Community-based Sectors for the New England Groundfish Fishery

Community-based Sectors for the
New England Groundfish Fishery
Contract No. 4300-003-01
FINAL REPORT SUBMITTED TO:
National Marine Fisheries Service,
Northeast Fisheries Science Center
PREPARED BY:
Daniel S. Holland, Ph.D.
Gulf of Maine Research Institute
350 Commercial Street, Portland, ME 04101
207-228-1643, dholland@gmri.org
DATE SUBMITTED:
September 27, 2007

Acknowledgements
Support for this Study was provided by the National Marine Fisheries Service, Office of
Science and Technology and the Northeast Fisheries Science Center.
The author is grateful for constructive comments provided by the staff of the Social
Science Branch of the Northeast Fisheries Science Center. Any remaining errors or
omissions in this report are the responsibility of the author alone. The opinions expressed
in this report are those of the author and do not reflect opinions or positions of the
National Marine Fisheries Service.
The author is also grateful for the assistance of several fishermen, business owners,
municipal officials, and bankers for providing information that was essential to compiling
this report.

Table of Contents
Executive Summary............................................................................................................ 2
1.0 Introduction................................................................................................................... 7
2.0 Background on the Groundfish Fishery and Sectors .................................................... 7
2.1 Sectors in the New England Groundfish Fishery.................................................... 10
2.2 Experience with Existing Sectors in the New England Groundfish Fishery .......... 13
3.0 Case Studies................................................................................................................ 14
3.1 Port Clyde Community-based Groundfish Sector .................................................. 14
3.1.1 Strawman Sector Structure and Operational Plan:........................................... 16
3.1.2 Economic Feasibility ....................................................................................... 18
3.1.3 Matching Catch to ACE................................................................................... 23
3.2 Portland Community-based Groundfish Sectors .................................................... 25
3.2.1 Strawman Sector Structure and Operational Plan:........................................... 27
3.2.2 Economic Feasibility ....................................................................................... 30
3.2.3 Matching Catch to ACE................................................................................... 38
3.3 Permit Bank ............................................................................................................ 40
3.3.1 Financing a Permit Bank.................................................................................. 41
3.3.2 Economic Feasibility of a Permit Bank ........................................................... 43
4.0 Operational and Regulatory Issues for Sectors........................................................... 46
4.1 Sector Implementation............................................................................................ 46
4.2 Rolling Baseline for Sector Allocations ................................................................. 46
4.3 Balancing Catches with Allocations ....................................................................... 48
4.4 Communities without Catch History ...................................................................... 49
5.0 Conclusions................................................................................................................. 49
5.1 Recommendations................................................................................................... 52
References......................................................................................................................... 53
Appendix A: Landings and revenue projections............................................................... 55
Appendix B: Groundfish Price Model .............................................................................. 57
Appendix C: Sector Proposals Submitted to the NEFMC in April and May of 2007...... 59
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Executive Summary
The Northeast Multispecies Fishery Management Plan contains provisions that allow groups of
permit holders to form self-organized “sectors” that are allocated a share of the total allowable
catch of the groundfish species they target. Sector management offers a number of potential
advantages to fishermen over the current management system which is based on a complex set of
regulations that dictate when, where and how much fishermen can fish. Sectors offer fishermen
the opportunity to: increase efficiency by increasing flexibility of when and where to fish;
manage fishing operations to meet social as well economic objectives of the sector; concentrate
on increasing quality and value of fish caught without concern for lost fishing time; make
targeting and location decisions without concern for lost fishing time; avoid having to return to
port or discard fish because a trip limit is reached for one species; and transfer (share, trade or
consolidate) catch privileges among sector members to reduce fishing costs.
Sector provisions offer fishing communities a means to address concerns that reduction and
consolidation of groundfish operations threaten the viability of their current groundfish industry.
A community-based sector could provide the means for a community and its fishermen to retain
or regain access to the groundfish fishery and to ensure that the community benefits from this
access.
To date there have only been two sectors approved by the NEFMC despite the potential
advantages they offer. Development of sectors has been constrained by a lack of understanding
or the potential advantages of sectors, the difficulty and cost of forming a sector, and the lack of
technical and financial resources available to potential sector organizers. Despite these
constraints, a large number of sector proposals were submitted to the Council in May of 2007.
These sectors have the potential to include vessels with catch history representing the majority of
groundfish catch in the Multispecies fishery.
This report presents a study of the feasibility of community-based groundfish sectors. The
purpose is to determine the objectives of community-based sectors, how they can be organized
and implemented, how they can be financed, and whether they are likely to be financially viable.
The concept of a permit bank as a means to enhance the viability of a community-based sector is
also evaluated. The analysis presented here is based largely on two case studies of prospective
community-based groundfish sectors, one for a potentially larger community sector in Portland,
Maine and another for a smaller sector based in Port Clyde, Maine. However, many of the
conclusions regarding the utility and feasibility of community-based groundfish sectors are
applicable to the broader New England region.
The primary interest of the Port Clyde and Portland fishermen in developing a community-based
sector is to improve their profitability and economic viability. However, they also expressed the
belief that sectors could improve safety. Some potential sector members envision using the sector
to operationalize fishing practices that will minimize bycatch of juvenile or spawning fish
through gear modifications, fleet communication, voluntary closures, or other management
measures.
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Community leaders in Portland and Port Clyde are supportive of sectors as a means to ensure the
economic viability of their local fishermen and related businesses. However, while they are
willing to provide some organizational assistance and possibly assistance in acquiring financing,
they appear unwilling to spend taxpayer dollars to support a community-based sector. This could
differ in other communities.
Port Clyde Case Study
The Port Clyde case study is based on a potential sector that includes 17 permits for mobile gear
vessels between 36 and 56 feet in length. These 17 permits represent nearly all of the groundfish
vessels fishing out of Port Clyde and the majority of active groundfish vessels in the Mid-coast
region of Maine. A strawman operational structure was developed through consultation with the
Mid-coast Fishermen’s Association. Under this strawman, the sector would receive allocations of
all regulated groundfish species its members regularly encounter. Because the rules for allocation
to sectors were in flux at the time this research was being undertaken, the analysis of the
economic feasibility of the sector is done using allocations representing catch history for two
periods: (1) from May 1, 2001 through April 30, 2006, and (2) from May 1, 1996 to April 30,
2002. The Port Clyde sector would restrict its operations to the Gulf of Maine. It would be
exempt from DAS limits, trip limits, and seasonal closures but its vessels would continue to be
subject to the same restrictions on year-round closed areas and gear as other multispecies vessels.
The Sector envisions assigning each permit-holder in the sector a specific percentage of the
overall allocation of each of the species-stocks for which the sector receives an allocation. Sector
members would be free to utilize these allocations on their vessels or transfer them to other
vessels within the sector upon notification and approval by the sector manager.
The expected annual gain in gross revenues under sector management is estimated by subtracting
the projected annual revenues without sectors management from projected revenues under sector
management. The annual gain in net revenues for the sector is calculated by subtracting from the
increase in annual gross revenue, the variable operating costs, the ongoing costs of sector
management, and loan payments to repay sector establishment costs. The analysis suggests that
sector management can provide substantial gains in net revenues to sector vessels and that these
gains far outweigh the costs of establishing and operating a sector. In the first year, the sector is
projected to increase net revenues by $605 thousand with the FY01-05 allocation and by $505
thousand with the FY96-01 allocation.
The projected gains for the sector are based on the ability of the sector to more effectively and
efficiently utilize their share of the overall target TACs by targeting effort on stocks for which
total industry catches have been well below TACs and by landing fish they are now forced to
discard because of trim limits. The ability to do this would be a consequence of exemptions from
DAS restrictions, rolling closures and trip limits. The sector may achieve additional gains beyond
what is calculated here through consolidation of harvesting on the most efficient sector vessels
and through higher prices if they are able to improve quality or make direct marketing
arrangements.
Portland Case Study
Analyses are done on two hypothetical Portland sectors. Portland Sector A includes all groundfish
vessels with more than 50% of their groundfish revenues in fishing year 2005 from landings in
Portland, a total of 76 vessels. Portland Sector B is a subset of Portland Sector A and includes 50
groundfish vessels with more than 90% of their groundfish revenues in fishing year 2005 coming
from landings in Portland. A strawman operational structure for the sectors was developed and
3

evaluated through discussion with a number of groundfish permit owners and vessel operators in
Portland. Under this strawman, the sector would receive allocations of all regulated groundfish
species it regularly encounters as well as monkfish. As was done for the Port Clyde case study,
the analysis of the economic feasibility of the sectors is done based on sector and overall
commercial catches for two different allocation periods: (1) from May 1, 2001 through April 30,
2006, and (2) from May 1, 1996 to April 30, 2002. The sector would not restrict the operations of
member vessels geographically. It would be exempt from DAS limits, trip limits, and seasonal
closures but would continue to be subject to the same restrictions on year-round closed areas and
gear as other multispecies vessels. Each permit in the sector will receive a specific allocation of
the overall allocation of each of the species-stocks for which the Sector receives an allocation.
Sector members would be free to utilize these allocations on their vessels or transfer them to other
vessels within the sector upon notification and approval by the sector manager.
The analysis suggests that sector management can provide substantial gains in net revenues to
sector vessels and that these gains far outweigh the costs of establishing and operating a sector.
Sector A is projected to increase net revenues by $4.6 million with the FY01-05 allocation and by
$4.2 million with the FY96-01 allocation. This assumes sector A vessels pay a landing tax of 1%
on groundfish and monkfish landings. The smaller Sector B is projected to increase net revenues
by $2.8 million with the FY01-05 allocation and by $2.0 million with the FY96-01 allocation.
Since the Portland sectors are much larger and have higher projected revenues than the Port
Clyde sector the percentage of sector revenues required for covering operating costs of the sector
is much lower. As with the Port Clyde sector, the projected gains for the sector are based on the
ability of the sector fishermen to more effectively and efficiently utilize their share of the overall
target TACs by targeting effort on stocks for which total industry catches have been well below
TACs and by landing fish they are now forced to discard because of trim limits. The sector might
achieve additional gains beyond what is calculated here through higher prices or by reducing
costs through consolidation.
Permit Bank
A means for communities interested in maintaining or regaining access to the groundfish fishery
is to create a permit bank affiliated with a sector. The permit bank would purchase and hold
permits and the associated catch history and then include these permits and catch history in the
community-based sector. The share of the sector’s annual catch entitlement (ACE) allocation
contributed by the permit bank vessels would be leased to sector vessels at rates sufficient to pay
back loans incurred for purchasing the permits. Once loans were paid back, the permit bank might
continue to charge a fee for access to this ACE and use the revenues to acquire more permits or
other investments in the interest of the fishing community and the sector members. The permit
bank might also use these revenues to purchase permits of sector members that wished to retire.
The sector could create an apprentice program that would provide young fishermen access to the
fishery through access to the ACE controlled by the permit bank.
There are a variety of ways that a permit bank might be financed. The most straight forward way
would be through a loan from a commercial bank. If Finance Authority of Maine (FAME) or
some other government program could provide loan guarantees, it would enable the lenders to
classify the assets in a preferred risk category. This would increase the likelihood of loan
approval and would increase the percent of the value that could be financed. An alterative
financing mechanism would be through a bond issue. The least costly bond option is a
government obligation (GO) that puts the name of the city behind paying back the bond. The cost
of capital for a GO is currently several points lower than a commercial loan. Direct loans from the
Federal government would be another and potentially superior alternative for financing creation
4

of community-based permit banks. This would require new legislation, but a program could be
modeled on the current legislation for industry financed buybacks.
To explore the economic feasibility of this concept, I constructed a strawman permit bank based
on vessels that were listed for sale during the summer of 2006. A total of 10 vessels were selected
with a combined asking price of $3.8 million. The vessels range in size from 46 to 74 feet with
prices ranging from $150 thousand to $575 thousand. The ratios of asking price to the average
annual groundfish revenue for those vessels (FY2001 – FY2005) range from 0.85 to 2.49.
ACE allocations based on the use of FY2001-FY2005 catch history of the permit bank vessels are
calculated and revenues associated with utilization of those allocations are projected based on the
same target TAC and prices projections used for the economic feasibility analysis of the sectors.
The ACE leasing fee as a percentage of revenues that would pay back a $3.8 million loan for
vessel acquisition is calculated to be 16.3% of ex-vessel price from the catch associated with the
leased ACE. Assuming variable operating costs equal to 38% of gross revenues (the same
assumption used in the sector analyses), the permit bank yields close to $2 million annually in net
revenues to sector vessels after payment of the lease fees necessary for loan repayment. The
permit bank then quickly builds a substantial asset base which it could use to purchase additional
permits.
Operational and Regulatory Issues for Community-based Sectors
Perhaps the most important constraint on sector development (community-based or otherwise) is
the difficulties and cost involved with formation of a sector. There is a need for provision of
extension services for prospective sectors (particularly for preparation of environmental
assessments) and/or for a financial facility whereby sectors can apply for a loans or grants to
defray the costs of sector development.
Currently, approval of a new sector can only be done though a framework or an amendment. This
creates considerable uncertainty as to whether the sector will ultimately be approved and when. A
process could be set up allowing NMFS to authorized new sectors, but the Council would
sacrifice some control over sector development in the fishery. Alternatively, the councils could
initiate some region wide ruling allowing for sectors in every fishery with the final approval
resting with the Councils and NMFS.
Current regulations create a rolling period of catch history to be used for allocations. Sectors lock
into a catch allocation as a percentage of the TAC based on the ratio of their catches during the
five years relative to total commercial catches. However, the years used for allocation to future
sectors continue to change. Rolling baselines have the advantage of creating sector allocations
that more closely match recent catch composition of the sector vessels but create a number of
potential problems as well. Perhaps most problematic is the fact that permit holders within a
sector that make their catch history available to other sector members will see their potential
future allocations eroded. This presents a particular problem for sectors that might want to form
permit banks to make additional catch history available to its members since the value of these
permits would quickly erode. The Council recently passed motions recommending that sector
regulations be changed to create fixed and consistent baselines for all sector allocations for a
given fishery. This would eliminate much of the ambiguity and perverse incentives created by
current rolling baseline allocations. It creates more security for individuals who make their ACE
available to other members of the sector thereby facilitating consolidation within the sector and
reduction of fixed costs. It also provides more security for permit banks that its permits will not
be devalued over time if the ACE is made available to other vessels.
5

Under current sector regulations, sectors can not buy, sell or trade ACE with other sectors. They
must constrain their catch of all species for which they have sector allocations to those annual
allocations. If more sectors are authorized, substantial gains in profitability for sectors may be
realized by allowing sectors to trade ACE.
There are some communities, such as some in Downeast Maine, that had traditionally had some
involvement in the groundfish fishery, but no longer have any fishermen with permits with “A”
DAS and catch history. Sectors in conjunction with permit banks could provide an opportunity
for permit owners and communities without “A” DAS and catch history to reenter the groundfish
fishery. Individuals that hold groundfish permits with only “C” DAS could enter a sector without
purchasing a new permit and could have access to that sector’s allocation. A sector could be
created with a permit bank to acquire catch history for this purpose.
In sum, although there has not been an explicit program to facilitate development of communitybased
sectors, the opportunity exists to do so and a number of them are likely to evolve in the
coming years. These community-based sectors can serve dual goals of improving the profitability
and safety of groundfish fishermen and also allowing communities to retain or regain their
involvement in the groundfish fishery. However, there a number of barriers that are impeding
development of community-based sectors and fuller utilization of sector management in general.
Listed below are a number of recommendations that may facilitate more effective use of sectors
by fishermen and communities. These include actions that could be taken by NMFS
independently, regulatory reforms that may be included by the Council in Amendment 16, and
creation of new financing program that would require federal legislation:
Recommendations
1. To facilitate individual permit holders’ evaluation of their decision of whether to join a
sector, NMFS should compile the catch histories by fish stock of all permitted groundfish
vessels and inform all current permit owners of the process of acquiring their catch history
and the specific forms and signatures required for release of their catch history to them and to
a sector organizer and or sector manager.
2. The NEFMC should authorize a streamlined process for sector approval that does not require
a Council framework action and reduces the burden of documentation and regulatory analysis
that must be done by sector organizers.
3. The NEFMC should allow sectors to trade some proportion of their ACE allocations with
other sectors within the fishing year to facilitate catch balancing and greater utilization of
ACE portfolios.
4. The NEFMC should fix the allocation baseline for determining individual permit holders’
contributions to sector allocations and decide how overall sector allocations are adjusted with
movement of individuals in, out and between sectors. Future catch privileges associated with
individual permits, whether in the context of sectors or other management systems, should be
unaffected by how catch privileges are utilized within sectors.
5. The NEFMC should explicitly authorize community-based sectors to form permit banks that
can hold permits and contribute catch history to the sector. This recommendation is not meant
to imply that multiple permits from a single vessel could be split.
6. Congress should create financial resources for development of community permit
banks through a loan guarantee program or a direct loan program modeled on the
industry funded buyback structure.
6

1.0 Introduction
The groundfish fishery in New England has been going through a sustained period of regulatory
and economic change since the mid 1990s. These changes have led to substantial reorganization
and consolidation of the industry that have and continue to change the character and geographic
distribution of the industry. Concerns have been raised by fishermen and community leaders in
some ports that landings will eventually be consolidated in a few large ports and that smaller
ports and communities that have traditionally been involved in the fishery will no longer have a
place in the fishery. Industry and community leaders in Maine are concerned that a trend in
migration of fishing operations toward Massachusetts will leave Maine with few participants in
the fishery and insufficient groundfish landings to support the Portland Fish Exchange.
The Northeast Multispecies Fishery Management Plan (FMP) contains provisions that allow
groups of permit holders to form self organized harvest cooperatives called “sectors”. Sectors can
be granted a share of the total allowable catch of regulated groundfish species based on the catch
histories of the members of the sector. Sectors may receive exemptions from many of the
regulations currently used to limit catch in the fishery in return for a binding agreement to keep
sector catches within specified limits. While they were not designed specifically for this purpose,
sector provisions offer fishing communities a means to address concerns that reduction and
consolidation of groundfish operations threaten the viability of their current groundfish industry.
A community-based sector could provide the means for a community and its fishermen to retain
or regain access to the groundfish fishery and to ensure that the community benefits from this
access.
This report presents a feasibility study of community-based groundfish sectors. The purpose is to
determine the objectives of community-based sectors, how they can be organized and
implemented, how they can be financed, and whether they are likely to be financially viable. It
identifies benefits, costs and constraints (organizational, financial and regulatory) to development
of community-based sectors. The utility and feasibility of a permit bank that would enhance the
viability of a community-based sector is also analyzed. The analysis presented here is based
largely on two case studies of prospective community-based groundfish sectors, one for a
potentially larger community sector in Southwestern Maine and another for a small community in
Midcoast Maine. However, many of the conclusions regarding the utility and feasibility of
community-based groundfish sectors are applicable to the entire New England region.
2.0 Background on the Groundfish Fishery and Sectors
Following the depletion of a number of key groundfish stocks in the late 1980s, the Conservation
Law Foundation successfully sued the Department of Commerce and forced implementation of a
rebuilding plan that implemented a limited access management program based on individual
vessel allocations of days at sea (DAS). The series of Amendments and frameworks to the
Northeast Multispecies (groundfish) Fishery Management Plan (FMP) contains FMP, together
with three vessel and permit buybacks, eventually led to reductions in landings and revenues and
some consolidation of the limited access fleet. However, a sustained reduction in landings did not
occur until after 2001.
7

Amendment 7, implemented in 1996, accelerated the DAS effort reduction program first
established in Amendment 5, but failed to bring about sufficient reductions in fishing mortality
due to the large amount of latent effort that existed in the fishery. Vessel buybacks in 1996 and
1997, using $25 million in government funds targeted at active groundfish vessels, purchased 79
vessels and permits that had accounted for approximately 20% of the revenues in the fishery.
Despite this, the SEIS for Amendment 13 notes that the number of active groundfish vessels
remained relatively constant between 1996 and 2001 (NEFMC 2003) implying that previously
inactive vessels must have been activated following the buybacks. In 2001, there were nearly
three times more multispecies permits than vessels that actually reported landings of groundfish
(NEFMC 2003). Another federally funded buyback with an appropriation of $10 million was
carried out in 2001 but purchased only permits and was directed at latent effort. The program
ended up purchasing 245 permits for $9.6 million in total. Of these only a few were active
vessels; the rest were inactive vessels reflecting the programs focus on latent effort.
Despite these reductions in active capacity and latent effort, increasingly strict limits on effort,
and other measures such as year-round and seasonal closed areas and trip limits, overall
groundfish landings generally trended upward between 1994 and 2001, and fishing mortality on
some key groundfish stocks continued to exceed overfishing thresholds. Substantial latent effort
still existed. Over 1300 limited access multispecies permits with individual or fleet days at sea
(DAS) allocations remained in the fishery as of 2001, but only 861 of them were active in the
groundfish fishery. Open access permits increased from 1381 to 2140 between 1996 and 2001
though less than 800 of these landed groundfish in 2001 (NEFMC 2003).
In December 2001, the Conservation Law Foundation and other organizations successfully filed
suit against NMFS alleging that the rebuilding plans that NMFS implemented were not consistent
with Amendment 9 overfishing definitions (Conservation Law Foundation et al. v. Evans et al.).
After a long series of negotiations among various parties, interim measures were adopted by the
court, and NMFS was instructed to submit a management plan to comply with the law. The
response to this was Amendment 13, which was developed over a four-year period to meet the
MSA requirement to adopt rebuilding programs for stocks that are overfished and to end
overfishing. Amendment 13 was approved by the National Marine Fisheries Service in March,
2004 and became effective on May 1, 2004.
Amendment 13 adopted a broad suite of management measures in order to achieve fishing
mortality targets necessary to rebuild overfished stocks and meet other requirements of the M-S
Act. The most important changes were to reduce DAS available to fishermen and to proscribe the
reactivation of latent permits. Rather than simply cutting the DAS of all permits, Amendment 13
created three categories of DAS (“A”, “B” and “C” DAS). Only “A” DAS can be used to fish for
groundfish under the normal fishery rules. “B” DAS can only be used for certain special access
programs designed to allow fishermen to access fish stocks for which catches were well below
target TACs if bycatch of other stocks can be avoided. “C” DAS are unusable at this point. Active
vessels saw 40% of their DAS turned into “B” DAS and the other 60% were made “A” DAS. A
large number of vessels with groundfish permits that had not been active in the fishery received
no allocation of “A” or “B” DAS and were effectively removed from the fishery. Although the
possibility was left open that “C” DAS might in future be “activated” allowing these boats to
return to the fishery, the likelihood of this occurring appears remote. However, vessels with only
“C” DAS can regain access to the fishery by buying or leasing “A” DAS or through membership
in a sector 1 .
1 A vessel with only “C” DAS would probably not bring any additional allocation to the sector, but, could
participate in harvesting a sector’s allocation if they were granted entry to the sector.
8

Although Amendment 13 effectively eliminated a large number of permits holders from the
fishery by allocating them only “C” DAS, it also reduced DAS allocations for the remaining
vessels to the point that the economic viability of many operations was threatened, particularly
for vessels that did not also have the ability to participate in other fisheries. In recognition of this,
Amendment 13 included programs including DAS leasing, sectors and special access programs
that could allow fishermen to increase profitability without causing additional fishing pressure on
stocks of concern. Both the leasing program and the sector program create the possibility of
increasing profitability by consolidating fishing on fewer platforms.
The leasing provisions of Amendment 13 allowed both leasing and permanent transfer of DAS
between vessels. The program was authorized initially for two years but was extended by
Framework 42. To avoid transfers that would increase effective fishing power, transfer or leases
can only be made between boats of the same size or from larger boats to smaller boats. Permanent
transfers of DAS also incur a 20% conservation tax (e.g. 50 DAS on the initial boat becomes 40
DAS on the boat it is transferred to). Because of this requirement, few permanent transfers have
been made 2 . However, the conservation tax has not prevented consolidation as many permit
holders have simply purchased additional permits and leased the DAS from those vessels to other
vessels they own. In some cases the permits have been transferred onto skiffs. This allows the
permit owner to avoid the unnecessary costs of maintaining the inactive vessels, while they
maintain the rights of the owner to lease DAS to vessels up to the size of the original vessel or to
transfer the permit back onto a vessel of that size at a later date. Nearly 15 percent of the baseline
allocations were transferred through the leasing program in the first year and indications were that
the percentage increased in the second year of the program. The leasing program resulted in
significant consolidation of DAS as the primary users of the program were those vessels that
received the highest baseline DAS allocations (NEFMC 2006).
Amendment 13 also contained provisions that allowed groups of fishermen to voluntarily form
“sectors” and create limited self management systems. A sector could apply for an allocation of
catch of one or several regulated groundfish species. The allocation would be based on the catch
history of the group of vessels relative to the total catch for that species. The group would then
receive an annual allocation equal to the target TAC 3 for that species multiplied by the ratio of the
group’s catch to the total commercial catch. If a sector requested an allocation for all regulated
stocks, and put in place an operations plan that would limit their catches to their allocation, they
could, in theory, avoid some of the other current regulations including DAS limits, trip limits and
seasonal area closures. Sectors provide another potential means of consolidation since sector
members can, if they choose, fish their allocation of catch with a subset of the vessels/permits that
make up the sector.
Since 2001, landings and revenues of groundfish have declined fairly steadily in the New
England region as a whole. The decline has occurred throughout the region, but has been more
severe in some areas than others. Revenues from regulated groundfish in Maine and
Massachusetts, which together account for over 90% of groundfish revenues, were 29% lower in
2 The author has been told by several individuals that there have recently been a number of purchase and
transfers of vessels with only “C” DAS. These permits do not provide the vessel with any additional fishing
opportunity, but the increase the vessel’s baseline number of DAS which allows them to lease a greater
number of DAS.
3 In cases where a share of the TAC is utilized by the recreational sector or as bycatch in other fisheries,
presumably the sector’s share would be a percentage of the commercial TAC once those other user groups
were accounted for. The regulations are not explicit about this and the issue has not yet been dealt with.
9

