Table Of ContentECONOMIC IMPACT OF THE WHITING ALLOCATION
ON OREGON COASTAL COMMUNITIES
4.SM 1:103-24
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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
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U.S. GOVERNMENT PRINTING OFFICE
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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 alloca-
tion 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 deci-
sion. 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 fish-
ing 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 inter-
est 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 sub-
committee 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 propor-
tion brought back into the regulatory process so that these regula-
tions 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 espe-
cially 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 re-
source.
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 state-
ment. 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 con-
cerns 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 representa-
tive, 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 state-
ments 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 indus-
try, 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 in-
dustry 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
