Table Of Content

ECONOMIC IMPACT OF THE WHITING ALLOCATION ON OREGON COASTAL COMMUNITIES 4.SM 1:103-24 f cononic Inpact of the Uhiting Alio... HEARING BEFORE THE SUBCOMMITTEE ON REGULATION, BUSINESS OPPORTUNITIES, AND TECHNOLOGY OF THE COMMITTEE ON SMALL BUSENESS HOUSE OF REPRESENTATR^S ONE HUNDRED THIRD CONGRESS FIRST SESSION NEWPORT, OR, JUNE 4, 1993 Printed for the use of the Committee on Sma'' Business Serial No. 103-24 '^i"it^U'^**,„, ««;, "?^1^'V U.S. GOVERNMENT PRINTING OFFICE 69-595t» WASHINGTON : 1993 ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402 ISBN 0-16-041660-4 ECONOMIC IMPACT OF THE WHITING ALLOCATION ON OREGON COASTAL COMMUNITIES SM 1:103-24 nic Inpact of the Hhiting Alio... HEARING BEFORE THE SUBCOMMITTEE ON REGULATION, BUSINESS OPPORTUNITIES, AND TECHNOLOGY OF THE COMMITTEE ON SMALL BUSEO]SS HOUSE OF REPRESENTATIVES ONE HUNDRED THIRD CONGRESS FIRST SESSION NEWPORT, OR, JUNE 4, 1993 Printed for the use of the Committee on Sma]' Business Serial No. 103-24 U.S. GOVERNMENT PRINTING OFFICE 69-595±i WASHINGTON : 1993 ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments.CongressionalSalesOffice,Washington,DC 20402 ISBN 0-16-041660-4 COMMITTEE ON SMALL BUSINESS JOHN J. LaFALCE, New York, Chairman NEAL SMITH, Iowa JAN MEYERS, Kansas IKE SKELTON, Missouri LARRY COMBEST, Texas ROMANO L. MAZZOLI, Kentucky RICHARD H. BAKER, Louisiana RON WYDEN, Oregon JOEL HEFLEY, Colorado NORMAN SISISKY, Virginia RONALD K. MACHTLEY, Rhode Island JOHN CONYERS, Jr., Michigan JIM RAMSTAD, Minnesota JAMES H. BILBRAY, Nevada SAM JOHNSON, Texas KWEISI MFUME, Maryland WILLIAM H. ZELIFF, Jr., New Hampshire FLOYD H. FLAKE, New York MICHAEL A. "MAC" COLLINS, Georgia BILL SARPALIUS, Texas SCOTT McINNIS, Colorado GLENN POSHARD, Illinois MICHAEL HUFFINGTON, California EVA M. CLAYTON, North Carolina JAMES M. TALENT, Missouri MARTIN T. MEEHAN, Massachusetts JOE KNOLLENBERG, Michigan PAT DANNER, Missouri JAY DICKEY, Arkansas TED STRICKLAND, Ohio JAY KIM, California NYDIA M. VELAZQUEZ, New York DONALD A. MANZULLO, Illinois CLEO FIELDS, Louisiana PETER G. TORKILDSEN, Massachusetts MARJORIE MARGOLIES-MEZVINSKY, ROB PORTMAN, Ohio Pennsylvania WALTER R. TUCKER III, California RON KLINK, Pennsylvania LUCILLE ROYBAL-ALLARD, California EARL F. HILLIARD, Alabama H. MARTIN LANCASTER, North Carolina THOMAS H. ANDREWS, Maine MAXINE WATERS, California Jeanne M. Roslanowick, StaffDirector Stephen P. Lynch, Minority StaffDirector Subcommittee on Regulation, Business Opportunities, and Technology RON WYDEN, Oregon, Chairman IKE SKELTON, Missouri LARRY COMBEST, Texas TED STRICKLAND, Ohio SAM JOHNSON, Texas THOMAS H. ANDREWS, Maine JAY DICKEY, Arkansas NORMAN SISISKY, Virginia JAY KIM, California JAMES H. BILBRAY, Nevada PETER G. TORKILDSEN, Massachusetts FLOYD H. FLAKE, New York MICHAEL HUEHNGTON, California MARTIN T. MEEHAN, Massachusetts WALTER R. TUCKER III, California Steve Jenning, Subcommittee StaffDirector Robert Lehman, Minority Subcommittee Professional StaffMember (II) CONTENTS Page HearingheldonJune4, 1993 1 WITNESSES Friday, June 4, 1993 Andrews, Bruce, director, Oregon DepartmentofAgriculture 6 Bates, Jerry, president, Depoe Bay FishCo., Inc 44 Blum,Joseph R., onbehalfofAmerican FactoryTrawler Association 14 CBooehnaennn,onN,eaFlr,anmkarB.i,nefisPhreorgmraanm manager, Oregon Department of Fi;sh and 42 Wildlife 46 Duncan, David, Trawler owner/operator, and member, Pacific Fi:shery Man- agementCouncil 38 Easley, Joe, administrator, Oregon Trawl Commission 13 Fisher, R. Barry, president, Yankee Fisheries and Midwater Trawlers Cooper- ative 36 Johnson, Jay S., Deputy General Counsel for Fisheries, Enforcement, and Regions, National Oceanic and Atmospheric Administration, U.S. Depart- mentofCommerce 25 Libby, Tom, general manager, PointAdamsPackingCo 40 Rasmussen, Jay L., director, Oregon Coastal Zone Management Association 11 Rijken, Hon. HedyL., Oregon State representative 4 Sylvia, Gilbert, marine resourceeconomist, Hatfield Marine ScienceCenter 48 Warrens, Frank, Pacific Fisheries Management Council 9 APPENDIX Letters submitted forthe record: Bioproducts, RussFarmer, manager, withattachments 183 Letters to PresidentClinton 184 Center for Marine Conservation, David Allison, fisheries conservation director 186 Motion Industries, Inc., MichaelJ. Farmer,branch manager 188 Price, E.R 189 