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From Fishermen's News of August, 2009

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Groundfish Ratz and the Fate of Coastal Fishing Communities

By Zeke Grader, Larry Collins, Nate Grader

Spokane is a nice town. Near the Idaho border, the Spokane River runs through the middle of the city over rapids as it rushes west to converge with the Columbia. There are good restaurants and two universities to maintain an air of intellect and youth. It is also hundreds of miles from the coast.

There in June the Pacific Council made its fateful decision on the future of Pacific Coast fishing communities. Before the PFMC was Amendment 20 to its Groundfish Fishery Management Plan. The amendment would reallocate the Pacific groundfish stocks designated for the trawl fishery among the 150-odd permitted draggers. It thus created an individual fishing quota (IFQ) system for this fishery -- a privatization idea that was pushed hard under the Bush Administration and being carried forward now under the Obama Administration, but now renamed as "catch shares."

Amendment 20's touch is not limited to the groundfish trawl sector. The decision to approve Amendment 20 will have far reaching consequences for every port along the coast and will affect adjacent fisheries.

The impact is not just on trawling, or groundfish fisheries, but the infrastructure and viability of ports when a major fishery disappears. The disappearance of trawlers in Morro Bay, when permits were bought up by The Nature Conservancy, caused the collapse of the fishery infrastructure in that port -- the offloading pier, processing plants, ice house, fuel dock, everything affecting the salmon and albacore fleets, the hook-and-line and trap fisheries, everyone. The number and distribution of groundfish trawlers and the allocation of groundfish will affect other fisheries and many ports.

Amendment 20 is expected to consolidate the fishery from the 150 or so boats that currently operate in the fishery to 40 to 60 boats. The remaining boats will grow larger and move to larger ports, primarily in Oregon. Smaller trawlers will no longer be economically viable in the fishery because of the way the Council designed Amendment 20 (more on why below).

Many smaller ports could lose access to their groundfish completely. The effect on shoreside infrastructure and dependent businesses from the loss of trawl groundfish landings could be devastating. The fisheries that remain in these smaller ports may not have adequate facilities for their operations.

At every stage of the Amendment 20 process, the Council voted against or removed nearly every protection for coastal communities. The Council voted against regional landing zones to prevent localized depletion of stocks and to prevent quota from leaving regions and fishing communities. The Council voted against owner-on-board requirements, which would have ensured that the value of the fishery remains within fishing communities. The Council adopted high accumulation limits that will inexorably lead to fleet consolidation. The Council voted not to implement the Adaptive Management Program, a 10% holdback of quota pounds to be used to mitigate the impacts of the program, until the third year of the program. The adaptive management program was the last line of defense to protect fishing communities from a poorly crafted IFQ program.

The decision made in Spokane to approve Amendment 20 got a standing ovation from trawl representatives and representatives from the Environmental Defense Fund. It was the culmination of six years of their work that ignored the public interest and the best interests of fishing communities on the West Coast. It is the most significant decision to affect the future of the West Coast fishing industry for probably a generation. And the decision was made in Spokane in front of a small audience that consisted almost entirely of people who stand to gain substantially from these management changes.

Amendment 21: Inter-Sector Allocation

The short answer to what happened during the inter-sector allocation process is: "The trawlers got all the fish." Sure there were a few small concessions made, but at the April Council meeting in Millbrae, California. In Spoakane, the Council adopted an allocation formula that gave the vast majority of the groundfish fishery to the trawl sector. In most cases 90% or more of each species (nearly 100% for flatfish such as petrale and dover sole) were allocated to the trawl sector.

The one exception was for chilipepper rockfish, which the Council increased to the non-trawl sectors from 20% to 25%. This slightly increased allocation, a small concession to be sure, only came about after PCFFA and several fishermen from the hook-and-line open access and fixed gear limited entry sectors testified in support of greater allocations of groundfish that they can target (non-flatfish) to the open access and fixed gear limited entry sectors. To read more about the inter-sector allocation process, including how the Council voted on the sector splits at the April meeting, see the June 2009 PCFFA article in Fishermen's News (www.pcffa.org/fn-jun09.htm).

