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REGULATORY IMPACT REVIEW AND
INITIAL REGULATORY FLEXIBILITY ANALYSIS

Apppendix H
TO THE

RATIONALIZATION OF THE PACIFIC COAST
GROUNDFISH LIMITED ENTRY TRAWL FISHERY
FINAL ENVIRONMENTAL IMPACT STATEMENT
PREPARED BY
THE PACIFIC FISHERY MANAGEMENT COUNCIL
7700 NE AMBASSADOR PLACE, SUITE 101
PORTLAND, OR 97220
503-820-2280
WWW.PCOUNCIL.ORG
AND THE
NATIONAL MARINE FISHERIES SERVICE
7600 SAND POINT WAY NE, BIN C15700
SEATTLE, WA 98115-0070
206-526-6150

JUNE 2010

Regulatory Impact Review and
Initial Regulatory Flexibility Analysis
Rationalization of the Pacific Coast Groundfish Limited Entry Trawl Fishery AND
Allocation of Harvest Opportunity BETWEEN Sectors of the Pacific Coast Groundfish
Fishery
National Marine Fisheries Service, Northwest Region
Initial Analysis May 2010
Executive Summary
The Pacific Fishery Management Council (Council) prepared a draft environmental impact
statement for Amendment 20 to the Pacific Coast Groundfish Fishery Management Plan (FMP);
a notice of availability was published on December 4, 2009 (74 FR 63751). The Council also
prepared a draft environmental impact statement for Amendment 21 to the Pacific Coast
Groundfish FMP; a notice of availability was published on January 29, 2010 (75 FR 4812). The
trawl rationalization program would consist of (1) an IFQ program for the shore-based, limited
entry groundfish trawl fleet and (2) cooperative programs (co-ops) for the at-sea whiting limited
entry groundfish trawl fleet. The trawl rationalization program is intended to increase net
economic benefits, create economic stability, provide full utilization of the trawl sector
allocation, consider environmental impacts, and promote conservation through individual
accountability for catch and bycatch.
A summary of the proposed action is as follows. The proposed action is to replace the current,
primary management tool used to control the West Coast groundfish trawl catch—a system of
two-month cumulative landing limits for most species and season closures for whiting—with a
system requiring more individual accountability by the assignment of limited access privileges
(LAPs). LAPs are a form of output control whereby an individual fisherman, community, or
other entity is granted the privilege to catch a specified portion of the total allowable catch
(TAC). The alternatives include (1) a catch-based IFQ system where all groundfish catch
(landings plus bycatch) by limited entry trawl vessels would count against a vessel’s IFQ
holdings, which could be applied to the whole groundfish trawl fishery or selected trawl sectors;
and (2) a system of co-ops that would be applied to one or more of the fishery sectors that target
Pacific whiting. The status quo alternative (no action) could also be considered for application to
one or more trawl fishery sectors, even if one or both action alternatives (IFQs or co-ops) are
chosen for the other trawl sectors.
The description of purpose and need in section 1.2 of the Amendment 20 DEIS also outlines the
objectives of the proposed action. The introductory paragraph in Chapter 1 and section 1.3 of the
DEIS, background to the purpose and need provide information on the legal basis for the
proposed action (proposed rule). The Council articulated the following goal for the trawl
rationalization program: “Create and implement a capacity rationalization plan that increases net
economic benefits, creates individual economic stability, provides for full utilization of the trawl
sector allocation, considers environmental impacts, and achieves individual accountability of
catch and bycatch.” The objectives supporting this goal are as follows: provide a mechanism for
total catch accounting; provide for a viable, profitable, and efficient groundfish fishery; promote

