Catch Shares Take Toll Council Called To Task

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With regard to an inshore/offshore boundary line, NEFMC member David Pierce said the issue of inshore vessels being impacted by offshore vessels fishing inshore was discussed at length by NEFMC and led to a preference for no action. Fishermen’s Voice file photo

range on stock-specific potential sector contributions (PSC), and said lesser controls could reduce efficiency unnecessarily. PSC is an individual fisherman’s historical share of landings of groundfish species.

The report was the basis of several accumulation limit alternatives in Amendment 18. At a meeting earlier this year, NEFMC recommended their preferred alternatives:

• Limit accumulation of PSC, in aggregate across all stocks, by individuals and entities to no more than 15.5 percent.

• Limit permits that may be held to no more than 5 percent.

• Create a sub-annual catch limit (ACL) that Handgear A (HA) permits could enroll in; remove the March 1-20 closure for common pool HA vessels; remove the standard fish tote requirement for HA vessels; allow sectors to annually request that HA vessels fishing in the sector be exempt from use of vessel monitoring systems (VMS).

• Maintain the status quo on data confidentiality, specifically the price of annual catch entitlements (ACE) transferred within a sector or leased between sectors.

• Do not establish an inshore/offshore boundary within the Gulf of

Maine.

• Establish an area in which vessels could fish with a smaller mesh net than the standard mesh size, targeting redfish.

At the hearings, some fishermen expressed their concern that the 15.5 percent cap could leave the fishery in the hands of just seven fishermen. Others said accumulation is necessary to some extent in order for a business to be profitable.

NEFMC has received considerable input from fishermen and others asking NEFMC to limit quota accumulate to between 2-5 percent of stocks. They have also requested inshore area protections such as trip limits, fishing one broad stock area to allow local stocks to recover, fleet diversity protections for inshore fishermen, and mechanisms for inter-generational trading of fisheries access, affordable community quota, baseline leasing criteria for leasing, and more.

These discussions are the latest since the fishery was converted in 2010 to a catch share system as a method to control fishing. Fishermen and others have said they’ve identified problems such as excessive fleet consolidation, inappropriate scale of fishing on inshore areas, lack of access for the next generation of fishermen, and lack of transparency.

According to NEFMC, taking no action could mean that low catch limits, in conjunction with expanded sector management, may lead to excessive consolidation and lack of diversity in the groundfish fleet. As stocks rebuild and allowable catches increase, there may be increased future consolidation and decreased diversity in the groundfish fleet. Amendment 18 is intended to implement measures that affect the level of allocation that individuals or groups of individuals may control, gear restrictions, inshore offshore sub-ACL measures, and other measures aimed at maintaining the diversity of the fleet. The action is intended to promote diversification and prevent any individuals, corporations, or other entities from acquiring or controlling excessive shares of the fishery.

According to NEFMC’s recent groundfish performance report, there are today fewer active vessels targeting groundfish across all length classes, down 18.3 percent from 2012 and 26.7 percent from 2010. There are fewer active vessels targeting groundfish in most homeport states since 2010. Declines range from minus-2 vessels in Connecticut to minus-66 vessels in Massachusetts. Since 2010, vessels dependent on groundfish have seen a 25-50 percent decline in groundfish revenue.

In Portland, Jim Odlin, owner of Atlantic Trawlers, Inc., with five offshore groundfish vessels that employ 30 people, said there is no excess consolidation going on, and none has been documented.

“Far from it, the fishery is very diverse,” Odlin said. “It is my opinion that no accumulation caps are needed.”

To the contrary, Odlin said, “Without further consolidation, no one will be able to reach profitability.”

Any accumulation limit will only allow deep-pocketed companies to consolidate the fleet, Odlin said.

“You are only kidding yourself and hurting the smaller guys,” Odlin said.

For a permit cap, Odlin said he supported 5 percent.

“Had you done this a few years ago, it would have allowed management resources to move on to things that could possibly help the industry as a whole. You would have stopped wasting time on something that has no possible upside,” Odlin said. “Be aware of unintended consequences. These kinds of regulations are easy to get around, and will clearly hurt the smaller fishermen by devaluing their businesses and limiting flexibility. I don’t see a single conservation benefit to any of these proposals. I cannot see any net gain to the nation by making it impossible to achieve OY [optimum yield], not to mention profitability or the possibility of providing sustainable seafood to the people of this country, who may or may not fish or live near the coast. This simply can’t be the plan.”