Price, Steve 191 Sease, Norm 195 Willamette Industries, Inc, John Rodecap 196 Openingstatements: Wyden, Hon. Ron 52 Kopetski, Hon. Michael J 54 Prepared statements: Andrews, Bruce, with attachment 68 Roberts, Barbara, GovernorofOregon, letter 75 Bates, Jerry 160 Blum, Joseph R., with attachments 106 Responses tosubcommittee'squestions 116 Bohannon, FrankB., with attachments 148 Tables 157 Coenen, Neal, with attachments 164 Charts 166 Duncan, David, with attachments 136 Whitingcharts 140 Easley,Joe, with attachments 93 (III) IV Page — Prepared statements Continued — Easley, Joe, with attachments Continued Title III—National Fishery Management Program 98 Comprehensive Fishery ManagementGoals 99 Fisher, R. Barry 129 Johnson, Jay S., with,attachment 118 Whiting processors worksheet 128 Libby, Tom, with attachment 142 U.S. whitingquota chart 147 Rasmussen, Jay L 87 Rijken, Hon. HedyL., with attachments 58 Lettersto PresidentClinton and Representative Manton 60 Proposed Amendments to the Magnuson Fishery Conservation and Management Act 64 SenateJoint Memorial 21 66 Sylvia, Gilbert, with attachments 170 Charts 181 Statementssubmitted forthe record: Bunn, Hon. Stan, Oregon State senator 56 Pacific Fishery ManagementCouncil, with attachments 76 Correspondencebetween PFMC and U.S. DepartmentofCommerce.... 83 U.S. Department ofCommerce, memorandum for Rolland A. Schmitten from RichardH. Schaefer 197 — ECONOMIC IMPACT OF THE WHITING ALLOCA- TION ON OREGON COASTAL COMMUNITIES FRIDAY, JUNE 4, 1993 House of Representatives, Subcommittee on Regulation, Business Opportunities, and Technology, Committee on Small Business, Washington, DC. The subcommittee met, pursuant to notice, at 9:55 a.m., in OSU Mark O. Hatfield, Marine Science Center Auditorium, 2030 Marine Science Drive, Newport, OR, Hon. Ron Wyden (chairman of the subcommittee) presiding. Chairman Wyden. Let us bring the Small Business Subcommit- tee on Regulation, Business Opportunities, and Technology to order. It is a pleasure to convene here in Newport today at the request of my good friend, Mike Kopetski, in order to learn first hand the economic impact of the Whiting Allocation Decision on the Oregon coast and on this community specifically. We made a special effort to be here today, because the Small Business Subcommittee on Regulation and Business Opportunities wants to look closely at the impact this decision has had on a number of areas such as small business lending and catch allocation decisions where the Federal Government is directly involved. For example, at this time, there are more than 40 Small Busi- ness Administration loans directly related to the fishing industry on the Oregon coast which are at risk because of the whiting decision. In addition to those 40 direct loans, the subcommittee's in- quiry into this issue found that in Clatsop, Tillamook, and Lincoln Counties alone, there are an additional 80 SBA—loans supporting a variety of secondary and support businesses such as hardware shops, boat repair yards, restaurants, and other small enterprises that directly and indirectly owe their survival to the onshore fishing industry. So, it's fair to say that already the Federal Government, consid- ering the extent of these SBA loans, has tens of millions of dollars that are at risk because of the Pacific Whiting Decision. My con- cern is that unless this matter is dealt with properly, ifthose loans fail, if those loans wash up onshore, they are going to take a lot of other businesses with them, and that is something that Congress- man Kopetski and I simply are not willing to accept. There are two public policy questions that I have a special interest in examining today. First, I am particularly concerned about (1) what appears to be a growing trend by the Federal Department of Commerce to simply ignore or, I think it would be fair to say, flout the decisions that are coming out ofthe regional bodies, specifically the Pacific Fishery Management Council. We are seeing a pattern where, in effect, there is a great effort to involve local citizens, local communities, those most directly affected by the decision being made, and then the Commerce Department, in a fashion that, at best, seems arbitrary and using a seat of the pants kind of process, sets aside the decision of regional bodies. If that is, in fact, the