Metrics

This indicator measures 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.

Analysis

Baseline: Before Catch Share Program

During the baseline period of 2002 through 2010, the costs of catch monitoring were funded largely by NMFS (Cost of Fishery Management: Public). In particular, NMFS supported the activities of the West Coast Groundfish Observer Program, which was implemented by the agency in 2001 to gather data on the total catch and discards of vessels participating in West Coast shorebased groundfish fisheries. Observer coverage of the limited entry trawl fleet began in September 2001, with a target coverage rate of 20 percent. This value was calculated as a proportion of fleet-wide non-whiting groundfish landings observed (Data Quality: Observer Coverage).

In 2004, however, the observer sampling system in the shorebased Pacific whiting sector was replaced by electronic (camera-based) monitoring (EM) under an exempted fishing permit in order to ensure that vessels complied with retention requirements. By 2008, the cost of EM had been transferred from NMFS to industry, including the cost of leasing or purchasing EM equipment from a NMFS-approved provider, equipment installation and maintenance costs, and the cost of initial interpretation of the EM data. The permit for the use of EM ended with the implementation of the Shorebased IFQ Program in 2011.

During the baseline years, logbook and vessel monitoring system (VMS) requirements on the limited entry trawl fleet also added to the compliance costs related to catch monitoring. State fishery management agencies require logbooks to record fishing effort (location, time, and duration of trawl tows) as well as the total catch of species/species groups with sorting requirements. NMFS implemented a VMS in 2004 in order to maintain the integrity of closed areas, primarily Rockfish Conservation Areas and essential fish habitat areas (Management Framework). VMS equipment is required on all commercial vessels that retain federally managed groundfish species caught in federal waters. Vessels are responsible for paying all costs associated with purchasing, installing, and maintaining the VMS transceivers along with the transmission of data.

Compliance costs were also associated with gear requirements specified for the groundfish fishery. These requirements compelled some fishermen to change their fishing practices or to replace or modify existing fishing gear. For example, part of the strategy to rebuild shelf rockfish stocks included gear restrictions on the maximum diameter of footrope rollers and on the use of chafing gear. These restrictions prohibited vessels from delivering nearshore and shelf rockfish species and many flatfish species if they used footropes with rollers larger than the upper limit.

During Catch Share Program

A key feature of the Shorebased IFQ Program is to shift from a largely NMFS-funded catch monitoring system that relied on observer sampling to an industry-funded system in which there is 100 percent at-sea observer coverage to ensure full individual vessel catch accountability. In addition, all deliveries of IFQ species/species groups to processing or buying facilities are to be verified by shoreside catch monitors (Shorebased IFQ Program and Data Quality: Observer Coverage). Typically, the catch monitors are at-sea observers who follow the fish off the boat into the plant.

To ease the cost of transitioning to the 100 percent monitoring requirement, daily costs of observers and catch monitors, estimated at $450–$500, were transferred to industry in phases over the first five years of the catch share program (Observer Subsidies ). Vessels received a federal subsidy of $328.50 per day in 2011 and 2012, and by 2015, the subsidy had decreased to $108 per day. Catch monitors were subsidized at similar rates. Starting in 2016, industry began paying the full cost of monitoring.

The cost of observer coverage in 2015 was about 4 percent of the revenue of an average non-whiting groundfish vessel in 2015 (DRAFT). However, observer costs are highly variable and depend upon a vessel’s location, activity level, and length of the fishing trip. Private observer service providers generally charge travel costs to vessels leaving from remote ports where no observer is stationed. In addition, vessels in remote ports often have a difficult time securing observers, which can lead to delayed or missed fishing trips. The sporadic fishing activity of many non-whiting groundfish vessels (Financial Viability of the Fishery: Landings) also contributes to higher observer costs because observer service providers have to maintain more capacity than is fully or consistently utilized. Observer and catch monitor costs likely place a disproportionate adverse economic burden on small fishing and processing operations because the costs are levied on a fixed per-day basis, plus any additional expenses.

