Department of Fish and Game

Groundfish Central: Trawl Rationalization Program

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The Pacific Fishery Management Council (Council) is continuing in the process of refining options for a Trawl Individual Quota (TIQ) program for the West Coast Groundfish Fishery.

Recent steps in the Council process toward TIQ management goals include: a Groundfish Management Team (GMT) review in late January 2007, a Council discussion on March 8, 2007 to refine alternatives, and subsequent meetings held by the TIQ Committee (TIQC) on May 2-4, 2007, and the Groundfish Allocation Committee (GAC) on May 15-17, 2007.

In March, 2007, the Council combined three alternatives into a single alternative, eliminated the permit stacking alternative, and specified an alternative that would provide for management via cooperatives for the three whiting sectors. With respect to the possibility that an Individual Transferable Quota (ITQ) program may result in stranded processor capital, the Council directed that the GAC consider alternative processor compensation measures. The Council also modified TIQ program goals and objectives, and requested that National Marine Fisheries Service (NMFS) collect additional ownership information on trawl permits as part of the renewal process for 2008 permits. The Council will further refine TIQ alternatives at the June 2007 meeting and will be adopting alternatives for analysis at the September 2007 meeting.

The Department spent a considerable amount of effort developing policy guidance for ITQ programs. The attached policy guidance represents a Californian perspective to all Individual Fishing Quota (IFQ) programs, including but not limited to, trawl fisheries. Future endeavors concerning IFQs will be based upon the important decisions drafted in this document.

 

California Department of Fish and Game (DFG) Draft Policy Guidance For Individual Transferable Quota (ITQ) Programs

  • DFG supports an ITQ program that establishes species by species quotas, for all fish species harvested in the subject fishery, and where all quota shares are expressed as percentages of the seasonal (or annual) total allowable catch for each respective species. Accumulation caps would be established on quota shares for individual fish species.
  • DFG supports an ITQ program that treats individual quota shares as a transferable, conditional, privilege to individuals in order to harvest a portion of the allowable take, devoid of any private property rights on un-harvested quotas.
  • DFG supports initial allocation of quota shares for harvesters only, and the use of a range of criteria to determine individual harvester share allocations.
  • DFG supports an ITQ program that preserves the diversity in the scale of operations among fishery participants, and facilitates new entrants without expanding the total number of quota shares, and allows for sub-sector area or group quotas where appropriate.
  • DFG supports an ITQ program where the fishery permits are non-transferable and are the property of the state. Permitted fishermen may transfer quota shares amongst other permitted fishermen, but do not possess any property rights beyond the privileges expressly granted.
  • DFG supports an ITQ program that encourages active participation in the fishery by quota-holders, and discourages shares held inactive (unless for specific biological objectives), and that ensures accountability among all quota-holders.
  • DFG supports an ITQ program that is market-driven and incorporates business incentives to reduce by-catch and to match capital with harvestable quota shares, that promotes sustainability and long-term business planning in the fishery, with the duration of entitlements long enough to encourage business investment that maximizes the value of the catch and advances economic efficiency in the fishery.
  • DFG supports an ITQ program that collects sufficient fees from quota-holders to cover the State's costs for management including supplemental federal enforcement and management.
  • DFG supports an ITQ program that encourages incentives for gear modifications, gear-conversion or fishing strategy innovation, to meet conservation objectives without adversely affecting other existing fisheries.

 

Summary of PFMC Trawl Rationalization Program Alternatives (April 2007)

(Note: this document describes the alternatives as adopted by the Council in March and does not include the most recent changes recommended by the Trawl Individual Quota Committee.)

The Pacific Fishery Management Council (Council) is currently considering alternatives that would rationalize the West Coast trawl fishery and provide incentive to reduce bycatch either through an individual fishing quota program for all trawl sectors or through co-ops for the whiting sectors. Under either alternative, allocations would be made to eligible fishery participants as a privilege to harvest a portion of fish, and not as a property right. Though structurally different, both the IFQ and co-op alternatives have been designed by the Council to fulfill the goal of the program:

Create and implement a capacity rationalization plan that increases net economic benefits, creates individual economic stability, provides for full utilization of the trawl sector allocation, considers environmental impacts, and achieves individual accountability of catch and bycatch.

Flexible vessel catch limits and individual accountability for catch are key components expected to result in achievement of most elements of this goal. In comparison, under status quo management vessels are individually accountable only for landings (not discards), and fishing is restricted by cumulative trip limits.

IFQ Alternative

Under this alternative, an individual fishing quota (IFQ) would grant an entity the privilege to catch a specified portion of the trawl sector's allocation. IFQs would be created for all species of groundfish under the Groundfish Fishery Management Plan (although some would still be managed collectively at the complex level), and the program would include both the non-whiting and whiting sectors. Vessels would be permitted to use any legal groundfish gear within this program, which would thus allow for "gear switching."

