are focused on economic and not 
environmental considerations. How would you address this?
    Mr. Cotter. Well, I would say that was probably an 
unfortunate comment. The CDQ groups partner up with the private 
sector to harvest our allocations, and increasingly the CDQ 
groups have invested in those operations, so we are directly 
participating.
    Whenever a CDQ group contemplates developing a relationship 
with another company, they pay very close attention to the 
catch history of that company--Are they clean? Do they have 
good bycatch rates?--and by and large I would say that the 
companies that the CDQ groups have invested in are the cream of 
the crop. By regulation, we are limited to catching no more 
than our specific allocation of each species, and that is 
unlike any of the other fishing entities in the North Pacific.
    What that means is, if we run out of halibut, then any 
fishery that we want to prosecute that requires halibut as 
bycatch, we cannot prosecute that fishery, because we do not 
have any more halibut to go with it, so we lose all that 
revenue.
    So the end result is that we have developed very complex 
and comprehensive systems to track our bycatch and manage our 
quotas so that they are as absolutely clean as they could 
possibly be, simply because otherwise we will not be able to 
catch our allocation, and that has become part of our creed, 
and not just for economic reasons, but I think for personal 
reasons. We like to brag about it.
    Senator Snowe. Mr. Christiansen, what kind of benefits 
would your gulf communities receive if you were a part of an 
IFQ halibut program?
    Mr. Christiansen. I guess I would have to respond with, 
benefits would be that----
    Senator Stevens. I am sorry, I cannot hear you. Can you 
pull that up?
    Mr. Christiansen. Well, first of all, you know, the number 
1 benefit would be that our communities would continue to 
exist. Without having access to the fisheries and being part of 
the harvest and the management of the resources our--you know, 
there is a continual decline in the coastal communities, and 
specifically in my region, and as well as the rest of the 
regions in the gulf.
    But I can speak from first-hand experience that Kodiak 
Island villages, there are a few of them that are on their way 
out, and to have communities so close to the resources and not 
having access to them is, you know, part of the reason why 
communities are going to become non-existent, and so that would 
be one of the benefits.
    The other benefit I believe would be that participation, a 
reason for the people to--a reason to wake up tomorrow and go 
to work, and also being able to give a future for our children 
and our kids that are continuing wanting to be involved in the 
fishing industry.
    The Kodiak Island villages are seafaring people, have 
always been. We have been totally dependant on the ocean for 
survival for thousands of years, and we need to continue to be 
able to be involved in that for thousands of years to come, and 
I think that is a major benefit, for the communities to be 
participating in the management of it as well. We have a lot of 
input that could help reduce bycatch per se, or you know, just 
things in that nature, and you know, we need--there is 
educational opportunities not only just in the fishing 
industry.
    So we have a lot of things relative to the ocean that can 
keep our people in our communities and keep our villages 
existing for generations to come, and as I stated, it is 
difficult for me to continue to reside in my village and watch 
the opportunities for the young people just being taken away 
from them, and that was one of the reasons why I have gotten 
involved. I have a heart for those kids, as my elders did for 
me when I was a child.
    Senator Snowe. Thank you very much. I appreciate it.
    Senator Stevens. I do not quite understand how the IFQ 
program could be modified. How would you propose to get part of 
the IFQ of, say, halibut? How would you propose that?
    Mr. Christiansen. Well, Senator Stevens, I will answer that 
question to the best of my ability. I guess the IFQ, the way 
that I would view the IFQ program, Senator, would be that it 
would be owned by the community.
    Senator Stevens. But currently the IFQ has already been 
allocated.
    Mr. Christiansen. Right.
    Senator Stevens. So we would have to take it away from 
somebody to give the community some of it.
    Mr. Christiansen. Senator Stevens, I would have to respond 
in a sense that I do not think that our proposal is asking for 
a hand-out at this time. I think that we----
    Senator Stevens. I am not accusing you of that. I am just--
it sounds like you are asking for a CDQ program to be imposed 
on the IFQ. Is that what you are really saying, you want a 
portion of that reserve for community use, for each community?
    Mr. Christiansen. Senator Stevens, at this time I would 
probably like to refer that to part of the technical team that 
I have behind here if at all----
    Senator Stevens. Well, I would appreciate it if you could 
let us know how you and your advisors believe this could work, 
because--Mr. Bush, have you looked into this, you or Larry?
    Mr. Bush. I will go ahead first, Senator Stevens. I think 
the answer would be that you are correct that what we are 
looking at potentially is sort of a--or what is being proposed 
would be imposing a CDQ program onto the IFQ program. The only 
way that I could see that could happen would be through some 
sort of a buyback system, where some of the IFQ that is 
currently out there would be purchased on behalf of the 
communities. My concern is that----
    Senator Stevens. But do you use those fees for that? Where 
are you going to get the money?
    Mr. Bush. I have not looked at that particular proposal at 
all. I am speculating here on how it would work. But I could 
see that that kind of a system could work. My concern would be 
that if you did impose such a system, I would hope that the 
IFQ's that are purchased by communities are nontransferable in 
the same way that the CDQ allocations are.
    Senator Stevens. Mr. Cotter.
    Mr. Cotter. Mr. Chairman, my understanding of the proposal 
is essentially that, that a system would be implemented through 
which designated communities that qualify in the Gulf of Alaska 
would be allowed to buy IFQ's on the open market, and pull them 
into the community, and they would then be able to use them as 
a CDQ for local residents to use and fish, so they would be 
buying in, and where they would get the money I do not know, 
but that is my understanding of the concept.
    Senator Stevens. Mr. Christiansen, I suggest that you get 
together and give us some context to what your proposal would 
be with regard to how this would be funded and really how you 
would manage it if a CDQ was imposed on the IFQ concept, OK.
    Mr. Christiansen. We would be more than willing to furnish 
that.
    Senator Stevens. Thank you.
    Senator Snowe. Thank you. We thank you very much.
    We will now proceed with our fourth and final panel of 
witnesses: Mr. Jack Phelps, executive director of the Alaska 
Forests Association; Mr. Paul Seaton, Director of the Alaska 
Marine Conservation Council; and Mr. Al Burch, executive 
director of the Alaska Draggers Association.
    Welcome, gentlemen. Mr. Phelps, we will begin with you.

STATEMENT OF JACK E. PHELPS, EXECUTIVE DIRECTOR, ALASKA FOREST 
                          ASSOCIATION

    Mr. Phelps. Thank you, Madam Chairwoman. For the record, my 
name is Jack Phelps, executive director of the Alaska Forest 
Association, which is the Alaska State-wide trade association 
for the forest products industry.
    I appear before you today both as a representative of my 
own association, which in turn represents nearly 300 member 
companies, but also as a representative of the Nation-wide 
Essential Fish Habitat Coalition.
    My written testimony has been submitted to you previously, 
and I ask that it be incorporated into the record of the 
hearing, and with the permission of the chair I would also 
submit my proposed oral comments for the record and would just 
try to summarize a couple of key salient points at this time.
    Senator Snowe. Yes. Without objection, it is so ordered. 
All of your testimony will be included in the record.
    Mr. Phelps. Thank you. The organizations participating in 
the Essential Fish Habitat Coalition share a common commitment 
to protecting habitat areas that are important to fish. Indeed, 
our activities routinely undergo extensive review under other 
laws, both State and Federal, to ensure such protection.
    For that reason, we are deeply troubled by and opposed to 
the attempt being made by the National Marine Fisheries Service 
to take a simple information-gathering tool enacted by Congress 
in 1996 and turn it into a massive, extensive, expensive, 
inefficient, and prescriptive regulatory program. My remarks 
today will reflect our view that it is necessary for Congress 
to put strict limits on the essential fish habitat program.
    The interim final rule, as written by NMFS, has led every 
commentator who has reviewed those regulations to conclude that 
NMFS has created an extremely broad and inclusive program. Both 
the industry and environmental community see a developing 
regulatory program fashioned after section 7 of the Endangered 
Species Act. This program has been used by the agency to 
influence if not exert its control over a vast array of Federal 
agency decisions involving not only fishing but land use and 
nonmarine resource utilization.
    I want to mention just a couple of points that are of 
particular concern. First of all, the essential fish habitat 
definition, which has been discussed earlier today. As we 
commented to NMFS at the outset of its rulemaking process, the 
agency's definition is too broad. All waters where a Magnuson-
Stevens Act managed species could be, is now, or ever has been, 
would be designated EFH.
    I brought a couple of charts, which I will give to your 
staff and submit for the record, that demonstrate the extensive 
nature of the essential fish habitat designations around the 
State of Alaska. As you can see, all the red area represents 
what is now deemed to be essential fish habitat. Now, this 
clearly completely eliminates the meaning of the word essential 
fish habitat. We might as well rename the program fish habitat.
    We do not take any comfort from the assurances you received 
earlier from Ms. Dalton that they are going to now somehow 
narrow this by creating a subcategory of it, habitat of 
particular concern. I agree with the implications of your 
comments that habitat of particular concern seems to be what we 
were originally trying to say about EFH.
    Our second concern has to do with the complexity of the 
program. In its final rule, NMFS uses five pages of small type, 
three columns to a page, to describe its consultation process. 
Furthermore, NMFS often states that the EFH program is a 
voluntary information-gathering tool, yet it is a promulgated 
regulation that requires action agencies to prepare EFH 
assessments and undertake other mandatory measures under 
mandatory time lines. These are prescriptive provisions, and we 
fully expect they will be used in court by opponents of various 
resource development projects to try to stop agency action.
    In the announcement of the reopening of the comment period 
NMFS announced that there had been 2,000 consultations that had 
taken place up till now. When we saw that claim, we were 
astounded. It validated our worst fears about the program. EFH 
designations have not been in place for even 1 year, and yet 
more than twice the number of consultations have taken place 
under EFH than took place during the same period under the 
Endangered Species Act.
    When we read that, we sought to obtain copies or 
documentation of these 2,000 consultations. We filed a FOIA 
request over 2 months ago, in fact, 2 months ago today, asking 
for all documents relating to EFH consultations. We still do 
not have the information, and NMFS has not been forthcoming 
with that information. Indeed, even though this is the 
information NMFS claims to be using in developing its final 
rule, it appears the agency has not yet compiled those 
documents, based on its response to our FOIA request, and they 
have been told that it will cost us $32,000 just to get a hold 
of these documents.
    We think that that is unreasonable, and we think it 
indicates that the full range of activities operated under 
these consultations has not thoroughly been considered by the 
rulemaking process, and we ask that Congress insist that NMFS 
make this information available before finalizing its final 
rule, and in a format that can be understood by the general 
public.
    I will very briefly mention the other two concerns we have, 
which are in my testimony that will be submitted. We believe 
that extending it to nonfishing interests who not only do not 
particularly have an interest in being involved in ocean 
fishery management, such as timber--you know, it is not our 
inclination to be involved in fisheries issues directly--but to 
include us in these provisions, who have no representation on 
the councils, is extremely problematic for us as well.
    And finally, with regard to overlap with other laws, the 
EFH program simply does not fit. As noted previously, our 
activities are already subject to a myriad of other laws that 
generate the desired information and provide a consultation or 
comment opportunity for NMFS. Laws such as NEPA, the ESA, 
Coastal Zone Management, and so forth, all provide NMFS an 
opportunity to comment. Thus, we believe that EFH consultation 
should be preempted by law from applying to any activity 
subject to a preexisting interagency consultation or comment 
process.
    In conclusion, it is necessary for Congress to intervene 
now on the EFH program. EFH consultation requirements should be 
repealed, or at least made nonapplicable to nonfishing 
interests. In short, wholesale changes are needed. NMFS has 
shown no inclination to make those changes. It is therefore 
necessary for Congress to provide some direction to the EFH 
program.
    Thank you very much for the opportunity to testify.
    [The prepared statement of Mr. Phelps follows:]

       Prepared Statement of Jack E. Phelps, Executive Director, 
                       Alaska Forest Association
Madame Chairwoman, members of the Committee:
    My name is Jack Phelps, and I am the Executive Director of the 
Alaska Forest Association. The Alaska Forest Association is the 
statewide trade association for the forest products industry in Alaska, 
and it is a member of the Essential Fish Habitat Coalition. The 
Essential Fish Habitat Coalition consists of diverse non-fishing 
resource and business interests, including the American Forest and 
Paper Association, the Bay-Delta Urban Coalition, the Edison Electric 
Institute, the National Association of Homebuilders and the Association 
of California Water Agencies. As a coalition, we are concerned about a 
new and expanding federal program that we fear will lead to 
unnecessary, burdensome and costly federal controls over land use, and 
an inappropriate intrusion into the rights of private property owners 
across the country. That federal program is the ``Essential Fish 
Habitat'' program, or EFH.
    In August of 1998, Ronald Baird, director of NOAA's National Sea 
Grant Program, made NMFS's plans for EFH clear when he said that EFH 
was, ``. . . the most significant piece of environmental legislation 
since the Clean Water Act of 1972. The full implications of essential 
fish habitat are not widely appreciated by the public. They will be 
shortly.'' It is the position of the EFH Coalition that there is no 
justification for such a sweeping new program. It is also our position 
that the EFH program, as described by Mr. Baird and implemented to date 
by NMFS, is fundamentally at odds with the intent of Congress as 
reflected in the 1996 amendments to the Magnuson-Stevens Fishery 
Conservation and Management Act (hereafter, Magnuson-Stevens Act).
    We are concerned that the EFH program, as described in the interim 
final regulations released by NMFS, already has grown into yet another 
regulatory impediment imposed on businesses by the federal government 
as a condition to receiving a federal permit. A large variety of 
permits could be affected. The EFH regulations could delay or stop a 
timber harvest project on the Chugach or a water diversion in 
California to irrigate a field.
    Getting a permit approved by a federal agency is not a pleasant 
experience. But, if a property owner has property that is in, near or 
might affect EFH, as it is very broadly defined by the NMFS, it will 
enter a regulatory morass that could be the equal of Section 7 of the 
Endangered Species Act.
    How did NMFS get this authority? They were not given it by Congress 
- they assumed it on their own.

Improper and Unfair Inclusion of Non-fishing Interests in the Fishery 
Management Council Process

    The term essential fish habitat or ``EFH'' comes from the 1996 
amendments to the Magnuson-Stevens Fishery Conservation and Management 
Act. This was a law designed primarily to address offshore commercial 
fisheries. The Magnuson-Stevens Act is administered by NMFS, an agency 
within the Department of Commerce. NMFS also regulates endangered 
species in the marine environment, and marine mammals like whales and 
dolphins. All of these share something in common: oceans and marine 
resources. NMFS enforces the Fisheries Act, but eight regional Fishery 
Management Councils guide it.
    As you know, the Councils are composed of appointed members from 
the fishing industry, state agencies dealing with fish, Indian tribes 
and, in some cases, representatives of environmental organizations. The 
Council memberships do not reflect representation of any land use or 
development interests. There is virtually no representation of 
interests not directly involved in fishing.
    The Council system is very procedural and very administrative. 
Councils meet frequently. They set up technical committees on issues 
like fishing gear, quotas, and habitat. These committees often meet for 
days and make recommendations regarding those issues to the Councils, 
which themselves meet for days. The Councils then make recommendations 
to NMFS, which conducts rulemaking on the proposals. Those rules, when 
final, become part of Fishery Management Plans. These Plans govern the 
behavior of participants in the fishery; the very interests whose 
representatives made the recommendations.
    Plans cover many marine fish species--including anadromous species 
like salmon--that are fished for commercial or sport purposes. A 
species does not have to be rare, endangered, threatened, or even 
subject to any particular risk. There are over 400 species of fish 
subject to these Plans, ranging from salmon, halibut and swordfish to 
spiny dogfish, shellfish and corals, etc.
    Before the 1996 Magnuson-Stevens Act amendments, this process was 
relatively self-contained. The interest groups involved in fishing 
activities interacted with each other, fought and compromised with each 
other, sued each other, and generally went on about their business. 
Now, thanks to the EFH program being developed by NMFS, a wide range of 
non-fishing activities, including real estate development, forest 
practices, mining, hydro-power, water supply, and agriculture are going 
to be affected by this process. All of these businesses and industries 
are being confronted with the prospect of getting pulled into a 
Fisheries Management Council system that does not represent, reflect, 
or generally consider their interests.
    The Magnuson-Stevens Act administrative regime should have no say 
over how the non-fishing sector conducts its business. That has never 
been the intent of this law. Indeed, it is notable that when the EFH 
concept was being developed during the 1996 Magnuson-Stevens Act re-
authorization process, the views of the non-fishing sector were never 
solicited. This is because, quite obviously, Congress did not intend 
that our sectors be pulled into the Magnuson-Stevens Act program. But 
NMFS has now expanded the EFH program so extensively that non-fishing 
interests are forced to become involved.
    It is necessary for Congress to fix this situation now. The 
Councils should be expressly denied any jurisdiction over non-fishing 
activities. All Council recommendations for, and NMFS actions on, EFH 
designations involving habitat subject to non-fishing activities should 
be rescinded. And it should be made clear that any recommendations or 
comments issued by the Councils concerning impacts of non-fishing 
activities on EFH will not be accorded special deference. Failure to 
take these steps will subject non-fishing entities to a fundamentally 
and irreparably unfair position in a administrative process that by 
design, intent, and practice concerns only the fishing industry.

    The NMFS Definition of EFH is Too Broad and All-Inclusive

    The interim final regulations, as written by NMFS, lead every 
commentator who has reviewed them to conclude that the agency has 
created an extremely broad and complicated program. Why have the 
regulations creating this program been written in this way?
    EFH was intended to be an information gathering process. It was 
designed to identify how the highest priority fish habitat was being 
harmed. It was, as its name implies, designed to cover habitat that is 
``essential,'' or especially important, to the subject fish species. 
Congress defined EFH as, ``those waters and substrate necessary to fish 
for spawning, breeding, feeding or growth to maturity.''
    I agree with Joseph M. Brancaleone, Chairman of the New England 
Fishery Management Council who alerted this Committee to the dangers of 
an overly broad EFH definition. ``If everything is designated as 
essential then nothing is essential, was a common theme throughout the 
EFH designation process, on a national and regional scale. Either the 
EFH definition should be modified, or the guidance on how to use 
different types of data should be more specific,'' he said.
    NMFS and the Councils, however, have taken this concept and greatly 
extended it by regulation. There are four issues that are especially 
noteworthy in the way that NMFS has defined, and the Councils have 
designated, EFH:

        First, NMFS interpreted EFH in its regulations to cover not 
        only the critically important habitat one would expect to be 
        considered ``essential,'' but instead concluded the designation 
        should cover all habitat necessary to a ``healthy ecosystem.''
        Second, NMFS concluded that the term should not be limited to 
        the marine environment--the traditional realm of the Magnuson-
        Stevens Act--but should be extended to cover inland waters as 
        well.
        Third, having taken the step of pushing inland, NMFS announced 
        the need for ``watershed'' planning. Not only would rivers, 
        estuaries, and wetlands be covered, but also all areas that 
        could affect those waters, including terrestrial habitat, would 
        be included.
        Finally, NMFS determined that it was not enough to cover waters 
        where fish currently are found, but also that EFH should cover 
        areas where fish historically were found.

    The Fishery Management Councils used this NMFS approach in 
developing EFH. In many cases, the results are indicative of a program 
that seems destined to grow beyond the claims of NMFS. Here are some 
examples:

        The Pacific Fishery Management Council, governing fish species 
        off the coasts of California, Oregon, Washington and Idaho, has 
        proposed extensive inland habitat as EFH for salmon.
        The North Pacific Fishery Management Council is proposing to 
        designate virtually every river that eventually touches the 
        ocean as EFH for salmon 
        in Alaska.
        The Mid-Atlantic Council, with the New England and South 
        Atlantic Councils, is proposing to designate the entire inland 
        coast from North Carolina to Florida for bluefish. This is just 
        the southern bluefish range.
        The New England, Mid-Atlantic and South Atlantic Councils have 
        actually listed all of the estuaries and most of the major bays 
        and river basins on the east coast, areas like the Connecticut 
        River and Chesapeake Bay, for bluefish.
        The Gulf Coast Council has effectively listed every bit of the 
        Gulf Coast, its wetlands, estuaries and rivers from the tip of 
        Florida to the border with Texas as habitat for brown shrimp.

    These designations are extraordinarily broad. Essential fish 
habitat has become all fish habitat. Remember that there are over 400 
fish species for which such designations must be made. The end result 
can only be that EFH will be all waters everywhere a Magnuson-Stevens 
Act managed species is now, or previously has been, found.
    When asked why the EFH definition is so broad that it now includes 
almost the entire coastline of the United States, and substantial 
upland riverine habitats, NMFS points to the lack of definition it 
received from Congress. The 1996 Amendments, NMFS asserts, established 
a broad and vague definition of the term. NMFS claims that with more 
funding from Congress would come better scientific information. Without 
that scientific information they ``over include'' habitat that may not 
necessarily be essential. This ``over inclusion'' of habitat expands 
the jurisdiction of the agency and obligates it to consult on an ever-
increasing number of federal actions that ``may adversely affect'' 
habitat. How much money is enough money for NMFS to exercise restraint? 
Who will judge when sufficient funds are made available? Apparently, in 
NMFS view, not the Congress. NMFS has created a program that can have 
an influence over even non-existent effects on terrestrial, riverine, 
estuarial and coastal habitats on a nationwide basis. Will any federal 
agency ever receive enough money from Congress or gather enough 
scientific information to convince it to elect to reduce its own power 
and influence over other Federal agencies?
    This is another aspect of the EFH program that should be placed on 
hold until a more reasonable approach to designation is developed. In 
addition, it is clear that Congress will need to be very specific in 
defining the term. The existing definition must be replaced with one 
that spells out in detail precisely the kind of habitat that should be 
subject to this information sharing process.

The NMFS Consultation Process Is Far Too Complex and Burdensome

    The 1996 amendment requires federal action agencies--those that 
decide whether to issue a permit or carry out a program--to ``consult'' 
with NMFS to determine what the impacts on EFH will be. NMFS, in turn, 
takes into account the views of the Councils. NMFS and the Councils 
submit recommendations to the action agencies. If the action agencies 
don't follow those recommendations, they must explain why, in writing. 
In short, a straightforward information process was envisioned. The 
term ``consultation,'' however, is a term of art. As will be described, 
NMFS has turned it into a complex, time-consuming, expensive process.
    As described in, and envisioned by, the 1996 Magnuson-Stevens Act 
amendments, this consultation process would be accomplished by a simple 
exchange of information. It could readily be undertaken through 
administrative agreements between NMFS and the principal action 
agencies. Instead, the process described in the EFH consultation 
regulations will be very similar to the cumbersome, detailed 
consultation procedure of the Endangered Species Act. NMFS and other 
supporters of the EFH program often proclaim that the 1996 amendments 
did not create a new consultation duty. Instead, they argue, this duty 
already existed and was simply never followed through on. They further 
argue that the intent is to develop an information sharing program, 
similar to what exists under the Fish and Wildlife Coordination Act.
    These statements could be accepted as the basis for a reasonable 
EFH program if NMFS was acting in a manner consistent with that intent. 
To the contrary, the program that has emerged from the NMFS rulemaking 
process bears little resemblance to the Fish and Wildlife Coordination 
Act or other procedures through which agencies share information. As 
noted above, it is modeled after the very burdensome and complex 
Endangered Species Act program.
    One need only make quick reference to the EFH regulations to 
understand this concern. The regulations consist of eight pages of 
Federal Register text. Of these, five pages are devoted to defining the 
consultation process. How can any program that is intended to be 
streamlined, efficient, and coordinated with existing consultation 
procedures require five pages of Federal Register text to describe?
    The severity of these problems becomes even more apparent when the 
content of the regulations is considered. NMFS has taken a simple 
statutory consultation process that could be satisfied through an 
exchange of letters and turned it into a cumbersome, expensive, time 
consuming process consisting of all of the following elements: 
Memoranda of Agreement between NMFS and every Fishery Management 
Council; Memorandum of Agreement between NMFS and every action agency; 
programmatic consultations; project-specific consultations; abbreviated 
consultations; expanded consultations; general concurrence for no 
further consultation; notification of further consultation; periodic 
review of general concurrence findings; mandatory preparation of 
written assessments; consulting agency recommendations; action agency 
responses; requests to elevate action agency decisions; reinitiation of 
consultation at Fishery Management Council requests; Memoranda of 
Agreement with agencies on dispute resolution; and supplemental 
consultation. Needless to say, any program which contains so many 
elements is extremely complex and is not likely to be efficient.
    In this testimony, we do not intend to delve into the intricacies 
of the EFH consultation regulations. Let it suffice to say, there is so 
much room for confusion, delay, inefficiency and needless expense that 
we are skeptical there is any way to work with the existing framework. 
What is needed is a far-reaching revision of the regulations to develop 
a more effective procedure. Our coalition of non-fishing interests has 
offered on numerous occasions to work with NMFS to achieve these 
results. We are pleased to report that NMFS has agreed to undertake 
such discussions. We are hopeful that they will be beneficial. However, 
even this prospect does not eliminate the need for additional guidance 
from Congress. Unfortunately, the EFH program is so far down the road 
at this point that we believe it is necessary for Congress to interject 
itself in the process and get the program back on track.

The EFH Program Needlessly Duplicates Other Information Gathering
Programs

    This process will be a new regulatory layer on top of those that 
already exist, such as NEPA's environmental impact review, Coastal Zone 
Management Act compliance, Endangered Species Act reviews, Federal 
Power Act licensing, Fish and Wildlife Coordination Act consultation, 
etc. Highlights include:

          The duty of the action agency to prepare a detailed 
        ``EFH Impact Assessment.'' When a private applicant is 
        involved, as when a federal Clean Water Act Section 404 
        wetlands permit is required, this duty will be probably be 
        passed to the private party who will be required to pay for 
        this analysis and ensure it is complete. In creating this 
        requirement, NMFS is seeking to transfer its EFH assessment 
        duties to other agencies and private parties.
          Time deadlines exist, but, as with the timelines 
        associated with the ESA, the agencies can easily get around 
        them. As a result, the process can greatly extend the time 
        needed to complete federal permitting.
          The recommendations of NMFS and the Councils will 
        become litigation fodder. Opponents of project development will 
        be able to sue based on these recommendations. This will 
        discourage action agencies from following any course other than 
        what is recommended by NMFS or the Councils, thus effectively 
        giving NMFS veto authority over the decisions of the action 
        agencies. Furthermore, we fear that NMFS and the Councils will 
        most likely recommend restrictions to protect habitat without 
        weighing the benefits against the economic consequences.
          NMFS often states that the EFH program is a voluntary 
        information gathering tool, yet it has promulgated a regulation 
        that requires action agencies to prepare EFH assessments and 
        undertake other mandatory measures and meet mandatory 
        deadlines. Congress did not vest NMFS with the power to impose 
        these duties on other agencies and, if the program is to be co-
        operative and voluntary as NMFS asserts, these requirements 
        must be deleted and replaced with co-operative mechanisms. For 
        example, NMFS should recast the program so NMFS will provide 
        helpful information about truly essential habitat for fish 
        species of concern, allowing other agencies to consider that 
        information in their own reviews of projects without formal 
        requirements for EFH assessments and consultations.
          Almost certainly, this procedure will result in 
        delays in getting permits. The cost of getting permits will 
        increase--due to delays, due to the need to undertake 
        consultation and prepare EFH assessments, due to the inevitable 
        slippage in deadlines that cover the federal agencies, and due 
        to the cost of complying with EFH restrictions. Permits are 
        likely to be subject to new restrictions. In some cases, 
        permits for activities are likely to be denied. And, it is 
        important to remember, these are not restrictions to protect 
        species in danger of extinction, they are restrictions to 
        protect the habitat of all managed fish species, no matter how 
        plentiful.

    The bottom line is that NMFS has not taken the steps necessary to 
coordinate its EFH review efficiently and effectively with the many 
environmental reviews non-fishing activities must already undertake. 
Although lip service is paid to this principle, we need to see evidence 
that it is being carried out. Accordingly, we believe Congress should 
step in and make clear that NMFS cannot impose mandatory duties and 
time frames on action agencies. It also should prescribe that EFH 
consultation will be satisfied by any other preexisting environmental 
review applicable to the agency action. EFH should be required to 
operate within, rather than reside on top of, such other procedures.

