GAO

United States General Accounting Office

Report to House Committee on

Resources

June 2000 COMMERCIAL

FISHERIES

Entry of Fishermen

Limits Benefits of

Buyback Programs

GAO/RCED-00-120

Page 1 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

Contents

Letter 3

Appendixes Appendix I: Results of the Telephone Survey of Participants

in the New England Groundfish Vessel and

Permit Buyback Program 20

Appendix II: Comments From the Department of Commerce 28

Tables Table 1: Commercial Fishing Permits by Annual Catch in the

New England Groundfish Fishery, 1996 Through 1999 9

Table 2: Commercial Fishing Permits by Annual Catch in the

Washington State Salmon Fishery, 1994 Through 1998 12

Figures Figure 1: Primary Occupations of New England Buyback

Participants 10

Abbreviations

NMFS National Marine Fisheries Service
Page 2 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs
Page 3 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

United States General Accounting Office

Washington, D.C. 20548

Resources, Community, and

Economic Development Division

B-284384 Letr

June 14, 2000

The Honorable Don Young

Chairman

The Honorable George Miller

Ranking Minority Member

Committee on Resources

House of Representatives

The nation’s coastal waters are home to many commercial fisheries that

provide a wide variety of fish for the domestic market.1 Coastal states issue

permits and develop and enforce regulations for fishing in waters that are

near their shores. In areas outside state jurisdiction, the National Marine

Fisheries Service (NMFS), within the Department of Commerce, is

responsible for issuing permits and developing and enforcing regulations

for harvesting fish. As you are aware, fish populations in many commercial

fisheries are declining, resulting in a growing imbalance between the

number of vessels in fishing fleets and the number of fish available for

harvest. In response to this growing imbalance, the federal government has

provided $140 million since 1995 to purchase fishing permits, fishing

vessels, and related gear from fishermen, thereby reducing the capacity of

fishermen to harvest fish. Generally, the government designed these

purchases, called buybacks, to achieve multiple goals, such as reducing the

capacity to harvest fish, providing economic assistance to fishermen, and

improving the conservation of fish. Because excessive fishing capacity has

been a continuing problem in many fisheries, several additional buybacks

have been proposed that, if implemented, would be in excess of $250

million.

This report evaluates the impact of recently completed buyback programs

in three diverse fisheries—New England groundfish, Bering Sea pollock,

and Washington State salmon. Buybacks in these fisheries account for

about $130 million of the $140 million in federal funds authorized since

1995. As agreed with your offices, we are assessing (1) the extent to which

the buyback programs have affected fishing capacity, (2) potential ways the

1

A fishery is one or more stock (defined as one species or several species in a geographical

area) of fish managed as a group.
B-284384

Page 4 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

buyback programs can be made more effective, and (3) NMFS’ efforts to

evaluate the effectiveness of buyback programs.

Results in Brief Buyback programs in New England, the Bering Sea, and Washington State

initially removed from 10 to 24 percent of their respective fishing

capacities. However, the experiences of these three cases demonstrate that

the long-term effectiveness of buyback programs depends upon whether

fishermen return to the fishery. For example, the $24.4 million New

England buyback removed 79 vessels that accounted for 19 percent of the

groundfish catch in that fishery. However, 62 additional vessels have

become active since the buyback because no steps were taken during the

program to prevent previously inactive vessels from engaging in fishing.

These vessels have begun to erode the capacity reductions made by the

buyback because they have replaced fishing capacity by as much as twothirds of that purchased through the buyback. Experience also shows that,

while buyback programs reduce capacity in one fishery, the recipients of

the buyback may simply shift that capacity to another fishery not subject to

the buyback. For example, according to our survey of fishermen who

participated in the New England buyback, nine recipients who formerly

fished for groundfish are now primarily lobster fishermen—a fishery that is

also classified as overfished throughout much of its area.

The effectiveness of buyback programs in reducing fishing capacity

depends upon whether fishermen return to the fishery and also whether

remaining fishermen have an incentive to invest in larger or betterequipped fishing vessels. In most fisheries, fishermen have an incentive to

increase their fishing capacity in order to catch fish before someone else

does, which is called the “race to fish.” However, when buyback programs

are accompanied by other measures that reduce incentives for larger or

better-equipped fishing vessels, capacity reductions from a buyback need

not erode. For example, the American Fisheries Act authorized the

purchase of 9 of the 30 vessels that catch and process fish onboard in the

Bering Sea and encouraged the owners of the remaining 21 vessels to form

a fishing cooperative that guaranteed each of its members an allocation of

fish, thereby ending the “race to fish.” Because of this guarantee, the need

for increased fishing capacity was eliminated. As a result, the Bering Sea

cooperative voluntarily withdrew 4 of the remaining 21 vessels from that

fishery.

NMFS has made limited efforts to evaluate buyback programs, assessing

only the fishing capacity reductions in the New England groundfish
B-284384

Page 5 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

buyback because it was required to do so. Because evaluations can identify

ways to improve future programs, prudent management suggests that

buyback programs should be evaluated. This report recommends that the

Secretary of Commerce require NMFS to take certain actions in designing

future buyback programs that would improve their effectiveness and to

evaluate these programs. The Department of Commerce generally agreed

with the information presented in the draft report and with its

recommendations.

Background In 1998, commercial fishing vessels in U.S. marine waters landed 9.2 billion

pounds of commercial fish in domestic ports, with an estimated value of

$3.1 billion. To manage the harvest of fish in these fisheries, NMFS works

with eight federally established regional councils consisting generally of

federal, state, and private-sector representatives to develop plans and

propose measures that attempt to balance the economic benefits of fishing

with the need to protect the environment.

The basic features, costs, and objectives of the three fisheries involved in

the buyback programs that we reviewed varied.2 The New England and the

Bering Sea buyback programs purchased fishing vessels and all federal

permits associated with them. The Washington State program purchased

state fishing permits but did not purchase vessels. Of the $130 million spent

on the buybacks in these fisheries, $90 million was spent to reduce fishing

capacity in the Bering Sea. About $40 million was spent in the New England

groundfish and Washington State salmon fisheries to reduce fishing

capacity while providing economic assistance and relief to fishermen

adversely affected by the closures of fishing areas or natural disasters that

had reduced fish stocks.

