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HOW IS NOAA MANAGING FUNDS TO PROTECT 

THE DOMESTIC FISHING INDUSTRY 

HEARING 

BEFORE THE

FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT 

INFORMATION, FEDERAL SERVICES, AND 

INTERNATIONAL SECURITY SUBCOMMITTEE 

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

FIELD HEARING IN BOSTON, MASSACHUSETTS 

JUNE 20, 2011 

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

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 

( 

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(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

MARK BEGICH, Alaska 

SUSAN M. COLLINS, Maine 

TOM COBURN, Oklahoma 

SCOTT P. BROWN, Massachusetts 

JOHN MCCAIN, Arizona 

RON JOHNSON, Wisconsin 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JERRY MORAN, Kansas 

MICHAEL L. ALEXANDER, Staff Director 

NICHOLAS A. ROSSI, Minority Staff Director 

TRINA DRIESSNACK TYRER, Chief Clerk 

JOYCE WARD, Publications Clerk and GPO Detailee 

SUBCOMMITTEE ON FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT 

INFORMATION, FEDERAL SERVICES, AND INTERNATIONAL SECURITY 

THOMAS R. CARPER, Delaware, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

MARK L. PRYOR, Arkansas 

CLAIRE MCCASKILL, Missouri 

MARK BEGICH, Alaska 

SCOTT P. BROWN, Massachusetts 

TOM COBURN, Oklahoma 

JOHN MCCAIN, Arizona 

RON JOHNSON, Wisconsin 

ROB PORTMAN, Ohio 

JOHN KILVINGTON, Staff Director 

WILLIAM WRIGHT, Minority Staff Director 

DEIRDRE G. ARMSTRONG, Chief Clerk 

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(III) 

C O N T E N T S 

Opening statements: Page 

Senator Carper ................................................................................................. 1 

Senator Brown .................................................................................................. 5 

Prepared statements: 

Senator Carper ................................................................................................. 47 

Senator Brown .................................................................................................. 50 

WITNESSES 

MONDAY, JUNE 20, 2011 

Hon. John F. Tierney, a Representative in Congress from the State of Massachusetts ................................................................................................................. 8 

Todd J. Zinser, Inspector General, U.S. Department of Commerce .................... 12 

Eric C. Schwaab, Assistant Administrator for Fisheries, National Oceanic 

and Atmospheric Administration ........................................................................ 14 

Lawrence Yacubian, Retired Fisherman ................................................................ 32 

Larry Ciulla, Proprietor, Gloucester Seafood Display Auction ............................ 35 

Stephan M. Ouellette, Attorney at Law, Ouellette and Smith ............................ 37 

Vito Giacalone, Chairman, Northeast Seafood Coalition ..................................... 38 

Brian J. Rothschild, Ph.D., Montgomery Charter Professor of Marine Science 

and Technology, University of Massachusetts-Dartmouth ............................... 40 

ALPHABETICAL LIST OF WITNESSES

Ciulla, Larry: 

Testimony .......................................................................................................... 35 

Giacalone, Vito: 

Testimony .......................................................................................................... 38 

Ouellette, Stephan M.: 

Testimony .......................................................................................................... 37 

Prepared statement .......................................................................................... 83 

Rothschild, Brian J.: 

Testimony .......................................................................................................... 40 

Prepared statement .......................................................................................... 98 

Schwaab, Eric C.: 

Testimony .......................................................................................................... 14 

Prepared statement .......................................................................................... 71 

Tierney, Hon. John F.: 

Testimony .......................................................................................................... 8 

Prepared statement .......................................................................................... 58 

Yacubian, Lawrence: 

Testimony .......................................................................................................... 32 

Prepared statement .......................................................................................... 79 

Zinser, Todd J.: 

Testimony .......................................................................................................... 12 

Prepared statement .......................................................................................... 61 

APPENDIX 

Questions and responses for the Record from: 

Mr. Schwaab with attachment ........................................................................ 102 

Mr. Ouellette (failed to answer questions submitted for the record) ...........

Mr. Rothschild .................................................................................................. 220 

Chart referenced by Senator Brown ....................................................................... 225 

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HOW IS NOAA MANAGING FUNDS TO 

PROTECT THE DOMESTIC FISHING INDUSTRY 

MONDAY, JUNE 20, 2011 

U.S. SENATE, SUBCOMMITTEE ON FEDERAL FINANCIAL MANAGEMENT, GOVERNMENT INFORMATION, FEDERAL SERVICES, AND INTERNATIONAL SECURITY, OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Subcommittee met, pursuant to notice, at 10 a.m., in Faneuil 

Hall, Boston, Massachusetts, Hon. Thomas R. Carper, Chairman of 

the Subcommittee, presiding. 

Present: Senators Carper and Brown. 

OPENING STATEMENT OF SENATOR CARPER 

Senator CARPER. Well, I understand, Senator Brown, when Sam 

Adams held forth here, they did not have a public address (PA) system, but I am also told they did not need it. 

Everyone, welcome to Faneuil Hall, your hall and in a way 

America’s hall. My wife, Martha, who is sitting in the back of the 

room, she and I were here yesterday and came up from Delaware 

on Saturday. We have a son who graduated from one of the schools 

over in Cambridge last year. It does not start with an ‘‘H.’’ It is 

that other one that goes by its initials. He is off into the world and 

has a younger brother who is going to be a senior at William and 

Mary and who is actually working here in the financial district this 

summer. So we have had a long and abiding interest in this State 

and in this city. 

Congratulations to—I do not know if we have any Bruins fans, 

but you have done well and you ought to feel very proud. Also, the 

way the fans handle themselves here as compared to some other 

places where they did not handle themselves quite as responsibly 

should be applauded. 

But I want to thank Senator Brown who serves on the Subcommittee, for suggesting that we have this hearing and for suggesting that we hold it here today. 

Ours is a small Subcommittee, but we have learned over time to 

maximize our effectiveness by partnering with, among others, the 

Office of Management and Budget (OMB), with the Government 

Accountability Office (GAO), with the Inspector Generals (IGs) 

throughout the Federal Government. All of the Federal departments have Inspector Generals and we have especially enjoyed 

partnering over the years with Todd Zinser, who is here with us 

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2 

today and will speak on our second panel. And we partner with 

government watchdog groups across the country, too, in order to leverage and increase our effectiveness. 

For the past half-dozen years or so, this Subcommittee has been 

singularly focused on how we can achieve better results for less 

money, and if not better results for less money, at least better results for not more money. And through the years, we have focused 

on issues like disposing of billions of dollars of surplus Federal 

properties that really are not used by the Federal Government as 

well as on eliminating $125 billion in improper payments and to 

also eliminate some $400 billion of major weapons system cost 

overruns. This hearing today continues with that theme, albeit on 

a smaller scale. 

Our primary job on this Subcommittee, as Senator Brown knows 

well, is to try to ensure that taxpayers’ dollars are not wasted. 

There have been some who have wondered why the Federal Financial Management, Government Information, Federal Services, and 

International Security Subcommittee (FFM) of the Homeland Security and Government Affairs Committee (HSGAC) would be holding 

a hearing about a National Oceanic and Atmospheric Administration (NOAA) program. Why would we be holding that hearing? 

That is a pretty good question. I have explained to those who have 

asked, though, that poor financial management is an unfortunate 

theme that runs throughout our Federal Government and all of us 

have an obligation to do something about it. 

Let me note, however, that the point of this hearing is not to try 

to adjudicate the laws of the ocean or discuss what is right or 

wrong about how NOAA polices our fisheries. Those issues are the 

jurisdiction of the Senate Commerce Committee. What we are concerned about and what we are going to be focusing on here today 

is ensuring that the monies collected and spent by NOAA are managed effectively and in accordance with the law. This is not a hearing about fisheries management. This is a hearing about sound financial management. 

And at a time when we are facing a massive Federal budget deficit and considering cuts across a broad range of Federal programs, 

we need to look into every nook and cranny of every agency, large 

and small, to find ways to make the most out of our scarce resources. We need to move our Federal Government away from what 

I call a culture of spendthrift toward a culture of thrift. And as 

Senator Brown has heard me say more than a few times, it is like 

turning the aircraft carrier. I am an old Navy guy. He is a not-soold Army guy. But we are trying to turn an aircraft carrier here 

and it is not easy. But we know from my experience in the Navy, 

if you try hard enough long enough, you can turn an aircraft carrier, and what we need to do and want to do is change this culture 

from a culture of spendthrift toward a culture of thrift. 

The money in NOAA’s Asset Forfeiture Fund (AFF) is supposed 

to be used to protect our valuable natural resources and support 

the fishing communities that are vital to this region and, frankly, 

to our Nation. Our Subcommittee wants to help make sure that is 

what happens. 

In June 2009, the Administrator of NOAA, Dr. Jane Lubchenco, 

first requested that the Office of the Inspector General (OIG) at the 

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Commerce Department look into NOAA’s enforcement activities in 

the handling of the Asset Forfeiture Fund. Since that time reports 

have been issued describing oversight and management of NOAA’s 

National Marine Fisheries Asset Forfeiture Fund that too often 

have been abysmal. 

For example, until recently—NOAA did not know the balance in 

the fund. They had trouble tracking how much money was coming 

into and going out of the fund. And the fund apparently was also 

being used to pay for things that it should not have been used to 

pay for. Cars were purchased when they should have been leased, 

for example. In addition, I understand that the Inspector General 

reported that NOAA actually purchased more cars than they had 

employees to drive them. 

These problems are longstanding. In fact, I am told that this 

record of poor management goes back some 15 years, maybe more, 

and up until this past year, very little was done to set things right. 

In the past year, however, the Department of Commerce and 

NOAA have taken important steps to address the concerns raised 

by the Inspector General and by many within the fishing industry. 

The Department and NOAA appear to have finally gotten a handle 

on the funds’ day-to-day management. Clear guidelines have been 

set for how the money contained in the fund may be spent. And 

just as importantly, maybe more importantly, rules have been implemented making clear how funds are not to be spent from that 

fund. 

For example, I am told that NOAA no longer allows monies in 

the fund to be spent on cars, boats, or cell phones. In addition, any 

fund expenditure over $1,000 from the fund now has to be approved by the NOAA Comptroller. NOAA apparently is also working to rightsize its vehicle fleet, a welcome example that probably 

could be followed in a number of other agencies across the Federal 

Government. 

The fund’s balance and accounting methods are also more transparent. Last week, I am told, the independent audit firm Clifton 

Gunderson, is one of the top 15 independent accounting firms in 

the country, gave the Asset Forfeiture Fund an unqualified clean 

opinion. In the accounting world, that is the Good Housekeeping 

Seal of Approval. 

I might add that, as Senator Brown knows, we have been beating 

on the Department of Defense (DOD) for years to get them to get 

a clean audit from the Department of Defense, or even for the 

Navy, or for the Army, or for the Air Force. They are still years 

away from coming up with a clean audit and we have one here, at 

least on this fund as of last week. And again, that might serve as 

an example to the folks who run our Department of Defense and 

the separate services that are part of it. 

I might also add, in addition, the independent auditor has confirmed that the fund’s balance as of last week or so was $7.5 million. 

All this progress would not have happened without a chorus of 

complaints from citizens like those that are gathered here today. 

In fairness, this progress probably would not have been made without the request made 2 years ago by Dr. Lubchenco for an investigation by the Inspector General and the tireless efforts since that 

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time by the IG and the IG’s staff. I believe that NOAA also deserves some credit for taking steps to address many—not all, but 

many of the problems that the Inspector General has identified. 

And while a number of needed steps have been taken over the 

past year, the auditor has also identified several other areas of concern that NOAA still needs to address. Specifically, the auditor believes that some problems remain with the way liabilities and expenditures are tracked from the fund. I know that Senator Brown 

has heard me say this more times than he wants to remember, but 

I am going to say it again. Everything I do, I know I can do better. 

I think that is true for everybody in this room, probably everybody 

in this State and everybody in this country. That is probably true 

for all of us, and also, that includes NOAA. I like to say, if it is 

not perfect, make it better. And I would strongly encourage the 

folks from NOAA that are here today and those that are not to continue doing just that. If it is not perfect, make it better as we go 

forward. 

I understand that NOAA’s recent budget submission makes proposals that might further improve the management and oversight 

of this fund. I want to hear some more about that today and to 

learn what we in Congress can do to help. 

Before I close, I should note that the Department of Commerce 

has also made a commitment to get to the bottom of what has gone 

wrong with the fund. Secretary Gary Locke appointed a Special 

Master to examine cases identified by the Inspector General that 

may have been mishandled. Finding flaws in some of them, the 

Secretary is worried that some $650,000 be given back to the fishermen who were affected. 

Now, one could argue that previous Secretaries of Commerce 

should have taken these steps years ago. They did not. I think Secretary Locke should be recognized for his commitment to right the 

wrongs of the past and to try to make them better. 

With that, I will turn it over to Senator Brown. Let me just say, 

before I do that, I understand that—correct me if I am wrong, but 

I think Secretary Locke has also directed that his staff go back to 

as far as, I think, 1994, before the period covered for the $665,000 

that has been paid back. But he said, go back to 1994 and let us 

look all the way back there to see if there are not other examples 

of instances where funds were taken from fishermen, from the fishing industry, and to see if we should not turn those funds over, as 

well. 

With that, I am going to turn it over to Senator Brown. I want 

to thank you, for inviting us to come here today, giving us a chance 

to spend this Father’s Day here on a beautiful weekend, to get here 

at the end of a huge celebration of the Bruins’ victory, and have 

a chance to see our youngest son, Ben, and to enjoy one of the most 

beautiful weekends I can remember in a long time, and to be here 

with all of you in this very special place today. Senator Brown, 

thanks so much. 

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OPENING STATEMENT OF SENATOR BROWN 

Senator BROWN. Thank you, Mr. Chairman. I am honored that 

you are here, as well. I know you and your family have very close 

ties here in Boston. It is good to see your wife again. 

I appreciate you taking the opportunity to hold this hearing and 

trying to address a lot of the things we have talked about, which 

is the waste, fraud, and abuse, and how to do it better, as you have 

noted. And I want to thank Mayor Thomas Menino for allowing us 

to hold this hearing in such an historic venue. Also, I would like 

to obviously thank you and your team. They have been very zealous and gracious in dealing with me and my staff and trying to 

zero in on this very important issue. 

I have said publicly many times, I commend your bipartisanship 

in Chairing this Subcommittee. There has never been a time where 

we felt that we have not been getting a fair shake. And through 

the hearings that we have had, we have done a tremendous 

amount to change the culture in Washington in forcing many of 

these entities to do it better. 

As you know, protecting our national fish stocks from over-fishing is a national imperative that requires good management backed 

by consensus science. Today, I will try to provide a voice to the 

many fishermen throughout New England and echo the voices of 

many other elected officials in this State, including Congressman 

Barney Frank and John Tierney. I know Congressmen Tierney is 

going to speak in a moment. Mayor Scott Lang is here. I know 

Mayor Carolyn Kirk is coming. Senator Bruce Tarr, Representative 

Ann-Margaret Ferrante, and many others who have worked tirelessly in bringing attention to us the plight of the New England 

fishermen and the abuses of the Washington agency, NOAA, in 

dealing with some of these issues. 