oth states in 2004 relative to 2001. However, the reductions were quite uneven within the states.
In Massachusetts, groundfish revenues fell by 45% between 2001 and 2004 for Cape and Islands
ports, by 33% for the New Bedford coast, but by only 20% for Gloucester and only 11% for
Boston (NEFMC 2006).
During this period, Maine saw a shift of activity toward the Southern part of the state. Groundfish
revenues for ports in upper Midcoast Maine dropped by 64% in this period. Groundfish revenues
in lower Midcoast Maine were 28% lower in 2004 than 2001 while revenues in Southern Maine
were 83% higher. Groundfish landings in Downeast Maine have been essentially nonexistent
since 1997. Although overall groundfish revenues in Maine dropped by about the same amount as
for Massachusetts between 2001 and 2004, concerns have been raised that permit holders are
beginning to move their base of operations and landings away from Maine to Massachusetts ports
because of proximity to the fishing grounds and because boats landing or registered in Maine are
prohibited from landing lobsters which can provide a significant boost to revenues. Revenues
from regulated groundfish landings in Maine did decline by about 2% in the 2005 fishing years
relative to 2004 and increased by the same percentage in Massachusetts. Representatives of the
Portland Fish Exchange, which handles the great majority of groundfish landings in Maine, have
stated that the drop in landing of groundfish in Portland has made the exchange unprofitable and
could lead to the close of the auction which would likely result in additional movement of vessels
to other ports (Valleau 2007).
2.1 Sectors in the New England Groundfish Fishery
The concept of self selecting sectors as a management tool for the New England groundfish
fishery was first raised by Frank Marachi during the initial development of Amendment 13
(Thunberg 2007). The groundfish PDT was tasked with exploring the concept further. These self
selecting sectors would allow groundfish permit holders to voluntarily join together to form a
“sector” that would receive an allocation of the species they caught. They would be allowed to
opt out of the input control system used to manage the fishery in return for keeping their catches
within their allocation. Permit holders that did not wish to join a sector could continue to fish
under a common set of regulations (i.e., the input control system as adapted by Amendment 13).
The concept of sectors that emerged from Amendment 13 remained basically consistent with
what was proposed by the PDT. A process was designed to allow groups of permit holders to
form sectors and seek allocations of groundfish in return for developing a binding operations plan
that would ensure the sector’s catch remained below its allocation. The allocation of catch to the
sector would be based on the documented accumulated landings of sector members for the 5-year
period prior to submission of a sector allocation proposal to the Council. An exception to that
allocation formula was created for Georges Bank (GB) for which the allocation was based on
fishing years 1996 through 2001 for any sectors that began operation by 2007. The sector
regulations specified that no sector could be allocated more than 20 percent of a stock’s TAC
unless otherwise authorized by the Council.
The regulations spell out clearly the method for calculating the allocation of cod to the Georges
Bank Cod Hook Sector which was also implemented with Amendment 13. It states that the
accumulated landings of GB cod by the sector participants from 1996–2001 will then be divided
by the accumulated landings of GB cod by all vessels for 1996–2001. This ratio is the percentage
of the GB cod TAC for the next fishing year that will be allocated to the sector. The sector would
then receive that fixed percentage of the GB cod TAC in future years as well. The regulations are
10

somewhat vague on how the allocations for future sectors would be calculated, at least for
allocations of stocks other than GB cod. The common presumption was that that allocations will
be a percentage of the TAC calculated by dividing the sector vessels’ accumulated landings over
the five years fishing years prior to submitting their proposal by the total documented
(presumably commercial) landings for that stock over the same period. This would mean that, for
a sector submitting its proposal in May of 2007 with plans to begin operation in May of 2008, its
allocation would be based on catches in the fishing years beginning in 2002-2006. This
allocation formula is likely to change anyway as a result of amendment 16.
The regulations that implemented sectors require sectors to submit a proposal accompanied by an
environmental assessment that satisfies National Environmental Policy Act (NEPA) and other
requirements for regulatory analysis of fishery management actions. The initial allocation of
catch or DAS to the sector would require authorization by the Council through a framework or
amendment. After the initial authorization, the sector would be required to submit an operations
plan and a binding contract to the NMFS Regional Administrator (RA) along with an updated EA
that evaluates the operations plan. The RA then reviews the operations plan and seeks public
comment on it before giving the final approval (through a federal rule making) required for the
sector to operate. Submission to and approval by the RA of an operations plan and contract with
an updated EA is required each year the sector continues to operate, but further Council actions
are not required for annual authorization of the sector unless there are substantial changes to the
operations plan or membership.
Sector management offers a number of potential advantages over the current management system.
By accepting hard limits on total allowable catch (TAC) on all species, the regulations suggest
that the sector members may be able to exempt themselves from trip limits and a number of
existing management controls including trip limits, seasonal closures and overall limits on days at
sea (DAS). This offers sector members an opportunity to:
• increase efficiency by increasing flexibility of when and where they fish;
• manage fishing operations to meet social as well economic objectives of the sector;
• concentrate on increasing quality and value of fish caught without concern for lost fishing
time;
• make targeting and location decisions without concern for lost fishing time;
• avoid having to return to port or discard fish because a trip limit is reached for one species
(this “regulatory discarding” is currently a legal practice but leads to the discarding and
mortality of large amounts of marketable fish);
• transfer and potentially consolidate catch privileges between sector members to reduce capital
costs.
The potential benefits of sectors go beyond allowing more effective and efficient use of catch
allocations. They empower fishery stakeholder to develop innovative ways to better manage the
resources they have access to, and they can create strong incentives for these stakeholder to
conserve fishery resources since their catch allocations in future years are directly related to the
size and productivity of the fish stocks. Sectors may also offer an opportunity for communities
that have historically participated in the groundfish fishery to maintain the viability of their local
fishing fleets, preserve or regain access to the fishery, and become actively involved in managing
local fishery resources through creation of community owned permit banks. By purchasing
permits and associated catch history, a community entity could own a share of a sector’s catch
allocation and make it available to sector members as an incentive to retain vessels in the
community. Such a permit bank might also provide a means for communities to provide ongoing
11

access to new fishery entrants, perhaps through an apprenticeship program. Sectors may also
offer a vehicle for environmental NGOs to negotiate mutually beneficial agreements for use of
environmentally friendly fishing practices using market incentives as an alternative to court
actions and regulatory initiatives that are slow, costly and often ineffective.
The industry has been slow to take up sectors despite the potential advantages they offer. To date
there have only been two sectors approved. No mobile gear (i.e. trawler) sectors have been
approved, and no sector has requested an allocation of all regulated groundfish species it catches
or been granted exemption from primary input controls (i.e., DAS limitations). The GB Hook
Sector has received some regulatory relief in the form of exemption from trip limits, the May
closures and differential DAS counting.
A primary constraint on the adoption of sector management is the difficulty involved in formation
of a sector. Prospective sectors must devise an operations plan complete with a legal contract and
system for monitoring catch of its members. They must also complete an environmental
assessment. They must submit these at least a year before the sector can be implemented. The
sector can only be implemented through a framework or amendment of the Council. The sector
must also bear the costs of monitoring catches of its members and ensuring their compliance with
the sector operations plan. There are no publicly provided resources (monetary or advisory)
available to prospective sectors, but the expertise and resources necessary to accomplish these
tasks are substantial for an industry that is already in severe financial difficulty. To make
development of sectors more feasible, it would be helpful if extension services could be provided
to prospective sectors (particularly for preparation of environmental assessments).
Despite these constraints, a large number of sector proposals were submitted to the Council in
May of 2007. The two Cape Cod sectors submitted proposals that would substantially change
their nature – by requesting allocations of all groundfish species as well as monkfish, dogfish and
skates and requesting exemptions from effort controls and seasonal closures. A small group of
permit holders of mobile gear vessels based in Port Clyde, Maine submitted a proposal also
requesting allocations of all groundfish stocks, monkfish and skates and exemptions from effort
controls. A potentially larger sector that would include primarily mobile gear vessels from Maine,
Massachusetts and Rhode Island submitted a proposal requesting only allocations of species of
concern and exemptions from trip limits, differential DAS counting and seasonal closures. 4 The
Northeast Seafood Coalition organized submission of another 12 sector proposals for prospective
fixed gear and mobile gear sectors based out of Gloucester and New Bedford, Massachusetts,
New Hampshire and Point Judith, Rhode Island. A final proposal was submitted by a small group
of permit holders based out of Boston. A more detailed summary of the proposal is provided in
appendix C. This set of sectors has the potential to include vessels with catch history representing
the majority of groundfish catch in the Multispecies fishery. However, since sector proposals do
not designate member vessels and do not bind prospective members to participation at the
proposal stage, it is not possible to say at this point what percentage of the industry these groups
account for.
4 The proposal and EA also includes an option for all groundfish, monkfish and skates and exemption from
effort controls, but this was not chosen as the preferred option because the sector organizers were informed
that it was highly unlikely they could be granted an allocation of monkfish of skates and thus would have to
remain under DAS controls for monkfish on trips with more than incidental catch of monkfish.
12

2.2 Experience with Existing Sectors in the New England
Groundfish Fishery
The first sector in the New England groundfish fishery, The Georges Bank Cod Hook Sector, was
developed along with Amendment 13 and was authorized by Amendment 13. It received an
allocation only of GB cod. Because the sector did not seek allocations of all groundfish stocks
they can catch (e.g. haddock), they were unable to completely opt out of the effort control system.
The lack of an effort constraint would have allowed them an unfair advantage to pursue other fish
stocks. Consequently GB Hook sector members have been required to use DAS when fishing.
Leasing amongst sector members was allowed and is not constrained by vessel size, but sector
vessels can not lease DAS from non-sector vessels. A primary benefit for the sector members is
exemption from the trip or possession limits on cod and exemption from the May seasonal
closure on Georges Bank. The sector is also assured by regulation that their allocation will not be
reduced as a result of non sector vessels catch exceeding the non-sector proportion of the TAC
(though if that led to a reduction in the overall TAC the sector would take a proportionate cut in
their allocation). The GB hook sector was reauthorized in 2005, 2006 and 2007 and has continued
to operate in a similar fashion as when it was first created though the number of members has
dropped by half.
Sectors are free to design their own system for allocating/rationing catch amongst their members
as long as NMFS is satisfied that this approach will constrain the overall sector catch within the
sector allocation. The approach taken by the GB Hook sector was to divide its allocation up into
monthly quotas that would be fished competitively by sector members. If a monthly quota is
caught before the end of the month, all sector vessels are required to stop fishing. If the monthly
quota is not taken it is rolled into the next monthly quota. In practice catch has never reached the
monthly quota, and the annual catch of the Sector remained well below the sector allocation in
the first two years of operation. In the 2004-05 fishing year the GB Hook sector was allocated
371 metric tons of cod (12.58% of the overall Georges Bank cod TAC), but only caught a total of
130 metric tons. In 2005, 49 vessels in the GB Cod Hook Sector (Sector) were allocated 455
metric tons. of GB cod and harvested 125 tons, only approximately 27% of the sector allocation.
The fact that the Hook sector’s catch was well under it’s allocation was largely due to low catch
rates for cod and continued restrictions of DAS, but a delay in authorization that resulted in a late
start of fishing both years also contributed. The sectors participation in a haddock special access
program (SAP) in closed area 1 may also contributed to their failure to catch their cod allocation.
A second Georges Bank cod sector for fixed gear was authorized under Framework 42 in 2006.
This sector included vessels using sink gillnet gear. Despite the fact that prospective members of
this sector had and would continue to catch species other than cod, the sector sought only an
allocation of Georges Bank cod. Like the hook sector its members were required to continue to
fish under the DAS system. No vessels actually participated in the GB fixed gear sector the 2006-
07 fishing year because of concern that they would not be able to fish at the beginning of the
fishing year. However, the sector was reauthorized and began operation in the 2007-08 fishing
year. As of March 7, 2007, 19 prospective Fixed Gear Sector members had signed the 2007
Sector Contract (Federal Register Vol. 72, No. 72 / Monday, April 16, 2007 pg. 18940).
The regulations authorizing the formation of sectors in the Northeast Multispecies groundfish
fishery do not specify that sectors be “community-based.” They do not specify that sector
members must be part of a particular geographically defined community nor do they require the
sector to limit fishing operations to a particular area (though the sector would have to have catch
history for the groundfish stocks in areas they fish in order to receive an allocation of those
13

stocks). In practice the only two sectors that have been authorized to date could be characterized
as community-based sectors. The members of both sectors fish out of Cape Cod (though this is
not an official restriction of membership) and both sectors voluntarily delineated a fishing area.
To date, both sectors are comprised of individual permit owners whose catch histories each
contribute to the overall sector allocation. However the Cape Cod Commercial Hook Fishermen’s
Association has begun to explore the concept of developing a permit bank owned by the
Association that would hold permits and associated catch histories that could contribute to the
sector allocation. The permit bank would enable the sector to purchase permits that might
otherwise be sold and migrate to other regions, and it could allow the sector to increase its share
of the fishery over time and provide a means for new entrants from the community to participate
in the fishery. To that end, both the GB Hook sector and the GB Fixed gear sector have included
right-of-first-refusal clauses in their sector contracts that provide the sector entity with the option
to purchase the permits of any members that are intending to sell their permits at a price equal to
what the individual has been offered by a private buyer.
3.0 Case Studies
The primary objective of this project is to conduct two case studies of potential community-based
sectors in Maine, one in the Midcoast region and one in the Southern region. Port Clyde is the
only port with a significant number of active groundfish boats in the Midcoast region. These
fishermen have also formed an association, the Midcoast Fishermen’s Association. For these
reasons, Port Clyde was chosen for one of the case studies. Portland is, by far the largest
groundfish port in Maine in terms of landings and vessels landing there. For that reason Portland
was chosen for the second case study. Although there is a group working with the Portland Fish
Exchange that is developing a sector, the sector includes vessels from three states landing in
several ports and does not fit the conceptual idea of a community-based sector being explored for
this study (i.e., one tied to a geographically defined community). For that reason, a case study
was conducted on a hypothetical sector including vessels that landed the majority of their
groundfish in Portland in the 2005/06 fishing year.
The case studies include: discussion of the objectives of the fishermen and the community for
setting up a community-based sector; a description of the potential sector including its structure,
potential participants and basic operational plan; and an analysis of the economic feasibility of
setting up and operating the sector. The port specific case studies are followed by an economic
feasibility analysis of a permit bank that could be developed in conjunction with a communitybased
sector. Operational and regulatory issues for the sectors that may present difficulties are
then discussed.
3.1 Port Clyde Community-based Groundfish Sector
The case study of the Port Clyde community-based sector was facilitated by the existence of the
Midcoast Fisherman’s Association which was established in 2006 by a group of area fishermen
that came together to discuss and deliberate the future of their industry. They decided to form an
organization that would be “an active voice for their interest in preserving a healthy ocean,
balanced with a need to maintain the viability of local coastal fishing communities.” I presented
the concept of a community-based sector to the association in June 2006. The members were
uncertain whether this form of management would suit them but voted unanimously to work with
14

me to explore the idea further and to participate in a case study. This eventually culminated in the
group submitting a proposal to form a sector, though the group of permit holders that is currently
considering joining the sector if it is authorized is not identical to the original set of vessels
included in the following case study.
The primary interest of the Port Clyde fishermen in developing a community-based sector is to
improve their profitability and economic viability. However, they also expressed the belief that
sectors could improve safety since vessels would be more likely to return to port if bad weather
was predicted. The current restrictions on DAS create incentives for vessels to stay at sea rather
than using up their limited fishing time steaming back to port before completing a full trip. The
sector members also see the sector as a way to improve sustainability since they would no longer
have to discard fish when trip limits were reached. They also envision using the sector to
operationalize fishing practices that will minimize bycatch of juvenile or spawning fish through
gear modifications, fleet communication, voluntary closures, or other management measures.
To develop an understanding of whether and why the surrounding community would be
supportive of a community base groundfish sector, Cindy Smith (sector project manager for
GMRI) interviewed John Falla, who is the town manager for St. George, Maine and Dave
Schmanska, the Port Clyde harbor master. They stated that the town is interested in maintaining
the groundfish fleet in Port Clyde. The town recognizes the importance of fishing to its year
round residents – the primary fisheries in St. George are lobster and groundfish, and most of the
groundfish vessels fish for scallops and or shrimp in the winter. The St. George comprehensive
plan includes a Commercial Fishing/Maritime Activities District, and language about the
importance of working waterfront was recently added. Throughout the comprehensive plan, it
states repeatedly that “other uses will not adversely affect existing commercial fishing or
maritime activities in a Commercial Fisheries/Maritime Activities District”.
Falla and Schmanska suggested that the town might be interested in managing a permit bank to
supplement catch quota available to boats landing in Port Clyde, particularly if the administration
cost is funded by some other entity such as the state. However, they also voiced concern about
whether they could administer a permit bank given their lack of expertise, experience and funds.
Mr. Falla and Mr. Schmanska agreed that any community-based sector would have to be able to
stand on their own without local subsidy. The town is not willing to foot the bill for a sector
manager unless the town will be getting some return on their effort. Again, they mentioned that
taxpayer money would not be available, and any sector would need to seek support from some
other sources if it were needed. Mr. Falla did say that it might be possible to use the town’s bond
rating to co-sign or float a bond that the sector members would have to pay back. He also
reported that the town would not be able to supply taxpayer dollars, but it might be possible to put
the concept out as an economic development initiative.
Falla noted that for the town to provide support to the community-based sector, there would have
to be a benefit to the town. Schmanska suggested that vessels leasing quota would have to
designate Port Clyde as their homeport, thus requiring them to pay their annual excise tax to the
Town of St. George. Requiring them to land in Port Clyde would ensure that they will buy their
fuel and ice in town as well.
15

3.1.1 Strawman Sector Structure and Operational Plan:
The Port Clyde case study is based on a sector that includes 17 permits. The permits/vessels
included were owned by the members of the Midcoast Fishermen’s Association at the time the
case study was begun in July of 2006. All vessels are mobile gear vessels between 36 and 56 feet
in length (Table 1). Two of the permits have been transferred to skiffs and the days leased to
other vessels owned by those individuals. Several of these vessels undertake multiday trips at
certain times of year, but they generally remain within 100 miles of Port Clyde and within the
Gulf of Maine stock areas (i.e. they do not fish Georges Bank or Southern New England stocks).
Most of these vessels also participate in the shrimp fishery in the winter and some participate in
other fisheries such as general category scallops. The permit owners mostly live in the town of St.
George which encompasses Port Clyde and Tenants Harbor. Port Clyde is one of the five villages
that make up the town of St George. These 17 permits represent nearly all of the groundfish
vessels fishing out of Port Clyde and the majority of active groundfish vessels in the Midcoast
region of Maine.
Table 1: List of Vessels Included in the Port Clyde Sector Case Study
Permit Vessel Name Length Gross Tons Horsepower Built
250573 SKIPPER 49 48 360 1981
240185 TAYLOR EMILY 48 35 360 1972
230570 SUSAN AND JESSICA 36 16 210 1979
250558 LESLIE & JESSICA 51 34 400 1980
242567 CAPT'N LEE 48 33 230 1998
240423 MEGALTAY 40 25 250 1979
240125 LIBERTY 47 29 250 1949
250387 ELLA CHRISTINE 45 37 250 1975
310354 LAUREN DOROTHY II 47 55 365 1980
250728 ANNA LENA IV 56 73 400 1984
310554 ERIKA LYNN 50 64 330 1987
150043 ADREA & ERIC 14 1 10 1999
149551 FOXY GIRL 14 4 10 1997
121830 SARAH MACKAY 41 5 225 1986
240143 MISTY MAE 52 30 350 1969
240636 HIGH ROLLER 40 24 320 1981
250582 WINDSONG 51 47 360 1981
A strawman operational structure for the sector was developed through consultation with the
Midcoast Fishermen’s Association. Under this strawman, the sector would receive allocations of
all regulated groundfish species it regularly encounters as well as monkfish. The groundfish
stocks for which allocations would be requested include: GOM cod, GOM haddock, Cape
Cod/GOM yellowtail flounder, witch flounder, American plaice, GOM winter flounder, white
hake, pollock, Acadian redfish, and northern windowpane flounder. Regulations state that sector
allocations are to be based on the ratio of the Sector members’ total catch by species and stock
relative to the total commercial catch of each species for the five years prior to the proposal of the
sector. However, recent decisions of the Council suggest that the years used for allocation may be
changed and fixed at the same years for all sectors. At the time this research was being
undertaken, it was not clear which catch history years would be used for determining allocations.
For this reason, the analysis of the allocation and economic feasibility of the sector is done based
on sector and overall commercial catches for two different allocation periods: (1) from May 1,
2001 through April 30, 2006, and (2) from May 1, 1996 to April 30, 2002. The earlier allocation
16

period is that which was used to determine allocations of cod to the two existing sectors. The
shares of total commercial catches landed by Port Clyde vessels for these species for these two
periods are shown in Table 2 5 . With the exception of witch flounder and winter flounder, the
“current” Port Clyde fleet landed a higher proportion of total commercial catch in fishing years
2001-2005 than in 1996-2001. Consequently their shares of TACs and ACE allocations would be
higher if the 2001-2005 years were used to determine their allocation. It should be noted that the
current regulations do not allow sectors to request allocations of monkfish; an amendment to the
Monkfish FMP will be required to make this possible.
Each year the sector would receive annual catch entitlements (ACE) for each species. These ACE
allocations become hard TACs for the overall sector. The ACE allocated to the sector each year
would be equal to the shares of the overall target TACs shown in Table 2.
Table 2: Port Clyde Sector Vessels’ share of landings
for two different allocation periods (FY01-05 and FY96-01)
Stock and species
Total FY01-05
Landings
Port Clyde
Sector Share
Total FY96-01
Landings
Port Clyde
Sector Share
GOM COD 42,105,000 1.3% 56,395,433 1.3%
GOM HADDOCK 10,769,000 1.9% 10,209,311 0.7%
GOM/CC WINTER FLOUNDER 6,072,000 0.7% 7,137,377 1.8%
GOM/CC YELLOWTAIL 16,218,000 0.3% 20,140,336 0.1%
GOM/GB WINDOWPANE 274,000 0.1% 3,416,338 0.0%
PLAICE 27,593,000 7.8% 52,992,348 5.6%
POLLOCK 52,853,000 0.8% 56,561,783 0.6%
REDFISH 4,461,000 2.3% 4,061,337 1.4%
WHITE HAKE 37,850,000 2.8% 38,320,463 1.9%
WITCH FLOUNDER 32,599,000 5.1% 30,024,873 6.9%
NFMA MONKFISH 142,821,000 4.1% 147,201,370 3.6%
The actual number of pounds of ACE allocated to the Sector each year would increase or
decrease in proportion to increases or decreases in the target TACs. Under the strawman
operational plan, sector members would be required to retain all legal sized fish of regulated
species for which the Sector received an allocation of ACE, and all sector members would be
required to stop fishing once total sector catch of any species equaled the sector ACE for that
species.
The Port Clyde sector would restrict the operations of member vessels to the Gulf of Maine,
specifically to statistical areas 511, 512, 513, 514 and 515. Because the catch of all managed
species would be constrained by hard TACs, the sector would request that it be exempted from
other regulations designed primarily to control fishing mortality. Specifically the sector would
request to be exempted from: Northeast Multispecies Days at Sea (DAS) limits (including
5 The catches for sector vessels for estimating sector allocations reflect the catches in the allocation years of
the permits associated with the current Moratorium Right ID of the vessel. The Moratorium Right ID is an
the means of tracking the catch history of a permit that may have been transferred amongst vessels over
time. The permit number changes with each change of vessel, but the Right ID does not. To calculate the
catch history attributable to the current permit, I determined its current Right ID and then determined the
permit numbers associated with that right ID historically. In some cases the catch history attributable to a
particular current permit may have been generated by multiple vessels and permits over time. It may also
be that the catch history for a current permit does not include all of the catches by that vessel in previous
years since its current Right ID may have been associated with a different vessel in previous years and then
transferred to the current vessel.
17

differential DAS counting), Monkfish DAS limits 6 , trip limits on cod, yellowtail flounder, winter
flounder and white hake, possession and landing limits on monkfish, and Gulf of Maine rolling
closures. The sector will continue to be subject to the same restrictions on year-round closed areas
and gear as other multispecies vessels. Initially, the sector would not propose any additional
restrictions on gear or vessel characteristics beyond current permit restrictions, though it might
create additional rules in the future to protect habitat or spawning aggregations or to reduce
bycatch.
The Sector envisions assigning each permit in the sector a specific allocation of the overall
allocation of each of the species-stocks for which the Sector receives and allocation. These
individual allocations would be based on the contribution of the catch history of the permit (i.e.,
its contribution to determining the overall sector allocation). Sector members would be free to
utilize these allocations on their vessels or transfer them to other vessels within the sector upon
notification and approval by the sector manager. These allocations would be usable only while
operating as part of the sector. Should they leave the sector or the sector not be renewed, these
vessels would again be subject to the same effort controls as the rest of the multispecies fleet not
enrolled in a sector.
Several of the prospective members of the Port Clyde Community Sector recently set up a
marketing cooperative, the Port Clyde Draggermen’s Co-op. The purpose of the Co-op is to
increase the price Port Clyde fishermen receive for their groundfish by developing direct
marketing arrangements with retailers and restaurants. It is envisioned that the cooperative and
sector would be integrated with the goal of organizing the harvesting of the sector’s groundfish
allocation to service the marketing arrangements developed by the cooperative. Sector
management would allow the sector members to concentrate on producing high quality fish to
meet market demand with less concern about time spent at sea. For example this might result in
more day trips with higher quality fish. However, it might also result in vessels steaming further
at times to find larger, more valuable fish or the species required to meet specific market
commitments. The sector also allows the cooperative to give greater assurance that it can meet
specific market demands since the sector has an allocation by species and is not limited by the
number of days if can fish and other regulations that constrain fishing at key times.
3.1.2 Economic Feasibility
The economic feasibility analysis for the Port Clyde Community-based Sector attempts to answer
whether the sector could recover from its members the costs of establishing and running the
sector and whether the profitability of the sector vessels (after subtracting these costs) is likely to
be higher under sector management than current management. The analysis to address these
questions entails estimating the landings and revenues of the sector, estimating the costs of
establishing and managing the sector, and estimating the revenues of sector members without
sector management. The relative gains in revenues or net revenues under sector management are
then compared with additional costs of sector management to calculate the net gain to the sector
participants.
A starting point for the analysis is to estimate the sectors species-stock allocations and the
projected sector ACE allocations and revenues. The sector species/stock allocations as shares of
TACs based on two separate allocation formulas (using 1996-01 or 2001-05 fishing years) were
6 This would likely require changes to the Monkfish FMP
18

shown above in Table 2. Revenue projections are based on 50 th percentile estimates of F msy TACs
and prices shown in appendix A. Sectors landings and revenues are then calculated based on the
Sectors allocation shares of each species. The sector is assumed to catch only 85% of their ACE
allocations. This 85% figure is arbitrary, but leaves a plausible buffer to account for discards of
undersize or unmarketable fish and for inability to use the entire ACE allocation of some species
without exceeding ACE allocations of others 7 . In reality the sector is likely to utilize nearly 100%
of some species ACE and less than 85% of others; but this is difficult to predict since sector
management is likely to substantially change the incentives and fishing patterns of sector
members.
Estimating the cost of establishing and operating the Port Clyde Community Sector is difficult
given the uncertainty in the regulatory process for approval and in the requirements for reporting
and monitoring the sector once in operation. The Cape Cod Commercial Hook Fishermen’s
association estimated that it cost them about $100,000 to establish their sector (Pappalardo 2006).
This included costs for meetings, legal costs and cost of preparation of an environmental
assessment. It does not include the opportunity cost of time spent in developing the sector by
some of the association staff and by sector members. Costs for future sectors may be somewhat
lower since they can use existing documents prepared by the GB Hook Sector as templates.
Furthermore, the Gulf of Maine Research Institute has hired a sector project manager that can
provide technical assistance to prospective sectors including preparation of operations plans and
environmental assessments. For these reasons, and because the Port Clyde Sector is quite small,
the estimate of $100,000 for sector establishment used for this analysis probably errs on the high
side of the true cost to the sector.
The primary ongoing costs for the sector are the salary of the sector manager, administrative
overhead and possibly some legal costs. In the case of the Port Clyde sector with only 17 boats
and a smaller number of members, it is expected that the sector manager will work only part time.
The estimated $75,000 annual operational cost used for this analysis would allow for $35,000 in
salary to the part time sector manager (with no benefits) and an additional $40,000 for
administrative and legal costs.
Sector revenues are calculated by multiplying projected sector landings by estimated prices that
vary by species. Sector vessel landings are assumed to attract the same ex-vessel prices as the
overall industry (i.e. the demand model projects prices based on overall commercial landings).
Prices for calculation of revenues are based on demand models described in Appendix B that
calculate region-wide prices based on region-wide landings. Price projections are nominal prices
(not adjusted for inflation). These price projections are likely conservative (i.e. biased low) since
they assume landings equal overall target TACs. Landings of many species the last few years
have been well below target TACs and may remain below them in the near future. 8 Since price
predictions are inversely correlated with landings levels, the upward bias in landings predictions
would result in downward bias in price predictions. Sectors might also be able to increase prices
by improving quality or changing the time of landings if they are freed from DAS restrictions and
rolling closures. Since price predictions are conservative, revenue predictions are also
7 The spreadsheet used to make predictions is available, and the percentage of ACE used can easily be
adjusted to explore the sensitivity of results to this assumption.
8 Effort controls and trip limits are designed to keep catches of all regulated species below target TACs
which results in catches of many species be constrained well below target TACs. In addition, landings for
many species are considerably lower than catches because of substantial discarding.
19

conservative except to the extent that the sector is unable to land catches equal to at least 85% of
its ACE.
The expected annual gain in revenues under sector management is estimated by subtracting the
projected annual revenues without sectors management from projected revenues under sector
management (Table 3a,b). The analysis assumes that, without sector management, the sector
members will continue to catch the same percentage of the different groundfish target TACs that
they caught during the 2004 and 2005 fishing years. Estimates are provided based on two
different sector allocation formulas (e.g. FY01-05 and FY96-01 basis years). The annual gain in
net revenues for the sector is calculated by subtracting from the increase in annual gross revenue,
the variable operating costs (estimated at 38% of the increased gross revenues) 9 , the ongoing
costs of sector management (assumed to be $75,000), and loan payments to repay sector
establishment costs (which was assumed to be $100,000). These net gains do not account for
additional labor costs associated with landing additional catch (only costs such as fuel, oil, ice,
water and provisions). Thus the gains in net revenues represent additional income that would be
divided between boat/permit owners, captains and crew. Presumably this will be on the same
basis as normal crew share which may vary from vessel to vessel.
The analysis suggests that sector management can provide substantial gains in net revenues to
sector vessels and that these gains far outweigh the costs of establishing and operating a sector. In
the first year, the sector is projected to increase net revenues by $605 thousand with the FY01-05
allocation and by $505 thousand with the FY96-01 allocation. This assumes sector vessels pay a
landing tax of 5% on groundfish and monkfish landings. The 5% landings tax would be sufficient
to cover the $75 thousand annual operating cost and to pay off a $100 thousand loan for
establishment of the sector in 5 or 6 years (depending on allocation formula) assuming a 7.5%
interest rate.
If the landings tax was continued at 5% indefinitely, the sector entity would begin to build capital
which could be used to pay dividends to sector members or to purchase additional permits. The
asset calculations in Tables 3a,b assume that the landing tax surplus and 7.5% interest on assets is
simply accumulated by the sector entity. Note that the column titled interest and management fees
becomes negative in later years once interest on the sector’s asset base exceeds the management
costs.
9 The estimate of variable operating costs as a percent of revenue is based on observer data collected from
observed trawler trips. For each trip the ratio of the sum of fuel, oil, food, water, ice, and supplies to the
revenues generated by the trip was calculated. A weighted average of this ratio (weighted by revenue) was
calculated to equal 25% of gross revenues. However, the average fuel cost in this data was only $1.92 per
gallon. If the calculation are redone with a fuel cost of $3 per gallon the weighted average variable cost per
dollar of revenue is 38%.
20