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practices that reduce bycatch and discard mortality, and minimize ecological impacts; increase
operational flexibility; minimize adverse effects from an IFQ program on fishing communities
and other fisheries to the extent practical; promote measurable economic and employment
benefits through the seafood catching, processing, distribution elements, and support sectors of
the industry; provide quality product for the consumer; and increase safety in the fishery.
As part of the proposed action, NMFS would place observers and/or cameras on board all catcher
vessels in the shore-based sector (which combines the current shore-based whiting and nonwhiting trawl sectors). Existing requirements for motherships, catcher vessels in the mothership
sector, and catcher-processors would continue. Independently contracted processing plant
monitors would track landings. There would also be new reporting requirements related to the
tracking of QS and quota pounds (QP) in the shore-based fishery.
This proposed rule has been determined to be significant for purposes of Executive Order 12866.
An initial regulatory flexibility analysis (IRFA) was prepared, as required by section 603 of the
Regulatory Flexibility Act (RFA). The IRFA describes the economic impact this proposed rule,
if adopted, would have on small entities. A description of the action, why it is being considered,
and the legal basis for this action are contained at the beginning of this section in the preamble
and in the SUMMARY section of the preamble.
The Council has prepared two EIS documents: Amendment 20—Rationalization of the Pacific
Coast Groundfish Limited Entry Trawl Fishery, which would create the structure and
management details of the trawl fishery rationalization program, and Amendment 21—
Allocation of Harvest Opportunity Between Sectors of the Pacific Coast Groundfish Fishery,
which would allocate the groundfish stocks between trawl and non-trawl fisheries. The two draft
EISs prepared by the Council provide economic analyses of the Council’s preferred alternatives
and draft RIR and IRFAs. The draft RIR and IRFAs were updated and combined into a single
RIR/IRFA, which comprises this document. Among other things, this single RIR/IRFA contains
additional information on characterizing the participants in the fishery and on the tracking and
monitoring costs associated with this program.
Due to the complexity of the proposed fishery management measures, the rule associated with
this analysis proposes only certain key components that would be needed both to issue permits
and endorsements in time for use in the 2011 fishery and to have the 2011 specifications reflect
the new allocation scheme. Specifically, this rule would establish the allocations set forth under
Amendment 21 and would establish procedures for initial issuance of permits, endorsements, and
QS under the IFQ and co-op programs. NMFS plans to propose additional program details in a
future proposed rule. Such additional details would include program components applicable to
IFQ gear switching, observer programs, retention requirements, equipment requirements, catch
monitors, catch weighing requirements, co-op permits/agreements, first receiver site licenses,
quota share accounts, vessel QP accounts, further tracking and monitoring components, and
economic data collection requirements. To encourage more informed public comment, this
proposed rule includes a general description of these additional program requirements. NMFS is
also planning a future “cost-recovery” rule, based on a recommended methodology yet to be
developed by the Council.

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The RIR/IRFA analyzes two alternatives—the No Action Alternative and the Preferred
Alternative. The analysis of the no action alternative describes what is likely to occur in the
absence of the proposed action. It provides a benchmark against which to compare the
incremental effects of the proposed action. Under the no action alternative, the current, primary
management tool used to control the Pacific coast groundfish trawl catch includes a system of
two-month cumulative landing limits for most species and season closures for Pacific whiting.
This management program would continue under the no action alternative. Only long-term,
fixed allocations for Pacific whiting and sablefish north of 36° N. lat. would exist. All other
groundfish species would not be formally allocated between the trawl and non-trawl sectors.
Allocating the available harvest of groundfish species and species complexes would take place
during the Council process of deciding biennial harvest specifications and management measures
and, as such, would be considered short-term allocations.
The analysis of the preferred alternative describes what is likely to occur as a result of the
proposed action. Under the preferred alternative, the existing shore-based whiting and shorebased non-whiting sectors of the Pacific Coast groundfish limited entry trawl fishery would be
managed as one sector under a system of IFQs, and the at-sea whiting sectors of the fishery
(i.e., catcher-processor sector and mothership sector, which includes motherships and catcher
vessels) would be managed under a system of sector-specific harvesting co-ops. The catcherprocessor sector would continue to operate under the existing, self-developed co-op program
entered into voluntarily by that sector. A distinct set of groundfish species and Pacific halibut
would be covered by the rationalization program. Amendment 20 would include a tracking and
monitoring program to ensure that all catch (including discards) would be documented and
matched against QP. The Council specified that observers would be required on all vessels, and
shore-based monitoring (catch monitors) would be required during all off-loading (100 percent
coverage). Compared to status quo monitoring, this would be a monitoring and observer
coverage level increase for a large portion of the trawl fleet, particularly for nonwhiting, shorebased vessels.
The limited entry trawl fishery is divided into two broad sectors: a multi-species trawl fishery,
which most often uses bottom trawl gear (hereafter called the non-whiting fishery), and the
Pacific whiting fishery, which uses midwater trawl gear. The non-whiting fishery is principally
managed through two-month cumulative landing limits along with closed areas to limit
overfished species bycatch. Fishery participants target the range of species described above with
the exception of Pacific whiting. By weight, the vast majority of trawl vessel groundfish is
caught in the Pacific whiting fishery. In contrast, the non-whiting fishery accounts for the
majority of limited entry trawl fishery ex-vessel revenues. On average for the period from 2000
to 2005, Pacific whiting accounted for about 75 percent of the quantity of groundfish landed in
the limited entry trawl fishery, but only 21 percent of the value due to their relatively low exvessel price.
Non-whiting trawl vessels deliver their catch to shoreside processors and buyers located along
the coasts of Washington, Oregon, and California. They tend to have their homeports located in
towns within the same general area where they make deliveries, though there are several cases of
vessels delivering to multiple ports during a year. Some Pacific whiting trawl vessels are