Non-fishing Interests and the General Public Need More Information 
about the EFH Program

    The EFH program is growing into an enormously expensive and, to a 
large extent, redundant program. The NMFS FY2000 budget request was for 
$13.85 million dollars for EFH consultations. This amount does not 
include the expense borne by other federal agencies to submit projects 
to NMFS, to respond to NMFS's recommendations, and to implement those 
recommendations. This amount also does not include the increased 
project costs resulting from either the delays inherent in the NMFS 
recommendation process or the cost of implementing the recommendations. 
This Committee has already received testimony about project delays and 
costs as a result of the EFH definition and there will be more to come 
as we learn about the 1999 consultations. When all these costs are 
taken together and combined with problems and costs associated with the 
expansive and overbroad definition of EFH detailed above, it become 
evident that the EFH program is entirely too expensive, cumbersome and 
burdensome.
    EFH could also be a new litigation tool for parties opposed to 
development in all coastal regions of the country. For reference, take 
a look at what has happened with the ESA and NEPA. Even if a party gets 
a permit it can live with, there is no guarantee a lawsuit will not be 
brought to protect EFH, especially if a NMFS/Council recommendation was 
not adopted.
    The announcement of the reopening of the comment period in 
development of the final rule for EFH, published by NMFS on November 8, 
1999, stated that: ``[s]ince the promulgation of the interim final 
rule, EFH provisions for 39 fishery management plans have been 
developed by the Councils and approved or partially approved by the 
Secretary. Additionally, NMFS and Federal Agencies have begun 
consulting on actions that may adversely affect EFH. Approximately 2000 
EFH consultations have been completed to date.''
    When we saw that claim, we were astounded. This claim provided 
graphic validation of our fears about the program. We had claimed that 
the overly broad ``ecosystem'' based definition of EFH would lead to a 
massive influx of EFH consultations. This may explain why 2000 
consultations have been required in the first 10 months of the new 
program.
    To get a sense of how disproportionate this program is compared to 
the issues subject to review, one need only compare this level of 
consultation with that under the ESA. In response to Congressional 
questioning in March of 1999, the National Oceanic and Atmospheric 
Administration responded in writing that: ``[a]pproximately 229 formal 
and 981 informal [ESA] consultations are completed each year''. The 
number of EFH consultations exceeds by a substantial number the formal 
and informal consultations completed annually under the ESA, and yet 
the EFH program is only in its earliest stages of implementation. NMFS 
has 55 full time employees dedicated to section 7 consultations under 
the ESA. What will it cost to staff a program that in less than a year 
has grown to nearly twice the size of section 7 consultations under 
ESA? Penelope Dalton, Assistant Administrator for the National Marine 
Fisheries Service, has stated on numerous occasions before this 
Committee that she only expects the number of EFH consultations to grow 
as NMFS's reach over other Federal agencies continues. Clearly, 
Congress did not intend to create a consultation program under the 
Magnuson-Stevens Act that so far exceeded the ESA in complexity and 
size.
    When we saw the claim that NMFS had completed 2000 consultations, 
we were astounded because NMFS had not made any of the information from 
those consultations public. How could they expect informed comment from 
the public when they had not released information about those 
consultations? NMFS claims to want to know about problems with the 
consultation process, but, they seem unwilling or unable to disclose 
information about the process. Most of the consultations are with 
federal agencies on federal projects and therefore the ability of the 
public to have first hand knowledge about the consultation process and 
its results are certainly limited.
    When we read the claim in the Federal Register that NMFS had 
completed 2000 consultations, we filed a FOIA request (dated November 
18, 1999) asking for all documents related to EFH consultations. We are 
still awaiting a substantive response.
    This Committee and the public must be given sufficient information 
about these consultations to evaluate the implementation of the EFH 
program to date. The following is the kind of information that NMFS 
should provide the people and the Congress to enable some level of 
meaningful review of the EFH consultations it has been conducting:

1. The number of consultations completed, by NMFS Region;
2. The average time taken to complete a consultation, and the range and 
distribution of time taken for each consultation around that average;
3. The average cost of each consultation, in dollars and man-hours or 
full time equivalents (FTEs), and the range and distribution of the 
costs of each consultation around that average;
4. The distribution and amount of that cost among NMFS, action 
agencies, third party applicants for federal authorizations, and 
others;
5. The number of consultations in each category described under the 
IFR: national general concurrences, regional general concurrences, 
abbreviated, expanded, extended, and supplemental consultations, and, 
separately, the number of programmatic versus project-specific 
consultations;
6. The number of documented ``no effect'' determinations by action 
agencies, the number of these with which NMFS concurred/did not concur, 
and the number of these for which an EFH consultation was nevertheless 
completed;
7. The number of consultations involving federal actions for which ESA 
consultation was also completed, and the number of these which involved 
ESA consultation with NMFS;
8. The number of consultations involving federal actions for which NEPA 
documentation was also completed, and the category of NEPA 
documentation completed (e.g., EA or EIS);
9. The number of consultations involving other environmental analysis 
documentation besides an EFH assessment, and the number of these for 
which the environmental documentation prepared for other purposes also 
served as the EFH assessment, without modification to meet EFH 
consultation requirements;
10. Other information about how EFH consultation was consolidated or 
integrated with procedures such as NEPA, ESA, Federal Power Act 
licensing procedures, and Coastal Zone Management Act regulations for 
individual or collective actions;
11. Categories of activities for which EFH consultations were 
completed, including the basic categories of fishing and non-fishing, 
more specific federal action categories such as Clean Water Act Section 
404 permits and FERC power facility licensing or relicensing, and more 
specific types of activities, such as timber sales, road projects, 
marina developments, oil and gas drilling, hardrock mineral extraction, 
housing subdivisions, agricultural water diversions, and so on;
12. The number of EFH consultations which were initiated but are not 
yet completed, and how long they have been pending; and
13. The categories and representative examples of recommendations made 
by NMFS in consultations, action agency disagreements with such 
recommendations, and how these differences were resolved.

We ask for this Committee to request that NMFS compile this kind of 
information into a format that promotes understanding of the EFH 
consultations that have occurred so far, and that facilitates 
constructive comment. We also ask this Committee to assist the American 
people by halting implementation of the EFH program until more guidance 
can be provided in the Act itself.

Conclusion

    The non-fishing sector does not oppose the EFH concept. Indeed, we 
address these concerns regularly. We are willing to engage with NMFS in 
a discussion on how this program should work and where we might help. 
We are pleased to report that we will be meeting with NMFS in the near 
future to discuss these concerns. We hope to learn more about their 
goals and plans, but we also will convey the need for fundamental 
changes in the program. Congress can greatly facilitate this process by 
letting NMFS know it is on the wrong track, and by developing more 
specific guidance to address the concerns discussed in this testimony. 
Moreover, we ask that Congress amend the Magnuson-Stevens Act to 
address the problems highlighted in this testimony if NMFS does not 
respond. Thank you.

Attachment: AFA's 12/23/99 letter to NMFS re: EFH Interim Final Rule

Alaska Forest Association, Inc.
EFH Coordinator
Office of Habitat Conservation
National Marine Fisheries Service
1315 East-West Highway
Silver Spring, Maryland 20910-3282

VIA FAX AND FIRST CLASS MAIL

        Re: Essential Fish Habitat Interim Final Rule

Dear EFH Coordinator:
    This letter constitutes the response of the Alaska Forest 
Association (AFA) to the National Marine Fisheries Service (NMFS) 
request for comments regarding the essential fish habitat (EFH) interim 
final rule (IFR) and program, published in the November 8. 1999 Federal 
Register, Volume 64, pages 60731-32. The AFA represents non-fishing 
interests in Alaska who are affected by the EFH program under the 
control and influence of NMFS. AFA members are engaged in forestry 
activities, including road building, timber harvest, second growth 
management, transportation of logs and chips and forest products 
manufacturing. All of these activities could he affected by the EFH 
program.
    In a December 3, 1999 letter to the Assistant Administrator of NMFS 
from our counsel, Perkins Coie, we have requested an extension or 
reopening of the comment period on EFH. which has not yet been granted. 
This extension is necessary to ensure that we obtain and review 
information needed for meaningful comment on the four issues concerning 
implementation of the IFR that were identified in the November 8. 1999 
notice. This information has not yet been made available. We are 
actively seeking pertinent information from NMFS through Freedom of 
Information Act (FOIA) requests submitted to your office on November 
18, 1999, and to NMFS regional field offices on November 29, 1999. 
However, NMFS has not yet provided any documents in response to these 
requests. Office of Habitat Conservation staff has indicated that it 
may be early January before we receive even a cost estimate for 
providing the information we are seeking through the FOIA. It appears 
that NMFS still has not assembled much, if any, useful information 
about the approximately 2000 EFH consultations which NMFS represents 
have taken place over the past year, or other basic information that 
would provide NMFS and the public a basis to start evaluating the early 
implementation of the EFH program.
The following are brief comments regarding the four issues identified 
in the November 8, 1999 Federal Register notice. based on the very 
incomplete information available to us at this time. While we have 
attempted to give some response on the requested subjects, these 
comments to not constituteany waiver of our continued objection to NMFS 
closing the comment period today. In the absence of NMFS's response to 
the FOIAs mentioned above, we are simply not in possession of 
sufficientinformation to adequately respond to the IFR.

Issue 1: Suggestions for improving the regulatory guidance regarding 
the description and identification of EFH, including the breadth of EFH 
designations, in Sec. Sec. 600.815(a)(1) and (2) of the interim final 
rule.

    NMFS must dramatically narrow the interpretation of the definition 
of EFH and other direction in the IFR to conform to the scope 
identified in the Magnuson-Stevens Fishery Conservation and Management 
Act (Magnuson-Stevens). The 1996 amendments to Magnuson-Stevens do not 
authorize the promulgation of standards and regulations that affect 
non-fishing entities. By its terms, the EFH provision is limited to 
``the description and identification of essential fish habitat in 
fishery management plans.'' 16 U.S.C. 1 855(b)(1)(A)(emphasis added). 
This limitation makes it clear that NMFS and Council authority applies 
only to ``fisheries.'' As it is, the language in the IFR and other 
guidance provided by NMFS has resulted in almost all areas used by 
Council- or NMFS-managed species, currently or in the past. being 
identified in FMCs as EFH (see, for example. the North Pacific Plan and 
AFA's letter of December 21, 1998 to Sue Salveson of NMFS's Juneau 
office regarding it). This approach fails to distinguish ``essential'' 
from other habitat and otherwise renders the concept of EFH 
meaningless. NMFS must abandon its vague and overly broad ``ecosystem'' 
and unduly risk-averse approach to designating EFH and begin focusing 
on present marine habitat within the jurisdiction of the various 
Councils that is genuinely critical to the viability of managed 
species. NMFS must require that acknowledged scientific standards be 
used in making these determinations.
    The overly broad approach to EFH designation adopted in the IFR may 
largely explain why, according to NMFS, so many EFH consultations have 
been completed in the first year of the program. In the Federal 
Register notice, NMFS says that it has completed ``approximately 2000'' 
EFH consultations. In response to Congressional questioning in March of 
1999, the National Oceanic and Atmospheric Administration (NOAA) 
responded in writing that. ``(A)pproximately 229 formal and 981 
informal [Endangered Species Act, Section 7] consultations are 
completed each year.''
    Thus the number of first year EFH consultations is about twice the 
number of consultations completed annually under Section 7 of the 
Endangered Species Act (ESA), and yet the EFH program is only in its 
infancy. Despite the breadth of this program. NMFS has not made the 
record of these consultations available to the public.

Issue 2: What additional guidance, if any, should the final rule 
contain on how Councils should document their efforts to minimize the 
effects of fishing on EFH, to the extent practicable?

    As a non-fishing entity, AFA is not in a good position to answer 
this questions. However, this points up the crucial problem with the 
EFH program as a whole. So far as AFA can ascertain, the recently 
revised FMCs have not addressed fishing impacts on EFH in any detail, 
or required any further measures to reduce impacts from fishing. At the 
same time. the FMCs have layered many stringent ``conservation'' 
measures on non-fishing interests (including. but not limited to, 
costly and delay-producing consultations) which will have significant 
adverse affects on their future operations. The IFR should focus on 
fishing impacts to EFH, including over-fishing and other chronic 
regulatory problems which Magnuson-Stevens was designed to address.

Issue 3: Has the use of existing environmental review procedures as 
described in Sec. 600.920(e) of the interim rule been an effective way 
to handle EFH consultations? What additional guidance, if any, should 
the final rule provide on how to use existing environmental reviews to 
satisfy EFH consultation requirements?

    Once again, the absence of specific information regarding the 
completed EFH consultations makes it difficult for AFA to comment on 
this issue. NMFS apparently has not assembled and certainly has not 
made available to us any information on the use of the procedures 
described in Sec. 600.920(e) to complete EFH consultations. AFA members 
have had no first hand experience so far with EFH consultations. 
Therefore, we presently have no idea how effective or ineffective the 
use of existing review procedures has been, or whether NMFS and other 
agencies are even adhering to the regulations in conducting 
consultations. We would assert, however, that a more cost-effective 
approach would be to exclude activities from the EFH consultation 
requirement if other environmental procedures applying to them provide 
NMFS an opportunity for review and comment. Requiring EFH consultation 
in these instances is mere duplication of effort and simply adds costs 
to each project without producing a commensurate advantage to the 
environment or the public.

Issue 4: How, if at all, should the EFH Assessment requirement be 
revised in the final rule?

    Requiring these EFH assessments in circumstances where NEPA 
documentation or any Alaska Coastal Zone Consistency review is already 
being prepared only generates extra costs, delay and confusion, whether 
or not the EFH assessment is ``consolidated'' with other analyses of 
the project. The rigid and formal consultation process set out in the 
IFR, which is based on pervasive and cumbersome regulatory models such 
as the Endangered Species Act and Clean Water Act, must be replaced 
with a simple and straightforward exchange of information that may be 
documented in an informal memorandum or letter. Magnuson-Stevens 
requires no more.

Summary

    As asserted previously, it is AFA's position that NMFS has provided 
insufficient information for the public to comment meaningfully on the 
IFR. For NMFS to receive an objective and useful evaluation of the EFH 
program from the affected public, the agency must compile and share 
pertinent information for review and evaluation by all interested 
parties. At a minimum, we request that the following information be 
provided and the public be afforded an opportunity to comment upon it 
before the agency finalizes the IFR:

(1) The number of consultations completed, by NMFS Region;
(2) The average time taken to complete a consultation, and the range 
and distribution of time taken for each consultation around that 
average;
(3) The average cost of each consultation. in dollars and man-hours or 
full time equivalents (FTEs), and the range and distribution of the 
costs of each consultation around that average;
(4) The distribution and amount of average consultation costs as 
distributed among NMFS, action agencies, third-party applicants for 
federal authorizations, and others;
(5) The number of consultations in each category described under the 
IFR: national general concurrences, regional general concurrences, 
abbreviated, expanded, extended, and supplemental;
(6) The number of documented ``no effect'' determinations by action 
agencies, the number of these with which NMFS concurred or did not 
concur, and the number of these for which an EFH consultation was 
nevertheless completed;
(7) The number of consultations involving federal actions for which ESA 
consultation was also completed, and the number of these which involved 
ESA consultation with NMFS;
(8) The number of consultations involving federal actions for which 
NEPA documentation was also completed, and the category of NEPA 
documentation completed (e.g. EA or EIS);
(9) The number of consultations involving other environmental analysis 
documentation besides an EFH assessment, and the number of these for 
which the environmental documentation prepared for other purposes also 
served as the EFH assessment, without modification to meet EFH 
consultation requirements;
(10) Other information about how EFH consultation was consolidated or 
integrated with procedures such as (inter alia) NEPA, ESA, or Coastal 
Zone Management Act regulations for individual or collective actions;
(11) Categories of activities for which EFH consultations were 
completed, including the basic categories of fishing and non-fishing, 
more specific federal action categories such as Clean Water Act Section 
404 permits and FERC power facility licensing or re-licensing, and more 
specific types of activities, such as timber sales, road projects, 
marina developments, oil and gas drilling, hardrock mineral extraction, 
housing subdivisions, agricultural water diversions, etc.;
(12) The number of EFH consultations that have been initiated but not 
yet completed, and how long they have been pending;
13) The categories and representative examples of recommendations made 
by NMFS in consultations, action agency disagreement with such 
recommendations, and how these differences were resolved.

    It is reasonable to expect NMFS to compile this kind of information 
into a format that facilitates understanding of the EFH consultations 
that have occurred so far and that enables constructive comment on the 
IFR, before proceeding to a final rule. We hereby formally request that 
NMFS do so.
    Thank you for the opportunity to comment on the EFH program, and 
the Interim Final Rule. Please contact me if you have any questions 
concerning these comments.

    Senator Snowe. Thank you, Mr. Phelps.
    Mr. Seaton.

STATEMENT OF PAUL SEATON, MEMBER OF THE BOARD DIRECTORS, ALASKA 
                  MARINE CONSERVATION COUNCIL

    Mr. Seaton. Thank you for the opportunity to testify today. 
For the record, my name is Paul Seaton. I am a commercial 
fisherman, and a board member of the Alaska Marine Conservation 
Council, known as AMCC. AMCC is a regional member-based 
community-oriented organization. Most of the 500 members are 
Alaskans who live in coastal communities and are a mixture of 
commercial, subsistence, and sport fishermen. I have given you 
a map of Alaska which shows where our board members come from 
and the fisheries in which they participate.
    I will be making three points in my testimony. First, the 
1996 act contains critical mandates to minimize bycatch, 
protect fish habitat, and prevent overfishing. Unfortunately, 
implementation by National Marine Fisheries Service has been 
slow and inadequate.
    Second, we urge Congress to strengthen the protections for 
essential fish habitat, and third, any limited access program, 
including IFQ's or fishing co-operatives, needs to incorporate 
conservation standards.
    AMCC thanks the committee, and especially Senator Stevens, 
for the precedent-setting conservation reforms of the Act in 
its North Pacific section. Implementation of the law, however, 
has been very slow, and the job is not yet done. The October 
1998 implementation deadline for the law came and went, but we 
have seen only incremental improvements. One reason for the 
law's conservation provisions being put on the back burner is 
that NMFS has been devoting substantial resources to allocation 
issues.
    An example of this delay is the bottom trawl ban to achieve 
bycatch reduction in the Bering Sea pollock fishery. In 1997, 
AMCC proposed allowing the use of only off-bottom trawls in 
this fishery. In June of 1998, the North Pacific Fishery 
Management Council approved. The draft regulations were not 
published by NMFS for public comment until this last month. We 
are very lucky the Council was able to put this into effect 
despite the slow response of NMFS rulemaking.
    Another example of slow implementation of the conservation 
provisions of the law is a requirement to set a minimum stock 
size threshold for each managed fishery. NMFS Alaska region 
refused to recognize the necessity to follow the mandate of the 
law even in the face of legal opinions and public pressure. 
Finally, the region was told by Washington, D.C., that it must 
comply. NMFS is just now starting to set MSSTs for each stock.
    One of the important additions made to the 1996 Act was a 
mandate for the identification and protection of essential fish 
habitat. The broad support of Alaskans for habitat protection 
is shown by the actions of the Board of Fisheries, which 
manages all State fisheries.
    The Board voted unanimously in March 1999 to protect crab 
habitat by closing waters around Kodiak Island to bottom 
trawls. The closure areas are shown on the Kodiak Island map 
attached to my testimony. We hope NMFS will begin to take the 
same kind of leadership in protecting marine habitat in Federal 
waters.
    The North Pacific Council is currently analyzing AMCC 
proposals for additional habitat types and specific places as 
habitat areas of particular concern. We hope the identification 
of the HAPCs proceeds, and the managers get on with the job.
    AMCC considers benthic habitat protection from destructive 
fishing practices the highest priority in Federal fisheries 
management in the North Pacific. A key feature to the 1996 
reauthorization was a moratorium on IFQ programs. AMCC strongly 
urges Congress to adopt conservation standards for any limited 
access program before the moratorium is lifted and before any 
new privatization programs are allowed to be developed by the 
regional councils.
    Some conservation improvement may come from limiting access 
by virtue of slowing down the race for fish and improving 
opportunities for more careful fishing practices. However, you 
should make conservation achievements a required element of the 
limited access fisheries. There should be deliberate mechanisms 
that will ensure conservation goals are met, and we strongly 
urge Congress to stipulate that if access is limited, viable 
community-based opportunities to participate in fisheries are 
included.
    In summary, I want to thank the Subcommittee, and 
especially Senator Stevens, for your attention to the Magnuson 
act implementation reauthorization. What we need now from 
Congress is to push NMFS to turn the conservation goals of the 
law into action. Thank you.
    [The prepared statement of Mr. Seaton follows:]

 Prepared Statement of Paul Seaton, Member of the Board of Directors, 
                   Alaska Marine Conservation Council
I. INTRODUCTION

    Thank you for the opportunity to testify today. For the record, my 
name is Paul Seaton. I am a commercial fisherman and board member of 
the Alaska Marine Conservation Council (AMCC). AMCC is a membership-
based community organization comprised of Alaskans, many of whom live 
and work in small communities along Alaska's coastline and draw their 
living and culture from the sea.
    AMCC's members include commercial and sport fishermen, biologists, 
subsistence harvesters, small business owners and conservationists 
dedicated to protecting the health and diversity of Alaska's ocean and 
coastal resources. We work collaboratively with local people and 
community organizations to reduce bycatch, protect habitat, and prevent 
overfishing to sustain Alaska's fisheries and a healthy marine 
ecosystem into the future.

        Today, I will be talking about three major points:

        1. The 1996 conservation mandates in the Magnuson-Stevens 
        Fisheries Conservation and Management Act (Magnuson-Stevens 
        Act) are excellent, but implementation has been slow and 
        inadequate. The National Marine Fisheries Service (NMFS) must 
        begin to aggressively implement the law. AMCC recommends 
        clarification and strengthening of the Act in the next 
        reauthorization.
        2. Congress must maintain and increase strong protection for 
        the essential fish habitat provisions in the law.
        3. The intent of the Magnuson-Stevens Act to enable progress in 
        the conservation of the nation's fisheries is being slowed, and 
        in some cases circumvented, by allocation decisions.

II. OVERVIEW

    On behalf of the Alaska Marine Conservation Council, I want to 
thank the committee and especially Alaska's Senator Ted Stevens, for 
the precedent-setting conservation language that Congress made law 
through passage in 1996 of the Magnuson-Stevens Fishery Management and 
Conservation Act. Our members have seen some isolated, but positive 
changes in management of the North Pacific fisheries as a result of the 
new law. Examples of progress include the North Pacific Fishery 
Management Council's (North Pacific Council) actions to eliminate 
bottom trawl gear for Bering Sea pollock, establish rebuilding plans 
for overfished Bering Sea crab stocks, and reduce Chinook salmon 
bycatch in specific areas in the Bering Sea.
    AMCC is proud to have played a role in these positive conservation 
actions, but we recognize that they represent only the beginning of 
what the Magnuson-Stevens Act was designed to achieve. Unfortunately, 
implementation of the law has been hindered by the failure of NMFS to 
prioritize work on it. Three years after its passage, what has changed 
in fisheries management as compared to before the reauthorization? The 
law called for a different way of doing business, yet fishery managers 
have only incremental changes to show for it.
    The most important work ahead for NMFS and the North Pacific 
Council is the identification and protection of essential fish habitat 
from adverse impacts caused by fishing practices. The Magnuson-Stevens 
Act language on essential fish habitat provides strong direction and 
the requirements are well-reasoned and sound. As described above, the 
problem is not in the language of the law, but in its implementation. 
We urge Congress to maintain the current habitat provisions and to 
ensure fishery managers act aggressively to protect the diversity and 
productivity of sensitive marine habitats.
    The North Pacific is home to some of the largest fisheries 
remaining in the world, and 50% of our nation's domestic fishery 
landings. (Fisheries of the United States, National Marine Fisheries 
Service, 1998.) The North Pacific region appears prosperous compared to 
other parts of the U.S., such as the North Atlantic, where overfishing 
problems have reached crisis proportions. However, our region is not 
free of overfishing examples. In addition, the North Pacific has 
excessively high bycatch as a consequence of industrial scale 
operations and scientists are beginning to document habitat alteration 
occurring on our fishing grounds. The North Pacific ecosystem is also 
experiencing dramatic ecological changes: scientists and local people 
have witnessed accelerated declines in regional populations of fish, 
shellfish, marine mammals and seabird species. In light of these 
changes, the National Research Council stated, ``It seems extremely 
unlikely that the productivity of the Bering Sea ecosystem can sustain 
current rates of human exploitation . . . .'' (National Research 
Council, Bering Sea Ecosystem, 1996, p 4.)
    To make our fisheries truly sustainable, the 1996 conservation 
provisions to minimize bycatch, protect habitat and prevent overfishing 
must be fully implemented. It is time to activate a new precautionary 
approach to fisheries management that accounts for the effects of 
fisheries on the ecosystem and reduces the risk that fisheries are 
contributing to a reduction in productivity, biological diversity or 
sensitive habitat. Such an approach is needed to guide fishery managers 
when there is inadequate scientific data on which to base decisions. 
(Paul Dayton, Reversal of the Burden of Proof in Fisheries Management, 
Science, Feb. 6, 1998, p. 821-822.)
    Since the Magnuson-Stevens Act passed, NMFS has been largely 
focused on allocation issues and regulations, often at the expense of 
conservation issues. Congress specifically gave NMFS the deadline of 
October, 1998 to implement the conservation requirements. The deadline 
came and went with only part of the job done. Then, with the passage of 
the American Fisheries Act in 1998, NMFS began devoting substantial 
resources to its implementation. NMFS has put the marine conservation 
provisions of the Magnuson-Stevens Act on the back burner. Only in the 
last month has NMFS published proposed rules for bycatch measures that 
were approved by the North Pacific Council one or more years ago. AMCC 
has been extremely frustrated by the pace of implementation.
    AMCC recognizes that a pivotal issue in this upcoming 
reauthorization of the Magnuson-Stevens Act is whether to lift the 
moratorium on Individual Fishing Quotas (IFQs). In light of efforts to 
address the problem of overcapitalization in the fisheries since the 
Act's passage in 1996, AMCC believes a broader discussion needs to take 
place. We agree overcapitalization is a serious problem, but we argue 
that any restructuring of the management system must equally address 
conservation goals. AMCC strongly urges Congress to adopt conservation 
standards that will apply to any limited access program, whether the 
program takes the form of IFQs, fishing co-operatives or another 
management structure. The standards should achieve clear and explicit 
conservation goals and support continued participation in the fisheries 
by independent, community-based fishermen. The standards should be 
defined before any new limited access programs are created and before 
the IFQ moratorium is lifted.
    AMCC members and Board of Directors have a vision of Alaska's 
fisheries being a place where a young person can enter a fishery and 
make a living through hard work and sweat equity. Our vision includes 
the opportunity for a long career in the fishery, which rewards clean 
fishing and habitat-friendly practices, and is managed for conservation 
so as to sustain the fishery and the ecosystem needed to support 
productive fisheries. Economic efficiency will be defined as managing 
fisheries to provide an economic base for coastal communities, and 
favoring a large number of fishermen who harvest fish slowly, rather 
than favoring a few vessels that harvest as quickly as possible. Alaska 
Native villages, where people harvest fish and marine resources for 
subsistence, will thrive from an abundant supply of traditional foods 
from the sea. This vision depends upon a healthy marine ecosystem and 
precautionary management of the fisheries. The language of the 
Magnuson-Stevens Act and how the law is implemented play a tremendously 
important role in the realization of this vision.

A. EXAMPLES OF FAILED IMPLEMENTATION

1. Bycatch

    Although improvements have been made in selected fisheries, bycatch 
remains a major problem in the North Pacific. At least 1,000 different 
species of fish and other sea life are hauled aboard and thrown back 
dead or dying because they are the wrong species, the wrong sex or the 
wrong size. Each year between 1993 and 1997--the most recent data 
available--this bycatch averaged approximately 680 million pounds of 
groundfish, 15,700,000 pounds of halibut, over 2,000,000 pounds of 
herring, 61,500 Chinook salmon, 135,000 other salmon, and millions of 
crabs. (Pacific Associates, 1995 & 1998.)
    There are no estimates for those fish and seafloor species of non-
commercial value that are wasted as bycatch, and there is no measure of 
the impact of the total bycatch on the ecosystem. There are also 
sectors of the fishing industry that are not observed, which 
compromises the reliability of data.
    One tool to fix this problem is the North Pacific observer program, 
the only one of its kind in the country. Although the observer program 
has been of great assistance in gathering data to quantify the bycatch 
in the North Pacific, this program is in need of improvement. The 
current program and the integrity of data it generates are at risk 
because of an inequitable funding mechanism and the limitations in how 
observers are distributed across the fisheries. In order to function as 
it should, AMCC recommends a mandatory fee-based system in which all 
fishermen would pay according to the average value of the fish they 
catch, including both target species and bycatch. This approach would 
build in a bycatch reduction incentive by encouraging fishermen to 
retain a greater proportion of the fish caught, process it into the 
highest value product possible and thereby generate value from more of 
the total catch. Waste would truly become a ``cost of doing business'' 
under this system. AMCC recommends that Congress institute a nationwide 
observer program that is supported through a fee-based system. In any 
observer program, AMCC recommends that managers be given the 
flexibility to assign observers where they are most needed to collect 
the data for conservation objectives.
    In 1998, NMFS activated a program requiring all fisheries to retain 
cod and pollock bycatch. A large portion of these discards were 
juvenile fish, too small for processing machinery. The stated purpose 
of the program (known as Improved Retention/Improved Utilization or IR/
IU) was to ``provide an incentive for fishermen to avoid unwanted 
catch, increase utilization of fish that are taken, and thus, reduce 
discards of whole fish.'' (62 Fed. Reg. 34430, 1997.) Bycatch data 
shows a significant reduction in the amount of economic discards 
compared to previous years as a result of this program. However, AMCC 
urges Congress to look more closely at the results to see if vessels 
are actually avoiding the catch of unwanted fish, or retaining them for 
production of fishmeal and other new products. While some vessels are 
employing methods to move away from schools of small fish, other 
vessels most likely are not. There has been no method to validate 
whether avoidance is occurring, casting doubt on the program's 
effectiveness as a true bycatch reduction measure.
    One method being used to reduce catch of small fish is large mesh 
nets that allow small fish to escape. Recent scientific research has 
shown that the fish escaping through these nets suffer a 46-84% 
mortality rate from injury during escapement. (Alaska Fisheries 
Development Foundation, Surviving the Great Escape, Lodestar, April 
1999.) This new information is of major concern. While the statistics 
show improvement in bycatch, the problem may just be masked and there 
may, in fact, be a sizable amount of indirect mortality that is now 
going uncounted. From a conservation standpoint, this situation would 
be worse than discarding a known quantity of fish. A careful monitoring 
program to measure the effects of the IR/IU program is the only way to 
determine the level of actual bycatch avoidance. Congress, the North 
Pacific Council and NMFS need to address this with open eyes and 
careful scrutiny to make bycatch reduction efforts meaningful.