Table 3a: Port Clyde Sector Revenues and Gains Over Non Sector Management
based on FY01-05 Allocation
Fishing
Year Total Revenue tax (5%)
Interest +
Mgmt fees
Outstanding
Loan or
(Assets)
Sector Revenue
Gain (vs. no sector) % Gain
Sector Net
Rev Gain
2008 $ 2,503,715 $ 125,186 $ 82,500 $ 100,000 $ 1,052,816 79% $ 605,175
2009 $ 2,071,357 $ 103,568 $ 79,299 $ 57,314 $ 830,020 73% $ 475,257
2010 $ 2,103,820 $ 105,191 $ 77,478 $ 33,045 $ 853,683 75% $ 489,311
2011 $ 2,140,039 $ 107,002 $ 75,400 $ 5,332 $ 876,453 76% $ 502,740
2012 $ 2,183,314 $ 109,166 $ 73,030 $ (26,270) $ 901,207 77% $ 517,265
2013 $ 2,233,589 $ 111,679 $ 70,320 $ (62,406) $ 930,631 78% $ 534,553
2014 $ 2,080,694 $ 104,035 $ 67,218 $ (103,765) $ 865,970 78% $ 497,368
2015 $ 2,095,163 $ 104,758 $ 64,456 $ (140,583) $ 870,485 78% $ 499,892
2016 $ 2,116,387 $ 105,819 $ 61,434 $ (180,884) $ 880,369 78% $ 505,618
2017 $ 2,135,157 $ 106,758 $ 58,105 $ (225,270) $ 889,709 78% $ 511,052
2018 $ 2,157,520 $ 107,876 $ 54,456 $ (273,923) $ 898,977 78% $ 516,373
2019 $ 2,176,498 $ 108,825 $ 50,449 $ (327,343) $ 906,731 78% $ 520,820
2020 $ 2,193,566 $ 109,678 $ 46,071 $ (385,719) $ 913,564 78% $ 524,732
2021 $ 2,209,382 $ 110,469 $ 41,301 $ (449,326) $ 919,789 78% $ 528,291
2022 $ 2,224,975 $ 111,249 $ 36,113 $ (518,495) $ 925,921 78% $ 531,796
2023 $ 2,239,365 $ 111,968 $ 30,478 $ (593,631) $ 931,680 78% $ 535,094
2024 $ 2,253,809 $ 112,690 $ 24,366 $ (675,121) $ 938,839 78% $ 539,258
2025 $ 2,267,361 $ 113,368 $ 17,742 $ (763,446) $ 943,970 78% $ 542,181
2026 $ 2,279,730 $ 113,987 $ 10,570 $ (859,072) $ 948,501 78% $ 544,756
2027 $ 2,309,629 $ 115,481 $ 2,813 $ (962,489) $ 957,177 77% $ 549,567
2028 $ 2,318,817 $ 115,941 $ (5,637) $ (1,075,157) $ 960,978 77% $ 551,749
2029 $ 2,329,240 $ 116,462 $ (14,755) $ (1,196,735) $ 965,204 77% $ 554,171
2030 $ 2,339,097 $ 116,955 $ (24,596) $ (1,327,952) $ 969,179 77% $ 556,448
2031 $ 2,349,535 $ 117,477 $ (35,213) $ (1,469,503) $ 973,277 77% $ 558,791
2032 $ 2,359,976 $ 117,999 $ (46,664) $ (1,622,193) $ 977,456 77% $ 561,183
2033 $ 2,370,114 $ 118,506 $ (59,014) $ (1,786,856) $ 981,432 77% $ 563,455
2034 $ 2,380,278 $ 119,014 $ (72,328) $ (1,964,376) $ 985,185 77% $ 565,589
2035 $ 2,390,093 $ 119,505 $ (86,679) $ (2,155,718) $ 988,890 77% $ 567,700
2036 $ 2,400,649 $ 120,032 $ (102,143) $ (2,361,902) $ 992,914 77% $ 569,994
2037 $ 2,409,934 $ 120,497 $ (118,806) $ (2,584,077) $ 996,221 77% $ 571,868
21

Table 3b: Port Clyde Sector Revenues and Gains Over Non Sector Management
Based on FY96-01 Allocation
Fishing
Year Total Revenue tax (5%)
Interest +
Mgmt fees
Outstanding
Loan or
(Assets)
Sector Revenue
Gain (vs. no sector) % Gain
Sector Net
Rev Gain
2008 $ 2,327,858 $ 116,393 $ 82,500 $ 100,000 $ 885,752 67% $ 504,937
2009 $ 1,945,545 $ 97,277 $ 79,958 $ 66,107 $ 710,499 62% $ 403,544
2010 $ 1,897,126 $ 94,856 $ 78,659 $ 48,788 $ 657,324 57% $ 371,496
2011 $ 1,867,019 $ 93,351 $ 77,444 $ 32,591 $ 617,083 53% $ 347,118
2012 $ 1,853,867 $ 92,693 $ 76,251 $ 16,684 $ 588,233 50% $ 329,481
2013 $ 1,853,678 $ 92,684 $ 75,018 $ 242 $ 569,716 48% $ 318,004
2014 $ 1,710,644 $ 85,532 $ 73,693 $ (17,424) $ 514,422 46% $ 286,440
2015 $ 1,714,545 $ 85,727 $ 72,805 $ (29,263) $ 508,898 45% $ 282,940
2016 $ 1,724,433 $ 86,222 $ 71,836 $ (42,185) $ 508,013 45% $ 282,204
2017 $ 1,733,732 $ 86,687 $ 70,757 $ (56,570) $ 508,356 45% $ 282,240
2018 $ 1,748,466 $ 87,423 $ 69,563 $ (72,500) $ 510,375 44% $ 283,212
2019 $ 1,761,293 $ 88,065 $ 68,223 $ (90,360) $ 512,287 44% $ 284,153
2020 $ 1,773,226 $ 88,661 $ 66,735 $ (110,202) $ 514,240 44% $ 285,138
2021 $ 1,784,646 $ 89,232 $ 65,090 $ (132,129) $ 516,290 44% $ 286,191
2022 $ 1,796,297 $ 89,815 $ 63,280 $ (156,271) $ 518,677 44% $ 287,450
2023 $ 1,806,821 $ 90,341 $ 61,290 $ (182,806) $ 520,764 44% $ 288,544
2024 $ 1,816,038 $ 90,802 $ 59,111 $ (211,857) $ 522,957 43% $ 289,729
2025 $ 1,826,499 $ 91,325 $ 56,734 $ (243,548) $ 525,151 43% $ 290,890
2026 $ 1,836,155 $ 91,808 $ 54,140 $ (278,139) $ 527,105 43% $ 291,918
2027 $ 1,864,323 $ 93,216 $ 51,314 $ (315,808) $ 534,137 43% $ 295,743
2028 $ 1,870,897 $ 93,545 $ 48,172 $ (357,709) $ 535,455 43% $ 296,435
2029 $ 1,878,616 $ 93,931 $ 44,769 $ (403,082) $ 537,111 43% $ 297,315
2030 $ 1,885,887 $ 94,294 $ 41,082 $ (452,244) $ 538,629 43% $ 298,118
2031 $ 1,893,707 $ 94,685 $ 37,091 $ (505,457) $ 540,241 43% $ 298,969
2032 $ 1,901,565 $ 95,078 $ 32,771 $ (563,052) $ 541,966 43% $ 299,889
2033 $ 1,909,250 $ 95,462 $ 28,098 $ (625,359) $ 543,610 43% $ 300,763
2034 $ 1,917,265 $ 95,863 $ 23,046 $ (692,723) $ 545,323 43% $ 301,672
2035 $ 1,924,766 $ 96,238 $ 17,584 $ (765,541) $ 546,829 43% $ 302,463
2036 $ 1,932,996 $ 96,650 $ 11,685 $ (844,195) $ 548,643 43% $ 303,432
2037 $ 1,940,250 $ 97,012 $ 5,313 $ (929,159) $ 550,020 43% $ 304,148
The projected gains for the sector are based solely on the ability of the sector to land a higher
percentage of the target TACs than it is currently catching. The ability to do this would be a
consequence of exemptions from DAS restrictions, rolling closures and trip limits. The sector
may achieve additional gains beyond what is calculated here through higher prices if they are able
to improve quality or make direct marketing arrangements. They may also achieve gains by
reducing fixed costs through consolidation and by having the most efficient boats in the sector
harvest its allocation. The analysis presented here implicitly assumes the same vessels are used to
harvest the fish with or without sector management. Under sector management, it would be
possible to consolidate fishing operations on fewer platforms if the sector desired. This would be
expected to reduce fixed costs which would provide an additional boost in profitability.
Although the projections are shown through the year 2037, the relative gains of sector vs. nonsector
management are unlikely to continue as projected. Major changes in management of the
fishery, including ITQs, are being considered which will presumably increase profitability of nonsector
vessels and erode the relative benefits of sector to non-sector management. TAC
projections are also highly uncertain in future years as actual TACs will be heavily dependent on
22

ecruitment and could be either higher or lower. Nevertheless, the analysis suggests that the gains
from sector management are sufficiently large to justify the difficulty and cost of establishing a
sector even if the gains are only realized for a few years.
Another way to evaluate the relative gains from sector management is a retrospective evaluation.
Tables 4a,b show the actual catch of the Port Clyde sector vessels in fishing years 2004 and 2005
and what the sector TACs would have been had they been under sector management in those
years (given the two different allocation formulas). The potential forgone revenue is calculated by
applying the actual average species prices for the sector vessels in those years by the estimated
forgone catch. This likely represents and upper bound on what the actual forgone revenues would
have been since the sector would not have been able to land 100% of all TACs. However, it is
clear that the potential gains could have been substantial.
Table 4a: Port Clyde Sector Revenues and Gains Over Non Sector Management
Based on FY01-05 Allocation
04-05 05-06 04-05 05-06 Forgone Forgone Forgone Rev Forgone Rev
Stock and species
Sector TAC Sector TAC Catch Catch Catch FY04 Catch FY05 FY04 FY05
GOM COD 136,657 179,542 75,107 125,373 61,550 54,169 $ 73,249 $ 70,420
GOM HADDOCK 203,097 199,061 22,818 33,295 180,279 165,766 $ 169,936 $ 159,665
GOM WHITE HAKE 239,337 238,277 190,737 161,235 48,600 77,042 $ 23,959 $ 60,690
NFMA MONKFISH 1,548,985 1,201,358 1,087,184 686,196 461,801 515,162 $ 309,226 $ 411,940
GOM PLAICE 631,388 619,427 236,870 173,570 394,518 445,857 $ 361,113 $ 620,755
POLLOCK 195,260 195,260 75,605 120,219 119,655 75,041 $ 76,066 $ 51,428
REDFISH 83,996 88,782 19,078 29,069 64,918 59,713 $ 29,359 $ 36,521
GOM/CC WINTER FLOUNDER 48,103 38,558 1,424 2,000 46,679 36,558 $ 41,762 $ 42,152
WITCH FLOUNDER 580,887 784,994 346,306 257,014 234,581 527,980 $ 247,565 $ 629,963
GOM/CC YELLOWTAIL 5,275 7,383 3 24 5,272 7,359 $ 5,272 $ 3,986
Total 3,672,985 3,552,643 2,055,132 1,587,994 1,617,853 1,964,649 $ 1,337,507 $ 2,087,520
Table 4b: Port Clyde Sector Revenues and Gains Over Non Sector Management
Based on FY96-01 Allocation
04-05 05-06 04-05 05-06 Forgone Forgone Forgone Rev Forgone Rev
Stock and species
Sector TAC Sector TAC Catch Catch Catch FY04 Catch FY05 FY04 FY05
GOM COD 140,613 184,739 75,107 125,373 65,506 59,366 $ 77,956 $ 77,176
GOM HADDOCK 77,143 75,610 22,818 33,295 54,326 42,316 $ 51,209 $ 40,758
GOM WHITE HAKE 162,388 161,669 190,737 161,235 (28,349) 435 $ (13,975) $ 342
NFMA MONKFISH 1,348,610 1,045,952 1,087,184 686,196 261,426 359,756 $ 175,053 $ 287,672
GOM PLAICE 457,496 448,829 236,870 173,570 220,626 275,260 $ 201,945 $ 383,236
POLLOCK 151,298 151,298 75,605 120,219 75,693 31,079 $ 48,119 $ 21,300
REDFISH 50,426 53,299 19,078 29,069 31,348 24,230 $ 14,177 $ 14,819
GOM/CC WINTER FLOUNDER 130,922 104,945 1,424 2,000 129,498 102,945 $ 115,857 $ 118,695
WITCH FLOUNDER 785,041 1,060,883 346,306 257,014 438,735 803,869 $ 463,019 $ 959,142
GOM/CC YELLOWTAIL 1,276 1,786 3 24 1,273 1,762 $ 1,273 $ 954
Total 3,305,213 3,289,010 2,055,132 1,587,994 1,250,081 1,701,016 $ 1,134,633 $ 1,904,094
3.1.3 Matching Catch to ACE
A frequently expressed concern of many fishermen regarding sector management as well
individual quota systems is that fishermen have limited control over the species composition of
their catch and may be unable to match their catches to their allocations. This may be particularly
difficult if the spatial distribution of different species has shifted over time relative to what it was
in the years on which their allocation was calculated. This imbalance could result in them being
unable to use much of their allocation of some species because they could not limit their catch of
other species and used up those allocations prematurely. In an individual transferable quota
23

system this problem could be mitigated through quota markets. An individual could simply
purchase additional ACE for species for which their ACE allocation is inadequate or they could
sell unused ACE. Internal trades within a sector could accomplish the same objective; however,
the effective market may be thin, particularly for small sectors like the Port Clyde sector.
Furthermore, for a geographically constrained sector, the species composition across vessels may
not vary that much, and vessels may have less ability to vary the composition through spatial or
temporal shifts of effort. Allowing trading between sectors (assuming more are created) might
alleviate this problem, but current rules do not allow trading between sectors.
Table 5 shows how the Port Clyde sector vessels’ catch by species-stock has changed over time
as a percentage of their total catch. Table 6 shows how the Port Clyde sector vessels’ catch as a
percentage of total commercial catch has changed over time. These percentages are based solely
on vessel trip report data which may be quite inaccurate or at least quite different from the dealer
data on which sector allocations are based. This is particularly true for species such as monkfish
that are often landed only as tails. It should also be noted that the catches of windowpane flounder
in the VTR data are much higher than those reported in the dealer data. The allocations to the
sector, based on dealer data, provide virtually no allocation of windowpane flounder to the sector,
yet the VTR data suggests that the sectors account of a relatively large share of windowpane
catch, particularly in fishing years 2000-2002. Nevertheless these tables offer some indication of
the relative variability over time of the sector vessels species composition and its catch relative to
the total commercial catch.
Table 5: Port Clyde Sector’s Species/stock Composition of Catch as a Percentage
of the Sector’s Total Groundfish Catch by Fishing Year
Groundfish Stock FY 1996 FY 1997 FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005
GOM cod 16.9% 10.3% 5.5% 3.8% 6.4% 6.7% 4.6% 3.0% 5.0% 10.9%
GOM haddock 0.2% 0.3% 0.3% 0.3% 0.5% 2.5% 1.9% 2.4% 1.8% 3.1%
Hake 6.8% 6.4% 3.8% 2.5% 4.6% 4.7% 8.0% 7.2% 6.9% 6.4%
Northern Monkfish 16.4% 17.4% 20.3% 25.4% 27.2% 26.2% 28.3% 29.1% 27.6% 21.4%
Plaice 30.4% 30.3% 38.7% 34.6% 32.2% 30.3% 29.8% 30.3% 19.0% 18.0%
Pollock 0.8% 8.8% 3.6% 2.6% 1.8% 3.0% 4.7% 4.7% 5.5% 10.8%
Redfish 0.2% 0.3% 0.6% 0.7% 0.6% 0.9% 1.0% 2.0% 1.8% 2.7%
GOM/GB windowpane 0.0% 0.0% 0.2% 0.0% 1.3% 0.7% 1.9% 0.5% 0.3% 0.2%
GOM winter flounder 1.3% 1.2% 0.4% 1.8% 1.0% 1.2% 1.0% 0.1% 0.2% 0.0%
Witch flounder 25.2% 23.9% 25.7% 26.5% 21.8% 21.4% 17.9% 20.4% 31.7% 26.3%
Cape Cod Yellowtail flounder 1.5% 0.9% 0.7% 1.4% 2.1% 1.4% 0.5% 0.0% 0.0% 0.0%
GOM Yellowtail flounder 0.0% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0%
Table 6: Port Clyde Sector’s Share of Total Commercial Catch by Stock and Fishing Year
Based on VTR Catch Reports
Groundfish Stock FY 1996 FY 1997 FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005
GOM cod 1.4% 1.3% 1.2% 2.0% 1.9% 1.8% 1.2% 0.6% 0.8% 1.8%
GOM haddock 0.4% 0.3% 0.2% 0.4% 0.6% 2.3% 1.8% 1.4% 1.1% 2.4%
Hake 1.5% 2.1% 1.6% 1.4% 3.3% 2.9% 3.3% 1.7% 2.1% 2.3%
Northern Monkfish 2.1% 3.5% 4.0% 3.3% 3.8% 3.7% 3.2% 3.0% 2.9% 2.3%
Plaice 3.3% 4.6% 6.5% 6.5% 6.2% 6.9% 7.5% 7.5% 5.8% 5.8%
Pollock 0.1% 1.1% 0.4% 0.5% 0.5% 0.8% 1.1% 0.6% 0.6% 0.9%
Redfish 0.3% 0.8% 1.0% 1.5% 1.7% 2.2% 2.5% 3.0% 1.9% 2.2%
GOM/GB windowpane 0.0% 0.0% 0.7% 0.0% 9.3% 10.2% 17.3% 4.2% 3.4% 2.4%
GOM winter flounder 1.1% 1.0% 0.6% 3.1% 1.5% 1.6% 0.9% 0.1% 0.2% 0.0%
Witch flounder 6.1% 7.4% 8.1% 7.2% 7.1% 6.6% 4.5% 3.5% 5.4% 4.3%
Cape Cod Yellowtail flounder 0.7% 0.4% 0.5% 0.6% 0.9% 0.6% 0.2% 0.0% 0.0% 0.0%
GOM Yellowtail flounder 0.2% 0.0% 0.0% 0.2% 1.2% 0.2% 0.1% 0.0% 0.0% 0.0%
The catch composition of the Port Clyde sector has shifted toward greater reliance on monkfish
and less reliance on cod over this period. In the past few years increases in pollock and redfish
catch have offset decreases in plaice. Since sectors allocate a share of TACs, it is probably more
important to look at how the Port Clyde sector’s share of overall commercial catch has changed
over time. Comparing the early years to the later years, the sector’s share of haddock catch has
24

increased. They also have caught a larger share of the hake and plaice but a smaller share of witch
flounder and winter flounder. These trends are consistent with the dealer data and the sector
allocations calculated from it based on the 96-01 vs. 01-05 fishing years which were shown in
Table 2.
These long term trends probably reflect changes in the distribution of stocks but also regulatory
changes such as rolling closures and trip limits. They also reflect changes in overall stock levels
and commercial catches. Therefore it is difficult to say how easily the sector could adjust to a set
of TACs that reflect older catch history (e.g. 1996-2001). Elimination of DAS limits, trip limits
and rolling closures and would give sector vessels considerably more flexibility to adjust their
species composition. If sector allocations were based on the earlier years it might require some
spatial or temporal shifting of the sector’s effort. However, since catches for most species have
been well below the target TACs, the sector TACs are likely to allow the sector to increase
catches of most stocks without being constrained by TACs of stocks which they caught a smaller
percentage of in the allocation years.
Perhaps a more serious problem for the sector will be constraining TACs for species that are not a
significant part of their landings history (as recorded in dealer data) and are probably taken
primarily as incidental catch when targeting other species. For species such as yellowtail
flounder, windowpane flounder and winter flounder, the sector will receive very small TACs.
Their landings, while small in absolute magnitude, have been and are likely to continue to be
quite variable in percentage terms over time. The sector may find itself constrained by these
TACs that are of little importance to their overall profitability unless they can find ways to avoid
them. Again, spatial and temporal shifts in effort may mitigate this problem, but this may result in
reductions in efficiency if the vessels are required to forgo high catch rates of their primary target
species in order to avoid these other stocks. Allowing sectors to trade ACE during the fishing
year could be quite beneficial in this case, particularly if the distribution of these stocks is shifting
from year to year causing relative catch rates in different areas to change.
3.2 Portland Community-based Groundfish Sectors
In my initial discussions with fishermen and boat owners in Portland about the idea of a
community-based sector and sectors in general, there was limited interest in sectors as a
management system and some misconceptions about how they would operate. Most people I
spoke with were skeptical about whether sectors would deliver economic benefits sufficient to
outweigh the costs and risks associated with developing sectors. Most also assumed sectors would
necessarily operate in a way similar to the GB Hook sector which sets monthly TACs that are
fished competitively by its members. They had not contemplated an operational plan that
subdivided the sector allocation amongst its individual members on the basis of the catch history
each brought to the sector. The idea of setting up an individual allocation system in the sector’s
operating plan with trading of ACE allowed between sector members was deemed a more
desirable or acceptable way of operating the sector by most of the individuals I spoke with who
expressed interest in this form of management.
The motivations for considering sectors expressed by permit holders were primarily related to
their own profitability. While most of the individuals did not express great enthusiasm for sector
management, many, though not all, also agreed that the current system was seriously undermining
their economic viability and that sectors might offer the possibility of improving their
profitability through greater ability to access stocks for which catches are currently well below
25

target TACs or through consolidating catches on fewer platforms. One of the permit holders
noted that the ability to trade ACE freely within the sector would have substantial advantages
over the current DAS leasing provisions since it would eliminate restrictions on trades between
vessels of different sizes which make it difficult for large vessels to find DAS to lease.
To develop an understanding of whether and why the surrounding community would be
supportive of a community base groundfish sector, I spoke with officials from the City of
Portland and the Portland Fish Exchange including: Ellen Sanborn (Assistant Director of Finance
in the Portland City Manager’s Office); Judy Harris (Portland Ports and Waterfront); Tom
Valleau (President of the Portland Fish Exchange); and Hank Soule (manager of the Portland Fish
Exchange). A key concern of all of these individuals is to increase the volume of fish handled by
the Portland Fish Exchange or to at least keep it from falling. The Fish Exchange, which is owned
by the Portland Fish Pier Authority, is currently losing money and needs to maintain a higher
volume in order to remain solvent. The city will subsidize it for a while, but it is in danger of
being shut down in the near future. Judy Harris also explained that the City has explicitly tried to
maintain a diverse economic base and that the fishing industry is an important part of that.
Consequently the city has forgone potentially higher property taxes by restricting development of
the waterfront to maintain working waterfront.
Ellen Sanborn explained that the city has a strong interest in supporting the groundfish fleet in
Portland and keeping them here but is unlikely to expend substantial taxpayer dollars to do so. A
key factor that the City would want to get out of their support for the industry is keeping enough
fish going through the Portland Fish Exchange to keep it solvent. The Fish Exchange can be
subsidized for a time by the fish pier authority out of revenues generated by services of the fish
pier authority. However, that will run out in a year to 18 months and the city is unlikely to be
willing to spend tax dollars subsidizing it after that. Ms. Sanborn thought that the city would be
happy to subsidize the salary of a sector manager if the sector was landing all its catch at the Fish
Exchange. Keeping the volume of landings up at the Fish Exchange also results in more business
for ancillary service providers (e.g. ice, fuel, supplies, maintenance, etc.). Many of these
businesses are facing difficult times due to the decline in the number of groundfish boasts fishing
out of Portland and the number of days each is fishing.
Determining the make-up and structure of a community-based sector in Portland is considerably
more difficult than for Port Clyde. The Portland fleet is highly heterogeneous in terms of vessel
size, areas fished and ports of landing. There is no Portland or Southern Maine groundfish
fishermen’s association that would sponsor a community-based sector. Associated Fisheries of
Maine, whose members recently submitted a sector proposal, includes members from
Massachusetts, New Hampshire and Rhode Island. Many of its members land much or all of their
catch in ports other than Portland. A primary interest of Portland officials involved with fishery
issues is to maintain landings in Portland, so the case study was conducted based on two
hypothetical sectors with membership determined by the percentage of the vessels’ groundfish
revenues associated with fish landed in Portland in the 2005 fishing year. Discussions with the
proponents of the sector proposed by Associated Fisheries of Maine (called the “Sustainable
Harvest Sector) were helpful in preparing this analysis and many of the vessels that are likely to
join that sector are members of the hypothetical sector analyzed here. However, the sector
membership used for the analysis below is quite different from the Sustainable Harvest Sector as
it excludes many vessels that do not land the majority of their fish in Portland and includes many
vessels that are not in the Sustainable Harvest Sector.
26

