Remarks to the National Fisheries Institute
Good Morning and welcome to Washington D.C. I hope that your, “Walk on the Hill”, is going well and your meetings have been very productive.
Thank you very much for the opportunity to address you this morning. I first want to compliment the National Fisheries Institute. You have been a strong voice on behalf of the seafood industry both in Washington D.C. and around the country. There isn’t another group out there doing exactly what NFI does and so effectively. Whether it is challenging USA Today and the New York Times on misreporting about Mercury in Seafood; correcting NBC News about Seafood sustainability, or educating members of the NGO community who are misinformed or misguided, NFI is out there fighting for you!
I have enjoyed working with NFI on promoting the health benefits of eating seafood and countering the misinformation about seafood consumption for pregnant mothers. I know of no better food for mothers AND babies than seafood.
I am so fortunate to come from America’s leading seafood producing state. A recent study showed that the Alaskan seafood harvest accounts for over 60% of the volume of seafood caught in the United States. Commercial fishing contributes over $5.8 billion dollars annually to Alaska’s economic output and is Alaska’s largest private employer, providing jobs to over 60,000 Americans directly and indirectly in the commercial fisheries in the State.
Now I don’t need to tell you that the fishing business is dynamic. That is why it is so important to stay on top of what is happening here in Washington D.C.
The list of issues that are facing the fishing industry can seem pretty daunting: Global market competition, increasing regulatory requirements, irregular supply of fish species, increased costs and small profit margins, additional fishing restrictions, opposition from the anti-fishing environmental community, and challenges with endangered species.
Many of these issues are just the nature of your business, but certainly there are things that are happening in Washington D.C. and on Capitol Hill that must raise your blood pressure.
It is clear that we are undergoing a paradigm shift in fisheries management. Catch shares are nothing new in Alaska, where we have 6 programs in place, from the Halibut/Sablefish IFQ program, which was implemented in 1995, to cooperative fishing for pollock, scallops and groundfish in the Bering Sea. But catch shares are a fairly new concept for many other parts of the country and I understand the concern. There is always fear of the unknown, and there is a lot of misinformation about catch shares. With the implementation of annual catch limits, over- fishing deadlines and rebuilding timelines, there is an awful lot hitting the fishing industry all at once. I will just say that our experience in Alaska with catch shares has been largely positive, especially in protecting the resource. In my view, giving the fishing industry tools, like catch shares, to deal with all the other regulatory challenges, can be very effective for the right fisheries.
Seafood marketing is always an issue and you know that there is never enough funding to do all the promotions that I am sure you would like to do. I know that the marketing budgets are already pretty thin and now it looks like we will have to fight a proposed cut for the Market Access Program funding this year. I would encourage you to take a look at the National Seafood Marketing Coalition plan that you will hear about later this week. I would love to hear your thoughts.
I know that many of you are engaged in tracking the National Ocean Policy Task Force and the recommendations that we might see for a new ocean policy. I think we would agree that prioritizing the oceans and our marine environment is something we all support. But how will it work with our existing fisheries management system? Will it continue to be a transparent, stakeholder driven process like the regional fishery management councils or will the decision making move away from the regions and be centralized here in Washington D.C.? I think this is something that we should all pay close attention to and continue to advocate for the continued direct involvement and participation by the stakeholders in the fishing industry.
I could go on and on about fisheries issues, but I think there are a few other issues that are pertinent to your industry as well.
The smallest of our small businesses will be particularly hurt by the new health care law. While the Small Business Administration defines a small business as one with 499 employees or less, under the new law, a company that employs 50 or more people and does not provide health insurance, starting in 2014, will be subject to an employer mandate, requiring a penalty of $2,000 per full time equivalent employee, defined as an employee who works 30 or more hours per week. As the employer, you will be subject to a penalty for all your employees if even one of your employees purchases health insurance in the exchange. The way to figure out the amount of your penalty is by deducting the first 30 employees from your total number, and deducting any full-time seasonal employees who work for less than 120 days during the year. The total number of employees, multiplied by $2,000 is your annual penalty.
Now, if you don't have employees or if you employ less than 50 employees, you individually, and members of your family will be subject to the “individual mandate” which is expected to raise $17 billion over ten years by penalizing those who don’t have the federally mandated level of required health care benefits. The penalties start in 2014 at $95 or 1% of your income and then jumps to $325 or 2% of your income in 2015 and $695 or 2.5% of your income in 2016, whichever is greater. This penalty amount is capped at an average premium health plan offered through the exchange. I believe that it makes no sense to penalize individuals for not buying health insurance when this health care law does nothing to bring down skyrocketing health care costs. The non-partisan Congressional Budget Office has said that under this new health care law, premiums in the individual market will go up 10-13 percent, resulting in a $2,100 increase in premiums for families.
Another key issue that could affect many of your businesses started this past December, when the EPA issued an endangerment finding for six greenhouse gases, including carbon dioxide and methane. As a result, those gases are now subject to regulation under the Clean Air Act.