        The Magnuson-Stevens Act states that it is the policy of 
        Congress to assure that the national fishery conservation and 
        management program...considers the effects of fishing on 
        immature fish and encourages development of practical measures 
        that minimize bycatch and avoid unnecessary waste of fish . . . 
        . (Sec. Sec. 2 (c)(3))

    The IR/IU program is the primary bycatch reduction measure 
instituted by the North Pacific Council to address economic discards. 
AMCC does not consider this to be a true reduction of bycatch unless it 
is clear that fishing vessels are successfully avoiding the catch of 
juvenile fish and minimizing mortality of fish that are not retained, 
as stipulated in the Magnuson-Stevens Act.

2. Overfishing

    Since the Magnuson-Stevens Act passed in 1996, the number of 
species considered to be overfished has steadily increased nationwide. 
NMFS reported that 98 species are overfished, an increase from 90 
overfished species in 1998. (Report to Congress: Status of Fisheries of 
the United States, National Marine Fisheries Service, October 1999.)
    In the North Pacific, no groundfish stocks are currently declared 
overfished. However, NMFS has failed to implement a key element in the 
overfishing regulations: the establishment of minimum stock size 
thresholds for each stock. For this reason, fishery managers do not 
know whether or not the North Pacific has any overfished stocks as 
defined in the 1996 Magnuson-Stevens Act overfishing provisions. 
Although the North Pacific overfishing definition started out being far 
better than other regions of the country, adding minimum stock size 
thresholds is an important conservation addition.
    Fish populations rise and fall in natural ranges of abundance but 
the minimum stock size threshold mechanism prevents a fishery from 
driving a stock below a productive level, or exacerbating a natural 
downward trend. The Aleutian Islands pollock fishery, for example, has 
undergone serial overfishing: each year the fleet has to travel farther 
west to find enough pollock. (Ecosystem-Based Management in the Bering 
Sea: Proceedings, Center for Marine Conservation, 1998, p 46-47.) 
Fortunately, NMFS closed this fishery in 1999 and 2000 in an effort to 
allow the stock to recover. Minimum stock size thresholds would help 
prevent fishery closures by guiding management toward conservation 
measures before dire action is needed.
    Over the last several years, the North Pacific Council and the 
State of Alaska did assign minimum stock size thresholds to Bering Sea 
crab stocks. As a result, major crab fisheries (Bairdi Tanner, opilio 
or snow crab and St. Matthew blue king crab) were found to be 
overfished. So far, only the Bairdi Tanner crab rebuilding plan has 
been developed and approved by the North Pacific Council. AMCC is 
concerned that, despite the rebuilding plan's conservative harvest 
strategy, the plan is insufficient because (1) it does not include 
measures to reduce crab bycatch in groundfish fisheries, and (2) it 
does not include new habitat conservation measures beyond what has been 
in place prior to the stock's overfished status. AMCC believes more 
aggressive action is needed to improve the likelihood that rebuilding 
can occur within a 10-year timeframe.

3. Managers are Operating with a Dangerous Lack of Information

    Scientists and the public are increasingly concerned with the great 
lack of information about the effect of large-scale fisheries on the 
ecosystem. Indeed current methods used to set annual catch limits do 
not take into account these effects and, in the North Pacific, there is 
little data on the habitat requirements of any of the managed fish 
species, not to mention those species in the food web that are not 
monitored or studied. (Ecosystem Considerations for 1999 and 2000, 
NPFMC.)
    Nationwide scientists do not know if the majority of fish stocks 
are healthy, increasing, declining or overfished. According to NMFS the 
status of 649 stocks)--75% of those assessed--is ``unknown.'' In the 
North Pacific, 70% are of unknown status. (Report to Congress: Status 
of Fisheries of the United States, National Marine Fisheries Service, 
October 1999.)
    Fishery managers know little about recruitment and population 
dynamics, basic biology of both non-commercial and commercially 
valuable species, ecology of marine life communities, the habitat needs 
of living marine resources, predator-prey relationships, and year-to-
year variability in ocean conditions. Fishery managers do not know how 
high volume fisheries affect declining stocks during periods of natural 
downward fluctuation.
    The combination of all of these sources of missing information and 
uncertainty makes it even more difficult to measure the effect of 
fisheries on the ecosystem as a whole. Despite these gaps in 
information, management decisions are being made routinely. While 
scientists and managers will probably never have complete, quantifiable 
knowledge of how the fisheries operate in an ecosystem context, 
managers do have the responsibility to account for uncertainty and lack 
of knowledge in their decision-making.
    In their 1998 report to Congress, the Ecosystem Principles Advisory 
Panel described the importance of considering ecosystem effects when 
making fisheries management decisions.

        This issue (overfishing and lack of knowledge) is urgent 
        because the current harvest levels are high and because new 
        fisheries will rise, be fully capitalized and reach 
        unsustainable levels of catch before the management process can 
        establish effective constraints . . . In many cases, the 
        ecological correlates of changing fish populations could have 
        served as evidence of intensified exploitation effects. 
        Frequently, the advent of a fishery and implementation of catch 
        restrictions have unknown ecological consequences. Too often, 
        we learn about ecological consequences after the fact, because 
        we do not consider them in our decision-making, nor do we 
        monitor ecosystem changes due to increased exploitation. 
        (Ecosystem-Based Fishery Management, A Report to Congress by 
        the Ecosystem Principles Advisory Panel, November 1998, p. 9.)

    The Panel went on to recommend that Congress enact legislation in 
the next reauthorization of the Magnuson-Stevens Act to require 
Fisheries Ecosystem Plans, a proposal which AMCC fully supports.
    Use of the Precautionary Principle is an internationally accepted 
strategy for coming to terms with scientific uncertainty in a resource 
management.. Elements of the Precautionary Principle include:

        1. Uncertainty is unavoidable in sustainability issues;

        2. Uncertainty as to the severity of the environmental impacts 
        resulting from a development decision or an ongoing human 
        activity should not be an excuse to avoid or delay 
        environmental protection measures;
        3. The principle recommends an anticipatory or preventative 
        approach, rather than a defensive one which simply reacts to 
        the environmental damage when it becomes apparent; and
        4. The onus of proof shifts away from the environment or those 
        advocating its protection, towards those proposing an action 
        that might harm it. (Dovers, S.R. and J.W. Handmer, Ignorance, 
        the precautionary principle, and sustainability, Royal Swedish 
        Academy of Sciences, 1995, Ambion 24 (2):92-97.)

    Considering the lack of information about the majority of species 
and ecosystem relationships in the North Pacific, employing the 
Precautionary Principle in an ecosystem context is a wise and necessary 
approach to management.

B. KEEP THE STRONG PROTECTION OF ESSENTIAL FISH HABITAT IN THE LAW.

    Alaska Marine Conservation Council recommends that Congress 
maintain the Magnuson-Stevens Act provisions to identify and protect 
essential fish habitat, and to strengthen them further to ensure 
effective and timely action is taken.
    In the North Pacific, essential fish habitat implementation should 
focus on protecting Alaska's ocean habitat from the adverse effects of 
fishing practices. The North Pacific Council is beginning a process to 
define, identify and consider protection for habitat areas of 
particular concern (HAPC). HAPC designation is critical to attaining 
the intent of the essential fish habitat requirements in the law. AMCC 
is confident that such an approach focuses fishery management actions 
on key geographic areas. A successful outcome for conservation would 
encompass protection of an adequate representation and suitable 
portions of sensitive or rare habitats in Alaskan waters. By 
establishing a mosaic of habitat areas protected from the adverse 
effects of fishing, managers can have greater confidence that the 
functions of those habitats in fisheries production will be sustained.
    In 1998 AMCC submitted several proposals to the North Pacific 
Council to identify and protect habitat areas of particular concern. 
The Council will consider them in 2000. In order to craft an effective 
habitat conservation regime, fishery managers must commit to focused 
and expeditious action on these and other proposals. The alternative is 
a potential unraveling of ecosystem components created and supported by 
important habitats and risking the well-being of diverse fisheries, 
their productivity and other species in the marine food web. The risk 
of losing habitat and creating barren areas in Alaska's marine waters 
due to sluggish management response is unacceptable. While the North 
Pacific region contains certain habitat protection measures, there is 
still a lot of work to be done to fulfill the Magnuson-Stevens Act 
mandate.
    We appreciate the 1996 essential fish habitat requirements as a 
good conservation tool and we recommend some additions to strengthen 
the law. AMCC urges Congress to require the councils and NMFS to 
evaluate the effectiveness of habitat protection measures and report 
back to Congress.
    The failure of NMFS and the North Pacific Council to move more 
quickly to identify and protect essential fish habitat is made even 
more apparent in comparison with recent actions at the state level in 
Alaska. For example, the Alaska Board of Fisheries is providing 
leadership in habitat protection in state waters. In March of 1999, the 
Board voted to close nearshore waters around Kodiak to bottom trawling. 
Their action was in response to the failure of the overfished Kodiak 
red king crab population to recover after closure of the fishery in 
1984. Even after sixteen years of no fishing, the Kodiak red king crab 
population is estimated to be at 200,000 animals today, compared to an 
estimated population of 30 million in the 1960s. The Board recognized 
that habitat protection is a critical component of rebuilding the crab 
population. As Board of Fish member Larry Engel stated during the 
deliberations, ``Without habitat, we have no fish.'' The State of 
Alaska is leading the way in marine habitat protection. AMCC urges NMFS 
and the North Pacific Council to follow suit by advancing a thorough 
habitat conservation regime in federal waters, as required by the 
Magnuson Stevens Act.

C. IFQS AND OTHER LIMITED ACCESS PROGRAMS

    A key feature of the 1996 reauthorization was the moratorium on new 
IFQ programs. When Congress deliberates over whether or not to lift the 
moratorium in the upcoming reauthorization we recommend looking broadly 
at all limited access strategies. AMCC strongly urges Congress to adopt 
conservation standards for any limited access program before the 
moratorium is lifted and before any other new programs are allowed to 
be developed by regional councils. Some conservation improvement may 
come from limited access by virtue of slowing down the race for fish 
and improving opportunities for more careful fishing practices. 
However, Congress should make conservation achievements a required 
element of limited access fisheries and there should be deliberate 
mechanisms that will ensure conservation goals are met. We also 
strongly urge Congress to stipulate that, if access is limited, viable 
community-based opportunities to participate in fisheries are included.
    Standards for limited access programs, whether they are IFQs, 
fishing co-operatives or some other management structure should:

    Achieve clear and explicit conservation goals including:

          No rewards that institutionalize past bycatch-
        intensive fishing practices;
          Compliance with congressional mandates to minimize 
        bycatch, identify and protect habitat, and prevent or end 
        overfishing;
          Application of the Precautionary Principle for 
        ecosystem-based fishery management.

    2. Ensure community-based participation by independent fishermen in 
fisheries through measures such as:

          Prohibiting access to fisheries from becoming a 
        compensable property right;
          Setting aside portions of the fishery for small 
        vessel or entry level fishermen;
          Prohibiting consolidation of access to fisheries that 
        reduces participation by independent fishermen.
III. MORE IMPROVEMENTS TO THE LAW ARE NEEDED:
RECOMMENDED CHANGES

    Despite the many positive changes to the law in 1996, more 
improvement is needed. Even with the strong language of the Magnuson-
Stevens Act, the management of our nation's fisheries has not shifted 
to a new and focused priority on sustainability. Fishery managers 
continue to place short-term economic considerations before long-term 
conservation goals. Instead of a flood of rebuilding plans, a reversal 
in the decline of fish stocks, and plans to protect habitat for 
continued productive and diverse fisheries, we are seeing a continued 
downward spiral of fish populations across the country and fisheries 
and fishing communities pushed to the brink of ruin.
    AMCC asks Congress to continue providing strong leadership in 
fisheries management, and to clearly establish conservation as the top 
priority of the Act. An economically sound fishery must be built around 
long-term sustainable goals. Congress must give unmistakable direction 
to NMFS and the regional councils to carry out the intent and spirit of 
the law. To that end, we ask that Congress amend the Magnuson-Stevens 
Act in the following areas.

A. REQUIRE FISHERY MANAGERS TO ACT CONSERVATIVELY IN THE FACE OF 
UNCERTAINTY, AND TO CONSIDER THE EFFECTS OF FISHING ON THE ECOSYSTEM.

    1. Require councils to develop a Fisheries Ecosystem Plan for the 
major ecosystems under their jurisdictions, as recommended by the 
National Research Council.

Sec. 305. OTHER REQUIREMENTS AND AUTHORITY
    (J) FISHERIES ECOSYSTEM PLANS.

    (1) Each council shall, within 18 months from the date of enactment 
of this Act, prepare and submit to the Secretary a Fisheries Ecosystem 
Plan (FEP) for the major marine ecosystem or ecosystems within its 
jurisdiction. In the case where significant portions of ecosystems are 
found in the jurisdictions of adjacent councils, joint FEPs shall be 
prepared. The process for preparing and developing FEPs shall be 
consistent with the fishery management plan process outlined in Section 
302.
    (2) Each fisheries ecosystem plan shall

        (A) contain information on the structure and function of the 
        ecosystem in which fishing activities occur, including the 
        geographic extent of the ecosystem and its biological, physical 
        and chemical dynamics, a description of the significant food 
        web including key predator-prey relationships, and the habitat 
        needs of different life stages of species that make up the 
        significant food web;
        (B) establish indices of ecosystem health and integrity;
        (C) describe how the information on ecosystem structure and 
        function is to be incorporated into the context of fishery-
        specific management plans;
        (D) include specific recommendations for implementing ecosystem 
        protections in fishery management plans; and, 
        (E) outline a long-term monitoring program to evaluate fishery-
        dependent and fishery-independent changes in the ecosystem.

    (3) No later than 6 months from the date of enactment, the 
Secretary shall prepare guidelines for FEP development, in conjunction 
with the councils and other scientific, fisheries and conservation 
interests as appropriate, and provide them to the councils to 
facilitate development and implementation of the required FEPs within 
the prescribed time period.
    (4) The Secretary shall review each fisheries ecosystem plan 
according to the guidelines prepared pursuant to paragraph (3) and 
approve or disapprove FEPs, in whole or in part, according to the 
process described in section 304. If the Secretary disapproves or 
partially approves a plan, the council shall revise and re-submit the 
plan within 9 months of its disapproval.
    (5) If, within the 18 month period beginning on the date of 
enactment of this Act, a council fails to develop and submit to the 
Secretary a Fisheries Ecosystem Plan as required under this section, 
the Secretary shall prepare a plan for that ecosystem within 9 months.
    (6) Within no more than 24 months after approval of a FEP, each 
council shall submit to the Secretary fishery management plans or plan 
amendments required to make all FMPs under its jurisdiction consistent 
with the principles, goals, policies and recommendations of the 
relevant FEP.
    (7) If, within the 24 month period after approval of a FEP, a 
council fails to submit adequate amendments, the Secretary shall 
prepare such amendments within 9 months.

    2. Require councils to consider the ecosystem impacts of amendments 
to Fishery Management Plans.

Sec. 303. CONTENTS OF FISHERY MANAGEMENT PLANS

    (a) REQUIRED PROVISIONS.--Any fishery management plan which is 
prepared by any Council, or by the Secretary, with respect to any 
fishery, shall--
        (1) contain the conservation and management measures, 
        applicable to foreign fishing and fishing vessels of the United 
        States, which are--
        (A) necessary and appropriate for the conservation and 
        management of the fishery to prevent overfishing and rebuild 
        overfished stocks, and to protect, restore, and promote the 
        long-term health and stability of the fishery and the ecosystem 
        within which the fishery functions;
          * * * * * * *
        (15) include a fishery impact statement for the plan or 
        amendment which shall assess, specify, and describe the likely 
        effects, if any, of the conservation and management measures on 
        other species, including key predator-prey interactions, in the 
        ecosystem, such assessment to be used to determine consistency 
        with the relevant Fisheries Ecosystem Plan as required under 
        Section 305 (-)(-).
                               __________
    3. Replace purpose and mission of the Act with conservation 
oriented goals.

Sec. 2. FINDINGS, PURPOSES, AND POLICY

    (b) PURPOSES.--It is therefore declared to be the purposes of the 
Congress in the Act--

        (6) to encourage the development by the United States fishing 
        industry of fisheries which are currently underutilized or not 
        utilized by United States fishermen, including bottom fish off 
        Alaska, and to that end, to ensure that optimum yield 
        determinations promote such development in a non-wasteful 
        manner;

        (6) to ensure that U.S. fisheries management takes into 
        consideration the ecosystem needs of target species and the 
        impacts of fishing on other species in the ecosystem;
          * * * * * * *
        (8) to promote management decisions incorporating the 
        precautionary approach, especially when the effects of fishing 
        are unknown or uncertain, in order to maintain ecosystem health 
        and sustainability.

    (c) POLICY.--It is further declared the policy of the Congress in 
this Act--
          * * * * * * *
    (3) to assure that the national fishery conservation and management 
program utilizes, and is based upon, the best scientific information 
available; involves, and is responsive to the needs of, interested and 
affected states and citizens; incorporates and applies ecosystem 
principles; considers how fishing affects predator-prey and other 
important ecological relationships within marine ecosystems; 
efficiency; draws upon Federal, State, and academic capabilities in 
carrying out research, administration, management, and enforcement; 
considers the effects of fishing on immature fish and encourages 
development of practical measures that minimize bycatch and avoid 
unnecessary waste of fish; and is workable and effective;
                               __________
    4. Add a national standard requiring the precautionary approach.

    Sec. 301. NATIONAL STANDARDS FOR FISHERY CONSERVATION AND 
MANAGEMENT

        IN GENERAL.--Any fishery management plan prepared, and any 
        regulation promulgated to implement any such plan, pursuant to 
        this title shall be consistent with the following national 
        standards for fishery conservation and management.

        (11) Conservation and management measures shall (A) when 
        information is uncertain, unreliable or inadequate, reduce 
        risks by setting precautionary reference points for each stock 
        of fish and the action to be taken should those thresholds be 
        approached or exceeded; (B) take into account the direct and 
        indirect impacts of fishing on other species and their habitats 
        and the conservation of those species as important components 
        of the ecosystem; and (C) allow the expansion of existing 
        fisheries or the development of new fisheries only after 
        measures are in place to prevent adverse impacts on the stocks, 
        associated species or the ecosystem.
                               __________
    5. Change the definition of optimum yield (OY) and overfishing in 
the Act to include ecosystem impacts.

    Sec. 3. DEFINITIONS
          * * * * * * *
    (28) The term ``optimum,'' with respect to the yield from a 
fishery, means the amount of fish which--
        (A) will provide the greatest overall benefit to the Nation, 
        particularly with respect to protection of marine ecosystems, 
        food production, and recreational opportunities and taking into 
        account the protection of marine ecosystems;
        (B) is prescribed as such on the basis of the maximum 
        sustainable yield from the fishery, as reduced by any relevant 
        economic, social, or ecological factors, including predator-
        prey and other important ecological relationships within marine 
        ecosystems.
    (29) The terms ``overfishing'' and ``overfished'' mean a rate or 
level of fishing mortality that jeopardizes the capacity of a fishery 
to produce the maximum sustainable yield on a continuing basis, or, 
through direct or indirect impacts on other species, jeopardizes the 
ecological integrity and sustainability of marine ecosystems;
                               __________
    6. Appropriate funds for application of ecosystem principles to 
fisheries research and management.

No specific language recommendations.

B. HOLD FISHERY MANAGERS ACCOUNTABLE FOR REDUCING BYCATCH, AND ENSURE 
THAT BYCATCH IS NOT INSTITUTIONALIZED.

    1. Congress should require Fishery Management Plans to include a 
timeline and specific goals for bycatch reduction and incentives for 
fishing practices that avoid bycatch or result in lower levels of 
bycatch mortality.

Sec. 303. CONTENTS OF FISHERY MANAGEMENT PLANS
          * * * * * * *
    (a) REQUIRED PROVISIONS.--Any fishery management plan which is 
prepared by any Council, or by the Secretary, with respect to any 
fishery, shall--
          * * * * * * *
        (11) establish and implement an accurate and reliable a 
        standardized reporting methodology to assess the amount and 
        type of bycatch occurring in the fishery within one year of the 
        date of enactment of this Act, specify objective and measurable 
        bycatch targets that minimize bycatch, and specify a timetable, 
        not to exceed five years, for achieving those targets through 
        include conservation and management measures that, to the 
        extent practicable, and in the following priority--
        (A) minimize avoid bycatch; and
        (B) minimize the mortality of bycatch which cannot be avoided;
          * * * * * * *
        (16) include conservation and management measures that provide 
        catch incentives for participants within and among gear 
        categories to employ fishing practices that avoid bycatch or 
        result in lower levels of the mortality of bycatch which cannot 
        be avoided;
                               __________
    2. The current language regarding Individual Bycatch Quotas (IBQs) 
may allow the institutionalization of bycatch unless the law is changed 
to prohibit the transfer of IBQs.

Sec. 303. CONTENTS OF FISHERY MANAGEMENT PLANS
          * * * * * * *
    (b) REQUIRED PROVISIONS.--Any fishery management plan which is 
prepared by any Council, or by the Secretary, with respect to any 
fishery, shall--
          * * * * * * *
        (17) in the case of an FMP or FMP amendment that allocates 
        bycatch to individual fishing vessels, or to groups of fishing 
        vessels within the fishery, specify that such allocations shall 
        not be transferable, shall be made on an annual basis only, 
        shall include measurable and objective bycatch minimization 
        goals, targets and schedules, and shall be reviewed 
        periodically.
                               __________
    3. Change the North Pacific section of the law to require the North 
Pacific Council to submit a plan to lower the total amount of bycatch, 
not just economic discards.

    Sec. 313. NORTH PACIFIC FISHERIES CONSERVATION

    (f) BYCATCH REDUCTION.--In implementing section 303(a)(11) and this 
section, the North Pacific Council shall submit conservation and 
management measures to lower, on an annual basis for a period of not 
less than four years, the total amount of bycatch economic discards 
occurring in the fisheries under its jurisdiction.

C. IMPROVE THE EFFECTIVENESS OF THE OBSERVER PROGRAM.

      Fund the North Pacific observer program with a user fee based on 
value and applied to all fish landed and sold in the U.S.

Sec. 313. NORTH PACIFIC FISHERIES CONSERVATION

    (a) IN GENERAL.--The North Pacific Council may shall prepare, in 
consultation with the Secretary, a fisheries research plan for all 
fisheries under the Council's jurisdiction except salmon fisheries 
which--
        (1) requires that observers be stationed on fishing vessels 
        engaged in the catching, taking, or harvesting of fish and on 
        United States fish processors fishing for or processing species 
        under the jurisdiction of the Council, including the North 
        Pacific halibut industry, for the purpose of collecting data 
        necessary for the conservation, management, and scientific 
        understanding of any fisheries under the Council's 
        jurisdiction; and
        (2) establishes a system of fees to pay for the costs of 
        implementing the plan.

D. CLARIFY AND STRENGTHEN THE LAW REGARDING ESSENTIAL FISH HABITAT 
IDENTIFICATION AND PROTECTION

Sec. 3. DEFINITIONS
          * * * * * * *
        The term ``essential fish habitat'' means those waters and 
        substrate necessary to fish, whether managed or not, for 
        spawning, breeding, feeding or growth to maturing.

Sec. 303. CONTENTS OF FISHERY MANAGEMENT PLANS
    (a) REQUIRED PROVISIONS
          * * * * * * *
        (7) describe and identify essential fish habitat for the , 
        giving priority to those fish species that are subject to the 
        fishery based on the guidelines established by the Secretary 
        under section 305(b)(1)(A), minimize to the extent practicable 
        adverse effects on such habitat caused by fishing, and--
        (A) analyze the impacts of fishing on essential fish habitat;
        (B) minimize any adverse impacts on essential fish habitat from 
        fishing;
        (C) close an area to a fishing gear or practice if such fishing 
        gear or practice may adversely affect essential fish habitat 
        unless the Council determines, based on the best scientific 
        information available, that a closure is not necessary to 
        protect such habitat; and
        (D) identify other actions to encourage the conservation and 
        enhancement of such habitats;
                               __________
Sec. 304. ACTION BY THE SECRETARY
          * * * * * * *
    (i) FINDING OF MINIMAL ADVERSE IMPACT._No person or vessel may 
employ fishing gear or engage in a fishery;

        (1) in an area closed to that fishing gear or fishery unless 
        the Secretary, after notice and opportunity for public comment, 
        finds that the fishing gear or fishery will have a minimal 
        adverse impact on essential fish habitat and minimal bycatch of 
        non-target species; or
        (2) not currently used in the prosecution of the fishery, or 
        included on the list published pursuant to section 305(a)(1), 
        unless the Secretary, after notice and opportunity for public 
        comment, finds that the fishing gear or fishery will have a 
        minimal adverse impact on essential fish habitat and minimal 
        bycatch of non-target species.

    Senator Stevens. Thank you, Mr. Seaton.
    Mr. Burch.

  STATEMENT OF AL BURCH, EXECUTIVE DIRECTOR, ALASKA DRAGGERS 
                          ASSOCIATION

    Mr. Burch. Thank you, Madam Chairman, Senator Stevens. I 
appreciate the opportunity to speak before this committee. I am 
Al Burch, executive director of the Alaska Draggers 
Association, located in Kodiak.
    Most of the boats I represent, including my own two 
trawlers, the DAWN and the DUSK, are less than 100 feet and are 
owned by Kodiak residents. I have been a fisherman since 1959 
and owned or co-owned all the vessels I have been on. I have 
survived many catastrophes during those 41 years, the collapse 
of the King and Tanner crab and shrimp, the 1964 earthquake, 
the sea lion closures of 1992, the roe-stripping vessel raid of 
1989, and market problems that affected canners and boats 
alike.
    During this time we always had new fisheries to develop, so 
we survived. We are now legislated into smaller and smaller 
areas of opportunity. We can no longer diversify. With the 
collapse of crab and shrimp in the late seventies, Senator 
Stevens introduced legislation both in 1978 and 1979 to help 
Alaskans Americanize the bottom fisheries. I would like to 
quote from the Kadiak Times of February 1, 1979, his 
introduction of his bill, and I quote:
    The development of the bottom fish industry has been one of 
my highest priorities, and the enactment of the 200-mile limit, 
which I cosponsored with Senator Magnuson, laid the 
foundations. Alaskans must now build a bottom fish fleet, and 
the legislation introduced will help that develop by 
substantially reducing the cost of loans to Alaska fishermen.
    A number of us seized the opportunity and converted our 
vessels. In a very short time, we did Americanize the 
fisheries. The Gulf of Alaska communities led this effort with 
help from grants from the Saltonstall-Kennedy funds through the 
Alaska Fisheries Development Foundation. These grants created 
the first full production of a shore-based surini plant at the 
Alaska Pacific Seafoods in Kodiak.
    We also supported the development of codfish fisheries with 
the development of a cod and pollock fillet plant with Trident 
Fisheries in Akatan. Then we concentrated on protecting the 
fish. A status of stock document is presented every year. The 
council very conservatively created quotas for each species. 
Pollock in the gulf has gone from 400,000 metric tons in the 
early eighties down to around 90,000 for the year 2000. The cod 
in the gulf went from 81,000 down to 58,700.
    With the co-operation of the canneries, we are developing a 
flatfish and Pacific Ocean perch fisheries, but with the 
tremendous increase of the halibut biomass and the fixed cap, 
we are only allowed to catch a very small percentage of the 
quota.
    We offered 10 percent of the gray cod for a small boat pot 
fishery to take place inside the State's 3-mile zone. The State 
ended up taking 25 percent. The draconian sea lion restrictions 
of 1999 and 2000 have pushed us further off-shore, a very 
dangerous situation for our small trawlers, forcing us into 
areas of potential higher bycatch, shorter seasons, and rougher 
weather. We are forced into a disastrous race for fish. An 
influx in the Bering Sea is also shortening our seasons.
    This means less work for our resident cannery workers and 
less income flowing through town. When shore cannery workers 
leave town, new people must be trained each opening. Costs go 
up, and recovery goes down.
    Forming co-ops will allow fuller compliance with the intent 
of improved retention and improved utilization. They would also 
limit the number of plants and boats. This would give us a 
known situation to work with. The vessels and plants are 
already overcapitalized. More plants would mean more boats, 
therefore shortening our limited season and income even more.
    I wanted to thank Senator Stevens for his help in providing 
$5 million for sea lion research in the year 2000. Beyond 2000 
we need to continue the research on the availability and use of 
prey by the Stellar sea lion in the Kodiak area. Wynne, 
Narcross, Hills and Buck are the principal investigators. To 
make this research meaningful, we need National Marine 
Fisheries Service to open Barnabus and Gull Point, as outlined 
in the University of Alaska research plan.
    This program was only funded at a reduced level for 1 year. 
We need multiyear funding in the future. This research is 
critical to the long-term survival of Kodiak, Sand Point, 
Seward, Cordova, and other communities.
    And just in closing, Senator, I am very worried at 
essential fish habitat also.
    [The prepared statement of Mr. Burch follow:]

          Prepared Statement of Al Burch, Executive Director, 
                      Alaska Draggers Association
    I appreciate the opportunity to speak before this committee. I am 
Al Burch, Executive Director of the Alaska Draggers Association located 
in Kodiak, Alaska.
    Most of the boats I represent including my own two trawlers, the 
Dawn and Dusk are less than 100, and are owned by Kodiak residents. I 
have been a fisherman since 1959 and owned or co-owned all the vessels 
I have been on. I have survived many catastrophes during these 41 
years, the collapse of the king and tanner crab, shrimp, the 1964 
earthquake, the sea lion closures of 1992, the roe stripping vessel 
raid of 1989, and market problems that affected canneries and boats 
alike.
    During this time we always had a new fishery to develop so we 
survived. We are now legislated into smaller and smaller areas of 
opportunity. We can no longer diversify.
    With the collapse of the crab, shrimp in the late 70's Senator 
Stevens introduced legislation in both 1978 and 1979 to help Alaskans 
to Americanize the bottom fisheries.
    I would like to quote from the Kadiak Times of February 1, 1979--
his introduction of the bill ``The development of the bottom industry 
has been one of my highest priorities, and the enactment of the 200 
mile limit which I co-sponsored with Senator Magnuson laid the 
foundation. Alaskans must now build a bottom fish fleet and the 
legislation introduced will help that development by substantially 
reducing the cost of loans to Alaskan fishermen.''
    A number of us seized the opportunity and converted our vessels. In 
a very short time we did Americanize the fisheries. The Gulf of Alaska 
communities lead this effort with help of grants from the Salton-Stall 
Kennedy funds through Alaska Fisheries Development Foundation. These 
grants created the first full production shore-based surmi plant at the 
Alaska Pacific Seafoods in Kodiak. It also supported the development of 
the cod fish fisheries with the development of a cod and pollock fillet 
plant with Trident Fisheries in Akutan. Then we concentrated on 
protecting fish.
    A status of stock document is presented every year. The Council 
very conservatively created the quota for each species. The Pollock in 
the Gulf has gone from 400,000mt in the early 80's down to around 
90,000mt for 2000. The Cod in the Gulf went from 81,000mt down to 
58,715mt. With the co-operation of the canneries we are developing a 
flat fish and pacific ocean perch fishery. But with the tremendous 
increase of the halibut biomass and a fixed by-catch cap, we are only 
allowed to catch a very small percent of the quota.
    We offered 10% of the gray cod for a small boat fishery to take 
place inside the States 3 mile zone, the State took 25%.
    The draconian sea lion restrictions of 1999 & 2000 have pushed us 
further off shore (very dangerous for our smaller trawlers) forcing us 
into areas of potential higher by-catch. Shorter seasons and rougher 
weather, we are forced into a disastrous race for fish. An influx of 
boats from the Bering Sea is also shortening our season. This means 
less work for our resident cannery workers and less income flowing 
through town. With short openings, cannery workers leave town. New 
people must be trained each opening, costs go up and recovery goes 
down.
    Forming co-ops will allow fuller compliance with the intent of 
Improved Retention & Improved Utilization. They would also limit the 
number of plants and boats. This would give us a known situation to 
work with. The vessels and plants are already over capitalized. More 
plants would mean more boats, therefore shortening our limited season 
and income even more.
    I want to thank Senator Stevens for his help in providing 
$5,000,000 for sea lion research in the year 2000. Beyond 2000 we need 
to continue the research on availability and use of prey by stellar sea 
lions in the Kodiak area.
    Wynne, Norcross, Hills, and Buck are the principal investigators. 
To make this research meaningful, we need National Marine Fisheries 
Service to open Barnabus and Gull Point as outlined in the University 
of Alaska research plan.
    This program was only funded at a reduced level for 1 year. We need 
multi year funding in the future. This research is critical to the 
long-term survival of Kodiak, Sandpoint, Seward, Cordova and other Gulf 
communities.