Initial Allocation

The program would initially allocate IFQ as quota shares (QS) to a number of fishery participants, based on their historical involvement in the fishery. Following the initial allocation, transfers - as generally described below - would allow for others to participate in the fishery as quota holders. The initial allocation is easiest understood in two segments. First, the Council is considering what groups should be included in the initial allocation and then what proportional split should be made among groups. Options specified are (1) to allocate 100 percent of QS to permit owners, or (2) for non-whiting groundfish to allocate 75 percent to permit owners and 25 percent to processors, and for whiting to allocate 50 percent to permit owners and 50 percent to processors.

Second, the Council is considering specific allocation formulas that would determine the amount of QS each eligible entity would receive. These calculations are based on the catch history associated with a vessel permit or delivery history for a processing company, summed over a set number of years. For catcher vessels and shoreside processors, a special calculation is being considered for overfished species to allocate these species based on a QS recipient's need to cover incidental catch under current fishing practices. In addition, QS that would have been allocated to trawl buy-back permits owners would be equally distributed to catcher vessel permit owners.

Management Structure

In structuring the management regime for the IFQ program, the Council is balancing the benefits of flexibility and individual accountability with the constraints of the very low allowable catch levels of overfished species. Prior to the start of each fishing year, and proportional to each species' OY, NMFS would issue quota pounds (QP) to entities based on the amount of QS they held. When a vessel goes fishing under the IFQ program, all catch must be recorded and must be matched by an equal amount of QP from the vessel's QP account. If there is not enough QP to cover the catch from a trip, there is a 30 day grace period during which time adequate QP must be transferred into the vessel's account; that vessel cannot be used to fish, and cannot be sold, until the overage is covered. Under limited circumstances, a carryover provision would allow for an overage in one year to be covered by up to 10 percent of the following year's QP; likewise, the provision also would allow QP that were not used in one year to be carried over into the following year, up to 10 percent.

Bycatch reduction and greater efficiency are expected to occur in the groundfish fishery under the IFQ program because of the transferability of QS and QP. As these units are transferred (bought and sold, and informally leased), it is anticipated that those best able to avoid catching overfished species and those that are most efficient entities would increase the amount registered to them, while those that regularly incur high bycatch rates or operate less efficiently might choose to sell their quota shares and leave the fishery. Generally, anyone eligible to own a US documented fishing vessel could also acquire QS and QP, and the QS and QP could be acquired in very small increments. These provisions would allow for new entrants into the fishery; for example a crew member could slowly purchase amounts of quota.

Rewarding bycatch avoidance and efficiency are a desired outcome from the program, however in order to protect against unintended consequences, two provisions limit transferability. The Council is considering whether to divide the trawl fishery into three or four sectors within the IFQ alternative (under three sectors, the fishery would divide into catcher-processor whiting, mothership whiting, and shoreside (whiting and non-whiting combined); while under four sectors the shoreside sector would divide additionally into shoreside whiting and shoreside non-whiting). QS or QP could not be transferred between the different sectors, and so there would be stability in the relative amount of fish caught within each sector. The second provision is to establish accumulation limits on the amount of QS or QP that can be owned or controlled by an entity, and accumulation limits on the amount of QP registered to a vessel. The Council is still considering the specific percentages, which would be established for each species for the non-whiting shoreside sector, and for whiting for the whiting sectors. The intent of these limits is to prevent excessive control of quota by a participant. A grandfather clause would allow a person initially allocated QS in amounts in excess of the cap to maintain ownership of those QS.

Monitoring and Tracking

The specific monitoring and tracking program necessary and feasible to assure that all catch (including discards) is documented and matched against QP is under development. Currently, 100 percent coverage by at-sea compliance monitors/observers is prescribed in the IFQ alternative (though it may be possible in certain situations to use cameras to assure compliance). Compared to status quo monitoring, this would be a significant increase for certain portions of the trawl fleet, particularly non-whiting shoreside vessels. Discarding may be allowed, though all fish discarded would also have to be covered by QP. A number of other elements of the monitoring program are still being resolved, including: the level of shoreside monitoring; whether to limit landing ports or landing hours; the expansion of the state fish ticket system into an electronic Federal system to track trawl landings; and a small vessel exception, if feasible.

Costs and Fee Structure

Program costs are of concern and are under assessment. Fee structures will be proposed to recover program costs and consideration will be made to aligning the fee structure with usage level. Another issue under consideration is the extent to which privatization of management system elements will take place under the program. Work on the cost and fee structure will proceed over the summer.