“I don’t see how any of these rules are going to help,” agreed Marty Odlin, also of Atlantic Trawlers, Inc. and a commercial groundfish fisherman in Portland. “They are not going to prevent consolidation up to everyone’s maximum limit, so it’s not really going to help anyone get into the industry. It’s just going to devalue the permits that exist. Most of the rules aren’t going to add a conservation effort. I don’t see the point. They are just going to cause more problems and confusion, and make it harder for people to operate.”

But Josh Wiersma, northeast fisheries manager with the New York-based Environmental Defense Fund, said consolidation is already occurring, but Amendment 18 does nothing to prevent it.

“I think everyone is aware that right now the fleet is in trouble,” Wiersma. “Consolidation is occurring, because of the dramatic cuts in annual catch limits.”

Wiersma cited Compass Lexecon’s assertion that the current level of accumulation has little to no risk of market power. He said that, while there might be no risk of consolidated market power today, NEFMC must put in safeguards to ensure consolidation doesn’t occur in the future.

“Fish stocks will recover at some point in the future,” Wiersma said. “Fishermen will have opportunities to invest in this fishery. At that point, we need to have safeguards in place to make sure that new entrants have a chance to participate, and that fishermen who are already participating have an equal shot at targeting and accessing the resource. The problem with the preferred alternative for accumulation limits is that it sets the PSC average aggregate level at a point where, if you compared a potential accumulation portfolio under the preferred alternative with the current max PSC holdings, you’d end up with a situation where someone could specifically target key choke stocks. For everybody, even larger vessels, this is a problem. For example, if every other stock was maintained at its maximum PSC holdings, someone could accumulate 50 percent of the Gulf of Maine cod PSC, 30 percent of the witch flounder, and 30 percent of the plaice and still maintain aggregate PSC holdings that are within the limit.”

Wiersma said the proposed 5 percent total accumulation cap on permits is also an issue.

“The total number of multispecies permits is in the neighborhood of 1,450 permits, but only about half of those permits have any PSC history on them,” Wiersma said. “What the preferred alternative says is, you want to target 5 percent of the 1,450 permits. Well, half of those permits are going to be off the table anyway. No one is going to be trying to accumulate permits with no catch history. What you really want to be doing is setting a total permit accumulation limit that is consistent with the 750 or so permits that actually have catch history. As a very easy rule of thumb, a more likely and equitable ratio should be 2.5-3 percent.”

According to NEFMC, there is a small number of individuals with more holdings than the majority of permit-holders, the average of that larger amount of holdings is about 7.6 percent.

“That’s why I’m surprised at their conclusion of no market power existing currently,” said Jim Kendall, owner of New Bedford Seafood Consulting and member of the Massachusetts Fishermen’s Partnership. “If it’s not a problem now…that might be reason enough to assign caps, if nothing else.”

But NEFMC members said that while it’s theoretically possible that just seven people could own the fishery, Compass Lexecon and NEFMC’s Plan Development Team have determined it’s unlikely that people could get the correct combination of permits to do that.

Steve Welch, a commercial groundfish fisherman from Scituate, Mass., countered, “A scallop boat just sold for $7 million based on the assumption that there is going to be mass-consolidation coming down the road. Am I missing something?”

Welch continued, “Six people? I always thought that the magic number for NMFS was 400 fishermen. Now, there are 210, and it seems like there’s still too many people.”

Welch wanted to know, for example, if Gulf of Maine winter flounder accounted for 10 percent of the whole resource, whether one person could own the entire GOM winter flounder allotment as part of his 15.5 percent share.

At the Gloucester, Mass., hearing, Northeast Seafood Coalition (NSC) executive director Jackie Odell said NSC does not support a PSC cap. However, if NEFMC selects a cap, she said, NSC supports the 15.5 percent aggregate cap because it’s least disruptive on the fishery and doesn’t penalize fishermen for what they received primarily as an outcome of the Amendment 16 allocation formula. Fishermen’s Voice photo

Theoretically, yes, said NEFMC staffers—a person could accumulate 100 percent of the PSC for a particular stock, so long as the average PSC for all the stocks is not above 15.5 percent. However, they said, that would be unlikely to occur given that PSC cannot be split off of permits.