3.2.1 Strawman Sector Structure and Operational Plan:
Analysis is done on two hypothetical Portland sectors. Portland Sector A includes all groundfish
vessels with more than 50% of their groundfish revenues in fishing year 2005 from landings in
Portland. Portland Sector B is a subset of Portland Sector A that includes only groundfish vessels
with more than 90% of their groundfish revenues in fishing year 2005 coming from landings in
Portland. The hypothetical sectors included only mobile gear vessels. Table 7 shows the vessels
included in the two hypothetical sectors along with the vessel characteristics. Sector A includes
76 permits while Sector B includes only 50. All vessels are mobile gear vessels between 36 and
85 feet in length (Table 7).
A strawman operational structure for the sectors was developed and evaluated through discussion
with a number of groundfish permit owners and vessel operators in Portland including (Maggie
Raymond, Barbara Stevenson, Jimmy Odlin, Bobby Tetrault, Vincent Balzano, and Yvette
Alexander) . . The strawman does not represent a consensus on how these individuals think a sector
should be structured, but is reflective of many of the opinions voiced by them. Under this
strawman, the sector would receive allocations of all regulated groundfish species it regularly
encounters as well as monkfish. The groundfish stocks for which allocations would be requested
include: GB cod, GB haddock, GB winter flounder, GB yellowtail flounder, GOM Cod, GOM
Haddock, GOM/CC winter flounder, GOM/CC yellowtail flounder, GOM/GB windowpane
flounder, American plaice, pollock, Acadian redfish, SNE/MA haddock, SNE/MA winter
flounder, SNE/MA yellowtail flounder, white hake, witch flounder, northern monkfish and
southern monkfish. As was done for the Port Clyde case study, the analysis of the allocation and
economic feasibility of the sector is done based on sector and overall commercial catches for two
different allocation periods: (1) from May 1, 2001 through April 30, 2006, and (2) from May 1,
1996 to April 30, 2002. The shares of total commercial catches landed by vessels in the respective
Portland Sectors A and B for these species for these two periods are shown in Table 8. For the
hypothetical Portland sectors, allocations based on fishing years 2001-2005 (relative to 1996-
2001) result in higher sector shares for some species but lower shares for others. As the economic
analysis shows, an allocation based on the 2001-05 years results in an overall portfolio of ACE
that is more valuable. It should be noted that the current regulations do not allow sectors to
request allocations of monkfish; an amendment to the Monkfish FMP will be required to make
this possible.
Each year the sector would receive annual catch entitlements (ACE) for each species. These ACE
allocations become hard TACs for the overall sector. The ACE allocated to the sector each year
would be equal to the shares of the overall target TACs shown in Table 8. The total pounds of
ACE would increase or decrease in proportion to increases or decreases in the target TACs.
Under the strawman operational plan, sector members would be required to retain all legal sized
fish of regulated species for which the Sector received an allocation of ACE, and all sector
members would be required to stop fishing once total sector catch of any species equaled the
sector ACE for that species.
27

Table 7: List of Vessels Included in Portland Sector Case studies
Vessel Name Length Gross Tons Horsepower Built Sector A Sector B
JENNIFER K 45 38 400 1987 Yes Yes
PRETENDER 38 22 335 1995 Yes Yes
MISTRESS 40 20 220 1972 Yes Yes
SAFE HAVEN 36 8 430 1997 Yes Yes
WEST HEAD 44 19 300 1988 Yes Yes
KELLY SEA 42 24 250 1996 Yes Yes
HANNAH RUTH 37 20 250 1982 Yes Yes
DANNY BOY II 43 13 220 1992 Yes Yes
SHERRIE MARIE 40 11 454 2005 Yes Yes
BARBARA & LYN 38 17 200 1973 Yes Yes
JANIE B 38 17 350 1972 Yes Yes
SUSAN A 38 17 485 1978 Yes Yes
PERSISTENCE 38 17 250 1978 Yes Yes
JEANNE C 36 21 290 1979 Yes Yes
SUSAN AND JESSICA 36 16 210 1979 Yes Yes
PANDORA 37 19 350 1981 Yes Yes
STELLA G 48 30 300 1948 Yes Yes
NORTH STAR 42 25 335 1955 Yes Yes
SIRIUS 50 31 200 1957 Yes Yes
SOLE TRAIN 45 34 525 1977 Yes Yes
CHRISTINA & REBECCA 41 25 400 1982 Yes Yes
HANNAH JO 38 25 400 1982 Yes Yes
MISTY DAWN II 42 24 480 1997 Yes Yes
PAMELA GRACE 40 23 475 2004 Yes Yes
FOXY LADY 45 34 400 1975 Yes Yes
BETHANY JEAN 48 49 365 1979 Yes Yes
DE DEE MAE II 51 47 365 1980 Yes Yes
AVATAR 49 39 275 1980 Yes Yes
ROBERT MICHAEL 54 73 364 1980 Yes Yes
CHERYL K 50 53 365 1980 Yes Yes
DEBORAH ANN 50 44 375 1981 Yes Yes
MAKAIRA 65 52 400 1977 Yes Yes
JULIE D 56 67 402 1978 Yes Yes
TARA LYNN 54 73 350 1979 Yes Yes
LADY DEE 55 61 550 1980 Yes Yes
FLIGHT 1 60 64 350 1982 Yes Yes
THUNDER BAY 56 56 250 1983 Yes Yes
LESLIE ANN 55 56 360 1978 Yes Yes
FIONA A 64 89 580 1981 Yes Yes
ELIZABETH 70 102 400 1985 Yes Yes
TARA LYNN II 54 73 400 1988 Yes Yes
THERESA & ALLYSON 71 99 443 1989 Yes Yes
ADVENTURER 65 99 542 1993 Yes Yes
EDWARD L MOORE 80 159 625 1978 Yes Yes
DRAKE 78 180 575 1980 Yes Yes
TERESA MARIE III 85 192 620 1984 Yes Yes
HARMONY 85 193 1280 1988 Yes Yes
TERESA MARIE IV 81 193 1280 1988 Yes Yes
HARMONY 85 188 850 1999 Yes Yes
TERESA MARIE IV 81 188 850 1999 Yes Yes
RACHEL T 43 5 235 1981 Yes No
HAYLEY ANN 42 14 300 1987 Yes No
MARCIA LEE 36 21 300 1980 Yes No
KATIE & SARAH 42 27 600 1988 Yes No
ETHEL B 48 27 318 1952 Yes No
TERRI & RUTH 48 28 300 1966 Yes No
MISTY MAE 52 30 350 1969 Yes No
MEGALTAY 40 25 250 1979 Yes No
HIGH ROLLER 40 24 320 1981 Yes No
NOVEMBER GALE 45 32 600 1991 Yes No
BAD PENNY 51 51 250 1979 Yes No
BLUE WATER III 56 45 402 1981 Yes No
ANNA LENA IV 56 73 400 1984 Yes No
CELTIC PRIDE 44 44 600 1986 Yes No
CAVALIER 52 56 350 1978 Yes No
JERRY & JOE 49 61 504 1979 Yes No
SARA KATHRYN 50 64 400 1985 Yes No
CHRISTINA CAROL 50 64 280 1985 Yes No
LYDIA & MAYA 71.5 104 700 1967 Yes No
PAULO MARC 63 77 402 1985 Yes No
JAMIE & ASHLEY 65 74 402 1989 Yes No
BLACK BEAUTY 63 105 503 1980 Yes No
CAROLINE M 71 138 500 1980 Yes No
JAMIE LEIGH 70 138 500 1980 Yes No
CAPT'N MARK 69 130 550 1981 Yes No
CAPT'N JAKE 78 127 550 1982 Yes No
28

Table 8: Portland Sectors A and B Vessels’ share of landings
for two allocation periods FY01-05 and FY96-01
Stock and species
Total FY01-05
Landings
Portland (A)
Sector Share
Portland (B)
Sector Share
Total FY96-01
Landings
Portland (A)
Sector Share
Portland (B)
Sector Share
GB COD 66,166,000 4.6% 3.5% 112,927,645 3.9% 3.3%
GB HADDOCK 66,001,000 8.3% 7.1% 35,687,670 9.0% 7.0%
GB WINTER FLOUNDER 26,960,000 0.6% 0.5% 18,897,799 0.3% 0.2%
GB YELLOWTAIL 39,925,000 0.5% 0.3% 32,548,287 0.4% 0.3%
GOM COD 42,105,000 11.1% 6.9% 56,395,433 12.2% 7.8%
GOM HADDOCK 10,769,000 21.6% 10.5% 10,209,311 33.8% 18.0%
GOM/CC WINTER FLOUNDER 6,072,000 0.3% 0.2% 7,137,377 0.7% 0.5%
GOM/CC YELLOWTAIL 16,218,000 0.3% 0.3% 20,140,336 0.7% 0.5%
GOM/GB WINDOWPANE 274,000 0.0% 0.0% 3,416,338 0.1% 0.1%
PLAICE 27,593,000 30.5% 17.2% 52,992,348 25.9% 14.5%
POLLOCK 52,853,000 26.8% 16.3% 56,561,783 20.2% 12.4%
REDFISH 4,461,000 30.7% 16.3% 4,061,337 28.8% 16.0%
SNE/MA HADDOCK 76,000 4.8% 2.2% 84,641 5.6% 1.7%
SNE/MA WINDOWPANE 633,000 0.0% 0.0% 1,320,000 0.0% 0.0%
SNE/MA WINTER FLOUNDER 25,217,000 0.3% 0.3% 47,371,788 0.1% 0.1%
SNE/MA YELLOWTAIL 4,118,000 0.0% 0.0% 9,954,000 0.0% 0.0%
WHITE HAKE 37,850,000 38.7% 24.3% 38,320,463 27.5% 18.3%
WITCH FLOUNDER 32,599,000 19.9% 11.4% 30,024,873 22.2% 11.1%
NFMA MONKFISH 142,821,000 22.9% 13.3% 147,201,370 18.1% 10.3%
SFMA MONKFISH 102,724,000 1.7% 1.6% 190,073,556 1.9% 1.8%
The sector would not restrict the operations of member vessels geographically since some of the
member vessels have catch histories for Georges Bank and Southern New England stocks and are
capable of taking multiday trips to utilize allocations for those areas. Because the catch of all
managed species would be constrained by hard TACs, the sector would request that it be
exempted from other regulations designed primarily to control fishing mortality. Specifically the
sector would request to be exempted from: Northeast Multispecies Days at Sea (DAS) limits,
Monkfish DAS limits 10 , trip limits on cod, yellowtail flounder, winter flounder and white hake,
possession and landing limits on monkfish, the May seasonal closure for Georges Banks, and
Gulf of Maine rolling closures. The sectors would continue to be subject to the same restrictions
on year-round closed areas and gear as other multispecies vessels. Initially, the sector would not
propose any additional restrictions on gear or vessel characteristics beyond current permit
restrictions.
The strawman envisions assigning each permit in the sector a specific allocation of the overall
allocation of each of the species-stocks for which the Sector receives an allocation. These
individual allocations would be based on the contribution of the catch history of the permit (i.e.,
its contribution to determining the overall sector allocation). Sector members would be free to
utilize these allocations on their vessels or transfer them to other vessels within the sector upon
notification and approval by the sector manager. These allocations would usable only while
operating as part of the sector. Should they leave the sector or the sector not be renewed, these
vessels would again be subject to the same effort controls as the rest of the multispecies fleet not
enrolled in a sector. The approach of giving individual allocations was nearly universally
supported by the individuals I spoke with. However, these individuals, for the most part have
relatively large individual catch histories. It is possible that the sector might settle on some other
allocation formula. In any case, the economic analysis that follows is not explicitly dependent on
the assumption though it implicitly assumes that there is no change in overall fixed costs or
average variable costs as a share of revenues.
10 This would require changes to the Monkfish FMP
29

3.2.2 Economic Feasibility
The economic feasibility analysis for the Portland Community-based Sectors evaluates whether
the sector could recover the costs of establishing and running the sector from its members and
whether the profitability of the sector vessels (after subtracting these costs) is likely to be higher
under sector management than current management. The analysis to address these questions is
identical to that done for the Port Clyde sector. It entails estimating the landings and revenues of
the sector, estimating the costs of establishing and managing the sector, and estimating the
revenues of sector members without sector management. The relative gains in revenues or net
revenues under sector management are then compared with additional costs of sector
management to calculate the net gain to the sector participants.
A starting point for the analysis is to estimate the sectors species allocations and the projected
sector ACE allocations and revenues. The sector species-stock allocations based on two separate
allocation formulas (using 1996-01 or 2001-05 fishing years) are shown above in Table 8.
Revenue projections are based on 50 th percentile estimates of F msy TACs and prices shown in
appendix A. Sectors landings and revenues are then calculated based on the Sectors allocation
shares of each species. The sectors are assumed to catch only 85% of their ACE allocations. This
85% figure is arbitrary, but leaves a plausible buffer to account for discards of undersize or
unmarketable fish and for inability to use the entire ACE allocation of some species without
exceeding ACE allocations of others 11 . In reality the sector is likely to land nearly 100% of some
species ACE and less than 85% of others; but this is difficult to predict since sector management
is likely to substantially change the incentives and fishing patterns of sector members.
Estimating the cost of establishing and operating the Portland Community Sector is difficult
given the uncertainty in the regulatory process for approval and in the requirements for reporting
and monitoring the sector once in operation. The Portland Sectors are quite large and may
required developing monitoring systems that accommodates fishing in multiple stock areas and
allows landings in alternative ports. An estimate of $200,000 for sector establishment is used for
this analysis. This is probably somewhat higher than the true cost to the sector so that profitability
estimates, once these costs are deducted, are conservative relative to this assumption.
The primary ongoing costs for the sector are the salary for the sector manager, administrative
overhead and possibly some legal costs. Since the sector will be relatively large and vessels may
be landing in alternative ports, it is likely the sector will require a full time manager. The
estimated $150,000 annual operational cost used for this analysis would allow for $80,000 in
salary to the part time sector manager (with no benefits) and an additional $70,000 for
administrative and legal costs.
Sector revenues are calculated by multiplying projected sector landings by species specific prices.
Sector landings are assumed to attract the same prices as the overall industry (i.e. the demand
model projects prices based on overall commercial landings). Prices for calculation of revenues
are based on demand models described in Appendix B that calculate region-wide prices based on
region-wide landings. Price projections are nominal prices (not adjusted for inflation). As was
11 The spreadsheet used to make predictions is available, and the percentage of ACE used can easily be
adjusted to explore the sensitivity of results to this assumption.
30

discussed earlier these price projections are likely conservative since they assume landings equal
overall target TACs.
The expected annual gain in revenues under sector management is estimated by subtracting the
projected annual revenues without sectors management from projected revenues under sector
management (Table 9a-d). The analysis assumes that, without sector management, the sector
members will continue to catch the same percentage of the different groundfish target TACs that
they caught during the 2004 and 2005 fishing years. Estimates are provided for both Portland
Sectors A and B based on two different sector allocation formulas (e.g. FY01-05 and FY96-01
basis years). The annual gain in net revenues for the sector is calculated by subtracting from the
increase in annual gross revenue, the variable operating costs (estimated at 38% of the increased
gross revenues) 12 , the ongoing costs of sector management (assumed to be $150,000), and the
loan to repay sector establishment costs (assumed to be $200,000). These net gains do not
account for additional labor costs associated with landing additional catch (only costs such as
fuel, oil, ice, water and provisions). Thus the gains in net revenues represent additional income
that would be divided between boat/permit owners, captains and crew. Presumably this will be on
the same basis as normal crew share which may vary from vessel to vessel.
The analysis suggests that sector management can provide substantial gains in net revenues to
sector vessels and that these gains far outweigh the costs of establishing and operating a sector.
Sector A is projected to increase net revenues by $4.6 million with the FY01-05 allocation and by
$4.2 million with the FY96-01 allocation. This assumes sector A vessels pay a landing tax of 1%
on groundfish and monkfish landings. The smaller Sector B is projected to increase net revenues
by $2.8 million with the FY01-05 allocation and by $2.0 million with the FY96-01 allocation.
This assumes sector vessels pay a landing tax of 1.1% on groundfish and monkfish landings. The
landings tax would be sufficient to cover the $150 thousand annual operating cost and to pay off a
$200 thousand loan for establishment of the sector in 5 or 7 years (depending on allocation
formula) assuming a 7.5% interest rate. The landings tax for the Portland sectors is much smaller
than that required for the Port Clyde sector simply because of the larger size and revenues of the
sector.
If the landings tax was continued indefinitely at 1% for Sector A or 1.1% for Sector B, the sector
entity would begin to build capital which could be used to pay dividends to sector members or to
purchase additional permits. The asset calculations in Tables 9a-d assume that the landing tax
surplus and 7.5% interest on assets is simply accumulated by the sector entity. Note that the
column titled interest and management fees becomes negative in later years once interest on the
sector’s asset base exceeds the management costs.
12 The estimate of variable operating costs as a percent of revenue is based on observer data collected from
observed trawler trips. For each trip the ratio of the sum of fuel, oil, food, water, ice, and supplies to the
revenues generated by the trip was calculated. A weighted average of this ratio (weighted by revenue) was
calculated to equal 25% of gross revenues.
31

Table 9a: Portland Sector A Revenues and Gains Over Non Sector Management
Based on FY01-05 Allocation
Fishing
Year Total Revenue tax (1%)
Interest +
Mgmt fees
Outstanding
Loan or
(Assets)
Sector Revenue
Gain (vs. no sector) % Gain
Sector Net
Rev Gain
2008 $ 31,383,441 $ 313,834 $ 165,000 $ 200,000 $ 7,589,188 32% $ 4,586,039
2009 $ 26,591,149 $ 265,911 $ 153,837 $ 51,166 $ 6,234,328 31% $ 3,764,237
2010 $ 26,448,165 $ 264,482 $ 145,432 $ (60,908) $ 6,340,434 32% $ 3,830,566
2011 $ 26,331,126 $ 263,311 $ 136,503 $ (179,958) $ 6,440,786 33% $ 3,893,229
2012 $ 26,510,043 $ 265,100 $ 126,993 $ (306,766) $ 6,601,893 34% $ 3,992,435
2013 $ 26,729,726 $ 267,297 $ 116,634 $ (444,874) $ 6,791,052 35% $ 4,108,879
2014 $ 25,657,896 $ 256,579 $ 105,335 $ (595,537) $ 6,424,111 34% $ 3,885,449
2015 $ 26,194,093 $ 261,941 $ 93,991 $ (746,781) $ 6,475,013 33% $ 3,914,970
2016 $ 26,338,146 $ 263,381 $ 81,395 $ (914,731) $ 6,448,494 33% $ 3,897,981
2017 $ 26,275,099 $ 262,751 $ 67,746 $ (1,096,717) $ 6,393,021 33% $ 3,863,828
2018 $ 26,802,163 $ 268,022 $ 53,121 $ (1,291,722) $ 6,438,592 32% $ 3,890,079
2019 $ 27,270,332 $ 272,703 $ 37,003 $ (1,506,623) $ 6,470,156 32% $ 3,907,870
2020 $ 27,693,093 $ 276,931 $ 19,326 $ (1,742,323) $ 6,498,113 31% $ 3,923,596
2021 $ 28,086,985 $ 280,870 $ 5 $ (1,999,928) $ 6,521,774 31% $ 3,936,769
2022 $ 28,442,046 $ 284,420 $ (21,059) $ (2,280,792) $ 6,543,838 30% $ 3,949,100
2023 $ 28,773,475 $ 287,735 $ (43,970) $ (2,586,272) $ 6,565,512 30% $ 3,961,278
2024 $ 29,059,736 $ 290,597 $ (68,848) $ (2,917,977) $ 6,587,363 30% $ 3,973,738
2025 $ 29,349,121 $ 293,491 $ (95,807) $ (3,277,423) $ 6,608,725 29% $ 3,985,883
2026 $ 29,608,658 $ 296,087 $ (125,004) $ (3,666,721) $ 6,627,289 29% $ 3,996,406
2027 $ 28,932,015 $ 289,320 $ (156,586) $ (4,087,812) $ 6,798,600 31% $ 4,105,190
2028 $ 29,268,842 $ 292,688 $ (190,029) $ (4,533,718) $ 6,801,639 31% $ 4,105,795
2029 $ 29,590,535 $ 295,905 $ (226,233) $ (5,016,435) $ 6,808,265 30% $ 4,108,680
2030 $ 29,885,830 $ 298,858 $ (265,393) $ (5,538,573) $ 6,817,423 30% $ 4,113,236
2031 $ 30,159,199 $ 301,592 $ (307,712) $ (6,102,824) $ 6,828,781 30% $ 4,119,239
2032 $ 30,415,973 $ 304,160 $ (353,410) $ (6,712,128) $ 6,841,292 29% $ 4,126,021
2033 $ 30,660,759 $ 306,608 $ (402,727) $ (7,369,697) $ 6,853,990 29% $ 4,132,963
2034 $ 30,887,427 $ 308,874 $ (455,927) $ (8,079,032) $ 6,867,273 29% $ 4,140,337
2035 $ 31,095,280 $ 310,953 $ (513,288) $ (8,843,834) $ 6,881,036 29% $ 4,148,080
2036 $ 31,290,340 $ 312,903 $ (575,106) $ (9,668,074) $ 6,897,698 29% $ 4,157,669
2037 $ 31,475,344 $ 314,753 $ (641,706) $ (10,556,083) $ 6,912,651 29% $ 4,166,237
32

Table 9b: Portland Sector A Revenues and Gains Over Non Sector Management
Based on FY96-01 Allocation
Fishing
Year Total Revenue tax (1%)
Interest +
Mgmt fees
Outstanding
Loan or
(Assets)
Sector Revenue
Gain (vs. no sector) % Gain
Sector Net
Rev Gain
2008 $ 30,875,740 $ 308,757 $ 15,000 $ 200,000 $ 7,089,026 30% $ 4,277,868
2009 $ 26,087,669 $ 260,877 $ (7,032) $ (93,757) $ 5,738,175 29% $ 3,458,536
2010 $ 25,884,261 $ 258,843 $ (27,125) $ (361,666) $ 5,784,349 29% $ 3,487,936
2011 $ 25,750,612 $ 257,506 $ (48,573) $ (647,633) $ 5,868,143 30% $ 3,540,396
2012 $ 25,936,817 $ 259,368 $ (71,528) $ (953,712) $ 6,036,446 31% $ 3,644,036
2013 $ 26,189,261 $ 261,893 $ (96,346) $ (1,284,609) $ 6,258,022 32% $ 3,780,454
2014 $ 24,998,416 $ 249,984 $ (123,214) $ (1,642,847) $ 5,772,800 30% $ 3,484,142
2015 $ 25,464,925 $ 254,649 $ (151,203) $ (2,016,045) $ 5,754,821 30% $ 3,471,222
2016 $ 25,545,467 $ 255,455 $ (181,642) $ (2,421,897) $ 5,665,514 29% $ 3,415,546
2017 $ 25,420,802 $ 254,208 $ (214,425) $ (2,858,994) $ 5,549,104 28% $ 3,343,845
2018 $ 25,892,617 $ 258,926 $ (249,572) $ (3,327,627) $ 5,540,025 28% $ 3,336,424
2019 $ 26,307,938 $ 263,079 $ (287,709) $ (3,836,125) $ 5,519,305 27% $ 3,321,999
2020 $ 26,682,917 $ 266,829 $ (329,019) $ (4,386,914) $ 5,499,984 26% $ 3,308,595
2021 $ 27,031,841 $ 270,318 $ (373,707) $ (4,982,761) $ 5,479,147 26% $ 3,294,350
2022 $ 27,346,090 $ 273,461 $ (422,009) $ (5,626,787) $ 5,460,824 25% $ 3,281,796
2023 $ 27,638,090 $ 276,381 $ (474,169) $ (6,322,257) $ 5,443,479 25% $ 3,269,932
2024 $ 27,893,379 $ 278,934 $ (530,461) $ (7,072,807) $ 5,434,678 25% $ 3,263,505
2025 $ 28,149,112 $ 281,491 $ (591,165) $ (7,882,201) $ 5,422,737 24% $ 3,255,131
2026 $ 28,378,578 $ 283,786 $ (656,614) $ (8,754,857) $ 5,411,541 24% $ 3,247,317
2027 $ 27,874,964 $ 278,750 $ (727,144) $ (9,695,257) $ 5,754,159 26% $ 3,461,654
2028 $ 28,161,956 $ 281,620 $ (802,586) $ (10,701,151) $ 5,707,871 26% $ 3,431,865
2029 $ 28,438,736 $ 284,387 $ (883,902) $ (11,785,357) $ 5,670,041 25% $ 3,407,358
2030 $ 28,693,742 $ 286,937 $ (971,523) $ (12,953,647) $ 5,639,320 25% $ 3,387,342
2031 $ 28,931,347 $ 289,313 $ (1,065,908) $ (14,212,107) $ 5,615,281 24% $ 3,371,535
2032 $ 29,154,649 $ 291,546 $ (1,167,550) $ (15,567,329) $ 5,594,663 24% $ 3,357,904
2033 $ 29,368,299 $ 293,683 $ (1,276,982) $ (17,026,425) $ 5,576,542 24% $ 3,345,856
2034 $ 29,567,863 $ 295,679 $ (1,394,782) $ (18,597,090) $ 5,562,999 23% $ 3,336,701
2035 $ 29,750,317 $ 297,503 $ (1,521,566) $ (20,287,550) $ 5,551,624 23% $ 3,328,956
2036 $ 29,923,137 $ 299,231 $ (1,657,996) $ (22,106,620) $ 5,546,278 23% $ 3,324,984
2037 $ 30,087,715 $ 300,877 $ (1,804,789) $ (24,063,848) $ 5,541,012 23% $ 3,321,094
33

