April 9, 2010

Alan Risenhoover, Director, Office of Sustainable Fisheries
National Marine Fisheries Service
1315 East-West Highway, SSMC3
Silver Spring, MD 20910
Re: MFCN Comments on the “Draft NOAA Catch Share Policy.”

Dear Mr. Risenhoover,

The Marine Fish Conservation Network, representing almost 200 environmental NGOs recreational and commercial fishing groups, science organizations and aquaria in the United States, appreciates the opportunity to comment on the “Draft NOAA Catch Share Policy.”

As noted by the U.S. Commission on Ocean Policy (USCOP 2004), the ocean and coastal resources within U.S. jurisdiction are held in the public trust. NOAA and the National Marine Fisheries Service (NMFS) have a special responsibility to manage public fishery resources for the continued benefit of all Americans. Our comments on the Guidelines for Implementing Limited Access Privilege (LAP) Programs (September 28, 2007), noted that LAP programs have the potential to improve compliance with the goals and objectives of the Magnuson-Stevens Reauthorization Act and other relevant laws, but only if they designed properly in accordance with the MSRA and are implemented in a manner that protects the public’s interests.

In our judgment, the draft policy strikes a reasonably good balance between encouragement of the use of “catch shares” as a management tool and recognition that such programs are not a panacea, are not appropriate in all fisheries, and must be tailored to the circumstances and needs of specific fisheries. We agree that NOAA should not require the use of LAP programs in any fishery, while striving to reduce the technical and administrative impediments to their use. Given the potentially far-reaching consequences for management of public fisheries resources, public engagement in the design of LAP programs will be essential. We appreciate the work of the catch share task force and its effort to engage the public in the development of the policy. However, we continue to believe that NOAA and NMFS must provide more detailed technical guidance to support the implementation of the policy. The Network’s comments submitted to NMFS in September 2007 on LAP program guidance are still directly relevant today. But we are concerned that some of the points we made in 2007 are not adequately addressed by the new policy, so we want to reiterate some of these points below, and urge you to refer to our letter of that time for more detail (appended here).

DEFINITION
At some points in the draft policy document, the term “catch shares” is used to refer to a set of several programs which are said to include LAPs and individual fishing quotas (IFQs), implying that LAP programs are a subset of “catch share” programs. At other times the document uses “LAPPs” interchangeably with “catch shares.” The MSA defines LAPs and IFQs, but makes no mention of catch shares. NOAA must clarify the relationship of these terms. We understand “catch shares” to be a popularized term that is loosely synonymous with LAPPs, including IFQ programs, fishery cooperatives, regional fishery associations, territorial use rights fisheries (TURFs), and other forms of allocating a specific percentage of the total allowable fishery catch or specific fishing areas to individuals, cooperatives, communities, or other entities. If, however, “catch shares” is considered to encompass a broader category of limited access programs than LAPPs, the policy should state this clearly and provide the statutory basis for emphasizing catch shares over LAPPs. Our reading of MSA303A indicates that LAP programs may encompass the full range of allocative options, including geographic or community-based allocations. For clarity we urge NOAA to take a consistent approach in its use of terminology; because the MSRA has already codified LAPPs as the mechanism for implementing “catch shares,” “LAP programs” should be the primary term for this management tool.

POLICY GOALS

As stated in the draft policy, NOAA intends to encourage LAP progams “to achieve long-term ecological and economic sustainability of the Nation’s fishery resources and fishing communities.” We support these objectives and we applaud NOAA’s efforts to engage the public in the development of a policy concerning this sometimes contentious management tool. However, we are concerned that the draft policy document also says NOAA intends to “promote” catch shares, while failing to say that NOAA will not promote catch shares at the expense of existing programs and management tools that are underfunded and in need of more support. The policy should require Councils to consider community access at the outset of LAP program design, including the use of alternative forms of allocative distribution, such as fishing community trusts, permit banks, or associations. The draft policy also lacks adequate consideration of ecosystem-based management objectives.

As noted previously by the GAO (2004), individual fishing quota programs are largely intended to improve economic efficiency and conserve the resource by limiting access to fisheries and reducing excess fishing capacity. But goals for economic efficiency (expressed in National Standard 5) often conflict with objectives for social equity/community participation (expressed in National Standards 4 and 8), creating tensions because a community or fishery sector may not be the most efficient user of quota in strictly economic terms. In the absence of guidance from NMFS, councils will be left to decide how much economic efficiency they are willing to sacrifice to protect communities or facilitate new entry. The policy should place matters of social equity/community participation on an equal footing with economic efficiency when decisions are made to limit access to public resources, and NMFS should provide more detailed guidance to the councils on ways to ensure that the range of participants are fairly accounted for when fishing opportunities are distributed.