• The New England groundfish fishery is the predominant fishery in the

northeastern United States in terms of the amount of fish caught and the

number of vessels. The fishery includes fishing grounds in the Gulf of

Maine, the Georges Bank off Cape Cod, and the waters of southern New

England. New England groundfish are a mixture of species, such as

Atlantic cod and haddock, that live on the ocean floor. A buyback

program in this fishery authorized under the Emergency Supplemental

2

See Commercial Fisheries: Information on Federally Funded Buyback Programs

(GAO/RCED-00-8R, Oct. 20, 1999) for additional information on the costs, the source of

funds, and the results of the 10 programs funded by the federal government since 1976.
B-284384

Page 6 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

Appropriations Act of 1994 and the Interjurisdictional Fisheries Act took

place in two phases between June 1995 and May 1998. NMFS spent $24.4

million to remove 79 fishing vessels, the fishing permits that allowed

these vessels to catch groundfish, and all other federal fishing permits

for other types of fish in other fisheries.

• The Bering Sea pollock fishery off Alaska is the largest U.S. fishery in

terms of the pounds of fish caught. In 1998, the American Fisheries Act

required NMFS to purchase 9 of 30 factory trawlers and their associated

fishing permits in the fishery.3 The total cost of the buyback was $90.2

million, with $15.2 million from federally appropriated funds and the

remaining $75 million from a federal loan to Alaskan pollock fishermen.

• The Washington State salmon fishery is part of a larger regional salmon

industry that includes salmon originating in the waters of California,

Oregon, Washington, British Columbia, and Alaska. The fishery involves

two fleets of fishing vessels—one large fleet within the Puget Sound and

a smaller fleet, based on the number of permits issued, that fishes off the

state’s coast and in the Columbia River, where fishing rights are shared

with Oregon and tribal fishermen. In 1995 and 1996, the state of

Washington spent about $9.3 million in federal funds authorized under

the Interjurisdictional Fisheries Act to purchase 436 state fishing

permits for its coastal and Columbia River fleet. Two years later in 1998,

the state spent an additional $3.5 million in federal funds authorized

under the Magnuson-Stevens Fishery Conservation and Management

Act and $1.2 million in state funds to purchase 391 state fishing permits

from commercial fishermen in both of its salmon fishing fleets. The state

did not purchase vessels with buyback funds but prevented some

participants from fishing in the state salmon fishery for 10 years.

While one goal of buyback programs was to reduce overall fishing capacity,

a Department of Commerce task force recently reported that this goal can

be measured in numerous ways.4 In this report, we present the following

measures used by NMFS to estimate fishing capacity: (1) the amount of fish

caught by commercial fishing vessels in a fishery, which measures active

fishing capacity; (2) the number of permits attached to commercial vessels

3

A factory trawler catches fish by dragging a large net through the water and then processes

the fish onboard.

4

Federal Fisheries Investment Task Force: Report to Congress (Department of Commerce,

July 1999). The Congress mandated this report, which we refer to as the Investment Task

Force Report, to examine how various federal programs, including buyback programs, have

generally influenced the industry’s investments in fishing capacity.
B-284384

Page 7 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

in a fishery that caught little or no fish, which measures seldom used or

unused fishing capacity; and (3) a weighted index of the length, the

tonnage, and the engine horsepower of commercial fishing vessels, which

measures potential fishing capacity. NMFS is also developing more

sophisticated statistical measures to estimate capacity for U.S. fisheries.

Preventing New

Fishing Is Essential to

Maintaining Capacity

Reductions

Recent buyback programs in the New England groundfish, Bering Sea

pollock, and Washington State salmon fisheries removed commercial

fishing vessels and/or permits that accounted for 10 to 24 percent of the

total catch. However, the experiences of these three programs demonstrate

that the long-term effectiveness of buybacks depends upon whether

fishermen return to the fishery. For example, the New England groundfish

fishery includes a large number of fishermen who hold permits but have

historically caught little or no fish. No steps were taken during the buyback

program to prevent either these fishermen or buyback participants from

entering the fishery after the buyback. As a result, capacity reductions

achieved through the buyback have already begun to erode because

previously inactive fishermen have begun fishing there and buyback

beneficiaries have returned. In contrast, capacity removed through the

Bering Sea pollock program has not returned, in part, because the buyback

legislation prevented the entry of additional fishing vessels. With respect to

the Washington State programs, while no steps were incorporated to

prevent additional fishing vessels from entering the fishery after the

buyback, significant declines in salmon stocks have made this impractical

and fishing capacity has declined. In some cases, however, this capacity

has been shifted to fisheries in other states.

Fishing Capacity Is

Returning Quickly to New

England Fishery

The 79 boats sold in the New England buyback caught a combined total of

about 15 million pounds of groundfish in the 1996 fishing year. This total

represented about 19 percent of all groundfish caught in that fishery.

However, because of the number of unused fishing permits in the fishery,

62 previously inactive vessels have begun catching groundfish since 1996.

During the 1998 fishing year, newly active vessels caught about 1.5 million

pounds of groundfish, or about 10 percent of the active fishing capacity

that had been removed in the buyback. NMFS economists estimate that the

62 vessels collectively have over two-thirds of the potential fishing

capacity—as measured by vessel length, gross registered tonnage, and

major engine horsepower—of the 79 vessels purchased in the buyback.
B-284384

Page 8 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

The program’s reduction in fishing capacity has also been offset by vessel

owners who participated in the buyback program and then purchased a

vessel with buyback funds and reentered the fishery. Our survey of vessel

owners that participated in the buyback indicated that nine of them

purchased a vessel with buyback funds and reentered the fishery.5

According to vessel catch data from NMFS, eight of these vessels were

catching groundfish as of 1998. These eight vessels had landed 0.8 million

pounds of groundfish in 1996 under previous owners. In 1998, these eight

vessels, under the ownership of buyback participants, increased their catch

of groundfish to 1.5 million pounds. In total, reductions in active fishing

capacity have eroded by about 15 percent—10 percent because of fishing

from previously inactive fishermen and an additional 5 percent because of

the increase in catch from buyback participants returning to the fishery.