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catcher-processors that, as their name implies, process their catch on-board, while other vessels
in this sector deliver their catch to shoreside processors or motherships that receive Pacific
whiting for processing but do not directly harvest the fish.
Over time, landings in the limited entry trawl fishery have fluctuated, especially on a speciesspecific basis. Pacific whiting has grown in importance, especially in recent years. Through the
1990s, the volume of Pacific whiting landed in the fishery increased. In 2002 and 2003, landings
of Pacific whiting declined due to information showing the stock was depleted, and the
subsequent regulations that restricted harvest in order to rebuild the species. From 2003 through
2007, estimated Pacific whiting ex-vessel revenues averaged about $29 million. In 2008, these
participants harvested about 248,000 tons of whiting worth about $63 million in ex-vessel
revenues, based on shore-based ex-vessel prices of $254 per ton, the highest ex-vessel revenues
and prices on record. In comparison, the 2007 fishery harvested about 224,000 tons worth
$36 million at an average ex-vessel price of about $160 per ton.
While the Pacific whiting fishery has grown in importance in recent years, harvests in the nonwhiting component of the limited entry trawl fishery have declined steadily since the 1980s. Exvessel revenues in the fishery peaked in the mid 1990s at over $60 million. Following the
passage of the Sustainable Fisheries Act (1996) and the listing of several species as overfished,
harvests became increasingly restricted, and landings and revenues declined steadily until 2002.
Since 2002, ex-vessel revenues have stabilized at approximately $23 to $27 million per year. In
2007, the Council estimated that 159 trawlers landed 94,000 metric tons (mt) of groundfish,
earning $37 million in ex-vessel revenues, for an average of $234,000 per vessel.
Expected Effects of Amendment 21—Intersector Allocation
The allocation of harvest opportunity between sectors under the proposed regulation does not
differ significantly from the allocation made biennially under the no action alternative. The
primary economic effect of the long-term allocation under the proposed regulations is to provide
more certainty in future trawl harvest opportunities, which would enable better business planning
for participants in the rationalized fishery. As described elsewhere, the trawl rationalization
program could create an incentive structure and facilitate more comprehensive monitoring to
allow bycatch reduction and effective management of the groundfish fisheries. In support of the
trawl rationalization program, the main socioeconomic impact of Amendment 21 allocations is
longer-term stability for the trawl industry. While the preferred Amendment 21 allocations do
not differ significantly from status quo ad hoc allocations made biennially, there is more
certainty in future trawl harvest opportunities, which enables better business planning for
participants in the rationalized fishery. This is the main purpose for the Amendment 21 actions.
The economic effects of Amendment 21 arise from the impacts on current and future harvests.
The need to constrain groundfish harvests to address overfishing has had substantial
socioeconomic impacts. The groundfish limited entry trawl sector has experienced a large
contraction, spurred in part by a partially federally subsidized vessel and permit buyback
program implemented in 2005. This $46 million buyback program was financed by a
congressional appropriation of $10 million and an industry loan of $36 million. Approximately
240 groundfish, crab, and shrimp permits were retired from state and Federal fisheries, and there
was a 35 percent reduction in the groundfish trawl permits. To repay the loan, groundfish,