    Senator Snowe. Thank you very much, Mr. Burch.
    Mr. Phelps, on the question of essential fish habitat, you 
said in your testimony that you did not believe that nonfishing 
interests were meant to be included in this process, is that 
correct?
    Mr. Phelps. That is correct, Senator. It was my 
understanding that the Magnuson act focused on ocean fisheries, 
and we are being drawn in by the application of this to streams 
and any activity that could possibly affect a stream.
    Senator Snowe. And you believe that the 1996 amendments 
never intended to have the nonfishing interests directly 
affected by this process?
    Mr. Phelps. That is correct. I believe that for a couple of 
reasons. One is the law itself, and second is the fact that 
there is no representation for those interests on the councils 
that are making these determinations.
    Senator Snowe. Do you have specific examples where there 
have been permitting delays as a result of the consultation 
process that NMFS has engaged in with other agencies? Where it 
has actually held up specific permits?
    Mr. Phelps. Actually, that is one of the reasons that I 
would like to get a response from NMFS with respect to the 
consultations that have been held. It appears to me, without 
having that information, that some of the consultations that 
have ben held in Alaska, and I heard Ms. Dalton say this 
morning there were 400 of them, may have been -- because it 
focuses on consultations with Federal action agencies, and what 
I have seen showing up in some forest service EIS's would 
indicate to me that some of those consultations may have taken 
place in the context of timber projects proposed by the forest 
service, and it would be interesting to see what the dynamic is 
there. We suspect there are delays. We also suspect, however, 
that like with the ESA these consultations are starting out as 
being fairly benign, but as time goes along could become 
increasingly draconian.
    Senator Snowe. More than a consultative process.
    Mr. Phelps. That is correct, and more than an information-
sharing process as well.
    Senator Snowe. Now, have you been turned down in your 
request for consultations?
    Mr. Phelps. We have not been turned down. It is just taken 
them a long time to get it together, and then what they have 
said is, they do not have the information compiled yet, and it 
will cost us in excess of $30,000 to get the information sent 
to us.
    Senator Snowe. And when was that request made?
    Mr. Phelps. We filed the request on November 18 of last 
year, 2 months ago today.
    Senator Snowe. Are you talking about the 2,000 that they 
have done?
    Mr. Phelps. That is correct. The FOIA focused on the 
statement in the NOI that there have been 2,000 done.
    Senator Snowe. Now, Mr. Seaton, you have taken the opposite 
point of view on this matter. Can you tell us why you think 
that nonfishing activities should be incorporated in this 
process? Could you also explain how you think the essential 
fish habitat should be implemented, in a way that does not 
represent a very complicated regulatory process? As we have 
even seen on the Endangered Species Act, the intent may be 
right, but the process becomes so complicated and expensive 
that it undermines the ultimate goal.
    I know you are suggesting very specific language to further 
address essential fish habitat, but do you think that is going 
to create more problems?
    Mr. Seaton. Senator, the Alaska Marine Conservation Council 
has addressed essential fish habitat from the very beginning. 
We helped work with Senator Stevens and others to get this into 
law, because it is so very important for the fish habitat 
protection.
    Alaska Marine Conservation Council has concentrated on 
benthic--that is, bottom-of-ocean--habitat as our primary goal 
and our focus in the North Pacific. We think that the reason it 
was so broadly interpreted is because NMFS just does not have 
very much information on a single-species basis on what the 
essential fish habitat is. We think that the habitat areas, 
HAPCs, are where the rubber meets the road, and that is where 
things get done for essential fish habitat, and so as you will 
notice our specific language is dealing with protection of 
habitat, especially benthic habitat, from destructive fishing 
practices, and that is where our concentration is.
    Senator Snowe. Would you agree with a further clarification 
on the essential fish habitat definitions? Do you see this as 
problematic at all?
    Mr. Seaton. Yes, Senator, we do see that there are some 
problems with that, and we also suggested some specific 
language and some specific ways to pinpoint this down, 
requirements to actually get to some studies that are 
investigating the effects of fishing gear on habitat.
    You know, what we have in most of these areas is not a 
wealth of knowledge. We have a problem in that we have a 
deficiency of knowledge, and so we are operating in the dark on 
many of these things, but the habitat area as a particular 
concern is a way in which National Marine Fisheries Service has 
set up a matrix of not only areas, but of what the concerns 
are, high and low impacts, and that seems to work for the areas 
that we have talked about.
    Senator Snowe. Mr. Phelps showed this map showing the 
designation. Would you agree that this may be an overly broad 
interpretation of essential fish habitat? This is similar to 
what we are dealing with in other areas. We have had a problem 
in the Gulf of Maine and the Gulf of Mexico. The same sort of 
issues have been raised time and again. We are using broader 
designations as opposed to trying to narrow the designations. 
Would you agree that that may be overly broad?
    Mr. Seaton. Yes, Senator. I think that what we need to do 
is--and I think the habitat area is of particular concern, to 
get to that point of identifying the habitats that we need to 
worry about, and especially, you know, like I said in our 
testimony, we need to worry about the effects of destructive 
fishing practices on that habitat.
    Senator Snowe. Do you think it is possible that we can do 
it? Is it possible to narrow the designations, while achieving 
the goal?
    Mr. Seaton. I think so, yes.
    Senator Snowe. You do?
    Mr. Seaton. Yes.
    Senator Snowe. Mr. Burch, what changes have you seen in 
your own community since the race to fishing has ended?
    Mr. Burch. Our seasons are shorter and shorter. When we 
were in shrimp, I fished 10 months out of the year. Due to a 
regime shift, the shrimp and the crab disappeared. There are 
studies done that show that that was not fishing pressure, 
especially in the shrimp.
    With Senator Stevens' help we converted into, at that time, 
joint ventures. Our ultimate goal was Americanization. We did 
do that. We had fairly extended seasons on cod and pollock. As 
we developed our shore-based infrastructure, as we got more 
sophisticated with our gear, we caught our quotas in shorter 
and shorter time. We expanded into other fisheries to take up 
that slack. Again, you know, the learning curve as we became 
more efficient, better marketing, again our seasons got 
shorter.
    With the legislation forcing us out of certain areas into 
different areas our bycatch patterns have changed, sometimes 
for the good, sometimes not.
    I had to do a count for my insurance company. I am down now 
to about 120 days of actual fishing time per year, where I used 
to fish 10 months, and that affects the production in town. 
With the way our seasons our chopped up now, we cannot keep 
cannery workers. We had a very large ethnic community in 
Kodiak, Filipino, Spanish, Mexican workers. We are starting to 
lose that trained work force now. This year for the first time 
our canneries are flying people in from outside, putting them 
up in bunkhouses.
    Just, we need the opportunity to rationalize the fisheries. 
We need to have the tools to work with the council to create 
the seasons that will allow us to take the fish at the best 
biological time for the fish, and also the best economical time 
for us.
    Senator Snowe. You mentioned that small boat owners are 
taking greater risks. Do you believe that the fishing 
regulations have forced small boat owners to go farther out to 
sea and to take more risks in order to go where the fish are?
    Mr. Burch. Well, no, not to go where the fish are. Sea lion 
measures are closing us out of areas where the fish are. We are 
being forced out of some pretty good areas, and that puts us 
out off-shore looking for fish, and that is where you get into 
that area of when you are looking for fish your bycatch 
generally goes up.
    If we were allowed in those in-shore areas, we would be 
closer to protection, there is a higher concentration of fish, 
and shorter fishing trips.
    Senator Snowe. Thank you.
    Senator Stevens.
    Senator Stevens. You want, Al, to really have a council to 
have authority to have co-ops or other management techniques 
such as IFQ in all the fisheries, don't you?
    Mr. Burch. Right. Our position is the right to co-op all of 
the federally managed fisheries under the council system.
    Senator Stevens. I sort of think they have got that 
authority already.
    Mr. Burch. We do not have the--if I understand the lawyers 
right, not in the gulf. We cannot co-op in the gulf. You know, 
we met before you in March. We thought we had an avenue to 
follow. The attorneys at that time thought we could do 
something. Evidently we cannot. You know, I am not a lawyer, I 
do not fully understand the situation.
    Senator Stevens. Is that because of legal restraints, or 
because of the problem of financing the co-ops?
    Mr. Burch. Legal restraints on co-ops in the gulf. Under 
the 1937 act fishermen can co-op, but you need something like 
90 percent of the fishermen to agree to it, then actually you 
do not get anything when you co-op. You do not get the 
opportunity to work with your canneries.
    Senator Stevens. I see. It is the interrelationship between 
facets of the industry, fishing and processing.
    Mr. Burch. Right. It is going to need a joint venture type 
operation in order to work, and right now we do not have that 
opportunity in the gulf.
    Senator Stevens. OK. Paul, you had an interesting 
suggestion about observers. Do you want to go into that a 
little bit? I do not think you did that here. You suggested, 
did you not, that fishery managers assign observers to where 
they are most needed and not have this requirement of 100 
percent on all boats?
    Mr. Seaton. Yes, Senator. One of the problems of the 
observer program has been the way it is financed and the way it 
is designated, not by fishery, where you are needing to look at 
bycatch rates and verify things, but just by vessel length, and 
this is a problem.
    AMCC has supported a fee-based system where everybody that 
has harvested fish is going to paying based on the amount of 
fish they are taking, and then National Marine Fisheries 
Service should apply and designate where the observers are 
based on the need for management and regulation.
    Senator Stevens. The regional council, or the National 
Marine Fisheries Service?
    Mr. Seaton. Well, the regional council, the National Marine 
Fisheries Service actually I think implements the plan that the 
council comes up with, so what we want to do, what we think is 
necessary is to get the most value out of the observers, you 
know, the money that is being spent, then the managers know 
where they need the data from, and that is where the observers 
should be placed.
    Senator Stevens. OK. Now, Jack, on your point, for the 
nonfishing interests that are impacted by the essential habitat 
concept, for those that are already subject to EIS and 
endangered species action, I can understand you, but there are 
some that are not involved in that. It seems to me we have to 
work out something whereby the redundancy factor is eliminated. 
Have you thought about that?
    Mr. Phelps. We have, Senator, and I am not sure I disagree 
with you, but I think the number of actions where there is not 
some regulatory process in place through which NMFS could get 
information and provide commentary are pretty small, because if 
it is operated within the coastal zone there is the CZM 
process, and I think I would go one step farther than what you 
summarized my thoughts to be, and that is that to the degree 
that we are subject to regulation and restrictions, say, 
through the Alaska State Forest Practices Act, with its best 
management practices mandated and so forth, to the extent that 
the issues concerning our effect on fish habitat are addressed 
under some other regulatory process, then it seems that other 
than an information-sharing relationship, that NMFS should not 
be accorded jurisdiction in those areas, if the issues are 
addressed properly and thoroughly by other agency regulations 
and other laws.
    We believe that the ground is fairly well-covered at this 
point with respect to that, and so what we would urge is that 
that be clearly looked at, and that perhaps some exception with 
respect to NMFS would have some jurisdiction if they can 
demonstrate that the issue is not being appropriately addressed 
by some other State or Federal regulation.
    Senator Stevens. I am really concerned with the increasing 
costs to the Federal agencies by the redundancy in these 
applications.
    Mr. Phelps. And well you should be, sir.
    Senator Stevens. We are financing all of these agencies to 
conduct their activities under the Endangered Species Act, and 
to some extent that is redundant to the need for process 
itself, and then beyond that, we are financing consultations 
between those agencies as one comments upon activities in the 
jurisdiction of the other, and it seems that if you add to 
that, then, the extreme cost of litigation when it is brought 
by one Federal agency against another, or a State agency 
against a Federal agency, or a private entity against both, 
this thing is pyramiding now to be excessive costs that reduces 
the amount of money we have for research, really for 
application to programs to enhance the reproductive capability 
of fisheries.
    Somehow or other I think we have got to find a way to 
eliminate this redundancy and get down to assigning co-
responsibilities to individual Federal agencies or the State, 
and not allow this conflict between their authority to lead to 
this excessive litigation. I do not know how to do that, but 
you have got your finger on a portion of it that is applied to 
the nonfishing, nonocean areas which are going to be impacted 
because of the upland and particularly the river and stream--I 
have not even mentioned wetlands. On top of that, there is 
wetlands.
    In this State it pays the price, because the money goes to 
the Federal agencies, and particularly to the activities they 
must conduct in the courts, and we are losing the money, the 
research base to get the funding for the actions we need, and 
the gear reduction and other things. Somehow we have to work 
together to find a process to work in this.
    And Paul, I think your area may be the key to finding 
solutions, because I hear you. You are saying, let us 
concentrate on the seabed first, right?
    Mr. Seaton. Right.
    Senator Stevens. And that is what we intended to do, I 
think. That is the dichotomy I see here, Madam Chairman.
    Mr. Phelps. Senator Stevens, if I might, I could not help 
but wonder today as I was listening to some of the needs under 
the provisions of the Magnuson act for funding and so forth, 
the almost $14 million that NMFS requested for fiscal year 2000 
to do EFH consultations could probably be used better 
elsewhere, within the context of the Magnuson act.
    Senator Stevens. I think they would probably agree, but 
they feel they are mandated right now by the terms of the act 
to do that. I think we have got to review that act, and I think 
it is going to have to be something that is worked out with the 
agencies to delineate their responsibilities, to give them back 
some of their authority and limit the access to the courts for 
so much. Every one of these Federal agencies faces increased 
participation in court activities that challenge their 
authority before they even make the decisions, which is to me 
wrong.
    Thank you very much, Madam Chairman.
    Senator Snowe. Well, thank you, Senator Stevens, and thank 
all of you. Mr. Seaton, we will look at your recommendations 
for specific language as we review this entire process.
    One question I did want to ask, on individual fishing 
quotas: do you believe that Congress should lift the 
moratorium? It is going to expire in October, but do you think 
we should allow it to happen? Or should we have some conditions 
under which IFQ's could exist?
    Mr. Seaton. The position of AMCC is that we should 
definitely have some conditions concerning standards, and we 
are worried about the conservation implications that occur here 
in the moratorium, and like I said, also with the other things 
that are going on, like the co-ops. There are big problems, 
potential problems with the conservation implications of the 
co-ops.
    I mean, we have all these applications for co-ops going 
forth now for people to lock in practices in fisheries that 
have a high bycatch rate, so we have competing gears right now, 
and gears that have high bycatch rates and that have been 
losing harvest share are seeking to quickly move to co-ops so 
that they can lock in that, and that will lock in those high 
bycatch rates. We also see the co-ops as coming back to you 
saying, well now, we should have credit for our past bycatch, 
and we should be rewarded for our dirty fishing in the past, 
and so there are a number of issues in co-ops, with the side 
boards and those kinds of things, that are very important, and 
we would like to send you some other comments on those.
    Senator Snowe. Yes, please do. OK, thank you very much. 
Thank you all very much.
    The final portion of our hearing this morning is an open 
microphone session for any individuals who may care to make a 
comment. We will allow everyone 2 minutes. You may have the 
opportunity to express your views to this committee, and 
Senator Stevens' staff, Jim Egan, will introduce the speakers 
for this part of the session.
    Senator Stevens. Madam Chairman, as I understand, there was 
a requirement to sign up, so that these people who wanted to 
come have already signed up, right?
    Mr. Egan. That is correct.
    Senator Snowe. Begin.
    Mr. Egan. Hazel Nelson, vice president of Bristol Bay 
Economic Development Corp.
    Senator Stevens. Who will be next?
    Mr. Egan. Following her will be Arni Thomson, executive 
director of Alaska Crab Coalition.

STATEMENT OF HAZEL NELSON, VICE PRESIDENT, BRISTOL BAY ECONOMIC 
                    DEVELOPMENT CORPORATION

    Ms. Nelson. Thank you, Senators. I appreciate the 
opportunity come here and share my concerns for Bristol Bay 
Economic Development Corporation with you. We are one of the 
CDQ groups, and I am Hazel Nelson, the vice president of BBEDC.
    There are 17 communities in our CDQ region, and we have 
about 6,000 residents in those communities, and in many 
respects all of the CDQ communities have the same problems and 
opportunities. However, each of our regions are very different. 
In Bristol Bay, for instance, we have the salmon fishery in the 
State waters, which is a constant boom and bust economy for our 
villages.
    BBEDC has invested in the Bering Sea pollock, crab, and in 
long-lining operations. We have concentrated on maximizing our 
returns on CDQ royalties while focusing on protecting the 
resources. We have also focused on human resource development 
by funding training, employment, and scholarships, and this is 
for all of our residents, regardless of race. Sometimes the CDQ 
program has been called a Native program. It is not. It is for 
everybody who is in a CDQ community.
    We are aware of the importance of both State and Federal 
oversight in fisheries. We have been unanimously supportive of 
oversight of the CDQ program to ensure that the benefits of the 
program are being brought to each of our communities.
    Finally, we do not want to lose our opportunity to continue 
this program because of mismanagement of how the CDQ is brought 
to those communities. The CDQ program has made the biggest 
difference in each of our villages since the inception of the 
Alaska Native Claim Settlement Act, and we urge you to continue 
support of this program in the reauthorization of the Magnuson-
Stevens Act, and if I knew I had 2 minutes I would have said a 
lot more.
    Senator Snowe. Thank you very much. We appreciate it.
    Ms. Nelson. Thank you.
    Mr. Egan. Thank you. Arni Thomson, executive director of 
the Alaska Crab Coalition. Following Arni is going to be John 
Gauvin, director of the Groundfish Forum.

  STATEMENT OF ARNI THOMSON, EXECUTIVE DIRECTOR, ALASKA CRAB 
                           COALITION

    Mr. Thomson. Thank you, Senator Snowe and Senator Stevens 
for the opportunity to make a few brief comments. My name is 
Arni Thomson. I am executive director of the Alaska Crab 
Coalition, a trade association representing the owners of 55 
Bering Sea crab vessels from Washington, Oregon, and Alaska. 
The ACC submitted extensive written comments to the 
Subcommittee for its Washington, D.C. hearing.
    I would first of all like to reference the excellent 
technical remarks of Penny Dalton, head of the National Marine 
Fisheries Service. In addition, I appreciate John Iani and 
Kevin O'Leary for having brought attention to the plight of the 
Bering Sea crab fisheries, and having made some suggestions 
about the direction in which we need to move.
    The ACC definitely supports moving ahead with crab co-
operatives for Bering Sea crab fisheries. We feel that it is 
vital, if many of the independent vessel owners are going to 
survive in the near future.
    I would also like to take the opportunity to compliment the 
U.S. Senate for its leadership in adoption of the 1996 
amendments to the Magnuson-Stevens Act to improve safety and 
conservation, including control of wasteful bycatch and 
initiation of habitat protection measures.
    The ACC applauds the U.S. Senate initiative for the 
enactment of the American Fisheries Act in 1998, which 
frameworked an innovative harvester and processor catch 
history-based quota share program for the Bering Sea pollock 
fishery. The negotiated framework contained in the act had the 
inherent resource life-saving and economic benefits of an ITQ 
program.
    Having said that, I would like to just divert for a minute 
at Senator Stevens' suggestion for some input on some ideas in 
terms of John Iani's suggestion for a direct appropriation. He 
was searching for an amount. I would like to just sort of 
briefly respond and suggest somewhere in the neighborhood of 
$30 to $40 million in a direct appropriation.
    The source of that, the Alaska Crab Coalition and another 
nonprofit group called the Crab Group worked very intensively 
on a business plan for a crab buy-back program under section 
312 of the act, and at that time the industry was asking for 
$60 million in an industry-funded buy-back, so the industry 
cannot afford that now. We are suggesting maybe a $30 million 
appropriation.
    Also, another suggestion, to open up title 11 to allow 
individual vessel owners on a vessel-by-vessel basis to access 
title 11 loan money for the sole purpose of purchasing vessels 
to retire the vessels on an individual basis, but allow the 
transfer of the catch history to be used in a council-
authorized co-op program. This would enable down-sizing of the 
fleet, but provide an incentive for individual vessel owners to 
purchase the vessels out of the fishery. This is kind of a 
spin-off from the AFA.
    Thank you very much for the opportunity.
    [The prepared statement of Mr. Thomson follows:]

        Prepared Statement of Arni Thomson, Executive Director, 
                         Alaska Crab Coalition
    The Alaska Crab Coalition (ACC). is a trade association which 
represents the owners of 55 Bering Sea crab vessels and a similar 
number of service and supply companies. The ACC submitted extensive 
written comments to the Subcommittee for its Washington D.C. Hearing on 
July 22, 1999. Reiterated below are key points from that statement.

          The ACC compliments the U.S. Senate for its 
        leadership in adoption of the 1996 amendments to the MSFCMA for 
        improved safety and conservation, including control of wasteful 
        bycatch and initiation of habitat protection measures. The 1996 
        safety, bycatch and habitat protection provisions had their 
        origins in the proposals of the ACC, FVOA and DSFU.
          The ACC applauds the U.S. Senate initiative for the 
        enactment of the American Fisheries Act in 1998. which 
        frameworked an innovative harvester and processor, catch-
        history-based quota share program for the Bering Sea pollock 
        fishery. The negotiated framework contained in the Act has the 
        inherent resource, life-saving and economic benefits of an ITQ 
        program, otherwise barred from implementation by the 1996 
        moratorium on new ITQ programs.
          Since 1996, three of the five major Bering Sea crab 
        fisheries available to the fleet have been closed for low 
        abundance, with the major one, opilio crab, scheduled for 
        likely closure in 2001, and the Bristol Bay king crab fishery 
        in a low and questionable stock status.
          Although many in the commercial fishing industry 
        today are promoting the need for research as the key to 
        sustainability in fisheries, ACC members' experience over the 
        last twenty-five years with research into crab life cycle 
        issues leaves them pessimistic about the productivity of 
        science. New scientific research in crab, unless it is 
        incorporated within a revitalized management structure--ITQs or 
        co-operatives, will contribute little towards rebuilding and 
        sustainability.
          ITQs or co-operatives can provide the single most 
        effective means of promoting safety, resource conservation, and 
        habitat protection through reduction of what is now excessive 
        capacity to sustainable levels. The widely publicized hazardous 
        race for crab could be brought decisively to a close. As 
        recently as 1999, 7 lives were lost in the Bering Sea crab 
        fisheries.
          Longer soak times for pots would allow juvenile and 
        non-legal female crabs to ``sort out'' on the ocean bottom 
        through escape mechanisms in the gear In a slower-paced 
        fishery, there would be fewer potlifts, thus reducing bycatch 
        mortality due to exposure of juvenile and female crabs to 
        multiple captures, on-deck handling, changes in water 
        temperature and to predation in a weakened condition.
          Under the existing regime, managers are restricted to 
        reducing pot limits, to counteract overcapacity and to slow the 
        pace of the crab fisheries. However, this exacerbates directed 
        fishing mortalities and precludes the likelihood for rebuilding 
        stocks that might be presented by changing climatic and 
        oceanographic conditions.
          In conclusion, the ACC is encouraged that, at the 
        July 22nd 1999 Senate hearing, in written testimony, the 
        chairmen of all eight of the regional councils called for 
        termination of the ITQ moratorium.

    Senator Snowe. Thank you. We appreciate it.
    Mr. Egan. John Gauvin, and then Morgan Crow.

      STATEMENT OF JOHN GAUVIN, DIRECTOR, GROUNDFISH FORUM

    Mr. Gauvin. Tank you, Senators Snowe and Stevens, for the 
opportunity to make a few comments.
    I am John Gauvin, and I am the director of the Groundfish 
Forum. We are flatfish fishing boats in the Bering Sea, and our 
group is principally involved with development of bycatch 
reduction methods for our fisheries.
    I would like to talk a little bit about essential fish 
habitat and the existing mandate in the act. I do agree with 
earlier comments that their mandate is too broad. They should 
focus it on the essential part of essential fish habitat. That 
has been covered, but a couple of other things that I thought 
were worth mentioning, there is a body of information about the 
impacts of fishing gears. It is mostly about trawls and 
dredges. It is inadequate, and most of it was developed at a 
time before side scan sonar was widely available and the 
techniques were really there that exist today.
    I think one of the things Congress could do is put some 
money toward development of empirical research, because I think 
that is what is going to help further our understanding and 
make the intelligent decisions on the effects of fishing gear 
on fish habitat, which is very important to the future of this 
industry.
    I will tell you that our group is involved in funding some 
of this research. It is incredibly complex. The experimental 
designs to be able to control for natural disturbance are 
overwhelming, but this is what has to happen if we are going to 
understand what fishing gears are doing, and I believe that to 
put this mandate in without funding is not going to result in a 
good debate over the effects of fishing gears, so I encourage 
you to do that.
    Second, I would like to see the act include language that 
would take out the allocation agenda aspects of essential fish 
habitat that I think is sort of playing out as this mandate 
gets implemented. What I mean by that is, a competing gear 
group, if there is available information on one gear group that 
suggests there may be some implications of the gear on habitat, 
to use essential fish habitat to further that aim, rather than 
really getting at the goal of essential fish habitat, which is 
to protect the habitat.
    I think that some standards should be put in for peer-
reviewed science to be used. I think it should say up-front 
that if there are problems with a gear type, that it does not 
necessarily follow that that gear loses its allocation of fish. 
There should be an opportunity to modify that gear to address 
the issues with the gear, or suggest where that gear can be 
fished, or the type of habitat that would be appropriate for 
that gear.
    Thank you very much for your time.
    Senator Snowe. Thank you very much.
    Mr. Egan. Morgan Crow, and then Thorn Smith.