At the same time that these fishermen have been adding capacity to the

fleet, the New England Fishery Management Council has been considering

additional measures to further restrict groundfishing. A committee of the

Council has reported that two of five key fish stocks, Georges Bank cod

and Gulf of Maine cod, continue to exhibit fishing mortality rates that are

higher than those needed to address stock rebuilding. The Council is

considering additional reductions in allowed days to fish for commercial

groundfishermen and continuing the closure of certain fishing grounds in

the Georges Bank and the Gulf of Maine.

Although no new fishing permits have been being issued, vessels have

entered the New England fishery because of the substantial pool of

previously issued, but unused, commercial fishing permits. The buyback

program removed only 79 of the 1,763 commercial groundfish permits that

were available in 1996, or less than 5 percent of all the permits for that

fishery. Table 1 shows that while total commercial fishing permits have

declined since the buyback, active fishing capacity can increase because of

the large number of seldom used and unused fishing permits. In 1999, there

were 796 commercial permits that landed zero up to 1,000 pounds of

groundfish—these permits are ten times the number of permits removed

during the program.

5

We surveyed all 73 fishermen NMFS identified as participants in the New England

groundfish buyback program. We completed structured telephone interviews with 54

fishermen, or 74 percent of all participants. See app. I for results of the survey.
B-284384

Page 9 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

Table 1: Commercial Fishing Permits by Annual Catch in the New England Groundfish Fishery, 1996 Through 1999

a

Fishermen do not have to catch fish to maintain their permit.

Source: NMFS.

Because the buyback program did not intend to restrict buyback recipients

from continuing to fish in the fishery, many participants never left. Twentysix of the 54 respondents to our survey of New England buyback

participants, or 48 percent, told us they are currently active in the

groundfish fishery. As shown in Figure 1, 41 percent of the buyback

participants we surveyed are primarily groundfish fishermen, either as a

boat owner, boat owner and captain, or crewmember on a groundfish boat.

Only six respondents told us they had retired, while 13 told us they are now

employed in a nonfishing occupation. See appendix I for information

concerning the survey’s results.

Groundfish catch 1996 1997 1998 1999

Permits with more than 1,000 pounds of catch 871 894 865 849

Permits with 1 to 1,000 pounds of catch 201 180 155 166

Permits with zero pounds of catcha 691 702 629 630

Total commercial permits 1,763 1,776 1,649 1,645
B-284384

Page 10 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

Figure 1: Primary Occupations of New England Buyback Participants

Note: Total based on 54 responses. Percentages do not total 100 because of rounding.

Source: GAO’s survey of buyback participants.

Buyback programs can adversely affect other fisheries. Nine of the 54 New

England buyback respondents now consider their primary occupation to be

a lobster fisherman. However, any transfer of groundfish fishermen into the

Atlantic lobster fishery could aggravate existing problems in that fishery.

According to a 1999 NMFS report on the status of U.S. fisheries,6 lobster

fishing grounds in the Gulf of Maine and inshore areas from Cape Cod

through Long Island Sound are already substantially overfished.

6

Our Living Oceans: Report on the Status of U.S. Living Marine Resources, 1999 (U.S.

Department of Commerce, NOAA Tech. Memo. NMFS-F/SPO-41).

41% • Employed, groundfish fishery

24%•

Employed, not fishing

17%•

Employed, lobster fisherman

•11%

Retired

•

6%

Unemployed

2%

Employed, unknown fishery
B-284384

Page 11 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

The Interjurisdictional Fisheries Act, which authorized the second phase of

the New England buyback, does not require that buyback programs

address the problems that may arise from unused or seldom used fishing

permits or the return of buyback participants to the buyback fishery. In

addition to this act, buyback programs have been authorized under

separate legislation, such as the American Fisheries Act, and would be

available under two provisions of the Magnuson-Stevens Fishery

Conservation and Management Act. NMFS has proposed a rule to

implement one of the provisions of this act that allows for funding buyback

programs intended primarily to reduce fishing capacity. The rule would

require that regional fishery management councils take steps to restrict

new entrants to a buyback fishery and to prevent the upgrade of existing

vessels that would increase their capacity to catch fish. As of May 2000, this

rule has not been finalized. The other provision of the act would allow the

funding of buyback programs as part of disaster relief efforts. According to

NMFS officials, they do not plan to develop a rule that would restrict

participants of buybacks funded under this disaster relief provision from

returning to the buyback fishery or would restrict fishermen in the fishery

with unused or seldom used fishing permits.

Bering Sea Pollock Buyback

Legislation Prevented New

Entrants

In contrast to the New England buyback, the Bering Sea buyback

legislation removed 9 of 30 factory trawlers that had been actively involved

in the fishery and restricted entrants. No other factory trawlers will be

issued fishing permits unless the vessels are replacing existing factory

trawlers. The restriction on new entrants, in part, ensured that the capacity

removed through the buyback will not return. The nine purchased vessels

caught about 113,000 metric tons of pollock, or about 10 percent of the

fleet’s active fishing capacity for the 1998 fishing season. As required by the

1998 American Fisheries Act, eight of the purchased vessels were scrapped

while the ninth vessel was prohibited from ever fishing in U.S. commercial

fishing waters. The act also limited the use of the remaining factory

trawlers in other fisheries.

Deteriorating Salmon

Conditions Have Kept

Buyback Fishermen From

Returning to Washington

State

In 1995 and 1996, the Washington State salmon permit buyback program

targeted the state’s coastal and Columbia River fleet and purchased state

permits from fishermen whose vessels accounted for about 24 percent of

that fleet’s catch. A 1998 buyback targeted both of the state’s fleets—

coastal/Columbia River and Puget Sound—and resulted in the purchase of

state permits from fishermen whose vessels’ catch accounted for about 14

percent of the combined catch of the two fleets.7
B-284384

Page 12 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

Reductions in the number of salmon permits from the 1995/1996 and 1998

buyback programs have not eroded during the 1997 and 1998 fishing

seasons.8 Table 2 shows the departure of fishermen from the state’s salmon

industry. From 1994 through 1998, about 950 fishermen have not renewed

their coastal or Puget Sound salmon permits. About 770 fishermen did not

renew their permits because they were involved in one of the buybacks;

about 180 voluntarily decided to leave the industry. As a result, the total

number of commercial salmon fishing permits has dropped from 2,476 in

1994 to about 1,530 in 1998.