The Council did not take up inter-sector allocation at the June 2009 meeting in Spokane. The Council may have already made a decision on inter-sector allocation but the process is far from over. As reported in June 2009 article, the Natural Resources Defense Council (NRDC) argued that Amendment 21, in its current form, might violate the National Environmental Policy Act (NEPA) and elements of the MSA, since it did not adequately analyze whether or not allocations between sectors could have a positive environmental impact. This lack of analysis may be grounds for later legal action.

Larry Collins, a commercial fisherman from San Francisco and the President of the San Francisco Crab Boat Owner's Association, questioned the decision not to reallocate fish to sectors that have much lower bycatch and do not have the bottom impacts of the trawl sector. He asked "If this plan is supposed to be about conservation, why was no analysis to examine allocating more fish to sectors that are known to fish cleaner done?"

Instead of creating a labyrinthian system of trading depleted species and putting observers on every boat in the trawl sector, the Council could have allocated fish to sectors that already have low bycatch and minimal bottom impacts. The decision that the Council made regarding inter-sector allocation will lead to a fishery that is dominated by 40 to 60 big trawl vessels with a few token small boat fleets based out of a few select ports.

The question that remains regarding the current allocation that the Council adopted is whether there will be enough fish in the open access sector to provide for a meaningful fishery. As the proliferation of eco-labels and the growing consumer awareness of sustainability attests, there is certainly no shortage of demand for these fish. But as everyone knows, demand isn't the problem. It is a problem of allocation and access.

Who Can Own Quota?

The glossy brochures and press releases from the pro-"catch share" camp abound with references to the North Pacific halibut-sablefish IFQ fishery. This fishery, they claim, is the model IFQ fishery that turned a two day derby fishery into an orderly, well managed fishery. Never mind that the International Pacific Halibut Commission had successfully managed the halibut stock since the 1920's and that the switch to IFQs was based more on economic considerations rather than conservation.

The most salient feature of the North Pacific halibut-sablefish fishery, and the feature that has contributed most to the success of that program, is the owner-on-board requirement. In most cases (there are some grandfather clauses) quota holders must personally participate in the fishery as captain or crew. Limiting the pool of potential buyers of quota to those directly engaged in the fishery allows for new entrants to slowly acquire quota at prices that have not been driven up by outside interests -- banks, speculators, and large processors. The system is not perfect, however. Changes in the fishery, such as reduction of the overall quota or changes in ex-vessel prices, can quickly put a fisherman in a situation where he or she owes more money on his or her loan for quota than the quota is worth.

It is for this reason that it is so dismaying that catch share advocates are so quick to compromise on the issue of an owner-on-board requirement. That is the most fundamental protection for fishermen and fishing communities in an IFQ fishery.

Yet amendment 20 has no owner-on-board requirement whatsoever. The only requirement to hold quota is to be a US citizen eligible to own a US documented vessel. In other words, the Council voted against one of the easiest ways to protect fishing communities, assure that the value of the fishery does not become a speculative asset for a bank or a large processor, and allow younger fishermen to buy quota at an affordable price. The Council did not even consider a second generation owner-on-board requirement which would have allowed for entities that acquired quota through permits they already hold to divest themselves of their quota to other working fishermen.

What Vessels Can Fish This Quota?

Amendment 20 is rife with irony. For instance, the IFQ system is supposed to be a "free market" solution to avoiding overfished species and rewarding the most efficient vessels, yet the market for which vessels can fish the quota share is strictly limited to those who own a trawl permit. Thus while the Council created a supposedly free market system, they also artificially restricted the market for quota share down to the 150 or so permit holders.