As you all know, fishing is a centuries-old Massachusetts tradition, but more importantly, it is a home-grown modern industry 

that employs thousands of hard-working people who put food on 

America’s tables. NOAA’s history of overzealous enforcement in the 

New England fisheries has come at the cost of fishermen’s trust 

and their livelihood, and many of them tell me that the folks in 

Washington regard them as criminals instead of a legitimate and 

valued regulated industry. 

While I want to emphasize that our fishing regulations must be 

enforced, we must not forget that fishing is about catching fish, 

where 96 percent of the violations are, in fact, civil matters. The 

tone and tenor of enforcement must reflect this. For example, 

Washington sanctioned agents to carry guns and 90 percent are 

criminal investigators. So we have a situation where armed criminal investigators are primarily enforcing non-criminal regulations, 

essentially issuing tickets. The Federal Aviation Administration 

(FAA), for example, Mr. Chairman, which regulates an industry 

where an error can lead to a large-scale disaster, has zero criminal 

investigators. That is none. And if they do not need them, I have 

to wonder why they are being used so prominently in the fishing 

industry. 

So it is clear to me that some of the abuses we will hear about 

today, which have been discussed long before I got involved, 

incentivized NOAA to fill the coffers of the Asset Forfeiture Fund, 

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1The chart referenced by Senator Brown appears in the appendix on page 225. 

which uses the proceeds from enforcement activities to fund further 

enforcement action. The AFF was treated like a piggy bank, almost. We have seen this before in other agencies, by the Washington headquarters and overseers of the NOAA Office of Law Enforcement (OLE) and the Office of General Counsel for Enforcement Litigation (GCEL), which had accounting practices that 

would have made Enron and other entities blush. In fact, the 

KPMG review found the fund to be in disarray, with no one at 

NOAA able to explain how it worked. 

And predictably, NOAA’s law enforcement officers and attorneys 

went on a spending spree funded by the hard working fishermen. 

For example, as you referenced, they purchased more than 202 vehicles, and yet only had an enforcement staff of 172, and a luxurious boat,1 which you can actually see right here, at a cost of 

$300,000. CBS News says it was used for fishing. We know about 

the credit card abuse that was referenced in the report. And while 

we have asked for many documents, Mr. Chairman, for this hearing, we have only received about 20 percent, and the documents we 

actually received came late Friday. 

I am encouraged, also, by the audit that was done. But remember, they only went from April 2010 to March 2011. They do not 

take into account the $96 million that have come in and the $49 

million that have gone out. Where is the rest of the money? I think 

it is very important, as we do in every other hearing, with every 

other entity, that we have these hearings, to find out where that 

money is and how it is being used. 

And you would think a fund like this would have tight supervision over the years, but it was only 16 months ago that the 

NOAA Comptroller was given control of this fund, which draws 

fines from many statutory sources established decades ago. And despite the unyielding exactness that NOAA used in collecting these 

fines, they could not tell the Inspector General the balance of the 

fund, except for the recent time period that you were referencing, 

or even a definition of the fund until last Thursday. So, finally, 

after ignoring the problem for decades and only when facing intense congressional scrutiny, not only by the House but by the Senate as well, was NOAA able to subject its AFF financial statements 

to an audit. 

And as you referenced, I am encouraged by some of the steps 

that have been taken by NOAA and I want to continue to, as we 

have done in the past, provide any guidance or help that they need 

to do it better. I am hopeful that we will be able to continue to 

work with them in the future. 

However, the fact that NOAA’s Washington leadership is celebrating the absolute bare minimum of financial transparency, just 

by the lack of documentation that they provided our office, some 

very basic things, tells me just about where they are coming from. 

I feel it is incumbent upon NOAA to rebuild the trust of fishermen 

and the elected officials that represent them. To do that, NOAA 

must account for the money paid by the fishermen’s fines and examine if it has been used properly, and we must do more, as you 

have referenced. 

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I know I will followup and will continue to followup in order to 

find out exactly where the monies are and how they are going to 

be spent and what we can do to do it better. 

And I will add for the record that I requested and gave NOAA 

3 weeks to produce documents, as I referenced, and not a single 

page was produced until Friday afternoon, right before the Father’s 

Day weekend. I cannot help but wonder whether NOAA would tolerate the same kind of behavior out of a Massachusetts fisherman 

if they were asked to provide the same type of documentation. 

We have seen stonewalling like this before, Mr. Chairman, in 

Congress with other entities. It is even more concerning given 

NOAA’s history of making documents disappear. And you have 

read, in November 2009, while facing litigation and an Inspector 

General review, NOAA’s Chief Law Enforcement Officer directed 

the shredding of 75 to 80 percent of the files in his office. So when 

we talk about going back to help other fishermen, I am hopeful we 

can do that despite the shredding of many of those documents. 

The Inspector General also confirmed nine complaints against 

NOAA involving false information in an affidavit, entry into a facility for other than authorized purposes, excessive fines, and steep 

assessed penalties in the Northeastern region to basically deter respondents from taking the cases to a hearing. 

I also reference, as you do, that Secretary Locke has appointed 

a distinguished retired Federal judge as a Special Master to review 

a lot of these cases, and in two cases, he found that NOAA, in fact, 

abused its power. We have the case of Captain Lawrence Yacubian. 

The Special Master found that the NOAA lawyers had unduly pressured him by unfairly delaying the sale of his vessel and extracting 

an oppressive penalty. And then, in turn, he had to sell the family 

farm, and I know you will hear that testimony and I am looking 

forward to it. 

There are many other stories, Mr. Chairman, and I recognize, as 

you do, we are not here to talk about fishing per se. We are here 

to talk about the money that was collected, where it is, where it 

is going, what it is doing, and we need to find a way to do it better. 

We have to reestablish that trust between the Washington bureaucrats who deal in this issue and the fishermen. It is very important 

to do that, and I feel if we do not, Mr. Chairman, we are going to 

be in deep trouble. 

So I want to thank you once again for your hearing about changing the culture in Washington. You say it many times and I take 

it to heart. Thank you for your leadership, and I do appreciate you 

taking time to come out and visit our fine city and look forward to 

the remaining part of the hearing. Thank you. 

Senator CARPER. Thanks very much for that statement, Senator 

Brown, and again for helping convene us here today. 

We have three panels. The first panel will be one person, and he 

is the Congressman from the Sixth District. Let me just add, what 

district do you live in, you and your family live in? 

Senator BROWN. My old State Senate district is actually split between Congressman Barney Frank—I used to have Congressman 

Stephen Lynch—and we also have Congressman James McGovern. 

Senator CARPER. But who is your family’s actual Congressman? 

Senator BROWN. Congressman McGovern. 

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1The prepared statement of Mr. Tierney appears in the appendix on page 58. 

Senator CARPER. Congressman McGovern. OK. Well, if he had 

been your Congressman, I would just say, well, a lot of times in the 

Senate, when you have Committee testimony and you have somebody from a Committee Member’s home district, we actually ask 

the Senator to make the introduction. I will just make some brief 

comments, and Senator Brown, if you want to add to that—— 

Senator BROWN. Yes, I will. 

Senator CARPER [continuing]. Feel free. But Representative John 

Tierney, whom I have had the pleasure of knowing for a while— 

I did not get to serve with him in the House before I was Governor. 

I had left to go off and become Governor, I think, just about the 

time that he was getting there, so I did not have a chance to serve 

with him. As I recall, he was born in Salem, Massachusetts. Is that 

true? 

Mr. TIERNEY. Right. 

Senator CARPER. OK. And I believe that among the places that 

are included in his district, the Sixth District, are Gloucester and 

Cape Ann and a bunch of other places. I understand that the issues 

that are before us today that Senator Brown has urged us to examine are of great interest to him. We are just delighted that you 

could be here, grateful for your testimony, and ask you to proceed. 

Mr. TIERNEY. Thank you. 

Senator CARPER. Thank you. 

Senator BROWN. Thank you. I just want to say a thank you for 

your effort on this issue. It is something that you and Congressman 

Frank have been working very hard on, along with Senator John 

Kerry, to try to bring these issues up, and as a result of the congressional hearing you have had and what we are doing and what 

the Commerce Committee is doing, hopefully, we will be able to 

bring these issues to light and do it better. So thank you, Congressman, for being here today. 

STATEMENT OF HON. JOHN F. TIERNEY,1 A REPRESENTATIVE 

IN CONGRESS FROM THE STATE OF MASSACHUSETTS 

Mr. TIERNEY. Well, thank you. Thank you both, Chairman Carper and Senator Brown. Frankly, I think most of us do not care 

how it is you got the jurisdiction to have the hearing. We are just 

pleased that you are focusing some light on this issue, as we have 

been trying to do for some time. And this has been a bipartisan effort, and Senator Brown, we have really welcomed your attention 

to it. We knew when you brought Vito Giacalone on board that you 

were really focusing like a laser beam and making sure that we are 

all on the same page. 

I see a lot of familiar faces out in the audience today that were 

at the hearing that we held in Gloucester a little over a year ago. 

I know Mayor Kirk and Representative Ferrante and Senator Tarr 

and all of the others that have been so involved in this issue are 

pleased that you are here, and they deserve a large part of the 

credit for actually inducing Dr. Jane Lubchenco Under Secretary of 

Commerce for Ocean and Atmosphere and NOAA Administrator to 

originally ask for an Inspector General’s report. It took quite a bit 

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9 

of agitation from the community, from elected officials, through 

people working in the industry, to make sure that happened. 

I am disappointed that Dr. Lubchenco is not here today, as I am 

sure you are. I am not surprised, unfortunately, given the reactions 

that we have had. I think it shows an attitude that we have experienced throughout, right up and including the recent alleged apologies that were made. I think they could have been done entirely 

better and more effectively on that. But it lends me to continue to 

question whether or not she is the right person to head NOAA 

going into the future on these important issues. 

But I appreciate everybody that is here today that is going to testify. I want to thank the Inspector General Todd Zinser and his 

team for having done such a good job on this, showing their dedication and their interest in making sure that we get to the bottom 

of a lot of these very important issues. 

We are now in the second year of the catch-share program and 

it has really caused a lot of agitation and concern to members of 

the community. They are enduring numerous challenges and economic hardship, and so when we know the individual fishing men 

and their family are suffering this, but it also goes beyond to related industries, and repair and maintenance, fuel and boats, ice 

to preserve the catch, just to name a few. 

And I think of just three of those, the Gloucester Marine Railways, a Massachusetts Shipyard that used to have 40 boats in its 

yard at any given time now has about six. They have been in business since the Civil War. We have Cape Pond Ice Company that 

started as a Gloucester company in 1848. It used to do 350 tons 

of ice for the fleet. Now its capacity is down to 200, but they are 

actually doing only five tons for the fleet at any given time. And 

so those are concerns on that. 

But the third is the Gloucester Seafood Display Auction. I think 

that they have, probably as much as anybody, suffered as a result 

of the overregulation of the fish stocks, but more so the overzealous 

action of the Office for Law Enforcement on that. I know Larry 

Ciulla is, I think, going to testify here later today and I think that 

we would do well to listen to his experience and the company’s experience and the people that go there for a fair deal, being able to 

buy and sell their product, including right through, Senators, if you 

would, the recent appearance by Dr. Lubchenco and the so-called 

apologies and reparations on that. I think it would be an interesting discussion. 

But I know the focus of this hearing is, in fact, on the Asset Forfeiture Fund, and we tended to that a bit a little over a year ago 

when Inspector General Zinser and his group filed a report that 

evidenced the materials Senator Brown was pointing out here, the 

improper accounting, the lack of accountability, the improper expenditures on that, and I think that it has been helpful for us trying to get the most recent audited report that covers that short period of time that Senator Brown mentioned. But it had weak internal controls. They had difficulties in a number of other areas, and 

followed by a report last July on the fund. Even then, it found that 

NOAA had administered the Asset Forfeiture Fund in a manner 

that was neither transparent nor conducive to accountability, thus 

rendering it susceptible to both error and abuse. 

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10 

Now, I know they have taken some correction. I agree with Senator Brown on this. I think they need to do a lot more, and that 

is why it is good that you are having this hearing and that Mr. 

Zinser and others will be able to discuss just what more they might 

be doing. 

But I pose to the Senate panel a fundamental question that I 

hope they ask today and then delve into a little bit further when 

you get the documents that have been requested. Should this fund 

even exist? Should this fund exist, or is it not a perverse incentive 

for an agency that has been shown to be out of control to actually 

go out and increase its own resources by affecting forfeitures and 

collecting assets and cash and then turning them into an asset that 

they can use in their investigations? 

Nobody disputes what I think Mr. Eric Schwaab said when he 

talked about the people that commit violations should pay for some 

of the enforcement, if not all of it, if you could do that. I do not 

think that is the question. I think the question is whether this 

Asset Forfeiture Fund has been run so poorly, has been so unaccountable, and has been used as such a vehicle in the way it has, 

whether or not we ought to just collect those fines, forfeit the assets, and turn them into cash and then put it in the Treasury and 

have the Department come through NOAA every year and get an 

appropriation for what they want to spend so that we do not have 

this perverse incentive out there and a concern that people are 

being abused for the betterment or the enhancement of the enforcement on that. 

Last year, we were trying to give them an opportunity—NOAA 

an opportunity—to clean up their own house. We filed legislation. 

I filed legislation that would have done some of that. It would have 

taken away their ability to reward persons who provide information leading to arrest, conviction, civil penalty assessments, or forfeiture of property. We thought that was an inducement that might 

be going the wrong way. It would have stopped them from paying 

the expenses directly related to the investigation, again, thinking 

that would be a bad inducement for them. It would have left them 

the ability to reasonably and necessarily pay for costs for primary 

storage and those matters, valid liens and mortgages, claims of 

parties that the property is being disposed of, and reimbursement 

for Federal and State agencies that they brought on to help. 

But I think that one or the other. Either we take a look and just 

say, this fund should not exist and the money should go directly 

to the Treasury and people should come in and make sure they get 

an appropriation, or at least limit it so that we take away that perverse incentive for them to maximize the receipts that they get in 

order to continue on in that basis. 

The other reason legislation may be warranted on this is the provision we put in that legislation that would allow for some of those 

assets to be spent for reparations and for attorneys’ fees and costs. 

Even after the apology of more recent days was made, some people 

that were involved in this did not feel as though they got the reparations they deserved, and certainly even after reparations, others, there were out-of-pocket attorneys’ fees and costs of substantial 

amounts, leaving them, besides the heartache and the emotional 

trauma and the agitation that they have gone through, leaving 

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11 

them with sizable amounts of money that they are out of pocket 

that impacted adversely on their businesses, but also on their personal life and their family support systems on that. 

So I would hope that this Subcommittee would give some consideration to those aspects on that, and I know that, going forward, 

we have to have a renewed commitment about this Asset Forfeiture 

Fund and how it is operated, but also about all the other issues on 

catch-shares and reasonable law enforcement. 