Table 2: Commercial Fishing Permits by Annual Catch in the Washington State Salmon Fishery, 1994 Through 1998

a

Fishermen do not have to catch fish to maintain their permit.

Source: Washington State Department of Fish and Wildlife.

This exodus from the industry was caused, in part, by a 40-percent decline

in salmon caught from 1994 through 1998 and a weakening international

demand for salmon, which decreased the value of the fish caught. However,

because the number of unused permits remains high, a reversal of these

conditions would encourage these fishermen to use their permits. This

scenario would reverse the reductions in capacity that the state has made

through its buybacks.

Fishermen who participated in the two Washington buybacks were not

restricted from fishing for salmon or other types of fish in waters managed

by other states. As a result, Washington fishermen who participated in the

buybacks have continued to fish elsewhere. Our review of 1998 catch data

7

If considered as separate fleets, the 1998 buyback removed permits from fishermen

associated with vessels that accounted for about 28 percent of the coastal/Columbia River

fleet’s 1998 catch and about 13 percent of the Puget Sound’s 1998 catch.

8

Fishing statistics for the 1999 salmon fishing seasons are not available to determine the

number of permits and the amount of catch in each fleet. However, the licensing manager

for Washington State believes that fishermen are continuing to leave the salmon industry.

Salmon catch 1994 1995 1996 1997 1998

Permits with more than 1,000 pounds of catch 966 766 531 701 501

Permits with between 1 to 1,000 pounds of catch 1,025 331 294 535 137

Permits with zero pounds of catcha 485 999 1,100 665 892

Total commercial permits 2,476 2,096 1,925 1,901 1,530
B-284384

Page 13 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

from Oregon and Alaska showed that 229 of the buyback participants

continued to catch fish in these states—49 buyback participants caught

salmon in Oregon and 180 caught salmon in Alaska. In Oregon, from 1994

through 1998, participants increased their catch of salmon by more than 70

percent. In Alaska, although Washington State buyback participants

decreased their salmon catch from 1994 through 1998, they more than

tripled their catch of other fish.

A January 2000 Washington State survey of commercial fishermen with

salmon permits indicated that almost one-third of the 693 fishermen who

responded also owned permits issued by Alaska, Oregon, or California.

These fishermen could continue to fish in these other states’ fisheries if

Washington State bought back one of its permits.

Buyback Programs

Could Be Made More

Effective

Buyback programs could be more effective if they addressed the problems

of new fishermen entering the buyback fishery and existing fishermen

expanding their capacity to fish. In our view, these programs also need to

address the movement of buyback participants to other fisheries and

fishermen’s incentives to catch as many fish as quickly as possible, called

the “race to fish.” This “race to fish” leads fishermen to invest in more

fishing capacity, such as adding fishing gear, increasing their time at sea

and number of crew, and replacing older vessels with bigger and more

productive ones in order to catch as many fish as quickly as possible in an

attempt to maximize their individual incomes. Economists conclude that

left unchecked, this “race to fish” will lead to overall higher costs and lower

profits, economic hardship for fishermen, and harm to fish populations and

habitat.

Therefore, buyback programs could be enhanced if they were undertaken

in conjunction with additional measures to address the “race to fish,” such

as establishing fishing cooperatives where fishermen have incentives to

catch their individual fish allocations at their own pace at lowest cost. In

only one of the fisheries in which a buyback program took place, the Bering

Sea pollock fishery, was this “race to fish” issue addressed by legislation

that facilitated creation of a fishing cooperative.

Buyback programs could be made more effective if they included

measures, such as forming a fishing cooperative in which fishermen have

incentives to catch fish at their own pace. For example, the Bering Sea

pollock fishery has addressed the “race to fish” that had previously existed

among factory trawlers. The buyback program’s legislation removed nine
B-284384

Page 14 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

trawlers and facilitated creation of a fishing cooperative by the owners of

the remaining 21 factory trawlers. This cooperative was designed to

eliminate the race to fish by assigning a specific amount of fish, or

allocation, to the cooperative, which divides the allocation among its

members. Because of this allocation, members of the cooperative had no

incentive to expand fishing capacity to catch the available fish before

someone else did, as they would in another fishery. Members were able to

catch their individual fish allocations at their own pace, at lower capital

and operating costs, while increasing product quality. These changes

resulted in higher profits and longer fishing seasons for the remaining

factory trawlers.

We found that since members of the pollock cooperative knew at the

beginning of the 1999 fishing season how much fish each could harvest,

they caught the fish with fewer vessels with the intent to minimize costs

and increase profits. Cooperative members decided not to use four factory

trawlers previously used in the fishery when they were competing for the

most catch. Even without these four vessels and the nine removed through

the buyback, the cooperative members caught their 1999 allocation of

pollock. This shows that the fishery had excess fishing capacity even after

the buyback and the cooperative reduced this excess capacity.

The Department of Commerce also reported that buyback programs could

be made more effective if they were linked with other measures that

address the “race to fish,” such as fish allocations made directly to

individual fishermen. In its 1999 Investment Task Force Report, the

Department concluded that a buyback program could be used as a

precursor to these measures. For instance, NMFS officials told us the

buyback program in the Bering Sea pollock fishery made the transition to a

fishery cooperative easier because the buyback reduced the number of

vessels that participated in the fishery.

NMFS’ Evaluations of

Buyback Programs’

Effectiveness Have

Been Limited

NMFS has made limited efforts to evaluate whether buyback programs

have achieved their intended benefits. As required by the Interjurisdictional

Fisheries Act, NMFS has evaluated the effects of the New England buyback

program on fishing capacity. Aside from this congressionally mandated

effort, NMFS has not evaluated how other buyback programs have affected

fishing capacity. The Magnuson-Stevens Fishery Conservation and

Management Act requires that NMFS manage federal fisheries in a way that

protects the environment and maximizes the benefits of fishing to the

nation, while minimizing the costs and the duplications of regulatory
B-284384

Page 15 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

programs. Considering the goals of this act, prudent management suggests

that buyback programs should be evaluated to identify lessons learned that

might help design future programs.

