Community-based Sectors for the New England Groundfish Fishery

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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
Page 1 and 2: Community-based Sectors for the New
Page 3 and 4: Table of Contents Executive Summary
Page 5 and 6: Community leaders in Portland and P
Page 7 and 8: of community-based permit banks. Th
Page 9 and 10: 1.0 Introduction The groundfish fis
Page 11 and 12: Although Amendment 13 effectively e
Page 13 and 14: somewhat vague on how the allocatio
Page 15 and 16: 2.2 Experience with Existing Sector
Page 17 and 18: me to explore the idea further and
Page 19 and 20: period is that which was used to de
Page 21 and 22: shown above in Table 2. Revenue pro
Page 23 and 24: Table 3a: Port Clyde Sector Revenue
Page 25 and 26: ecruitment and could be either high
Page 27 and 28: increased. They also have caught a
Page 29 and 30: 3.2.1 Strawman Sector Structure and
Page 31 and 32: Table 8: Portland Sectors A and B V
Page 33 and 34: discussed earlier these price proje
Page 35 and 36: Table 9b: Portland Sector A Revenue
Page 37 and 38: Table 9d: Portland Sector B Revenue
Page 39 and 40: Table 10b: Portland Sector A Revenu
Page 41 and 42: Table 11b: Portland Sector B Specie
Page 43 and 44: vessels would be leased to sector v
Page 45 and 46: is ostensibly to reduce excess capa
Page 47: Table 15: Projected Total Revenue,
Page 51 and 52: 4.4 Communities without Catch Histo
Page 53 and 54: opportunities for consolidation of
Page 55 and 56: References Alexander, Yvette 2006.M
Page 57 and 58: Appendix A: Landings and revenue pr
Page 59 and 60: Appendix B: Groundfish Price Model
Page 61 and 62: Appendix C: Sector Proposals Submit
Page 63 and 64: Port Clyde Community Sector Glen Li
Page 65 and 66: Full Retention All fish caught 1. e
Page 67 and 68: Reasons for Existence: 1. end overf
Page 69 and 70: Gloucester Fixed Gear Sector Peter
Page 71 and 72: New Bedford Channel Trawl Sector Ri
Page 73 and 74: Point Judith / Southern New England
Page 75: Pier 6 Initiative Michael Walsh Req

Community-based Sectors for the New England Groundfish Fishery

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