case, at some point people are going to say, what is the use of trying to bring a regional focus and local input, if Washington, DC is just going to take it away from us and make these judgments on a political basis. The second and last point that concerns me is that, as the subcommittee looks at the regulatory framework in which the fishing industry operates today, it appears to me that more and more of the regulations are being skewed to favor the big businesses. Ifyou look at the regulatory system, it appears that the new regulations consistently seem to focus on the arguments that have been made by the large businesses and give short shrift to the many small businesses that tend to predominate on the Oregon coast. This subcommittee exists to advocate for small business. We want small business to get a fair shake. It seems to me that there needs to be more balance, and there needs to be a sense of proportion brought back into the regulatory process so that these regulations are no longer skewed in favor of big business, but are bal- anced between the needs of both small and large businesses. This way, the small businesses that Congressman Kopetski and I saw first-hand this morning will get a fair shake. So, this will be the end of the Chair's opening statement. Again, I want to commend our friend. Congressman Kopetski, for his good work, for getting us here today, and for all the leadership he has shown. [Chairman Wyden's statement may be found in the appendix.] Mr. Kopetski. Thank you, Mr. Chairman, and welcome to New- port and to Lincoln County. I want to thank you for taking the time and effort to hold this hearing here in Newport today. As you can see, before us is an issue of great importance and interest to many people on the Oregon coast. We deeply appreciate your willingness to take time from your busy schedule and to bring your subcommittee out of your district to the coast of Oregon. Truly, you are an Oregon Rep- resentative, and we appreciate that. Today, we will be hearing from many of the key players in the development of the onshore whiting fishery in Oregon. I am especially pleased to see that Barry Fisher, president of the Midwater Trawlers Association, will be testifying today. Barry, arguably the grandfather of whiting fishery in Oregon, has spent many hours with me and my staffgetting this formerly landlocked legislator up to speed on the issues affecting Oregon's coastal fishermen. I am also grateful that other members of the coastal fishing community are able to attend. Similarly, I am happy to see the State ofOregon and fisheries associations and commissions well represented at this hearing. Over the years, our State government, especially through the leadership of Bruce Andrews, the director of the State Department of Agriculture, has been involved in an intensive effort to develop the shore-site processing industry, investing both money and time to develop better ways of more efficiently utilizing this whiting resource. I would also like to thank the representatives of the offshore processing industry for being here today. It may come as a surprise to some that I am not against factory trawlers entirely. I simply believe the council process was fair, given the history ofthe factory trawler fleet in the whiting industry, and that this sector should contribute to the wellbeing ofthe fishery in proportion to the bene- fits they receive. As you may know, I recently introduced legislation, H.R. 2274, the Factory Trawler Equitable Tax Act, to impose an excise tax on the offshore processing of Pacific whiting. The legislation is straightforward. The amount of the tax per metric ton shall be 10 percent of the ex-vessel value of processed whiting, which is ap- proximately $7.70, or up to $8.80 per metric ton in today's market. Importantly, the bill directs that revenues collected from the tax be dedicated to Pacific whiting habitat restorations, restoration and rebuilding of fisheries and fishing stock, and by-catch gear selectiv- ity and reduction research in Oregon, Washington, and California. The Factory Trawler Equitable Tax Act attempts to make up for the competitive advantage that factory trawlers enjoy by not sig- nificantly contributing to State and local taxes in the Pacific Northwest, and the tax act provides revenues we need to research how to