NMFS has completed a series of four annual reports on the New England

groundfish buyback program that are the most detailed of any evaluation of

such programs completed by the agency.9 A 1996 amendment to the

Interjurisdictional Fisheries Act mandated that NMFS report annually to

the Congress on the impact of the groundfish buyback on fishing capacity

and estimate the conservation benefits attributable to that program. The

reports provide estimates and updates to several analytical measures of the

capacity of vessels removed by the buyback. In its evaluation of

conservation benefits, the reports said that because many regulatory

changes were occurring in the fishery at the same time as that buyback

program, it was difficult to distinguish changes in fish stocks due to the

buyback program and other management measures.

Because the Congress required NMFS to evaluate the New England

buyback, NMFS’ Northeast Fisheries Science Center developed fishing

capacity measures from existing data that estimated changes in fishing

capacity. However, other NMFS offices that have similar data have not

developed measures to evaluate buyback programs. For example, NMFS

has information on the size, the horsepower, and other characteristics of

fishing vessels. NMFS also collects information on the type and the amount

of fish caught by these vessels and is developing more sophisticated

statistical measures for all fisheries that would measure changes in fishing

capacity. NMFS officials believe that such statistical measures could be

used to estimate changes in capacity if they were applied to a fishery before

and after a buyback.

NMFS has also broadly examined whether various federal programs,

including buybacks for New England groundfish, Washington State salmon,

and Bering Sea pollock, have influenced the industry’s investment

decisions in fisheries. The 1999 report by the Department’s Investment

Task Force, which was also congressionally mandated, included general

9

During 1996, the Department of Commerce’s Office of Inspector General evaluated NMFS’

pilot program for the New England groundfish buyback and the 1995/1996 Washington State

salmon buybacks. The Inspector General concluded that the buybacks were not the most

effective way to achieve the programs’ objectives. See Expanded Vessel Buyout Program Is

Not Needed (Audit Report No. ENT-8657-7-0001, Jan. 1997) and Northwest Emergency

Assistance Plan Needs Focus (Audit Report No. STL-8518-7-0001, Mar. 1997).
B-284384

Page 16 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

information on (1) the events preceding each federally funded buyback

program; (2) the direct effects of each program on the number of permits

and/or vessels bought; and (3) the concerns and the observations on the

programs discussed in the economic literature, such as concerns with

unused capacity and the indirect effects of fishing capacity moving from

one fishery to another. The report does not discuss each program’s impact

on improving the conservation of fish stocks.

Other than reviewing progress reports from the state that detail how it

spent buyback funds, NMFS did not evaluate the Washington State salmon

buyback programs because NMFS officials considered them to be ad hoc

disaster relief efforts, rather than part of a national effort to reduce fishing

capacity. They believe that the primary objective of disaster relief programs

is to provide economic relief to fishermen. Therefore, they believe that it is

inappropriate to evaluate how well such programs have reduced fishing

capacity.

Evaluations of buyback programs can identify lessons learned that might

help in the design of future programs. For example, NMFS’ evaluations of

the New England buyback have highlighted that substantial fishing

capacity remains unused in that fishery even after the buyback program.

These evaluations point to the need to control the rate at which unused

capacity returns to the fishery so efforts to conserve fish stocks are not

jeopardized. Such evaluations can also provide lessons learned in the

design of future buyback programs in other fisheries that have substantial

unused capacity or unused fishing permits.

Conclusions The problems of past buyback programs should be addressed as part of the

design of any future programs. In particular, experience has shown that

initial reductions in fishing capacity achieved by buyback programs can be

quickly eroded if buyback participants, or if previously inactive fishermen,

return to the buyback fishery. To make future programs more effective,

NMFS needs to design these programs to restrict buyback participants

from entering a fishery that has excess fishing capacity and to restrict the

use of unused fishing permits. In addition, NMFS needs to identify

mechanisms as part of this program’s design to minimize “race to fish”

incentives that can further erode reductions in fishing capacity. In

designing future programs, NMFS should also establish performance

measures that relate to program and legislative goals.
B-284384

Page 17 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

NMFS’ evaluations of the New England buyback program demonstrate that

such evaluations can identify lessons that can improve the design of future

programs.

As future buyback programs are authorized, it would seem reasonable that

there be a good understanding of how well the programs work. Evaluating

the programs’ results against performance measures would improve the

effectiveness of future buyback programs.

Recommendations Before new buyback programs are used to reduce fishing capacity, they

should be made more effective. To do this, we recommend that the

Secretary of Commerce direct NMFS to

• Design future buyback programs to (1) restrict buyback participants

from entering a fishery that has excess fishing capacity; (2) restrict the

use of unused fishing permits in a buyback fishery with excess fishing

capacity; (3) identify mechanisms to minimize the incentives to increase

fishing capacity in a buyback fishery; and (4) develop performance

measures that relate to program goals and broader legislative goals,

such as the need to better manage fishing capacity and conserve fish

stocks.

• Evaluate the results of future buyback programs against the

performance measures.

Agency Comments We provided the Department of Commerce with a draft of this report for

review and comment. The Department generally agreed with the

information presented in the draft report and with its recommendations.

The Department stated that the New England groundfish and Washington

State salmon buybacks were a combination of disaster assistance and

capacity reduction. While the Department stated it attempted to make both

efforts achieve as much of both objectives as possible, it said it could have

achieved its disaster assistance objective without also achieving its

capacity reduction objective. We believe that unless disaster relief

programs address long-term capacity issues in a fishery, fishermen will

continue to expand their capacity to fish and will race against each other

for a declining number of fish. The Department also stated that disaster

assistance was not the purpose of the Bering Sea pollock buyback, and that

the Magnuson-Stevens Act is the only legislative authority with the specific

objective of achieving capacity reduction. We agree. However, we believe
B-284384

Page 18 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

that, regardless of legislative authority, when funds are spent to reduce

fishing capacity they should be spent in a way to achieve the most longterm benefits. The Department’s complete comments and our detailed

responses are in appendix II.

