US Government Audit Reveals Government Waste in Catfish Regulation

Mar 29, 2011   
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In 2008, the U.S. catfish industry convinced Congress to require tougher federal inspections on just one species of fish”catfish”by transferring regulation of domestic and imported catfish from the Food & Drug Administration (FDA) to the Department of Agriculture (USDA). The U.S. catfish industry supported these tougher inspections by the USDA not because it supported tougher regulation on catfish, but because it believed they would be a roadblock to imports from Vietnam and other countries.

Now, a recent government audit has cited the catfish program and its $30 million price tag as a prime example of government waste and duplication. It turns out that when the regulation of catfish, one of the most popular fish in the U.S., was transferred to USDA, the legislation did not clarify that FDA was relieved of any duties regarding the inspection of catfish. As such, there are now two federal agencies responsible for inspecting the same type of fish. The big difference, however, is that while the FDA usually inspects only about 2 percent of the fish imported into the U.S. through spot checks and sampling, the USDA also requires inspection on-site of production facilities. This would require the foreign producers of catfish to create and implement an equivalent inspection system and that could take years.

In the meantime, a Final Rule on implementation of the provision has yet to be issued by USDA. As such, the inspection regime by USDA has not been implemented despite millions already having been spent to implement the legislation.

Given what was stated to be government waste and duplication by the recent audit, Sen. John McCain has taken up the cause of repealing the provision, which was buried in the 2008 Farm Bill. McCain has stated that the provision is “nothing more than a protectionist tactic funded at taxpayers expense” to help special interests, here the U.S. catfish industry. McCain introduced legislation to repeal the provision, stating that “if implemented, the proposed USDA regulations will lead to a duplicative, costly and complex overseas inspection programs that serves no real purpose but to protect American catfish growers from competition while forcing American consumers to pay more for fish.”

Catfish have been a subject of much political debate in Washington. In 2002, legislation backed by the U.S. catfish industry was passed mandating changes in labeling so that Vietnamese catfish could not be imported into the U.S. under the name “catfish”; instead it was mandated that Vietnamese catfish be labeled “pangasius”. Vietnam has considered such restrictions to be trade barriers and has hinted at trade retaliation. In any event, Vietnamese exports of “pangasius” to the U.S. boomed.

Seafood labeling fraud on the other hand, is a serious problem. A February, 2009 General Accounting Office report to Congress found the most common types of Seafood fraud are: Transshipping through a third country to avoid duty; adding water or ice to seafood to increase its weight; substituting one species for another one listed on the label; and less seafood in the package than shown on the label. The Department of Justice takes this kind of fraud seriously; criminal prosecutions have resulted in recent months, as can be seen here. With the passage of the new Food Safety Modernization Act, which became law in January, regulation of seafood will inevitably skyrocket, with the FDA receiving new inspection and recall powers, and Customs implementing restrictions at the border.