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shrimp and crab fisheries are subject to landings fees. Follow-on effects of the buyback have
been felt in coastal communities where groundfish trawlers comprise a large portion of the local
fleet. As the fleet size shrinks, and ex-vessel revenues decline, income and employment in these
communities are affected. Fishery-related businesses in the community may cease operations
because of lost business. This can affect non-groundfish fishery sectors that also depend on the
services provided by these businesses, such as providing ice and buying fish. An objective to the
trawl rationalization program is to mitigate some of these effects by increasing revenues and
profits within the trawl sector.
However, because further fleet consolidation is expected, the resulting benefits are likely to be
unevenly distributed among coastal communities. Some communities may see their groundfish
trawl fleet shrink further as the remaining vessels concentrate in a few major ports. Species
subject to Amendment 21 allocations would be lingcod, Pacific cod, sablefish south of 36° N.
lat., Pacific ocean perch, widow rockfish, chilipepper rockfish, splitnose rockfish, yellowtail
rockfish north of 40° 10’ N. lat., shortspine thornyhead (north and south of 34° 27’ N. lat.),
longspine thornyhead north of 34° 27’ N. lat., darkblotched rockfish, minor slope rockfish (north
and south of 40° 10’ N. lat.), Dover sole, English sole, petrale sole, arrowtooth flounder, starry
flounder, and Other Flatfish. While the preferred Amendment 21 allocations of these species do
not differ significantly from status quo ad hoc allocations made biennially, there is more
certainty in future trawl harvest opportunities, which enables better business planning for
participants in the rationalized fishery. This is the main purpose for the Amendment 21 actions.
Based on ex-vessel revenue projections, Table 4-18 (Amendment 21 Intersector Allocation
DEIS) shows the potential 2010 yield to trawl and non-trawl (including recreational) sectors
under the Amendment 21 alternatives and the potential 2010 value of alternative trawl
allocations. Under the status quo option Alternative 1, the projected ex-vessel value of the trawl
allocation is $56 million while the projected ex-vessel value of the Council’s preferred
alternative is $54 million, indicating a potential increase to the non-trawl sectors and a potential
decrease to the trawl sector.
In addition to the species above, halibut would also be specifically allocated to the trawl fishery.
The proposed regulations include a halibut trawl bycatch reduction program in phases to provide
sufficient time to establish a baseline of trawl halibut bycatch and for harvesters to explore
methods (e.g., adjustments to time and/or area fished, gear modifications) to reduce halibut
bycatch and bycatch mortality. Pacific halibut currently cannot be retained in any U.S. or
Canadian trawl fisheries per the policy of the IPHC. The Council’s intent on setting a total catch
limit of Pacific halibut in Area 2A trawl fisheries is to limit and progressively reduce the bycatch
to provide more benefits to directed halibut fisheries. The program establishes a limit for total
Pacific halibut bycatch mortality (legal-sized and sublegal fish) by using an individual bycatch
quota in the trawl fishery. The initial amount for the first two years of the trawl rationalization
program would be calculated by taking 15 percent of the Area 2A total constant exploitation
yield (CEY) as set by the International Pacific Halibut Commission (IPHC) for the previous
year, not to exceed 130,000 pounds (lbs) per year for total mortality. For example, if the trawl
rationalization program went into effect in 2013, the trawl halibut IBQ would be set at 15 percent
of the Area 2A CEY adopted for 2012 or 130,000 lbs per year, whichever is less, for 2013 and
2014 (years 1 and 2 of the program). Beginning with the third year of implementation, the