We urge NOAA to revise its policy discussion to much more clearly emphasize that – in keeping with the MSRA LAP program provisions – any new limited access privilege program designed by the councils must:

• Improve compliance with the conservation objectives of the MSA;
• Foster ecological stewardship and ecosystem-based management;
• Allocate quota shares fairly among fishery participants;
• Prevent excessive consolidation of quota shares by individuals or companies;
• Protect the access of coastal fishing communities (discussed on p. 6 of the draft policy);
• Preserve and promote owner operators and working fishermen;
• Provide fishing opportunities for new entrants;
• Establish clear and measurable program goals and objectives (as noted in the draft policy, p. 4) and establish the responsibility of councils to modify review and modify programs and allocations, as needed, to achieve program goals;
• Prevent granting of privileges that will last in perpetuity (discussed on p. 5) or that become de facto property rights;
• Include adequate monitoring and enforcement mechanisms to ensure that program objectives are achieved; and
• Contain a cost recovery mechanism.

PRIVILEGES VS. RIGHTS
Many of our member groups have expressed the concern that catch share programs can lead to privatization of the public’s fisheries resources. Retaining an emphasis on the “privilege” in limited access privilege programs reminds all involved of this core principle in the Magnuson-Stevens Act. Section 303A of the MSRA affirms that limited access quota shares are revocable privileges, not property rights or permanent franchises. But there are reports that even LAP shares are already being treated as de facto property in that they can be inherited, bought and sold, used as collateral, and fought over in divorce court. NOAA’s draft policy does note that the granting of catch share privileges to an entity is not made in perpetuity, and that the MSA defines a LAP as a permit that may be issued for a period of not more than 10 years, with provision for renewal unless otherwise revoked, limited or modified, but this acknowledgement is buried in a subsection of catch share program features that addresses distinctions among fishing sectors. The NOAA policy should follow the MSA in making this a core principle of the policy and should clearly affirm at the outset of the policy that LAP quota shares are revocable privileges, not property rights or permanent franchises. In other words, a LAP is a permit to catch fish that may be revoked, modified, or limited at any time and the holders of the LAP permits would not be entitled to compensation.

FISHING COMMUNITY SUSTAINABILITY
We are pleased that the draft policy includes consideration of how LAP programs can promote the sustained participation of fishing communities in fisheries. We are also pleased that NOAA is committed to assisting communities in the planning and design of community-based programs and providing technical assistance in the creation of fishing community trusts or permit banks to help retain local community access to fisheries resources. National Standard 8 and Section 303A of the MSA require fishery managers to account for the importance of fishery resources to fishing communities, but community-based considerations are sometimes treated as an afterthought in the design of LAP programs. Therefore, the draft policy should not merely “encourage” but rather reinforce the existing requirement that Councils take advantage of special community provisions in the MSA at the outset of LAP program design. Committed funding and technical resources will be necessary to make good on promises of NOAA technical assistance in the development of community sustainability plans under MSA Section 303A. At present, however, it is not clear if or how much funding will be available through federal appropriations in the newly created NMFS catch shares budget line. NOAA’s policy on fishing community sustainability should clarify that LAP program funding through the NMFS catch share budget will be available to assist fishing communities.

CONSERVATION STEWARDSHIP
A recently published study of North American catch share programs found that they generally do not lead to greater ecological stewardship or higher abundance of fish populations. Perhaps this could change in future programs with greater emphasis on conservation or better design features. Unfortunately, the draft policy virtually omits any mention of whether and how LAP programs as management tools will support the fundamental goal of ecological sustainability. The policy should include explicit objectives to protect marine ecosystems and achieve the MSA’s conservation objectives for ending overfishing, rebuilding overfished stocks, reducing bycatch and waste, and conserving habitat. The policy should also include consideration of ways in which LAP programs can create incentives for holders of quota shares to improve stewardship and enhance ecological resilience.

Incentives to minimize bycatch, conserve vulnerable habitat, and protect the marine food web should be included in any LAP program, as in non-LAP programs, in order to achieve the objectives of the MSA. For example, LAP programs could include incentives to convert from gears with high bycatch and high habitat impacts to cleaner, lower-impact fishing gears. Quota set-asides for new entrants and loan programs that help individuals purchase quota shares could be directed at those participants using lower-impact fishing gears. Another way that LAP programs could be designed to protect key ecosystem functions involves the role of forage fish in marine food webs. The National Standard 1 guidelines encourage consideration of managing forage stocks for higher levels of abundance than conventional fishing strategies based on MSY (i.e., maintaining higher stock biomass than BMSY). LAP program fisheries targeting forage fish stocks should include program objectives to address the needs of predators when setting annual catch limits.

