WRITTEN STATEMENT OF TIMOTHY R.E. KEENEY DEPUTY…

             WRITTEN STATEMENT OF TIMOTHY R.E. KEENEY
       DEPUTY ASSISTANT SECRETARY FOR OCEANS AND ATMOSPHERE
         NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION
                    U.S. DEPARTMENT OF COMMERCE

             LEGISLATIVE HEARING ON OFFSHORE AQUACULTURE
                              BEFORE THE
           NATIONAL OCEAN POLICY STUDY SUBCOMMITTEE OF THE
           COMMERCE, SCIENCE AND TRANSPORTATION COMMITTEE
                              U.S. SENATE

                                           June 8, 2006

Chairman Sununu and members of the Subcommittee, good morning and thank you for the
invitation to testify on behalf of the Administration on S. 1195, the National Offshore
Aquaculture Act of 2005. My name is Tim Keeney, and I am the Deputy Assistant Secretary for
Oceans and Atmosphere at the National Oceanic and Atmospheric Administration (NOAA),
within the Department of Commerce.

My testimony today will address the opportunities and challenges posed by offshore aquaculture
and the Federal Government's role in setting the stage for more robust commercial production of
cultured seafood. We believe the development of the domestic marine aquaculture industry in
the United States is essential to meet the growing demand for seafood.

Right now, the United States imports over 70 percent of our seafood and half of those imports
are products of aquaculture. This bill presents a rare opportunity for the United States to become
more self-sufficient in the production of healthy seafood by growing more of it here at home.
This bill will also lay the foundation for creating more jobs in coastal communities, and for
reducing our nearly $8 billion seafood trade deficit. The United States must develop aquaculture
as a complement to commercial fishing because both are needed to produce seafood to meet the
growing demand. Now is the time for us to be bold and decisive, to look to the future and to
develop offshore aquaculture.

The National Offshore Aquaculture Act is a Starting Point
On April 6th, Dr. Bill Hogarth, the Assistant Administrator for Fisheries at NOAA, testified
before this Subcommittee and emphasized that NOAA considers S. 1195 to be a starting point. I
want to underscore that point again today. The Administration believes that S. 1195 maps out a
careful and inclusive process to establish a regulatory structure for offshore aquaculture. NOAA
would like to work with the Committee to address the amendments and concerns about the bill.
We want to help clarify language regarding environmental requirements, including the need to
provide for public comment and to consider risks and impacts, including cumulative impacts.
Our goal is to work with you and our stakeholders to create an opportunity for aquaculture in
federal waters so we can ensure that the industry develops in a predictable, environmentally
compatible, and sustainable manner in conjunction with our wild harvest. We also want to
ensure other top priorities, including the protection of the marine environment, the rights of other
users of marine resources, and human health and safety.



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Of the many challenges faced, regulatory uncertainty is widely acknowledged as the major
barrier to the development of offshore aquaculture in the United States. S. 1195 will provide
regulatory certainty, which is important to the offshore aquaculture industry as well as to those
who are concerned about the potential impacts of offshore aquaculture. Business needs
regulatory certainty to make sound investment decisions and obtain financing. Those concerned
about the impacts of offshore aquaculture need to know the industry will be held to strict
environmental standards.

Enactment of S. 1195 would authorize the Department of Commerce to directly regulate
aquaculture in federal waters, and to establish a coordinated permitting process among federal
agencies. We envision a one-stop regulatory shop, coordinated by NOAA, and integrated into
NOAA's environmental stewardship responsibilities. Action on S. 1195 will allow us to begin a
public rulemaking process to produce a comprehensive, environmentally sound permitting and
regulatory program for aquaculture in federal waters, as we committed to do as part of the U.S.
Ocean Action Plan.

S. 1195 will:

   ·   Authorize the Secretary of Commerce to issue offshore aquaculture permits and to
       establish environmental requirements where existing requirements under current law are
       inadequate;

   ·   Stipulate that aquaculture will not be subject to fishing regulations that restrict size,
       season, and harvest methods;

   ·   Require the Secretary of Commerce to work with other federal agencies to develop and
       implement a coordinated permitting process for aquaculture in federal waters. This
       includes the authority to require that development proceeds in an environmentally
       responsible manner that protects wild stocks and the quality of offshore ecosystems and
       is compatible with other uses;

   ·   Establish a research and development program in support of offshore aquaculture; and

   ·   Provide for enforcement of the Act, its implementing regulations, and the terms and
       conditions of any permits issued under the Act.