Scope and

Methodology

To determine how buyback programs have affected fishing capacity, we

interviewed officials from NMFS’ headquarters who are responsible for

defining and measuring fishing capacity. We also met with NMFS officials in

its Northeast and Alaska Science Centers and with state officials from the

Washington State Department of Fish and Wildlife who were involved in

the buyback programs. These officials provided us with several definitions

of fishing capacity and statistics they had developed on the buyback

programs. We also collected additional information from them on the

amount of fish caught, the permits issued, and the vessels involved in their

fisheries before and after the programs were implemented. From this

information, we identified changes in fishing activities in the buyback and

other fisheries and the factors that contributed to these trends. We

conducted telephone interviews with 54 of the 73 participants in the New

England buyback and contacted the company involved in the Bering Sea

buyback to discuss the buybacks’ impact on them. We submitted the names

of Washington State buyback participants to state officials in Oregon and

Alaska to determine how many of the participants in Washington’s buyback

continued fishing elsewhere.

To determine the factors that could make buyback programs more

effective, we reviewed previous evaluations of buyback programs and met

with officials from NMFS, the Department of Commerce’s Inspector

General, and the Congressional Research Service. We also met with state

regulators and nongovernmental organizations, such as the H. John Heinz

III Center for Science, Economics, and the Environment. We met with these

officials in their offices in the Washington, D.C., area; Woods Hole,

Massachusetts; and Seattle and Olympia, Washington.

To determine the efforts NMFS has undertaken to evaluate the

effectiveness of buyback programs, such as how these programs affected

the fishermen’s profitability and fish stocks in the buyback fisheries, we

reviewed previous evaluations of buyback programs conducted by the

NMFS Northeast Science Center. We also discussed these reports and the

data NMFS collects on fishing capacity, fishermen’s profitability, and the

conservation of fish with agency officials in the Washington, D.C., area;

Woods Hole, Massachusetts; and Seattle, Washington.
B-284384

Page 19 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

We conducted our review from October 1999 through May 2000 in

accordance with generally accepted government auditing standards.

As agreed with your offices, unless you publicly announce its contents

earlier, we plan no further distribution of this report until seven days after

the date of this letter. At that time, we will send copies of this report to

appropriate House and Senate Committees and Subcommittees; the

Honorable William M. Daley, Secretary of Commerce; Dr. James Bake,

Director, the National Oceanic and Atmospheric Administration; Penelope

Dalton, Director, NMFS; and other interested parties. We will also make

copies available to others upon request. If you have any questions about

this report, please contact me at (206) 287-4800. Major contributors to the

report were Peg Reese, Robert Lilly, Timothy Minelli, Lynn Musser, Charles

Bausell, and Dan Williams.

James K. Meissner

Associate Director, Energy,

Resources and Science Issues
Page 20 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

Appendix I

Results of the Telephone Survey of Apendxies

Participants in the New England Groundfish

Vessel and Permit Buyback Program ApendxiI

We conducted a structured telephone interview with 54 of the 73

individuals NMFS identified as participants in the buyback program for

New England groundfish.1 We obtained a list of buyback participants from

NMFS and checked this list with information obtained from the New

England Fishery Management Council and local fishermen in the New

England area. We made telephone calls to buyback participants from

January 2000 through March 2000. We completed interviews with 54

participants, or 74 percent of all participants. These 54 participants

accounted for 60 vessels purchased, or 76 percent of all vessels purchased,

in the buyback. The structured telephone interview is reproduced at the

end of this appendix.

Principal survey results are discussed below.

Restrictive Fishing

Regulations Prompted Most

Participants to Sell Vessels

Participants cited a number of reasons for participating in the buyback

program. The most common response, cited by 40 of the participants we

reached, or 74 percent, was increasingly restrictive fishery regulations,

such as reductions in the time allowed to fish and closures of fishing

grounds. Thirteen participants, or 24 percent, said that the buyback

program allowed them to sell an old vessel or to sell the vessel at a price

not available on the open market. Ten participants, or 19 percent, said that

rising insurance and maintenance costs prompted them to sell. Only two

participants told us they sold their vessel because they decided to retire

from commercial fishing.

Many Buyback Participants

Still in Groundfish Fishery

Thirty-one of the 54 participants we reached, or 57 percent, told us they

currently own a fishing vessel. Twenty-seven of the 54 participants, or 50

percent, said they currently hold a groundfish permit. All but 1 of the 27

participants currently holding a groundfish permit told us they are

currently landing groundfish. However, only four participants said they

were fishing more with this permit than before the buyback. Another 4

participants said they were fishing about the same, while 17 said they were

fishing less. One participant currently landing groundfish did not answer

this question.

1

While 79 vessels were purchased in the buyback program, six participants sold two vessels

each, resulting in a total of 73 participants. In some instances, the vessel sold was owned by

more than one individual. In these cases, we tried to contact the owner that NMFS listed as

the primary applicant for the buyback program.
Appendix I

Results of the Telephone Survey of

Participants in the New England Groundfish

Vessel and Permit Buyback Program

Page 21 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

Of the 27 participants without a current groundfish permit, 7 told us they

plan or would like to reenter the groundfish fishery; 17 said they do not

plan to reenter that fishery; and 4 had no response.

Several Bought Vessels With

Buyback Funds

Sixteen participants we reached, or 30 percent, told us they have purchased

at least one fishing vessel since the buyback. Two fishermen said they have

purchased two vessels each since the buyback. Of the 18 vessels

purchased, we were told that 12 were bought with buyback funds and 6

were bought with other funds. We were told that 10 of the vessels

purchased since the buyback were smaller in size than the vessels sold in

the buyback, 4 were larger, and 4 were about the same size.

