Has the cost of fishery management to the private sector changed?

Indicators: Cost of Fishery Management: Private

Key Findings

Prior to the Northeast Multispecies Sector Program, the primary management cost to the industry was the implementation of measures for fishery monitoring. This included reporting requirements and vessel monitoring systems.
Observer coverage under the NMFS Northeast Fisheries Observer Program (NEFOP) was required for 8 percent of fishing trips, but those costs were covered by NMFS. With the implementation of the catch share program, the NEFOP was augmented by an at-sea monitoring (ASM) program in order to monitor the discards and ACE utilization of sector vessels. Although the costs of the ASM program were intended to be shifted to sectors by their third year of operation, NMFS funded the program through 2015.
The catch share program has imposed new reporting and record-keeping requirements.
Limited access groundfish vessels that join a sector must cover the costs associated with the administration and management of the sector, which may include the cost of ensuring their sector has sufficient allocation for all stocks in the areas they fish.

Metrics

This indicator shows the amount of money spent by the fishing industry to comply with catch share program regulations. Together with Cost of Fishery Management: Public, this indicator answers the question of whether the cost of fishery management has changed, compared to the period before the catch share program.

In Their Own Words

Although some of the quantitative data analyzed for this indicator exhibited clear trends, it was challenging to discuss the relationships between observed data trends and implementation of the respective catch share programs. The Measuring the Effects of Catch Shares project team believed that those stakeholders most involved in the fishery, either as active participants or as representatives of an involved coalition of participants (e.g., sector managers in the Northeast), would be able to provide insight and help to explain trends seen in the existing quantitative data. The following quotes were selected to illustrate some of those perspectives and highlight trends such as effects on small vessels, the effect of avoiding “choke stocks,” fleet diversification, and product quality. The individual quotes do not represent findings or conclusions for this indicator, nor do they represent a consensus across any category of participants.

Interview methodology and crosscutting themes

“In our sector the larger boats subsidize the smaller boats, because our fee is based on your allocation. So naturally if somebody has a big allocation, they’re paying a bigger share. And that’s okay. We set it up like that. That’s okay. I’m fine with that. And even on our monitoring and stuff, it’s spread out that way.”
~ Fisherman

“I think after a couple years people are becoming used to sectors, but there are still a small number of guys in the common pool who have just held out and said, “We think we can make it better staying in the common pool.” They don’t see the sector program as really having anything to offer other than additional fees.:
~ Government

“The bigger guys, I mean they can go out. They have enough fuel capacity to be able to get off the fish that they shouldn’t be catching and move somewhere else. And if they’re fishing on some of the George’s stocks that are in far better shape. They go fill their boat full of haddock.”
~ Government

“The problem was these small boats were small, private companies. They had spent their entire life competing against the very people that they had to form a sector with. It went against all business practice. On top of that, we found out that you were liable for everybody else in your sector. That’s mind boggling. The expectation of the federal government was that these guys would pool all of their allocation and divvy it up evenly, which is totally an economic nightmare and something that goes against the fabric of New England fishing.”
~ Fisherman

“The shift has been towards less and less participation, particularly at the smaller end of the scale. Folks who are diversified operators, who might have groundfished part of the year or as part of their portfolio are becoming less and less engaged in the fishery and having fewer and fewer opportunities.”
~ NGO

“When you’re operating at that scale, every penny matters when it comes to expenses, so if you add on the expenses that are associated with the sector fishing, it doesn’t make sense for a model like that. You’re better off in the common pool if you’re operating at that scale.”
~ Industry Representative

“The problems of the smaller guy as a consequence of catch shares were made even more difficult by the fact that all vessels are now required to pay for the at sea monitoring costs. That’s been the source of great friction. How do they pay for it? Money is not available. Smaller boats in particular have said they’re done. They can’t pay for it. Whenever an observer comes they’ll have an unprofitable trip.”
~ Government

“Our sector is set up that instead of paying the five or six hundred dollars when an observer goes with us, every boat in our sector, if they go to sea, they pay one hundred and fifteen dollars. Even the boats that don’t get the observers have to pay it. And that will pay for the cost of all the observers.”
~ Fisherman

“And it is just flat out more expensive to monitor small day trip boats because you have the overhead associated with every trip. If I pay the overhead once and have the guy on the boat for ten days, it’s cheaper than paying the overhead ten times to have him on ten day trips.”
~ Government

“And because these are smaller boats, their trips are not planned in the same way that a trip boat plans a trip, and they’re much more weather-dependent. So there are lots of risks that they’ll end up paying for observers for days if they can’t fish.”
~ Industry Representative