The bill will not supersede existing laws such as those concerning navigation, offshore
structures, management of fisheries, environmental quality, protected resources, and coastal zone
management. The implementation of the offshore aquaculture bill will complement NOAA's
management and research responsibilities over wild fisheries and resolve some of the challenges
the agency has faced trying to manage existing aquaculture under laws, regulations, and fishery
management plans written for wild harvest fisheries.

Once a bill is enacted, NOAA envisions that a substantial role for the Regional Fishery
Management Councils will evolve as part of the rulemaking process. A well-defined


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consultation process for the Councils will be integral to the success of the permitting process for
aquaculture in federal waters.

Under S. 1195, NOAA would consult with the Councils in the development of regulations, in the
establishment of environmental and other requirements (especially as they relate to interactions
with wild stocks managed by the Councils), and in the review of individual permit applications.
Councils may also help identify areas of the U.S. Exclusive Economic Zone (EEZ) where
offshore aquaculture would be least likely to interfere with known fishing activities and other
managed areas offshore.

Aquaculture is an Important Opportunity for U.S. Coastal Communities
By enacting legislation to allow the development of an offshore aquaculture industry in the
United States, we are creating opportunities for coastal communities struggling with issues of
overcapitalization and limited harvests in commercial fishing. With a more robust domestic
aquaculture industry, boats used for fishing could also service aquaculture operations. Similarly,
seafood industry infrastructure could process and distribute both cultured and wild harvest
fishery products. Domestic aquaculture could provide a steady, year-round source of product
and, in some locations, it could prevent processing facilities from closing down altogether due to
insufficient harvest from wild fisheries.

Aquaculture, like agriculture, requires inputs of goods and services from many sources, while its
outputs are processed into value-added offerings. Beneficiaries include owners and employees
of aquaculture businesses, equipment suppliers, boat owners and operators, feed ingredient
suppliers (e.g., soybean farmers and fishermen who supply fishmeal), feed manufacturers,
seafood processors, and transportation and distribution companies. Other opportunities include
sales, marketing, and accounting services. In turn, these activities benefit the coastal
communities in which these businesses operate. And, of course, the public will eat seafood and
benefit from its health attributes.

The successes of aquaculture-related businesses to date have demonstrated direct economic
benefits from an increase in domestic aquaculture production, including offshore. More and
more communities are recognizing that aquaculture presents a sustainable alternative for areas hit
hard by job losses, natural disasters, or other challenges. As interest grows, these communities
are beginning to integrate aquaculture into their economies. For example, NOAA research and
technology on the culture of oysters, mussels, clams, hybrid striped bass, offshore shrimp,
abalone, moi, cobia, salmon, and crayfish has helped build annual aquaculture production in the
United States to an industry worth over $150 million a year. One highlight is the Hawaiian
Islands, where Sea Grant estimates the number of aquaculture enterprises is up to 126 farms
valued at $25.2 million supporting approximately 630 jobs.

Preliminary NOAA economic assessments indicate that the development and expansion of
offshore aquaculture in the United States federal waters could also significantly contribute to job
creation. Preliminary production estimates indicate that domestic aquaculture production of all
species could increase to 1 million tons per year by 2025. The additional production could
include 760,000 tons from finfish aquaculture, 47,000 tons from crustacean production, and




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245,000 tons from mollusk production. Of the 760,000 tons of finfish aquaculture, 590,000 tons
could come from marine finfish aquaculture.

Aquaculture and Commercial and Recreational Marine Fisheries
NOAA is currently studying the economics of offshore aquaculture as it relates to commercial
and sport fishing, market opportunities, global trends, underused processing capabilities, value-
added niche markets, and coastal job development. The report, which will be available in late
2006, is the next step toward anticipating and then designing a strategy to address the
socioeconomic questions associated with aquaculture production.