Open access vessels and limited entry fixed gear vessels will not be able to buy trawl quota unless they also buy a trawl permit. The gear switching provision in Amendment 20, which allows trawl vessels to switch to limited entry gear (longlines or pots), effectively gives trawl vessels a fixed gear endorsement. So while trawl vessels get to have it both ways, open access boats and fixed gear limited entry boats are prevented from acquiring quota.

Thus, the sectors that are most able to avoid overfished species are the very sectors that are prevented from buying quota which was created as an incentive to avoid overfished species. Trawl vessels would have a tough time competing in the free market with other gears in avoiding overfished species. Now this healthy competition has been effectively eliminated.

The reason that a trawl permit is required to use quota share or quota pounds, according to the Council, is because of the issue of enforcement. There is 100% observer coverage in the trawl IFQ fishery, but quota share and quota pounds used in other sectors would not be observed. If the Council is serious about creating a free market system, they are going to have to develop a way to open up the market to all fishermen and figure out a reasonable way to enforce compliance. Clearly, non-trawl vessels do not need 100% observer coverage like the trawl fleet does.

How Much Quota?

Amendment 20 also allows an individual to hold quota far above the 1% figure that is considered prudent to prevent excess consolidation of the fishery. The accumulation limits vary by species but the accumulation limits for some species are close to 10%. The high accumulation caps that the Council approved for each species in the groundfish fishery will allow some boats to acquire a much greater share of the fishery and will help start a trend towards ever larger boats in ever fewer hands.

The high accumulation caps combined with the mandatory observer required for the prosecution of the fishery will help to consolidate the fishery by pushing smaller trawlers out of the fishery. With the estimated cost of an observer at around $80,000 a year, most small trawlers will have to sell out their quota share to larger operators. The high accumulation caps and the observer costs, which are borne by individual fishermen rather than spread out throughout the fleet, will assure that the fishery consolidates quickly down to 40 to 60 boats just as the economic analysis in the EIS predicts. And, look for larger quota holders in the future to push for even further consolidation with even fewer vessels.

Excess Quota

The issue of dealing with quota that exceeds the accumulation limits adopted by the Council has been referred to as divestiture, which is a bit of a misnomer. Divestiture implies ownership and quota holders do not technically "own" quota -- rather they hold a privilege to harvest a quota portion of the total allowable catch.

The issue of excess quota only affects a few entities, presumably The Nature Conservancy and a large processor from Oregon, although nobody is sure just yet as the amounts of quota share that each permit holder will receive have not been released yet. The Council voted at the June 2009 meeting to allow quota holders to use excess quota for the first four years. They are prohibited from selling their excess quota share for the first two years because of the prohibition against all transfers of quota share for the first two years. In years three and four of the IFQ fishery, quota holders will have to sell their quota or they will forfeit it at the end of the fourth year.

Whether the process of selling excess quota share will actually be as orderly (or as honest) as the Council seems to think is another story. Entities that hold excess quota can probably find ways around accumulation limits simply by creating other legal entities to hold the quota or having family members hold quota. Also there may be legal challenges to NMFS when it comes time to forfeit excess quota. Additionally, quota holders can lobby the Council and NMFS to simply raise the accumulation limits.

Community Fisheries

At the April 2009 Council meeting it was briefly discussed whether or not Community Fishing Associations should have the first opportunity to buy excess quota. The Council in the end decided not to include such as provision. Amendment 20 contains no protections for fishing communities. Even the most basic provisions like owner-on-board requirements are not part of the program. It is for this reason that groups such as PCFFA, Food & Water Watch, and Ecotrust have argued that community fishing associations, funded with "pockets" of fish, need to be part of the trawl rationalization program from the outset in order to protect smaller fishing communities access to their traditional fishing grounds. Trying to buy quota later to restore access to public resources with government grants or philanthropic money is an expensive proposition and one that is likely to fail.

The Limited Access Privilege Programs (LAPPs, an earlier name for IFQs) provision of the Magnuson-Stevens Act (Section 303A) allows for fishing communities to hold limited access privileges just as it does for individuals. However, the Council made only a cursory effort to analyze community fishing associations (CFAs) and regional fishing associations as entities to hold or receive quota.