“I mean we’re paying for a sector manager. That’s 50 grand. We’ve got to buy him an office, filing cabinets, phones, all that crap. That all comes out of the fish hold. They’re taking five cents a pound out of my check just to pay for that.”
~ Fisherman

“We have negotiated for our at-sea monitoring proposals for next year. We are a small sector and we have boats that are very spread out along the coast. We don’t have the same opportunities that the coalition or the Sustainable Harvest Sector might have to leverage cost savings. This is a problem, we’re seeing it costs more to monitor trips out of remote ports. That’s why we’re really focusing on this electronic monitoring stuff, because it levels the playing field.”
~ Industry Representative

“So we do believe that electronic monitoring can be a way to bring the cost down and be a system that works better for some of the smaller boats because they don’t have to accommodate another person on board a 40-foot boat. But electronic monitoring is not a silver bullet.”
~ NGO

“It might be more expensive to have electronic monitoring equipment on board with all the associated costs than to have an observer come on board for a trip every once in a while.”
~ Government

“And why the heck are we paying somebody $60,000 to do bookkeeping, to give information that the government should be collecting on their own? But it turned out that the value in the sector manager was not being an accountant. The value was being a coordinator of fishing. Sharing information, shopping for quota, warning you when you’re getting tight on your allocation.”
~ Fisherman

Analysis

Baseline: Before Catch Share Program

During the baseline period, the costs of catch monitoring were funded largely by NMFS (Cost of Fishery Management: Public). In particular, NMFS supported the activities of the Northeast Fishery Observer Program (NEFOP). At-sea observer coverage under the program during the baseline period ranged from less than 2 percent to 16 percent (Data Quality: Observer Coverage).

During the baseline years, reporting and vessel monitoring system (VMS) requirements also added to the compliance costs related to catch monitoring. A limited access groundfish vessel was required to submit a vessel trip report each month. Since 2004, groundfish days-at-sea (DAS) vessels that opted to fish under a groundfish DAS in the U.S./Canada Management Area have been required to fish with a VMS. The cost of purchasing and installing a VMS, along with the associated operational costs, is estimated at $3,600 per vessel. Since 2004, daily electronic reporting of fish purchases has also been required for all federally permitted dealers.

Additional compliance costs were associated with gear requirements specified for the groundfish fishery. Those requirements compelled some fishermen to change their fishing practices, or to replace or modify existing fishing gear. For example, minimum mesh sizes were initially adopted through interim rules in 2001 and 2002, and made permanent by Amendment 13 (2004). Framework 42 (2007) further modified the mesh regulations in the Southern New England and Mid-Atlantic Regulated Mesh Areas to reduce discards of yellowtail flounder.

During Catch Share Program

The Northeast Multispecies Sector Program created two new components of the NMFS monitoring program for the groundfish fishery: an at-sea monitoring (ASM) program to monitor discards and ACE utilization by sector vessels, and a dockside monitoring program to ensure that landings by sector vessels are accurately reported.

The catch share program initially specified that dockside monitors would need to be present at 50 percent of all offloads of sector harvests in 2010, and 20 percent in subsequent years, and that the costs of dockside monitoring would be transferred to sectors by their second year of operation. In 2010, NMFS provided $1.2 million to the sectors to cover dockside monitoring expenses (Cost of Fishery Management: Public). By 2011, Framework 45 required dockside monitoring only to the extent that NMFS could fund it, and Framework 48 eliminated all dockside monitoring requirements in 2013 after NMFS determined that dealer reports and dockside intercepts by NMFS enforcement personnel were sufficient to monitor sector landings and that eliminating the program would alleviate general sector operating costs.

The costs of designing and implementing the ASM program were scheduled to be transferred to sectors by their third year of operation. However, NMFS was able to fully fund the costs of the program from 2012 through 2015. In 2016, NMFS secured funds to reimburse sectors for 85 percent of ASM coverage costs. Because of the anticipated shift to industry funding, the ASM program was designed to operate at a lower cost relative to the NEFOP, largely by reducing the data collection requirements to only those data elements needed to accurately estimate fishery catches (Palmer et al 2016). In addition, the expectation was that increased catch limits—as a result of rebuilding—would help enable industry to afford the cost of monitoring. Instead, since 2010, annual catch limits (ACLs) for many stocks have declined sharply (Annual Catch Limits), along with groundfish landings and revenues (Financial Viability of the Fishery: Landings and Financial Viability of the Fishery: Revenues).