Although NOAA is certain benefits will result from the bill, the agency must consider its
potential impacts as well, including the impact on our nation's commercial fisheries. Some have
expressed concern that offshore aquaculture will hurt wild harvest in the United States. If
aquaculture is managed correctly, we do not believe wild harvest will be affected.

Aquaculture products, whether imported or domestic, compete with wild-caught fisheries. And
this competition will exist with or without domestic aquaculture. We live in a global market and
demand for seafood products is growing. The United States cannot meet that demand through
wild-caught fishing activities alone. Seafood imports and other forms of protein, such as beef and
chicken, already provide significant competition. Over 70 percent of the seafood Americans
consume annually is imported, and half of those imports come from foreign aquaculture
operations. The challenge is to integrate aquaculture into domestic seafood production so that
our boat owners, fishermen, processors, and marketing companies can benefit directly.

Recreational and commercial fishing will also benefit from hatcheries and stock enhancement
techniques developed for offshore aquaculture. Currently, U.S. hatcheries grow finfish and
shellfish to enhance recreational and commercial fishing stocks with great success. For example,
recreational fishermen in Southern California and the Hubbs­SeaWorld Research Institute are
cooperating on a white seabass restocking program. This excellent program helped rebuild and
sustain the valuable recreational fishery for seabass in California.

The United States needs a strong commercial fishing industry and a robust aquaculture industry
to meet projected seafood demand and supply the nation's stock enhancement needs. While we
look for aquaculture to help meet demand, NOAA will continue to assist wild-capture fisheries
with management programs, stock enhancement, and marketing to channel wild-capture products
to high-valued premium market outlets. But we also need to supply that vast middle market that
demands a year-round supply of affordable, healthy, and safe seafood. We can do this through
domestic aquaculture.

Preparing for Offshore Aquaculture in the United States
The socioeconomic issues and environmental impacts associated with aquaculture are not new.
NOAA and other federal agency partners have been working to address them for the past 30
years by funding cutting-edge research and technology development. In addition to this work,
NOAA has been preparing for offshore aquaculture for the past 10 years. NOAA is currently:




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   ·   Designing environmental risk management guidelines for aquaculture, as highlighted in a
       recently published NOAA technical memo (Guidelines for Ecological Risk Assessment
       of Offshore Fish Aquaculture [NOAA Technical Memorandum NMFS-NWFSC-71]);
   ·   Analyzing the economics of offshore aquaculture;
   ·   Outlining regulatory steps to be taken if legislation is passed;
   ·   Consulting with communities and businesses; and
   ·   Examining aquaculture's role in ecosystem management with an international group of
       experts.

With leadership and foresight provided by NOAA through the National Marine Aquaculture
Initiative's competitive grants program, the United States has invested over $10 million in
offshore aquaculture research. The resulting technology is in use in commercial applications in
Hawaii, Puerto Rico, and New Hampshire. All of these operations involve some combination of
U.S. investors, including coastal fishermen, university scientists, and local processing, hatchery,
feed, and equipment supply companies.

Environmental Standards
Also central to the National Offshore Aquaculture Act is the authority to establish rigorous
environmental standards. For example, S. 1195 authorizes regulations or permit conditions to
avoid, minimize, or mitigate unacceptable impacts. The bill also authorizes emergency actions
to address unanticipated impacts in a timely manner. S. 1195 does not override or preempt
existing laws to protect the offshore environment, wild stocks, endangered species, marine
mammals, and habitat.

Thirty years of improvements to marine finfish aquaculture practices in the United States and
abroad have shown that many problems can be prevented by continuous technological
innovation, best management practices, careful species selection, and proper site selection.
Today's aquaculture cages, pens, and anchoring systems are more durable and have dramatically
reduced the number of escaped fish. We expect these types of technological innovations will
continue to develop.