And I am glad that you are here. I am thrilled that you are going 

to get those documents that we can look into making sure that we 

get this done thoroughly, complete, and in a manner that restores 

some professionalism to the Department and hopefully the confidence of the people that are being regulated by the agency, as 

well. 

I thank both of you again for being here and for doing this work 

and we look forward to working with you in any way that we can. 

Thank you. 

Senator CARPER. I just want to say, thanks so much for making 

the time to join us today and for providing really an excellent statement. It is obvious that you have spent a lot of time on this issue 

and know it well. 

We are not going to ask, I do not think, unless Senator Brown 

would like to ask a question—— 

Senator BROWN. No. 

Senator CARPER. I just would like to note, my understanding is 

that in their budget submission to Congress from the President 

from NOAA, I think they have asked for additional monies that 

previously they would have used—drawn monies from the fund to 

pay for. And given the new stipulation that has been issued, I 

think, as part of this ongoing investigation by the IG, I believe that 

there are a number of expenditures which previously had come 

from the fund, including the purchase of cars, boats, and stuff like 

that, from now on, basically, you cannot do that. And I think that 

comes from an internal directive. 

But I understand, at the same time, the agency will be—instead 

of taking monies from that fund, will be asking us to consider providing monies through the budgetary process, which is a more appropriate way to do that. So I think that is where we are going and 

I hope that is the case. We will have an opportunity to ask our witnesses when they come up. 

Mr. TIERNEY. I hope it is, as well. Thank you again. 

Senator BROWN. Thank you, Congressman. 

Senator CARPER. Thanks so much. All the best. 

And with that, we invite our second panel to come forward, Mr. 

Zinser and Mr. Schwaab. 

Our first witness on our second panel is the Hon. Todd Zinser, 

good morning, who serves as the Department of Commerce’s Inspector General, no stranger to this Subcommittee, no stranger to 

us in the Senate, either. Prior to his appointment as Inspector General, Mr. Zinser spent 24 years as a civil servant, including a long 

tenure at the Department of Transportation (DOT), where he was 

named Deputy Inspector General in 2001. We thank you for being 

here today. We thank you for your service to our country very 

much. 

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1The prepared statement of Mr. Zinser appears in the appendix on page 61. 

Our next witness is Eric Schwaab, Assistant Administrator for 

Fisheries at NOAA. He is responsible for the management of 

NOAA’s National Marine Fisheries Service (NMFS). Mr. Schwaab 

spent the majority of his career at the Maryland Department of 

Natural Resources, and they are our neighbor right across the line 

there, and we have had an opportunity to work with him in that 

previous role. I think he may have begun his service as a Natural 

Resources Law Enforcement Officer. And he served as Deputy Secretary of that Department until his appointment to serve at NOAA. 

So we thank you both for joining us today. I am going to ask you 

to try to keep your testimonies to about 5 minutes or so. You have 

an opportunity to summarize your statement if you wish and the 

rest of it will be made a part of the record, and then Senator 

Brown and I will ask you some questions. 

Please proceed, Mr. Zinser. 

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

DEPARTMENT OF COMMERCE 

Mr. ZINSER. Mr. Chairman, Senator Brown, and Members of the 

Subcommittee, thank you for inviting us to testify today. 

Over the past 2 years, beginning in June 2009, we have carried 

out a review of NOAA’s Fisheries Enforcement Program at the request of Under Secretary Lubchenco. Our review resulted in three 

publicly released reports. 

Our first report, in January 2010, included findings and recommendations concerning NOAA’s overall enforcement program. 

Our second report, in July 2010, included findings and recommendations concerning NOAA’s Asset Forfeiture Fund. The 

Asset Forfeiture Fund is authorized by the Magnuson-Stevens 

Fishery Conservation and Management Act (MSA). It allows NOAA 

to retain fines and penalties collected as a result of enforcement actions for violations of the Act and other statutes. 

Our third report, in September 2010, included findings and recommendations related to 27 specific cases brought to our attention, 

in which there were allegations against NOAA’s Office for Law Enforcement or General Counsel for Enforcement and Litigation concerning how those offices conducted their enforcement activities. 

In all, our review of NOAA’s enforcement program led to 28 recommendations for improving the transparency and accountability 

of the program. In addition to Under Secretary Lubchenco, our 

findings and recommendations have received the attention of Secretary Locke. The reforms directed by the Secretary and the Under 

Secretary have been responsive, substantial, and—if effectively implemented—will go a long way toward fixing the mismanagement 

and other problems identified in our review. Many of our recommendations are now the responsibility of Assistant Administrator Schwaab to implement. 

Mr. Chairman, my testimony today will focus on our findings 

with respect to NOAA’s Asset Forfeiture Fund and can be briefly 

summarized in three points. 

First, the fund and its operation are very complex. A major finding is that, for years, the fund’s purpose and proper usage were not 

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13 

well defined, and the fund received very little attention from 

NOAA’s senior management. NOAA enforces over 37 different statutes related to conservation and protection of marine resources and 

is authorized to retain proceeds from other statutes in addition to 

Magnuson-Stevens. However, we found that it was not clearly defined as to which enforcement proceeds were being deposited into 

the fund and which were not. We also found that no one person at 

NOAA had central authority or an overall understanding of the 

fund. As a result, calculating the revenues, expenditures, and balance of the fund proved very problematic. 

For example, NOAA reported to us in December 2009 that the 

balance of the fund was approximately $8.4 million. But the audit 

firm we hired reported in July 2010 that it had calculated revenues 

of the fund over the previous 5 years amounting to $96 million and 

expenditures of $49 million, suggesting that the balance of the fund 

could be significantly higher. NOAA has since retained its own accounting firm to render an opinion on the fund’s financial statements, and we will be reviewing the audit report to understand 

what makes up the fund’s balance. 

In addition to the complexity surrounding the definition of the 

fund and its balance, other complexities include the decentralized 

nature of the internal controls and management of the fund. 

My second point, Mr. Chairman, is that there is no argument 

that the fund was severely mismanaged. The fund did not receive 

the careful management you would expect and that is characteristic of such funds maintained at other Federal agencies. For 

example, despite the sensitive nature of the fund activities, it had 

not received a stand-alone audit in all its years of operation. This 

stands in stark contrast to the annual audits required of similar 

funds at the Treasury or Justice Department. 

We also found a serious lack of internal controls, including a disturbing lack of uniform procedures, documentation to support expenditures from the fund, and documented approvals for expenditures. As noted, our July 2010 report goes into greater detail about 

these issues. 

My third point, Mr. Chairman, is that the reforms initiated by 

NOAA for managing the fund, if effectively implemented, should 

provide greater confidence that the problems found in the fund’s 

past management and use will not be repeated in the future. Upon 

receiving our report, the Secretary and Under Secretary ordered 

some immediate actions, including placing restrictions on the use 

of the fund and transferring responsibility of the fund from the Office for Law Enforcement to NOAA’s Chief Financial Officer (CFO). 

NOAA is continuing to implement the 13 recommendations we 

made specifically concerning the operation of the fund, and we are 

following up to track the progress of their efforts. 

Mr. Chairman, Senator Brown, that concludes my statement. I 

would be happy to answer any questions. 

Senator CARPER. Thanks very much for the statement, Mr. 

Zinser, and thanks even more to you and your team. Is anybody 

here from your team, the Inspector General’s Office? Is anybody 

here? 

Mr. ZINSER. I have two folks sitting behind me, sir. 

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14 

1The prepared statement of Mr. Schwaab appears in the appendix on page 71. 

Senator CARPER. Would you raise your hand, please, those of you 

with the IG? No? Nobody raises their hand. Thank you. Just convey our thanks to those with whom you work for the good work 

that has been done. All right. Thanks. 

Mr. Schwaab, you are recognized. Please proceed. 

Mr. SCHWAAB. Good morning, Chairman Carper. 

Senator CARPER. I was afraid that maybe nobody wanted to be 

recognized as part of your team but in this case, they can be proud 

of it, so—— 

Mr. SCHWAAB. The acoustics—I do not know if you have noticed—are really hard to hear what you are saying over here. 

Senator CARPER. No kidding. 

Mr. SCHWAAB. Yes. 

Senator CARPER. What did you say? [Laughter.] 

We can hear you just fine. All right. 

Mr. SCHWAAB. So, if you would like me to introduce the folks 

with me—— 

Senator CARPER. Yes, please do. 

Mr. SCHWAAB. Alan Risenhoover, who runs our Office of Sustainable Fisheries but for the last year has been serving in an acting 

capacity as the Director of our Office for Law Enforcement, and 

Stephanie Hunt, who is with our Legislative Office. 

Senator CARPER. Welcome. 

Mr. SCHWAAB. Thank you, sir. 

Senator CARPER. Please proceed. 

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

Mr. SCHWAAB. Good morning, Chairman Carper, Ranking Member Brown. It is a pleasure to be here with you this morning. 

The fishing industry is, of course, an important part of the Nation’s culture and economy. Nowhere is that more evident than 

here in Massachusetts. Gloucester is America’s oldest seaport, and 

Boston, New Bedford, and other coastal towns have fishing industries that have supported families, businesses, and communities for 

hundreds of years. According to our most recent estimates, nationwide, commercial and salt water recreational fisheries support almost two million jobs and generate more than $160 billion in sales. 

Making sure that there are enough fish to sustain those fishing 

industries is a part of NOAA’s job. Another part of NOAA’s job is 

to make sure that fishermen have a level playing field so that their 

businesses are not compromised by others who choose to violate the 

rules. Fishermen want a level playing field and regulations that 

are easy to understand and fairly enforced. They also want to know 

that if others break the rules, they will be caught. 

Following the Department of Commerce Inspector General reports, this Administration conducted a top to bottom review of 

NOAA’s enforcement program and instituted sweeping reforms to 

ensure that the program is both fair and effective. Some of the 

highlights of those reforms include new enforcement leadership at 

headquarters and in the New England Regional Office; transfer of 

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15 

authority to issue charges and settle cases from the field staff to 

supervisors in headquarters; a new, more transparent penalty policy that ensures consistency in charging decisions nationwide and 

provides greater clarity for fishermen and fishing businesses; revised regulations that now place the burden on NOAA rather than 

a fisherman to justify the proposed penalty and permit sanctions 

in hearings before Administrative Law Judges. 

We are also reshaping our enforcement workforce by increasing 

the number of enforcement officers to emphasize compliance, dockside problem solving, and enhanced communication with fishermen. 

These actions will increase our dockside presence and also enhance 

already effective enforcement partnerships with the States. 

NOAA has also instituted a number of important reforms to our 

Asset Forfeiture Fund. We instituted greater oversight of fund expenditures, and now the NOAA Fisheries Chief Financial Officer 

must approve any expenditure of $1,000 or more from the fund. We 

implemented a new policy for use of the fund. The policy prohibits 

approximately half of the fund’s historical uses, including the purchase of vehicles and vessels. The new policy eliminates even the 

appearance of conflict of interest with respect to use of the fund. 

NOAA has also, as you have heard, initiated a financial audit of 

the fund by an independent auditing firm. We received the results 

of that audit last Wednesday and I am pleased to say that we received an unqualified, or clean, opinion, the best type of audit one 

can receive. In issuing their clean opinion on the financial statements, the auditors confirmed the fund’s overall balance at $7.5 

million as of March 31, 2011. 

NOAA has also contracted with the same independent accounting 

firm to test fund transactions more susceptible to fraud, waste, 

and/or abuse. The firm is directly testing purchase card transactions and travel vouchers for fiscal years (FY) 2005 through 

2010. This special transaction review is scheduled to be completed 

by July 15, 2011. Should this review find any misuse of funds, the 

agency will take appropriate action. 

Also, I want to note that after requests from fishermen and elected officials, Secretary Locke appointed a Special Master to review 

past cases identified by the Inspector General. On May 17, 2011, 

the Secretary announced remittance of $650,000 in penalties to 11 

fishermen in the first set of cases under review. A second set is 

also now under review. 

Also at the request of the Secretary, NOAA is now looking at one 

final matter regarding closure days in some of those penalty actions. These are just a few of the many reforms underway to create 

a more effective and transparent enforcement program. 

I would like to turn now briefly to the issue of funding for the 

transition to groundfish sector management. For many years, the 

New England groundfish fishery has been underperforming, both 

ecologically and economically. Under sector management, a group 

of fishermen are allotted a portion of a fish stock’s total allowable 

catch. This provides greater flexibility about where and when to 

fish, allowing fishermen to maximize capture of healthy stocks and 

avoid or minimize the capture of weaker stocks. Although it is still 

early and not everyone has seen gains, the sector system is showing promise. 

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16 

Additionally, in 2011, catch levels have gone up for 12 groundfish 

stocks over the past fishing year. This is, of course, a part of or reflective of the rebuilding process that is underway. 

To aid the transition to sectors, NOAA has allocated more than 

$47 million, which, among other things, is supporting research 

with the fishing industry on developing more selective fishing gear, 

for the fishery to avoid weaker stocks. This investment also helped 

to defray startup costs for sectors and is supporting the development of permit banks that provide fishing opportunity for smallscale fishermen. 

Fishermen are the lifeblood of so many of our coastal communities, and America’s fishermen support vital jobs in our coastal 

communities. Effective management and enforcement ultimately 

protects the business interests of fishermen as well as the marine 

environment. 

Thank you again for the opportunity to be here today. I welcome 

your questions. 

Senator CARPER. And I am going to suggest, Senator Brown, that 

we use maybe 7 minutes—— 

Senator BROWN. Sure. 

Senator CARPER [continuing]. Take turns every 7 minutes and 

do, maybe a couple of rounds with this panel. 

First of all, thank you both very much for what I thought was 

excellent testimony. I want to lead off with you, Mr. Zinser. This 

fund was a mess, and what I think happened, just as someone looking at this from the outside, is you had a diminished amount of 

trust between the community, the fishing community, and NOAA, 

the administrator, because of the view that monies were being 

taken into this Asset Forfeiture Fund in ways that were inappropriate and unfair, expended in ways that were inappropriate, too, 

and it helped undercut whatever trust, diminish whatever trust 

might have existed. 

Senator Brown and I work in an environment in Washington 

where we are trying to deal with these huge budget deficits, and 

one of the things that is most important is that Democrats and Republicans in the Senate and in the House find a way to trust each 

other again, and out of that trust hopefully will emerge a consensus of how, what combination of spending cuts across the board, 

or maybe not across the board but in domestic spending, defense 

spending, entitlement spending, tax expenditures, but maybe with 

that trust restored or being restored across the aisle, we can actually get something done. 

I used to serve on the Merchant Marine and Fisheries Subcommittee in the House before I was Governor and these fishery 

issues, fisheries management issues are very difficult. Change is 

difficult. And to try to do that change or implement that change, 

even if it is thoughtful and the right thing to do in the long term, 

if you do not have the trust between, in this case, the commercial 

fishermen and the agencies whose job it is to oversee it, you make 

that change all the more difficult. 

So that is why this is, I think, such an important hearing, and 

I am pleased that Senator Brown suggested that we hold it. 