           STATEMENT OF MORGAN CROW, COASTAL VILLAGES

    Mr. Crow. Good afternoon, Madam Chairman. My name is Morgan 
Crow. I work for Coastal Villages. We had intended to have our 
president deliver this speech. He called this morning from the 
village and they are having rains there and planes cannot land. 
Therefore I am going to read his message.
    Our president's name is Fred K. Phillips from Guidamuk. 
This is his thing that he faxed in to me this morning.
    It is my firm belief that the CDQ program is working, and 
working well.
    Senator Snowe. Could you speak into the microphone?
    Senator Stevens. Pull the mike toward you.
    Senator Snowe. We cannot hear you.
    Mr. Crow. How is that?
    Senator Snowe. That is great.
    Mr. Crow. It is my firm belief that the CDQ program is 
working, and is working well. It is succeeding in achieving the 
goals that were set out at its inception by the North Pacific 
Fisheries Management Council in 1991, and it was placed into 
Federal law as part of the Magnuson-Stevens Act in 1997.
    On behalf of our member communities, I want to thank you 
for your leadership in supporting this program, and look 
forward to its continued development in the future. Coastal 
Villages is providing many of the tangible benefits from the 
program directly to the residents of its member communities, 
employment opportunities, training, scholarship programs, and 
the development of operating fishing businesses in our 
communities.
    In addition, I would like to highlight some of the programs 
that we believe are unique to CVRF that will soon be seen as 
some of the extraordinary benefits to come from this program. 
These include the CVRF leadership team, the Yukon-Kusokwin 
Delta Employers Council, and numerous partnerships with 
Federal, State, private, tribal, and regional entities that 
create and expand village-based services in the area of 
literacy, business education, drug and alcohol dependency and 
prevention, youth mentoring, home support programs, development 
of information technology skills and infrastructure, and 
community development strategic planning.
    CVRF is implementing these services in collaboration with 
Alaska Human Resource Investment Council, the State-wide 
Private Industry Council work force, investment board, the 
Cholista Corporation, the Yukon-Kusokwin Health Corporation, 
Junior Achievement of Alaska, United National Indian Tribal 
Youth Unity, the Distance Delivery Consortium, School-to-Work 
Business Consortium, the University of Alaska Rural Development 
program, the U.S. Army Corps of Engineers, the State 
Departments of Transportation, Energy, and Trade and 
Development, the U.S. Department of Agriculture, Rural 
Development, and the U.S. Department of Commerce and Economic 
Development Administration.
    Thank you for your support of the CDQ program.
    Senator Snowe. Thank you very much.
    Mr. Egan. Thorn Smith, and then Charles McGee.

  STATEMENT OF THORN SMITH, NORTH PACIFIC LONGLINE ASSOCIATION

    Mr. Smith. Good afternoon, Senators. Thank you for your 
patience. I will try to talk fast here.
    I am with the North Pacific Longline Association, and 
represent freezer and longliners fishing process off Alaska. 
Freezer longliners are owned and operated by Alaskans, Alaska 
Native groups, and Washingtonians. Most of the folks in our 
association have come up the hard way, from the back deck. We 
are now a group of small, independent competitive companies. We 
would like to stay that way. Sometimes Federal legislation 
aimed at stabilizing other sectors of the industry tend to 
destabilize ours, and I will try to explain.
    There were two events in recent years that have posed 
serious threats to our continued existence. First is fishery 
interaction with the short-tailed albatross, a seriously 
endangered sea bird. Second is an unintended consequence of the 
passage of the American Fisheries Act.
    With regard to the first issue, the general issue is agency 
responsibility in endangered species interactions. It relates 
to Senator Stevens' statements on research. In 1995, we were 
shocked to find that we had taken the short-tailed albatross on 
the endangered species. We had never heard of one. Our industry 
response was to develop regulations that are now in effect to 
try to prevent us from doing that.
    The Fish & Wildlife Service wrote a biological opinion 
saying that NMFS was required in 1999 to commence research to 
figure out whether these methods worked. I was shocked to find 
later on, talking to NMFS staff, that NMFS had not budgeted any 
money for this research. I was concerned that that would give 
rise to a cause of action and litigation that could have dire 
consequences for our industry, so I joined with Ed Melville of 
the Washington Sea Grant, later with Ed Alverson, and we flew 
together a program by getting a bunch of small grants out of 
NMFS and Fish & Wildlife.
    We now have a program which we hope is meeting the 
obligation of the biological opinion, but it is a very 
difficult process. We are still dazed and confused as to why no 
Federal agency had undertaken this work a long time ago.
    The Endangered Species Act is a drop-dead act. There is no 
consideration, as you know, of the impacts on human activities. 
Given that, it is reasonable to expect the industry to 
participate in mitigative activities with respect to endangered 
species, but somebody in the Federal Government has got to 
shoulder the burden of figuring out how this gets done.
    We think in the course of Magnuson act reauthorization, 
since the Endangered Species Act is not going to be amended in 
the near term, as near as we can tell, that usually require 
that NMFS as steward of the fisheries identify potential 
commercial fisheries endangered species interactions, and 
perform the basic hands-on at-sea research necessary to 
discover what fishing techniques and equipment will mitigate 
those interactions with minimal impact on the fisheries, long 
before we get to the point where lawsuits are filed.
    We note that NMFS has spent millions of dollars trying to 
mitigate trawl bycatch. We think they should be doing the same 
thing for longliners.
    As far as co-ops are concerned, which is our second 
concern, the co-ops that were created in the American Fisheries 
Act have created a new race for fish in our fishery, people 
trying to get into our fishery because it is basically an open 
access fishery. There is a license limitation program, but it 
does not protect us.
    We tried to get protection in the act because we knew the 
co-ops were going to cause this. The Senate told us to go to 
the council to get side boards. We did that. The council twice 
voted emergency rules to protect us. The Secretary of Commerce 
has twice refused to implement those rules.
    A week ago, the council voted 9 to 1 to reaffirm its 
intention that these protections be implemented by emergency 
rule, and we are now waiting, still, to find out whether the 
Secretary of Commerce will do it.
    With respect to co-ops, there is one thing we are concerned 
about, and that is that within a fairly uniform group like 
ours, that you do not allow cherry-picking, or you do not 
change the law so that we can have cherry-picking or what Kevin 
O'Leary calls highliner co-ops. We do not want small subgroups 
within a fishery to be able to go out because they have got 
more catch within a certain period, or whatever. Small, little 
co-ops form a little co-op and basically screw the rest of the 
guys.
    If you allow that to happen, if you change the law, you are 
going to end up with that same rear view mirror effect that 
Rick Lauber was talking about. You are going to end up with a 
lot of people who get crunched. Better to require that 
everybody get in that room for 150 hours and negotiate on a 
level playing field, and at least the weaker players will have 
some chance of coming out with something, whether it is a long-
term buy-out, or whatever.
    Thank you very much.
    Senator Snowe. Thank you.
    Mr. Egan. Charles McGee. After Charles will be Mark Lloyd, 
and then Tammy Schrader.
    [The prepared statement of Mr. Smith follow:]

 Prepared Statement of Thorn Smith, North Pacific Longline Association
    Mr Chairman, members of the Senate, thank you for the opportunity 
to speak with you today. The North Pacific Longline Association 
represents freezer-longliners that harvest groundfish in the waters off 
Alaska, processing and freezing their catch at sea. Most of our owners 
and operators have worked their way up from the back deck in the 
traditional manner--we are now a group of small, independent and 
competitive companies--and we want to stay that way.
    In recent years two events have posed serious threats to our 
continued existence: fishery interaction with the short-tailed 
albatross, and passage of the American Fisheries Act. We are hopeful 
that you will be mindful of these occurrences as you proceed with 
reauthorization.
        agency responsibility in endangered species interactions
    In 1995 our industry was shocked when we found we had taken a 
short-tailed albatross, an endangered species. Neither the United 
States Fish and Wildlife Service (USFWS) nor the National Marine 
Fisheries Service (NMFS), responsible for seabirds and for regulating 
fisheries respectively, had given us warning. Our response was to 
develop a set of regulations to minimize seabird bycatch, that are now 
in effect. USFWS then wrote a biological opinion which required NFMS to 
commence research to test the effectiveness of these regulations during 
1999. In 1998 I discovered to my surprise that NMFS had not budgeted 
funds for the research.
    There followed a dizzying chain if events in which a researcher 
from Washington Sea Grant, another longline representative and myself 
developed a modest research program by obtaining an inadequate 
Saltonstall/Kennedy grant, exempted fishing permits, small grants from 
USFWS and NMFS. We are now meeting the obligation of the biological 
opinion, but would like to be testing many more applications. In my 
view a NMFS failure to undertake the research might well have provided 
a legal cause of action with dire potential consequences for our 
fishery.
    The Endangered Species Act provides no balancing test between the 
interests of the species involved and the impact of regulation on human 
activity--it is a drop-dead statute, and amendment in the near future 
seems unlikely. While it is reasonable to expect industry to 
participate in discovering ways to mitigate endangerd species 
interactions it is entirely unreasonable to expect a tiny fleet like 
ours to do basic research on a worldwide problem. So long as our 
environmental statutes maintain their current posture (we have no 
problem with the protection of endangered species), the Magnuson/
Stevens Act should require that NMFS, as steward of the fisheries, 
identify potential commercial fisheries/endangered species interactions 
and perform the basic hands-on at-sea research necessary to discover 
what fishing techniques and equipment will mitigate those interactions 
with minimal impact on the fisheries--long before lawsuits are filed. 
Alternatively (or perhaps better), NMFS should be required to provide 
adequate funding for those willing to take the initiative--undoubtedly 
this would require additional NMFS funding. NMFS has spent millions 
trying to mitigate trawl bycatch. Why not expend equal sums when 
longliners have a problem with an endangered species?
          the american fisheries act--no cherry-picking co-ops
    Among the unintended consequences of the American Fisheries Act is 
a race to establish catch history in the BSAI fixed gear fishery for 
cod, by those who have no real dependence on the fishery (exacerbated 
now by a crab stock crash). The theory is that a ``co-op'' may be 
established in the future, based on catch history, and everyone needs 
to race to get one. We were not allowed to participate in the 
development of the Act, and when we realized that it posed a threat to 
us, we asked that language be included in the Act to protect us from 
just this threat. We were told to go to the North Pacific Fishery 
Management Council. We did, and twice the Council recommended emergency 
rules to freeze the BSAI fixed gear cod fisheries at historic levels. 
Twice the Secretary of Commerce disapproved those rules. We are now 
awaiting with bated breath the secretary's response to a recent Council 
reaffirmation of its earlier intent.
    The sudden race for ``co-op'' catch history has placed us in 
serious jeopardy, and makes us ask what other legislative changes might 
have such unanticipated consequences. One which occurs to us is this: 
the NOAA Office of General Counsel has offered the opinion that absent 
a chance in legislation, NMFS cannot allocate ``catch history'' to sub-
groups within fisheries. This is exactly as it should be. ``Cherry-
picking co-ops'' raise the specter of groups of fishermen gathering in 
smoke-filled rooms calculating what qualifying years might be selected 
so that they can form a small co-op claiming the lion's share of their 
fishery's quota. Twenty per cent of the vessels could quite possibly 
walk away with forty percent of the quota, leaving the rest of the 
vessels to wither on the vine. Good continuing public policy would 
provide a level plyaing field so that all vessels in a fishery must be 
included in a co-op. In that manner those whose recent catch histories 
have suffered because of mechanical failure or for many other reasons 
will have some bargaining power and a chance to survive.
    In summary, we hope that in the course of reauthorization you will 
impose a specific requirement that NMFS identify potential endangerd 
species interactions in the fisheries it regulates, and undertake 
hands-on at-sea research to ameliorate the problems; and that you 
prevent the development of ``cherry-picking co-ops.''
    Thank you again for your attention.

      STATEMENT OF CHARLES McGEE, ANCHORAGE, ALASKA 99524

    Mr. McGee. My name is Charles McGee, for the record. On 
there is my post office box address, Anchorage, Alaska, 99524, 
and what you are looking at is a mathematical description of 
what a star looks like when it goes through Kodiak. Now, that 
was copyrighted in 1992, and I called it on my sign-up, In the 
Wake of IFQ's.
    Now, I was commercial fishing out of Kodiak. I have been in 
commercial fishing for many years prior to the IFQ's. In fact, 
I recorded in the State of Alaska, Juneau, incorporated an 
independent commercial fishing association in 1979, and I took 
my proposal, my business plan to Lydia Silcraig, professor of 
program planning and business development, University of 
Alaska, and she gave me an A plus. I was the only one who 
received any kind of grade, bothered to take a grant rating 
course to begin with, and then submitted that underneath 
Stevens' support through that foundation that was run by Mrs. 
Henpeel down in Juneau under that foundation structure.
    So from 1979, that fell flat because the proposal was 
essentially too good, and so then I went and got on-the-deck 
support for commercial fishing with salmon, prior to IFQ's 
there, limited entry permits, and then I went into Grey cod and 
halibut, and that was prior to IFQ's at that point.
    Then I went beyond that, once I got out of that industry 
because of the injuries sustained on the boat, wanting to get 
back to it, because then I realized there was much more 
draconian measures going on with the insurance industry, and so 
I went into investigating that aspect of it because of my 
sustained injury.
    I present all this to you because this is a Senate 
Committee on Commerce, Science, and Transportation, and I have 
not yet received a notice of consideration for a Nobel peace 
prize, and I cannot submit my own nomination. It has to be a 
professor or a Senator, any Senator, and of course that would 
give me the notoriety of achieving something that they have 
been trying to do for, oh, 100 years, to figure out the theory 
of everything. This is how all carbon-based life form came into 
being.
    I present this as a matter of record to Senator Snowe, and 
I will make a copy for Senator Stevens, and I also gave a copy 
to a commissioner representing the Securities and Exchange 
Commission, indicating to him, and giving him some background 
information that the State of Alaska, or its collective 
manipulative attitude in controlling resource development has 
been very bad to me.
    Senator Snowe. Well, thank you very much.
    Mr. Egan. Mark Lloyd, and then Tammy Schrader, followed by 
Jack Stern.

  STATEMENT OF DR. MARK LLOYD, EXECUTIVE DIRECTOR, ALASKA SEA 
                          LIFE CENTER

    Dr. Lloyd. I am Dr. Mark Lloyd. I am the executive director 
of the Alaska Sea Life Center, and I certainly want to thank 
Madam Chair, Senator Snowe, Senator Stevens and the committee 
for allowing me to say a few words. I will try to make my 
comments very brief.
    I am no fisheries expert. I am a relatively new Alaskan 
resident, but I did spend about 6 years as a conservation 
management individual in New England, and at that time there 
were numerous fisheries issues, including the management of 
George's Bank, which indirectly and directly affected the 
management of the entire region, and so I feel like I am kind 
of back in that arena again, even though I had no plans to be 
here at that time.
    Many individuals and organizations represented right here 
today have supported the institution where I work now, but the 
single key issue I think here today is information. We need 
more information on the marine ecosystem. For example, 
obviously the EFH designation, what are the essential habitats, 
and the direct impacts and social issues that go along with it.
    I simply want to encourage broadbased support from all of 
you on marine research, not only at the Alaska Sea Life Center, 
but also institutes of marine sciences, various governmental 
entities, and others, both public and private, to collect that 
data in order to minimize redundancy of people reinventing the 
wheel in different places.
    Our institution collaborates with the parks department, 
with NMFS, NOAA, with universities, and to disseminate data 
throughout those organizations as well as to the general 
public.
    I am sort of glad to say that the Sea Life Center is 
actually turning away research projects because of the physical 
facility limitations and the fiscal constraints upon our 
institution. The demand is overwhelming. It is really a good 
thing to see that that many people are looking into the marine 
ecosystem and what is going on there. We need that information.
    But we are now challenged to accept new projects on 
halibut, on cod, on invertebrates such as crabs, and we have to 
balance those physical limitations and those fiscal restraints 
in order to achieve those goals, but I simply want to encourage 
support of all scientific research to evaluate the ecosystem 
management and the social implications thereof.
    Thank you very much.
    Senator Snowe. Thank you.
    Mr. Egan. Tammy Schrader, and then Jack Stern, followed by 
Michael O'Callahan.

   STATEMENT OF TAMMY SCHRADER, SMALL BOAT HALIBUT FISHERMAN

    Ms. Schrader. My name is Tammy Schrader, and I am a small 
boat halibut fisherman from Homer. I have purchased every 
halibut IFQ that I own. My partner was given an initial 
allocation, and he has since purchased additional quota through 
loans. We fish from Homer to Dutch Harbor for halibut.
    We feel that the current IFQ program is a better system of 
management than the previous scheme for the following reasons. 
Number 1, it is better for the resource. Gear conflict and gear 
loss, with resultant wastage of halibut, is a nonissue.
    Number 2, the market for halibut has given a resounding 
yes. Our buyer did not buy halibut pre-IFQ. Fresh fish is now 
the cornerstone of his business, and he actively seeks halibut 
throughout the entire season. His company is one of the 500 
fastest-growing companies, according to Inc Magazine, November 
1999.
    Number 3, each fisherman and processor has equal 
opportunity to participate. For fishermen, both entrants and 
long-time participants, loans are available due in large part 
to a stable system of management if you would like to buy more 
quota.
    Number 4, safety was increased immensely by eliminating the 
Derby-style fishery and the race for the fish. This benefit is 
a measure that cannot be quantified.
    Number 5, the current form of the program affords both 
fishermen and processors much opportunity to deliver a better 
product for a better price.
    In conclusion, I feel that the system may be refined, but I 
feel very strongly that it would not be good to do a wholesale 
revamping of the program. We are small boat fishermen who have 
made this work for us through loan purchases. Keep the current 
equal assess through all participants, and do not create 
special classes of IFQ holders.
    Thank you.
    Senator Snowe. Thank you.
    Mr. Egan. Jack Stern, and then Michael O'Callahan.

     STATEMENT OF JACK STERN, ATTORNEY, TRUSTEES FOR ALASKA

    Mr. Stern. Thank you, Senator Snowe and Senator Stevens. My 
name is Jack Stern. I am an attorney with the environmental law 
firm, Trustees for Alaska. We, along with Earth Justice Legal 
Defense Fund, represent Greenpeace, American Oceans Campaign, 
and the Sierra Club in the Stellar sea lion litigation. I am 
here today on behalf of Greenpeace, and I would like to say it 
is a privilege to be here.
    I would like to emphasize today our view that there have 
been serious problems with the Magnuson-Stevens Act, 
particularly the Sustainable Fisheries Act implementation by 
NMFS and the North Pacific Council.
    If I may, I would like to introduce into the record a 
letter which was sent by our clients to NMFS last week that 
details these problems, particularly with respect to 
overfishing. As the letter points out, NMFS has failed to 
implement minimum stock size thresholds and appropriate harvest 
control rules, as required by the Sustainable Fisheries Act 
amendments. Furthermore, NMFS has failed to identify maximum 
sustainable yield and optimum sustainable yield, MSY and OSY, 
for individual fish stocks although this is a basic tenet of 
MSY management.
    While we have serious reservations about whether MSY 
management adequately takes into account the protection of 
marine ecosystems, the fact remains that NMFS is not even 
complying with the system that the law mandates now. As a 
result, we think that serious problems of overfishing are being 
overlooked here in the North Pacific.
    Under the current overfishing definition, for instance, for 
groundfish, a stock would not be declared overfished until it 
reached 5 percent of MSY, which is roughly 2 percent of virgin 
biomass. This is a frighteningly low biomass level, one that 
would probably justify an ESA listing.
    By not having MSST's, the North Pacific avoids having to 
declare a fish species as overfished, and we have seen what has 
happened with MSST's in the crab fisheries, and we think that 
there would be similar results for other groundfish species 
should appropriate MSST's be put into place here.
    As to EFH, we would echo what Paul Seaton of AMCC said and 
note that NMFS made a deliberate decision not to attempt to 
comply with EFH mandates during the statutory time period.
    Finally, with respect to bycatch I would note that we have 
pointed out numerous times that NMFS and the council have 
failed to take adequate measures to avoid bycatch. NMFS relies 
on the IRIU full retention program, forgetting to note that 
this program was put into place prior to the SFA amendments, at 
least in the Bering Sea, and therefore is not sufficient to 
meet the more stringent standards of SFA.
    To summarize, we see serious problems with each of the 
three main areas of the SFA amendments, and we urge you to 
strengthen those mandates during reauthorization.
    I have 20 copies of the letter. Should I----
    Senator Snowe. Yes, you can give the letters to us and we 
will include them in the record.*
---------------------------------------------------------------------------
    * The information referred to was not available at time of 
printing.
---------------------------------------------------------------------------
    Mr. Egan. Michael O'Callahan. Is Michael O'Callahan here? 
That concludes the list.
    Senator Snowe. Thank you. Senator Stevens, I want to thank 
you again for your hospitality in extending this invitation to 
the Subcommittee. I want to thank all of you in the audience, 
the witnesses, and those who have testified at the open 
microphone session. Your insights and views will be very 
helpful as we undertake the reauthorization of the Magnuson-
Stevens Act in this session of Congress.
    This process does not stop here. Please do not hesitate to 
submit information to the Subcommittee. In fact, I will ask 
unanimous consent to hold the record open for the next 10 
legislative days so that people can submit information and 
statements for the Subcommittee record.
    [The prepared statement of Mr. Asicksik follows:]

    Prepared Statement of Eugene Asicksik, President and Executive 
    Director, of the Norton Sound Economic Developmenmt Corporation
    Madame Chair and members of the Subcommittee, I am Eugene Asicksik, 
the president and executive director of the Norton Sound Economic 
Development Corporation (NSEDC).
    In 1976 when Congress enacted the Magnuson-Stevens Fishery 
Conservation and Management Act (MSFCMA), the fishery resources of the 
Bering Sea were being harvested nearly exclusively by foreign 
fishermen. The MSFCMA instructed the North Pacific Fishery Management 
Council (NPFMC) and the Secretary of Commerce (Secretary) to regulate 
the Bering Sea fishery in a manner that would reduce, and eventually 
eliminate, foreign fishing by encouraging fishing by United States 
fishermen.
    In accomplishing that objective, MSFCMA national standard no. 4 
directed the NPFMC and the Secretary to allocate fishing privileges in 
the Bering Sea fishery among United States fishermen in a manner that 
would be ``fair and equitable'' to all such fishermen. However, by 1991 
the NPFMC realized that it and the Secretary's regulation of the Bering 
Sea fishery had not afforded fishermen who reside in small western 
Alaska communities ``fair and equitable'' fishing opportunities. To 
conform its regulation of the Bering Sea fishery to the 
nondiscretionary ``fair and equitable allocation of fishing 
privileges'' national standard no. 4 requirement, in 1991 the NPFMC 
established, and in 1992 the Secretary by regulation began 
implementing, the western Alaska community development quota program 
(CDQ program).
    The NPFMC and the Secretary initially allocated 7.5 percent of the 
total allowable catch (TAC) of Bering Sea pollock to the CDQ program. 
In 1991 and 1996 the NPFMC and the Secretary expanded the CDQ program 
to include a percentage of the TACs and guideline harvest levels, first 
of halibut and sablefish, and then of crab and other groundfish 
species. In 1996, Congress amended the MSFCMA to mandate the Secretary 
to establish the CDQ program and to allocate a percentage of the TAC of 
each Bering Sea fishery to the program. In 1998 Congress enacted the 
American Fisheries Act, which increased the percentage of the TAC of 
Bering Sea pollock allocated to the CDQ program from 7.5 percent to 10 
percent.
    In 1992 the 56 communities that initially were eligible to 
participate in the CDQ program organized six CDQ groups. In 
northwestern Alaska, fifteen communities on the Seward Peninsula and 
surrounding Norton Sound (which collectively have a population of more 
than 7,000 residents) organized NSEDC. NSEDC then applied to the 
Secretary for a percentage of the 7.5 percent of the TAC of Bering Sea 
pollock that had been allocated to the CDQ program, and was awarded 20 
percent of the 7.5 percent. Today, NSEDC annually harvests 22 percent 
of the 10 percent of the pollock TAC that has been allocated to the CDQ 
program.
    The opportunities arising from NSEDC's ability to harvest a share 
of the percentage of the TACs of pollock and other Bering Sea fisheries 
that have been allocated to the CDQ program are of significant economic 
value. NSEDC has used the revenue it has derived from those harvest 
opportunities to fund a variety of activities that benefit residents of 
NSEDC's member communities, including employment and job training and 
placement. NSEDC has funded near-shore salmon and other fish processing 
and marketing, as well as salmon restoration projects and other 
fisheries development activities. NSEDC also has created, and is 
constantly enlarging, an education, training, and scholarship 
endowment, which reflects NSEDC's recognition that investing in the 
people who reside in its member communities, and particularly the 
communities' teenagers and young adults, is key to improving the long 
term economic future of the Seward Peninsula and Norton Sound region.
    NSEDC also has invested in income-producing assets outside its 
member communities that generate revenue which NSEDC then expends in 
its member communities. NSEDC has purchased a fifty percent ownership 
interest in Glacier Fish Company, a fishing company that owns two 
midwater catcher-processor vessels and a freezer longline vessel, which 
the company operates primarily in the Bering Sea. NSEDC's ownership 
interest in Glacier Fish Company annually brings capital that would not 
otherwise be available into the Seward Peninsula and Norton Sound 
region. NSEDC believes that, in the years ahead, that annual in-flow of 
capital will be another key component of regional economic self-
sufficiency. To accelerate that process, NSEDC intends to purchase 
additional equity interests in the Bering Sea fishing industry.
    As the CDQ program was conceived, and as it today continues to 
operate, each CDQ group periodically prepares a community development 
plan (CDP) that requests that the Secretary award the group a share of 
the percentage of the TAC of a Bering Sea fishery that has been 
allocated to the CDQ program. A CDP describes how the CDQ group that 
submits it will harvest the requested share and how the group will use 
the revenue earned from the harvesting to provide economic development 
and social benefits to the western Alaska community or communities that 
organized the company.
    As the CDQ program was conceived, the Secretary evaluates the six 
CDQ companies' CDPs, after which he, as an exercise of his 
administrative discretion, apportions the percentage of the TAC of a 
Bering Sea fishery that has been allocated to the CDQ program among the 
six companies however he deems appropriate. But the Secretary's 
regulations require the companies to first submit their CDPs to the 
Governor of Alaska. The regulations then require the Governor to 
transmit the CDPs and his recommendations regarding their approval to 
the Secretary. See 50 C.F.R. 679.30(d).
    The Secretary routinely accepts and implements the Governor's 
recommendations.\1\ The practical consequence of the Secretary doing so 
has been to delegate the Governor de facto authority to exercise the 
Secretary's administrative discretion in the Secretary's stead.
---------------------------------------------------------------------------
    \1\ The National Academy of Sciences' report on the CDQ program 
describes the Governor's de facto control over the apportionment of CDQ 
allocations among the six CDQ groups as follows:
    The CDPs are] submitted [by the groups] to the State of Alaska, 
which reviews the plans for compliance with federal and state 
guidelines and may return a plan for revision if pertinent information 
is missing. The state [i.e., the Governor's staff] recommends 
allocation to the governor, who has the option of changing it. Once the 
state has decided on an allocation, the [NPFMC] is consulted. Although 
the National Marine Fisheries Service is required to perform a final 
review of the plans prior to their approval and authorization, this has 
been basically a pro forma step to date.
    Report, at 63-64.
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    Because the right to harvest a share of the TAC of a Bering Sea 
fishery--and particularly the Bering Sea pollock fishery-is of 
significant economic value, the CDP application process through which 
CDQ groups are awarded shares of the TACs is highly competitive. The 
competition has created a strong inducement for the groups to conform 
the content of their CDP applications to satisfy the perceived desires 
of the members of the Governor's staff who recommend to the Governor 
the percentage share of the TACs that the Governor recommends to the 
Secretary that each CDQ group should receive. Since the same members of 
the Governor's staff also closely monitor the ongoing business 
decisions and activities of the CDQ groups, the constant need for each 
group to satisfy the discretionary requirements of State oversight 
intensifies the competition between the groups and motivates the groups 
to engage in business activities of which they hope State regulators 
will approve. Conversely, it also motivates the groups not to engage in 
business activities of which State regulators do not approve, even if 
the decision to engage in a particular activity makes good business 
sense.
    During the early years of the CDQ program the CDQ groups for the 
most part contracted with established fishing companies to harvest 
their respective shares of the TACs. Each CDQ group used its harvest 
contract to negotiate employment opportunities on board fishing company 
vessels, and used the revenue derived from the harvest to provide local 
economic development-related activities for the benefit of their 
western Alaska communities.
    Because negotiating a contract with an established fishing company 
is a relatively simple and straightforward activity, the discretionary 
award of shares of the TACs to the competing CDQ groups initially did 
not hinder the groups' ability to operate in the time-sensitive and 
highly competitive international business world of which the Bering Sea 
fisheries are a part. However, as the size, scope, and sophistication 
of the business activities in which CDQ groups are involved have 
increased as the CDQ program has matured, policy issues relating to 
state and federal government involvement in the business activities of 
the CDQ groups have grown more complex. To provide this Congress 
information about both those and other CDQ program-related issues for 
use during its consideration of the reauthorization of the MSFCMA, in 
1996 the 104th Congress directed the National Academy of Sciences to 
prepare and to deliver to this Congress a ``comprehensive report on the 
performance and effectiveness of the [CDQ program].'' See section 
108(h) of the Sustainable Fisheries Act, Pub. L. No. 104-297. In 1999 
the Academy delivered its report to this Subcommittee. See National 
Research Council, The Community Development Quota Program in Alaska, 
National Academy Press (1999).
    After evaluating the information and conclusions in the Academy's 
report and reviewing the lessons learned from its eight years of 
participation in the CDQ program, NSEDC has identified the following 
CDQ program-related subject areas that it requests the Subcommittee to 
investigate and address.

