Mr. THOMPSON. Proceed.

Mr. McKERNAN. The fisheries loan fund was first authorized by section 4 of the Fish and Wildlife Act of 1956. It provided authority for making loans for financing and refinancing of operations, maintenance, replacement, repair, and equipment of fishing gear and vessels, and for research into the basic problems of the fisheries.

The primary bill before you, Mr. Chairman, H.R. 4227, extends the life of what we consider to be a highly successful program to June 30, 1975. Unless this bill is enacted by June 30 of this year, the funds will cease to exist, as the chairman has pointed out.

Mr. Chairman, in addition to extending the bill, on May 10 the Secretary submitted a proposal for an additional amendment for the fisheries loan fund and we were later advised by the committee that this proposal could be taken up at this hearing, also.

Now, this original proposal by the Secretary was a fairly simple one, Mr. Chairman.

Under the present law, the existing loan law, a loan can be made for new and used commercial fishing vessels only when the vessel is to be used as a replacement for a vessel that is then operating in the fleet or has been lost.

Now, the proposal that the Department submitted would authorize the Secretary to make loans for the purchase or construction of a commercial fishing vessel without regard to whether the vessel will replace an existing vessel; but, in making a loan where the vessel is an addition rather than a replacement, the Secretary must determine that the operation of the vessel in the fishery will not cause any economic hardship to the already efficient operators operating in that fishery.

Then, Mr. Chairman, following the Senate hearings that were held recently on this same proposal, the Department was asked to furnish the Senate committee a drafting service which would combine the provisions of the Senate bill, and that Senate bill was similar to the bills before you today, with the Department proposal to extend this to the purchase of vessels.

Mr. THOMPSON. At this point in your statement, it has been indicated to the Chair that the gentleman from Washington in the other body introduced certain amendments.

Mr. McKERNAN. Yes. Do you mean in the Senate?

Mr. THOMPSON. In the Senate.

Mr. McKERNAN. We understand, Mr. Chairman, although we have not seen the report, that the drafting service prepared by the Department, a copy of which came to this committee, was adopted by this Senate Commerce Committee and will be reported out by that committee as it was drafted by the Department.

That is our understanding.

Mr. THOMPSON. The Chair mentions this inasmuch as it seems to recall that, in prior hearings, there was some objection from west coast fishermen in regard to certain competition being created, and I wonder if you would know whether that has been resolved and agreed upon by at least the major fishing industry?

Mr. McKERNAN. The major objections on the Pacific coast concerned the construction subsidy bill which this committee passed and which Congress passed last year. Incidentally, this construction subsidy bill has been in operation and, generally speaking, the people, the fishermen and vessel owners throughout the country, are finding its operation satisfactory.

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There has been some question raised but, out of 28 applications so far, I believe only 1 has been contested. We do hold hearings on these under the Administrative Procedure Act.

One has been contested so far, but the problems are nowhere as great as they might have been had there been any substantial opposition. Now, generally speaking, the fishermen and boatowners around the country did not object to the loan fund and, in fact, have found it. very, very useful in keeping up, in maintaining their vessels, and in replacing those that have been lost.

Mr. THOMPSON. At that point, if they have been satisfied with the operation of the loan fund-and I feel that they should be, but the Chair wants to be certain that there will be no area of opposition to this amendment being considered.

Mr. McKERNAN. To my knowledge, there is no opposition to this suggestion, Mr. Chairman.

Mr. THOMPSON. Proceed.

Mr. McKERNAN. Now, the drafting service that we have supplied to this committee tends to extend these provisions to the purchase of new and used vessels, not only ones that have been lost but additional vessels to the fleet.

In addition to this, they tend to tighten up the provisions of the act and add certain features which the Department has adopted as regulations, but which are not part of the present law.

Some of these questions were raised in the Senate and we have decided simply to add those to the law, seeing no great disadvantage to them and considering that the Congress might well wish to have these provisions added.

So that, the draft bill that was supplied to the Senate does extend the authority to the purchase of vessels and tends to tighten up the law itself, although most of the provisions provided were already regulations of the Department.

There is one other minor addition. I consider it a minor addition. Mr. THOMPSON. On the point of regulation, I want to show this in the record at this time. Do these regulations extend to the authority of specifying the type of personnel to be employed aboard the boats, there are basic qualifications, and such?