That may sound alright at first blush – and I think most of us agree on the need to reduce greenhouse gas emissions – but the Clean Air Act is perhaps our worst option for meeting that challenge. Congress wrote it to address conventional air pollutants, like smog, and never meant for it to be applied to greenhouse gases. It relies on a command-and-control regime that would force businesses to acquire ‘Best Available Control Technologies’ to reduce emissions. I wish I could tell you what those technologies are, but the truth is, no one knows. EPA, seeking to avoid controversy, hasn’t made any decisions yet. But I can tell you this: those technologies will be expensive. In many cases, they will be unproven or difficult to implement. And they’ll be decided on a case-by-case basis by the EPA, which means more government bureaucracy and even longer waits for your operating permits.
The scope of new regulation is simply breathtaking to think about. According to the EPA, a total of six million entities would be captured at the Clean Air Act’s existing thresholds – about 400 times more businesses, facilities, and farms than are regulated today. Realizing that’s practically unworkable and politically unacceptable, the EPA is attempting to “tailor” its regulations – it wants to start by targeting energy producers and energy-intensive businesses before everyone else. Even if that proposal somehow survives the courts, the smallest emitters – office buildings, restaurants, and even the local dry cleaners – will still face regulation about six years from now.
So what’s at stake? If Congress allows the EPA to proceed, there will almost certainly be severe economic consequences. EPA’s climate regulations will increase energy prices, increase prices for goods and services, restrict businesses’ ability to pursue new economic development, and ultimately cause significant job losses.
Now, I say tremendous costs are “almost certain” because there is another, equally unpleasant outcome that’s also possible. You see, the EPA’s climate regulations would be triggered when businesses seek to build a new facility or modify an existing one. So instead of making improvements or growing their operations, it’s entirely possible that businesses will choose to do nothing – no upgrades, no expansions, no development. Some have already said they will choose this approach. If others follow their lead, emissions will not be cut, but the private investments that will lead to renewed job creation and economic growth will be frozen.
One of my Democratic colleagues, Senator Byron Dorgan of North Dakota, likes to characterize some of the policies he opposes as “yesterday, forever.” I think this is the best example yet. EPA’s regulations will be tremendously expensive if they’re effective, but there’s also a chance they’ll be inexpensive and tremendously ineffective. Whether you’re concerned about the economy, the environment, or our national security – neither of those outcomes is acceptable.
The impacts on industry and businesses could be devastating. Hundreds of facilities will ultimately be subject to them, including our resource producers, utilities, large hotels, hospitals, fish processors, and mines. Over the next few years, that list will grow considerably. The EPA estimates that any building larger than 65,000 square feet and heated with natural gas or oil would exceed the Clean Air Act’s statutory thresholds – as would many much smaller, energy-intensive businesses.
As if regulating emissions under the Clean Air Act isn’t enough, the newest entry in the range of possibilities is the possibility of regulation under the Clean Water Act. The Environmental Protection Agency (EPA) has agreed to consider how states can address ocean acidification under the Clean Water Act. The settlement responds to a lawsuit brought by the Center for Biological Diversity that challenged EPA’s failure to recognize the impacts of acidification on coastal waters off the state of Washington. The suit, brought under the Clean Water Act, was the first to address ocean acidification.
Ocean acidification, if you are unfamiliar with the term, results from the ocean's absorption of CO2 from the atmosphere, which increases the acidity of the ocean and changes the chemistry of seawater. The primary known consequence of ocean acidification is that it impairs the ability of some marine animals to build and maintain the protective shells and skeletons. Now ocean acidification is a severe threat to our ocean resources and I have been very supportive of increased monitoring and research to get a handle on the impacts and potential effects on our marine fisheries.
Previously, states have taken steps to address rising acidity levels in lakes and streams under the Clean Water Act, but this is the first time the EPA has agreed to consider ocean acidity. Now the Center for Biological Diversity is petitioning each coastal state to address the issue.
In the settlement agreement, the EPA said it would take public comment on the increasing acidity of oceans, on ways states can determine if their coastal waters are affected, and on how states can limit pollutants that cause the problem.
Such measures could include regional cap-and-trade systems to limit carbon-dioxide emissions from the burning of fossil fuels or requiring industrial plants to reduce their emissions as a condition of any discharge permits granted under the Clean Water Act.
Any regulations would likely be several years in the future. But because oceans absorb CO2 from the atmosphere, the possibility exists that this could eventually lead to regulation of greenhouse gases under the Clean Water Act.
This is really just another backdoor way to climate regulation and one I believe we need to pay just as much attention to as the endangerment finding.
The last issue that I will bring up is the financial reform bill. Clearly the focus is on Wall Street and the bailout provisions. Ending too big to fail.
But the focus on the community banks, from the credit unions and the smaller financial institutions, is "Well, how is this going to impact us? What is this going to do to the availability of credit? How will that influence or impact our ability as a small community bank to offer consumer products?"
As we look to rebuild this country at a time of recession, and we're trying to create jobs and build up wealth, the frustration is that in this bill, we are focused on adding compliance officers, and that's how we're creating jobs. This is not what is going to help our community banks. It's not what is going to help our credit unions and our smaller financial institutions.
And if the smaller banks are worried about this, then the businesses that depend on them should also be concerned.
Right now they are worried, and appropriately so. We've got an obligation to make sure that they don't get caught up in this tsunami of regulation and that they, and you don’t end up being hurt by it.
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