Table 9c: Portland Sector B Revenues and Gains Over Non Sector Management
Based on FY01-05 Allocation
Fishing
Year Total Revenue tax (1.1%)
Interest +
Mgmt fees
Outstanding
Loan or
(Assets)
Sector Revenue
Gain (vs. no sector) % Gain
Sector Net
Rev Gain
2008 $ 21,837,304 $ 240,210 $ 165,000 $ 200,000 $ 4,665,595 28% $ 2,801,389
2009 $ 18,367,791 $ 202,046 $ 159,359 $ 124,790 $ 3,821,891 27% $ 2,292,795
2010 $ 18,027,334 $ 198,301 $ 156,158 $ 82,103 $ 3,825,353 27% $ 2,296,365
2011 $ 17,696,919 $ 194,666 $ 152,997 $ 39,960 $ 3,819,286 28% $ 2,293,984
2012 $ 17,600,890 $ 193,610 $ 149,872 $ (1,709) $ 3,853,090 28% $ 2,315,344
2013 $ 17,537,657 $ 192,914 $ 146,591 $ (45,447) $ 3,906,107 29% $ 2,348,479
2014 $ 16,814,655 $ 184,961 $ 143,117 $ (91,770) $ 3,674,898 28% $ 2,208,151
2015 $ 17,180,677 $ 188,987 $ 139,979 $ (133,613) $ 3,688,854 28% $ 2,215,274
2016 $ 17,230,829 $ 189,539 $ 136,303 $ (182,622) $ 3,650,367 27% $ 2,191,203
2017 $ 17,116,401 $ 188,280 $ 132,311 $ (235,858) $ 3,591,892 27% $ 2,155,426
2018 $ 17,480,217 $ 192,282 $ 128,113 $ (291,827) $ 3,606,179 26% $ 2,162,764
2019 $ 17,804,372 $ 195,848 $ 123,300 $ (355,997) $ 3,612,817 26% $ 2,165,524
2020 $ 18,096,991 $ 199,067 $ 117,859 $ (428,545) $ 3,618,596 25% $ 2,167,884
2021 $ 18,369,582 $ 202,065 $ 111,769 $ (509,752) $ 3,622,285 25% $ 2,169,032
2022 $ 18,613,490 $ 204,748 $ 104,996 $ (600,049) $ 3,625,903 25% $ 2,170,256
2023 $ 18,840,810 $ 207,249 $ 97,515 $ (699,801) $ 3,629,835 24% $ 2,171,743
2024 $ 19,036,624 $ 209,403 $ 89,285 $ (809,535) $ 3,636,229 24% $ 2,174,889
2025 $ 19,233,330 $ 211,567 $ 80,276 $ (929,653) $ 3,641,277 24% $ 2,177,197
2026 $ 19,409,164 $ 213,501 $ 70,429 $ (1,060,944) $ 3,645,596 23% $ 2,179,139
2027 $ 18,891,861 $ 207,810 $ 59,699 $ (1,204,016) $ 3,800,959 26% $ 2,277,627
2028 $ 19,126,844 $ 210,395 $ 48,590 $ (1,352,127) $ 3,790,758 25% $ 2,270,319
2029 $ 19,349,947 $ 212,849 $ 36,455 $ (1,513,932) $ 3,783,695 25% $ 2,265,008
2030 $ 19,554,936 $ 215,104 $ 23,226 $ (1,690,326) $ 3,779,776 24% $ 2,261,722
2031 $ 19,743,020 $ 217,173 $ 8,835 $ (1,882,205) $ 3,778,126 24% $ 2,259,913
2032 $ 19,919,302 $ 219,112 $ (6,791) $ (2,090,544) $ 3,777,913 24% $ 2,259,043
2033 $ 20,087,126 $ 220,958 $ (23,734) $ (2,316,447) $ 3,778,388 23% $ 2,258,636
2034 $ 20,241,179 $ 222,653 $ (42,085) $ (2,561,139) $ 3,779,977 23% $ 2,258,978
2035 $ 20,381,684 $ 224,199 $ (61,941) $ (2,825,877) $ 3,782,511 23% $ 2,259,962
2036 $ 20,512,418 $ 225,637 $ (83,401) $ (3,112,017) $ 3,787,592 23% $ 2,262,565
2037 $ 20,637,040 $ 227,007 $ (106,579) $ (3,421,054) $ 3,792,185 23% $ 2,264,892
34

Table 9d: Portland Sector B Revenues and Gains Over Non Sector Management
Based on FY96-01 Allocation
Fishing
Year Total Revenue tax (1.1%)
Interest +
Mgmt fees
Outstanding
Loan or
(Assets)
Sector Revenue
Gain (vs. no sector) % Gain
Sector Net
Rev Gain
2008 $ 20,528,643 $ 225,815 $ 165,000 $ 200,000 $ 3,374,027 20% $ 2,006,087
2009 $ 17,272,757 $ 190,000 $ 160,439 $ 139,185 $ 2,741,413 19% $ 1,627,476
2010 $ 17,004,330 $ 187,048 $ 158,222 $ 109,623 $ 2,815,988 20% $ 1,674,835
2011 $ 16,765,080 $ 184,416 $ 156,060 $ 80,798 $ 2,899,955 21% $ 1,727,894
2012 $ 16,754,783 $ 184,303 $ 153,933 $ 52,442 $ 3,018,524 22% $ 1,801,450
2013 $ 16,782,365 $ 184,606 $ 151,655 $ 22,072 $ 3,161,335 24% $ 1,889,877
2014 $ 16,052,667 $ 176,579 $ 149,184 $ (10,879) $ 2,923,003 23% $ 1,745,161
2015 $ 16,389,064 $ 180,280 $ 147,129 $ (38,274) $ 2,907,780 22% $ 1,734,317
2016 $ 16,424,913 $ 180,674 $ 144,643 $ (71,424) $ 2,855,244 21% $ 1,701,595
2017 $ 16,303,439 $ 179,338 $ 141,941 $ (107,455) $ 2,789,872 21% $ 1,661,572
2018 $ 16,638,788 $ 183,027 $ 139,136 $ (144,852) $ 2,776,056 20% $ 1,651,605
2019 $ 16,936,014 $ 186,296 $ 135,844 $ (188,742) $ 2,756,100 20% $ 1,637,990
2020 $ 17,204,147 $ 189,246 $ 132,060 $ (239,194) $ 2,737,690 19% $ 1,625,455
2021 $ 17,453,783 $ 191,992 $ 127,772 $ (296,379) $ 2,718,700 19% $ 1,612,637
2022 $ 17,676,857 $ 194,445 $ 122,955 $ (360,599) $ 2,701,732 18% $ 1,601,184
2023 $ 17,884,244 $ 196,727 $ 117,593 $ (432,090) $ 2,685,966 18% $ 1,590,543
2024 $ 18,064,903 $ 198,714 $ 111,658 $ (511,223) $ 2,677,383 18% $ 1,584,466
2025 $ 18,244,390 $ 200,688 $ 105,129 $ (598,279) $ 2,665,415 17% $ 1,576,296
2026 $ 18,404,864 $ 202,454 $ 97,962 $ (693,838) $ 2,654,554 17% $ 1,568,891
2027 $ 17,954,037 $ 197,494 $ 90,125 $ (798,330) $ 2,875,672 19% $ 1,707,869
2028 $ 18,165,488 $ 199,820 $ 82,073 $ (905,699) $ 2,842,207 19% $ 1,686,237
2029 $ 18,367,145 $ 202,039 $ 73,242 $ (1,023,446) $ 2,813,944 18% $ 1,667,871
2030 $ 18,552,483 $ 204,077 $ 63,582 $ (1,152,243) $ 2,790,597 18% $ 1,652,621
2031 $ 18,723,086 $ 205,954 $ 53,045 $ (1,292,739) $ 2,771,669 18% $ 1,640,173
2032 $ 18,882,796 $ 207,711 $ 41,576 $ (1,445,648) $ 2,755,075 17% $ 1,629,216
2033 $ 19,035,130 $ 209,386 $ 29,116 $ (1,611,783) $ 2,740,237 17% $ 1,619,380
2034 $ 19,175,643 $ 210,932 $ 15,596 $ (1,792,053) $ 2,728,442 17% $ 1,611,480
2035 $ 19,303,505 $ 212,339 $ 946 $ (1,987,389) $ 2,718,480 17% $ 1,604,769
2036 $ 19,422,791 $ 213,651 $ (14,909) $ (2,198,782) $ 2,712,249 16% $ 1,600,407
2037 $ 19,536,888 $ 214,906 $ (32,051) $ (2,427,341) $ 2,706,436 16% $ 1,596,326
35

The projected gains for the sector are based solely on the ability of the sector to catch a higher
percentage of the target TACs than its members are currently catching as a consequence of
exemptions from DAS restrictions, seasonal closures and trip limits. The sector may achieve
additional gains beyond what is calculated here through higher prices if they are able to improve
quality or make direct marketing arrangement or through consolidation. The analysis implicitly
assumes the same vessels are used to harvest the fish with or without sector management. Under
sector management, it would be possible to consolidate fishing operations on fewer platforms if
the sector desired. This would be expected to reduce fixed costs which would provide an
additional boost in profitability.
Although the projections are shown through the year 2027, the relative gains of sector vs. nonsector
management are unlikely to continue as projected. Major changes in management of the
fishery, including ITQs, are being considered which will presumably increase profitability of nonsector
vessels and erode the relative benefits of sector to non-sector management. The TAC
projects are also increasingly uncertain in later years. Nevertheless, the analysis suggests that the
gains from sector management are sufficiently large to justify the difficulty and cost of
establishing a sector even if the gains are only realized for a few years.
Another way to evaluate the relative gains from sector management is a retrospective evaluation.
Tables 10a-d show the actual catch of the Portland sector vessels in fishing years 2004 and 2005
what the sector TACs would have been had they been under sector management in those years
(given the two different allocation formulas). The potential forgone revenue is calculated by
applying the actual average species prices for the sector vessels in those years by the estimated
forgone catch. This likely represents an upper bound on what the actual forgone revenues would
have been since the sector would not have been able to land 100% of all TACs. However, it is
clear that the potential gains could have been substantial.
Table 10a: Portland Sector A Revenues and Gains Over Non Sector Management
Based on FY01-05 Allocation
04-05 Sector 05-06 Sector
Forgone Forgone Forgone Rev Forgone Rev
Stock and species
TAC TAC 04-05 Catch 05-06 Catch Catch FY04 Catch FY05 FY04 FY05
GB COD 298,693 414,261 383,080 358,836 (84,386) 55,426 $ (119,529) $ 87,978
GOM COD 1,183,295 1,554,630 999,659 1,027,793 183,636 526,837 $ 260,111 $ 836,255
GB HADDOCK 2,749,827 2,258,334 1,558,108 1,813,648 1,191,720 444,686 $ 1,259,499 $ 555,496
GOM HADDOCK 2,302,499 2,256,744 414,373 219,206 1,888,126 2,037,538 $ 1,932,611 $ 2,603,812
GOM WHITE HAKE 3,272,293 3,257,803 3,152,530 2,291,060 119,764 966,743 $ 78,012 $ 935,488
NFMA MONKFISH 8,559,529 6,638,579 6,131,142 5,123,133 2,428,386 1,515,445 $ 1,864,576 $ 1,311,041
SFMA MONKFISH 254,544 363,585 377,247 11,165 (122,703) 352,421 $ (94,214) $ 304,886
GOM PLAICE 2,485,763 2,438,671 1,123,526 852,294 1,362,237 1,586,378 $ 1,696,901 $ 2,406,709
POLLOCK 6,257,529 6,257,529 3,761,752 4,105,547 2,495,777 2,151,982 $ 1,427,279 $ 1,359,413
REDFISH 1,103,555 1,166,441 320,741 387,830 782,814 778,611 $ 426,309 $ 511,218
GB WINTER FLOUNDER 38,652 38,652 7,455 25,006 31,197 13,646 $ 22,881 $ 22,052
GOM/CC WINTER FLOUNDER 18,860 15,118 17,246 20,727 1,614 (5,609) $ 1,184 $ (9,065)
SNE/MA WINTER FLOUNDER 19,255 23,901 1,283 3,197 17,972 20,704 $ 13,181 $ 33,458
GOM WITCH FLOUNDER 2,269,529 3,066,978 1,463,129 1,357,646 806,399 1,709,332 $ 1,108,847 $ 2,681,675
GOM/CC YELLOWTAIL 6,611 9,253 1,083 1,010 5,528 8,242 $ 2,910 $ 8,977
GB YELLOWTAIL 72,459 51,446 24,889 7,325 47,570 44,121 $ 25,043 $ 48,054
Total 30,892,895 29,811,926 19,737,244 17,605,423 11,155,651 12,206,503 $ 9,905,601 $ 13,697,447
36

Table 10b: Portland Sector A Revenues and Gains Over Non Sector Management
Based on FY96-01 Allocation
Stock and species 04-05 Sector 05-06 Sector 04-05 Catch 05-06 Catch Uncaught_04 Uncaught_05 RevGain04 RevGain05
GB COD 255,534 354,403 383,080 358,836 (127,546) (4,433) $ (180,662) $ (7,037)
GOM COD 1,309,269 1,720,137 999,659 1,027,793 309,610 692,344 $ 438,547 $ 1,098,966
GB HADDOCK 2,954,416 2,426,355 1,558,108 1,813,648 1,396,308 612,707 $ 1,475,724 $ 765,385
GOM HADDOCK 3,598,615 3,527,105 414,373 219,206 3,184,242 3,307,899 $ 3,259,265 $ 4,227,232
GOM WHITE HAKE 2,325,526 2,315,228 3,152,530 2,291,060 (827,004) 24,168 $ (538,695) $ 23,386
NFMA MONKFISH 6,773,086 5,253,054 6,131,142 5,123,133 641,944 129,920 $ 492,901 $ 112,397
SFMA MONKFISH 279,445 399,154 377,247 11,165 (97,802) 387,989 $ (75,095) $ 335,657
GOM PLAICE 2,105,912 2,066,017 1,123,526 852,294 982,386 1,213,723 $ 1,223,731 $ 1,841,351
POLLOCK 4,713,618 4,713,618 3,761,752 4,105,547 951,866 608,071 $ 544,351 $ 384,120
REDFISH 1,036,366 1,095,424 320,741 387,830 715,625 707,594 $ 389,719 $ 464,590
GB WINTER FLOUNDER 20,145 20,145 7,455 25,006 12,690 (4,861) $ 9,307 $ (7,856)
GOM/CC WINTER FLOUNDER 52,457 42,049 17,246 20,727 35,211 21,321 $ 25,824 $ 34,456
SNE/MA WINTER FLOUNDER 7,272 9,026 1,283 3,197 5,988 5,829 $ 4,392 $ 9,419
GOM WITCH FLOUNDER 2,533,677 3,423,941 1,463,129 1,357,646 1,070,548 2,066,296 $ 1,472,068 $ 3,241,695
GOM/CC YELLOWTAIL 13,242 18,533 1,083 1,010 12,159 17,523 $ 6,401 $ 19,085
GB YELLOWTAIL 57,958 41,150 24,889 7,325 33,068 33,825 $ 17,409 $ 36,840
Total 28,036,538 27,425,337 19,737,244 17,605,423 8,299,294 9,819,913 $ 8,565,186 $ 12,579,686
Table 10c: Portland Sector B Revenues and Gains Over Non Sector Management
Based on FY01-05 Allocation
04-05 Sector 05-06 Sector
Forgone Forgone Forgone Rev Forgone Rev
Stock and species
TAC TAC 04-05 Catch 05-06 Catch Catch FY04 Catch FY05 FY04 FY05
GB COD 225,652 312,960 285,188 297,916 (59,536) 15,044 $ (83,566) $ 24,017
GOM COD 734,956 965,596 652,065 658,105 82,892 307,492 $ 116,349 $ 490,913
GB HADDOCK 2,336,256 1,918,683 1,502,291 1,464,477 833,965 454,206 $ 847,809 $ 573,344
GOM HADDOCK 1,120,927 1,098,653 188,692 107,659 932,235 990,993 $ 947,711 $ 1,250,931
GOM WHITE HAKE 2,058,712 2,049,596 1,922,890 1,293,315 135,823 756,281 $ 87,547 $ 728,402
NFMA MONKFISH 4,985,628 3,866,741 3,354,877 2,727,710 1,630,751 1,139,032 $ 1,267,706 $ 981,740
SFMA MONKFISH 235,721 336,700 333,068 6,004 (97,347) 330,696 $ (75,675) $ 285,029
GOM PLAICE 1,397,439 1,370,965 661,763 463,672 735,676 907,293 $ 897,903 $ 1,388,125
POLLOCK 3,792,102 3,792,102 2,306,354 2,338,242 1,485,748 1,453,860 $ 818,641 $ 895,314
REDFISH 586,971 620,420 169,933 200,285 417,038 420,135 $ 226,352 $ 293,267
GB WINTER FLOUNDER 31,839 31,839 3,594 19,653 28,245 12,186 $ 20,890 $ 19,846
GOM/CC WINTER FLOUNDER 12,716 10,193 10,824 18,633 1,893 (8,440) $ 1,400 $ (13,745)
SNE/MA WINTER FLOUNDER 16,712 20,744 1,005 2,936 15,707 17,809 $ 11,617 $ 29,003
WITCH FLOUNDER 1,303,545 1,761,574 857,422 756,448 446,123 1,005,126 $ 614,312 $ 1,608,550
GOM/CC YELLOWTAIL 5,519 7,724 1,104 892 4,415 6,831 $ 2,316 $ 7,286
GB YELLOWTAIL 36,076 25,614 20,009 5,829 16,067 19,785 $ 8,427 $ 21,101
Total 18,880,774 18,190,104 12,271,079 10,361,776 6,609,695 7,828,328 $ 5,709,740 $ 8,583,123
Table 10d: Portland Sector B Revenues and Gains Over Non Sector Management
Based on FY96-01 Allocation
Stock and species 04-05 Sector 05-06 Sector 04-05 Catch 05-06 Catch Uncaught_04 Uncaught_05 RevGain04 RevGain05
GB COD 212,256 294,381 285,188 297,916 (72,932) (3,536) $ (102,370) $ (5,645)
GOM COD 830,391 1,090,980 652,065 658,105 178,326 432,875 $ 250,305 $ 691,089
GB HADDOCK 2,312,823 1,899,438 1,502,291 1,464,477 810,531 434,961 $ 823,987 $ 549,051
GOM HADDOCK 1,913,578 1,875,552 188,692 107,659 1,724,886 1,767,893 $ 1,753,520 $ 2,231,611
GOM WHITE HAKE 1,547,399 1,540,547 1,922,890 1,293,315 (375,491) 247,232 $ (242,029) $ 238,118
NFMA MONKFISH 3,843,546 2,980,968 3,354,877 2,727,710 488,669 253,258 $ 379,879 $ 218,285
SFMA MONKFISH 275,461 393,463 333,068 6,004 (57,607) 387,459 $ (44,782) $ 333,954
GOM PLAICE 1,180,306 1,157,946 661,763 463,672 518,543 694,274 $ 632,889 $ 1,062,213
POLLOCK 2,881,774 2,881,774 2,306,354 2,338,242 575,420 543,532 $ 317,054 $ 334,717
REDFISH 575,160 607,936 169,933 200,285 405,227 407,651 $ 219,941 $ 284,552
GB WINTER FLOUNDER 15,021 15,021 3,594 19,653 11,427 (4,632) $ 8,451 $ (7,544)
GOM/CC WINTER FLOUNDER 37,960 30,428 10,824 18,633 27,137 11,795 $ 20,071 $ 19,210
SNE/MA WINTER FLOUNDER 7,270 9,024 1,005 2,936 6,265 6,089 $ 4,634 $ 9,916
GOM WITCH FLOUNDER 1,265,791 1,710,555 857,422 756,448 408,369 954,107 $ 562,325 $ 1,526,901
GOM/CC YELLOWTAIL 10,166 14,228 1,104 892 9,062 13,336 $ 4,753 $ 14,222
GB YELLOWTAIL 41,425 29,412 20,009 5,829 21,417 23,583 $ 11,233 $ 25,152
Total 16,950,329 16,531,652 12,271,079 10,361,776 4,679,250 6,169,876 $ 4,599,861 $ 7,525,804
37

3.2.3 Matching Catch to ACE
A frequently expressed concern of many fishermen regarding sector management as well as
individual quota systems is that they have limited control over the species composition of their
catch and may be unable to match their catches to their allocations. The Portland sectors are much
larger than the Port Clyde sector and have member vessels that are highly mobile. Therefore they
may have more ability to change catch composition through spatial and temporal shifts of effort.
Tables 11a and 11b show how the catch by species/stock of Portland based sector vessels’ in
Sectors A and B have changed over time as a percentage of their total catch. Tables 12a and 12b
shows how the Portland sector vessels’ catch as a percentage of total commercial catch has
changed over time. These percentages are based solely on vessel trip report data which, as noted
in the discussion for the Port Clyde sectors, may be quite inaccurate or at least quite different
from the dealer data on which sector allocations are based. This is particularly true for species
such as monkfish that are often landed only as tails. It should also be noted that the catches of
windowpane flounder in the VTR data are higher than those reported in the dealer data. As was
true for the Port Clyde sector, the allocations to the sector, based on dealer data, provide virtually
no allocation of windowpane flounder to the sectors, yet the VTR data suggests that the sectors
accounts of a relatively large share of windowpane catch, particularly in fishing years 2000-2002.
Nevertheless these tables offer some indication of the relative variability over time of the sector
vessels species composition and its catch relative to the total commercial catch.
Table 11a: Portland Sector A’s Species/stock Composition of Catch as a Percentage of the
Sector’s Total Groundfish Catch by Fishing Year
Groundfish Stock FY 1996 FY 1997 FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005
GB cod 3.1% 4.2% 7.1% 7.3% 4.9% 6.7% 4.3% 4.9% 2.5% 2.7%
GOM cod 20.4% 13.9% 7.1% 4.5% 6.0% 6.1% 6.1% 6.8% 6.6% 7.7%
GB haddock 0.4% 2.2% 3.1% 6.9% 6.5% 5.7% 4.6% 6.1% 10.3% 15.0%
GOM haddock 1.1% 5.1% 6.9% 4.1% 4.8% 5.2% 3.7% 3.5% 2.7% 1.8%
Hake 9.2% 7.3% 4.3% 5.4% 6.0% 7.2% 10.0% 12.2% 11.3% 7.5%
Northern Monkfish 12.2% 11.8% 11.0% 17.8% 17.1% 19.6% 24.4% 19.8% 17.2% 14.6%
Southern Monkfish 8.8% 4.8% 5.0% 4.5% 3.4% 3.2% 2.0% 1.7% 1.1% 0.0%
Plaice 20.5% 17.9% 19.2% 18.7% 24.8% 20.4% 16.6% 12.2% 8.8% 7.3%
Pollock 11.7% 20.2% 22.3% 15.5% 13.1% 11.3% 15.4% 18.6% 24.2% 28.5%
Redfish 1.1% 1.2% 2.9% 2.0% 1.4% 1.8% 1.2% 1.8% 2.2% 3.0%
GOM/GB windowpane 0.1% 0.2% 0.4% 0.1% 0.5% 0.7% 0.6% 0.4% 0.1% 0.0%
GB winter flounder 0.0% 0.0% 0.0% 0.1% 0.1% 0.1% 0.3% 0.5% 0.1% 0.4%
GOM winter flounder 0.5% 0.2% 0.3% 0.2% 0.5% 0.5% 0.3% 0.2% 0.2% 0.3%
SNE winter flounder 0.0% 0.0% 0.0% 0.1% 0.0% 0.3% 0.0% 0.1% 0.0% 0.0%
Witch flounder 10.3% 10.6% 10.2% 12.1% 10.3% 10.4% 9.5% 10.6% 12.4% 11.0%
Cape Cod Yellowtail flounder 0.2% 0.1% 0.0% 0.1% 0.2% 0.2% 0.1% 0.1% 0.0% 0.0%
GOM Yellowtail flounder 0.1% 0.1% 0.1% 0.1% 0.1% 0.0% 0.1% 0.0% 0.0% 0.0%
GB Yellowtail flounder 0.0% 0.1% 0.1% 0.2% 0.3% 0.3% 0.8% 0.4% 0.2% 0.1%
38