Mr. McKERNAN. For example, it relates to citizenship, if that is what you were asking about.

Mr. THOMPSON. I mean other than citizenship, which might be a determining factor as to the ability of the seamen or the navigator? Mr. McKERNAN. Yes; it does.

Mr. THOMPSON. Would that conflict with the Coast Guard responsibilities?

Mr. MCKERNAN. I beg your pardon, Mr. Chairman.

Mr. THOMPSON. Would this interfere with the Coast Guard operation and responsibility in the licensing of pilots?

For example, one of the amendments provides that the applicant shall possess the ability, experience, resources, and other qualifications necessary to enable him to operate and maintain new or used commercial fishing vessels and gear.

Mr. McKERNAN. That means simply that it would make sure that experienced fishermen were provided the funds and, in a sense, eliminate the possibility of speculators and inexperienced people coming in under this particular provision.

The draft bill that has come out of the Senate, we understand, provides for an extension of the program for 5 years, but the Department's recommendation is for an extension of 10 years, Mr. Chairman. So that, the only difference in the Department's position, approved by the Bureau of the Budget, and the Senate bill, which we understand has been passed by the Commerce Committee, is that the Senate version provides for a 5-year extension and the Department's recommendation is for a 10-year extension. That is the only difference.

I think, Mr. Chairman, that in view of the time element that the chairman pointed out, I will just make myself available for any questions in this regard.

Mr. THOMPSON. Are there any questions?

Mr. DOWNING. No questions.

Mr. THOMPSON. Mr. Pelly.

Mr. PELLY. I would like to ask Mr. McKernan about the language which is in the draft bill. Is that the language which you indicated, according to your understanding, had been approved by the Senate

committee?

Mr. McKERNAN. Yes.

Mr. PELLY. In other words, this is a new proposal as far as your Department goes, dated May 10, and does this language as given in this bill superseded any other proposed action that you recommended to this committee?

Heretofore you approved the extension of the law. Now you are sending over language which was sent to the Senate, too, I take it?

Mr. McKERNAN. This combines these, Mr. Pelly. It does not really supersede them. It simply combines the legislation and the bills which have been introduced here in the House with the additional proposals that have been suggested in the Senate and recommended by the Department.

Mr. PELLY. In effect, the language in this proposed bill would allow the Department to finance new fishing vessels regardless of whether they were replacing the older vessels or were simply to add to our fishing fleet?

Mr. McKERNAN. Yes; and we see this as an advantage in two areas: One, a young man just getting started oftentimes does not have the financial resources to put up money enough for a construction of a new modern fishing vessel which would, for example, qualify under the Construction Act, and this, then, would allow him perhaps to purchase a vessel from a more experienced fisherman who was well established, but he wanted to build, perhaps, a newer vessel.

This would in a sense, in our view, supplement existing legislation quite well and fill in what we consider to be a gap in the present financial program that Congress has provided fishermen in recent years.

Mr. PELLY. The Department certainly is aware that there are going to be a considerable number of fishermen or groups that will not approve of this because they feel that already we have too many fishing boats, and they feel that the problem of the fishing industry is of too much fish and too low price, is that not right?

Mr. McKERNAN. We do not feel that this particular proposal will cause the same kind of objections that were caused by the Construction Subsidy Act because in this case there will not be a change in the value of the vessel, you see.

In fact, one might consider that the value of the vessels might even increase because there would be more competition for them.

Mr. PELLY. Yes. And one objection, of course, to a subsidy was the fact that it gave your competitor an advantage over you because his boat was subsidized and your boat was not.

Mr. McKERNAN. Yes; and this will not do this.

Mr. PELLY. On the other hand, there are certainly fishermen's organizations that feel that their problem today is one of too many fishing boats and too much fish and, as a consequence, too low a price.

I would myself feel that a large amount of that problem came from imports and not from our own production. Is that not right?

Mr. McKERNAN. Yes, Mr. Pelly. I could not agree with you more. Mr. PELLY. For the first time in history this country now is consuming a larger amount of imported fish than we produce ourselves, is that not right, in the last 2 years?

Mr. McKERNAN. Yes. You are on a favorite subject of mine. When a foreign nation can come and fish off our shelf and take its products back to Europe and Asia and then reship them back to our country, there obviously is something wrong with the economics of our industry.