H605-41331-79W7 with DISTILLER

17 

Let me just ask of the Inspector General, how did this get so 

messed up? Why was something not done 10 years ago, 15 years 

ago, to fix it? Why did it take so long? 

Mr. ZINSER. When this allegation first came to us, sir, it was one 

of a nest of issues about fisheries enforcement, and I thought that 

we would just go in and tell people what the fund was used for and 

look at the accounting for it and that it would be very transparent. 

That is what I expected. 

And very quickly, we learned that transparency and accountability were not there, and the best explanation I can provide for 

your question is that when the fund was authorized early on, it 

had very limited purposes. It was to pay for storage of fish that 

were seized or for rewards for people providing information. And 

then there were amendments to the Act in 1990 that expanded the 

authorized use of the fund or the proceeds to support investigations. 

I think that the handling of that, the accounting of that, was just 

delegated too far down in the organization, and it was delegated to 

people who, frankly, were investigators or folks of that background 

and not financial managers. And then as we proceeded through 

time, the leadership that came into the fisheries enforcement organization were also law enforcement people who did not come from 

a Federal background—they came from a State background—and 

this whole idea of strategic planning and knowing how to maximize 

the use of resources was totally lost. 

The operation of the fund remained decentralized. Different divisions had different procedures. We have an astounding lack of documentation for these expenditures. And even the expenditures 

where we have some documentation, there are missing approvals, 

and it is, sir, quite a challenge to go back and try to determine the 

appropriate use—whether all these funds were appropriately used. 

Senator CARPER. We have a term in Delaware, maybe you do 

here in Massachusetts, for a situation like the one that you uncovered and have investigated and tried to straighten it out. We call 

it a dog’s breakfast. That is what we call it, a dog’s breakfast. 

When you look at what is being done, the reforms that are being 

adopted and changes being made, what are some of the—three or 

four most important ones? 

Mr. ZINSER. Well, I think in terms of the Asset Forfeiture Fund, 

the things that they are doing are very important and right on the 

money. The idea of setting up a separate code for the fund, to elevate the centralized control of the fund, to clarify the authorized 

uses, I think those are all right on the money. 

Senator CARPER. In terms of the changes that are still to be 

adopted and implemented, would you mention a couple of those 

that are still a work in progress? 

Mr. ZINSER. Well, I think the biggest thing, and this applies not 

only to the Asset Forfeiture Fund but the other aspects of the enforcement program that we have made recommendations on and 

that NOAA is working on, is that the political leadership is on 

board. Under Secretary Lubchenco and Mr. Schwaab, the Secretary, of course, the General Counsel’s Office, the political leadership is on board. I think the more difficult thing that has to be 

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tant reforms to implement and to forget about the acrimony or the 

defensiveness that comes with an IG investigation—forget about 

that and get on with making sure that these reforms are in place, 

because they will, if properly implemented, fix these problems. 

Senator CARPER. In terms of what our responsibilities are, as 

Senator Brown knows certainly as well, maybe better than me, but 

we play an oversight role. Our job is to poke in every nook and 

cranny of the Federal Government, looking at what is going on and 

asking IGs, asking OMB, asking a number of interested parties 

what is going well here and what is not. And in this case, there 

is bad behavior, misbehavior that is being addressed, and part of 

our responsibility and our oversight role is to positively enforce the 

good behavior, the kind of behavior that we think and you think 

is appropriate, and to make sure we put a spotlight on that. 

The other thing that we need to do and seek to do in hearing 

after hearing is to put a spotlight on bad behavior. And just a great 

example of this, and I mentioned in my opening statement and 

Senator Brown knows we have been trying for years to get the Department of Defense to give us audited financials—for years. They 

miss deadline after deadline after deadline. The Government Accountability Office holds them out as a very poor example in terms 

of missing their responsibilities in conducting in a fiscally appropriate manner. Now, we are told by the Department of Defense 

they are not going to give us audited financials until maybe 2017, 

and they may not be able to make it by then. 

And I am encouraged that we have what looks like a clean audit 

out of a real independent auditing firm. We did a little bit of a 

background check and found that this firm is actually real. They 

do all kinds of audits. They are one of the top 15 in the country. 

They do a lot of audits for Federal agencies, so they are somebody 

that apparently we can trust. 

In terms of their additional work and work that has to be done 

by the agency in response to that audit, are there any other points 

that you want to mention in terms of a work in progress or the ‘‘to 

do’’ list? I would ask either of you to respond to that. Do you want 

to take it first, Mr. Zinser, and then Mr. Schwaab? 

Mr. ZINSER. Well, specifically on the Asset Forfeiture Fund, I 

think the continuing audit by Clifton Gunderson to look into some 

of the specific transactions. There were thousands of individual 

transactions over the last 5 years that will undergo some further 

investigation by Clifton Gunderson to determine whether the documentation is there, appropriate use. Those types of reviews will 

also provide some recommendations about internal controls that 

are needed, and so I would look forward to the results of that to 

identify not only any kind of misuse, but also internal controls that 

might be important but that are not in place yet. 

I think that the definition of authorized use, there is still some 

ambiguity, for example, on what type of training and travel should 

be paid for out of the fund, and, for example, even if a training 

course is authorized, does the statute authorize the travel associated with that training to be paid for? So there are some ambiguities that are still present. Although the Department has done a 

good job defining authorized use, I think it could probably use another iteration. 

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Senator CARPER. OK. My 7 minutes has expired, so Mr. 

Schwaab, I will just ask you to hold in abeyance. We will come 

back—no, that is OK. I want to be respectful of my colleague. 

But I do want to say, one of my favorite saying is, the road to 

improvement is always under construction. Think about that. The 

road to improvement is always under construction. This is a road 

to improvement, and I think we are hearing today a lot of improvement has been made, but there is a lot of construction that lies 

ahead, so thanks very much. Senator Brown. 

Senator BROWN. Thank you, Mr. Chairman. 

It is good to see you again, Mr. Zinser. I appreciate the previous 

hearings you have testified at. When you were doing your investigation, did you find that the shredding that took place has hurt 

your ultimate determination as to what was right and what was 

wrong? Did that hinder your investigation and reporting? 

Mr. ZINSER. I would say that by nature, it hindered the reporting, because we will never know what was in those documents. So, 

we will never know what was in those documents. We reconstructed a list of what the files were—what the file labels said— 

but we do not know what documents were in those files, so we do 

not really know. 

We did not find that the Director had an intent to obstruct our 

audit in doing the destruction, and some people have questions 

about, well, how could that be? But my response is, the fact that 

leadership would destroy his records in the middle of an investigation is kind of consistent with the way the place was managed in 

general. It really suffered from very unsophisticated management. 

Senator BROWN. And, Mr. Schwaab, what was actually done with 

that person that shredded? Was he fired or disciplined in any way? 

Mr. SCHWAAB. Senator, as I think you are well aware, I cannot 

speak specifically to individual personnel actions because of Privacy Act considerations. I can speak to the position that he once 

held and the position that he holds now, but I cannot speak to—— 

Senator BROWN. Is he in that position now? 

Mr. SCHWAAB. He is not. 

Senator BROWN. So he has been relocated? 

Mr. SCHWAAB. He is in a different position today. 

Senator BROWN. Mr. Chairman, also, just for the record, we only 

received about 20 percent of our documents. For the record, and I 

would like to keep my request open for the completion of my document request and I also will have questions as we traditionally 

keep the period open to ask additional questions so we can continue getting the information. 

Senator CARPER. Senator Brown, I think we will leave it open for 

the next couple of weeks—— 

Senator BROWN. Yes, that is all, just a couple of questions. 

Senator CARPER [continuing]. For you and I to offer our questions, and we just ask for a prompt response. Thanks. 

Senator BROWN. Yes, just so we have the appropriate documents 

so we can see if there is anything that we missed. And unfortunately, Administrator Lubchenco is not here today, yet in March 

2010, she testified before the House Subcommittee prior to release 

of the IG’s report that was referenced earlier, found that NOAA’s 

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20 

chasing approximately 200 vehicles at a cost of $4.6 million, predominately with the Asset Forfeiture Fund monies, and that the 

vehicles exceeded its staffing of 172 personnel. Also, NOAA’s OLE 

lacked policy authorization for acquiring 22 vessels at a cost of $2.7 

million, including a luxurious $300,000 boat. I have a chart here 

that references a lot of the spending that took place. 

In addition, the independent Special Master found that there was 

credible evidence that money from sanctioning fishermen was a 

motivating objective in NOAA’s past enforcement objectives. Mr. 

Schwaab, do you agree with Administrator Lubchenco’s March testimony concerning the AFF and that there is an appearance of perverse incentives operating here? 

Mr. SCHWAAB. I am not—again, the acoustics are a little tough 

here. So you are asking me if I agreed with—— 

Senator BROWN. Yes. Do you agree with her testimony that there 

was an appearance of perverse incentives operating in that situation? 

Mr. SCHWAAB. I think it is very clear that the way the fund was 

managed previously left open that possible interpretation, and taking steps to foreclose on many of those uses of the fund is intended 

to remove that appearance. Yes, sir. 

Senator BROWN. Do you think that the purchases identified by 

the IG of all the cars and boats and everything, in your opinion, 

is the proper use of taxpayer funds? 

Mr. SCHWAAB. The previous interpretation was that was consistent within the law and that using the fund for that purpose—— 

Senator BROWN. There was no—— 

Mr. SCHWAAB [continuing]. Was acceptable. I do believe and 

agree, sir, with the Secretary’s new policy that substantially restricts the use of the fund, particularly as it pertains to use for the 

purchase of vehicles and vessels. So I agree that is a much better 

place for us to be. 

Senator BROWN. Well, there was no policy. That is why we got 

into this mess. There was no policy authorizing it, according to the 

IG’s report. There was no policy authorizing any of these purchases. And, as a matter of fact, the Magnuson-Stevens Act requires that AFF expenditures be directly related to investigations 

or criminal enforcement proceedings. So there really was not a policy before. There is a policy now, and that is one of the things that 

we have commended you publicly for, is establishing that. So there 

was not a policy before. That is why we are in this mess, is that 

not right? 

Mr. SCHWAAB. I think the lack of policies and procedures is a big 

part of why we got to where we are, and putting those policies and 

procedures in place is a big part of moving forward more effectively. 

Senator BROWN. Do you think that the new policy that you have 

in place now will eliminate a lot of the things that we have come 

to note in the past? 

Mr. SCHWAAB. Yes, sir. 

Senator BROWN. And Mr. Zinser, the $109,000 trip to Norway, I 

guess, 15 people including the contractor were actually brought 

there. Did you note that in your report as to questioning whether, 

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21 

in fact, that was an adequate use of the forfeiture fund and taxpayer money? 

Mr. ZINSER. We did not make a judgment on whether that was 

an appropriate use of the fund. We did note that the funds were 

used for that purpose and tried to understand rationale for using 

Asset Forfeiture Funds for that trip. What was reported to us is 

that the trip involved a conference about international fishing treaties, that the NOAA staff who attended did so for the purpose of 

making presentations at that conference, and again, the difficulty 

for us is the absence of any kind of legal opinion from the Department or from NOAA as to what the authorized use of that is. This 

kind of an interpretation of the statute just did not exist. 

Senator BROWN. Well, your report actually found nearly $580,000 

in international travel that was charged to the fund and only 17 

percent of that travel was directly related to specific investigations 

or enforcement proceedings. And as you also noted, Magnuson-Stevens requires that the expenditures be directly related to investigations or criminal proceedings. Does NOAA’s new policy on the use 

of the AFF meet the specific prescriptions of the law mentioned in 

your report? 

Mr. ZINSER. Well, I think one of the benefits of our work is that 

we finally do have an opinion from the Department’s General 

Counsel. That opinion defines ‘‘directly related’’ very broadly and 

provides a legal analysis as to why that language can be interpreted very broadly. That is why I suggested that there is some 

ambiguity in there and that some further clarification may be 

needed. 

Senator BROWN. Well, it is interesting, because we look at Magnuson-Stevens and to the letter of the law, we apply it to the fishermen. Yet when we have the language which says it is supposed 

to be directly related to investigations and criminal enforcement 

proceedings, it is like it is loosey-goosey all of a sudden. 

Mr. Schwaab, I know that there have been new policies in place, 

but how do you justify taking—and I know there is going to probably be an argument, well, we use it to deal with other countries 

with treaties and this and that so we can come up with enforcement. But you are taking money, hard-earned money from fishermen, using it to send 15 people over to Norway in that previous 

instance with really no real oversight at all. I mean, is that still 

the policy? Is that something that you plan on still doing, is using 

money—I understand that you are still going on international trips 

with fishermen’s money. Is that still happening? 

Mr. SCHWAAB. No, sir. So we now use other sources of funds to 

pay for general trips of that nature—admittedly important trips in 

many cases, because achieving parity internationally in the way 

that fisheries are enforced is another large objective that we share 

and it is one that benefits our domestic fishermen. But as it relates 

to the use of travel funds, we only use travel funds—we only pay 

for travel out of the Asset Forfeiture Funds now related to specific 

cases, and the case number has to be identified in that paperwork. 

Senator BROWN. Well, the new policy I have, it says that attendance at international and domestic bi or multi-lateral meetings and 

negotiations to discuss enforcement-specific agenda items is still alH605-41331-79W7 with DISTILLER

22 

lowed. It is still allowed pursuant to the policy that you folks provided us with. So which is it? 

Mr. SCHWAAB. I am sorry. Mr. Risenhoover just clarified for me 

that we do still under the policy allow bilateral engagements with 

specific countries under the forfeiture fund. 

Senator BROWN. So you still use fishermen’s money to go overseas for these trips? 

Mr. SCHWAAB. For particular bilateral engagements, yes, sir. 

Senator BROWN. Well, what does that mean for the average listener, bilateral? 

Mr. SCHWAAB. Country to country—— 

Senator CARPER. Just give us some clear examples. Just be real 

specific. Give us some clear examples of how these monies can be 

used for foreign travel. Please, just be very specific. Clear it up. 

Mr. SCHWAAB. Country-to-country engagements as opposed to 

conferences and larger training venues. 

Senator BROWN. OK. Mr. Zinser, in 2010, your office issued a report on the Office of General Counsel, the GCEL, which found that 

inattention by their management to completing performance appraisals, a pass-fail system contrary to the Department of Commerce’s five-level system, and all attorneys currently employed 

were rating ‘‘meets’’ or ‘‘exceeds’’ performance levels. In Secretary 

Locke’s May 17 decision memo on the Special Master, he cites that 

there was little management or supervision, which contributed to 

the overly aggressive conduct toward fishermen. Does your December 10 finding about weaknesses in the GCEL Performance Management System support Secretary Locke’s contention? 

Mr. ZINSER. Yes, it does. The reason we looked at the performance appraisals to begin with was to see whether or not the attorneys were doing what their bosses wanted them to do, because we 

could not criticize the attorneys for the way they conducted themselves if their performance appraisals said that was good performance. And what we found was a serious lack of executed appraisals. 

