Order Code RS21799 Updated May 26, 2004 CRS Report for Congress Received through the CRS Web Saltonstall-Kennedy Fishery Funding Eugene H. Buck Specialist in Natural Resources Policy Resources, Science, and Industry Division Summary The Saltonstall-Kennedy Act established a fund that, among other things, has supported fishery research and development projects, with funding awarded annually on a competitive basis. Recent congressional “earmarks” have preempted the competitive process for awarding funding for industry projects. This report will be updated as this issue evolves. The Saltonstall-Kennedy (S-K) Act, as amended (15 U.S.C. §713c-3), established a fund (known as the S-K Fund) that the Secretary of Commerce uses to finance projects and cooperative agreements for fishery research and development. Under this authority, projects or cooperative agreements are selected annually on a competitive basis to assist NOAA Fisheries (previously known as the National Marine Fisheries Service) in addressing concerns related to U.S. commercial and recreational fisheries. The S-K Fund is capitalized through annual transfers under a permanent appropriation to the Secretary of Commerce of 30% of the gross receipts collected by the Secretary of Agriculture under the customs laws on imports of fish and fish products.1 The objective of the S-K program is to address the needs of fishing communities in providing economic benefits for rebuilding and maintaining sustainable fisheries, and in dealing with the impacts of conservation and management measures.2 The S-K program has become very important in addressing issues of immediate concern to the commercial fishing industry, by producing many new gear innovations, markets, and management options. Issues addressed have included fish harvesting, seafood quality improvements, domestic and foreign market development, efficiency and productivity improvements, and the costs/profitability of potential fishing industry investments.3 1 Because of progressive reductions and eliminations of tariffs on edible fisheries products, most of these customs duties come from non-edible products, such as pearls, coral jewelry, etc. 2 U.S. Dept. of Commerce, National Marine Fisheries Service, The Saltonstall-Kennedy Grant Program: Fisheries Research and Development, Report 2003 (Aug. 1, 2003), p. 2. 3 U.S. General Accounting Office, Uses of Saltonstall/Kennedy Fisheries Development Funds, (continued...) Congressional Research Service ˜ The Library of Congress CRS-2 Customs receipts have increased substantially during the life of this program, with almost $80 million currently being transferred annually to the Secretary of Commerce. Table 1 summarizes program funding. In 1980, Congress enacted formal program authority to fund fishing industry development projects and expanded this authority in 1983, establishing a minimum percentage of S-K funds to be used to provide financial assistance to projects. The balance of S-K funds were to be used by the Secretary of Commerce for a national program of fisheries research and development to address aspects of U.S. fisheries not adequately addressed by funded industry projects. Beginning in FY1979, increasing amounts of S-K dollars have been transferred to the Department of Commerce’s National Oceanic and Atmospheric Administration’s (NOAA’s) Operations, Research, and Facilities (ORF) account, reducing the funds and percentage of funds available for fishing industry projects and the national program. Since FY1982, the S-K program has never allocated the minimum amount (50% after FY1980 and 60% after FY1983) specified by law for industry projects. For example, in FY2002, slightly more than $79.1 million in customs duty receipts were transferred to the Department of Commerce from the Department of Agriculture. Of this amount, P.L. 107-77 transferred $68 million to NOAA’s ORF account “for necessary expenses of activities authorized by law for the National Oceanic and Atmospheric Administration.”4 A total of slightly more than $11.1 million (14.1% of the customs receipts transferred to the Department of Commerce) remained for commercial fishing industry projects, the national program of fisheries research and development, and S-K program administration. In FY2004 appropriations (P.L. 108-199, 118 Stat. 73, §208 of “General Provisions — Department of Commerce”), congressional earmarks designated