Table 11b: Portland Sector B Species/stock Composition of Catch as a Percentage of the Sector’s
Total Groundfish Catch by Fishing Year
Groundfish Stock FY 1996 FY 1997 FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005
GB cod 4.4% 5.8% 9.7% 10.0% 6.0% 8.4% 4.5% 5.6% 2.9% 3.6%
GOM cod 22.0% 14.7% 7.6% 4.2% 5.8% 5.4% 6.1% 6.5% 6.6% 7.9%
GB haddock 0.5% 3.2% 3.9% 8.2% 7.6% 7.4% 5.6% 7.2% 14.7% 19.4%
GOM haddock 1.3% 4.5% 6.1% 2.9% 4.7% 3.6% 3.3% 2.8% 1.8% 1.4%
Hake 9.1% 6.9% 5.5% 5.6% 7.0% 9.1% 12.8% 16.0% 13.5% 8.8%
Northern Monkfish 10.4% 11.3% 10.3% 15.7% 15.4% 18.9% 23.6% 18.0% 15.2% 12.2%
Southern Monkfish 14.2% 7.6% 8.0% 6.8% 5.3% 4.9% 3.0% 2.4% 1.5% 0.0%
Plaice 18.0% 15.7% 16.2% 16.2% 22.7% 18.0% 14.8% 10.2% 7.6% 6.1%
Pollock 11.6% 20.0% 21.5% 16.3% 14.3% 11.8% 14.6% 18.0% 23.1% 27.0%
Redfish 1.1% 1.1% 2.1% 2.2% 1.4% 1.4% 1.1% 1.7% 1.9% 2.6%
GOM/GB windowpane 0.0% 0.3% 0.3% 0.1% 0.2% 0.3% 0.2% 0.1% 0.1% 0.0%
GB winter flounder 0.0% 0.0% 0.1% 0.1% 0.1% 0.2% 0.5% 0.6% 0.1% 0.5%
GOM winter flounder 0.4% 0.1% 0.3% 0.3% 0.7% 0.6% 0.4% 0.2% 0.2% 0.4%
SNE winter flounder 0.0% 0.0% 0.0% 0.1% 0.1% 0.5% 0.0% 0.2% 0.0% 0.1%
Witch flounder 6.6% 8.4% 7.8% 10.4% 8.1% 8.8% 8.8% 9.8% 10.6% 9.8%
Cape Cod Yellowtail flounder 0.4% 0.1% 0.1% 0.2% 0.3% 0.3% 0.1% 0.1% 0.0% 0.0%
GOM Yellowtail flounder 0.1% 0.1% 0.1% 0.0% 0.1% 0.0% 0.1% 0.0% 0.0% 0.0%
GB Yellowtail flounder 0.0% 0.1% 0.2% 0.3% 0.3% 0.3% 0.3% 0.5% 0.2% 0.1%
total 100.0% 100.0% 100.0% 99.7% 100.0% 99.8% 99.9% 100.0% 99.9% 100.0%
Table 12a: Portland Sector A’s Share of Total Commercial Catch by Stock and Fishing Year
Based on VTR Catch Reports
Groundfish Stock FY 1996 FY 1997 FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005
GB cod 2.2% 3.0% 4.9% 4.6% 3.8% 4.6% 3.3% 5.4% 6.4% 7.1%
GOM cod 13.7% 13.9% 12.2% 17.0% 11.9% 10.5% 10.9% 11.7% 12.9% 15.0%
GB haddock 4.3% 8.0% 8.3% 9.0% 10.1% 7.8% 3.9% 5.7% 9.7% 15.7%
GOM haddock 17.6% 35.9% 39.2% 35.9% 41.3% 30.4% 24.2% 19.2% 20.6% 16.6%
Hake 17.6% 18.6% 13.9% 21.8% 28.3% 28.3% 29.5% 26.7% 39.7% 31.8%
Northern Monkfish 13.3% 18.0% 16.7% 16.2% 15.5% 17.7% 19.2% 18.6% 21.3% 18.9%
Southern Monkfish 6.9% 4.2% 3.5% 3.2% 5.4% 3.6% 2.3% 1.2% 1.8% 0.0%
Plaice 18.9% 20.9% 24.5% 24.9% 31.5% 29.6% 29.5% 27.8% 31.1% 28.2%
Pollock 16.6% 20.0% 20.7% 20.1% 22.8% 19.4% 24.8% 22.9% 30.7% 29.0%
Redfish 15.5% 23.4% 37.4% 30.2% 26.4% 26.5% 21.9% 24.0% 27.8% 29.1%
GOM/GB windowpane 0.6% 1.8% 9.5% 2.0% 25.7% 62.7% 38.1% 27.6% 11.7% 5.2%
GB winter flounder 0.0% 0.0% 0.2% 0.4% 0.4% 0.6% 0.8% 0.8% 0.2% 0.8%
GOM winter flounder 3.8% 1.5% 3.2% 2.8% 4.6% 4.0% 1.9% 1.3% 2.2% 4.9%
SNE winter flounder 0.0% 0.0% 0.0% 0.1% 0.1% 0.4% 0.1% 0.3% 0.1% 0.2%
Witch flounder 20.8% 25.0% 24.4% 23.5% 22.1% 20.5% 17.0% 16.5% 24.8% 21.8%
Cape Cod Yellowtail flounder 0.9% 0.2% 0.2% 0.4% 0.5% 0.5% 0.1% 0.2% 0.0% 0.1%
GOM Yellowtail flounder 4.7% 5.7% 8.5% 7.7% 3.8% 2.4% 3.8% 0.3% 0.3% 0.6%
GB Yellowtail flounder 0.0% 0.4% 0.3% 0.3% 0.5% 0.5% 1.6% 0.7% 0.2% 0.1%
Table 12b: Portland Sector B’s Share of Total Commercial Catch by Stock and Fishing Year
Based on VTR Catch Reports
Groundfish Stock FY 1996 FY 1997 FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005
GB cod 1.9% 2.6% 4.2% 4.1% 3.0% 3.7% 2.2% 4.1% 4.8% 6.2%
GOM cod 9.2% 9.4% 8.2% 10.7% 7.4% 6.0% 6.9% 7.5% 8.5% 10.2%
GB haddock 3.2% 7.2% 6.5% 7.0% 7.6% 6.4% 3.0% 4.5% 9.2% 13.6%
GOM haddock 12.5% 20.4% 21.8% 17.0% 25.6% 13.3% 13.5% 10.3% 9.2% 8.7%
Hake 10.9% 11.3% 11.1% 15.0% 21.1% 22.8% 24.0% 23.5% 31.6% 24.9%
Northern Monkfish 7.1% 11.1% 9.7% 9.5% 8.9% 10.9% 11.7% 11.3% 12.5% 10.5%
Southern Monkfish 6.9% 4.2% 3.4% 3.2% 5.4% 3.5% 2.2% 1.2% 1.7% 0.0%
Plaice 10.4% 11.7% 12.9% 14.3% 18.4% 16.7% 16.7% 15.5% 17.9% 15.8%
Pollock 10.2% 12.6% 12.5% 14.0% 16.0% 12.9% 14.9% 14.9% 19.3% 18.3%
Redfish 9.6% 14.2% 16.7% 20.9% 17.1% 13.2% 12.3% 16.0% 15.4% 17.1%
GOM/GB windowpane 0.1% 1.6% 5.4% 1.5% 5.1% 19.2% 6.1% 7.6% 5.8% 2.8%
GB winter flounder 0.0% 0.0% 0.2% 0.3% 0.3% 0.4% 0.7% 0.7% 0.1% 0.7%
GOM winter flounder 1.9% 0.5% 2.2% 2.0% 4.0% 3.5% 1.8% 1.1% 1.7% 4.8%
SNE winter flounder 0.0% 0.0% 0.0% 0.1% 0.1% 0.4% 0.1% 0.3% 0.1% 0.2%
Witch flounder 8.4% 12.7% 11.6% 13.3% 11.1% 11.1% 10.0% 10.3% 14.0% 13.0%
Cape Cod Yellowtail flounder 0.9% 0.2% 0.2% 0.4% 0.5% 0.5% 0.1% 0.2% 0.0% 0.1%
GOM Yellowtail flounder 3.1% 4.6% 5.9% 1.7% 2.3% 1.3% 3.7% 0.1% 0.2% 0.6%
GB Yellowtail flounder 0.0% 0.3% 0.3% 0.3% 0.3% 0.3% 0.4% 0.6% 0.1% 0.1%
39

Although plaice, as a percentage of the sectors’ groundfish catch has declined over this period,
the sector’s share of total commercial plaice landing has increased. The catch composition of the
Portland sectors has shifted toward greater reliance on monkfish, pollock, hake, and, in recent
years, haddock. The sectors became less reliant on GOM cod and plaice as a percentage of their
catch.
Since sectors allocate a share of TACs, it is probably more important to look at how the sector’s
share of overall commercial catch has changed over time. Comparing the early years to the later
years, the sector’s shares of plaice, pollock, hake, Northern monkfish and GB cod have increased
while their shares of GOM cod and GOM haddock have declined. The share of witch flounder for
the larger Sector A has also declined somewhat. These trends are consistent with the dealer data
and the sector allocations calculated from it based on the 96-01 vs. 01-05 fishing years which
were shown in Table 8.
As was true for Port Clyde vessels, these long term trends reflect changes in the distribution of
stocks but also regulatory changes such as rolling closures and trip limits. They also reflect
changes in overall stock levels and commercial catches. In the case of the Portland sectors which
include several large vessels, the trends also probably reflect changes in where vessels have been
fishing. Therefore it is difficult to say how easily the sector could adjust to a set of TACs that
reflect older catch history (e.g. 1996-2001). Elimination of DAS limits, trip limits and rolling
closures will give them considerably more flexibility to adjust their species composition. Since
catches for most species have been well below the target TACs, the sector TACs are likely to
allow the sector to increase catches of most stocks without being constrained by TACs of stocks
which they caught a smaller percentage of in the allocation years.
As was the case for the Port Clyde sector, a more serious problem for the sector may be
constraining catches of species that are not a significant part of their landings history (as recorded
in dealer data) and are probably taken primarily as incidental catch when targeting other species.
For species such as yellowtail flounder, windowpane flounder and winter flounder, the sector will
receive very small TACs. Their landings, while small in absolute magnitude, have been and are
likely to continue to be quite variable in percentage terms over time. The sector may find itself
constrained by these TACs that are of little importance to their overall profitability unless they
can find ways to avoid them. Again, spatial and temporal shifts in effort may mitigate this
problem, but this may result in reductions in efficiency if the vessels are required to forgo high
catch rates of their primary target species in order to avoid these other stocks. Allowing sectors to
trade ACE during the fishing year could be quite beneficial in this case, particularly if the
distribution of these stocks is shifting from year to year causing relative catch rates in different
areas to change.
3.3 Permit Bank
A means for communities interested in maintaining or regaining access to the groundfish fishery
is to create a permit bank affiliated with a sector. The permit bank would potentially be set up as a
cooperative with ownership and voting shares owned by sector members and perhaps the town or
city or some other entity (e.g. the Portland Fish Pier Authority in the case of a Portland permit
bank). The cooperative would purchase permits and the associated catch history, transfer the
permits to skiffs if necessary, and then include these permits and catch history in the communitybased
sector. The share of the sector’s annual ACE allocation contributed by the permit bank
40

vessels would be leased to sector vessels at rates sufficient to pay back loans incurred for
purchasing the permits. Once loans were paid back, the permit bank might continue to charge a
fee for access to this ACE and use the revenues to acquire more permits or other investments in
the interest of the fishing community and the sector members. The permit bank might also use
these revenues to purchase permits of sector members that wished to retire. It could create an
apprentice program that would provide young fishermen access to the fishery through access to
the ACE controlled by the permit bank.
There do not appear to be regulations that would explicitly allow or prohibit a cooperative from
owning a set of permits and including them in a sector together with privately owned permits.
However, it would be important to get a definitive ruling on the legality of this before making any
investments.
3.3.1 Financing a Permit Bank
There are a variety of ways that a permit bank might be financed. The most straight forward way
would be through a loan from a commercial bank or from a cooperative bank such as Farm
Credit. I spoke with a number of loan officers from Farm Credit in Maine and from TD
Banknorth in Maine and Massachusetts to determine issues associated with acquiring a
commercial loan and the likely requirements and terms of such a loan. The responses from both
financial institutions were similar and are described below.
Tim Kelleher of TD Banknorth explained that, when considering loans for fishing boats and
permits, the personal relationship and personal history of the borrower are key. They are lending
to a businessman is based on his success in the past. It is difficult to project cash flow or to factor
in regulatory risk associated with a groundfish permit, and the resale value of the permit is
unclear. Therefore the track history of the businessmen responsible for paying back the loan is
highly important. In the past, the bank would often require onshore collateral (e.g. the person’s
house) for loan on vessels, but there is less of that now.
Typical terms for purchase of a fishing boat and permit are 25% down with a payout over 7-12
years. Valuing permits is difficult but auditors have to agree with estimates. Typically there might
be a fixed interest rate for the first five years at about 2.5% to 2.75% over the cost of funds. Cost
of funds is the federal home loan bank rate which is around 5% now so the interest rate on the
loan is likely to be in the neighborhood of 7.5% to 8.5%. If loan guarantees were available, it
would not greatly affect lending rates but would affect the bank’s decision to lend and might
increase the amount they could lend relative to the value of the asset. While loan guarantees
mitigate risk of default they do not affect loan servicing costs and these could be higher for more
problematic loans.
I also met with Dick Robertson who is Executive Vice President and Chief Credit Officer for
Farm Credit of Maine as well as Rob Horne who is Vice President, Commercial Lending Coastal
and Interior Region, and Fred Morton, who is Senior Vice President, Corporate Lending. Farm
Credit of Maine is a federally-chartered cooperatively-owned lending institution — owned and
directed by Maine business owners. Farm Credit of Maine is part of the national Farm Credit
system, a $125 billion nationwide network of cooperative banking institutions making loans for
food and fiber businesses since 1916. Farm Credit sells bonds on the money market to finance
their loans. Farm Credit of Maine used to have a large portfolio of groundfish boat loans but are
now down to 12-15 owners (some with multiple boats). Farm Credit of Maine generally makes
41

loans involving boats and permits. Only recently have they begun to put separate values on the
hull and the permit. They have been making some loans on permits alone, but generally with
customers with whom they already have a relationship and other loans. They noted that there is a
lack of case law that clarifies whether they can take and sell a permit in the case of a loan default.
This makes it difficult to use the permit as collateral.
We talked about the possibility of loan guarantees through the Finance Authority of Maine
(FAME). They said that FAME has not wanted to deal with the fishing industry for a while. They
would need direction from the legislature to do so. If FAME could provide loan guarantees, it
would enable the lenders to classify the assets in a preferred risk category. This might not affect
the rate much but would make it easier for them to make the loans and would increase the percent
of the value that could be financed. Generally with the FAME guarantee this would be 90% but
could be even higher. However a loan guarantee through FAME can actually add 1% to the
interest rate on the loan because there is need to cover insurance on the loan. The officers of Farm
Credit of Maine were negative about the idea of setting up a new federal loan guarantee program
saying there are too many already and it would take a long time. They said it would make more
sense to use an existing facility such as the USDA’s FSA to provide loan guarantees if that could
be arranged.
The officers of Farm Credit of Maine noted that changes in fishery management that make
permits more of a commodity will make them more valuable and easier to loan against since there
is a thicker market for resale. With only permit leasing the market is thin because you have to
match up the permit’s vessel baseline to a similar boat. If the catch history can be used by anyone
in the sector regardless of boat size, it becomes easier. ITQ would be even better from that point
of view.
I spoke with Ellen Sanborn, Assistant Director of Finance in the Portland City Manager’s Office
about financing of a permit bank. She noted that there are two different types of bonds that could
potentially be used. The first and less costly is a government obligation (GO) that puts the name
of the city behind paying back the bond. The city would not support this unless it was very clear
that the money would be paid back, and it is probably not feasible to provide this level of
certainty. The cost of capital for a GO is currently around 4.5-5%.The alternative is a revenue
bond. In this case the permit bank would have to convince the buyers of the bonds that the permit
bank will be able to repay the loan. It could potentially buy its way into a revenue bond by getting
insurance but this would add about a percentage point to the financing costs. To get the insurance
the insurance company has to be convinced that the probability of default is low. Revenue bonds
might work for a few million but probably not a larger sum. Estimated financing cost with
insurance would be more like 5.5-6.5%. Ms. Sanborn said that this would be a lot easier and the
city would be a lot more likely to participate if their investment was leveraged by federal or state
money. State money seems unlikely, so looking for federal money might be a better bet. It would
also have to be clear that the permit bank, through a sector, could pay back the loan required to
purchase permits. The city would need some assurances that the management rules for use of the
permits in the sector would not change for the period that it would require to pay back the loan. If
there is little assurance that the rules won’t change in a way that could undercut the value of the
permits, then it would be difficult to get support for a bond.
Direct loans from the Federal government would be another and potentially superior alternative
for financing creation of community-based permit banks. This would of course require new
legislation, but a program could be modeled on the current legislation for industry financed
buybacks. That program allows a fishery as a whole to apply for a long term, low interest loan to
reduce capacity in the fishery and to pay that loan back through a landings tax. While the program
42

is ostensibly to reduce excess capacity in fisheries, in practice it is a means for consolidation of
the fishery to a reduced number of permit holders. A financing mechanism for community permit
banks would achieve the same end while also addressing objectives of National Standard 8 of the
Magnuson-Stevens Act.
3.3.2 Economic Feasibility of a Permit Bank
To explore the economic feasibility of this concept, I constructed a strawman permit bank based
on vessels that were publicly listed for sale during the summer of 2006. The vessels listed in
Table 13 were chosen from a larger set of offered vessels based on the ratio of the value of their
groundfish revenue history to the sale price and the percentage of their groundfish catch from
GOM stocks. Vessels with a large percentage of their catch history from GB or SNE stocks were
excluded on the assumption that the Maine community-based sector vessels would mainly be
fishing GOM stocks. A total of 10 vessels were selected with a combined asking price of $3.8
million. The vessels range in size from 46 to 74 feet with prices ranging from $150 thousand to
$575 thousand. The ratios of asking price to the average annual groundfish revenue (FY2001 –
FY2005) range from 0.85 to 2.49.
Table 13: Vessels included in the strawman permit bank with associated list prices, DAS
allocations, and vessel characteristics and percent of FY01-05 GOM groundfish landings
Permit
Moratorium
Right ID Vessel Name List_price
Regulation
Length
NEMS A
DAS
% Landed
Pounds from
GOM Stocks
250305 370 DOLORES LOUISE $150,000 46 49 99%
320541 572 LYDIA & MAYA $435,000 71 53 92%
250483 401 BETHANY JEAN $395,000 48 89 100%
320695 669 MARY AND JOSEPHINE $500,000 67 53 82%
250728 432 ANNA LENA IV $335,000 56 80 100%
310554 1530 ERIKA LYNN $299,000 50 53 100%
320885 684 TARA LYNN II $575,000 54 88 99%
230320 1696 IRENE ALTON $270,000 58 63 100%
320233 490 JANAYA & JOSEPH $395,000 74 53 98%
310331 505 TARA LYNN $525,000 54 66 100%
43

Just as was done for the sector analyses, the catch history associated with the current moratorium
right IDs of these vessels was calculated and a the combined share of these vessels catch by
species/stock for the period from May 2001 through April 2006 was calculated (Table 14).
Table 14: Combined catch history by fish stock of permit bank vessels for the fishing years 2001-
2005 and the proportion of total commercial landings by these vessels.
Stock and species
Total FY01-05
Landings
Permit
BankFY01-05
Total Landings
Proportion of total
landings landed by
permit bank
vessels
GB COD 66,166,000 258,827 0.4%
GB HADDOCK 66,001,000 330,319 0.5%
GB WINTER FLOUNDER 26,960,000 6,647 0.0%
GB YELLOWTAIL 39,925,000 3,576 0.0%
GOM COD 42,105,000 848,299 2.0%
GOM HADDOCK 10,769,000 555,657 5.2%
GOM/CC WINTER FLOUNDER 6,072,000 87,432 1.4%
GOM/CC YELLOWTAIL 16,218,000 155,192 1.0%
GOM/GB WINDOWPANE 274,000 - 0.0%
PLAICE 27,593,000 1,816,007 6.6%
POLLOCK 52,853,000 1,593,109 3.0%
REDFISH 4,461,000 203,158 4.6%
SKATES 160,780,000 - 0.0%
SNE/MA HADDOCK 76,000 - 0.0%
SNE/MA WINDOWPANE 633,000 - 0.0%
SNE/MA WINTER FLOUNDER 25,217,000 3,834 0.0%
SNE/MA YELLOWTAIL 4,118,000 - 0.0%
WHITE HAKE 37,850,000 1,898,262 5.0%
WITCH FLOUNDER 32,599,000 1,966,996 6.0%
NFMA MONKFISH 142,821,000 6,541,841 4.6%
SFMA MONKFISH 102,724,000 8,051 0.0%
Based on these percentages, ACE allocations as a share of target TACs are calculated and
revenues associated with utilization of those allocations are projected based on the same target
TAC and prices projections used for the economic feasibility analysis of the sectors (Table 15).
As with the sector analyses, the assumption is made that 85% of the ACE allocation of the permit
bank for all stocks is actually leased by sector vessels. The ACE leasing fee as a percentage of
revenues that would pay back a $3.8 million loan for vessel acquisition is calculated to be 16.3%
of ex-vessel price from the catch associated with the leased ACE. This assumes an interest rate of
7.5% and a 10 year repayment period for the vessel purchase loan. Assuming variable operating
costs equal to 38% of gross revenues (the same assumption used in the sector analyses), the
permit bank yields close to $2 million annually in net revenues to sector vessels after payment of
the lease fees necessary for loan repayment. The permit bank then quickly builds a substantial
asset base which it could use to purchase additional permits. However, the growth of the asset
base in Table 15 assumes the permit bank continues to lease ACE at 16.2% of ex-vessel price and
reinvests its assets in investments that pay a 7.5% return.
44

Table 15: Projected Total Revenue, ACE fee revenue, outstanding loan balance or asset base, and
net gains to sector vessels associated with ACE controlled by the permit bank
Fishing
ACE Fee % of
Outstanding Loan Gains To Sector
Year Total Revenue Revenue (16.2%) Interest (7.5%) or (Assets) Vessels
2008 $ 4,160,347 $ 674,753 $ 290,925 $ 3,879,000.00 $ 1,904,662
2009 $ 3,549,007 $ 575,602 $ 262,138 $ 3,495,172.12 $ 1,624,783
2010 $ 3,595,222 $ 583,097 $ 238,628 $ 3,181,708.32 $ 1,645,940
2011 $ 3,657,071 $ 593,128 $ 212,793 $ 2,837,239.40 $ 1,674,256
2012 $ 3,743,172 $ 607,093 $ 184,268 $ 2,456,904.16 $ 1,713,674
2013 $ 3,846,614 $ 623,870 $ 152,556 $ 2,034,079.42 $ 1,761,031
2014 $ 3,666,850 $ 594,714 $ 117,207 $ 1,562,765.78 $ 1,678,733
2015 $ 3,710,814 $ 601,845 $ 81,394 $ 1,085,259.04 $ 1,698,860
2016 $ 3,743,646 $ 607,170 $ 42,361 $ 564,808.84 $ 1,713,891
2017 $ 3,761,560 $ 610,075 $ - $ - $ 1,722,092
2018 $ 3,820,294 $ 619,601 $ (45,756) $ (610,074.87) $ 1,748,982
2019 $ 3,872,052 $ 627,995 $ (95,657) $ (1,275,431.28) $ 1,772,677
2020 $ 3,918,974 $ 635,605 $ (149,931) $ (1,999,083.90) $ 1,794,158
2021 $ 3,962,823 $ 642,717 $ (208,847) $ (2,784,620.54) $ 1,814,233
2022 $ 4,003,480 $ 649,311 $ (272,714) $ (3,636,184.16) $ 1,832,847
2023 $ 4,041,288 $ 655,443 $ (341,866) $ (4,558,209.09) $ 1,850,156
2024 $ 4,083,796 $ 662,337 $ (416,664) $ (5,555,517.83) $ 1,869,616
2025 $ 4,116,892 $ 667,705 $ (497,589) $ (6,634,518.95) $ 1,884,768
2026 $ 4,147,051 $ 672,596 $ (584,986) $ (7,799,812.96) $ 1,898,575
2027 $ 4,109,720 $ 666,542 $ (679,305) $ (9,057,395.27) $ 1,881,485
2028 $ 4,144,383 $ 672,164 $ (780,243) $ (10,403,241.75) $ 1,897,354
2029 $ 4,178,725 $ 677,733 $ (889,174) $ (11,855,648.64) $ 1,913,076
2030 $ 4,210,383 $ 682,868 $ (1,006,692) $ (13,422,555.74) $ 1,927,570
2031 $ 4,240,695 $ 687,784 $ (1,133,409) $ (15,112,115.48) $ 1,941,447
2032 $ 4,269,559 $ 692,466 $ (1,269,998) $ (16,933,308.41) $ 1,954,661
2033 $ 4,297,333 $ 696,970 $ (1,417,183) $ (18,895,772.07) $ 1,967,376
2034 $ 4,323,860 $ 701,273 $ (1,575,744) $ (21,009,925.12) $ 1,979,521
2035 $ 4,348,522 $ 705,272 $ (1,746,521) $ (23,286,942.01) $ 1,990,811
2036 $ 4,372,575 $ 709,173 $ (1,930,405) $ (25,738,734.99) $ 2,001,823
2037 $ 4,394,993 $ 712,809 $ (2,128,374) $ (28,378,313.46) $ 2,012,086
45

4.0 Operational and Regulatory Issues for Sectors
There are a number of factors that inhibit creation of community-based groundfish sectors in
Maine and elsewhere in New England. There are also a number of factors that constrain the
benefits that sector management can provide to fishermen and communities. The regulations that
dictate the process and requirements for sector formation and the rules for sector operation may
be revised as part of Amendment 16 to the Multispecies Groundfish FMP. This provides an
opportunity for reforms to address some of the issues discussed below.
4.1 Sector Implementation
Perhaps the most important issue is the difficulties and cost involved with formation of a sector.
Prospective sectors must devise an operations plan complete with a legal contract and system for
monitoring catch of its members. They must also complete an environmental assessment (EA)
that satisfies NEPA requirements for their initial sector proposal and for their final operations
plan. The sector must submit their proposal and initial EA at least a year before the sector can be
implemented. They must develop a system for monitoring and reporting that provides NMFS with
assurance that all sector groundfish catches will be counted against their allocation and fishing
will cease when the allocation is exhausted. The sector must also bear the costs of this
supplementary monitoring and reporting. There are no government resources (monetary or
advisory) available to prospective sectors to defray these organizational costs, but the expertise
and resources necessary to accomplish these tasks are substantial for an industry that is already in
severe financial difficulty. To make development of sectors more feasible, it would be extremely
helpful if extension services could be provided to prospective sectors (particularly for preparation
of environmental assessments) and/or if a financial facility whereby sectors can apply for a loans
or grants to defray the costs of sector development.
Currently, approval of a new sector can only be done though a framework or an amendment. This
creates considerable uncertainty as to whether the sector will ultimately be approved and when.
Unless the Council is prepared to undertake special frameworks for approval of sectors, this may
be a serious hindrance to approval of new sectors. In Amendment 13, the Council rejected the
option of setting up a procedure for approving new sectors that would not require a framework
this option. However it may reconsider this in Amendment 16. By doing so, the Council would
sacrifice some control over sector development in the fishery, but the cost of creating new sectors
and adapting existing ones would probably be reduced considerably.
4.2 Rolling Baseline for Sector Allocations
Current regulations create a rolling period of catch history to be used for allocations. Sectors lock
into a catch allocation as a percentage of the TAC based on the ratio of their catches during the
five years relative to total commercial catches. However, the years used for allocation to future
sectors continue to change. Rolling baselines have the advantage of creating sector allocations
that more closely match recent catch composition of the sector vessels. Presumably this
minimizes difficulties in matching catches to sector TACs. Rolling baselines also provide
opportunities for vessels with low catch histories to improve their catch histories and join a sector
46

later. However, rolling baselines create a number of potential problems as new sectors form and
individuals exit and enter sectors with allocations based on different baseline periods.
The rolling catch history creates incentives for individuals who think they can improve their catch
histories to remain outside of sectors and fish competitively to increase catch history. The rules
create incentives for sectors to forgo allocations of some species if they think they can increase
allocations of those in future (though their ability to do so is likely to be limited by continued
effort controls). Perhaps most problematic is the fact that permit holders within a sector that make
their catch history available to other sector members will see their potential future allocations
eroded. There is nothing to stop the individuals who have developed larger catch histories inside
the sector from simply exiting the sector and using those increased catch histories to form a new
sector. This presents a particular problem for sectors that might want to form permit banks to
make additional catch history available to its members since the value of the permits held by the
permit bank would quickly erode.
The Council recognized the problems associated with rolling baselines and recently passed
motions recommending that sector regulations be changed to create fixed and consistent baselines
for all sector allocations for a given fishery. This would eliminate much of the ambiguity and
perverse incentives created by current rolling baseline allocations. It creates more security for
individuals who make their ACE available to other member of the sector thereby facilitating
consolidation within the sector and reduction of fixed costs. It also provides more security for
permit banks that their permits will not be devalued over time if the ACE is made available to
other vessels. There is, however, still a lack of security for individual or permit banks who lease
ACE since there is no guarantee that more recent catch history will not be used in some future
allocative actions (e.g. if ITQs or the point system is implemented in Amendment 17 with
allocations based on years later than those used for sector allocation).
This concern might be alleviated by setting a control date for catch and effort history years that
can be used in future allocative actions (e.g. they would not be based on years later than the
control date which would presumably be either the current date or a past date). A control date
would increase the level of security, though control dates can be rescinded by a future Council.
Another option would be to specify by regulation that, for vessels enrolled in sectors, their catch
(or other historical allocation factors such as effort or capacity) as a percentage of the total
commercial catch (or other history based allocation factors) would be assumed to remain fixed
while they were enrolled in the sector. For example, if the share of the GOM cod TAC their
permit contributed to a sector’s allocation were 1% of the total commercial catch history, for the
purpose of future allocations, it would be recorded as 1% of total commercial catch for the years
they were in the sector. This would protect individuals in sectors whose catch was less (as a
percent of total commercial catch) than it was in the baseline period. It would also means that
sectors and individuals in sectors that do not catch their full ACE will not see their future
allocation shares reduced. Additionally, it would protect non-sector vessels from the possibility
that sector vessels could accumulate greater catch histories (in percentage terms) because of
regulatory advantages such as removal of effort controls that allow them to catch a higher
percentage of their ACE allocations.
An alternative would be to require sectors to specify in the sector contracts how the catch history
of the sector as a whole will be distributed amongst its member permits. This, however, would
create a good bit of additional complexity for the Regional Office and would not protect either the
sector or the common pool vessels from redistributions resulting from either sector or non-sector
vessels having an advantage in building catch history.
47

