I want to start my report by saying how much I appreciate the honor to address you as the business leaders of Alaska and how much we appreciate the efforts of the Resource Development Council in helping to protect our regional economies.

The Kodiak Island Borough covers an area of over 15,000 square miles; from the Barren Islands, to south of Chirikof Island, over to the Alaska Peninsula and along the mountaintops to Cape Douglas. We have a population of 14,000; 3,000 of which are on the Coast Guard Base, 1,200 in outlying communities and the balance of nearly 10,000 in, and around, the City of Kodiak. For those who haven’t visited our area yet, it is one of contrast, with rain forests to the north, Aleutian style grasslands to the south and cottonwood and alder to the west. Rainfall varies dramatically due to wind shadow, with some areas having less than 30 inches and others with more than 100 inches of rainfall, and Kodiak falling somewhere in between.

As some of you may know, Kodiak was the first capital of Alaska having been settled in 1792 by Russian fur traders. Kodiak is the site of the oldest log structure still standing in Alaska, which was built in 1808 and is now part of the Baranov Museum. For many years, Kodiak served as a base of operations in the western Gulf for Russian America. One of the more profitable enterprises was the shipping of ice to California in the early 1800’s. In fact, the purchase price of Alaska from the Russians is reported to have been $7,000,000, with an additional $200,000 for Russian assets; the largest of which was the Kodiak ice making company.

Down through the years, Kodiak has continued to survive and grow, even though it was virtually wiped out by the Mount Katmai eruption in 1912 and again by the 1964 earthquake and tsunami. Beginning with the first Kodiak cannery at Karluk in 1882, a large fleet and fish-processing sector was built on salmon, crab and shrimp. The processing sector has been sustained by conversion to the groundfish industry since the Americanization of Alaskan fisheries was completed in the early 1980’s.

Kodiak is unique in other ways, one of which is as homeport to one of the nation’s largest fishing fleets, with over 700 vessels tied up in the two boat harbors. We are the homeport to fleets of crabbers, trawlers, longliners, seiners and other support vessels. Kodiak is the main port of landing for the Gulf of Alaska groundfish industry and has ranked in the top 3 ports nationally in dollar volume for well over 15 years. Another unique feature is our resident processor work force that has lived in our community for many years, bringing talent and experience to the fish processing industry.

We are also home to the nation’s largest Coast Guard Base with over 1,300 uniformed personnel and 1,800 dependents stationed in Kodiak. Recently, we became the location of the Kodiak Commercial Rocket Launch Complex and the University of Alaska’s Fisheries Industrial Technology Center that is co-located with the Borough owned Fishery Research Center providing a state of the art building for NOAA, University and ADF&G research operations.

As you can see, we have many things going for us, but despite these assets, we are in dangerous waters economically. The community has always come together in times of crisis and is currently battling the economic challenges of restrictions on our number one industry, Fishing. Our economy is supported by the fishing industry, which comprises over 60% of the primary economic base.

Following are some economic facts recently compiled by the McDowell Group on the Kodiak economy:

> From 1999 the beginning of the Stellar Sea Lion closures to 2001
> Pollock and Cod harvest quota have fallen 40% in the Western Gulf
> Over 30,000 metric tons of available quota was not harvested largely because of Stellar Sea Lion closures.
> Even though salmon volume increased, the value declined 66% and the number of salmon permits fished, fell by 39%
> Bering Sea crab volumes caught by Kodiak Crabbers declined by 64%
> Overall groundfish volumes landed in Kodiak fell by 25%
> Four processors closed down with a loss of 300 local jobs, or 20% of processing employment, and harvester payroll fell over 20%.

The net result in this downward spiral is that the whole economic foundation of the community is in severe distress. The majority of the harvesters are at the end of their savings and ability to keep fishing, and the processor workers are leaving the community because they cannot get by on 6 months of work per year. As if this isn’t enough, virtually every sector is threatened by litigation from environmental groups that are seeking to further restrict commercial fishing.

So what are we doing about it?

One step is that we are coming together on numerous fronts to ensure that the impacts of these restrictions are recognized. The MSA is clear that harvest plans be conducted in a manner that is sensitive to negative community impacts, but radical groups have been able to sue their way past this issue and conduct their business between attorneys instead of in the public eye with stakeholder input.

Another step is to seek the rationalization, or slowing down of the fisheries, to give us the tools to fish safer and to minimize bycatch while allowing more processing time to maximize the value of the fish we do harvest. This tool will also allow us to seek more environmentally sensitive ways to fish and serve as a platform for research and development of new fishing and processing techniques while still providing a revenue base. But most important is that by stopping the race for fish, we will minimize the loss of life that our community knows all to well.

However, rationalization of any form will be useless if the continued wave of closures and restrictions continue. For example, some of the current areas that are restricted are:

State Marine Parks, State Critical Habitat Areas, Stellar Sea Lion no trawl zones, State Bottom Trawl closures of all state waters in the Gulf of Alaska, State Dive Fishery Closures, State Coastal Management Special Attention Areas, Bering Sea Crab and Halibut Closures, Bogoslof Groundfish Closure, Chum, and the Chinook and Red King Crab Savings Area.

Now we are looking at Essential Fish Habitat Closures on the shelf break in the Gulf, huge sweeping closures in the Bering and large areas in the Aleutians. The scale of existing and proposed EFH closures is monumental, yet no one speaks to the fact that the areas comprise more restricted habitat than the rest of the restricted marine habitat closures in the US combined. Just our region in Kodiak represents more coastline than the west coast of the U S and all of the nearshore waters are closed to trawl fisheries. Arbitrary numbers of 20% to 50% of the remaining fishing grounds are being proposed for additional closures.

As if that isn’t enough, the State is moving forward with the creation of Marine Protected Areas, which can only add to the already massive closures. A further problem is the use of federal subsistence protection authority to restrict salmon and herring fisheries in State waters and to control upstream activities that they believe might impact subsistence fisheries.

Another part of our effort is to ensure we let others know about the challenges we are facing in order to gain support which is why I appreciate the opportunity to address you’re here tonight. We also want to state how much we appreciate the efforts of RDC in addressing the impacts of Essential Fish Habitat and Marine Protected Areas. We look forward to any suggestions, direction or information the membership can provide and to working cooperatively to insure the long term health of our communities.