funds for specific activities outside the regular competitive award process, and the competitive program was cancelled for FY2004.5 A similar situation occurred in FY2003. Regardless of the merits of the activities funded through the congressional earmarks, some elements of the commercial fishing industry have expressed frustration when the competitive process is circumvented and projects are funded outside a competitive selection process.6 Since the S-K program requires no periodic reauthorization, no recent congressional oversight hearings have been held to review the department’s rationale for allocating S-K funds between industry projects and agency base funding; how specific project areas to be funded are selected; how this program is administered and at what cost; how the results of funded projects are reviewed, disseminated, and used; and to what extent the program continues to meet its statutory objectives. Additional questions include whether the S-K 3 (...continued) GAO/RCED0-85-145 (Washington, DC: Aug. 30,1985), p. ii. 4 115 Stat. 774-775. 5 In several earlier instances, congressional “soft” earmarks were specified in report language associated with annual appropriations. Although such language is not legally binding, NOAA followed the direction in making funds available noncompetitively for various specific projects. Examples include the Interstate Shellfish Sanitation Conference for an education program on naturally occurring Vibrio vulnificus in shellfish and the Alaska Fisheries Development Foundation for a report entitled An Ocean of Answers. 6 Discussions among commercial fishermen on the internet discussion group “Fishfolk” fishfolk@mitvma.mit.edu on Mar. 22-25, 2004. CRS-3 program might be considered a continuing subsidy for the commercial fishing industry, whether the funding of industry projects continues to be useful, how the utility of the S-K program authority may have changed over time, and whether critical research might be done by industry if it were not funded by the S-K program. Criticism of S-K program management generally comes from elements of the commercial fishing industry. Some critics of S-K Fund management question whether the administration of both regulation and research within the same agency raises questions about objectivity; they suggest that researchers might be hesitant to criticize the agency for its regulatory actions because they might lose access to future or continued project funding. Others suggest that the selection (i.e., restriction) of what types of projects will be funded also may administratively “earmark” funds, such as occurred in FY2003 when about half of all industry project funding ($5 million of an anticipated $10.3 million) was identified for direction to Atlantic salmon aquaculture development. Others suggest that the narrow agency identification of projects that would be funded in FY2003 actually prompted the subsequent congressional earmarks to specify projects that are to be funded. The following chronology presents the development of this program. Key references are identified in footnotes by links to where they may be viewed, with care taken to select those resources that may be least transient. Full citations are not provided to these footnoted documents because of the lengthy organizations and titles for them. Chronology 07/01/1954 — President Eisenhower signs the Saltonstall-Kennedy Act (68 Stat. 376; 15 U.S.C. §713c-3) into law. 06/15/1961 — Senate Commerce Subcommittee on Merchant Marine and Fisheries holds a hearing on fishery research and rehabilitation amendments to the S-K Act.7 10/01/1978 — NOAA’s National Marine Fisheries Service (NMFS) begins receiving S-K dollars as annual budgetary transfers to NOAA’s Operations, Research, and Facilities account. 12/22/1980 — Section 210 of the American Fisheries Promotion Act (P.L. 96-561) amends the S-K Act to require that not less than 50% of each fiscal year’s funds be used to provide financial assistance for projects. 01/06/1983 — Section 423 of P.L. 97-424 amends the S-K Act to require that not less than 60% of each fiscal year’s funds be used to provide financial assistance for projects. 