        1. Authority of the Governor of Alaska to Approve and Control 
        Business Activities of Subsidiary Companies in Which CDQ 
        Companies Own Equity Interests.

    As the CDQ program has matured, CDQ groups have purchased varying 
percentages of equity interests in fishing companies. Most of those 
companies are the companies with whom the CDQ groups initially had 
contracted to harvest their respective shares of the percentages of the 
TACs of Bering Sea fisheries that have been allocated to the CDQ 
program.
    For example, NSEDC has purchased a fifty percent equity interest in 
Glacier Fish Company. The Bristol Bay Economic Development Corporation 
and Aleutian Pribilof Community Development Association have purchased 
equity interests in the Arctic Storm and Starbound companies. And the 
Central Bering Sea Fishermen's Association and the Coastal Villages 
Regional Fund are in the process of purchasing equity interests in the 
American Seafoods Company.
    The Secretary's CDQ regulations require the CDQ groups to include a 
``detailed description of all proposed CDQ projects'' in the CDPs that 
the groups submit to the Governor, and the Governor then submits to the 
Secretary. See 50 CFR 679.30(a). The Secretary's regulations define the 
term ``CDQ project'' to mean

        any program that is funded by a CDQ group's assets for the 
        economic or social development of a community or group of 
        communities that are participating in a CDQ group, including, 
        but not limited to, infrastructure development, CDQ 
        investments, employment and training programs, and CDP 
        administration.

See 50 CFR 679.2

    The fishing companies in which CDQ groups own equity interests are 
entities that are separate and distinct from the CDQ groups\2\. The 
business activities of the fishing companies in which CDQ groups own 
equity interests are funded by the assets of the fishing companies, 
rather than by the assets of the CDQ groups. Nor are those activities 
``program[s] . . . for the economic or social development of a 
community or group of communities that are participating in a CDQ 
group.''
---------------------------------------------------------------------------
    \2\ It is a blackletter rule of law that:
    A corporation is a legal entity, separate and distinct from its 
shareholders, officers, and directors, and, generally, from all other 
corporations with which it may be affiliated. It possesses a legal 
entity separate and distinct from its owners, regardless of whether 
such owner is another corporation, a group of individuals, or a single 
individual. (emphasis added).
    18 CJS Corporations, section 8 at 273. Accord, State, Dept. of Rev. 
v. Alaska Pulp America, 674 P.2d 268, 275 (Alaska 1983) (Alaska Supreme 
Court holding that ``courts refuse to look through the corporate veil 
and consider separate corporations a single unit even when inter-
corporation transactions are mere bookkeeping entries'' and ``even if 
commonly owned and managed''); Croxtion v. Crowley Maritime Corp., 817 
P.2d 460, 466 (Alaska 1991) (holding that ``The entire point of the 
corporate veil doctrine . . . is that form does prevail over 
substance'') (emphasis in original).
---------------------------------------------------------------------------
    For those reasons, the business activities of the fishing companies 
are not ``CDQ projects'' over which, through control of the CDP 
approval process and the discretion to apportion fishing opportunities 
among the CDQ groups, either the Governor or the Secretary lawfully may 
assert jurisdiction under the Secretary's CDQ regulations.
    The Secretary has correctly held that, as a matter of federal law, 
the Governor may not impose requirements on the administration of the 
CDQ program that ``conflict with the Federal requirements.'' See 63 
Fed. Reg. 30383 (1998). Nevertheless, for the past several years the 
Governor has asserted that the business activities of Glacier Fish 
Company and other fishing companies in which NSEDC and the other CDQ 
groups own equity interests are ``CDQ projects'' as that term has been 
defined by the Secretary.
    NSEDC believes that the Governor's assertion is inconsistent with 
the plain meaning of the text of the Secretary's ``CDQ project'' 
definition. Because NSEDC and the Governor's disagreement regarding the 
meaning of the text of the Secretary's ``CDQ project'' definition is 
legal in nature, NSEDC requested the National Marine Fisheries Service 
(NMFS) to ask its attorney, the Office of NOAA General Counsel, to 
issue a legal opinion regarding the subject. NMFS made the request, and 
the legal opinion is being prepared.
    Whatever the opinion's conclusion, it is appropriate during its 
reauthorization of the MSFCMA for the Subcommittee to consider, and to 
then reach its own view regarding, the policy implications for the CDQ 
program of treating the business activities of fishing companies in 
which CDQ companies own equity interests as ``CDQ projects'' that are 
subject to the Governor's oversight and control. After considering 
those implications, NSEDC recommends that, as a matter of national 
fisheries policy, the fishing companies in which CDQ groups own equity 
interests should be allowed to compete in the Bering Sea fishing 
industry without having to subject their business decisions and 
activities to prior review and approval by the Secretary or the 
Governor through the CDQ program.
    2. Issues Relating to Congress' Native American Self-Determination 
Policy.
    The CDQ program affords all residents of eligible western Alaska 
communities an equal opportunity to participate in, and to derive 
benefits from, the CDQ program. However, as Senators Inouye and Stevens 
in 1996 explained to the Senate during its consideration of the 
Sustainable Fisheries Act, Congress amended the MSFCMA to direct the 
Secretary to establish the CDQ program because a majority of residents 
of the eligible communities are Alaska Natives for whose economic and 
social well-being Congress, under established principles of federal 
Indian law, has a special fiduciary responsibility. See generally 142 
Cong. Rec. S10820-24 (daily ed. Sept. 18, 1996).\3\
---------------------------------------------------------------------------
    \3\ In pertinent part, Senator Stevens informed the Senate that the 
provisions for the community development quotas are based in part on 
the authority of Congress to regulate the commerce of the Indian 
tribes. The communities of the west coast of Alaska are predominately 
Alaska native people. They were there and fishing a long time before 
anyone else came on the fishing scene . . . We are allocating a portion 
of the fisheries to the communities involved that are historic native 
communities along our coast.
    142 Cong. Rec. S10824 (daily ed. Sept. 18, 1996). See also Alliance 
Against IFOs v. Brown, U. S. District Court for the District of Alaska, 
No. A93-480 CIV, Transcript of Order Granting Motion for Summary 
Judgment (Dec. 19, 1994) (holding that Secretary was authorized to 
create the CDQ program by regulation because the Secretary ``has 
substantial authority, without violating MSFCMA national standard four, 
to specifically, intentionally, and voluntarily benefit Alaska Natives 
if [the Secretary] spells out the fact that that is what she is 
doing'').
---------------------------------------------------------------------------
    Since 1970 the hallmark of Congress's Native American policy has 
been a commitment to Native American self-determination and to 
affording Native Americans maximum participation in the administration 
of federal programs that have been implemented for their benefit. But 
for reasons more of happenstance than design, the Governor has been de 
facto authorized to exercise oversight authority over the activities of 
CDQ groups that contravenes Congress's Native American self-
determination policy.
    Still, NSEDC believes that the exercise of oversight authority may 
be appropriate if it reasonably and practicably furthers an appropriate 
governmental interest. In the past, two governmental interests have 
been advanced. The first is the interest that CDQ groups make informed 
and financially prudent business decisions regarding the use of their 
CDQ allocations. The second is the interest that the business decisions 
of CDQ groups advance achievement of community economic development and 
social objectives.
    With respect to the first interest, the Governor's staff does not 
necessarily have business and financial technical expertise that the 
staffs of the CDQ groups do not. With respect to the second interest, 
oversight which has the effect of allowing the Governor's staff to 
substitute its judgment for the judgment of members of the boards of 
directors of the CDQ companies regarding how best to provide economic 
development and social benefits derived from the CDQ program to the 
residents of western Alaska communities is an approach that Congress 
abandoned when it established its Native American self-determination 
policy.
    For those reasons, NSEDC believes that Congress should revisit the 
manner in which the Secretary and the Governor oversee the business and 
other activities of CDQ groups.

        3. The Need for an Identifiable and Judicially Enforceable 
        Standard for Apportioning the Percentage of the TAC of a Bering 
        Sea Fishery That Has Been Allocated to the CDQ Program Among 
        the CDQ Groups.

    The Secretary's regulations delegate the Secretary administrative 
discretion to apportion shares of the 7.5 or 10 percent of the TAC of a 
Bering Sea fishery that has been allocated to the CDQ program among the 
six CDQ groups. The Secretary's regulations also delegate the Governor 
administrative discretion to fashion the recommendations regarding the 
apportionments that he submits to the Secretary.
    Since the Secretary in practice accepts the Governor's 
recommendations, the Governor's exercise of his administrative 
discretion is determinative, and there is no timely opportunity to 
appeal the Governor's recommendations.
    The Governor has adopted regulations that describe the procedure 
that governs the participation by the Governor and his staff in the 
administration of the CDQ program. See generally 6 A.A.C. 93.010 et 
seq. In August 1999 the Governor amended his regulations. Section 
93.040 of the amended regulations identify twenty factors the Governor 
and his staff may consider in deciding the Governor's recommendation to 
the Secretary regarding the division of CDQ quota among the CDQ groups.
    In actual practice, an administrative structure that allows a 
decisionmaker to make decisions by applying multi-decisionmaking 
criteria actually allows the decisionmaker to make decisions pursuant 
to no legal standard other than his or her unfettered discretion. As 
the National Academy of Sciences has explained regarding the CDQ 
program:

        Multi-criteria decision-making is difficult. As Arrow and 
        Raymond (1986) have shown for the general case, such decision-
        making is troubled by two tendencies: either one criterion 
        appears to take over as the single criterion, or decisions 
        appear to be inconsistent. These dangers exist whether or not 
        the analyst applies a ``scoring system,'' which implies a 
        single unit of measure for all of the criteria. Use of a 
        scoring system tends to increase the probability of being 
        inconsistent. Thus, it should be no surprise that the [CDQ 
        companies] most affected by the application of the many 
        criteria that the State uses find the outcome somewhat 
        difficult to fathom.

NAS Study, at 88.

        [CDQ groups] fear that their particular allocation of a share 
        of the total CDQ quota is highly uncertain. This uncertainty 
        arises from a sense that the criteria used by the State of 
        Alaska to allocate individual shares of the total quota are 
        unclear. There is a concern that if a group is perceived by the 
        State as receiving ``too much'' income their share of the total 
        allocation may be reduced and given to another group with 
        greater needs. Conversely, if a group is not performing well it 
        may lose its share of the total allocation in the future. The 
        committee [that conducted the NAS study] finds these various 
        forms of uncertainty to have undesirable effects on the 
        development strategies chosen by the various boards of 
        directors [of CDQ companies].

    Id. 74.

    To remedy the problem, the National Academy of Sciences has 
recommended to the Subcommittee ``that changes be made to simplify the 
criteria, in consultation with the CDQ groups.'' Id. 95.
    NSEDC supports that recommendation.

        4. The Advisability of Authorizing CDQ Groups to Expend 
        Revenues Derived From the CDQ Program for Non-Fisheries-Related 
        Economic Development Activities in Western Alaska Communities.

    Although the limitation does not appear either in the section of 
the MSFCMA that directs him to establish the CDQ program or in his 
regulations, the Secretary generally has required CDQ groups to 
restrict the ``CDQ projects'' described in their CDPs to fisheries-
related economic development activities. NSEDC understands that the 
Secretary's implementation of the restriction relies on language in the 
text of the preamble to the Secretary's regulations (which has no force 
of law), rather than on the text of the regulations themselves.
    After investigating the result that the fisheries-related 
development restriction has produced, the committee that conducted the 
National Academy of Sciences study concluded that the restriction means 
that although the CDQ program has two objectives--community development 
and fishery development--``community development'' is defined as 
``fishery development.'' The committee finds this strict requirement to 
be of dubious merit. Thee are, to be sure, advantages to a fisheries 
program that encourages continued investment in, and improvement of, 
fishery resources and fishing capacity. To the extent that there are 
viable fishery-related investments in the coastal villages that promise 
reasonable returns on investment, they should be pursued. However, we 
can foresee a time when this restriction on investment opportunities 
will force the CDQ [company] boards [of directors] to make investments 
that may not promote economic diversity and sustainability at the 
village level. it is also possible that the available sound fisheries 
investments in many villages will ultimately be exploited, in which 
case the restriction will force some CDQ boards to undertake less than 
ideal investments. A more compelling argument is that ``community 
development'' should be seen as broader than just fisheries 
development.

    Id 75-76.

    To remedy those problems, the National Academy of Sciences has 
recommended that

        the restriction that CDQ revenues [are] to be invested only in 
        fishery-related activities should be removed, at least for some 
        portion of the revenues. Many of the communities will find that 
        fishery investments are still the ones they wish to undertake. 
        However, since community development is broader than fishery 
        development, funds should also be available for other 
        activities that will enhance community infrastructure or land-
        based economic activity. This broadening of the allowed 
        investments would also remove uncertainty about whether 
        particular investments are indeed ``fishery related'' and thus 
        allowable under current rules.

    Id. 76-77.

    NSEDC supports that recommendation.
    I would like to conclude my remarks by on behalf of the NSEDC board 
of directors emphasizing that NSEDC very much appreciates the CDQ 
program and the commitment Congress made in 1996 when it amended the 
MSFCMA to codify the Secretary's establishment of the program to 
improving the lives of all residents of the Seward Peninsula and Norton 
Sound region. Over the past seven years the CDQ program has 
accomplished much. And if during the years ahead the program is allowed 
to fulfill its potential, it will continue to grow as one of western 
Alaska's most important economic development programs.

    Thank you.

    Senator Stevens. With that, the hearing is adjourned.
    [Whereupon, at 1:46 p.m., the Subcommittee adjourned.]
                            A P P E N D I X

       Prepared Statement of Kris Poulsen, Owner and Manager of 
                           Three Crab Vessels
    I have been a participant in the Bering Sea crab fisheries for over 
30 years. I currently own and manage three crab vessels. The current 
crisis in the Bering Sea crab industry can only be compared to the 
resource collapse in the early 1980's. However, in the early 1980's, 
crab vessels had the opportunity to enter the emerging joint venture 
groundfish fisheries. Today, with the recent collapse in all the major 
Bering Sea crab fisheries and the beginning of limited entry in all the 
EEZ fisheries off the coast of Alaska, there are no new alternative 
fisheries for crab vessels.
    The Bering Sea crab industry is grossly overcapitalized for the 
size of the resource. There are more than 250 vessels which have 
historically fished crab, and have been granted licenses. It is 
estimated that total revenue for vessels during 2000 will be about $75 
million. That equates to about $300,000 per vessel during 2000. 
Unfortunately, the average vessel has historically required $650,000 
per year to break-even. Obviously, many vessels are going to go 
bankrupt, and the stability of the most dangerous industry in the 
United States will be upset even more. Immediate relief is necessary in 
the form of a direct financial assistance from the federal government 
to buyout excess fishing effort in order to alleviate this disaster.
    The Magnuson-Stevens Fishery Conservation and Management Act of 
1996 took steps in the right direction, especially with implementation 
of National Standards 9 (bycatch) and National Standard 10 (safety of 
life at sea). However, I still find the industry to be in the same 
place today, in regards to both bycatch and safety of life at sea, as 
it was in 1996.
    Bycatch of crab is a major problem in the crab fisheries, 
especially with the implementation of pot limits in 1992, which 
heightened the race for crab. By speeding up the fishery, crabs are 
unable to escape from the mandated escape mechanisms which crab traps 
(or pots) employ. What results is increased bycatch, as well as crab 
mortality, which has undoubtedly had a hand in the recent crash of the 
crab resources.
    Safety of life at sea has improved very little since 1996. In fact, 
just last year 7 crewmembers were killed during the snow crab fishery. 
Innumerable injuries also occur, scarring peoples lives forever. Both 
problems of safety of life at sea, as well as bycatch can be 
dramatically reduced if the management regime were allowed to change. 
The current olympic style derby is bad for both the fishermen and the 
resource.
    Congress should allow the moratorium on IFQ's to lapse, to 
authorize the regional Councils the proper tools to fix problems such 
as those faced by the crab industry. Some form of IFQ or co-operative 
is necessary for the long-term survival of this industry, comprised of 
a lot of independent small businessmen. An IFQ or co-operative will 
take away the race for fish and allow fishermen to avoid periods of 
dangerous conditions. In addition, by slowing down the fishery, the 
crab pots will be able to function as designed. Undersize crab will 
have time to crawl out before the pot is hauled to the surface again, 
minimizing bycatch and the impact on the crab resource.
    In conclusion, the Bering Sea crab industry is in desperate need of 
relief in the form of reduction of capacity, due to severely low crab 
resource levels. However, it is also my belief that implementation of 
either an ITQ or co-operative is necessary to avoid resource collapses 
in the future. An ITQ or co-operative is also the only viable solution 
to the severe safety problem of the Bering Sea crab industry.
                                 ______
                                 
   Prepared Statement of Bristol Bay Economic Development Corporation
Introduction:
    The Bristol Bay Economic Development Corporation (BBEDC) is the 
third largest of the six CDQ groups participating in the Community 
Development Quota Program (CDQ). BBEDC represents seventeen communities 
and their 6000 residents in Bristol Bay.
    The CDQ Program has provided the only opportunity for the region, 
its communities, and residents to participate in the Bering Sea 
fisheries and bring the benefits of that participation back to the 
region for the benefit of the communities and their residents.
CDQ Program Issues:
    We in the CDQ Program are just beginning to make a positive impact 
on our regions. Given time, the CDQ Program will be the most important 
and successful economic development tool to be made available to the 
residents of western Alaska. It is the last and only hope to move our 
areas toward self-sufficient economies. We in the remote geographic 
areas of the state encounter many roadblocks and barriers to the 
development of diverse and well established economies. The high cost of 
living and lack of year round employment in smaller communities, where 
as many as 50% of the residents live below the poverty level, documents 
the enormous problems facing the CDQ program participants. High costs 
of living, transportation and lack of modern communication tools along 
with relatively small and geographically dispersed populations 
compounds the problems that confront us.
    Here in Bristol Bay and other CDQ regions, where salmon is our 
bread and butter, we have seen the dramatic down turn in prices and 
resources available to our local fishers. It is no longer possible to 
support our living costs with returns from salmon fishing and 
subsistence. Subsistence is a necessity of life in the ``bush''. The 
NAS study clearly points out the necessity of a cash economy to support 
and make possible the subsistence economy.
    BBEDC has placed a great deal of emphasis on the development of the 
``Human Resources'' of the region. Through the CDQ program, training 
and employment within the Bering Sea fisheries has provided well paying 
jobs for residents totaling many millions of dollars brought back to 
the region through wages.
Programmatic Issues:
    The CDQ Program was organized to provide the maximum flexibility in 
project development to the individual CDQ groups, recognizing the many 
differences between the groups. Differences in geographic location, 
economic opportunities, number of residents served, and cultural and 
philosophical differences.
    An important aspect of the program is the ``OVERSIGHT'' role 
assigned to the State of Alaska. BBEDC recognizes and fully supports 
the necessity and appropriateness of state oversight. Oversight 
provides a mechanism to ensure that the intent of the CDQ Program is 
met and the benefits of the program are delivered to the communities 
and residents of the region.
    Oversight is critical to the CDQ program to insure and defend the 
integrity of the program from those who would diminish or destroy this 
program. The integrity of the program must be maintained at all cost to 
protect and move the CDQ Program forward.
    The National Academy of Science, National Research Council Ocean 
Studies Board Report, mandated in the Magnasun Act Reauthorization, 
pointed out the many successes and suggestions for further improvements 
in the CDQ Program.
Conclusion:
    Attached to this document is a copy of the Bristol Bay Economic 
Development Corporation's Executive Summary for the 1998-2000 CDP and 
the Annual Report for 1998 both which give more detail descriptions of 
the projects and programs undertaken by BBEDC during the past three 
years.
    BBEDC appreciates the opportunity to address the committee and 
supply written information. We urge you to continue the CDQ Program as 
authorized at its current levels of allocation of the fishery resources 
of the Bering Sea. The people of western Alaska look forward to the 
coming years and the positive impacts the CDQ Program will have on 
their communities and their lives.

Respectfully submitted:
Judith Nelson
Bristol Bay Economic Development Corporation
 community purchase of halibut and sablefish individual fishing quota 
shares discussion paper and community ``set aside'' of halibut charter 
            individual fishing quota shares discussion paper

                                 NOTICE

Following are the Gulf of Alaska Coastal Communities' Discussion Papers 
regarding Community Purchase of Existing Commercial IFQs and Community 
``Set Aside'' of halibut charter IFQ.
These documents, although approved in concept by the GOACCC Board of 
Directors, have been approved in their final form and may be edited 
prior to final approval at the May 31, 2000 GOACCC Board of Directors 
meeting.

                           Executive Summary

    National Standard 8 of the Magnuson-Stevens Fishery Conservation 
Management Act directs that ``Conservation and management measures 
shall, consistent with the conservation requirements of this Act 
(including the prevention of overfishing and rebuilding of overfished 
stocks), take into account the importance of fishery resources to 
fishing communities in order to (A) provide for the sustained 
participation of such communities, and (B) to the extent practicable, 
minimize adverse economic impacts in such communities.''
    The Oceans Studies Board of the National Academy of Science's 
National Research Council (NRC) report on Individual Fishing Quotas, 
Sharing the Fish: Toward a National Policy on IFQs, explicitly 
recommends that ``For existing IFQ programs, councils should be 
permitted to authorize the purchase, holding, management and sale of 
IFQ by communities.''
    Alaska's halibut and sablefish IFQ program, created prior to the 
adoption of National Standard 8, was not designed to minimize adverse 
economic impacts on smaller fisheries-dependant coastal communities in 
the Gulf of Alaska and, by all current indications, will not provide 
for the sustained participation of many of Alaska's smaller Gulf 
communities in the halibut and sablefish IFQ fisheries.
    Existing loan programs or newly created community loan entities may 
help reverse current trends regarding quota share transfer and job 
loss. However, these approaches still focus on individual ownership and 
are subject to an individual's economic needs and decisions.
    Community IFQ ownership provides an alternative model that could 
allow qualifying communities to obtain halibut and sablefish fishing 
rights and preserve those rights in perpetuity--similar to an 
endowment.
    Eligible communities are defined by four criteria: 1. located on 
salt water (coastal); 2. fisheries dependant; 3. remote (no road 
access); and 4. less than 2,500 people as recorded by the 2000 census. 
These criteria qualify six communities in halibut management area 3B, 
twelve communities located in halibut management area 3A, and twenty-
two communities located in halibut management area 2C.
    A non-profit community development corporation or fisherman's 
association would be an appropriate ownership and management entity for 
community IFQs. The entity must be inclusive of all residents in 
qualifying coastal communities, native and non-native alike.
    Communities should be restricted by the same ownership caps 
currently applied to individual IFQ holders. In addition, communities 
should be restricted to purchasing shares for areas in proximity to 
their communities. Additional limitations should be applied to halibut 
management area 2C and sablefish area ``Southeast'' and ``West 
Yakatat''.
    Given community caps and geography limitations as well as market 
costs, it is improbable that a cumulative cap for the program is 
needed.
    Once IFQs are purchased by the community ownership entity, they 
become ``community fishing quota'' (CFQ) and can be fished by community 
residents without block or vessel class distinction.
    If blocking restrictions are imposed, they should not be limited in 
number nor more restrictive than the current ratio of blocked and 
unblocked shares.
    Allocations within communities should primarily be determined by 
the community ownership entity--with each community developing its own 
criteria.
    Communities are required to have some community residents involved 
in the fishing of community quota shares and cannot ``lease'' quota 
share for fishing by non-residents with non-resident crews.
    Individuals should have use caps, probably in the range of 25,000 
to 75,000# per individual--inclusive of privately held IFQs.
    The community ownership entity remains the registered owner of 
community quota shares and annually notifies RAM division of its intent 
to transfer an amount of quota to an designated community member
    Communities are free to resell their quota shares; however, upon 
resale quota retains its block and vessel size restrictions. (Some 
exceptions may apply for blocks in area 3B).
    Codes of conduct will be established for the ownership entity, 
quota transferee and crewmembers. Administrative costs and dept service 
will be limited to 25% of ex-vessel value.
    Sunset provisions would compromise the program's objective of 
creating endowment like fishing opportunities for residents of 
qualifying Gulf of Alaska coastal communities.
    RAM division of the National Marine Fisheries Service would he the 
primary agency for administration and oversight of the program.
    Community governing structures provide another approach to natural 
resource management that may enhancement the success of Alaska's 
halibut and sablefish IFQ program.
                                 ______
                                 
     Letters Written to Hon. Olympia J. Snowe and Hon. Ted Stevens
                                           January 17, 2000
Dear Senators:
    My name is Gordon Ito and I am a lifelong resident of the Kotzebue 
region. I am currently a board member of the Bering Sea Fishermen's 
Association, a member of the Kotzebue Fish a Game Advisory Committee, a 
board member of the Arctic Marine Resource Commission and a tong time 
subsistence hunter and fisher of our regions resources.
    The CDQ program which has been in affect since 1992 has been of 
enormous importance to the villages south of my region. The jobs and 
opportunities created for these villagers has meant the difference in 
particular for the young people who are struggling to enter into the 
21st century's economy. When the program was adopted by the NPFMC many 
of the people of our region were dismayed that the council's adoption 
of a boundary excluding us from the program was upheld. We see no just 
reason that our exclusion from participating in the Bering Sea program 
be maintained into the future by federal regulation. The justification 
for the adoption into the program are as fitting in our region, as they 
are to the south. Our economic circumstances at this time are as 
compelling, as the reasons cited for the adoption of the program to 
benefit the regions to the south of us, also. At the present time our 
small salmon fishery is a ghost of its former economic importance to 
the region. Additionally, though there are other species that we may be 
able to promote, such promotions will take significant capital and at 
this time we lack that specific capital to go forward and attempt to 
market these underutilized species in our region. We believe our 
inclusion into the CDQ allocation program administered by the state 
under direction by the NFMS and the NPFMC is the vehicle to allow not 
only for localized job creation but as training for our young people to 
pursue creative economic endeavors elsewhere.
    It is clear that the money available from the pollock CDQ in 
particular could and would be used in our region to fully develop our 
other marine resources.
    We are asking that the Magnuson Act amendments include a new 
provision including us within the boundaries of the current CDQ 
program. The communities of Kivalina, Point Hope, Deering, Buckland, 
Shishmaref and Kotzebue have asked me to provide this request to you. 
We will be submitting more detailed information about our communities 
the past reliance on the marine resources of the region and information 
concerning the state of our regional economy.
    I hope that after reviewing our situation you will see the wisdom 
in allowing our inclusion in the CDQ program.

Sincerely,

Gordon Ito
                                 ______
                                 
                                           January 12, 2000
Dear Sirs/Madam,
    The Native Village of Kotzebue, on behalf of its 2,400 members, 
would like to provide testimony in support of the inclusion of Point 
Hope, Kivalina. Kotzebue, Buckland, Deering and Shishmaref into the CDQ 
program.
    The justification for this consideration is both sensible and 
biologically supported.
    It is sensible because all coastal villages affected, potentially 
and practically, have some stake in the maintaining of present levels 
of resource populations, regardless if they have been delineated in 
some way. For example, the current qualification boundary for the 
existing CDQ program essentially qualifies ``all villages south'' of 
the imaginary boundary extending Russia-bound from Wales. There is no 
real practical reason for this boundary, as marine resources give no 
heed to boundaries.
    Biologically, it is becoming evident that the continental shallows, 
which in this area constitutes all of the Kotzebue Sound connected to 
and including the Bering Sea, is a birthing area for marine resources, 
such as crab of several species, as well as a feeding ground for most 
marine mammals which feed off of the assorted resources. Since we do 
have ongoing studies that are indicating that this may be the case, 
then it makes sense to include the above Villages to be included in 
present and future CDQ scenarios.
    In the event the North Pacific Management Council takes this 
testimony into consideration, we thank you.

Sincerely

Pete Schaeffer,

Executive Director
                                 ______
                                 
                                           January 17, 2000
Dear members of the Senate:
    On behalf of 10,000 residents, and the marine communities residing 
in this area, I am submitting testimony in support of amending and 
reauthorizing the Magnuson-Stevens Fisheries Conservation Act.
    We ask for favorable consideration and inclusion into the Community 
Development Quota (CDQ) for these several communities in the Arctic/
sub-Arctic region.
    Kotzebue, Kivalina, Buckland, Deering, Pt. Hope, and Shishmaref are 
coastal cities in need of inclusion to foster a long-term economic 
development with resources familiar to our livlihood.
    Through participation as communities within the jurisdiction of the 
Northwest Arctic Borough, North Slope Borough (Pt. Hope), and the 
Bering Straits region (Shishmaref), they have an opportunity to become 
members of Federal fisheries allocation plan that is necessary for them 
to regain some meaningful purpose in the state, and in waters that 
include Federal jurisdiction.
    The Kotzebue Sound/Bering Sea-Arctic Ocean that these communities 
occupy must have some stake in the future activities that allow them to 
be part of an overall fisheries plan previously excluded to them in the 
past for unnecessary and overlooked reasons. This can now be corrected 
through appropriate legislative language in the reauthorization of the 
Magnuson-Stevens Fisheries Conservation Act.