I am quite convinced in my own mind that we need to get out and fish, and I think in many parts of the country the legislation that this committee has sponsored is going to bring that revolution about. We are going to begin to compete on the high seas and, furthermore, we are going to begin to compete successfully.

The price of some of the frozen products from Europe is rising to a point now where I feel it is economical, for example, to produce frozen blocks from American sources. I believe that this will be done

within the next year, in fact, in New England and the west coast. Mr. PELLY. The chairman asked the question as to whether there might be any opposition or whether we could expedite action on the bill. My feeling is that I do not believe that the fishing organizations out in my area know about this additional language or have had a chance to express themselves.

I would like them to have a chance to testify or to at least consider the new language that has been added in this proposal.

Mr. McKERNAN. Mr. Chairman, while I would leave this to the judgment of the committee, of course, this was discussed in the Senate rather fully and, in fact, at that time there were representatives of Pacific Northwest people present at the hearings.

Mr. PELLY. When were the hearings on this?

Mr. McKERNAN. They were the 11th and 12th of May.

Mr. PELLY. Were the fishing vessel owners' associations represented by witnesses?

Mr. McKERNAN. Yes; they were.

Mr. PELLY. You would know. I would concede that there is nobody that knows more about the fishing industry in my district than the witness who is before the committee now.

Mr. McKERNAN. I might mention a couple of names that are very familiar to you from your district. Mr. John Wedin testified in favor of the amended bill, if my memory serves me right.

Mr. PELLY. That is a pretty good recommendation because Mr. Wedin has to satisfy everybody. He runs a fishermen's newspaper.

Mr. McKERNAN. He also represents some trawlers out there, too. Mr. George Johansen testified in favor of the legislation also.

Mr. PELLY. That means a lot to me. If those people support the bill, Mr. Chairman, that means that it is really carefully considered because they are really very knowledgeable as to the industry. Mr. THOMPSON. Will the gentleman yield?

Mr. PELLY. I yield.

Mr. THOMPSON. On page 6 of your statement, you stated:

However, in making a loan where the vessel will not replace an existing vessel, the Secretary must determine that the operation of the vessel in a fishery will not cause economic hardship or injury to the efficient vessel operators already operating in that fishery.

Now, did you hear any specific comments in the Senate testimony as to whether or not that type of stopgap authority would satisfy the fisheries in operation?

Mr. McKERNAN. I do not recall any specific comment but there was no opposition whatsoever to any aspects of the legislation. We feel that if by chance anybody felt they might be injured because of the addition of units to the fleet, that a hearing would be held, and they could present their material and the Secretary of the Interior would be required to consider this very carefully before approving such applications.

Mr. THOMPSON. How would these other members of this fleet or this fishery be alerted to the fact that approval was pending?

Mr. McKERNAN. We would publish it in the Federal Register, Mr. Chairman, according to the Adminisrative Procedure Act.

Mr. THOMPSON. I just wonder if the fisheries ever have access to the Federal Register or whether it is the practice of them to follow the Federal Register?

Mr. PELLY. I think the publication is pretty widespread and I have noticed in the Fishermen's News out my way the actual printing of the questions and answers that went on in connection with one of these hearings.

Mr. McKERNAN. The chairman will recollect that we put out a daily news service that reaches large groups of fishermen and vessel owners, and they are well notified.

We are quite certain of this. The announcement goes out about 30 days in advance, and we make sure that it is carried in local papers, and then our daily Fisheries Market News gets out to the fishermen and boatowners also. So they are quite well informed.

Mr. THOMPSON. Thank you, Mr. McKernan. Are there any further questions?

Mr. DOWNING. Yes, Mr. Chairman.

Mr. McKernan, I wonder if you would refresh my memory as to what this bill actually covers. Would it cover, say, an oysterman who wanted to replace his oysterboat?

Mr. McKERNAN. Yes; it would, and we have made loans to oyster

men.

Mr. DOWNING. Or, say, an oyster buy boat, a larger type vessel? Mr. McKERNAN. No, it would only cover fishing vessels, Mr. Peterson informs me. Oyster dredger or tonger boats.

Mr. DOWNING. Would it cover the boat that contacts each of these small vesels and takes in their catch at the end of the day and then sells their catch on the shore that night?