Best Management Practices
Best management practices have also been developed and refined over time to ensure that
aquaculture operations minimize risk and operate safely and securely. Some standard
management practices used today to reduce or mitigate the risks associated with aquaculture
include:

   ·   Regular inspections by divers to ensure the integrity of nets and net infrastructure;
   ·   Cameras and surveillance to monitor efficient use of feed, which reduces discharges of
       uneaten feed into the marine environment;
   ·   Regular health inspections to prevent disease; and
   ·   Comprehensive sanitary and bio-security programs to prevent the introduction and/or
       spread of pests or diseases from one farm site or cage to another or into the marine
       environment.




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Species Selection
Another key environmental safeguard is species selection, which is one of the most effective
techniques available to reduce the impact of escapes. NOAA and other agencies have over 30
years of experience in stock enhancement research and programs to support commercial and
recreational fisheries. The knowledge gained from these programs will allow managers to design
safeguards for conserving wild stocks.

All of the open ocean aquaculture efforts currently in the United States involve species native to
the region in which the demonstration project or commercial operation is located. For example,
the University of New Hampshire's Open Ocean Aquaculture project raises blue mussels, cod,
haddock, and halibut--all native to the Northeast. The open ocean operations in Hawaii raise
Pacific threadfin and yellowtail, both native to the islands. With careful broodstock
management, selective breeding protocols and technologies, and good management practices to
prevent escapes, the culture of indigenous species should present few, if any, risks to wild stocks.
Scientific protocols for considering and testing the use of non-native species are also well-
established.

Aquaculture operations in coastal waters in the United States have never raised genetically
modified fish--another concern often raised in the context of non-native species. The
knowledge NOAA and other agencies have gained from existing stock enhancement programs
for commercial and recreational fishing--which include deliberate releases of finfish, oysters,
and crabs for replenishment--will allow managers to design appropriate safeguards for
conserving wild stocks.

Aquatic Animal Health
Comprehensive aquatic animal health programs that include health experts administering
vaccines and monitoring aquatic species are also well-established. These programs further
reduce the possibility of negative impacts on wild resources by cultured aquatic animals.
Because aquatic animal pathogens occur naturally in open waters, and wild marine organisms
serve as natural reservoirs for these disease-causing agents, disease outbreaks may occur in both
wild and cultured aquatic animals. There is little scientific evidence to link disease episodes in
wild populations of fish, caused by endemic pathogens, to cultured animals.

In its work with the U.S. Departments of Agriculture and the Interior and with other federal
agencies, NOAA is developing a National Aquatic Animal Health Plan that will provide for safe
national and international commerce of aquatic animals and the protection of cultured and wild
aquatic animals from foreign pests and diseases. Technological and scientific advances also
continue to refine aquatic animal health practices. For example, as a result of scientific
advances, the offshore aquaculture industry has largely replaced antibiotics with vaccinations
administered before fish are stocked into cages.

Site Selection
NOAA continues to advocate careful site selection as one of the keys to minimizing
environmental risk and maximizing environmental benefits of aquaculture--no matter what
organism is under culture. Local site characteristics will dictate the proper organism or mix for
that site, as all areas do not have the same environmental conditions and concerns. In some



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cases, it may be important to encourage a mix of organism types, including cultured finfish, filter
feeding mollusks, marine algae, and other species. Applicants and NOAA will seek to provide
the maximum benefit with the smallest ecological footprint.

Alternatives to Fishmeal and Fish Oil Developing Quickly
Another area of aquaculture where advancements are being made is in developing alternatives to
fishmeal and fish oil for feeds. From a purely economic perspective, feed is a major component
of the cost of production in an aquaculture operation. Typically, the cost of feed accounts for
over 60 percent of operating costs, so there are strong economic incentives for the industry to
help develop suitable alternative ingredients for feed formulas, and to become more efficient in
converting feed into product.

Overall, the reliance on fishmeal and fish oil for aquaculture has been significantly reduced
based on research advances using plant-based alternatives to fishmeal and fish oil. NOAA plays
a vital role in that research. For example, scientists at NOAA's Northwest Fisheries Science
Center, along with scientists from other agencies and industry, are developing alternative feed
ingredients for cultured species, including finfish. This groundbreaking research--using
soybeans, barley, rice, peas, and other crops as alternatives--is expanding in the United States
and across the globe.