4.3 Balancing Catches with Allocations
Under current sector regulations, sectors cannot buy, sell or trade ACE with other sectors. They
must constrain their catch of all species to their annual allocations. If more sectors are authorized,
substantial gains in profitability for sectors may be realized by allowing sectors to trade ACE.
Gains might also be realized by allowing sectors to trade the permanent sector shares, but this
may be infeasible.
By altering where, when and possibly how they fish, sector members should have some ability to
control and adjust the composition of their catch (over the fishing year) to match their ACE
allocation. However, if a sector has only a small allocation of a stock taken incidentally (e.g.
GOM or SNE windowpane flounder or SNE yellowtail), and the catch rates of that stock are low
but highly variable and/or hard to control, the possibility exists that the sector will be constrained
from utilizing the ACE for their primary target species due to incidental catch of these other
species. If other sectors have surplus ACE, the ability to purchase additional ACE for these stocks
if they become constraints would alleviate this problem and would likely increase the ability of
sectors to utilize a greater percentage of their allocations of their primary target species.
More substantial trades of ACE might be desirable in response to shifts in the distribution of
primary target species. For example if cod stocks begin to expand into or shift to areas where they
have been less prevalent, it may be beneficial for sectors in the area where cod has moved to
purchase ACE from sectors in other areas. The potential gains may be sufficient to increase the
profits to both sectors. If the species shifts are long-term, a shift in permits between sectors may
make sense, but trades of ACE will be useful in the interim.
Allowing trading of sector shares could be useful if sectors perceive long term mismatches
between their share portfolios and desired catches. Under current rules sectors can effectively
trade shares on an annual basis through the movement of vessels between sectors. Assuming a
fixed baseline for allocation, the entire set of shares of catch history associated with a particular
vessel would move with that vessel causing a reduction in the allocation to the old sector and an
equal addition to the new one. However, finding a permit with the desired mix of species
allocations may be difficult. Allowing the sectors to trade specific amounts of shares of particular
stocks as opposed to the entire basket of allocation associated with a permit would make
acquisition of the desired portfolio for the sector easier, but would have to allow fragmentation of
the catch history from a particular permit. It is probably not the intent of the Council to do this
and would increase the likelihood of triggering an ITQ referendum as well. It would also require
a fairly complex registry to track the shares associated with particular vessels and sectors.
It may however be useful to design rules that make it simpler for vessels to move between
sectors. Currently the permit owner must declare into a sector several months in advance of the
fishing year. With fixed baselines, it may be possible to allow these declarations to be closer to
the beginning of the fishing year and to allow a permit declared into one sector to declare its
intention to switch into another at the beginning of the next fishing year. However, it may still be
necessary for vessels to declare into a sector well before the beginning of the fishing year if the
sector if required to submit a NEPA analysis on the final operations plan which NMFS is required
to review this prior to the start of fishing. If the regulatory review process can be streamlined, it
may be possible to allow declaration of sector membership closer to the beginning of the fishing
year.
48

4.4 Communities without Catch History
There are a large number of permit holders who have little catch history in recent years. Some of
these permit holders had been inactive for some time and were not granted any allocation of “A”
DAS in amendment 13. Others did receive “A” DAS allocations in 2004 but have not been
actively participating in the groundfish fishery since then. Some were leasing out their DAS to
other vessels. Additionally there are some communities (including several in Downeast Maine)
that traditionally had some involvement in the groundfish fishery, but no longer have any
fishermen with permits with “A” DAS and catch history.
Currently allocation to sectors is based solely on catch history. However future sector allocation
may be based on factors other than catch history. For example, allocation of a proportion of TACs
to sectors could be based on the physical characteristics of the vessels and their DAS allocations.
This would provide some allocation to vessels with little or no catch history, but, it is not clear
whether that allocation would be provided to vessels without “A” DAS. Therefore it may still be
necessary for communities without current access to the groundfish fishery to buy their way back
into the fishery through acquisition of permits.
Sectors in conjunction with permit banks could provide an opportunity for permit owners and
communities without “A” DAS and catch history to reenter the groundfish fishery. Individuals
that hold groundfish permits with only “C” DAS could enter a sector without purchasing a new
permit and could have access to that sector’s allocation. A sector could be created with a permit
bank to acquire catch history for this purpose. However, in order to provide communities or
groups of fishermen with sufficient security to make an investment in a permit bank and to
acquire financing, it would be necessary to provide greater assurance of the longevity of
allocations associated with fishing permits held by the permit bank and clarity on the legality of a
community-based entity holding permits.
5.0 Conclusions
The current management system based on individual effort (DAS) limits, year-round and seasonal
closures and trip limits has undermined the economic viability of many fishing operations and the
efficiency of the overall fleet. Trip limits result in substantial discarding and waste of marketable
fish. Increasingly restrictive DAS limits and trip limits appear to have reduced fishing mortality
on stocks of concern to a below-overfishing thresholds, but they constrain the fleet from catching
a substantial proportion of the sustainable yield of other species. The current system has also
created safety concerns by causing vessels to fish in unsafe conditions in order to maximize
revenues from their limited DAS.
Although the inefficiencies of the current management system have affected nearly all active
groundfish permit holders, the impacts may have been greater in some areas as evidenced by a
shift of landings toward a few larger ports in Massachusetts. This shift is mainly a result of
vessels moving to or landing at ports closer to the most productive fishing grounds. However,
groundfish boats in Maine face additional disadvantages, including a prohibition on landings
lobsters caught by trawl gear and the state tax on marine fuel which have contributed to a shift of
activity away from Maine. Groundfish landings in Downeast Maine have been essentially
49

nonexistent since 1997, and the Midcoast Maine and Portland fleets have been shrinking over the
last five years. The Portland Fish Exchange is now operating with unsustainable losses. Its
potential closure threatens to further undermine the viability of the Maine groundfish fleet.
Sector management creates opportunities for groups of fishermen to develop operating plans that
allow them to fish more efficiently, increase access to stocks for which catches are currently well
below TACs, land and sell fish they are currently forced to discard because of trip limits, and
potentially reduce costs by consolidating operations on fewer and the most efficient vessels. The
potential benefits of sectors go beyond allowing more effective and efficient use of catch
allocations. They empower sector members to develop innovative ways to better manage the
resources they have access to, and they can create strong incentives to conserve fishery resources
since their catch allocations in future years are directly related to the size and productivity of the
fish stocks. Sectors may also provide a means for communities to retain or regain their access to
the groundfish fishery.
The industry has been slow to take up sectors and has yet to take advantage of the full regulatory
relief they offer. Fishermen have lacked a clear understanding of the potential benefits of sector
management and whether those benefits outweigh the considerable effort and costs required for
sector formation and operation. However, the additional restrictions on effort included in
Framework 42 and the looming prospect of hard TACs following reauthorization of the
Magnuson-Stevens Act appears to have tipped the balance. Technical assistance provided by the
Gulf of Maine Research Institute also facilitated development of proposals by two sectors which
may have spurred development of others. There are now up to 19 new sector proposals that could
be authorized by the Council under Amendment 16 to the Multispecies FMP. It is possible that
sectors could account for the majority of groundfish activity if these new sectors begin operating
2009, but it is too early to know either the number or size of the sectors that will ultimately be
approved.
The economic evaluation of prospective sectors in Portland and Port Clyde suggest that sectors
can realize substantial increases in profits relative to status quo management. The gains estimated
in the foregoing analysis are more than sufficient to offset the costs of establishing and operating
a sector, even for the comparatively small Port Clyde sector. The gains in revenues and
profitability projected in the analysis are due solely to higher rates of utilization of the sectors’
shares of TACs for species for which landings have been well below target TACs and optimal
yield. The projections assume the sectors will be able to catch 85% of their species allocations on
average. These higher utilization rates should be possible as result of relaxation of effort
constraints including limited DAS and trip limits that currently force vessels to turn some
marketable fish into discards.
However, the ability to fully utilize allocations will depend on the sectors’ ability to find fish for
which they have allocations in the specific areas where they fish, and localized depletion of some
species in the area fished by a particular sector could prevent this. If sectors are able to trade
ACE, as is currently being considered, sectors may be able to adjust ACE portfolios to more
closely match the relative availability of species and thereby achieve a higher level of utilization
of their ACE allocations. Additional gains not included in the analysis could be realized by
concentrating through consolidation of fishing onto fewer an the most efficient platforms and by
increasing the prices of catch through improved quality and forward contracting.
This move toward sector management presents both risks and opportunities for fishing
communities that have been struggling under current management. Overall, sectors have the
potential to improve profitability of participating fishermen. However, sectors also create
50

opportunities for consolidation of the industry that could reinforce the trend of consolidating
landings in larger ports at the expense of smaller fishing communities. Additionally sectors make
it possible to move fishing privileges from smaller boats to larger boats which was not possible
with DAS leasing. On the other hand, sectors may also mitigate some of the disadvantages faced
by smaller, less mobile boats and even create some potential advantages (e.g. development of
high value markets for dayboat fish).
Sectors offer an opportunity for communities that value their access to the groundfish fishery to
actively maintain it through a partnership with community fishermen. Fishermen will require
organizational and technical assistance to set up and operate a sector. Community assistance may
be critical to sector development and also the key to retaining an active groundfish fleet in the
face of incentives and opportunities to move fishing operations or ACE allocations to larger ports.
Sectors also offer the possibly of establishing some community ownership of fishing rights and
potentially ongoing access to future entrants through creation of a permit bank partially or fully
owned by a community entity. By purchasing permits and associated catch history, a community
entity could own a share of a sector’s catch allocation and make it available to sector members as
an incentive to retain vessels in the community. Such a permit bank might also provide a means
for communities to provide ongoing access to new fishery entrants, perhaps through an
apprenticeship program. The economic feasibility analysis of permit banks presented in this
report suggests that a permit bank could be a profitable enough investment to finance permit
acquisition with a commercial loan and still provide substantial surplus benefits. However,
uncertainty about the security of the fishery access right associated with the permit and the ability
of the permit bank to utilize that right may make it difficult for communities or groups of
fishermen to find funding to acquire permits due to the risk. Establishment of a fixed baseline for
sector allocations will increase the level of security for such an investment, but the possible
transition of the fishery to sector or other forms of management still creates considerable risk and
uncertainty. A loan guarantee program might be needed to help lenders manage the risk
associated with loans for permit banks. Alternatively, a mechanism for direct government loans to
community permit banks could be created.
Direct involvement by communities in sectors requires a more active role in the fishery than most
communities have taken to date. While many communities have created or administered
programs to assist fishermen, the concept of direct involvement in marine fisheries management
and particularly of ownership of fishing rights is likely to meet resistance from community
leaders as well as fishermen. Some fishermen express philosophical objections to community
entities owning fishing rights, and communities generally do not have the experience or the
mandate from tax payers to take an active role, never mind equity position, in marine fisheries.
However, community involvement in management of shellfish fisheries in tidal areas is not
uncommon in New England states and does provide some precedent.
Notwithstanding the lack of active participation of communities in establishing groundfish
sectors, several groundfish sectors are likely to be de-facto community-based. The two Cape Cod
sectors, which may be reformed as new sectors with new allocations, have been communitybased
from the start and have been exploring the development of a permit bank. The Port Clyde
sector is community-based, and some of the sectors proposed by the Northeast Seafood Coalition
may also be geographically defined community-based sectors. A non-profit entity in Gloucester
has been created to administer several million dollars from a settlement process for establishment
of an offshore LNG terminal. This money was set aside to provide additional access to Gloucester
fishermen in the form of leased DAS, but could also fund the establishment of a permit bank to be
51

used in conjunction with a community-based sector. This idea has not been proposed to date, but
the development of one or more Gloucester based sectors creates the opportunity to do so.
In sum, although there has not been an explicit program to facilitate development of communitybased
sectors, the opportunity exists to do so and a number of them may evolve in the coming
years. These community-based sectors can serve dual goals of improving the profitability and
safety of groundfish fishermen and also allowing communities to retain or regain their
involvement in the groundfish fishery. However, there a number of barriers that are impeding
development of community-based sectors and fuller utilization of sector management in general.
Listed below are a number of recommendations that may facilitate more effective use of sectors
by fishermen and communities. These include actions that could be taken by NMFS
independently, regulatory reforms that may be included by the Council in Amendment 16, and
creation of new financing program that would require federal legislation:
5.1 Recommendations
1. To facilitate individual permit holders’ evaluation of their decision of whether to join a
sector, NMFS should compile the catch histories by fish stock of all permitted groundfish
vessels and inform all current permit owners of the process of acquiring their catch history
and the specific forms and signatures required for release of their catch history to them and to
a sector organizer and or sector manager.
2. The NEFMC should authorize a streamlined process for sector approval that does not require
a Council framework action and reduces the burden of documentation and regulatory analysis
that must be done by sector organizers.
3. The NEFMC should allow sectors to trade some proportion of their ACE allocations with
other sectors within the fishing year to facilitate catch balancing and greater utilization of
ACE portfolios.
4. The NEFMC should fix the allocation baseline for determining individual permit holders’
contributions to sector allocations and decide how overall sector allocations are adjusted with
movement of individuals in, out and between sectors. Future catch privileges associated with
individual permits, whether in the context of sectors or other management systems, should be
unaffected by how catch privileges are utilized within sectors.
7. The NEFMC should explicitly authorize community-based sectors to form permit banks that
can hold permits and contribute catch history to the sector. This recommendation is not meant
to imply that multiple permits from a single vessel could be split.
5. Congress should create financial resources for development of community permit
banks through a loan guarantee program or a direct loan program modeled on the
industry funded buyback structure.
52

References
Alexander, Yvette 2006.Maine Fishermen's Wives Association and Maine Vessel Owner.
Personal Communication, June 14, 2006
Conservation Law Foundation 2006. The Road to Groundfish Collapse and Turning the
Corner to Recovery: A Brief History of the New England Fisheries Crisis (1976-1997).
http://www.clf.org/programs/cases.asp?id=406
Conservation Law Foundation 2006. Rebuilding Groundfish: Timeline of CLF's Advocacy.
http://www.clf.org/programs/cases.asp?id=344
Harris, Judy 2006. City of Portland, Transportation and Ports, Personal Communication,
May 24, 2006.
Horne, Robert 2007. Vice Pres, Commercial Lending Coastal and Interior Region, Farm
Credit of Maine. Personal Communication, May 11, 2007
Kelleher, Tim 2007. Loan Officer, TD Banknorth. Personal Communication, April 10, 2007
LaPointe, George 2006. Commissioner, Maine Department of Marine Resources.
Personal Communication June 20, 2006.
Midcoast Fisherman’s Association 2006. Association Meeting. Town Hall Tennant’s
Harbor. June 20, 2006.
Morton, Frederick 2007. Senior Vice President, Corporate Lending. Farm Credit of
Maine. Personal Communication, May 11, 2007
New England Fishery Management Council (NEFMC) in consultation with NMFS.1996.
Final Amendment #7 to the Northeast Multispecies Fishery Management Plan Including a
Final Supplemental Environmental Impact Statement. February 7, 1996.
New England Fishery Management Council (NEFMC) in consultation with NMFS.2003.
Final Amendment #13 to the Northeast Multispecies Fishery Management Plan Including a
Final Supplemental Environmental Impact Statement and an Initial Regulatory Flexibility
Analysis. December 18, 2003
New England Fishery Management Council (NEFMC) in consultation with NMFS.2006.
Final Framework 42 to the Northeast Multispecies FMP. April 21, 2006.
53

Odlin, Jimmy, Portland Vessel Owner, Member New England Fishery Management
Council. Personal Communication, June 27, 2006
Pappalardo, John 2006. Sector Manager, Cape Cod Hook Sector and Chair, New England
Fishery Management Council. Personal Communication, October 16, 2006
Spies, Charlie 2007. Coastal Enterprises, Inc. Managing Director Capital Management
LLC (CCML)). Personal Communication, May 3, 2007
Sanborn, Ellen 2007. City of Portland, Assistant Director of Finance and Member of
Board of Portland Fish Exchange. Maine Fishermen's Wives Assn May 29, 2006 and
May 17, 2007.
Stevenson, Barbara 2006.Vessel owner and seller representative, Personal
Communication, May 24, 2006
Raymond, Maggie 2006. Executive Director, Associated Fisheries of Maine and Vessel
Owner. Personal Communication, May 25 th 2006
Roberston, Richard 2007. Executive Vice President and Chief Credit Officer for Farm
Credit of Maine. Personal Communication, May 11, 2007
Tetrault, Bobby 2006. Portland Vessel Owner. Personal Communication, June 27, 2006.
Thunberg, Eric 2007. Economist with Northeast Fishery Sciences Center and Member of
Groundfish Plan Development Team. Personal Communication May 2007.
Valleau, Tom 2007. President, Portland Fish Exchange. Personal Communication,
March 15, 2007
Walden, J.B., J.E. Kirkley and A.W. Kitts. A limited economic assessment of the Northeast
Groundfish Fishery Buyout Program. Land Economics 79(3):426-439.
Williams, Cathy 2007. Vice President, TD Banknorth. Personal Communication, April
10, 2007
54

Appendix A: Landings and revenue projections
Landings and revenue projects are based on 50 th percentile estimates of F msy TACs projected by Steve Correa. These projections were updated
from GARM II projections to be used in the analysis of the industry funded buyback program. The projections were provided to me by Chad
Demarest who had been responsible for estimating the expected landings tax and payback period for the industry funded buyback.
Table A1: Fmsy TACs Used for Economic Analyses
Southern New Georges
England Bank
Yellowtail Yellowtail
Flounder Founder
Gulf of
Maine
Winter
Flounder
New
England
Winter
Flounder
Cape Cod
Georges
Northern Southern
Gulf of
Witch
Yellowtail
American
Bank Winter Gulf of Georges Georges Bank Windowpane Windowpane
Maine
Northern
Year Flounder
Flounder
Plaice
Flounder Maine Cod Bank Cod Haddock Flounder Flounder Redfish Haddock Pollock White Hake Monkfish
2006 12,771,248 7,352,341 7,215,524 1,624,790 6,199,335 8,172,452 4,886,981 2,927,709 9,007,775 14,273,956 73,121,181 858,217 380,566 4,283,538 2,820,636 24,608,020 4,145,859 17,052,348
2007 11,710,835 13,364,285 8,344,850 2,524,267 5,119,081 9,113,816 5,913,266 3,366,424 16,364,305 18,523,860 149,872,125 858,217 365,151 4,567,931 2,764,888 35,838,402 3,456,321 11,000,000
2008 9,980,224 18,324,635 10,027,090 3,192,261 4,475,338 11,358,099 7,003,573 3,805,140 17,015,544 22,221,663 175,847,935 858,217 350,360 4,772,959 2,710,242 38,800,960 2,881,468 11,000,000
2009 8,143,792 14,365,174 9,731,281 2,885,821 4,104,965 7,506,663 9,461,614 4,228,423 17,274,805 21,251,356 134,185,184 956,760 216,882 4,865,552 2,615,970 38,800,960 2,402,223 11,000,000
2010 6,604,982 16,757,165 11,508,898 3,163,601 3,899,937 8,187,884 11,102,895 4,625,251 18,322,651 24,539,403 118,225,974 1,268,720 658,697 4,947,122 4,772,842 38,800,960 4,116,497 11,000,000
2011 5,458,590 18,562,732 13,178,698 3,370,833 3,688,296 8,595,735 12,588,971 4,986,805 19,855,069 28,776,644 102,163,589 1,580,680 1,100,511 5,057,352 6,929,715 38,800,960 5,830,772 11,000,000
2012 4,618,637 19,885,492 14,317,700 2,735,909 3,639,795 8,888,947 13,915,964 5,306,472 21,131,311 33,393,076 89,882,865 1,892,640 1,542,326 5,086,012 9,086,587 38,800,960 7,545,046 11,000,000
2013 4,049,850 20,892,994 15,080,721 2,903,458 3,602,316 9,104,998 15,134,314 5,582,047 22,106,627 38,009,509 78,656,821 2,204,600 1,984,140 5,119,081 11,243,460 38,800,960 9,259,320 11,000,000
2014 3,670,659 24,515,152 15,592,166 3,029,120 2,777,796 8,099,700 16,839,617 5,813,530 18,833,457 42,612,713 71,536,294 2,204,600 1,984,140 5,167,582 11,243,460 38,800,960 9,259,320 11,000,000
2015 3,408,312 24,638,610 19,530,293 2,200,191 2,971,801 8,313,547 17,654,437 6,007,535 20,000,131 47,297,488 71,973,356 2,204,600 1,984,140 5,196,242 11,243,460 38,800,960 9,259,320 11,000,000
2016 3,229,739 24,506,334 19,081,051 2,319,239 3,115,100 8,492,119 18,323,753 6,164,062 20,983,162 51,975,650 67,856,375 2,204,600 1,984,140 5,174,196 11,243,460 38,800,960 9,259,320 11,000,000
2017 3,108,486 24,431,377 18,700,923 2,409,628 3,216,511 8,631,009 18,894,127 6,291,928 21,781,007 56,479,647 61,843,549 2,204,600 1,984,140 5,194,038 11,243,460 38,800,960 9,259,320 11,000,000
2018 3,026,916 24,369,648 18,420,319 2,482,380 3,284,854 8,734,625 19,381,080 6,393,340 22,412,184 60,712,479 62,472,632 2,204,600 1,984,140 5,271,199 11,243,460 38,800,960 9,259,320 11,000,000
2019 2,969,596 24,279,260 18,239,240 2,535,290 3,333,355 8,811,786 19,761,329 6,472,706 22,873,607 64,753,511 62,913,993 2,204,600 1,984,140 5,275,608 11,243,460 38,800,960 9,259,320 11,000,000
2020 2,929,913 24,338,784 18,113,452 2,577,177 3,364,220 8,864,697 20,054,276 6,536,639 23,217,745 68,324,963 63,285,137 2,204,600 1,984,140 5,277,812 11,243,460 38,800,960 9,259,320 11,000,000
2021 2,903,458 24,398,308 18,033,280 2,608,042 3,386,266 8,902,175 20,289,022 6,536,639 23,486,265 71,669,341 63,584,632 2,204,600 1,984,140 5,268,994 11,243,460 38,800,960 9,259,320 11,000,000
2022 2,888,026 24,354,216 17,987,664 2,630,088 3,401,698 8,935,244 20,481,087 6,536,639 23,702,316 74,608,073 63,740,828 2,204,600 1,984,140 5,251,357 11,243,460 38,800,960 9,259,320 11,000,000
2023 2,872,594 24,312,329 17,940,667 2,647,725 3,414,925 8,961,699 20,613,010 6,536,639 23,835,033 77,293,276 63,864,065 2,204,600 1,984,140 5,255,766 11,243,460 38,800,960 9,259,320 11,000,000
2024 2,863,775 24,299,101 17,910,256 3,772,071 3,421,539 8,974,927 20,739,113 6,536,639 23,963,120 79,707,313 63,885,560 2,204,600 1,984,140 5,280,017 11,243,460 38,800,960 9,259,320 11,000,000
2025 2,857,162 24,169,030 17,897,816 3,661,841 3,430,358 8,990,359 20,845,816 6,536,639 24,055,713 81,801,683 63,925,684 2,204,600 1,984,140 5,286,631 11,243,460 38,800,960 9,259,320 11,000,000
2026 2,852,752 24,228,554 17,883,993 3,578,066 3,434,767 8,994,768 20,917,598 6,536,639 24,123,615 83,576,386 63,908,488 2,204,600 1,984,140 5,280,017 11,243,460 38,800,960 9,259,320 11,000,000
2027 2,848,343 24,173,439 17,890,904 3,518,542 3,436,971 9,001,382 20,964,159 6,536,639 24,191,517 65,167,976 63,944,313 2,204,600 1,984,140 5,271,199 11,243,460 38,800,960 9,259,320 11,000,000
2028 2,848,343 24,255,009 17,906,110 3,474,450 3,439,176 9,003,586 21,024,300 6,536,639 24,219,295 68,812,180 63,970,107 2,204,600 1,984,140 5,262,380 11,243,460 38,800,960 9,259,320 11,000,000
2029 2,848,343 24,363,035 17,897,816 3,443,585 3,441,381 9,010,200 21,047,581 6,536,639 24,268,678 72,057,351 63,988,735 2,204,600 1,984,140 5,255,766 11,243,460 38,800,960 9,259,320 11,000,000
2030 2,848,343 24,363,035 17,868,788 3,421,539 3,439,176 9,012,405 21,082,502 6,536,639 24,267,135 74,808,692 64,057,519 2,204,600 1,984,140 5,253,562 11,243,460 38,800,960 9,259,320 11,000,000
2031 2,846,139 24,398,308 17,871,552 3,401,698 3,443,585 9,016,814 21,107,722 6,536,639 24,294,912 77,172,023 64,070,416 2,204,600 1,984,140 5,251,357 11,243,460 38,800,960 9,259,320 11,000,000
2032 2,846,139 24,329,966 17,890,904 3,388,470 3,445,790 9,023,428 21,111,602 6,536,639 24,290,283 79,277,416 64,081,880 2,204,600 1,984,140 5,246,948 11,243,460 38,800,960 9,259,320 11,000,000
2033 2,846,139 24,356,421 17,885,375 3,381,856 3,443,585 9,025,632 21,119,363 6,536,639 24,285,653 81,186,600 64,091,911 2,204,600 1,984,140 5,244,743 11,243,460 38,800,960 9,259,320 11,000,000
2034 2,848,343 24,277,055 17,896,434 3,370,833 3,443,585 9,021,223 21,146,523 6,536,639 24,318,061 82,806,981 64,051,787 2,204,600 1,984,140 5,242,539 11,243,460 38,800,960 9,259,320 11,000,000
2035 2,846,139 24,182,257 17,883,993 3,366,424 3,443,585 9,019,019 21,158,163 6,536,639 24,322,690 84,187,060 63,983,004 2,204,600 1,984,140 5,242,539 11,243,460 38,800,960 9,259,320 11,000,000
2036 2,846,139 24,186,667 17,863,259 3,362,015 3,447,994 9,021,223 21,152,343 6,536,639 24,333,493 85,273,928 63,914,220 2,204,600 1,984,140 5,242,539 11,243,460 38,800,960 9,259,320 11,000,000
2037 2,843,934 24,067,618 17,863,259 3,359,810 3,443,585 9,012,405 21,154,283 6,536,639 24,345,839 86,235,134 63,875,529 2,204,600 1,984,140 5,238,130 11,243,460 38,800,960 9,259,320 11,000,000
55