In many cases the employee did not sign their appraisals. In other 

cases, the supervisors were not signing them. It was a pass-fail system. 

As a result of a pass-fail system, there were very few appraisals 

that provided any record of the work products that the attorneys 

worked on. So we felt it was important as part of these reforms to 

bring that to the attention of the Under Secretary to try to institute some reforms, and I believe they are running into some issues 

with the fact that the attorneys for NOAA are part of a collective 

bargaining unit and that this is caught up in their collective bargaining agreement, the way they get their performance appraisals. 

Senator BROWN. Great. I had 10 minutes. I will turn it back to 

you, Mr. Chairman. 

Senator CARPER. Thanks, Senator Brown. 

I just want to come back one more time on the travel issue, 

which really grates on people. In some cases in this country, folks 

do not get to take a vacation at all this year. If they do not have 

a job, they do not get to take a vacation, and the idea that trips 

to a place like Norway and Malaysia have been taken that cost a 

lot of money and a lot of people get to go. 

H605-41331-79W7 with DISTILLER

23 

So what I want to do is come back and say what we have been told is between January 2005 and June 2009, some $580,000 was 

charged to the Asset Forfeiture Fund for international travel, almost $600,000. I am told that just under 20 percent of that cost 

for this travel was directly related to specific investigations or to 

enforcement proceedings. Seventy percent of the cost for this travel 

was directly related to specific investigations or enforcement proceedings. And what I would like to hear is some assurance that 

going forward, we are not going to see this kind of money be used 

for those kinds of trips, and that the trips that will be taken, if 

there is foreign travel in the future, it would have to relate to specific investigations or to enforcement proceedings. I need that assurance. We need that assurance. 

Mr. SCHWAAB. Yes, sir. Under the current policy, we will not use 

Asset Forfeiture Fund proceeds to pay for travel to conferences 

such as the two that you described. As I indicated, we will use it 

for followup on specific cases, and in some cases country-to-country 

engagements around specific management issues. 

Senator CARPER. All right. Good. Well, not all travel is bad. Senator Brown and I actually got to know each other on a congressional delegation trip to Afghanistan and Pakistan, and that was 

a good learning experience for both of us, and I think taxpayers’ 

expenditures that were valuable to us and I hope to our colleagues 

in the Senate. So not all travel is bad. But the appearance can be 

more damaging sometimes than the actual trip itself, so continue 

to be vigilant in that area for us, if you would. 

I want to come back, if I could, I think to Mr. Schwaab and say, 

I understand, going back to what happened last week, the independent audit of the Asset Forfeiture Fund was released. There 

has been some discussion already, I think, back and forth with Mr. 

Zinser, but do you have any other comments about the audit findings? This would be for you, Mr. Schwaab. Do you have any other 

comments on the findings of the independent audit? 

Mr. SCHWAAB. Yes, sir. So, obviously, I would emphasize again 

the followup review of specific expenditures that is an important 

second component of this particular audit. 

In addition to that, as I think you have already heard indicated, 

one of the concerns raised was the lack of a specific line item in 

the Federal budget to account for the Asset Forfeiture Fund and 

its management. The President’s fiscal year 2012 budget does include just such a proposal. 

The only other concern or issue that was raised by the auditors 

was a concern that in some cases, we were found to have not 

turned over overdue bills to the Treasury for collection in as timely 

a fashion as is called for under law. 

Senator CARPER. And there has been a little bit of discussion on 

this already. I want to come back and just make it clear, at least 

for me. As I understand it, another audit is in the works and I am 

told that the independent auditor is looking at individual purchases. You may have just mentioned this, but I missed it, but individual purchases. Can you give us some thoughts—either one of 

you, actually—about when that audit is expected to be completed 

and the results released? 

Mr. SCHWAAB. July 15 of this year, sir. 

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24 

Senator CARPER. OK. Good. And this is a question really for either of you. I understand that NOAA has put in place a procedure 

whereby, as I understand it, the Comptroller has to approve expenditures of $1,000 or more. Is that out of the Asset Forfeiture 

Fund? Is that correct? Just yes or no. 

Mr. SCHWAAB. Yes. 

Mr. ZINSER. Yes, sir. 

Senator CARPER. OK. Thank you. Mr. Schwaab, could you talk 

about how this new policy works and why it was put into place in 

the first instance. Why was it put into place? And, Mr. Zinser, once 

he responds, I am going to ask you for your thoughts on this new 

policy and whether it is the right move or not. 

Mr. SCHWAAB. As indicated by Mr. Zinser, one of the previous 

concerns was that there was significant decentralization of spending authority. What this process requires is that any single expenditure over $1,000 be approved centrally in NOAA headquarters. In 

addition to that, we do have a regular review of all expenditures 

in NOAA headquarters, much more regularly than would have existed previously. 

Senator CARPER. Do you want to add anything to that, Mr. 

Zinser? You do not have to if you do not want to. 

Mr. ZINSER. No, I think that Mr. Schwaab is right. The thing 

that policy was trying to correct was the over-decentralization of 

purchasing authority. The only other thing I would add is on the 

audit—the audit report that Clifton Gunderson issued. I agree that 

it is progress. 

The other thing that I think NOAA should consider is more of 

a report, like an annual report, on what the money has been used 

for. You can read the financial statement audit and see that they 

have accounted for their revenues and their assets and their liabilities and that the two lines equal each other. But I think what 

would be helpful to people is to know exactly what kinds of things 

that money was used for. 

Senator CARPER. Good. All right. I would just ask both of our 

staffs, both Republican and Democratic, to especially note that 

point and we will just come back to you for a followup on that. 

We had problems, actually across the range in Federal departments, with the use of credit cards for travel and other purchases 

by staff, in some cases honest mistakes, in some cases not. To what 

extent has this been a problem with purchases made by agency employees from this forfeiture fund? To what extent has that been a 

problem, the use of credit cards, travel cards, and misuse of those? 

Is that a problem? If it is, has it been addressed? 

Mr. SCHWAAB. So, Senator, we looked at a subset of transactions 

last summer following the initial report on the Asset Forfeiture 

Fund. One of the things that we found was that there were some 

procedural problems that emerged. They emerged, at least as characterized to us, at a rate and of a nature that was very similar to 

what you would find in a similar review in any agency or any subsection of the agency. So we did not find any particularly anomalous behavior. We did find procedural problems that merited additional training and counseling for particular employees. 

Senator CARPER. OK. Just keep in mind, if it is not perfect, make 

it better. Thanks. 

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25 

I think I have used my 7 minutes. Senator Brown. 

Senator BROWN. Thanks, Mr. Chairman. 

Mr. Zinser, in your opening statement, you said you found the 

fund complex, very little attention to the fund, no central authority. 

You noted that $96 million has come in, $49 million has come out. 

My question to you is where is the remaining $47 million of hardearned fishermen’s dollars? 

Mr. ZINSER. Yes, sir. The figures that I cited came from the report from KPMG, and the problem they had was in defining the 

fund. There are civil penalties and seizures that come in from a 

number of statutes that NOAA enforces, and some of those proceeds—civil penalties—are put into accounts that comprise the 

Asset Forfeiture Fund. It is kind of a misnomer. It is actually a 

civil penalty fund. And some of those proceeds from civil penalties 

do not. 

KPMG had such difficulty getting a definition from NOAA about 

exactly which of those proceeds constitute the Asset Forfeiture 

Fund that they provided basically a worst-case scenario. These are 

all the proceeds from enforcement activities that NOAA collected 

over those 41⁄2, 5 years, and NOAA was not able to help us say 

which of those were actually part of the Magnuson-Stevens Asset 

Forfeiture Fund and which ones were just collected by NOAA and 

then remitted to the Treasury or put in some other account. 

Senator BROWN. Mr. Schwaab, on the credit card issue, since the 

Chairman brought it up, how many credit cards are actually issued 

to employees? How many employees do you have, 172? 

Mr. SCHWAAB. We have just slightly over 200, all told, in the Office for Law Enforcement. 

Senator BROWN. And how many of those have credit cards? 

Mr. SCHWAAB. I have those numbers here and I can pull it out 

for you momentarily. I can tell you this, that since the finding 

came out, we have drastically reduced the number of credit cards 

that are issued across the Office for Law Enforcement so that they 

are only issued to offices in a number that is needed to meet the 

requirements of those specific locations. 

Senator BROWN. Yes, because what I noted in doing the work 

leading up to the hearing, I mean, there is an instance of a $2,500 

cash withdrawal with no documentation. There was double-billing 

by agents submitting expense reports in the beginning of the 

month and the end of the month. Have any of those overpayments 

or duplicate—and we deal with duplicate payments in this Subcommittee. We just had a hearing, $125 billion just in improper 

payments alone. Has anybody repaid the money, or have you recouped any of that money from any of those people? 

Mr. SCHWAAB. So not specific to credit cards, but I am aware 

that in some of the travel reviews, after issues were made aware 

to individual employees, that they did step forward and pay back 

discrepancies in travel payments. 

Senator BROWN. Has all the money been paid back that has been 

found as being duplicative or incorrectly billed or whatever? 

Mr. SCHWAAB. To my knowledge, sir, anything that we are aware 

of that was incorrectly paid out has been rectified. 

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26 

Senator BROWN. And in the body of your review and upcoming 

audits, if you find more, will you, in fact, seek reimbursement from 

those employees? 

Mr. SCHWAAB. Yes, sir. 

Senator BROWN. In looking at the—Secretary Locke actually—I 

know we had this Special Master’s report. The Special Master cited 

that some of the attorneys he found abused their discretion by extracting excessive monetary penalties, which in one instance led to 

a coerced settlement, and then noted that Secretary Locke’s response to the Special Master’s report. Specifically his statement in 

the decision memo, he found after his own legal review that none 

of the conduct described in the report undertaken by any individual 

lawyer warranted disciplinary action against any employee mentioned in Judge Charles Swartwood’s report. Has anyone been disciplined or moved or anything related to that particular report and 

Judge Swartwood’s comments on the excessive monetary penalties 

being given? 

Mr. SCHWAAB. Senator, I believe what the Secretary was getting 

at in his finding there was that this was largely a failure of procedure, a failure of policy to dictate standard approaches by which 

penalties would be applied for particular offenses across the country. And one of the important things that we have done since that 

time is put in place a standard penalty policy to prevent those 

kinds of things systematically from recurring and to provide the 

employees the kind of guidance that they need to avoid finding 

themselves in that situation. 

Senator BROWN. And are there still Special Act or Service Award 

bonuses? For example, I know in one instance, it was referenced 

that someone got a $2,000 bonus and referenced in the award that 

it was a high-stakes game, and as a result, he received a $2,000 

bonus. Are you still giving out these Special Act or Service Award 

bonuses? 

Mr. SCHWAAB. I am not familiar with the particular situation 

that you are talking about. There are service bonuses of that sort 

for—— 

Senator BROWN. There still are? So they get a salary and a bonus 

if they do something—— 

Mr. SCHWAAB. There still are opportunities to provide that kind 

of a bonus. I think in the case of enforcement cases, one of the, obviously, challenges historically for lack of standard policy and procedure was to measure what you are measuring performance 

against, and I think the new policies and procedures will put us in 

a much better stead in that regard. 

Senator BROWN. So they are getting a salary, and presuming the 

average salary is about $100,000, give or take, and then they are 

also getting a bonus on performance in enforcement and forfeiture, 

is that accurate? 

Mr. SCHWAAB. Well, I would not say necessarily it was specifically related to an enforcement action or a particular penalty or 

forfeiture. I would say that those bonuses are generally related to 

job performance over the course of a year. 

Senator BROWN. So can the attorney still get a bonus? Is that 

policy still in place? 

H605-41331-79W7 with DISTILLER

27 

Mr. SCHWAAB. Well, I can speak generally to Federal agency 

process in that regard. I honestly cannot speak specifically to the 

performance structure for the attorneys in the General Counsel Office. 

Senator BROWN. Mr. Zinser, I see you shaking your head there. 

What are your comments on that? 

Mr. ZINSER. I believe that the policy that enabled NOAA to make 

that Special Act Award is pretty much a Department-wide policy 

and that those policies are common in the Federal service. But I 

think that in this case, the case that you referenced, the award 

seemed premature because the case had not been finally resolved 

yet—— 

Senator BROWN. It had not even been signed off on yet? 

Mr. ZINSER. And that is also why, when people wonder why employees are not disciplined or harsher action is not taken for bad 

management or bad performance—when they are given performance awards for that conduct or that performance—it is hard now 

for the management to come back and say, you should not have 

done that and we are going to discipline you for it. 

Senator BROWN. Is it common around other agencies to have that 

type of payment for the high stakes, supposedly ‘‘high stakes’’ 

games? Are there other agencies? I have never heard of somebody 

getting a salary and then getting a bonus on top of it for basically 

closing down cases. Is that common? 

Mr. ZINSER. The language that you are referencing was in the 

justification for the award. We thought that was inappropriate, and 

when we learned of it, we brought it to the attention of the Administrator. And, in fact, I think it came to our attention from somebody from the public who had a hold of that justification through 

a FOIA request. So it is actually public information. 

Senator BROWN. So it is inappropriate, but they are still doing 

it, apparently, from what we just heard. 

Mr. ZINSER. Yes. I should say that particular award was a number of years ago, but it was in connection with one of the cases the 

Special Master reviewed. 

Senator BROWN. When you are looking at, Mr. Zinser, the type 

of enforcement folks—apparently, from what we have received, 90 

percent are criminal investigators—the workforce consists of approximately 90 percent criminal investigators while its caseload 

was 96.4 non-criminal. The Office for Law Enforcement considers 

it appropriate to operate from a criminal investigative standpoint 

and apply techniques used for criminal investigations. In your opinion, how adequately has NOAA addressed your recommendations 

that determine whether it should continue that type of approach or 

do it differently? Are you satisfied with the actions that have been 

taken thus far? 

Mr. ZINSER. I think the action NOAA has taken includes commissioning a study of their workforce, a workforce analysis, and I 

think that is the proper step to take. I think it has taken a long 

time, that it has been in the works for several months now. But 

I think the point we were trying to make in our report was not that 

criminal enforcement is unnecessary; we think criminal enforcement capabilities are necessary; we just think the criminal investigators ought to be used to conduct criminal investigations and 

H605-41331-79W7 with DISTILLER

28 

non-criminal investigators or inspectors should be used to enforce 

regulations, and NOAA has mixed the two up. So we think the 

criminal investigators ought to be out investigating those provisions that have real serious criminal implications and that the 

Magnuson-Stevens regulations should be enforced by regulatory inspectors. 

Senator BROWN. Mr. Schwaab, so what does it take to actually 

get fired at NOAA? [Laughter.] 

I have to tell you, watching the special that Dan Rather did, 

being on this for a year and a half now—I mean, some of the things 

we have heard, and I have not heard of one person being fired at 

NOAA. Is that going to change? Is there going to ultimately be 

somebody held accountable for some of these things? 

Mr. SCHWAAB. Well, as I said before, without speaking to individual cases, I think there is a distinction between whether someone has been fired and whether someone has been held accountable. 