Respectfully submitted,
Dennis J. Tiepelman
President/ CEO
                                 ______
                                 
                                           January 14, 2000
Dear Senate Commerce Committee:
    The Northwest Arctic Borough is aware that the northern boundary of 
the Bering Straits may have been misinterpreted in the Community 
Development Quota (CDQ) Program. Because it may have been 
misinterpreted, several Northwest Arctic Borough communities (Kotzebue, 
Kivalina, Deering, Buckland), a Northslope Borough community (Point 
Hope) and a Bering Straits Region community (Shishmaref) are left out 
of beneficial economic and long range fishery career opportunities that 
a CDQ Program provides.
    The Northwest Arctic Region no longer has a thriving commercial 
salmon fishery. Since the latter part of the 1980's the price of chum 
has dropped from a high of .85 cents a pound to .16 cents a pound in 
1999. The down hill spiral of prices for chum has had a profound 
economic impact for our 220 primary permit holders and 220 or so 
``deck-hand'' permit holders. Not only do our fishermen suffer, but 
their families also feel the economic impacts of Kotzebue Sound's 
distressed fishing industry.
    In reading the Magnuson-Stevens Act (as amended), which established 
the CDQ Program, there is no definition of where the northern boundary 
of the Bering Sea or Bering Strait ends. Since this act established the 
CDQ Program and has authority to define the northern boundary of the 
CDQ Program, the Northwest Arctic Borough is recommending to this 
Senate Committee, who has authority to propose amendments to the act, 
to allow the Magnuson-Stevens Act to include the above communities to 
participate in the CDQ Program.
    The CDQ Program has brought stability, jobs and economic 
development to other areas in western Alaska that have some of the 
highest unemployment rates. The Northwest Arctic Region has the highest 
unemployment rates in the state. Taking the annual averages from the 
years 1990 to 1998, the unemployment rate in the Northwest Arctic 
Borough for these nine years is 16.2% (Alaska Department of Labor) . A 
CDQ Program would definitely alleviate the unemployment in this region.
    By allowing Point hope, Kivalina, Kotzebue, Buckland, Deering and 
Shishmaref to participate in the CDQ Program, it would not merely be 
adding them to the program, but it would be justice due to these 
communities.
    Whether it be clarifying the northern boundary of the Bering Sea or 
amending the Magnuson-Stevens Act to include the above communities, 
because they do have a distressed fishing industry, it is important to 
allow these communities to participate in the economic opportunities 
that a CDQ Program provides.
    The Northwest Arctic Borough strongly encourages this committee to 
consider adding these villages to the CDQ Program.

Sincerely,
Chuck Greene
Mayor
                                 ______
                                 
                                           January 18, 2000
The Honorable Olympia J. Snowe, Chair
Subcommittee on Oceans and Fisheries of the Senate
Committee on Commerce, Science, and Transportation
Washington, D.C.
Re: Written Comments of Coastal Villages Region Fund on the Magnuson-
Stevens Act Reauthorization

Dear Senator Snowe:
    On behalf of the twenty member communities of the Coastal Villages 
Region Fund (``CVRF''), I would like to present our comments to the 
Subcommittee concerning the reauthorization of the Magnuson-Stevens 
Act. This Act provides the framework for how the fishery resources of 
the United States are to be managed throughout the exclusive economic 
zone. As such, the policies that are enacted into the law by the 
Congress are critical to those individuals, companies, and regions that 
rely upon those resources for their livelihood and well-being.
    CVRF is one of the six community-based groups organized to 
participate in the Harold Sparck Western Alaska Community Development 
Program. In fact, in addition to being the one individual who conceived 
of the CDQ program as a way of bootstrapping Western Alaska residents 
into the commercial fisheries immediately adjacent to their 
communities, it also was Mr. Sparck who organized the Coastal Villages 
CDQ program.
    As any independent observer will tell you, the CDQ program has met 
and surpassed everyone's expectation of what could be accomplished. As 
we near the end of the first decade of its existence, western Alaskan 
residents are now a part of the Bering Sea and North Pacific fisheries. 
Whether through employment on vessels, within fishing companies, or as 
owners of those companies, the CDQ program is meeting its goals. As to 
local and regional economic development, the program is beginning to 
put the pieces together where the benefits from the offshore fishing 
activity will provide the mechanism to create self-supporting economies 
in the communities. I am sure that each CDQ group will go about this 
process in a different manner, however, the bottom line is that without 
the CDQ program, there would be no tools or mechanisms available.
    This brings me to the points that I would like for the Subcommittee 
to consider as it completes the reauthorization process.

    1. The CDQ program has been included specifically in the Magnuson-
Stevens Act and in the American Fisheries Act of 1999. It has been 
studied by the National Research Council, which concluded that it is a 
successful program and should be continued for the long term, if not 
permanently. We believe that the program has become even more 
successful and beneficial since that report was completed. We request 
that the Subcommittee enshrine the program as a permanent part of the 
Nation's fisheries policies.
    2. In action by the North Pacific Fishery Management Council (the 
``Council'') in1995 and in amendments to the Magnuson-Stevens Act in 
1997, the CDQ program was expanded to include all species for which 
there is a total allowable catch in the Bering Sea and Aleutian Islands 
area. Regulations implementing the statute require that CDQ harvests of 
target species be kept within the quotas for all species, no matter how 
small the allocation. This system has made it impossible to harvest a 
sizable portion of many of the target species. While the National 
Marine Fisheries Service (``NMFS'') and the Council are dealing with 
this issue, it is our belief that for the issue to be addressed fully 
it will need Congressional action. We do not have a specific proposal 
at this time other that to identify this as an issue that needs further 
consideration through the reauthorization process.
    3. In the joint CDQ groups' testimony presented by Larry Cotter, 
there is an extensive discussion of the observer requirements that have 
been added for the CDQ program. We agree with the points raised in 
those comments and would like for the Subcommittee to consider one 
additional point. During 1999, CVRF petitioned the Council to reduce 
the observer requirements on a sablefish and halibut catcher boat in 
which we own an interest. The justification for this petition was that 
when this same vessel is participating in the IFQ program there is a 
less onerous observer requirement. In addition, CVRF agreed to some 
additional restrictions to meet the legitimate needs of NMFS in regard 
to harvest of prohibited species and discard of unwanted bycatch. Upon 
consideration of this request, the Council twice approved the petition 
and twice it was denied by NMFS. We believe that the observer 
requirements, in some cases, are onerous given the amount of harvest on 
a particular vessel and the precedents set in the management of the IFQ 
program. We request that the Subcommittee review these requirements and 
reduce the burden on this aspect of the CDQ harvest.
    4. CVRF has been a supporter of the concept that revenues from the 
CDQ program be invested in the fishing industry. While the CDQ groups 
have a monumental charge--creating a self-sustaining economy in their 
respective regions--accomplishing this solely through investment in 
fisheries-related projects is not feasible. In our view, investments 
outside the region in the fishing industry (offshore fishing boats, 
shoreside seafood facilities located outside the region, etc.) will 
provide the financial ability to create self-sustaining economies in 
the groups' regions that are based in part on fishery-related 
industries and in part on other economic activities. CDQ groups should 
be able to invest their fishery-related income into a wide-range of 
economic activities that together will provide the jobs and 
opportunities for residents of western Alaska communities. We are now 
reaching the point when the range of economic activities will begin to 
be identified and implemented. Consequently, flexibility to support the 
various choices needs to be available to the CDQ groups.
    Thank you for the opportunity to present this testimony. We look 
forward to working with the Subcommittee as it continues its 
consideration of the Magnuson-Stevens Act.

Fred K. Phillip

Board President
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                      Rear Admiral Thomas Barrett
           challenges in meeting enforcement responsibilities
    Question 1. In your statement, you briefly discussed the challenges 
you face in meeting your enforcement responsibilities under the 
Magnuson-Stevens Act. It has been stated that the Coast Guard is 
stretched thin and recruitment and retention problems are occurring 
throughout the service. You stated that the Coast Guard will be cutting 
back on routine operations to save resources for emergency situations. 
How are the Coast Guard's organizational problems affecting your 
operations in the north Pacific, including fisheries law enforcement, 
search and rescue, and drug and migrant interdiction? Please give 
examples of operations that will he reduced in the north Pacific.
    Answer. Our operational reduction will require some routine patrols 
to he shortened or cancelled and may impact our ability to project a 
full-time presence along the U.S./Russia Maritime Boundary or fully 
monitor domestic fishing operations. There will he no planned 
reductions in our search and rescue response operations.
                    commercial fishing vessel safety
    Question 2. Beginning with field hearings during the 1996 
reauthorization, the Subcommittee heard of the need for an increased 
focus on safety of life at sea. The Sustainable Fisheries Act added 
National Standard 10, which promotes the safety of life at sea. It is 
understood that fishing in Alaska is one of the most hazardous 
occupations in the nation. In some fisheries, a race for fish and other 
conditions cause fishermen to forego needed vessel maintenance and fish 
in conditions that are too dangerous for their boats. Please respond to 
the following two questions regarding the Coast Guard's recently 
completed series of dockside safety boardings of crab fishing boats in 
preparation for the Bering Sea Snow Crab season: Did you find a 
significantly better or worse maintained fleet than in previous years?
    Answer. The Coast Guard conducted dockside safety boardings prior 
to both the Red King Crab fishery in October, 1999 and the Bering Sea 
Snow Crab fishery from January 15, 1999 to March 23, 1999. Since this 
was the first operation of this type, it is difficult to compare this 
year's results to previous years. The information gathered during this 
first operation will serve as a useful data point in developing trends 
and conclusions about the material condition of the fleet in future 
years. Though not indicative of nationwide compliance trends and 
voluntary examination participation rates (6 percent of the total 
commercial fishing fleet is examined in the voluntary examination 
program nationally with only 3 percent of the total fleet receiving 
decals for compliance), the results of the operation were positive in 
that they indicated a large number of vessels in the targeted fisheries 
had current Coast Guard Commercial Fishing Industry Vessel Safety Act 
Decals. The Coast Guard boarded 75 out of the 250 (30 percent) vessels 
in the fishery and found 53 (70 percent) of those vessels had current 
Coast Guard Fishing Vessel Safety Exams and 73 (97 percent) had 
stability letters. Two vessels were found to be overloaded and three 
others reportedly offloaded pots when they learned of the Coast Guard's 
presence.

    Question 3. Did you find any problems that would support the 
position that current fisheries regulations force fishermen to put to 
sea in unsafe vessels?
    Answer. No. Generally, the intense competitive nature of the crab 
fisheries, along with the extraordinarily harsh winter conditions of 
the Bering Sea, dictate that only substantial, well-founded boats can 
economically survive in this fishery. So this is not a situation of 
unsafe vessels being ``forced to'' put to sea. Instead, the derby-type 
nature of the crab fisheries, or any derby fishery for that matter, 
creates a substantial economic penalty for those operators who chose to 
delay fishing or suspend operations in adverse weather. Under this 
system, when the quota is caught, the entire fishery is closed, leaving 
no reasonable way for those who choose to delay operations due to 
forecasted had weather to catch up. Under this situation, some 
fishermen may choose to operate in weather far more severe than might 
otherwise be prudent.
  u.s.-russian maritime boundary line: illegal foreign fishing vessels
    Question 4. What is being done by the Coast Guard to address the 
significant increase in foreign fishing vessels illegally crossing the 
U.S.-Russia maritime boundary to fish?
    Answer. In response to increased foreign fishing vessel activity, 
the Coast Guard dedicated additional air and surface resources to the 
U.S.-Russia Maritime Boundary (MB) patrol and enforcement effort in 
1999. Ninety-two MB incursions were detected in 1999, a ten-fold 
increase over 1998. In addition to increased patrol efforts, which may 
not be sustainable given other mission demands, the Coast Guard is 
pursuing various initiatives related to the maritime boundary. 
Recently, the Seventeenth Coast Guard District Commander (D17), 
headquartered in Juneau, Alaska, met with his Russian counterpart from 
the Northeast Russian Federal Border Service (NRFBS) to discuss ways of 
improving the current situation. Discussions included possible joint 
patrols, formal hand-off procedures for future incursion cases, 
potential data sharing, and a shiprider program. The NRFBS and D17 have 
developed a working relationship and are actively engaged in 
identifying more effective means of fisheries enforcement along the MB. 
The Coast Guard will continue to pursue and develop this co-operative 
relationship. In addition, the Coast Guard continues to work closely 
with the Department of State to address international issues regarding 
the maritime boundary treaty. Finally, in an effort to increase 
operational effectiveness, the Coast Guard is exploring the use of non-
lethal technologies as a means of stopping non-compliant foreign 
fishing vessels detected operating inside the U.S. Exclusive Economic 
Zone.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                                Al Burch
Question 1. What are your thoughts on EFJ?
Answer. It is a very dangerous piece of legislation for the harvesting 
and processing industry. It is so vague that the environmentalists will 
miss interpret and miss use it to close down large areas to trawlers 
first and all other fisheries later. Case in point--Marine Mammal 
Protection Act and Endangered Species Act lawsuits against National 
Marine Fisheries Service by the environmentalists because of an 
unproven link between sea lions and Pollock, cod herring salmon and 
flat fish are next.

Question 2. Has NMFS adopted an overly-broad interpretation that 
dilutes the original intent--that is, to protect truly essential 
habitat, rather than the entire ocean?
Answer. The way NMFS interprets the act is irrelevant. Anything NMFS or 
NPFMC does will not be acceptable to the environmentalists. The act 
needs to be re-written in such a manner that will protect the 
environment and still allow the industry to survive. Proof that an 
action is detrimental to the environment needs to be determined before 
actions are taken. The socio-economic impact studies of the proposed 
actions need to be in-depth and per reviewed. I am sure that any action 
taken now will result in more law suites than were filed under the MMPA 
and ISA.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                            Jeffrey W. Bush
    Question 1. In 1992, the North Pacific Fisheries Management Council 
implemented the community development quota program, or CDQ's for 
western Alaska. As you know, the CDQ program allocates a percentage of 
the annual catch of a variety of commercial fisheries directly to 
western Alaska villages. These villages were originally selected 
because of their geographic isolation and dependence on subsistence 
lifestyles. Therefore, the CDQ program was designed to increase limited 
economic opportunities through enhanced development of fishing 
industries, new employment opportunities, and community infrastructure. 
The 1999 National Research Council report, required by the Sustainable 
Fisheries Act, concluded that the greatest weakness of the CDQ program 
is a lack of open, consistent communication between the CDQ groups and 
the communities they represent. At approximately $20 million a year, 
the CDQ program ought to be providing real benefits to these 
communities. Certainly, the development of some villages has had a 
positive effect, but what can the State of Alaska do to help distribute 
the wealth?
    Answqer. The State of Alaska (state) monitors the actions of the 
CDQ group participants very closely. A significant component of state 
oversight is determining the level of benefits reaching CDQ 
communities. Each CDQ group must maintain a Community Development Plan 
(CDP), which is a working business plan that must be kept current. A 
CDQ group may not engage in an activity that requires an amendment to 
the group's CDP until state and federal approval has been granted.
    CDQ groups are required to submit quarterly reports with 
consolidated financial statements that clearly identify CDQ projects, 
revenue and expenditures, year-to-date information on education, 
employment and training activities, and minutes from all board 
meetings. An annual audit from an independent auditor is also required 
from each group. The state monitors and responds to quarterly reports 
and annual audits on a regular basis.
    New state regulations for the CDQ program were incorporated in 
1999. Among the revisions was the establishment of CDQ Program 
Standards. Included in the program standards are requirements that each 
CDP must include specific and measurable benefits to each community 
participating in the CDP, and that a proposed CDQ have the support of 
all participating communities. A CDQ group must also demonstrate how a 
proposed CDQ project will further the goals and purposes of the CDQ 
program set out in 50 C.F.R. 679.

    Question 2. The NRC report on community development quotas 
recommended that the State of Alaska prohibit the permanent conveyance 
of CDQ's to businesses located outside of these Western Alaska 
communities. Clearly, the point of the program was to provide a 
platform for fisheries and economic development in these villages. Has 
there been notable interest in outside businesses to invest or 
otherwise become involved in the CDQ Programs in western Alaska? 
Answer. Yes. Recognizing the strength of this program and the potential 
for growth by the CDQ groups, CDQ groups have been approached by 
several non-Alaskan fishing businesses as potential investment 
partners. CDQ groups have become equity investors in various catcher 
processor vessels owned by non-Alaskan corporations. The passage of the 
American Fisheries Act in 1998, and in particular its American 
ownership requirements, has created additional opportunities for CDQ 
groups to partner on an equity basis with industry players.

    Question 3. Regarding the permanent conveyance of CDQ's, do you 
(the state) support this recommendation of a permanent prohibition?
    Answer. The state opposes any permanent transfer of CDQ's (quota), 
and has adopted state regulations to prohibit the commitment or 
encumbrance of future quota. The CDQ program was structured to provide 
ongoing fisheries-related opportunities to communities in western 
Alaska. The state believes the best way to provide benefits to CDQ 
communities is through the local control and ownership of CDQ quota at 
the CDQ group level.
    I hope this reply provides adequate responses to your questions. 
Please let me know if further information is required.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                              Paul Seaton
    Question 1. Do you think the concern over the potential for delay 
in routine projects or other monetary losses by non-fishing interests 
as a result of essential fish habitat is valid?
    Answer. It is difficult to answer this question because Alaska 
Marine Conservation Council (AMCC) has no knowledge of examples where 
the consultation process has caused delay and additional costs to non-
fishing interests. Staff of the National Marine Fisheries Service have 
indicated that the consultation review process is not an additional 
review process, but is coordinated with existing review of permit 
applications and project plans.

    Question 2. In regard to ITQs, how do you see the allocation 
process of halibut and sablefish affecting these stocks, and what is 
the potential for success in other fisheries?
    Answer. The Total Allowable Catch, or TAC, was not altered when 
ITQs were introduced into the Alaska halibut and sablefish fisheries, 
so the overall level of fishing has not changed. There have been some 
cases of localized depletions of fish stocks because of concentrated 
fishing activity in near-shore areas by ITQ-holders, as well as other 
fishermen.
    Applying the ITQ model, or other quota system, to fisheries in the 
Gulf of Alaska could have very different results than the halibut and 
sablefish ITQ program, which are two species fished by a single gear 
type. Fisheries in the Gulf of Alaska are multi-species and are fished 
using a variety of gear types, making management and monitoring of the 
program much more difficult and complex.
    Strong conservation measures must be tied to the establishment of 
new programs; conservation should not be left to chance, but instead 
should be a required part of any allocation system. AMCC advocates that 
any new program to establish fishing co-operatives, ITQs or other 
efforts to limit access to a fishery, be explicitly designed to promote 
habitat-friendly and low-bycatch gear. AMCC urges Congress to require 
that the conservation objectives listed in ``Sharing the Fish'' be met 
before a new co-operative, ITQ, or other quota program is allowed to be 
established. AMCC also advocates that any new quota program should 
include a sunset, and not continue on in perpetuity. Sunsets give 
managers the option to make conservation adjustments as needed.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                             Richard Lauber
    Question 1. In which North Pacific fisheries, if any, do you think 
new ITQ programs should be considered?
    Answer. I would recommend considering new IFQs only for the scallop 
fishery. We approved a license system for scallops in February 1999, 
and if approved by the Secretary, only nine vessels will be authorized 
to fish scallops. Management for the most part is delegated to the 
State of Alaska. Scallop IFQs would allow the fishery to proceed at a 
slower pace, and the fishermen to fish more cleanly and provide the 
highest quality product possible. In the past, the Council expressed 
interest in proceeding with development of an IFQ system for the 
pollock fisheries, but with the recent development of co-operatives for 
those fisheries under the American Fisheries Act, the need for further 
rationalization seems to have abated for the time being.

    Question 2. How do you suggest bringing common sense into the 
Essential Fish Habitat dialogue, and do what the Sustainable Fisheries 
Act intended by protecting those areas that are truly essential 
habitat? How would you suggest refining EFH provisions to place the 
appropriate emphasis on unique habitat? What types of research is 
needed to appropriately designate Habitat Areas of Particular Concern 
in Alaska? Could you describe how the Council went about establishing 
the closed areas in the Bering Sea and Gulf of Alaska? What sort of 
scientific information were these closures based on?
    Answer. The definition of Essential Fish Habitat (EFH) in the 
Magnuson-Stevens Act (the Act) and NMFS guidelines both have 
contributed to the very expansive treatment of EFH. I believe that most 
legislators probably were thinking of a much narrower focus to EFH when 
the SFA was being drafted. For example, the staff of the Committee on 
Merchant Marine and Fisheries, in an April 25, 1994 memorandum to the 
Council chairmen, suggested that the definition of essential habitat 
should include spawning areas, nursery areas, and areas of special 
ecological significance to those fisheries. They cautioned that the 
definition should not include the entire geographical area occupied by 
the fish stocks. Other definitions were offered as well, some more 
expansive than others. In the Congressional Record of October 18, 1995, 
when final amendments to HR 39 were being debated on the House floor, 
essential habitat was characterized as breeding and nursery areas. 
However, in the end, the following more expansive definition was placed 
in the Act:

        ``Essential fish habitat includes the waters and substrate 
        necessary to fish for spawning, breeding, feeding, or growth to 
        maturity.''

NMFS guidelines then defined and expanded on almost every word in the 
definition:

        Waters: aquatic areas and associated physical, chemical, and 
        biological properties, used currently or historically.
        Substrate: sediments, geological features underlying the 
        waters, and associated biological communities such as coral 
        reefs or submerged aquatic vegetation.
        Necessary: habitat required to support a managed species or 
        assemblage at a target production level reflecting 
        conscientious stewardship.
        Spawning, breeding, feeding, or growth to maturity: covers a 
        species' full life cycle.
        Feeding and growth to maturity: includes EFH for prey species 
        if the managed species depends on the existence of a specific 
        prey species.

    This is not, of course, the first time that this has ever happened. 
Almost any piece of legislation, regardless of how simple and straight 
forward it may appear at first blush, undergoes a very expansive 
transformation when it is reshaped into guidelines or federal rules by 
the Agency or the councils. The old axiom is very true: the devil 
really is in the details.
    Nonetheless, the combined effect of the legislated definition and 
the interpretive guidelines is to commit the Secretary and councils to 
a very broad ecosystem approach to fish habitat conservation and 
enhancement. And to a great extent, this approach is in many respects 
far beyond our technical abilities and knowledge base. As much as we 
would like to know what the habitat needs are for each species, the 
reality is that our current information is very limited, even in our 
case off Alaska where there have been large commercial fisheries, with 
rigorous reporting requirements, for many years.
    Instead of attempting to tinker with the definition of EFH or the 
guidelines, as I suggested in my original testimony, it may be more 
constructive to set our sights on gathering the types of detailed 
information that will be required to delineate those very specific 
ecologically significant, spawning and nursery areas that were more 
likely the expectation of the legislators when the SFA was developed. 
We need to proceed from the basic EFH amendments we now have, which are 
very broad brush, based mainly on level 0 (no systematic sampling), 1 
(presence/absence data), and 2 (habitat-related densities, available 
mainly for adults) type information, to well defined focused areas 
that, if damaged, either by fishing or non-fishing activities, could be 
a critical factor in the sustainability of a particular species.
    The guidelines provide such a pathway: identification of Habitat 
Areas of Particular Concern (HAPCs). These will provide the basis for 
defining habitat that is truly essential. We have started that process 
up here and hope to identify such special habitats at our meeting in 
April 2000. The second avenue, already mentioned above, is to do more 
research. Currently, only salmon information rates much more than a 
level 2 status. With more research over the next ten years, we need to 
elevate the level of information for our major groundfish species and 
species complexes to levels 3-4, which should enable us to sharply 
focus on those hotspots that need to be protected and given special 
consideration. This will take significant funding for research by NMFS 
and its science centers if we truly want to identify and ultimately 
protect essential habitat.
    In summary, I do not believe that we should tinker with the 
definition of EFH just yet, but should keep firmly in mind that 
protecting EFH will require compromise, both in addressing fishing and 
non-fishing impacts, because our data are so limited. Over time, as 
more information is garnered to identify special areas needing 
protection, we can apply more of a rifle, rather than shotgun, approach 
to addressing protection of EFH.
    In answer to some of the other questions posed above, our Council 
has closed large areas to on-bottom trawling. In doing so we relied on 
distribution maps of the species we were trying to protect. For 
example, trawl surveys and catch information showed that what was left 
of the king crab populations occurred throughout Bristol Bay. We had 
extensive information on trawl bycatch of crab because of our 
comprehensive observer program that has been imposed on the fishing 
fleet since 1990, and before that on the foreign fleets. The crab 
stocks have remained low for some time now. We have closed other areas, 
such as around the Pribilof Islands, and near rookeries and haulouts to 
protect marine mammals. Much of the information comes from commercial 
fisheries, trawl surveys and other more archival information generated 
in past research. But again, our observer program plays a significant 
role in providing information and verifiable bycatch data. Without that 
program, we would have little idea of what was being caught and 
discarded by fishermen in the absence of observers.
    Regarding further delineation of Habitat Areas of Particular 
Concern, we will need considerable research on the location and 
functions of specific bottom habitats in the overall ecosystem. Our 
original EFH amendments in 1999 already identified living substrates 
(e.g., eelgrass, kelp, sponges, and coral) and freshwater areas used by 
anadromous fish as HAPCs. Currently, we are considering HAPC habitat 
types including seamounts and pinnacles, the ice edge, the shelf break, 
and biologically-consolidated fine-grained sediments for HAPC status. 
We also are examining certain specific HAPC areas including a deep 
basin in Prince William Sound, the Chirikov Basin north of St. Lawrence 
Island, and red king crab bycatch areas around Kodiak Island.
    Our goal is to identify ecologically important, sensitive, exposed, 
and/or rare areas that are vulnerable to fishing and non-fishing 
activities. In the longer run, we will need to be as specific as 
possible so that we can better balance protection of habitat with the 
needs of both fishing and non-fishing stakeholders. We need more 
research by NMFS, and we need stakeholders involved in locating these 
valuable, vulnerable habitat areas. Significant funding will be needed, 
as well as patience, as we try to tease out the relationships of fish 
species to their habitat.

    Question 3. The Council and NMFS should be commended that only one 
stock in the North Pacific has been designated ``overfished''--Bering 
Sea snow crab. However, the decline in snow crab populations may be 
largely due to environmental factors. Additionally, in the October 1999 
Status of Stocks report, NMFS states fishing levels are safe, but that 
Snow crab is ``overfished.'' If the decline is due to environmental 
factors, the agency may inaccurately be labeling the status of snow 
crab as being ``overfished.'' Do you have any comments on this topic?
    Answer. We actually now have two additional crab species classified 
as overfished--opilio and blue crab. As with bairdi, these fisheries 
are managed by the State of Alaska, with general oversight through the 
Council's crab FMP. As with bairdi, environmental factors are thought 
to be the primary cause of the declines, such that ``overfished'' may 
well be a misnomer. However, the specific regulations stipulate 
criteria for classification as overfished, and those regulations 
require an ``overfished'' designation based on the biomass level of the 
stock, regardless of the cause. In any case, removals by fishing 
remains one variable we can control, so quotas should be reduced or 
eliminated as necessary to achieve rebuilding goals, along with other 
measures including habitat protection and bycatch mortality reductions. 
In the spirit of fairness and public perception, however, it may be 
desirable to coin a new phrase to refer to specific species which are 
in low abundance, but for which fishing cannot be identified as the 
primary culprit. As I stated in my testimony on January 18th, we want 
to be precautionary, especially if a species is in low abundance and 
needs extra protection. But we do not want to be compelled to close 
down or significantly reduce other target fisheries on the basis of 
bycatch concerns, if an environmental shift will still be needed to 
restore the species in low abundance.

    Question 4. The North Pacific Council is often identified as the 
region with the best fisheries conservation record, but NMFS' October 
1999 Status of Fisheries Report to Congress indicated that the agency 
does not know the status of 219 out of 252 fish stocks in the area. In 
the Bering Sea groundfish fishery alone, NMFS says 14 species are not 
overfished and the status of 109 is unknown. Do you feel the agency 
needs to improve how it presents information to the public in order to 
restore some measure of confidence in the quality of scientific 
research and fishery management actions that it takes with taxpayer 
money?
    Answer. When NMFS says it ``does not know the status of 109 
species'', much of the time they are referring to various species of 
little or no commercial value. We do not really manage for those 
species and the commercial catch is very low. We have little or no 
knowledge of their relative abundance, and their importance in the 
overall ecosystem remains unclear to us. Unfortunately, it is unlikely 
that we are going to gain definitive information on these species, 
because the science and technology do not exist to accurately assess 
their numbers or their specific importance to the ecosystem.
    In an ideal world, with boundless funding for fisheries research, 
we would know everything we need to about each species in our realm. We 
know, however, that NMFS has very limited research funds and must 
target those funds on research on fish species that are the true basis 
for commercial fisheries. Our scientific support from the NMFS Alaska 
Fisheries Science Center is outstanding. We receive annual reports on 
each species with a TAC and on species complexes of importance to the 
fisheries. I rarely hear any complaints about the research 
presentations and their adequacy, and I firmly believe that their 
scientific recommendations are highly respected.
    Some species will remain unknown, and the issue raised here may be 
one more of opticality than real significance. The lists of species in 
the report to Congress seem more the result of an effort by over-eager 
fisheries biologists to show they know all the species in the water, 
rather than a cogent presentation of the species that are really 
managed, and how they are faring. How to couch the lack of knowledge is 
something which could stand improvement. These are minor species in 
terms of management, and somehow the message needs to be conveyed to 
the public, that with limited research funds, it is better policy to 
expend them on the species of significance to the commercial fisheries, 
since that is where the greatest potential damage could be done if the 
managers are flying blind. We are happy that we receive the types of 
comprehensive information that we do from NMFS, especially compared to 
other regions of the U.S. Our scientific resources are valued highly up 
here and we would not want their capacity diminished in any way.
    We also have the most expensive and comprehensive observer program 
in the nation, if not the world, all paid for by industry. The 
observers count all species brought aboard and this information helps 
us track any emergent problem with certain species. If we were having a 
significant impact on a particular species that is not being tracked by 
the scientists at the Center, I think that it would show up in our 
observer collection program and set off alarms. Otherwise, we will 
continue to believe that the most significant impact of our fisheries 
is the removal of specific target species, and those are well monitored 
and researched.