At the April 2009 Council meeting PCFFA, Food & Water Watch, and Ecotrust identified three sources or "pockets" of fish that could fund CFAs. The first is from the difference between the historical catch levels of the trawl sector and the soon to be expanded optimum yields. The second would be from fish that would be divested from permit holders who would exceed the level of quota share allowed for an individual. The third source would come from the publicly funded portion of the trawl fishery buyback program ($10 million or roughly 22 percent of the buyback fish).

The three groups argued that the Council is not obligated to give these fish to the trawl fleet and that these fish could provide a meaningful amount of quota to give directly to fishing communities themselves to maintain their stability. Despite these arguments, the Council refused to give an initial allocation of fish to CFAs. Given the level of consolidation that is predicted in the economic analysis in the EIS, CFAs will have to play a role in maintaining fishing communities' access to public resources. It just looks like the Council thinks CFAs should ask the government to pay or go looking for a handout from some Silicon Valley philanthropist, a mega-retailer or venture capitalist to later buy what others are initially getting for free.

Adaptive Management

The much-vaunted Adaptive Management Program has been put on hold in what has been euphemistically called the "pass through" option. As noted, there are no protections for coastal communities in this plan and no conservation tools other than a total allowable catch (which will be determined later in Amendment 23). Instead of holding back 10% of the quota share to deal with the economic and environmental consequences of the trawl rationalization program as originally intended, the Council voted to give out the 10% of adaptive management to permit holders for the first two years of the program.

Research into IFQ systems has shown that protections for fishing communities need to be in place before the system goes into place, not as an afterthought. The economic analysis contained in the EIS, while not complete, did list the ports that were likely to see a reduction of landings of trawl fish. It is precisely these communities that could use the infusion of quota to help transition to the new system rather than being left in the lurch.

There is also the chance that once quota holders have come to depend on that 10% of additional quota and build business plans around that quota, that they might not be so eager to give it up. Possible pressure from the trawl fleet combined with the Council's reluctance to administer a complex and costly program could simply result in the adaptive management program being permanently scuttled.

Keep on Marching?

One Council member, Kathy Fosmark, had been warning early on that discussions on the sector allocation of groundfish could have a large impact on those who fished hook-and-line, particularly the open access fleet. There were questions, too, being raised about the side meetings of trawl representatives and EDF on an IFQ program. But groundfish regulations are Byzantine at best and most of the non-trawl interests didn't think it was their business to meddle in what was seen as a purely trawl activity.

It became apparent last year, however, that proposals were afoot to change the allocation of groundfish between the different sectors and even proposals to eliminate the largely small boat open access sector. That began raising alarms. And, the Morro Bay experience made it clear that changes in the trawl fleet could affect other fleets and many communities.

However, then communities and others who had a historic dependence on non-trawl groundfish were basically told to butt out, that the Council had been working on this for six years and that the "train had left the station" -- as if we managed fish stocks by cliche or railroad metaphors. For most Council members, this was now thought to be no time to slow it down or change direction. Moreover, NMFS and the feds were anxious for a plan.

The rush to completion is based on a half truth at best. Much of the work on the trawl IFQ plan took place over the years in side rooms at Council meetings and elsewhere among the Environmental Defense Fund (EDF) -- which has long pushed "market-based solutions," i.e., privatization of public trust resources -- and trawl representatives. Most of these meetings went unnoticed and unpublicized. Indeed, it was only within the last year that it became apparent that the EDF-trawler scheme's impact would be much larger than just the trawl sector of the groundfish fishery. It was also revealed about that time that the scheme to overturn Amendment 6 and take away the historic hook-and-line catch history and give it to the trawlers was likewise being prepared.

The Council was following the lead of its highly-conflicted groundfish allocation committee and the groundfish advisory subpanel, both dominated by the very interests that stood to gain financially from a privatized quota system. And the more quota available with a wide-open market for the sale of that quota meant that permitted trawl vessel owners would gain substantially.