To your question, what does it take to get fired at NOAA, pretty 

much the same thing as in many other agencies. There are two 

pathways. One is performance-based, and those are long-term failures to perform in the job indicated. That requires ongoing collaborations, discussions with the supervisor who sets forth corrective 

action plans, and if the person does not improve performance accordingly, then they can be certainly subject to termination under 

that process. 

Another direction, of course, is conduct-related. Obviously, the severity of a particular incident is held against a number of different 

standards in making a decision ultimately to terminate. There are 

any number of things that could, on a first offense, reach that level 

of severity, but in our individual investigations, those are the kind 

of things that we look at in particular cases. 

Senator BROWN. And the Chairman is nice enough to wrap me 

up. I am still just shocked that based on everything that we have 

heard, that there has only been some shifting of people. They have 

taken a small reduction in salary. No one has been fired. There is 

a complete lack of accountability in saying, sir or ma’am? You 

messed up and we are going to have to let you go, or we are going 

to have to put you—there is no history of any type of counseling. 

There is nothing. 

So I am encouraged, as the Chairman is, that, based on the pressure we brought to bear, that you are doing it better, and I would 

once again just add in conclusion that I would hope that if there 

is something that you need us to do, if there is some type of clarification with the Magnuson-Stevens, let us know. We have a lot of 

good people who are willing to work on these types of things. 

So thank you, Mr. Chairman. 

Senator CARPER. As a recovering Governor, I will say that in 

State Governments, it is not always easy to hold people accountable. It is not always easy to fire people who, frankly, should have 

been fired. But if people in Delaware really behaved egregiously, 

we tracked their records, tracked their performance and eventually 

built a case and we were able to remove them from service. But 

it is not easy, and it is not easy in the Federal Government, either, 

and part of it is to protect the rights of the individual. 

H605-41331-79W7 with DISTILLER

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I think you mentioned that in several instances, employees who 

should have been held accountable have been held accountable, and 

I would just ask that as you go forward, that this continue to be 

the standard that is set, whether they are fired or not, but that 

they are held accountable in ways that are appropriate. 

The other thing I want to ask, and this is my last question, but 

after I ask this question, and I do ask you to respond fairly briefly, 

I am going to ask you to take maybe a minute or so apiece and just 

give us some closing comments. You gave an opening statement. I 

want you to give a brief closing statement, as well, before we turn 

it over and welcome our third panel. 

This will be, I think, a question probably for you, Mr. Schwaab. I understand that NOAA has allocated about close to $50 million 

to transition this region and perhaps others to catch-share fishing 

management systems. Just take maybe a minute to explain to us 

how that money is being spent and what it is being spent on, if you 

would. 

Mr. SCHWAAB. I am sorry, the last part of that again—— 

Senator CARPER. Yes. I would like for you to take a minute to 

explain how that money is being spent and what it is being spent 

on. 

Mr. SCHWAAB. Yes, sir. So just for your reference purposes, there 

is a table attached to my written testimony—— 

Senator CARPER. OK. 

Mr. SCHWAAB [continuing]. That describes that money and its 

use, and it speaks specifically to fiscal year 2009 and 2010. That 

money falls into essentially three main categories. One category is 

direct support for the industry and standing up sector-based management, grants to hire sector managers, funds to pay for some of 

the at-sea monitors and dockside monitors that are required under 

this new system. 

The second part is used by the agency specifically to stand up the 

infrastructure needed to put the system in place. 

And then there is a third part that really speaks to some continued attempts to innovate around things like gear so that fishermen 

can fish more selectively and we can capture a higher percentage 

of the available quota, particularly in the healthier stocks, and 

avoid running up against quota limitations in some of the weaker 

stocks. 

Senator CARPER. All right. Thank you. 

Just take a minute and give us any closing thoughts you might 

have, please. Mr. Zinser, do you want to go first? 

Mr. ZINSER. Yes, sir. First, I think that the oversight being applied is very important. I think it is going to continue to be important. Identifying the problems and solutions is a big part of it, but 

making sure that those recommendations and reforms are implemented and become institutionalized is really the key. 

For our part, what we plan to do is followup with our own audit 

staff to make sure that the things NOAA says it is doing, it is actually doing, and I think that if Congress were to also do that, it 

would be important. 

I do have a concern with respect to the Asset Forfeiture Fund 

that the recommendations are implemented. I know that the Appropriations staff, for example, put language in the 2011 appropriaH605-41331-79W7 with DISTILLER

30 

tion that was not enacted that basically said that the Asset Forfeiture Fund could not be used until the recommendations were implemented, and I know that Senator Barbara Mikulski has found 

our work important for them. I would just urge NOAA to follow 

through on the Asset Forfeiture Fund recommendations so that I 

am not put in the position of saying whether or not the recommendations are implemented. I want that to be clear so the appropriators feel free to authorize the use of that money. 

Senator CARPER. All right. Thanks. A closing comment, Mr. 

Schwaab. 

Mr. SCHWAAB. Yes. Thank you, Senator, and thank you again for 

the opportunity to be here. I would just like to say that, as I think 

you have heard throughout the testimony today, we have identified 

failings, particularly in policy and procedure. We have appreciated 

the work of the Inspector General in helping to bring those to our 

attention. We have certainly appreciated the focus that congressional members have brought to bear on this issue, and I think 

that our actions to date, certainly under the leadership of Secretary 

Locke and Dr. Lubchenco, have, I hope, illustrated the seriousness 

with which we take these findings and these recommendations and 

our commitment to the task at hand. 

We certainly understand there is a strong need to work closely 

with fishermen, fishing communities, and other stakeholders to ensure that our efforts, both in management—well, in management, 

in science, and in enforcement are open, transparent, accurate, and 

fair, and we are taking steps aggressively, both in the law enforcement arena as well as others, to redouble our efforts to make the 

case that is, in fact, true. 

In addition to the fishing communities, I also want to close by 

noting the hard work of many people throughout the Department 

of Commerce and NOAA to get us to the place where we are today. 

Certainly, as we indicated in some of my answers, oftentimes, the 

employees are caught up, as is everybody else, in failings of policy 

and procedure, and not only to the benefit of you, to the benefit of 

the fishing communities and other stakeholders, but to the benefit 

of our own employees, we owe to have the right policies and procedures in place to faithfully execute them so that we can all go forward fairly, effectively, and transparently. Thank you, sir. 

Senator CARPER. And let me close by saying, a friend of mine 

likes to say, ‘‘editorial writers are people who enter the battlefield 

when the fighting is over and shoot the wounded.’’ We are not interested in entering the battlefield as a Subcommittee—or Committee—we are not interested in entering the battlefield when the 

shooting is over and shooting the wounded. This is a fight that 

should have been fought. This is a fight that should have been resolved years ago—in previous Administrations, with previous Secretaries, with previous IGs, with previous folks from NOAA, and it 

was not done. 

Good work is being done now. And the key is that good work provides a foundation on which even better work can be done to restore the trust that needs to exist between, in this case, the fishing 

community itself and those that are entrusted with the responsibility to oversee that community and make sure we have a healthy, 

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vibrant fishing industry in this country and especially in this region. 

With that having been said, Senator Brown and I will have, I 

think, 2 weeks to provide additional questions, and we just ask 

that as we do that, you provide a prompt response to those questions. 

The other thing, our job is oversight. Our job is to back up the 

work that is being done, the appropriate work that is being done 

to make sure that continues to positively enforce that work and 

also to help find out if other work needs to be done, and that work 

is followed up on, as well. And finally, if there are things that we 

need to do, as Senator Brown has said, if there are things that we 

need to be doing to help make sure that the Legislative Branch of 

our government, that we are being responsive and supportive to 

this agenda, that we are doing that, that we are held accountable. 

Thank you very much for joining us today, for the work that you 

are doing, your teams are doing. Let us keep it up. Thanks very 

much. 

Mr. ZINSER. Thank you. 

Mr. SCHWAAB. Thank you. 

Senator CARPER. Let me invite the third panel to join us, please. 

We will now welcome our third panel, and I am going to ask Senator Brown just to lead off. I have a couple of brief comments to 

make about each of them, but, Senator Brown, why don’t you make 

any comments—these are your folks. 

Senator BROWN. Yes. Well, thank you, Mr. Chairman. 

Senator CARPER. Please proceed. 

Senator BROWN. I appreciate you inviting them and I will save 

introductions, but just note that they each have specialties in this 

area based on what we have been dealing with. I appreciate their 

time. I know, because of our time getting back to Washington, they 

are going to be very brief. I may submit the comments for the 

record. But with that, Mr. Chairman, I will turn it back to you. 

Senator CARPER. Good. Thanks so much. 

Let us start with Lawrence Yacubian. I want to get the correct 

pronunciation of your last name, please. 

Mr. YACUBIAN. It is Yacubian, sir. 

Senator CARPER. Yacubian, OK. Mr. Yacubian spent decades, I 

am told, as a commercial fisherman in New Bedford, Massachusetts, working his way up from apprentice deckhand to engineer to 

captain. As one Navy captain to another, I salute you. A native of 

Westport, Massachusetts, he now resides in Florida. 

Our next witness is Larry Ciulla, is that correct? 

Mr. CIULLA. That is correct, sir. 

Senator CARPER. You guys do not make it easy on me to pronounce these names. But I understand you are the co-owner of the 

Gloucester Seafood Display Auction in Gloucester, Massachusetts, 

and that you and your sister started the business about 14 years 

ago, in 1997. The business sells New England fish to buyers around 

the world via live Internet auctions. That is pretty interesting 

stuff. 

The next witness is, I am told, Stephan Ouellette, partner at 

Ouellette and Smith in Gloucester, Massachusetts, and you specialize in fishing law. 

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1The prepared statement of Mr. Yacubian appears in the appendix on page 79. 

Mr. OUELLETTE. I do. 

Senator CARPER. Our fourth witness is Mr. Giacalone. Mr. 

Giacalone is the Policy Director of Gloucester-based Northeast Seafood Coalition (NSC) and also has experience as a commercial fisherman. 

Last but not least, a name even I can pronounce, Dr. Brian Rothschild, Dean Emeritus and Montgomery Charter Professor at the 

University of Massachusetts-Dartmouth School of Marine Science 

and Technology. He is also Co-Director of the Massachusetts Marine Fisheries Institute. Dr. Rothschild worked with Senator Warren Magnuson on the drafting of the Magnuson-Stevens Act at 

NOAA during the law’s implementation. 

I have been handed a note by our staff that Eric Schwaab has 

had to leave in order, I think, for other travel arrangements. Members of his team are still here and will report back to him. We are 

pleased to hear that. 

Why don’t we ask you to testify in the order you have been introduced. I would ask you to limit your comments to 5 minutes and 

any additional comments will be made part of the record. Your full 

statement will be made part of the record, and then, Senator 

Brown and I would like to ask you a couple of questions. 

But, Mr. Yacubian, why don’t you lead off for us. Thank you. 

STATEMENT OF LAWRENCE YACUBIAN,1 RETIRED FISHERMAN 

Mr. YACUBIAN. Thank you, Senator Carper. I understand it is 

customary to begin testimony by saying thank you to the Subcommittee for the opportunity to be here. Of course, considering 

why I am here, if I could rewrite history, none of this would have 

happened. To be honest, I would rather be out scalloping today. 

But these things did happen and I am here. 

Chairman Carper, I thank you for agreeing to hold this hearing. 

Senator Brown, thank you for your unwavering focus on our 

State’s fisheries. Your predecessor, the late Senator Ted Kennedy, 

was a true friend of the fisherman. Your actions since your election 

to the Senate have upheld that legacy with honor. Thank you. 

I also thank the Commerce Department Inspector Todd Zinser 

and his staff for undertaking the investigation which exposed this 

corruption. 

I thank Commerce Secretary Gary Locke for his promise that 

these problems will end on his watch. 

And I further credit NOAA Assistant Administrator Eric 

Schwaab for releasing the highly critical reports on fisheries management in the Northeast conducted by Preston Pate and on 

science conducted by Dr. Michael Sissenwine and Dr. Brian Rothschild, who is here with us today. But more has to be done. 

During the darkest days of this long nightmare, I never imagined 

that one day, I would have the chance to sit face-to-face with a cabinet member and tell him how his Department had wronged me. 

Thanks to Congressman Barney Frank, that happened. I never 

thought the Secretary of Commerce and the Administrator of 

NOAA would return fines and apologize to me. Thanks to Senator 

John Kerry, that happened. I am forever indebted to the men and 

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women of the U.S. Senate and Congress who put policies aside and 

worked as catalysts across State and party lines to exonerate the 

many in my industry who were also wronged by a misguided regulatory system. 

I am a proud American. Despite what I have been through, I still 

love this Nation of ours. In 2004, when we sold the family farm in 

Massachusetts to pay the settlement, we boarded a plane to Virginia, where we saw our son, Captain Lawrence Yacubian, who is 

sitting right here today, leave to serve in Afghanistan. He later 

served in Iraq and was awarded the Bronze Star for meritorious 

service in combat. It is still hard for me to accept that unsupervised Federal employees working in a rogue agency could be allowed to run amok in this Nation that I love. 

The first reason that I am here today is to question why the National Marine Fisheries Service attorneys and judges have not been 

indicted. In fact, never mind indictments, none of them have even 

been fired. Apparently, it is not possible to be fired from civil service. Nearly every one of them is still working for the Federal Government today, despite the findings of the Office of the Inspector 

General’s report and the Special Master’s case review that these 

Federal employees operated with malicious ethics and biased prosecution. 

When Special Master Swartwood reviewed my story, he discovered what I have known all along, that justice was impossible and 

that the cards were stacked against me before my case began. The 

National Marine Fisheries Service enforcement system within 

NOAA was rigged by its own financial self-interest, warped career 

ambition, and misplaced motives. 

There was none of the legal checks and balances that are granted 

by our Nation’s legal system. The system violated even the most 

basic conflict of interest standards. Judges and prosecutors were allowed to maintain eerily close in-house relationships with little or 

no oversight during the prosecution of my case. It is difficult to feel 

you are having your day in court when the prosecution and the 

judge hearing your case are literally allowed to go to lunch together 

while the court is in recess. It is difficult to feel you are getting justice when the judge has been appointed by the prosecuting agency 

and will eventually be paid by fines of your conviction. 

With such clear conflicts of interest, this agency upheld its own 

motives, not justice. As Judge Swartwood concluded in his report, 

money was NOAA’s motivating objective. 

The second reason that I am here today is to shed light on the 

abuse of the National Marine Fisheries Service Asset Forfeiture 

Fund. NOAA turned the Asset Forfeiture Fund into a cookie jar for 

its enforcement staff. The fines they seized from fishermen like me 

were lumped into one big account from which staff bonuses, company cars, international staff travel, luxury boats were financed 

with little to no oversight and no auditing. And as I noted a moment ago, this fund was used to pay the salaries of administrative 

law judges that heard our cases in their courtrooms. 

One of the Nation’s top accounting firms, KPMG, at the request 

of the Inspector General, concluded the first audit of the Asset Forfeiture Fund last year and they could only account for a little more 

than half of it. Forty-seven million dollars still remained unacH605-41331-79W7 with DISTILLER

34 

counted for. This is not just lax accounting. It is a violation of the 

public trust. 