Co-op Alternative

This alternative considers another form of a dedicated access privilege - co-ops - for the whiting fishery. If this alternative is adopted, the Council still also could consider adopting the IFQ alternative for the non-whiting shoreside sector only, or maintain the non-whiting shoreside sector under status quo. Similarly, the Council could adopt co-ops for all or any combination of whiting sectors. There are provisions that would apply to the whiting fishery in general under this alternative, and then specific provisions for the mothership sector, the shoreside sector, and the catcher-processor sector. As described below, all qualified catcher vessels (delivering shoreside or to motherships) would have a choice whether to participate in a co-op or in the non-coop portion of the fishery. For catcher-processors (CP), no formal co-op fishery would be established; instead, a closed class would be created by limiting the number of CP permits, and a co-op would be formed on a voluntary basis among limited entry permit owners in the fishery. Rather than each permit being issued a privilege to harvest a proportion of the allowable catch (as with QS in the IFQ alternative), this alternative allocates a permit's whiting catch history to the co-op to which the permit is assigned (or to the non-coop portion of the fishery).

Whiting Sector Management under Co-ops

The existing allocation of whiting between the shoreside whiting, mothership, and CP sectors would remain under this alternative (42%, 24%, and 34%, respectively). Within each sector, this allowable catch would be assigned each year to co-ops or to the non-coop portion of the fishery. Co-ops would then be responsible for monitoring and enforcing the catch of the organization and of co-op members, and NMFS would monitor the catch of each sector and of the non-coop fisheries, as well as the overall catch by all three sectors. NMFS would make the following closures if limits are reached: close a co-op fishery if co-ops have collectively reached their limit; close the non-coop fishery if it reaches its limit; and/or close the combined co-op and non-co-op fishery if that whiting sector reaches its limit.

Provisions also would address the catch of overfished species (widow, canary, and darkblotched rockfish) and salmon in the whiting fishery. For bycatch limits (hard caps) on overfished species, the Council is considering whether or not to make these sector-specific. If the latter is chosen, this would be done proportionately relative to the whiting allocation. NMFS would also close the whiting fishery, or particular sectors, if a bycatch limit were reached.

Given the high levels of monitoring already in place in the whiting fishery, only moderate changes are expected to be required to implement this alternative. For the shoreside whiting fishery, at-sea observers/monitoring would be increased to 100 percent to enforce catch accounting requirements. For the at-sea fishery, 100 percent coverage aboard mothership and catcher-processors would continue. For some coverage, it may be possible for cameras to be used in place of observers.

Co-ops for Catcher Vessels Delivering to Motherships

Under this alternative, catcher vessels with a co-op endorsement for the mothership sector would make the choice each year whether to be part of a co-op or whether to register to fish in the non-coop portion of the fishery. Each co-op would be made up of catcher vessels. In the first year of the program, catcher vessel co-ops would be formed around motherships to which participating members made the majority of their landings to in the previous year. Catcher vessel permit holders would be designated a share of the mothership sector allocation based on their catch history, and that share would be designated for delivery to the mothership that that permit owner had delivered the majority of its catch to in the prior year. The class of motherships would be closed by creating a LE permit for mothership vessels.

Each year, NMFS would distribute a catch allocation to a co-op based on the sum of catch history for the permits registered to that co-op. Each co-op would submit a co-op operating agreement to NMFS prior to each season. The co-op organization would coordinate the harvest by its members. Where there are multiple co-ops in a sector, one co-op may transfer its allocation to another co-op, but catch would still be obligated to be delivered to the original mothership unless a mutual exception were made. NMFS would not track these transfers between co-ops or those among co-op members. NMFS would also distribute a catch allocation each year to the non-co-op portion of the fishery, based on the collective share of permit holders registered to that mode. If a catcher vessel permit owner wants to join a different co-op or deliver to a mothership other than the one it would be assigned to as explained above, the existing alternative would require that it first enter into the non-co-op portion of the fishery for one year. Like in the IFQ alternative, accumulation limits would be imposed to prevent excessive concentration. These limits, which are still under development, would cap the proportion of whiting that an individual or entity could process and would cap the proportion of whiting an individual or entity could have registered to his catcher vessel permit(s).

Co-ops for Catcher Vessels Delivering to Shoreside

Shoreside whiting industry members are still developing this alternative. It is anticipated that the proposed structure will be similar to that discussed above for catcher vessels delivering to motherships.

Co-ops for Catcher-Processors

Catch by the CP sector would be controlled primarily by closing the fishery when a constraining allocation is reached. As under status quo, vessels could form co-ops to achieve benefits that result from a slower-paced, more controlled harvest. The main change from status quo would be the creation of a CP endorsement that would close the CP fishery to new entrants. This endorsement would be applied to limited entry permits registered to CP vessels that fall under specified qualification criteria, and only vessels with a CP limited entry permit would be allowed to harvest fish from the sector's allocation. Limited entry permits with CP endorsements would continue to be transferable.

As under status quo, co-op(s) would be voluntarily formed among holders of permits for catcher-processors. If a co-op is formed, the sector would be managed as a private voluntary cooperative and governed by a private contract that would include division of the sector allocation among eligible vessels according to an agreed harvest schedule; NMFS would not establish an allocation of catch or catch history among permits. Therefore, if any permit holder decided not to join the cooperative, a race for fish could ensue. Similarly, if more than one co-op were formed, a race for fish could ensue absent an inter co-op agreement.