In the process, the Council trotted out the acting head of NMFS, a Bush hold-over, to bless the process and say that they -- Washington, DC -- wanted an IFQ plan. Of course this same James Balsinger was in Alaska when the North Pacific Council adopted its controversial Crab Ratz program that gave processors quota to 90 percent of the crab caught in the Bering Sea/Aleutian Islands area. There was also some playing fast and loose with quotes from NOAA Administrator Jane Lubchenco's statements about catch shares. Yet just a week before the Pacific Council meeting she made it clear that "catch shares" were no panacea, they weren't for every fishery, and they had to be carefully drafted.

Amendment 20 was certainly not carefully drafted -- at least for fishing communities. But the Council Chairman, who was termed out, saw this issue as his legacy and they were to the man and woman at the table determined to finish it then -- even though largely out of sight and still highly flawed. They were marching on.

Fosmark, for her Cassandra-like efforts, was awarded by not even having her name submitted by California Governor Schwarzenegger to Commerce for reappointment to her council seat. The Governor, instead, packed his nomination list so blatantly with so many EDF supported candidates that even Commerce had to ask him for another name (he initially submitted only three names for two seats when six were required).


The schedule for approval by Commerce of Amendment 20 or even 21 is not clear. The Council has put-up a "Trawl Rationalization Progress Tracking Table" webpage: www.pcouncil.org/groundfish/gffmp/gfa20/gfa20progtrack.html, and individuals can also visit the PFMC trawl IFQ webpage at: www.pcouncil.org/groundfish/gffmp/gfa20.html.

Commerce, for its part, should be requested to reject or at least substantially change what the Pacific Council has sent it. Amendment 20 is no consensus position among the fleet or affected fishing communities. It is, we believe an instance of a Council process gone wildly amok. At risk here are groundfish stocks, those who've fished or may someday fish groundfish, and the fate of entire coastal fishing communities. Many of these communities may end up watching from the beach as vessels from other ports come to take the fish just off the shores of these communities.

In 1976 and in the decade preceding, it was Soviet, Japanese and fleets from other foreign nations operating 12 miles offshore that were our problem. Then, however, vessels from a US coastal community could at least go out and fish amongst the foreigners -- they still had some access. Now these communities will be watching as vessels from elsewhere take what were traditionally their communities' fish just 3 miles out. If this plan goes forward, many won't even have access to the fish off their own shores.

The June Council decision brought to mind a metaphor of failed leadership, not trains. And, in Spokane, in another windowless hotel meeting room far from any air of youth or intellect, it was hard not to think of a different river -- one larger and slower -- and Pete Seeger's song "Waist Deep in the Big Muddy." As the song goes, there was a platoon in training during World War II that was ordered by the Captain to ford part of the Mississippi at a particular point. At first they were knee deep and the Captain ordered them to go on. When they were waist deep, the Sergeant asked if it was a good idea to continue proceeding from that point and the Captain again ordered them to go on. After all, they had already come that far. When they were neck deep in the river, the Sergeant again asked if it were wise to continue and the Captain said he knew what he was doing and ordered them to march on. That was the last they saw the Captain alive, as his helmet floated down river. The refrain goes "And the big fool said to 'March on.'"

Zeke Grader is the Pacific Coast Federation of Fishermen's Associations (PCFFA) Executive Director, whose office is in San Francisco. Larry Collins is a San Francisco-based fisherman and Vice-President of PCFFA as well as President of the Crab Boat Owners' Association. Nate Grader is a staff member of the Institute for Fisheries Resources (IFR) working primarily on sustainable fisheries policy issues. PCFFA can be reached at its San Francisco Office at PO Box 29370, SF CA 94129-0370, (415)561-5080; at its Northwest Office at PO Box 11170, Eugene, OR 97440-3370, (541)689-2000; or by email to fish1ifr@aol.com. The PCFFA Home Page is at www.pcffa.org.

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