Was my $430,000 fine used to protect the fisheries? Did it go toward the purchase of 200 government vehicles for a staff of 172? 

Did it go toward a boat described as luxurious by its manufacturer 

that NOAA somehow thought was necessary for their work? Or was 

it perhaps used to finance all-expense-paid trips literally around 

the world for some of the NOAA employees who penalized my family to the brink of bankruptcy? 

I did not know—— 

Senator CARPER. Mr. Yacubian, You are about 6 minutes right 

now into your statement, and I am just going to ask you to go 

ahead and complete your sentence. Your whole statement will be 

made a part of the record. We just ask you to finish this paragraph, 

OK, and then I need to recognize the other witnesses. Please, just 

finish your paragraph. 

Mr. YACUBIAN. All right. In addition to my $430,000 fine, I had 

to pay in excess of $250,000 in legal fees in order to defend myself. 

When the lawyers on the other side worked for the only organization that can print money, legal bills add up quickly. 

But the damages go beyond that. Not only did my career disappear with that money, but my family’s heritage and my children’s inheritance did, as well. My wife’s family farm in Massachusetts that was in her family for 350 years is gone. We had to sell 

it. Our hope of passing along the property and its story, which 

spans almost all of American history, is no more. 

The $649,000 in fines returned by Secretary Locke to several 

other fishermen like myself is a good start to restoring trust, but 

it by itself is not sufficient. For those of us who have been wronged, 

we have lost careers, years, and our legal fees and other costs we 

have incurred at the hands of corrupt Federal employees, are still 

unreimbursed. 

For those of us who are still in the fishing business, there is still 

much more to be done before our faith and trust in the government 

is restored. 

First, more needs to be done to restore the confidence of fishermen—— 

Senator CARPER. I do not mean to be rude, but you are about 8 

minutes into your statement. 

Mr. OUELLETTE. Senator, if it would help, I will take a shorter 

time if you could let him finish. 

Senator CARPER. OK. But I need to ask you to please summarize—— 

Mr. OUELLETTE. Thank you. 

Mr. YACUBIAN. I am almost done, Senator. First, more needs to 

be done to restore the confidence of fishermen in the regulatory 

system. Today, I ask the Senate to conclusively determine what 

NOAA did with the unaccounted half of the Asset Forfeiture Fund 

and the $430,000 in wrongly assessed fines that I was forced to 

pay. 

Second, an independent investigation of NOAA Fisheries rulemaking is critical. What Preston Pate and his colleagues achieved 

in the agency’s internal report is commendable, but I suggest that 

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an independent outside investigation conducted by Inspector General Zinser or the Government Accountability Office is warranted. 

Third, better oversight into the funding of science programs is 

crucial. Independent institutions that both scientists and fishermen 

trust must be funded. The institution Dr. Brian Rothschild helped 

to found, the University of Massachusetts School for Marine 

Science and Technology, is an example. Without him, there would 

not be a scallop industry today. Fishermen do not trust NOAA’s internal grantmaking to fund outside science. In the past, what they 

have done is feather their own nests rather than direct the money 

to the most worthy institutions. 

Finally, I ask the Senate to hold accountable the government attorneys and judges that were the source of this injustice and who 

are still employed by the Federal Government. These individuals 

cannot be allowed to be reshuffled into the deck and be protected 

within the Federal system. They must be separated and terminated 

in order for justice and integrity to be restored into this agency of 

the United States. 

Thank you for listening. 

Senator CARPER. Thanks very much for your testimony and for 

the passion and sincerity that underpins it. 

I would just ask the other remaining witnesses, please adhere to 

your 5-minute limit. Thanks so much. 

Please proceed, Mr. Ciulla. 

STATEMENT OF LARRY CIULLA, PROPRIETOR, GLOUCESTER 

SEAFOOD DISPLAY AUCTION 

Mr. CIULLA. Senators, thank you for inviting me here today. 

Larry Yacubian has become a good friend of mine. He became a 

friend of mine—at first, I must say, I was afraid of him. When I 

first had charges put against me in 2009, I got a call from a gentleman I did not know. He was from Florida. One of the women in 

the office picked it up and said, ‘‘I have a gentleman by the name 

of Larry Yacubian on the phone. I think he has been in trouble 

with NOAA agents and has lost his business due to some problems 

he had with the government.’’ I was afraid to pick up the phone, 

because I thought maybe he did do something wrong. I know I had 

not done anything wrong, but I thought maybe this good gentleman 

had actually done something wrong, and at first, I backed away 

from even wanting to talk to him. And now, I am a little bit 

ashamed of it, because people did the same thing to me. 

Our family has been in a battle with NOAA law enforcement for 

close to 10 years now. Ten years of my life, fighting with them. And 

what did I do wrong? Nothing. I stuck up for my rights. We as a 

community stuck up for our rights, and we fought, and we did not 

fight just to be right. We fought for justice. We wanted to know 

what we were doing was the right thing. 

We would ask for help from NOAA and we would get ridiculed. 

And when we stuck up for our rights and won a case in our instance, more pressure was put upon us. We were abused. We all 

were abused. And this is not something you kind of get pushed 

around a little bit by a bully next door and you grow up and you 

are able to push him back. We are talking about the U.S. Government, a branch of the government. NOAA, an agency that has law 

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enforcement agents that carry guns. We are dealing with fish, 

folks. We are dealing with seafood. 

Laws have to be upheld, but do you know what also has to be 

upheld? Our rights as people, not just as people of the United 

States, how about our human rights? We were ridiculed so much, 

our family did not want to come to work every day. My mother 

would sit in the car literally at 70-odd years of age and wonder if 

she can get through the day, because we know the presence of law 

enforcement was going to make us sick. The pressure to make a 

mistake within a quarter-of-an-inch of a fish size—and by the way, 

we handle millions of fish a day—could possibly put us out of business. 

My father said to the Special Master before he left, he said, 

‘‘Your Honor, can I see you just for a moment? Can you talk privately?’’ I did not even know he said this until recently. He said 

to him that he was sorry he lived long enough to see a United 

States agency such as NOAA do this to his family. That is what 

they have done to us. 

We have just tried to make a living in this community, in our 

community. Yes, we have been looked at as second-class citizens 

and we do not want to be that. We want to be people’s equal. And 

still today, we are fighting, and maybe we can get into that a little 

bit later. But I have still attorneys hired, still fighting for my 

rights and the rights of other fishermen here in our community. 

We are fighting for attorney fees. We are fighting for the possibility 

of damages. And in my case, I still have permit sanctions against 

me. I am still fighting to keep our business open, and why? 

People like Larry Yacubian, a lot of small family businesses that 

unload at our facility and operate in Gloucester, are not being 

thanked for opening up the eyes of NOAA to what was wrong. We 

are being apologized to and they are shutting the door on us. They 

do not want to make up for what they have done wrong to the fishermen. They do not want anything to do with making them whole 

again and making them feel a part of their communities again. 

They do not want to help hold their heads up again. They would 

rather it just go away. 

Well, folks, we are not going to go away. And we are not fighting 

to win. We are fighting for justice, and we will not stop until we 

get it. That does not mean that I am going to be around to see it. 

It does not mean that my business will not fail because of it. But 

there are a lot of hard things in this world that we have to make 

decisions about and this is one that I have made. I am going to see 

this through to the end, until some justice comes of it and good 

people like Larry Yacubian are actually made whole again. 

Thank you. 

Senator CARPER. Thank you very much for that statement. 

Mr. Ouellette, you have 5 minutes, please. 

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1The prepared statement of Mr. Ouellette appears in the appendix on page 83. 

STATEMENT OF STEPHAN M. OUELLETTE,1 ATTORNEY AT 

LAW, OUELLETTE AND SMITH 

Mr. OUELLETTE. Yes. Chairman, Senator Brown, thank you very 

much for having me here. As a resident of a coastal community, living around fishermen and for the last 15 years of my professional 

practice having had the honor, and I call it a distinct honor, of representing fishermen, boat owners, and working within this fishing 

community, I have become acutely aware of problems within NOAA 

and its management of both the fisheries and of the men and 

women involved in this industry. 

NOAA law enforcement, which I have been heavily involved with 

for the last 15 years, began to develop very disturbing characteristics in the mid-1990’s, leading many of us to begin complaining to 

NOAA and eventually to our Congressman about how fisherman 

were being treated and how fines and penalties were being dramatically increased. At that point in time, initial attempts to determine what was going on with the Asset Forfeiture Fund were met 

with bills to the FOIA account of $10,000 to $15,000, which at that 

point nobody had money to pay. So we are very gratified, but at 

the same time exceptionally disturbed to see where all of the 

money taken from hard-working fishermen over the last 15 years 

has gone, to the extent that it can be accounted for. 

One might say that in the last 15 years, we have seen a different 

type of over-fishing, over-fishing by NOAA law enforcement. In the 

late 1980’s and early 1990’s, there were some significant violations 

which occurred. NOAA law enforcement dealt with them. But as 

we saw the number of fishermen diminish, the number of time 

spent on the sea decrease, and new enforcement measures like vessel tracking systems come online, the number of serious violations 

all but disappeared. There were a few, but now it seemed that 

NOAA law enforcement had to concentrate on the small fish and 

we started to see an increasing number of fines for routine violations like late log books, like misunderstanding of a complex regulation. So as we began to say, we had too many law enforcers chasing too few fishermen. 

We see that even today under the Joint Enforcement Agreements, which as I understand are funded out of the Asset Forfeiture Fund, there are large amounts being given to State enforcement agencies to chase our fishermen. For example, as related in 

my written testimony, one of our local fishermen was boarded 30 

out of 45 days—30 out of 45 days—a two to 21⁄2 hour boarding each 

time, to determine whether or not he was in violation of regulations. They found no violations. 

The local enforcement officer was exceptionally polite, and when 

later on I asked him about it, he said, ‘‘Well, we have so much Federal funding under the Joint Enforcement Agreement that I have 

to board a boat every day, and he is the only Federal vessel fishing 

out of a port within 10 miles of my office and I am obligated to continue boarding him.’’ 

Similarly, one dealer in Boston has complained that for as long 

as 90 days in a row at a time, he has two full-time environmental 

police officers sitting outside his door. They are very polite, but 

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they get in the way and they make mistakes and they spend a lot 

of time backtracking to figure out what is going on. 

Good enforcement is essential to the success of any regulatory 

program. I think somebody in Washington put it well. Without enforcement, regulations are nothing more than suggestions. But we 

have to have reasonable, rational enforcement and it should not be 

self-perpetuating. It should not exist for its own purpose, to fund 

itself and build a larger and larger system. 

And I will quickly alert you to a problem that we have seen developing up and down the East Coast. Suddenly, we have all of 

these criminal law enforcement agents who now are finding new 

and unique ways to bring cases to U.S. Attorneys to prosecute U.S. 

fishermen for what under Magnuson-Stevens are supposed to be 

civil violations. 

It is a greater problem than law enforcement and the Asset Forfeiture Fund. Despite what Mr. Schwaab said earlier, we are investing $50 million to implement a catch system in a fishery that 

is grossing about $100 million a year. That fishery is landing less 

than 30 percent of what the scientists say we should be landing. 

We are falling abysmally short. Literally a half-billion dollars in 

landings in the New England area alone are being lost due to mismanagement by this agency, fish their scientists say we can and 

should be landing. This may not be strictly accountability as to how 

they are spending the money, although I submit that $50 million 

on a catch-share program in a small fishery like this is a total 

waste of money. But we are losing a half-billion dollars a year in 

landings, $2 billion a year in economic activities, and tens of thousands of jobs. 

Congress needs to understand what NOAA is really spending 

this money for, because we have the most expensive aquarium in 

the world off our shores right now and it needs to be harvested. 

Thank you. 

Senator CARPER. Mr. Ouellette, thank you very much for being 

with us and for your testimony. 

Next, Mr. Giacalone. Please proceed. Five minutes, please. 

STATEMENT OF VITO GIACALONE, CHAIRMAN, NORTHEAST 

SEAFOOD COALITION 

Mr. GIACALONE. Thank you, Senator. Mr. Chairman, Members of 

the Subcommittee, thank you for this opportunity to testify before 

your Subcommittee. As an active fisherman and Policy Director for 

the Northeast Seafood Coalition, I have been deeply involved in the 

process of development and implementation of fisheries management frameworks and amendments affecting the Northeast multispecies fisheries since 2001. Recognizing that the list of witnesses 

testifying before you today includes two gentlemen who have endured tremendous personal and business stresses as a result of 

their experiences with fisheries enforcement in the Northeast region, I thought I would focus my testimony on another issue that 

may be of interest to you and within the influence of your Subcommittee. 

Most recently, our fishery has made a profound transition from 

an effort-controlled management system to a catch-based system of 

harvesting cooperatives called sectors. The Northeast Seafood CoaH605-41331-79W7 with DISTILLER

39 

lition is the sponsor of 12 of the 17 sectors in operation, with over 

300 active vessels as members, operating in ports from Maine to 

New York. 

While the NSC is now both deeply invested and committed to 

making the existing sector system work as well as to seeking future improvements, sector-based management was not the preferred choice of the Northeast Seafood Coalition, nor were a number of key aspects of the current system. However, NSC could not 

ignore the reality that this was the direction that the New England 

Fisheries Management Council and the National Marine Fisheries 

Service were taking. This direction was further reinforced when the 

newly appointed NOAA Administrator attended a Council meeting 

to not only give a strong directive for the Council to complete and 

implement the sector system, but also to announce a NOAA commitment of at least $16 million to do so. 

For whatever reasons, the millions of dollars of NOAA funds 

committed to implement the new system remained largely with the 

government agency, even though it was abundantly clear that it 

was the fishing industry that was to be burdened with unprecedented burdens for the costs and development of the new policies, 

data collection and processing infrastructures that did not yet even 

exist, as well as the daily management of the fishery, once implemented. 

This latest round of top-down Federal policy has produced a profound shift of management, data collection, data processing, and 

enforcement burdens for the National Marine Fisheries service to 

the fishing industry. The monitoring requirements of the new management system, as adopted by the New England Fisheries Management Council and approved by the Secretary, will shift the entire cost of monitoring the fishery onto the fishing industry, beginning next year. This will certainly cause this complex and cumbersome system to collapse under its own weight, along with the 

industry now dependent upon it. 

Currently, the at-sea and dockside monitoring programs are 

being underwritten by NOAA funding, but these are annual allotments that are beholden to NOAA fiscal funding availability and 

cannot be depended upon in future years. It should be known that 

these monitoring programs are essentially functioning as thirdparty private sector enforcement. The combination of this newly 

implemented fisheries monitoring system—now virtually 100 percent of trips are monitored by third-party NOAA-certified contractors, either at sea or dockside, as compared to 3 to 5 percent prior 

to the sector system. The elimination of most all daily and trip possession limits and the contractual obligations, professional sector 

managers, and joint liabilities associated with sector operations has 

substantially reduced the role of NOAA enforcement in the Northeast groundfish fishery. 