Table A2: Prices Projections Used for Economic Analyses
Southern
New
England
Georges
Bank
Gulf of
Cape Cod Maine
Southern
New
England
Georges
Bank
Georges Northern Southern
Gulf of
Witch Yellowtail Yellowtail Yellowtail Winter American Winter Winter Gulf of Georges Bank Windowpane Windowpane
Maine
White
Year Flounder Flounder Founder Flounder Flounder Plaice Flounder Flounder Maine Cod Bank Cod Haddock Flounder Flounder Redfish Haddock Pollock Hake Monkfish
2006 1.43 1.28 1.28 1.28 1.21 1.25 1.21 1.21 1.61 1.61 1.02 0.54 0.54 0.54 1.02 0.57 0.86 0.80
2007 1.45 1.18 1.18 1.18 1.21 1.25 1.21 1.21 1.69 1.69 0.97 0.54 0.54 0.54 0.97 0.59 0.91 0.76
2008 1.46 1.11 1.11 1.11 1.21 1.25 1.21 1.21 1.69 1.69 0.96 0.53 0.53 0.54 0.96 0.60 0.96 0.75
2009 1.48 1.18 1.18 1.18 1.23 1.28 1.23 1.23 1.65 1.65 0.99 0.55 0.55 0.54 0.99 0.55 1.01 0.76
2010 1.50 1.15 1.15 1.15 1.23 1.28 1.23 1.23 1.58 1.58 1.01 0.58 0.58 0.54 1.01 0.54 0.90 0.75
2011 1.52 1.14 1.14 1.14 1.23 1.28 1.23 1.23 1.50 1.50 1.02 0.60 0.60 0.54 1.02 0.54 0.84 0.74
2012 1.54 1.15 1.15 1.15 1.23 1.28 1.23 1.23 1.44 1.44 1.04 0.62 0.62 0.55 1.04 0.54 0.79 0.73
2013 1.55 1.15 1.15 1.15 1.23 1.28 1.23 1.23 1.39 1.39 1.05 0.63 0.63 0.55 1.05 0.55 0.76 0.73
2014 1.56 1.14 1.14 1.14 1.24 1.29 1.24 1.24 1.37 1.37 1.07 0.64 0.64 0.55 1.07 0.54 0.76 0.73
2015 1.57 1.10 1.10 1.10 1.24 1.29 1.24 1.24 1.34 1.34 1.07 0.63 0.63 0.55 1.07 0.56 0.77 0.72
2016 1.58 1.11 1.11 1.11 1.24 1.30 1.24 1.24 1.31 1.31 1.08 0.63 0.63 0.55 1.08 0.57 0.78 0.72
2017 1.59 1.13 1.13 1.13 1.25 1.30 1.25 1.25 1.28 1.28 1.10 0.64 0.64 0.56 1.10 0.57 0.79 0.72
2018 1.59 1.14 1.14 1.14 1.25 1.31 1.25 1.25 1.27 1.27 1.10 0.64 0.64 0.56 1.10 0.59 0.80 0.71
2019 1.60 1.15 1.15 1.15 1.26 1.32 1.26 1.26 1.27 1.27 1.11 0.64 0.64 0.56 1.11 0.60 0.81 0.71
2020 1.61 1.15 1.15 1.15 1.26 1.33 1.26 1.26 1.26 1.26 1.11 0.65 0.65 0.56 1.11 0.61 0.82 0.71
2021 1.61 1.16 1.16 1.16 1.27 1.33 1.27 1.27 1.26 1.26 1.12 0.65 0.65 0.56 1.12 0.62 0.83 0.71
2022 1.62 1.16 1.16 1.16 1.27 1.34 1.27 1.27 1.26 1.26 1.12 0.65 0.65 0.57 1.12 0.63 0.83 0.72
2023 1.62 1.17 1.17 1.17 1.28 1.35 1.28 1.28 1.26 1.26 1.13 0.65 0.65 0.57 1.13 0.64 0.84 0.72
2024 1.63 1.16 1.16 1.16 1.28 1.35 1.28 1.28 1.26 1.26 1.13 0.66 0.66 0.57 1.13 0.65 0.85 0.72
2025 1.63 1.16 1.16 1.16 1.29 1.36 1.29 1.29 1.26 1.26 1.14 0.66 0.66 0.57 1.14 0.66 0.86 0.72
2026 1.63 1.17 1.17 1.17 1.29 1.37 1.29 1.29 1.27 1.27 1.14 0.66 0.66 0.57 1.14 0.66 0.86 0.72
2027 1.64 1.17 1.17 1.17 1.30 1.38 1.30 1.30 1.33 1.33 1.15 0.67 0.67 0.57 1.15 0.64 0.87 0.76
2028 1.64 1.18 1.18 1.18 1.30 1.38 1.30 1.30 1.33 1.33 1.15 0.67 0.67 0.58 1.15 0.65 0.88 0.75
2029 1.65 1.18 1.18 1.18 1.31 1.39 1.31 1.31 1.32 1.32 1.16 0.67 0.67 0.58 1.16 0.66 0.89 0.75
2030 1.65 1.18 1.18 1.18 1.31 1.40 1.31 1.31 1.32 1.32 1.16 0.68 0.68 0.58 1.16 0.67 0.89 0.76
2031 1.66 1.19 1.19 1.19 1.32 1.40 1.32 1.32 1.33 1.33 1.16 0.68 0.68 0.58 1.16 0.67 0.90 0.76
2032 1.66 1.19 1.19 1.19 1.32 1.41 1.32 1.32 1.33 1.33 1.17 0.68 0.68 0.58 1.17 0.68 0.91 0.76
2033 1.66 1.19 1.19 1.19 1.33 1.42 1.33 1.33 1.33 1.33 1.17 0.68 0.68 0.58 1.17 0.69 0.91 0.76
2034 1.67 1.19 1.19 1.19 1.33 1.42 1.33 1.33 1.33 1.33 1.18 0.69 0.69 0.59 1.18 0.69 0.92 0.76
2035 1.67 1.20 1.20 1.20 1.33 1.43 1.33 1.33 1.34 1.34 1.18 0.69 0.69 0.59 1.18 0.70 0.93 0.77
2036 1.67 1.20 1.20 1.20 1.34 1.43 1.34 1.34 1.34 1.34 1.19 0.69 0.69 0.59 1.19 0.71 0.93 0.77
2037 1.68 1.20 1.20 1.20 1.34 1.44 1.34 1.34 1.35 1.35 1.19 0.70 0.70 0.59 1.19 0.71 0.94 0.77
56

Appendix B: Groundfish Price Model
Projection of revenues for groundfish sectors and permit banks requires a projection of the
TACs the sector will be allocated, an estimate of the percentage of those TACs the sector will
actually land, and an estimate of the prices sector members will receive. While sectors may
be able to realize premium prices for the fish they land by improving quality or contracting
directly with retailers or restaurants, it is difficult to project how large this premium might be.
At the same time there are other factors that are likely to affect prices, particularly changes in
overall landings of various species that result from changes in target TACs. Since some of
these species are rebuilding and TACs are expected to rise, this may create downward
pressure on prices. Secular upward trends in prices over time can also be expected and are
likely to correlate with increases in disposable income of consumers. This is likely to result in
increases in real prices independent of change in quantity landed and even greater increases
in nominal prices before adjustment for inflation. Since a primary use of these price
projections is to estimate the repayment period required for a permit bank to pay back a loan
to acquire a permit, nominal rather than real prices are modeled.
Prices are projected based on demand models for the regulated groundfish species and
monkfish estimated with landings and revenue data from the Northeast Fishery Science
Center’s commercial fisheries data for the years 1983 to 2005. Since the intent is to predict
nominal prices, nominal prices are used to estimate demand models. Per capita disposable
income (PCDI) for the New England region is used as an explanatory variable to capture
secular temporal trends in prices. For future price predictions this requires predicting PCDI
which is done on the using a simple OLS model of PCDI growth over time.
The specifications used for the individual equations were linear-log (i.e. price per kilogram is
regressed against the natural logs of the regressors). This allows for a non-linear demand
curve without imposing constant elasticity. With the exception of ocean pout, the natural log
of PCDI was used in place of an intercept. The demand equations are estimate using a
seemingly unrelated regression that includes price equations for monkfish, cod, haddock,
winter flounder, witch flounder, yellowtail flounder, plaice, sand dab, white hake, pollock,
ocean pout and redfish. In addition to own quantity landed, the models use combined
roundfish or combined flatfish landings as explanatory variables in some equations. Import
quantities and prices were not used in these models. An investigation of price relationships
with imports suggested that import quantities are driven by domestic prices and landings but
the reverse is not true.
Despite parsimonious specifications with only two or three regressors, the price equations are
highly significant. All regressors in all equations are significant at the 0.01 level with the
exception of own quantity for witch flounder which had a p-value of 0.07. First order
autocorrelation was present and corrected for in both systems of equations. The estimated
equations used to predict prices in the simulations and summary statistics for them are given
in the equations below

System of equations for roundfish (A1-A6)
Eq. 1: Monkfish; R 2 =0.76
P = 0.284* ln( PCDI )-0.129* ln( Q )
cod,t t cod,t
Eq. 2: Cod; R 2 =0.96
P = 0.467* ln( PCDI )-0.480* ln( Q ) + 0.472* ln( Q ) − 0.225* ln( Q )
cod,t t cod,t crf,t cff,t
Eq. 3: haddock; R 2 =0.81
P = 0.260* ln( PCDI )-0.094* ln( Q )
haddock,t t haddock,t
Eq. 4: White Hake; R 2 =0.86
P = 0.403* ln( PCDI )-0.221* ln( Q )
w.hake,t t w.hake,t
Eq. 5: Pollock; R 2 =0.69
P = 0.229* ln( PCDI )-0.471* ln( Q ) + 0.332* ln( Q )
pollock,t t pollock,t crf,t
Eq. 6: Ocean Pout; R 2 =0.51
P = -3.444 -0.135* ln( Q ) + 0.295*ln( Q )
redfish,t ocean pout,t crf , t
Eq. 7: Redfish; R 2 =0.49
P = 0.095* ln( PCDI )-0.030* ln( Q )
redfish,t t redfish,t
Eq. 8: Witch Flounder; R 2 =0.77
P = 0.234* ln( PCDI )-0.062* ln( Q )
witch,t t witch,t
Eq. 9: Winter Flounder; R 2 =0.69
P = 0.270* ln( PCDI )-0.092* ln( Q )
winter,t t cff,t
Eq. 10: Yellowtail Flounder; R 2 =0.73
P = 0.162* ln( PCDI )-0.464* ln( Q ) + 0.401* ln( Q )
yellowtail,t t yellowtail,t cff,t
Eq. 9: Plaice; R 2 =0.80
P = 0.391* ln( PCDI )-0.162* ln( Q )
plaice,t t cff,t
Eq. 10: windowpane flounder; R 2 =0.63
P = 0.179* ln( PCDI ) + 0.074* ln( Q ) − 0.135* ln( Q )
windowpane,t t windowpane,t cff,t
58

Appendix C: Sector Proposals Submitted to the NEFMC
in April and May of 2007
Sustainable Harvest Sector
Hank Soule
Alternative 1: No Action
Alternative 2: Preferred: Hard TAC on groundfish stocks of concern (GOM cod, GB
cod, CC/GOM YT, GB YT, SNE/MA YT, GB Winter flounder, white hake), and DAS
for all else
Alternative 3: Allocation and hard TAC for all stocks of GF, monkfish, skates and
dogfish
Requests
• Implementation in 2008
• Full retention of legal sized groundfish
• Allocation based on May 1, 2002 – April 30, 2007
• Alternative 2 Preferred: Allocation of 7 groundfish stocks (GOM cod, GB cod,
CC/GOM YT, GB YT, SNE/MA YT, GB Winter flounder, white hake) with Hard
TAC backstop on these stocks
• Alternative 2 Preferred: Maintain input controls and DAS except as requested
below
• Alternative 3: Allocation and Hard TAC backstop for all stocks of GF, monkfish,
skates and dogfish
Requested Exemptions
• Alternative 2 Preferred: Trip limits on GB and GOM cod, CC/GOM, GB and
SNE Yellowtail, GB Winter flounder and white hake
• Alternative 2 Preferred: Rolling closures in GOM and May seasonal closure on
GB
• Alternative 2 Preferred: Differential DAS counting
• Alternative 3: DAS and reporting controls
• Alternative 3: Differential DAS counting
• Alternative 3: Monkfish DAS and reporting controls
• Alternative 3: trip limits on GOM, GB cod, CC/GOM, GB, SNE yellowtail, GB
winter, and white hake
• Alternative 3: possession and trip limits on monkfish, skates and dogfish
• Alternative 3: GOM rolling closures
• Alternative 3: GB Seasonal (May) closure
Necessary Policy Changes
• Alternative 2: 20% cap of the allocation for white hake
• Alternative 3: allocation of monkfish, skates and dogfish
59

Members:
• 60+ permits using trawl, gillnet and hook gear,
• operating from most of the major ports of New England (ME, MA, NH, and RI)
60

Port Clyde Community Sector
Glen Libby
Alternative 1: No action
Alternative 2: Hard TAC on groundfish stocks of concerns and continuing to operate
under DAS for all other stocks.
Alternative 3 Preferred: Hard TACs on all GOM stocks, monkfish, skates and dogfish,
and exempt from DAS, rolling closures and trip limits.
Requests
• Implementation in 2008
• Alternative 2: Hard TAC on GOM cod, CC/GOM yellowtail and white hake;
DAS to control fishing on all other stocks including monkfish and skates.
• Alternative 3 (Preferred): Allocation of all GOM groundfish stocks, monkfish,
skates and dogfish (GOM cod, GOM haddock, CC/GOM YT, witch flounder,
GOM winter flounder, white hake, pollock, redfish, ocean pout, northern
windowpane and halibut) (11 stocks of groundfish, monkfish, skates and dogfish);
• Alternative 3 (Preferred): Hard TAC backstop for all species
• Both alternatives: Limited to fishing in the GOM only – (areas 511, 512, 513,
514, 515)
• Both alternatives: Full retention of all legal sized fish
• Both alternatives: Allocations based on catch in fishing years 2002-2006
• Both alternatives: Lease DAS from within the sector under existing leasing
restrictions
Requested Exemptions – Alternative 2:
• Trip limits on GOM cod, CC/GOM yellowtail, and white hake
• Differential DAS counting
• Rolling and seasonal closures in the GOM
Requested Exemptions – Alternative 3(Preferred):
• DAS
• Trip and possession limits
• Rolling and seasonal closures
• Differential DAS counting
• Landing and possession limits on monkfish, skates and dogfish
Required Policy Changes
• Allocation of monkfish, skates and dogfish
• Maintain the flexibility to not take Hard TACs on EVERY stock?
Suggested Management Measures To Prevent Derby Fishing
• Sector may allocate a quota of each species to each individual vessel
Members
12 vessels owned by 8 people - all use trawl gear
61

Hook Sector Proposal for 2008
Erik Brazer
Requests:
• Implementation in 2008
• Hard TAC backstop for all species;
• Allocation of all species (GF (20 stocks), monkfish (2 stocks), dogfish, skates (7
species);
• 2,000 pounds min allocation for every stock (allow for incidental catch);
• Trading quota between sectors if both sectors have an allocation and if it would
not result in violating the 20% cap;
• Qualifying / Baseline years of 1996-2006;
• If NMFS or the NEFMC regulatory bureaucracy prevents timely implementation,
existing sectors will be allowed to fish under the previous year's operations plan
and allocations.
• The sector will land all catch; but that discards would be counted against the TAC
for the sector;
• “Future catch histories associated with the sector are proposed to remain constant
regardless of whether the vessels land the fish; and
• sectors will be credited with their actual TAC percentage, instead of actual
percentage of TAC achieved
• “Sectors will be credited with the maximum TAC amount (up to 20%), rather than
the actual amount of fish caught.
• Increasing observer coverage,
• Moving into electronic catch reporting
• Will comply w/ the requirement for 20 day spawning block out of the fishery
between March and May and any spawning closures
• Not limited to fishing in any areas
Requested Exemptions
• paper reporting;
• DAS;
• seasonal, rolling, habitat and mortality closures;
• minimum fish sizes
• trip limits;
• hook and gillnet limits;
Necessary Policy Changes
• qualifying baseline years;
• trading quota between sectors;
• future catch history remain constant regardless of actual catch;
• Increasing observer coverage,
• Moving into electronic catch reporting
Reasons for Existence:
62

Full Retention
All fish caught
1. end overfishing,
2. reduce bycatch,
3. ensure economic viability,
4. measure and minimize bycatch of marine mammals and undersize /
juveniles via fleet communication, voluntary closures, or other measures
5. retain shoreside infrastructure
Members:
• 21 vessels (24-42 ft) and 4 skiffs (8-13 ft)
• at least 23 different owners
• 9 – 10 % of GB cod
63

Fixed Gear Sector Proposal for 2008
Erik Brazer
Requests:
• Implementation in 2008
• Hard TAC backstop for all species;
• Allocation of all species (GF (20 stocks), monkfish (2 stocks), dogfish and skates
(7 sp);
• Monthly TACs for the sector to reduce derby
• 2,000 pounds min allocation for every stock (allow for incidental catch);
• Trading quota between sectors if both sectors have an allocation and if it would
not result in violating the 20% cap;
• Qualifying / Baseline years of 1996-2006;
• If NMFS or the NEFMC regulatory bureaucracy prevents timely implementation,
existing sectors will be allowed to fish under the previous year's operations plan
and allocations.
• The sector will land catch of all legal sized multispecies, monkfish, and skates;
but discards would be counted against the TAC for the sector;
• “Future catch histories associated with the sector are proposed to remain constant
regardless of whether the vessels land the fish; and
• sectors will be credited with their actual TAC percentage, instead of actual
percentage of TAC achieved.”
• “Sectors will be credited with the maximum TAC amount (up to 20%), rather than
the actual amount of fish caught.
• Increasing observer coverage,
• Moving into electronic catch reporting
• Will comply w/ the requirement for 20 day spawning block out of the fishery
between March and May and any spawning closures
• Not limited to fishing in any areas
Requested Exemptions
• paper reporting;
• DAS;
• seasonal, rolling, habitat and mortality closures;
• trip limits;
• minimum fish sizes
• hook and gillnet limits;
• gillnet mesh size limits
Necessary Policy Changes
• qualifying baseline years;
• trading quota between sectors;
• future catch history remain constant regardless of actual catch;
• Increasing observer coverage,
• Moving into electronic catch reporting
64

Reasons for Existence:
1. end overfishing (Hard TACs on all species)
2. reduce bycatch (full retention of legal sized regulated species)
3. ensure economic viability and stability
4. measure and minimize bycatch of marine mammals and undersize /
juvenile fish via gear modifications, fleet communication, voluntary
closures, or other measures
5. retain shoreside infrastructure
Full Retention
• All legal sized regulated species including groundfish, monkfish and skates
Members:
• 19 vessels (ft)
• at least ___ of which are skiffs (ft)
• at least ___ different owners
• _____ % of GB cod
65

Tri-State Sector
Erik Brazer
Requests
• Implementation in 2008
• Allocation of all GF species, monkfish, skates and dogfish (29 stocks)
• Full retention of legal size groundfish, monkfish, skates, and dogfish
• Will use monthly quotas
• 2,000 pounds minimum allocation for every stock (allow for incidental catch);
• Trading quota between sectors if both sectors have an allocation and if it would
not result in violating the 20% cap;
• Qualifying / Baseline years of 1996-2006??
• If NMFS or the NEFMC regulatory bureaucracy prevents timely implementation,
existing sectors will be allowed to fish under the previous year's operations plan
and allocations.
• “Future catch histories associated with the sector are proposed to remain constant
regardless of whether the vessels land the fish; and
• sectors will be credited with their actual TAC percentage, instead of actual
percentage of TAC achieved
• “Sectors will be credited with the maximum TAC amount (up to 20%), rather than
the actual amount of fish caught.
• Increasing observer coverage,
• Moving into electronic catch reporting
• Will comply w/ the requirement for 20 day spawning block out of the fishery
between March and May and any spawning closures
• Not limited to fishing in any areas
Requested Exemptions
• paper reporting;
• DAS;
• seasonal, rolling, habitat (anything less than level 3) and mortality closures;
• minimum fish sizes
• trip limits;
• non-spawning blocks
• hook number and size, gillnet number and mesh size, trawl mesh size and shape
Necessary Policy Changes
• qualifying baseline years;
• trading quota between sectors;
• future catch history remain constant regardless of actual catch;
• Increasing observer coverage,
• Moving into electronic catch reporting
Members:
List of 51 vessels (15 trawl, 4 hook, 1 scottish seine, 31 gillnet)
66

Gloucester Fixed Gear Sector
Peter Libro
Reason for Existence:
• Securing a placeholder
Requests:
• Allocation of GOM cod and CC/GOM YT
• DAS for all other stocks, including monkfish and skates
• 7% - 20% of the TAC
Requested Exemptions
• GOM differential DAS counting
• Seasonal rolling closures
• GOM cod trip limits
• CC/ GOM YT trip limits
Members
• Small to medium sized day and trip gillnet and hook vessels that fish in the GOM
• 10-60 vessels
Gloucester / Boston GOM and GB Trawl Sector Proposal
Enzo Russo
Reason for Existence:
• Securing a placeholder
Requests:
• Allocation of GOM cod, GB cod and CC/GOM YT
• DAS for all other stocks, including monkfish and skates
• 7% - 20% of the TAC
Requested Exemptions
• GOM differential DAS counting
• Seasonal rolling closures
• GOM cod trip limits
• GOM YT trip limits
Members
• 55 - 95 ft trawl vessels that fish in the GOM and GB
• 10-60 vessels
67

Gloucester / Western Gulf of Maine Trawl Sector
Joe Orlando
Reason for Existence:
• Securing a placeholder
Requests:
• Allocation of GOM cod and CC/GOM YT
• DAS for all other stocks, including monkfish and skates
• 7% - 20% of the TAC
Requested Exemptions
• GOM differential DAS counting
• Seasonal rolling closures
• GOM cod trip limits
• GOM YT trip limits
Members
• 36 – 70 ft trawl vessels that fish in the GOM
• 10-60 vessels
New Bedford and Southern New England Fixed Gear Sector
William McCann
Reason for Existence:
• Securing a placeholder
Requests:
• Allocation of GB cod,
• DAS for all other stocks, including monkfish and skates
• 7% - 20% of the TAC
Requested Exemptions
• GB Seasonal rolling closures
• GB cod trip limits
Members
• Vessels that fish GB and GOM
• 10-60 vessels
68

New Bedford Channel Trawl Sector
Richard Canastra
Reason for Existence:
• Securing a placeholder
Requests:
• Allocation of GB cod, GB YT and GB Winter flounder
• DAS for all other stocks, including monkfish and skates
• 7% - 20% of the TAC
Requested Exemptions
• GB seasonal rolling closures
• GB cod trip limits
• GB YT trip limits
• GB Winter flounder trip limits
Members
• Medium to large Trawl vessels that fish GB and SNE
• 10-60 vessels
New Bedford Deep Water Trawl Sector
Richard Canastra
Reason for Existence:
• Securing a placeholder
Requests:
• Allocation for GB cod, GB YT and GB Winter flounder
• DAS for all other stocks, including monkfish and skates
• 7% - 20% of the TAC
Requested Exemptions
• GB Seasonal rolling closures
• GB cod trip limits
• GB YT trip limits
• GB Winter flounder trip limits
Members
• Medium to large Trawl vessels that fish GB and SNE
• 10-60 vessels
69

New Hampshire and Southern Maine Fixed Gear Sector
Erik Anderson
Reason for Existence:
• Securing a placeholder
Requests:
• None
• DAS for all stocks, including monkfish and skates
• 7% - 20% of the TAC
Requested Exemptions
• GOM differential DAS counting
• Seasonal rolling closures
• GOM cod trip limits
• GOM YT trip limits
Members
• Small to medium sized gillnet and hook vessels that fish in the GOM
• 10-60 vessels
New Hampshire and Southern Maine Trawl Gear Sector
Dennis Robillard
Reason for Existence:
• Securing a placeholder
Requests:
• Allocation of GOM cod
• DAS for all stocks, including monkfish and skates
• 7% - 20% of the TAC
Requested Exemptions
• GOM differential DAS counting
• Seasonal rolling closures
• GOM cod trip limits
• GOM YT trip limits
Members
• Small to medium sized trawl vessels that fish in the GOM
• 10-60 vessels
70

Point Judith / Southern New England Offshore Trawl Sector
Fred Mattera
Reason for Existence:
• Securing a placeholder
Requests:
• Allocations of GB cod, GB yellowtail, GB winter, SNE/MA yellowtail
• DAS for all other stocks, including monkfish and skates
• 7% - 20% of the TAC
Requested Exemptions
• SNE differential DAS counting
• GB Seasonal rolling closures
• GB cod trip limits
• GB YT trip limits
• SNE YT trip limits
Members
• Medium to large sized trawl vessels that fish in GB and SNE
• 10-60 vessels
Point Judith Southern New England Trawl Sector
Chris Brown
Reason for Existence:
• Securing a placeholder
Requests:
• Allocations of SNE/MA yellowtail flounder
• DAS for all other stocks, including monkfish and skates
• 7% - 20% of the TAC
Requested Exemptions
• SNE differential DAS counting
• SNE YT trip limits
Members
• Small to medium sized trawl vessels that fish in SNE
• 10-60 vessels
71

South Shore Fixed Gear
Edward Barrett
Reason for Existence:
• Securing a placeholder
Requests:
• Allocation of GOM cod
• DAS for all other stocks, including monkfish and skates
• 7% - 20% of the TAC
Requested Exemptions
• GOM differential DAS counting
• Seasonal rolling closures
• GOM cod trip limits
• GOM YT trip limits
Members
• Gillnet and hook vessels that fish in the GOM
• 10-60 vessels
South Shore Trawl Sector
Edward Barrett
Reason for Existence:
• Securing a placeholder
Requests:
• Allocation of GOM cod and CC/GOM YT
• DAS for all other stocks, including monkfish and skates
• 7% - 20% of the TAC
Requested Exemptions
• GOM differential DAS counting
• Seasonal rolling closures
• GOM cod trip limits
• GOM YT trip limits
Members
• Small to medium sized trawl vessels that fish in the GOM
• 10-60 vessels
72

Pier 6 Initiative
Michael Walsh
Request
“For the purposes of prospectively entering into a voluntary multispecies fisheries sector,
… we request that the Council initiate a framework to authorize an allocation of catch or
effort …” based on our catch histories as reported by dealers.
73