Many Say Their Primary

Occupation Is in Groundfish

Fishery

Twenty-two of 54 participants we reached, or 41 percent, indicated they

still fish in the groundfish fishery either as a boat owner, boat owner and

captain, or crewmember. Nine of the participants, or 17 percent, indicated

they are still fishing, but fishing for lobster. Six participants indicated they

are retired, while three indicated they were unemployed. Thirteen

participants, or 24 percent, indicated they were employed in occupations

other than commercial fisherman.

Most Buyback Funds Spent

on Taxes, Debts, Other

Fishing Vessels

Twenty-four of the participants we reached, or 44 percent, told us they used

buyback money to pay taxes, either in the form of capital gains, income, or

sales taxes, on the sale of their vessel. Twenty-three participants, or 43

percent, indicated they paid mortgages or debts on the vessels sold in the

buyback. Twelve participants, or 22 percent, told us they bought another

commercial fishing vessel with buyback funds. Of the 12 vessels bought

with buyback funds, 9 vessels are being used primarily for groundfishing,

while 3 are being used primarily for lobster fishing. Seven participants, or

13 percent, told us they bought gear to upgrade a previously owned

commercial fishing vessel.
Appendix I

Results of the Telephone Survey of

Participants in the New England Groundfish

Vessel and Permit Buyback Program

Page 22 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs
Appendix I

Results of the Telephone Survey of

Participants in the New England Groundfish

Vessel and Permit Buyback Program

Page 23 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs
Appendix I

Results of the Telephone Survey of

Participants in the New England Groundfish

Vessel and Permit Buyback Program

Page 24 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs
Appendix I

Results of the Telephone Survey of

Participants in the New England Groundfish

Vessel and Permit Buyback Program

Page 25 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs
Appendix I

Results of the Telephone Survey of

Participants in the New England Groundfish

Vessel and Permit Buyback Program

Page 26 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs
Appendix I

Results of the Telephone Survey of

Participants in the New England Groundfish

Vessel and Permit Buyback Program

Page 27 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs
Page 28 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

Appendix II

Comments From the Department of

Commerce ApendxiI
Appendix II

Comments From the Department of

Commerce

Page 29 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs
Appendix II

Comments From the Department of

Commerce

Page 30 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

See comment 1.

See comment 2.
Appendix II

Comments From the Department of

Commerce

Page 31 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

See comment 3.

See comment 4.
Appendix II

Comments From the Department of

Commerce

Page 32 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

See comment 5.

See comment 2.

See comment 6.
Appendix II

Comments From the Department of

Commerce

Page 33 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs
Appendix II

Comments From the Department of

Commerce

Page 34 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

See comment 7.

See comment 8.
Appendix II

Comments From the Department of

Commerce

Page 35 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

See comment 9.

See comment 10.
Appendix II

Comments From the Department of

Commerce

Page 36 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

GAO’s Comments 1. We agree that the New England groundfish and Washington State

salmon buybacks were a combination of disaster assistance and

capacity reduction. However, we disagree that capacity reduction

objectives need be compromised in order to provide disaster relief. In

the long term, the best use of disaster relief funds would be to address

the factors that contribute to the disaster. We believe that unless

disaster relief programs address long-term capacity issues in a fishery,

such as inactive permits, disasters may continue to occur because

fishermen can easily expand their capacity to fish. Capacity reductions

achieved through buyback programs, regardless of funding sources,

should not be allowed to erode. Such erosion can lead to the conditions

that led to the need for disaster relief in the first place. The Department

of Commerce stated that activation of previously inactive groundfish

permits could erase buyback benefits. This shows that unless these

programs are carefully designed, capacity reductions achieved through

a disaster relief program may not be long lasting. Commerce also stated

that disaster assistance was not the purpose of the Bering Sea pollock

buyback and that the Magnuson-Stevens Act is the only legislative

authority with the specific objective of achieving capacity reduction.

We agree. However, we believe that, regardless of legislative authority,

when funds are spent to reduce fishing capacity they should be spent in

a way to achieve the most long-term benefits.

2. We agree that the New England buyback addressed active fishing

capacity. However, we believe that inactive fishing capacity should also

have been addressed at the time of the New England buyback, because,

as Commerce states, the activation of latent groundfish permits could

erase the buyback’s benefits. As we noted in the draft report, 62

previously inactive vessels have begun catching groundfish since 1996

and these newly active vessels caught about 1.5 million pounds of

groundfish during the 1998 fishing year, or about 10 percent of the

active fishing capacity that had been removed in the buyback. We also

noted that these 62 vessels collectively have about two-thirds of the

potential fishing capacity as the 79 vessels purchased in the buyback.

This increase in active fishing capacity, along with the active fishing

capacity added from buyback participants’ returning to the fishery, is

significant because the New England Fishery Management Council is

currently considering additional measures to further restrict

groundfishing, such as reductions in allowed days to fish for

commercial groundfishermen. The potential fishing capacity of these 62

newly active vessels is also significant because they are likely to
Appendix II

Comments From the Department of

Commerce

Page 37 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

increase their active fishing capacity as groundfish stocks recover.

Commerce agrees this is a problem and notes that they have been

unsuccessful in motivating the New England Fishery Management

Council to address previously inactive groundfish permits. We agree

with Commerce that the Council needs to address this problem before

groundfish stocks rebuild. However, because NMFS, an agency within

the Department of Commerce, is responsible for oversight of the

Council’s activities and for approving its plans to manage the

groundfish fishery, we believe that NMFS can take more concrete steps

in working with the Council to address the problems of previously

inactive permits.

3. Commerce states that no additional fishing capacity was created when

buyback participants purchased existing lobster or groundfish fishing

boats. We disagree and believe that Commerce uses a very narrow

definition of fishing capacity when making its point. While Commerce

defines fishing capacity as the number of boats in a fishery, this report

measures fishing capacity in terms of the number of fish a boat is

catching (active fishing capacity), and the capability of the boat to

catch fish (potential fishing capacity). For example, we show that

buyback participants who purchased existing groundfish vessels are

catching more groundfish than the previous owners. In practical terms,

the active groundfish fishing capacity of these vessels has increased. In

addition, the potential fishing capacity of the recently purchased

groundfish and lobster boats increased when buyback participants, for

example, used funds to add gear to the vessel. Several buyback survey

participants said that they used buyback funds to upgrade either a boat

they previously owned or purchased with buyback funds.