NMFS and the Pacific Fishery Management Council have taken steps to address industry concerns about difficulties securing timely, consistent observer coverage, and the associated costs. In 2015, NMFS developed a new permitting system for observer and catch monitor providers that allows for the entry of new providers. Additional companies may lower costs to fishing vessels and processors and alleviate logistical/scheduling issues with providing observers and monitors to the various ports. In addition, NMFS and the Council began exploring options for EM in 2012 that would complement traditional observer coverage as an alternative way to satisfy the 100 percent monitoring requirement. NMFS implemented exempted fishing permits to allow a limited number of vessels to replace observers with EM. Thirty-four percent of shorebased Pacific whiting vessels started using EM in 2015, and this number increased to 42 percent in 2016. To date, grants from various sources have funded all or a portion of the equipment, infrastructure, maintenance, and administrative costs associated with EM.

While EM is expected to result in cost savings for vessels that use it in place of observers, EM could raise costs for processors and for those vessels that choose to continue to employ observers. As noted above, observers often perform catch monitoring duties at the conclusion of a fishing trip. On trips with EM, however, processors must incur the costs and logistical burden of acquiring a separate catch monitor. Vessels that do not use EM may incur higher observer costs because as the number of vessels requiring observers is reduced, observer service providers may raise their fees, particularly in small and remote ports where providers cannot profitably maintain observers.

Under the Shorebased IFQ Program, all limited entry trawl vessels must continue to maintain state logbooks and comply with fishing gear and VMS equipment requirements. The program also includes a new requirement for annual submission of socioeconomic data (e.g., vessel/plant characteristics, capitalized investments, annual expenses, annual earnings, crew/labor payments, and quota and permit expenses) by limited entry trawl vessels and first receivers in order to help fishery managers monitor program performance. The reporting burden associated with this requirement includes the time to review instructions, search existing data sources, gather and maintain the data needed, and complete and review the collection of information.

An additional operating cost that some fisherman may incur as a result of the Shorebased IFQ Program is the acquisition of additional QP beyond their allocation. Fishermen who are unable to attain an acceptable level of profitability due to insufficient allocations may be compelled to either acquire additional QP or exit the fishery (Shorebased IFQ Program and Access and Exclusion Effects). The “tie up” provision of the catch share program, which prohibits a fisherman who experiences a QP overage from fishing in the groundfish trawl fishery, could also be considered a related cost or sacrifice of potential profit.

According to the NMFS Five-Year Review of the catch share program, in 2015, the median non-whiting groundfish vessel spent 7 percent of its revenue on quota. These costs do not include the expense of completing the QP transfer, such as the time costs of searching out one or more possible sellers and negotiating the terms of the exchange. The transactional costs of acquiring QP have likely diminished somewhat as a result of the establishment of an active QP trading market, as well as the organization of risk pools by some fishermen (Access and Exclusion Effects and Financial Viability of the Fishery: Landings).

Lastly, the Magnuson Stevens Act (MSA) requires fishermen to pay fees that cover the costs of management, data collection and analysis, and enforcement activities related to the catch share program (Shorebased IFQ Program). The cost recovery fee amount due is calculated by multiplying ex- vessel value by a fee percentage determined annually by NMFS. The cost recovery fee percentage for the Shorebased IFQ Program was set at 3 percent, which is the maximum percentage allowable under the MSA. In order to reduce the burden on industry, NMFS structured cost recovery for the Shorebased IFQ Program to coordinate with the Pacific Coast groundfish buyback program (History of Fishery). Nonetheless, given that industry is responsible for covering some of the costs of management of the catch share program, some fishermen have argued that there should be a corresponding responsibility for NMFS to delineate costs related to management, data collection, and enforcement at a finer scale than is currently done (Cost of Fishery Management: Public).