    Question 5. Under Section 303 of the Magnuson Act, the North 
Pacific Fishery Management Council is mandated to reduce bycatch for 
fisheries under its jurisdiction. How have bycatch reduction incentives 
worked? What have been the problems in creating these incentives? In 
the North Pacific region, what do you see as the costs and benefits of 
bycatch quotas, the sale of bycatch to support research, and the 
donation of unavoidable bycatch to food kitchens?
    Answer. Bycatch has been a focal issue for the Council over its 23-
year existence and we spend a significant amount of our time addressing 
bycatch management, allocation, and reduction. Since enactment of the 
1996 amendments the Council has taken the following specific actions:

          Banned on-bottom trawling for pollock;
          Established an incremental chinook salmon bycatch 
        reduction in trawl fisheries from 48,000 chinook down to 29,000 
        chinook by year 2003;
          In process of developing a halibut mortality 
        avoidance program;
          Reduced the maximum retainable bycatch (MRB) amount 
        for several species, including sablefish and rockfish; and
          Implemented an improved retention and utilization 
        program which prohibits the discard of all pollock and Pacific 
        cod in all North Pacific fisheries, regardless of gear type or 
        fishery. Flatfish retention will be required for certain 
        species beginning in 2003, which should reduce overall total 
        discard rates in our groundfish fisheries to about 5%, well 
        below the world average of about 25%.

    Unfortunately, we do not have a viable program of bycatch reduction 
incentives at an individual vessel level. Our regulations promote 
reduction of bycatch on a fleet-wide basis; however, no matter how 
finely we subdivide the bycatch caps, there is always opportunity for a 
few dirty vessels to spoil the fishery for all; i.e., there is little 
incentive for vessels toindividually avoid bycatch because the penalty 
is spread across the entire fleet. Our so-called vessel incentive 
program (VIP) does provide for after-the-fact monetary penalties on 
vessels which exceed certain bycatch rates of prohibited species. 
However, the legal burden of proof required and the level of penalties 
do not provide a strong incentive. In fact, very few cases have ever 
been successfully prosecuted under this program. It remains on the 
books simply because it is the only individual incentive program we 
have, and it may provide some deterrent.
    The ability to develop a system of individual bycatch 
accountability has been fraught with legal issues. Primarily, again, 
the burden of proof required to take a vessel off the water, on a real-
time basis, is too high given the level of hard data (from observers) 
required. The necessary levels of observer coverage and sampling 
protocols to very accurately measure real-time bycatch levels would be 
prohibitively expensive, and still may not overcome the legal burden-
of-proof threshold required. Programs which might reserve quota for 
clean fishers suffer from the same problem - how can we precisely and 
accurately measure bycatch levels to determine who gets to fish and who 
does not? The co-operative program now in effect for Bering Sea and 
Aleutian Islands pollock fishermen may provide a new and effective tool 
for individual bycatch reduction incentives. Because they are limited 
in their catch of non-pollock species, the pollock co-op participants 
are developing inter-co-op agreements, and employing the services of 
real-time data monitors, to allocate bycatch of groundfish and PSC 
species among the participants.
    Concerning the benefits and costs of bycatch quotas, sale of 
bycatch, donations, etc., presumably what we are referring to in this 
context is Prohibited Species Catch (PSC) species which are not allowed 
to be retained and for which there are specific, overall, fleet-wide 
caps in existence (and not referring, for example, to cod that may be 
caught while targeting pollock, but which is open for fishing and 
marketable and not discarded). Quotas for these species would indeed 
provide direct incentives for reduction of such bycatch, and allow 
those species to be (1) caught in their directed fisheries and brought 
to market instead of being discarded, or (2) in the case of juvenile, 
unmarketable species, would enhance the overall productivity of the 
stock. Benefits also would occur from a public perception standpoint. 
Costs are related to the discussion above, in terms of the necessary 
observer coverage required to monitor such quotas.
    In conjunction with quotas, or all by itself, mandatory retention 
of PSC and surrender for sale by the government (or donation to food 
banks) may make sense from a public perception standpoint, but there 
are market competition issues to consider, particularly for halibut. 
There also are strong, longstanding political currents against allowing 
the retention and sale of trawl bycaught halibut. There is also the 
fact that, in the case of halibut, many are released back into the 
water alive. Nonetheless, some halibut that have a very low chance of 
surviving after being taken as bycatch, are donated to food banks. We 
also have a pilot program for donation of salmon which normally die 
when taken as bycatch in trawls. Crab bycatch is mostly small, 
unmarketable crab that amounts to a small percentage of the total 
mortality (or area 
should be, carefully weighing the needs of all involved, but allowing 
for stability to develop.
    Yes, you can have an ITQ program and continue to have traditional, 
family run businesses which thrive and prosper. A perfect example of 
that is the halibut IFQ program in Alaska which has provided a 
tremendous source of stability and security to many small, family-owned 
operations. In fact, there is some thought that without IFQs, many of 
these operations may not have survived.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                            Chris Blackburn
    Question 1. If excess capacity, or too many fishermen targeting 
particular fish, is a problem in a fishery, should the regional council 
be allowed to consider whether or not to use an ITQ system?
    Answer: An unqualified YES. The Magnuson-Stevens Act requires the 
commercial fishing industry to take significant measures to assure 
sustainable fisheries. The Alaska fishing industry supported these 
measures. Our communities are dependent on well management fisheries.
    Open access fisheries are not ``environmentally friendly'', 
``sustainably friendly'' or ``safety friendly'' models for fishery 
management. Open access rewards those who can take the most fish in the 
shortest amount of time. The fishermen who take time to avoid bycatch, 
avoid critical habitat, deliver fish in prime condition and fish in a 
safe manner is a fishermen are rewarded with a steadily declining share 
of the catch. Not even the Magnuson-Stevens Act mandates can be fully 
realized when fisheries are open access. For example, there are times 
when halibut or salmon are mixed with trawl targets like flatfish or 
pollock. Waiting to fish a week or so would give time for these 
prohibited will move on and allow for clean fishing. However, NMFS does 
not have the ability to close the season until conditions change. Since 
many fishing seasons only last a week or two due to over-capitalization 
fishermen have the choice of losing a season or dealing the best they 
can to avoid the bycatch species.
    The poster child for ITQ fisheries is the Alaska halibut fishery. 
For decades it was a nearly year long fishery. Then the price went up, 
the number of participants increased to the point that the fishery 
became a two day derby. In the derby skates of gear with hooked halibut 
were left on the bottom, fishermen worked 24 hours a day and sustained 
injuries as a result and usually there were several deaths. The same 
problems occur in the crab fishery for the same reasons.
    Implementation of the halibut ITQ program allowed fishermen to take 
personal responsibility for their fishery. The race was over, exvessel 
value increased, new markets were developed, and skates of gear with 
hooked halibut or no longer left on the sea bottom. Even more 
important, the injury and death rates dropped dramatically.
    It is amazing to me that the number of taxi caps are limited in 
many areas of the nation and that in some areas the taxi's are limited 
to specific areas within an area, but fisheries are open to all in most 
cases.
    Only during the development stage of a fishery can open access 
work, and only for a short time.

    Question 2. If Congress were to allow for some form of ITQ's, how 
should the issue related to fees and taxes be handled?
    Answer. Under any scenario there should be a fee or tax for the 
management measures specific to a rights based fishery. The fee should 
be based on the tonnage held by the fishermen. I also believe that 
transfers of ITQ's should be taxed at a significant rate and the 
revenue used for research. A significant transfer tax used this way 
returns benefit to the industry and is a way of charging users for 
their acquisition of a national resource.I actually prefer the American 
Fisheries Act model since it does not give ``until death'' rights to a 
quota, but allows the co-op to annually allocate among the members. 
It's more like a lease arrangement. This model requires more 
responsibility by the co-oped fishermen than does IFQ's, and therefore 
relieves NMFS of micro management and some allocative decisions. In 
this case some annual fee based on share would be appropriate and 
should be assessed to the Coop itself.
    Question 3. If councils were allowed to design an ITQ program with 
fees or taxes, would your position on IFQ*s change?
    Answer. No.

    Question 4. Can you in fact continue to have traditional, family 
run businesses in a fishery with an IFQ program?
    Answer.The Alaska halibut IFQ program has actually put the family 
back into the fishery. Since fishermen can take their time many now 
employ family members on their boats.
    Concerning concentration of share by large entities the North 
Pacific Fishery Management Council dealt with this issue in the halibut 
and sablefish fisheries by setting share caps and requiring owners to 
be on the vessel while fishing their IFQ quotas.
    Also, halibut shares were divided into ``blocks'' of three 
different quota share sizes. There are limits on how many blocks a 
vessel may have. A vessel cannot aggregate different sized blocks. A 
vessel maxed out on his ability to buy more small blocks has to sell 
the small blocks before buying larger blocks.
    Critical to an ITQ program is the qualification criteria used to 
initially to determine who will receive IFQ's. The criteria needs to be 
pretty inclusive even at the risk of substantially decreasing the 
allocation to large operations. It may also be useful to set aside some 
quota for small boats in artesianal fisheries. Alaska has exempted 
boats under 60-feet from a number of management regulations. I've 
always felt it was a shame that some halibut quota was not left in open 
access for fishermen to fish by hand from a skiff.
    Thank you for the opportunity to expand on my comments at the 
Anchorage field hearing.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                            Penelope Dalton
    Please state whether or not you support Congress lifting the 
moratorium on ITQ' and respond to some of the concerns raised in the 
NAS study. For example, how could the initial allocations of quota be 
accomplished in a fair manner and what could be done to address the 
fear of a consolidated fishing industry in the hands of a few large 
companies?

The witness did not provide a response.

    In which North Pacific fisheries, if any, do you think new ITQ 
programs should be considered?

The witness did not provide a response.

    The Council and NMFS should be commended that only one stock in the 
North Pacific has been designated ``overfished''--Bering Sea Snow crab. 
However, the decline in Snow crab populations may be largely due to 
environmental factors. In addition, in the October 1999 Status of 
Stocks report, NMFS states fishing levels are safe, but that Snow crab 
is ``overfished.'' If the decline is due to environmental factors, has 
the agency inaccurately labeled the status of Snow crab as being 
``overfished?'' Additionally, how many of the 98 species defined in 
NMFS's report as ``overfished'' suffer from a similarly inaccurate 
description as the Snow crab fishery?

The witness did not provide a response.

    The North Pacific is often identified as the region with the best 
fisheries conservation record, but NMFS' October 1999 Status of 
Fisheries Report to Congress indicates that the agency does not know 
the status of 219 out of 252 fish stocks in the area. In the Bering Sea 
groundfish fishery alone, NMFS says 14 species are not overfished and 
the status of 109 is unknown. What percent of the commercial catch do 
these 109 Bering Sea species account for?

The witness did not provide a response.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                              Dave Benton
    In which North Pacific fisheries, if any, do you think new ITQ 
programs should be considered?

The witness did not provide a response.

    How do you suggest bringing common sense into the Essential Fish 
Habitat dialogue, and do what the Sustainable Fisheries Act intended by 
protecting those areas that are truly essential habitat?

The witness did not provide a response.

    Is the decline in Snow crab stocks due to overfishing or are there 
other environmental factors to blame?

The witness did not provide a response.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                              Beth Stewart
    If excess capacity, or too many fishermen targeting particular 
fish, is a problem in a fishery, should the regional council be allowed 
to consider whether or not to use an ITQ system?

The witness did not provide a response.

    The 1999 National Research Council report on ITQ's recommended that 
Congress should permit (1) the assessment of fees on initial 
allocations of quota; and (2) imposition of an annual tax on quota 
shares. Please answer the following two questions regarding this topic:

          If Congress were to allow for some form of ITQ's, how 
        should the issue related to fees and taxes be handled?

The witness did not provide a response.

          The NRC report indicates that such fees or taxes 
        should be considered because an ITQ program essentially 
        provides for the gift of a public resource to a private entity, 
        therefore, it may be appropriate to allow the public to receive 
        some economic benefit from the program. If councils were 
        allowed to design an ITQ program with fees or taxes, would your 
        positions on ITQ's change?

The witness did not provide a response.

    Due to the free-market nature of ITQ's, a primary criticism is that 
they could result in the consolidation of quota among only a few large 
fishing companies. This could squeeze many traditional, small and 
family run fishing operations out of business. These businesses are the 
foundation of coastal communities all over this country. It is a 
concern that if the number of ITQ programs increases nation-wide, then 
the quota will be consolidated in a number of large fishing companies. 
In regards to requiring accumulation limits, one NRC report recommends 
that councils considering an ITQ program define limits on accumulation 
of quota and other measures to prevent such a consolidation. It is 
understood that these decisions would need to be made on a fishery-by-
fishery basis, but can you offer the Subcommittee any guidance on 
whether you can in fact continue to have traditional, family run 
businesses in a fishery with an ITQ program?

The witness did not provide a response.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                               John Iani
    If excess capacity, or too many fishermen targeting particular 
fish, is a problem in a fishery, should the regional council be allowed 
to consider whether or not to use an ITQ system?

The witness did not provide a response.

    The 1999 National Research Council report on ITQ's recommended that 
Congress should permit (1) the assessment of fees on initial 
allocations of quota; and (2) imposition of an annual tax on quota 
shares. Please answer the following two questions regarding this topic:

          If Congress were to allow for some form of ITQ's, how 
        should the issue related to fees and taxes be handled?

The witness did not provide a response.

          The NRC report indicates that such fees or taxes 
        should be considered because an ITQ program essentially 
        provides for the gift of a public resource to a private entity, 
        therefore, it may be appropriate to allow the public to receive 
        some economic benefit from the program. If councils were 
        allowed to design an ITQ program with fees or taxes, would your 
        positions on ITQ's change?

The witness did not provide a response.

    Due to the free-market nature of ITQ's, a primary criticism is that 
they could result in the consolidation of quota among only a few large 
fishing companies. This could squeeze many traditional, small and 
family run fishing operations out of business. These businesses are the 
foundation of coastal communities all over this country. It is a 
concern that if the number of ITQ programs increases nation-wide, then 
the quota will be consolidated in a number of large fishing companies. 
In regards to requiring accumulation limits, one NRC report recommends 
that councils considering an ITQ program define limits on accumulation 
of quota and other measures to prevent such a consolidation. It is 
understood that these decisions would need to be made on a fishery-by-
fishery basis, but can you offer the Subcommittee any guidance on 
whether you can in fact continue to have traditional, family run 
businesses in a fishery with an ITQ program?

The witness did not provide a response.

    If excess capacity, or too many fishermen targeting particular 
fish, is a problem in a fishery, should the regional council be allowed 
to consider whether or not to use an ITQ system?

The witness did not provide a response.

    The 1999 National Research Council report on ITQ's recommended that 
Congress should permit (1) the assessment of fees on initial 
allocations of quota; and (2) imposition of an annual tax on quota 
shares. Please answer the following two questions regarding this topic:

          If Congress were to allow for some form of ITQ's, how 
        should the issue related to fees and taxes be handled?

The witness did not provide a response.

          The NRC report indicates that such fees or taxes 
        should be considered because an ITQ program essentially 
        provides for the gift of a public resource to a private entity, 
        therefore, it may be appropriate to allow the public to receive 
        some economic benefit from the program. If councils were 
        allowed to design an ITQ program with fees or taxes, would your 
        positions on ITQ's change?

The witness did not provide a response.

    Due to the free-market nature of ITQ's, a primary criticism is that 
they could result in the consolidation of quota among only a few large 
fishing companies. This could squeeze many traditional, small and 
family run fishing operations out of business. These businesses are the 
foundation of coastal communities all over this country. It is a 
concern that if the number of ITQ programs increases nation-wide, then 
the quota will be consolidated in a number of large fishing companies. 
In regards to requiring accumulation limits, one NRC report recommends 
that councils considering an ITQ program define limits on accumulation 
of quota and other measures to prevent such a consolidation. It is 
understood that these decisions would need to be made on a fishery-by-
fishery basis, but can you offer the Subcommittee any guidance on 
whether you can in fact continue to have traditional, family run 
businesses in a fishery with an ITQ program?

The witness did not provide a response.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                              Larry Cotter
    In 1992, the North Pacific Council implemented the community 
development quota program, or CDQ's for Western Alaska. As you know, 
the CDQ program allocates a percentage of the annual catch of a variety 
of commercial fisheries directly to Western Alaskan villages. These 
villages were originally selected because of their geographic isolation 
and dependence on subsistence lifestyles. Therefore, the CDQ program 
was designed to increase limited economic opportunities through 
enhanced development of fishing industries, new employment 
opportunities, and community infrastructure. The 1999 National Research 
Council report, required by the Sustainable Fisheries Act, concluded 
that the greatest weakness of the CDQ program in Western Alaska is a 
lack of open, consistent communication between the CDQ groups and the 
communities they represent. Since CDQ's were designed to benefit entire 
communities, not just a select few who have financial investments in a 
CDQ business interest, how do you respond to the criticism raised in 
the NRC report?

The witness did not provide a response.

    The NRC report on CDQ's also criticizes the State of Alaska for not 
providing enough outreach to the communities. The report goes so far as 
to say that the State needs to help ensure that the communities and 
their residents are aware of the program and how to participate. Do you 
have any comments on this subject?

The witness did not provide a response.

    The NRC report on community development quotas recommended that the 
State of Alaska prohibit the permanent conveyance of CDQ's to 
businesses located outside of these Western Alaska communities. 
Clearly, the point of the program was to provide a platform for 
fisheries and economic development in these villages.
          Has there been notable interest in outside businesses 
        to invest or otherwise become involved in the CDQ programs in 
        Western Alaska?

The witness did not provide a response.

    Do you support this recommendation of a permanent prohibition?

The witness did not provide a response.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                              Jack Phelps
    During the Subcommittee's hearings on Magnuson, we have heard a 
fairly extensive debate on the essential fish habitat provisions in the 
Sustainable Fisheries Act. In short, many fishing interests support the 
concept, but believe that the interpretation and implementation have 
been too broad. On the other hand, the environmental community believes 
that NMFS and the Councils should be more aggressive in identifying and 
protecting EFH. And, finally, many non-fishing interests are extremely 
concerned about the effect that EFH may have on businesses, especially 
routine permitting procedures. It is possible that some of these non-
fishing interests may be afraid of having to deal with a new federal 
agency and its bureaucracy. As a representative of the Alaska Forest 
Association, could you please tell us if any of your member companies 
experienced actual business losses or delays as a result of the EFH 
provisions? Please explain.

The witness did not provide a response.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                          Freddie Christensen
    In 1992, the North Pacific Council implemented the community 
development quota program, or CDQ's for Western Alaska. As you know, 
the CDQ program allocates a percentage of the annual catch of a variety 
of commercial fisheries directly to Western Alaskan villages. These 
villages were originally selected because of their geographic isolation 
and dependence on subsistence lifestyles. Therefore, the CDQ program 
was designed to increase limited economic opportunities through 
enhanced development of fishing industries, new employment 
opportunities, and community infrastructure. The 1999 National Research 
Council report, required by the Sustainable Fisheries Act, concluded 
that the greatest weakness of the CDQ program in Western Alaska is a 
lack of open, consistent communication between the CDQ groups and the 
communities they represent. Since CDQ's were designed to benefit entire 
communities, not just a select few who have financial investments in a 
CDQ business interest, how do you respond to the criticism raised in 
the NRC report?
    The NRC report on CDQ's also criticizes the State of Alaska for not 
providing enough outreach to the communities. The report goes so far as 
to say that the State needs to help ensure that the communities and 
their residents are aware of the program and how to participate. Can 
you please comment on this subject?
    The NRC report on community development quotas recommended that the 
State of Alaska prohibit the permanent conveyance of CDQ's to 
businesses located outside of these Western Alaska communities. 
Clearly, the point of the program was to provide a platform for 
fisheries and economic development in these villages.

          Has there been notable interest in outside businesses 
        to invest or otherwise become involved in the CDQ programs in 
        Western Alaska?
          Do you support this recommendation of a permanent 
        prohibition?

    Pertaining to the ``Questions for the Record'':
    The questions as posed regard CDQs (Community Development Quotas) 
already existing in Western Alaska (Bering Sea / Aleutian Islands.)
    As you know, there are currently no CDQs in the Gulf of Alaska and 
our constituency, with the exception of communities on the eastern side 
of the Aleutians, are not in CDQ areas. Therefore, we cannot comment on 
the questions as they directly relate to the current CDQ 
program.However, our testimony to the Subcommittee reflected the 
concern we have in the Gulf of Alaska that there is no corresponding 
program which can retain or encourage fisheries access, specifically in 
our smaller communities. Our feeling, substantiated by declining 
village populations and job opportunities, by the ``migration'' of 
permits and quota shares outside of those communities and by the 
erosion of fishing access, is that if we don't do something soon, we 
are going to see a lot of ``ghost towns'' in the Gulf of Alaska.
    We are losing what development and access we traditionally had and 
we are fighting continual restrictions on developing new fisheries 
access, such as within the charter and tourism industry.
    Subsequent to our testimony, we have continually promoted our 
proposal to the North Pacific Fishery Management Council (NPFMC) 
regarding amendments to the existing Halibut and sablefish IFQ 
(Individual Fishing Quota) program which would allow a community non-
profit to purchase X number of quota shares (based on a cap) for 
management within a community. The purpose of this proposal is to 
maintain a certain level of quota share within a small coastal 
community (or group of communities) in perpetuity. This would be based 
on open market criteria. The status of this proposal is that it is only 
now (as of February 11, 2001) being tasked by Council for first 
analysis. This action has ostensibly been delayed by an over-burden on 
staff due to analysis of the Stellar sea lion Biological Opinion and 
other issues before Council. This has not been a satisfactory response 
for us but we are encouraged that the Council is now moving forward. We 
still have a long way to go but we are gaining political support from 
various stakeholders as people further understand the proposal.It is 
important to note that our commercial proposal is NOT a reallocation of 
resources but just an addition of ``qualifying buyer.'' As we 
understand from NMFS (National Marine Fisheries Service) General 
Counsel, this is an allowable amendment to the existing IFQ program.
    An additional proposal regards a community set-aside for the 
proposed halibut charterboat IFQ program. We have been continually 
testifying before Council that the charter ITQ will only work in our 
communities if (a) we don't repeat the same mistakes of the commercial 
IFQ implementation, and (b) if we have a ``community set aside'' for 
initial issuance that allows our current operators to stay fishing and 
promotes growth in the industry, combined with proposed Local Area 
Management Plans (LAMPs) which can protect conservation concerns.
    We are concerned, also, about other rationalization plans for other 
fisheries and we want to make certain with every rationalization 
proposal that (a) the impacts on small coastal communities are well 
analyzed, and (b) there is some form of ``setaside'' or allowance for 
community purchase. Here again, our intent is to reverse the decline of 
fisheries access, prevent any future loss, and encourage new forms 
which stabilize community economics.
    We feel these items are specifically pertinent to Section 301 (a) 
(8) of the Magnuson-Stevens Fishery Conservation Management Act 
regarding consideration of community impacts. We feel we have had to 
continually educate Council members and others of their obligation to 
consider those impacts and we believe we are making progress in this 
direction but it is a painfully slow process with no current guarantee 
of positive results for the communities. We have chosen to ``work 
within the system'' and we are committed to that process, but we ask 
that the Senate Committee keep in mind the dilemma we are facing.
    Subsequent to the January 18, 2000 hearings, we submitted copies of 
our proposals to the Senate Committee, but I am sending additional 
copies to your office for the record.
    Thank you. Please call us at the above number if there are further 
questions.

Sincerely,

Gale K. Vick, Executive Director
Gulf of Alaska Coastal Communities Coalition (GOAC3)
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                            Michael J. Hyde
    Question 1. If Congress were to allow for some form of ITQ's, how 
should the issue related to fees on initial allocation of quota shares 
and an annual tax on quota shares be handled?
    Answer. As Congress considers whether or not the moratorium on new 
Individual Fishing Quotas (IFQs) programs should expire, it is 
appropriate for Congress to review the issue of fees and taxes. While 
Congress has authorized the collection of fees to recover management 
and enforcement cost for IFQ/ITQ programs, the Secretary is prohibited 
from collecting fees for in other fisheries, except for purpose of 
recovering administrative costs. Congress should begin first by 
deciding whether IFQ/ITQ programs should be treated differently than 
other limited access programs in which the government extends to a 
certain class of individuals the privilege to participate in a specific 
fishery.
    This policy issue received little or no attention in 1996 when the 
Magnuson-Stevens Act was amended, authorizing the Secretary to collect 
a fee of up to 3 percent to recover the costs of managing and enforcing 
an IFQ/ITQ program. (Congress extended the authority to use fees 
collected under an IFQ/ITQ system to fund programs aiding new entrants 
and small boat fishermen.) Congress should be cautious before it 
considers fees on recipients of initial quota allocation shares or 
attempts to collect economic rent from IFQ/ITQ participants. The issue 
should be considered within the context of the increasing use of 
limited entry systems.

    Question 2. If councils were allowed to design an ITQ program with 
fees or taxes, would your positions on ITQs change?
    Answer. If councils were given a free hand to impose fees and taxes 
on ITQ programs, my position on ITQs would not change, but my 
enthusiasm for participating in an ITQ program might well diminish. 
Congress established a national policy in 1996 relating to appropriate 
fee levels. Congress might elect to amend those provisions, but it 
should continue to provide for a uniform, national policy on fees in 
the Magnuson-Stevens Act to which councils must adhere.

    Question 3. Can you offer the Subcommittee any guidance on whether 
you can in fact continue to have traditional, family-run businesses in 
a fishery with an ITQ program?
    Answer. The answer is an unqualified ``yes.'' The halibut/sablefish 
IFQ program is an excellent example of a fishery that retained its 
traditional, family-run business character after converting from a 
dangerous, wasteful ``race for fish'' format to a rationalized IFQ 
fishery. The North Pacific Council instituted limits on quota 
accumulation and adopted numerous other management measures designed to 
preserve the socio-economic characteristics of the fishery. Congress 
should allow councils the flexibility to tailor future IFQ/ITQ programs 
to meet the management objectives of disparate fisheries.
                                 ______
                                 
Response to Written Questions by Hon. John F. Kerry to Kevin B. O'Leary
    Question 1. What type of buyback program is recommended for crab?
    Answer. Because the Alaska crab industry is currently facing a 
fisheries disaster, with greatly reduced crab seasons, a straight 
buyback for crab licenses is unrealistic. The buyback regulations 
(which have not been published) would require some demonstration of an 
ability to repay a loan. For the crab fisheries of Alaska, it is most 
likely appropriate to combine some form of straight federal disaster 
aid to a portion of the fleet, giving them an opportunity to sell out 
of the fishery and lose the license/catch history and vessel. This 
disaster money coupled with the ability to obtain direct and individual 
loans to purchase catch history seems to make a lot of sense. One 
thought that seems to have some merit is that of the ability to use 
existing Capital Construction Fund accounts for the purpose of buying 
someone out.
    Regarding a buyback in the form of a reverse auction, this concept 
should certainly be considered. A benefit to the nation would be that 
those entities that are bought out won't go bankrupt causing further 
distress in the industry.

    Question 2. How have bycatch incentives worked and what have been 
the problems?
    Answer. As long as there is a ``race for fish'', bycatch incentives 
will not work. When the fishery is slowed down through an IFQ or co-
operative program, then there is a reason to expect that industry will 
have the ability to make a bycatch difference. Until that time, the 
only option is to set a bycatch cap at the lowest possible level and 
shut fisheries down when the cap is achieved.
    Question 3. What are the costs and benefits of bycatch quotas, the 
sale of bycatch to support research, and the donation of unavoidable 
bycatch to food kitchens?
    Answer. The concept of bycatch quotas has been debated among 
industry for many years. One position is that by giving bycatch quotas 
based on history that you are simply rewarding those who were the 
dirtiest. Another way to give bycatch quotas would be to estimate a 
realistic bycatch rate based on data and everyone would receive an 
equal share. A bycatch quota would only work if there were an IFQ 
system in place for the target species. The ability to slow the fishery 
down and take more care under a quota system will automatically reduce 
the bycatch of prohibited species, undesirable species, and the 
interaction with seabirds. This is a good thing for the resource.
    The sale of bycatch to support research is probably not a good 
idea. The whole idea is to reduce the bycatch, not make money on it. 
This would reduce the incentives to fish clean and have a lower 
bycatch. After all, it is being used for a good cause. It is also 
possible that research dollars could be higher than what the fishermen 
who target on that species for their livelihood might receive. This 
would result in an allocation dispute over the resource that is not 
needed.
    With regard to the donation of unavoidable bycatch to food banks, I 
can only say that it is the right thing to do. With world hunger and 
many people in the United States experiencing hunger problems, we have 
an obligation as stewards of the resource to make sure the best and 
wisest utilization is developed. It is absolutely appropriate to take 
unavoidable bycatch, such as halibut and salmon in the trawl fisheries, 
process that product and give it to the poor.

                                
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