4. We agree that Washington State designed its buyback programs to meet

its fishery management objectives. We believe that Commerce can

adopt this practice of designing disaster relief programs within the

context of overall plans for managing fisheries and, therefore, reduce

fishing capacity.

5. We agree that a portion of the costs of the three buyback programs we

reviewed comes from private and state funding. Of the $140 million that

the federal government has provided since 1995 for all buyback

programs, $75 million, or about 54 percent, is a federal loan to the

owners of factory trawlers fishing in the Bering Sea. The loan is

repayable over 30 years. Until the loan is repaid, federal taxpayers

assume the risk of nonrepayment of any federal loans. Regardless of
Appendix II

Comments From the Department of

Commerce

Page 38 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

the financing method used, NMFS is the federal agency implementing

the buyback and is responsible for ensuring that the program

effectively achieves its buyback objectives.

6. Commerce generally agrees with this recommendation and offered

three possible issues related to this recommendation that should be

considered. Regarding Commerce’s first issue, we believe buyback

participants’ buying existing vessels and/or permits from other owners

can create additional fishing capacity. Regarding Commerce’s second

issue, we agree that there are conditions in which owners of buyback

vessels returning as captains and crews would not create additional

fishing capacity. Commerce believes it has no authority to prevent

buyback participants from becoming vessel owners in another fishery

or effectively returning to the buyback fishery as a captain or

crewmember. Buyback authorities do not specifically address these

circumstances. Regardless of whether Commerce has the authority to

restrict buyback participants from entering another fishery, we believe

that Commerce could work with regional fishery management councils

to better manage fisheries that have excess fishing capacity so new

entrants cannot cause additional capacity problems. As for Commerce’s

third issue, we agree that buyback programs financed through federal

loans are likely to buy permits in just the buyback fishery, rather than

the vessel and all of its permits. We believe that Commerce’s suggestion

of financing buybacks through a combination of federally appropriated

funds and loans to the fishing industry is a viable alternative for

addressing this problem.

7. Although Commerce agrees with our recommendation, it states that it

may be inconsistent with buyback components of disaster assistance.

We disagree. We believe that, in the case of fishing disasters, unless

disaster relief programs address long-term solutions to fishing capacity

issues, the response to one disaster may itself be creating the

foundation for the next disaster. Therefore, we believe that, except in

the most extreme cases of financial distress in which some form of

immediate relief is needed, sufficient time exists to develop disaster

relief programs for the fishing industry that restrict the use of unused

fishing permits in a fishery after a buyback.

8. Although Commerce agrees with our recommendation, it states that

section 312(b)(1)(B)(i) of the Magnuson-Stevens Act provides a

mechanism for preventing the replacement of fishing capacity from

buybacks funded under sections 312(b)-(e) of the Act. This mechanism
Appendix II

Comments From the Department of

Commerce

Page 39 GAO/RCED-00-120 Entry Limits Benefits of Buyback Programs

would not apply to buybacks funded under other authorities. Also, this

mechanism does not require Commerce to identify alternatives that

address the incentives to increase fishing capacity in a buyback fishery.

Concerning alternatives that Commerce discusses in its comments, we

agree that Commerce cannot compel fishermen to form a cooperative

for harvesting fish. However, in the Bering Sea pollock industry, the

American Fisheries Act facilitated creation of a cooperative by

addressing such issues as the allocation of fish to different sectors of

the industry. We believe that, when designing a buyback program,

Commerce should identify ways to reduce the incentives to race to fish

in the buyback fishery.

9. Although Commerce agrees with our recommendation, it states that its

interim final rule implementing section 312(b)-(e) of the MagnusonStevens Act provides for information needed to develop performance

measures for evaluating buyback programs. However, our

recommendation applies to all buyback programs regardless of

legislative authority. This would include section 312(b)-(e) of the

Magnuson-Stevens Act; as well as the disaster relief section of the

Magnuson-Stevens Act; other legislation that allows for disaster relief

funding; or separate legislation, such as the American Fisheries Act.

10. Although Commerce agrees with our recommendation, it states that it

could evaluate buyback programs implemented under section 312(b)-

(e) of the Magnuson-Stevens Act in its Stock Assessment and Fishery

Evaluation reports. However, we believe that all buyback programs

should be evaluated regardless of the legislative authority for funding

them. As previously discussed, this would include instances where

buyback programs are funded under the disaster relief section of the

Magnuson-Stevens Act, other legislation that allows for disaster relief

funding, or separate legislation, such as the American Fisheries Act.

(141402) Letr
Ordering Information The first copy of each GAO report is free. Additional copies of

reports are $2 each. A check or money order should be made out to

the Superintendent of Documents. VISA and MasterCard credit

cards are accepted, also.

Orders for 100 or more copies to be mailed to a single address are

discounted 25 percent.

Orders by mail:

U.S. General Accounting Office

P.O. Box 37050

Washington, DC 20013

Orders by visiting:

Room 1100

700 4th St. NW (corner of 4th and G Sts. NW)

U.S. General Accounting Office

Washington, DC

Orders by phone:

(202) 512-6000

fax: (202) 512-6061

TDD (202) 512-2537

Each day, GAO issues a list of newly available reports and

testimony. To receive facsimile copies of the daily list or any list

from the past 30 days, please call (202) 512-6000 using a touchtone

phone. A recorded menu will provide information on how to obtain

these lists.

Orders by Internet:

For information on how to access GAO reports on the Internet,

send an e-mail message with “info” in the body to:

info@www.gao.gov

or visit GAO’s World Wide Web home page at:

http://www.gao.gov

To Report Fraud,

Waste, or Abuse in

Federal Programs

Contact one:

• Web site: http://www.gao.gov/fraudnet/fraudnet.htm

• e-mail: fraudnet@gao.gov

• 1-800-424-5454 (automated answering system)

United States

General Accounting Office

Washington, D.C. 20548-0001

Official Business

Penalty for Private Use $300

Address Correction Requested

Bulk Rate

Postage & Fees Paid

GAO

Permit No. GI00