Our industry cannot survive without a secure and long-term 

funding commitment to meet government-imposed monitoring and 

management requirements. Given the millions of dollars that have 

already been committed within the NOAA budget to implement 

these new management strategies, it is our hope that a thorough 

review of government limitations on providing funding to the fishing industry to meet these requirements be conducted to determine 

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1The prepared statement of Mr. Rothschild appears in the appendix on page 98. 

the real and/or perceived limitations on doing so. It is our hope 

that all potential sources of funding, including the Asset Forfeiture 

Fund, be considered for direct industry assistance. 

I want to take this opportunity to personally thank you, Senator 

Brown, for your leadership and continued support for our industry 

in Massachusetts and New England. I also want to thank the 

Members and staffers of this Subcommittee for coming to Boston 

and giving us this opportunity to give you our perspectives. I would 

be happy to answer any questions afterward. 

Senator CARPER. Thanks. 

Dr. Rothschild, would you please. 

STATEMENT OF BRIAN J. ROTHSCHILD, PH.D.,1 MONTGOMERY 

CHARTER PROFESSOR OF MARINE SCIENCE AND TECHNOLOGY, UNIVERSITY OF MASSACHUSETTS-DARTMOUTH 

Mr. ROTHSCHILD. I will be very brief. I have been asked to address how NOAA’s National Marine Fisheries Service is handling 

money allocated to assist New England fishermen transition to a 

new catch-share fishery management system. 

We are 1 year into the implementation of catch-shares, yet we 

do not have a careful analysis of what the catch-share system costs, 

how it is performing regarding producing food for the Nation, 

whether it is sustaining economic wealth, and whether it is maintaining jobs in the fishing industry. We were provided with revenue 

statistics, but these are virtually meaningless because there are no 

data costs. 

In terms of production of food for the Nation, the catch-share system did no better than the days at sea system. From the point of 

cost effectiveness, it was worse because the catch-share system is 

costing roughly a nominal of $30 million more to manage than the 

days at sea system. This involves a tripling of observer costs, a 

quintupling of permit bank subsidies, and also large increases in 

enforcement, all for the same quantity of fish. Failure to monitor 

the economic progress of the catch-share system is not only bad 

public policy, it flouts the intent of Congress because taking an account of economic and social impacts is required by National 

Standard 8 of the Magnuson-Stevens Act. 

In looking at the costs of management, we need to factor in the 

costs of gross under-fishing. Regulations promulgated by the agency under the catch-share system do not account for the mixed-species nature of the fishery and have resulted in hundreds of millions 

of dollars in waste. Instead of landing 95,000 tons of fish last year, 

as deemed possible by NOAA’s scientists, regulations caused the 

catch to amount to only 33,000 tons. This is a waste of 62,000 tons 

of fish, which has a value of $200 million at the dock and $800 million by the time it reaches the consumer. So catch-share implementation has not only flouted the intent of Congress with respect to 

National Standard 8, it has also flouted the intent of Congress with 

respect to National Standard 1, which says that fisheries management shall produce optimum yield. 

These are only a few examples drawn from many, a whole tapestry of issues and problems. But they do suggest that we could do 

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a better job of handling money. We could also implement programs 

that are more consonant with the intent of Congress. 

To do this, and this is what we need to do moving forward, we 

need a blueprint. We need a time-phased action plan focused on addressing shortfalls in fishery management. This plan needs to be 

developed with the buy-in of those that are most affected, the fishing industry. In my written testimony, I outline the issues in much 

more detail and make suggestions for, one, an ad hoc Fishery Management Commission to facilitate the action plan, and two, a National Fisheries Board to reinstitutionalize accountability in the 

agency, which other witnesses have pointed out has been going on 

for a long time. 

Thank you very much. 

Senator CARPER. Gentlemen, thank you all very much. 

Senator Brown may have a question or two. Please proceed. 

Senator BROWN. Thank you, Mr. Chairman. 

Mr. Yacubian, thanks for your story. Actually, I was disturbed by 

the Dan Rather report and hearing what happened to you. I note 

your son is here. He is an Afghanistan and Iraq veteran, is that 

true? 

Mr. YACUBIAN. Yes, sir. 

Senator BROWN. Well, thank you for that service and thanks for 

coming. 

Based on some of your testimony, you criticized but you also 

praised and you indicated that certain things are being done. In 

your estimation, are the actions that have been taken in the last 

year, are they leading you to have some hope for the changes and 

reestablishing that trust between the fishermen and the governmental agency? 

Mr. YACUBIAN. Yes, Senator. I was in Washington in September 

and I met with Secretary Locke and he said to me, ‘‘I was not here 

when this was going on,’’ but, he said, ‘‘it will end on my watch,’’ 

and I believed him, and I think there have been some stops and 

starts, but I think they have made a good effort to do this. And I 

never thought that I would get a personal letter from Secretary 

Locke and—— 

Senator BROWN. And a check. 

Mr. YACUBIAN. And a check. And a lot of people think that was 

a big check, but that check did not even—— 

Senator BROWN. It did not cover the attorneys’ fees and all the 

other stuff. Right. 

Mr. YACUBIAN. But it bothers me that the people who were described by Special Master Swartwood, who is a truly amazing man, 

that there were a lot of things done that were not correct. 

Senator BROWN. Right. 

Mr. YACUBIAN. They are still working today. 

Senator BROWN. Yes. 

Mr. YACUBIAN. Their positions may have been changed, but they 

are still there. 

Senator BROWN. Just so you know, we are aware of that. That 

is another committee and another hearing. We are addressing that. 

We will talk offline. 

H605-41331-79W7 with DISTILLER

42 

But, Mr. Ciulla, I know we have met and we have spoken. I visited your facility. In the last year only, have you noted some positive steps to resolving these issues? 

Mr. CIULLA. There have been steps. They appear to be positive. 

Senator BROWN. And, Mr. Chairman, just for the record, I will 

have questions. I know we are under some time and pressure. I 

have some questions I will be directing directly to the panel and 

I would hope that you will take the time to answer them because 

they are very helpful. 

Mr. Ouellette, with the number of fishermen and vessels decreasing in New England—you noted that in your testimony—and the 

administrative burden of compliance with the government’s new 

regulatory scheme increasing, would it be a better use of the AFF 

funds to direct some of these funds toward alleviating the cost of 

compliance for fishermen, for example, directing some AFF funds 

toward aiding with the cost of at-sea observers or shoreside monitoring? The reason I ask is that I have a piece of legislation I am 

working on. You heard Congressman Tierney noting very similar 

pieces of legislation, because you also noted that is going to be 

borne by the fishermen fairly soon. What are your thoughts on 

that? 

Mr. OUELLETTE. Yes, Senator. Obviously, as the regulatory burden has increased, fishermen have had more difficulty complying. 

There has really been little outreach or attempt to help people stay 

in compliance, and certainly costs of compliance have gone up with 

things like observer costs. So it would seem quite appropriate to 

take money that is being assessed against fishermen who commit 

more serious violations and use it to help the honest people avoid 

making honest mistakes with often crippling results. 

Senator BROWN. Is there an opportunity—I know in some agencies in years past, if you had a problem, you had a question, you 

say, ‘‘hey, excuse me,’’ call them up, have them come down to the 

boat, have them work on things together. Is that the attitude now 

after we brought it to everybody’s attention? Is that happening or 

not? 

Mr. OUELLETTE. The short answer is the agency—and I am critical of the agency on many levels, but I have to say that the standard people who answer the phone and try to deal with these issues 

and work in the permit office and interact with fishermen do try 

their hardest to get the job done, and I do not mean to be overtly 

critical of everybody within the agency. 

But in terms of getting somebody to come down and assist you 

on a routine matter on a boat, most fishermen are still reluctant 

to do it because the agency has, over the last 15 years, changed. 

In 1994, if you had a problem, law enforcement would come down 

and then an agent would look at it and say, ‘‘Geez, you made a mistake here. You had better do this and correct it.’’ 

Today, the fear—at least last year and probably today, the fear 

is that an agent will come down and look at you and say, ‘‘Yes, you 

are right. You have it wrong, and I am going to look through your 

log books and I am going have to charge you for every violation and 

we are going to send it up to the Office of General Counsel and you 

will see a half-million-dollar fine issued.’’ So most fishermen are 

not out there—they are very reluctant to raise potential—— 

H605-41331-79W7 with DISTILLER

43 

Senator BROWN. Out of sight, out of mind—— 

Mr. OUELLETTE [continuing]. Concerns that may result in prosecutions, yes, 

Senator BROWN. Dr. Rothschild, I note that we spoke earlier and 

we have met many times. You helped draft the Magnuson-Stevens 

Act. My question is, when you are talking about taxpayer dollars 

and the use of the money from the fund, was it your opinion when 

you helped write it that they were able to use—and you have noted 

some of the trips and all these things—was it your opinion when 

you wrote it so that they were able to do those sorts of things? 

Mr. ROTHSCHILD. Well, I remember very clearly when we 

launched the implementation of the Act, Senator Magnuson was 

there and he said, ‘‘At last, we have a system where the folks in 

the fishing industry have some say in their future and the conservation of the fish.’’ So I would say that, looking at this boat, it 

is probably headed on a different course. By the way, I always 

wanted to see a picture of the boat. 

Senator BROWN. There it is. [Laughter.] 

And as I noted, Mr. Chairman, I have other questions, and I 

know we have to get back to Washington, but I do have a question 

for Mr. Giacalone. As an active fisherman, could you describe for 

us in Washington your perspective on how the new regulations affect you? And the reason I ask that is because we are facing an 

enormous amount of national debt. Are we using the taxpayer dollars effectively and efficiently at this point, in your estimation? 

Senator CARPER. And I am going to ask you just to summarize 

briefly, if you would, please. Thank you. 

Mr. GIACALONE. Sure. I think if we could, as I said in the testimony, if we could figure out a way to relieve some of the limitations that appear to be either perceived or regulatory blocks that 

are keeping a lot of the funds that were committed to make this 

system work actually get to the private sector, which is where most 

of the new requirements were placed, if we were able to do that, 

then I think we could make excellent use of the funds. But right 

now, I would say not. I would say there has been an awful lot of 

money committed that is being parked in the agency for the agency 

to do new things, but not entirely different than what they have 

done before, and very little money going to the private sector, 

where they have an enormous new set of burdens to deal with— 

daily reporting now, then weekly reporting that needs to be submitted. Thank God, right now, they are not enforcing these things 

to the level that they were when, as Mr. Steve Ouellette had just 

talked about, because it is almost impossible right now for the complex set-up that was put in the new regulations, for everyone to be 

in strict compliance. So it is really sort of ironic that we knew we 

had these difficulties before and then we raised the bar exponentially higher. 

Senator BROWN. Thank you. 

Senator CARPER. I am going to ask Senator Brown if you would 

just give a short closing statement. I will do that, and then we will 

call it a day. 

Senator BROWN. Thank you, and I have a whole host of other 

questions. I know that the time on your end, we went a little 

longer on the first panel, and as I said, we do need to get back. 

H605-41331-79W7 with DISTILLER

44 

But I want to just thank IG Zinser for doing his job. It is a tough 

job. And it is good to see many of my friends and colleagues here, 

Mayor Kirk, Mayor Lang, Senator Tarr, Representative Ferrante, 

everybody doing a good job getting the word out outside the fishing 

community. It is very important to note what is going on so people 

can understand and not just have one opinion. 

So your fight is our fight and I plan to be here as long as I am 

on this job, doing what we are doing to bring it to the attention 

so we can use those taxpayers’ dollars wisely. As Senator Carper 

always says, we need to find a way to do it better. So I appreciate 

you all taking the time. 

Senator, I want to thank you for your courtesy in holding this 

hearing and look forward to our many other hearings in the Senate. 

Senator CARPER. All right. Thank you so much. Thanks again for 

inviting us to come and helping us put a spotlight on what has 

been a sad history, a sad past, one that is being addressed in ways 

that I am encouraged about, but is a work in progress. 

I said at the beginning of our hearing that there were some who 

question whether or not we should be holding a hearing about a 

NOAA program, and I thought that was a pretty good question. My 

response was that the issue of financial mismanagement is one 

that is found throughout the Federal Government. Frankly, it is 

found throughout large organizations, businesses as well as governments, and all of us, and particularly those who are stewards and 

enjoy the trust of those that we represent, we have an obligation 

to try to do something about mismanagement of the finances for 

our country. 

But I want to reiterate again that the point of this hearing has 

not been, as I said earlier, to adjudicate the laws of the ocean or 

describe what is right or wrong with how NOAA polices our fisheries. Those issues are the jurisdiction of the Senate Commerce 

Committee, and you have from this State, a very senior member of 

that committee who I think understands these issues far better 

than I ever will, and I believe I have heard from witnesses here 

and talked to others who suggest that he has not been quiet about 

trying to make sure that the right thing is done. 

What we are concerned about is trying to ensure that the monies 

collected and spent by NOAA are managed effectively and in accordance with the law. And as I said earlier, it is not a hearing 

about fisheries management. This is a hearing about sound financial management. 

The point that I sort of walk away from here—that was just a 

reminder, and Senator Brown and I both mentioned the word 

‘‘trust’’ several times. In order for us—one of the reasons why we 

do not get more done in Washington these days is because of a lack 

of trust, across party lines, across the aisle. And to the extent that 

we can bridge those differences and rebuild the trust that used to 

be rather routine when Senator Kennedy was a pup down there 

and knew members—in fact, for decades, the kind of trust that existed, and we need to rebuild that. 

There has been trust understandably missing here between the 

fishing community and NOAA for a number of years. Our witnesses have mentioned apologies made by the Secretary of ComH605-41331-79W7 with DISTILLER

45 

merce. To the extent that the Federal Government has not been 

diligent for years—for years—in making sure that we do the right 

thing in this regard, has been delinquent in not abiding by what 

I call the Cliff Notes of the New Testament—that is the Golden 

Rule, and treat other people the way we want to be treated—to the 

extent that we have not adhered to doing what is right and, frankly, treating other people the way that we want to be treated, I also 

would apologize on behalf of our colleagues in the Senate. 

Having said that, you have somebody’s attention, and not just 

anybody’s attention. We are moving in the right direction. As a 

Federal Government, we are moving in the right direction. And the 

key is not to stop that movement. We want to continue to move in 

the right direction and to—we do not go away in our Subcommittee. We are not small—we are not large, rather, but we are 

pretty diligent. We are diligent and we are not going to go away 

on this, either. 

My hope is, out of our efforts, our collective efforts, that sense 

of trust will be restored and not only will that be restored, but so 

can the fisheries which a lot of people depend on for their livelihood. 

Thank you, and with that having been said, we will have 2 

weeks that myself, Senator Brown, and other Members of our Subcommittee may offer additional questions of you, and we would just 

ask, if we do that, that you respond to those questions. 

With that, thank you all for joining us and thank you for the hospitality at this hearing. Thank you. 

[Whereupon, at 12:24 p.m., the Subcommittee was adjourned.] 

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