To relieve the cost pressures of the.ASM program to government as well as industry, NMFS reduced the portion of sector trips subject to industry-funded monitoring by decreasing annual observer coverage levels (Observer Coverage). In addition, NMFS has focused monitoring resources by excluding some sector groundfish trips with low catch of groundfish species from the ASM requirement, such as those trips using gillnets with 10-inch or greater mesh in Southern New England and Inshore Georges Bank.

The costs of ASM coverage average around $710 per day per vessel, but there is variation depending on which private ASM service provider a sector contracts and the terms of the contract. Vessels in remote ports may be required to pay the travel costs for observers. Some sectors are spreading the costs evenly among members by charging vessels a flat rate per sea day to cover the overall costs of monitoring, while other sectors require each vessel to bear its own costs.

In early 2013, NMFS and the Council developed a white paper outlining the use of electronic (camera-based) monitoring (EM) as a possible replacement for at-sea observers, thereby helping ease the economic burden of the catch monitoring needs of the catch share program. A pilot study testing the applicability of EM in the groundfish fishery has been undertaken by the Maine Coast Fisherman’s Association in partnership with the Ecotrust Canada, The Nature Conservancy, and Gulf of Maine Research Institute. From 2013 through 2015, two to seven vessels participated in the study, with observers remaining on the boats at all times. In 2016, 12 vessels in Maine participated, along with four in Massachusetts and four in Rhode Island, and some some of these vessels were exempt from using observers.

Groundfish vessels that join a sector must cover the costs associated with the administration and management of the sector, such as the payment of the sector manager’s salary. Those costs are paid by sector members through annual membership dues and/or a surcharge on all landed pounds of groundfish or annual catch entitlement (ACE) sold to another sector. Typically, membership dues are borne solely by the holder of the limited access Northeast multispecies permit, while the surcharges are shared by the crew. NMFS helped sectors with startup costs through a grants program administered by the Gulf of Maine Research Institute. Awards of approximately $15,000 were made to each sector for needs such as hiring sector managers, setting up offices, purchasing equipment, and establishing systems and procedures to facilitate the exchange of data between NMFS and the sectors.

The Northeast Multispecies Sector Program changed the vessel trip report submission frequency from monthly to weekly for all limited access groundfish vessels. In addition, a VMS catch report is required on every trip if fishing in multiple stock areas. Each sector must submit weekly and yearly catch reports to NMFS that include detailed landings and discards for all species by all vessels in the sector. In addition, each sector must annually report other types of information, including ACE transfers with other sectors and any redistribution of potential sector contribution (PSC) among sector members.

A potential additional operating cost that fishermen who have joined a sector may incur is the cost of ensuring that their sector has sufficient ACE for all stocks in the areas where they fish. Once a sector’s ACE for a specific stock is reached, all vessels participating in that sector are prohibited from fishing in that specific stock area until such time that the sector obtains additional ACE from another sector (Northeast Multispecies Sector Program). Sector members may be held jointly liable for fishing violations such as ACE overages, discarding of legal-sized fish, and misreporting of landings and discards.

NMFS concluded that the sector program is not a limited access privilege program (Northeast Multispecies Sector Program). Consequently, the LAPP provision of the MSA—which requires a cost recovery program be implemented for the costs of management, data collection and analysis, and enforcement activities—does not apply to the Northeast Multispecies Sector Program.

Methods

Methods document available for download

Data Gaps and Limitations

Detailed data on fishery management costs incurred by the fishing industry are currently unavailable. However, the NMFS Northeast Fisheries Science Center is collecting data through the Annual Cost Survey.

Information Sources

Kitts, A. et al. 2011. 2010 Final Report on the Performance of the Northeast Multispecies (Groundfish) Fishery, (May 2010-April 2011). NMFS Northeast Fisheries Science Center Reference Document 11-19. Woods Hole, MA.

Murphy, T. et al. 2012. 2011 Final Report on the Performance of the Northeast Multispecies (Groundfish) Fishery, (May 2011-April 2012). National Marine Fisheries Service, Northeast Fisheries Science Center Reference Document 12-30. Woods Hole, MA.

Murphy, T. et al. 2014. 2012 Final Report on the Performance of the Northeast Multispecies (Groundfish) Fishery, (May 2012-April 2013). National Marine Fisheries Service, Northeast Fisheries Science Center Reference Document 14-01. Woods Hole, MA.

Murphy, T. et al. 2015. 2013 Final Report on the Performance of the Northeast Multispecies (Groundfish) Fishery, (May 2013-April 2014). National Marine Fisheries Service, Northeast Fisheries Science Center Reference Document 15-02. Woods Hole, MA.

Updated: May 2018