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• Within the Magnuson framework, Congress should address the overcapitaliza- 

 tion of the U.S. fisheries. The Act currently prohibits the Secretary from designing 

 or initiating programs to limit access to U.S. fisheries through market based sys- 

 tems such as ITQs. As you know, the authority to prepare such measures resides 

 solely within the regional Councils. Unfortunately, the Councils have been slow to 

 pursue effort limitation schemes. In fact, the North Pacific Fisheries Management 

 Council (NPFMC) aggravated the problems of overcapitalization in the North Pacific 

 by spending three years developing a "shoreside preference" regulatory scheme. In- 

 stead of finding a way to reduce effort and increase economic efficiency, this plan 

 created two olympic-style fisheries where only one had previously existed, and 

 thereby encouraged capital expansion by the shore-side ana at-sea sectors, further 

 contributing to overcapitalization. 



If I may, Mr. Chairman, I'd like to briefly but more specifically address the sub- 

 ject of overcapitalization in our North Pacific fisheries — excess harvesting and proc- 

 essing capacity that results directly in substantial economic inefficiency. Under the 

 present Olympic or open access fishery, the groundfish fleet operates under an in- 

 dustry-wide annual quota. Each vessel seeks to catch as many fish as possible as 

 quickly as possible before the quota is reached. Consequently, those who employ the 

 most fishing effort during a compressed season are rewarded. It's an unsafe and in- 

 efficient system, one that places a premium on quantity, not quality. 



Oceantrawl believes that an Individual Transferable Quota (ITQ) Program would 

 help resolve problems caused by overcapitalization. Under an ITQ system, vessel op- 

 erators would not have to run a race to get their share of fish; safety at-sea would 

 most certainly be improved; and market factors such as demand, supply and price 

 could be used to determine a company's business and operational plans. To run a 

 business efficiently, one must have predictability. In the recent past, we have not 

 been able to make any predictions with regularity due to the nature of the Olympic 

 fishery system. ITQs would provide some of the certainty which is necessary for 

 sound business decisions. 



In keeping with the intent of the Magnuson Act, we believe ITQ allocations should 

 be given to those participants who have done the most to Americanize the ground- 

 fish fisheries in the North Pacific. A rational way to measure degrees of Americani- 

 zation would be to determine which participants have created and continue to create 

 the most value in a given fishery. For example, a value-added processing vessel cre- 

 ates more value from a metric ton of pollock than does a catcher vessel which sells 

 the same ton of pollock over-the-side to a foreign processor or a shore plant. By com- 

 bining harvesting and processing functions, catcher/processors truly fulfilled the 

 goals and principles of the Magnuson Act and merit appropriate consideration when 

 ITQs are determined. 



We believe that ITQs should be awarded only to active fishery participants. For 

 example, we would propose that, in order to receive an ITQ, a prospective partici- 

 pant must have fished during each of the three years immediately prior to the year 

 ITQs are awarded. Quite simply, ITQs should not be awarded to boats which no 

 longer make their livelihood in the fisheries. 



Finally, as most everyone knows, the groundfish industry is experiencing difficult 

 financial times, and we believe that further industry disruption should be avoided. 

 In this regard, we believe that currently active participants in a given fishery who 

 have invested years of hard work and equity and gained a certain measure of mar- 

 ket share have a right to expect to receive an ITQ allocation at least equal to the 

 market share that they have currently achieved in fair and open competition. 



This concludes my testimony, Mr. Chairman. Thank you for the opportunity to 

 testify. Mr. Morgan and I would be happy to answer any questions the Committee 

 may have. 



Prepared Statement of Trefon Angasan, Vice President of Corporate 

 Affairs, Bristol Bay Native Corp. 



My name is Trefon Angasan. I am a lifelong commercial fisherman in the Bristol 

 Bay fishery and currently serve on the State Board of Fisheries. I am also Vice 

 President of Corporate Affairs of the Bristol Bay Native Corporation. 



I am here today to urge that you support passage of the reauthorization of the 

 Magnuson Act. It is my position that the Magnuson Act has been a very effect 

 means of curtailing the interception of salmon on the high seas within the 200 mile 

 EEZ. 



For us, the most important issue in the prosecution of the bottom fishery is con- 

 servation. 