7 U.S. Congress, Senate, Committee on Commerce, Subcommittee on Merchant Marine and Fisheries, Fishery Research and Rehabilitation (Amendments to Saltonstall-Kennedy Act), 87th Congress, 1st session, hearing on S. 1230 on June 15, 1961 (Washington, DC: GPO, 1961), 103 p. CRS-4 08/30/1985 — The General Accounting Office (GAO) releases a report on the Uses of Saltonstall/Kennedy Fisheries Development Funds (GAO/RCED0-85-145), reviewing both NMFS in-house activities and competitive industry projects supported by S-K dollars. GAO examines the adequacy of the project selection process, project monitoring procedures, and the dissemination of project results. GAO presents views on the benefits of this program to the U.S. commercial fishing industry but makes no recommendations.8 11/14/1986 — The enactment of §209 of P.L. 99-659 creates the Fisheries Promotional Fund, to be capitalized with S-K funds.9 05/14/2002 — NOAA Fisheries announces the FY2003 S-K Program, allocating $5 million of an anticipated $10.3 million for Atlantic salmon aquaculture development.10 02/20/2003 — President Bush signs P.L. 108-7, wherein §209 (Division B; General Provisions — Department of Commerce) appropriates $10 million in S-K dollars for the Alaska Fisheries Marketing Board for FY2003.11 06/30/2003 — NOAA Fisheries announces the FY2004 S-K Program, suggesting that about $4 million would be available for projects.12 08/01/2003 — NOAA Fisheries publishes its 2003 S-K Report to Congress.13 01/23/2004 — President Bush signs P.L. 108-199, wherein §208 (Division B; General Provisions — Department of Commerce)14 appropriates $17 million in S-K dollars for various specified fisheries programs for FY2004;15 a “soft” earmark (H.Rept. 108-221, p. 89) identifies an additional $250,000 for the Gulf and South Atlantic Fisheries Foundation to continue a Vibrio education program. 03/19/2004 — NOAA Fisheries announces that the FY2004 competitive S-K Program is being canceled due to insufficient funding and all 8 See [http://161.203.16.4/d11t3/127795.pdf], visited Mar. 24, 2004. 9 16 U.S.C. §4008. 10 67 Federal Register 34427-34434 (May 14, 2002). 11 117 Stat. 78. 12 68 Federal Register 38678-38690 (June 30, 2003). 13 See [http://www.nmfs.noaa.gov/ocs/sk/pdf/03report_wsite.pdf], visited Mar. 24, 2004. 14 118 Stat. 73-74. 15 $10,000,000 to the Alaska Fisheries Marketing Board, $2,000,000 to the Gulf and South Atlantic Fisheries Foundation, $2,000,000 to the South Carolina Seafood Alliance, $1,500,000 to the Oregon Trawl Commission, and $1,500,000 to the Oregon State University Seafood Laboratory. CRS-5 applications are being returned to the applicants without further consideration.16 On its S-K website, NOAA Fisheries notes that the President’s budget request for FY2005 also does not provide sufficient funding for the competitive S-K Program.17 16 69 Federal Register 13021 (Mar. 19, 2004). 17 See [http://www.nmfs.noaa.gov/ocs/skhome.html], visited Mar. 24, 2004. CRS-6 Table 1. Financing History of Saltonstall-Kennedy Account (thousand $) Import duties collected Transfer from Agriculture Funds to NOAA ORF Fishermen’s Promotional Fund Congress. earmarksa Remainder availableaa Earmarks and remainder as % of transfer 1978 43,280 12,984 0 0 0 12,984 100% 1979 58,120 17,436 5,000 0 0 12,436 71% 1980 88,930 26,679 5,000 0 0 21,679 81% 1981 116,600 35,000 17,500 0 0 17,500 50% 1982 87,300 26,200 10,000 0 0 16,200 62% 1983 102,100 30,600 22,600 0 0 8,000 26% 1984 119,900 33,600 23,600 0 0 10,000 30% 1985 116,500 34,900 25,900 0 0 9,000 26% 1986 145,600 43,700 34,100 0 0 9,600 22% 1987 191,400 57,400 51,600 750 0 5,050 9% 1988 187,800 56,300 44,400 2,600 0 9,300 17% 1989 178,900 53,600 45,600 3,000 0 5,000 9% 1990 206,500 61,900 55,000 2,000 0 4,900 8% 1991 235,900 70,800 60,900 2,000 0 7,900 11% 1992 213,700 64,100 63,100 0 0 1,000 2% 1993 204,700 61.400 55,000 0 0 6,400 10% 1994 206,500 61,944 54,800 0 0 7,144 12% 1995 215,885 64,765 55,500 0 0 9,265 14% 1996 242,977 72,893 63,000 0 0 9,893 14% 1997 221,270 66,381 66,000 0 0 381 1% 1998 219,110 65,730 62,380 0 0 3,350 5% 1999 221,420 66,430 63,380 0 0 3,050 5% 2000 233,070 69,920 68,000 0 0 1,920 3% 2001 242,760 72,830 68,000 0 0 4,830 7% 2002 263,770 79,130 68,000 0 0 11,130 14% 2003 250,750 75,220 65,000 0 10,000 220 14% 2004 265,747 79,724 62,000 0 17,250 474 22% FY a .Except for FY2004, this column does not include the “soft” earmarks as previously discussed. aa .This amount includes funds for industry projects, the national program, and NMFS/NOAA Fisheries expenses for administering the industry projects. In FY2003, these administrative expenses were estimated at $500,000.