“I thought this catch share thing was supposed to make us more profitable and independent, and it’s done nothing but the complete opposite,” Welch continued. “I can’t run my own business anymore without having to have a sector manager, an association to belong to, and people to give me more rules on top of what NMFS is already giving me. It has made my business a lot more difficult to navigate and a lot more expensive. It was supposed to be better for the fish, better for the consumers, and more economically efficient. Those are the reasons that I thought we went into this catch share program. I went to British Columbia. We went to a fish processing plant. There was one boat unloading 210,000 pounds of Pacific whiting. We got there in the afternoon and went outside, and there were vats lined up in the sun, all up and down the parking lot and in the warehouse with no ice on them and flies all over them. Wasted fish. This was the model of economic efficiency. One boat catching all that fish and bringing it to the dock and just let it rot in the sun. I thought that was a problem….I talked with one of the guys that worked there, a former fisherman. He said that they used to have about 30 boats that would catch the whiting and bring it in a little bit at a time, bringing a quality product to the market and it was processed. There were a lot more processors there at the time, too. All that’s gone now. That was about six years ago. Fast forward, and now British Columbia is talking about using Pacific whiting for fish feed for fish farms, because it’s slop. That is a quality protein that’s gone to waste, because of the efficiency of catch shares. That’s what we have here.”

“How you can say the process is working is really beyond me,” agreed Ron Borjeson, a commercial groundfisherman from Sandwich, Mass. “On the accumulation caps, and how things are going to be distributed by percentage, it’s easy to see that some individual or entity could control, just for example, Gulf of Maine flounders. With the sectors, if that were almost caught, that would turn the flounders into a choke stock….It’s bad enough that you have to buy fish to go fishing, then you have to buy it because someone else owns a higher percentage of it. You have to purchase the fish [in case you] accidentally catch them. There’s something definitely wrong with that picture, whereas for years and years we had trip limits that worked. Everybody abided by them. It was equal throughout the whole fishery. In all my years of fishing, I have never seen such a boondoggle as sector management. It’s very discouraging. How it’s supposed to promote anything is beyond me. There’s nobody new coming into any of the fisheries. People are dropping out every single day.”

“It’s obvious to anyone that it’s just a numbers game,” said Pat Kavanagh, a commercial groundfisherman from New Bedford, Mass. “The aggregate cap is the sound of one hand clapping. It does nothing. It doesn’t limit anything right out of the bag. It leaves the door open for some rampant abuse of the system, when you start to buy up permits and drop of the stuff you don’t want, or pay a lot for a permit because it’s got an amount of something that you are looking to get. The PSC needs to be limited per species to be effective. Otherwise, it’s not effective at all. Someone could make it their mission to buy up a given stock. You could buy up all the GOM cod if you pay enough money, coupled with the option where you can hold the permits, but not use the excess PSC. You can just keep buying permits that have GOM cod, for instance.”

At the Gloucester, Mass., hearing, Northeast Seafood Coalition (NSC) executive director Jackie Odell said NSC does not support a PSC cap. However, if NEFMC selects a cap, she said, NSC supports the 15.5 percent aggregate cap because it’s least disruptive on the fishery and doesn’t penalize fishermen for what they received primarily as an outcome of the Amendment 16 allocation formula.

With regard to an inshore/offshore boundary line, NEFMC member David Pierce said the issue of inshore vessels being impacted by offshore vessels fishing inshore was discussed at length by NEFMC and led to a preference for no action.

Odell said NSC agreed with that outcome.

“Having a boundary without a clear problem that has been identified and analyzed doesn’t solve a problem,” said Odell.

But Welch expressed frustration at what he said was NEFMC’s failure to protect the inshore fleet.

“There’s no one left,” Welch said. “If it weren’t for the state water fishery, I’d be out of business right now.”

Toward the end of the Portland hearing, Kyle Molton, policy director with the Penobscot East Resource Center in Stonington had comments about the public hearing process itself, with regard to the challenges it presents for small boats and fishermen, particularly in eastern Maine.

“I drove 3.5 hours to be here from Stonington,” said Molton. “Some fishermen whom we work with live two hours further east. The timeframe basically for the entire thing, from now up until the public comment period after final action has been taken, falls smack-dab within the middle of Maine’s lobster fishing season. I understand the need to move these things forward on a timely basis, and obviously this has been delayed significantly, but virtually all of the fishermen in our sector and that we work with are interested in this, but simply don’t have the time at this time of year to get in their car and drive between three and five hours to Portland.

….With timelines and trying to operate businesses that a lot of these folks have moved into because of the lack of groundfish, this is further driving them away from fishing in the groundfish fishery.

NEFMC will make final recommendations on Amendment 18 at its meeting in Plymouth, MA on September 29 – October 1, 2015. If approved by NMFS, the management measures probably will be implemented by May 1, 2016.