rebuild our fisheries industry here on land. These revenues will be dedicated to important management issues, such as the effect that Olympic and pulse-type fisheries have on the Pacific whiting resource, as well as issues of by-catch, including techniques to reduce tonnage and increase utilization of that by-catch. Finally, I would like to thank the Department of Commerce for sending a representative here today. Despite the events of the last several months, I remain confident that this administration strong- ly desires to do right by the people of Oregon and this important onshore industry. It is my goal today to help the administration begin to achieve that goal. Mr. Chairman, again, thank you for holding this hearing. In the interest of time, I would like my longer statement inserted in the record. [Mr. Kopetski's statement may be found in the appendix.] Chairman Wyden. Without objection, that will be so ordered, and thank you for your leadership and your excellent opening statement. Before we go further with our witnesses, I would like to note that this is the first congressional hearing to be held since the whiting decision came down, but I assure you, it will not be the last hearing on this topic. Our colleague, Congresswoman Elizabeth Furse, deserves considerable credit for the commitment she got from the Merchant Marine Committee, the full Merchant Marine Committee, to come to Oregon in August to again listen to the concerns of the Oregon coast. Between our two committees, the voice of the Oregon coast will be heard in Washington. So, we open today's hearing, the first on this issue, but certainly not to be the last. I would like to remind our witnesses that time is going to be ex- tremely short. We're going to put their prepared statements into the record in their entirety, but we are going to have to be draconi- an in terms of enforcing the 5-minute rule today, and I would like to ask all our witnesses at the outset if they have a watch or an eggbeater with them or something like that, we'll make sure they stay on time. Our first panel, the Honorable Hedy Rijken, State representative, and Bruce Andrews, the Oregon Department ofAgriculture. If you would come forward, we have a couple of formalities.. Ms. Rijken and Mr. Andrews, we welcome you. It has been the practice of this subcommittee to always swear the witnesses who come before the subcommittee. Do either of you have any objection to being sworn as a witness today? Ms. Rijken. No. Mr. Andrews. No. [Witnesses sworn.] Chairman Wyden. We welcome you both. Your prepared statements will be made a part of the record. Ms. Rijken, it is always a pleasure to see you and be able to work with you. Knowing ofall of the work that you have done on behalf of the coastal fishing industry, it's great to have your input. Please proceed. TESTIMONY OF HON. HEDY L. RIJKEN, OREGON STATE REPRESENTATIVE Ms. Rijken. Thank you. Chair Wyden and Congressman Ko- petski. I would also like to welcome you to Newport and the Cen- tral Oregon coast. We very much appreciate your time in coming down and listening to the concerns of the citizens who are very much involved in this situation. My name is Hedy Rijken, and I represent Oregon House District 4, which encompasses Lincoln County and parts of Tillamook and Lane Counties. It also includes Newport where we are meeting this morning. Before I begin my statement, I would like to say on behalf of Senator Stan Bunn who is also representing this area on the Senate side, that he has testimony which I have given to your staff. He would personally very much like to apologize for not being able to join us today. He is a member of the Pacific Fisheries Task Force which is meeting over these 3 days, and they are discussing, as a matter of fact, the whiting issue and several other fishing industry issues, and he again, apologizes for not being able to join us this morning. Chairman Wyden. We will put Senator Bunn's statement into the record at this point. [Mr. Bunn's statement may be found in the appendix.] Ms. Rijken. Thank you. As a coastal district, district 4 has felt first-hand the recent U.S. Department of Commerce decision allocating this season's whiting harvest. Over half of the entire Oregon trawler fleet that fishes for Pacific whiting is based right here in Newport. This Newport fleet