Other meals such as canola, lupine, wheat gluten, corn gluten, and various plant protein
concentrates--many of them grown in the United States--have already been shown to be highly
palatable and digestible for fish. As the price of alternative ingredients drops below that of
fishmeal, those ingredients will be substituted for fishmeal and fish oil.

Further development of plant-based feeds also represents a huge opportunity for American
agriculture, as the United States produces an abundance of high-quality proteins and fats that
could be used in fish production. Increased production of high-protein by-products from bio-
diesel production, and high-protein and high-fat by-products from ethanol and bio-plastics
production, are likely in the future. Feed experts believe these by-product meals will be ideal for
fish production.

Although the amount of fishmeal and fish oil in feeds will be reduced as alternative ingredients
come online and the cost drops, they likely will not disappear from feed altogether. Research on
plant-based oils has found that maintaining some fish oil in fish feed is important to maintain the
health benefits to humans of eating marine fish, including the long-chain Omega-3 fatty acids.

Scientists are most concerned about two healthy fatty acids--decosahexinoic acid (DHA) and
ecospentanoic acid (EPA). These fatty acids are not produced by fish, but fish concentrate them
in their fats from the prey they eat. DHA and EPA are made by algae and microorganisms and
are passed up the food chain. These organisms can be cultured directly to produce concentrated
DHA and EPA. In fact, all the DHA currently used in baby formula in the United States comes
from production of micro-algae, not from fish oil. Although it is costly, experiments have shown
that a small amount of this concentrated algae oil can be added to vegetable oil to restore the
healthy fatty acids in the final product. In addition, other healthy fats, such as the shorter chain
Omega 3 fatty acids found in olive and flax oil, can also be incorporated into the cultured fish.



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NOAA and other federal agencies are working with industry on research to develop lipid
substitutes, such as marine micro-algae production, to reduce reliance on fish and fish oil. The
agencies, research institutions, and others will continue to work with grain and feed companies
and with feed researchers to find suitable alternatives for fishmeal and fish oil.

Seafood and Human Health
A vexing issue related to seafood, both wild and cultured, is the misinformation related to the
health and safety of seafood products. NOAA's mission includes a focus on human health and
safety, and NOAA seeks to maintain a positive connection between human health and seafood.
Misinformation about the safety of our seafood supply includes published research that has been
shown to be inadequate, flawed, or biased. This research continues to be cited, especially by
critics of aquaculture. NOAA will take every opportunity to address seafood safety based on the
latest, fact-based information from leading scientists, nutritionists, and medical and healthcare
professionals.

Peer-reviewed studies, including those presented at the international Seafood & Health
Conference co-sponsored by NOAA in December 2005, link seafood consumption to higher
intelligence in babies and children, lower heart rates in adults, lower cholesterol, lower blood
pressure, and lower body weight. It is clear, based on the facts, that the health benefits of eating
seafood far outweigh the risks due to trace-level contaminant exposure. Seafood has been
scientifically shown to fight cardiovascular disease, cancer, Alzheimer's disease, and other major
illnesses.

Conclusion
Mr. Chairman and members of the Subcommittee, the Department is looking forward to working
with you, the public, the fishing and aquaculture industries, and the environmental community to
craft a regulatory framework for offshore aquaculture. The U.S. Exclusive Economic Zone is 3.4
million square miles and NOAA is confident there are appropriate sites where aquaculture
facilities could operate without compromising the protection of wild stocks, environmental
quality, or people's livelihoods. In the long run, U.S. fishing communities will be harmed more
by foreign competition than by a robust domestic aquaculture industry. The challenge is to find
ways for our domestic fishing industry to benefit from the use of aquaculture technologies to
produce additional seafood--as fishermen are doing in some parts of the United States and in
other countries.

Offshore aquaculture has great potential to make a significant contribution to our seafood supply
and the economy, but this potential will be realized in the United States only if we can provide
the regulatory certainty for businesses to make sound investment decisions. S. 1195 will give
NOAA the authority it needs to provide that regulatory certainty. I appreciate the opportunity to
present the National Offshore Aquaculture Act of 2005 to you today, and I will be happy to
answer any questions.




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