COST RECOVERY
All LAP programs must have a cost recovery plan, and the MSA authorizes a program of fees paid by LAP holders that will cover the costs of management, data collection and analysis, and enforcement activities under MSA § 304(d)(2). The approach to LAP program cost recovery outlined in section 2.2 of the draft policy focuses only on “incremental costs” and does not specify how much of the implementation or management cost is included in the incremental cost. Yet section 2.1 of the draft policy acknowledges that additional costs are incurred in monitoring and managing individual catch shares and that actual costs can exceed the MSA’s 3 percent cap on cost recovery. We are concerned that if the cost recovery cap is exceeded then the funds to cover the additional management costs of the LAP program will have to come from current appropriations – which could mean budget cuts in other management programs. The policy document should clarify that NOAA will not promote catch shares at the expense of non-LAP programs and management tools.

The draft policy does not address the feasibility of measuring the incremental costs of running the management program under a LAP program, and does not provide examples of how this cost is quantified in existing LAPPs. It is our understanding that incremental annual costs associated with existing LAPPs do not include analytic or implementation costs. The policy is unclear as to how much of the management cost associated with compliance monitoring, data collection, stock assessment development and catch specification is included in the incremental cost. LAP program cost recovery should be adequate to achieve the mandate of the LAPP provisions of the MSRA to “cover the costs of management, data collection and analysis, and enforcement activities.” We urge NOAA to clearly specify what costs are included in the “incremental” cost and provide examples from existing LAP programs to show how cost recovery should be addressed.

NOAA LAP PROGRAM GUIDANCE
While it is valuable to have a national policy, the evidence from the task force and from the March 16, 2010 hearing on catch shares before the House Subcommittee on Insular Affairs, Oceans and Wildlife demonstrates that there must also be national guidelines. We are concerned that the “draft NOAA policy [only] lays out high level principles regarding catch shares, but does not address specific questions of technical interpretation and applicability raised by implementation of the 2006 MSA amendments,” leaving for later “many issues [that] will be addressed by issuance of informal guidance and the conduct of regional or national workshops.

In our view, the guidance should be formal and should include both national and regional workshops. The LAPPs provisions of the MSRA continue to be subject to wide interpretation by the regional fishery management councils on a number of critical issues, leaving it to the councils to establish policies, criteria and methodologies for compliance. Poorly conceived or structured LAPPs have already had serious unintended consequences. Without clear guidance from NMFS, LAP programs could lead to wholesale consolidation of fisheries under the control of larger companies at the expense of coastal communities and working fishermen, who stand to lose access to public resources and livelihoods if LAPPs are not carefully designed and regulated. Poorly designed LAPPs can also increase the risk of overfishing and create incentives for wasteful practices such as highgrading. These are the kinds of outcomes that regulatory guidelines on LAPPs should seek to prevent.

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In closing, we reiterate our support for NOAA’s efforts to engage public stakeholders in the development of a policy to address the role of LAP programs as a management tool. Existing LAPPs such as the commercial Alaska halibut and sablefish fishery and Gulf of Mexico red snapper fishery demonstrate that LAPPs can end the race for fish, reduce bycatch and discards, increase the value of the fishery, and improve safety at sea, but concerns about fairness, consolidation of fishery benefits and community access to fishery resources continue to bedevil many LAP fisheries. In addition, the success of any LAP program will depend on the ability of managers to ensure that individual holders of quota shares do not exceed the amount of fish allotted to them annually, thus increasing the operational and monitoring costs of management. Although the MSA specifies that a LAP program must include an effective system for monitoring, enforcement and management of the program, the draft policy provides little in the way of guidance on how to meet those added LAP program costs without compromising the availability of funds appropriated for the management of non-LAP fisheries. The draft policy also fails to address the role that LAPPs should play in improving ecological stewardship and achieving larger national ocean policy goals for healthy, resilient ecosystems. For all these reasons, the Network urges NOAA and NMFS to issue formal LAP program guidelines in conjunction with the policy to ensure that the public interest is protected and compliance with the MSA occurs.

Sincerely,

Bruce Stedman, Executive Director
Marine Fish Conservation Network