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maximum amount set aside for the trawl rationalization program would be reduced to
100,000 lbs per year for total mortality. This amount may be adjusted downward through the
biennial specifications process for future years.
Currently there are no total catch limits of Pacific halibut specified for the west coast trawl
fishery. Trawl bycatch of Pacific halibut, therefore, does not limit the trawl fishery. A phased-in
halibut bycatch reduction program would provide sufficient time to establish a baseline of trawl
halibut bycatch under the new rationalization program and would enable harvesters to explore
methods (e.g., adjustments to time and/or area fished, gear modifications) to reduce both halibut
bycatch and bycatch mortality. By limiting the bycatch of Pacific halibut in the limited entry
trawl fisheries, Amendment 21 would control bycatch and could provide increased benefits to
Washington, Oregon, and California fishermen targeting Pacific halibut. Reducing the trawl
limit would also provide more halibut to those who participate in the directed tribal, commercial,
and recreational halibut fisheries.
Effects of Amendment 20-Trawl Rationalization
Due to the lack of quantitative data, an overall comprehensive model was not feasible. Instead, a
set of models designed to focus on specific issues was developed. For example, models were
used to analyze the effects of the initial allocation of QS in the trawl IFQ program; project
geographic shifts in fishery patterns; and illustrate the potential for reducing bycatch, increasing
target catch, and increasing revenues. To illustrate the benefits of the IFQ program, a model
projecting the expected amount of fleet consolidation in the shore-based non-whiting fishery was
developed. This model illustrates the potential for the fleet to reduce bycatch and potentially
increase the amount of target species harvested. This model is primarily based on bycatch
reduction experiences in the Pacific whiting fishery and on the arrowtooth flounder fishery as
carried out under an exempted fishing permit. The model accounts for the fact that trawlers
harvest many species (multiple outputs). The model also uses fish ticket data and the data from
the recently completed West Coast Limited Entry Cost Earnings Survey sponsored by the NMFS
Northwest Fisheries Science Center. [For the other sectors, similar models could not be
developed because the appropriate cost data were unavailable.]
Estimates of potential economic benefits are generated based on the predicted harvesting
practices from the first step analysis. Because the west coast nonwhiting groundfish fishery is
not a derby fishery, it is expected that economic benefits will come through cost reductions and
increased access to target species that arise from modifications in fishing behavior (overfished
species avoidance). The key output of this analysis is an estimate of post-rationalization
equilibrium harvesting cost.
Changes in harvesting costs can arise from three sources. First, the total fixed costs incurred by
the groundfish trawl fleet change as the size of the fleet changes. Since many limited entry
trawlers incur annual fixed costs of at least $100,000, reductions in fleet size can result in
substantial cost savings. In other words, fewer vessels in the fishery will lead to decreased costs
through a decrease in annual fixed costs. Second, costs may change as fishery participation
changes, no longer incurring diseconomies of scope (such as the costs of frequently switching
gear for participating in multiple fisheries). Third, costs may change as vessels are able to buy

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and sell quota to take advantage of economies of scale and operate at the minimum point on their
long-run average cost curve (i.e. the strategy that minimizes the cost of harvesting).
The major conclusions of this model suggest that (with landings held at 2004 levels), the current
groundfish fleet (non-whiting component), which consisted of 117 vessels in 2004, will be
reduced by roughly 50 percent to 66 percent, or 40 to 60 vessels under an IFQ program. The
reduction in fleet size implies cost savings of $18 to $22 million for the year 2004 (most recent
year of the data). Vessels that remain active will, on average, be more cost efficient and will
benefit from economies of scale that are currently unexploited under controlled access
regulations in the fishery. The cost savings estimates are significant, amounting to 60 percent of
the costs incurred currently, suggesting that IFQ management may be an attractive option for the
Pacific Coast Groundfish Fishery. Assuming a 10 percent annual return to the vessel capital
investment, estimates indicate that the 2004 groundfish fleet incurred a total cost of $39 million.
The PacFIN data indicate fleetwide revenue at roughly $36 million in 2004. Therefore, fleetwide
losses of about $3 million occurred in 2004. Based on a lower 5 percent return to vessel capital,
the results suggest that the groundfish fleet merely broke even in 2004; i.e., dockside revenues
were offset by the fleet wide harvesting costs. The results also suggest that a switch from the
current controlled access management program to IFQs could yield a significant increase in
resource rents in the Pacific Coast Groundfish fishery. For instance, the analysis finds that the
2004 groundfish catch generated zero resource rent. Instead, it could have yielded a substantial
positive rent at about $14 million.
As the model was based on the 2004 fishery, it may be useful to show current trends in the
fishery. In 2004, the shorebased non-whiting trawl fishery generated about $30 million in exvessel revenues. According to cost estimates discussed above, however, this fishery was at best
breaking even or perhaps suffering a loss of up to $2 million. Since 2004, shorebased nonwhiting trawl fisheries have increased their revenues to about $40 million. The increases in
shorebased revenues have come from increased landings of flatfish and sablefish and significant
increase in sablefish ex-vessel prices. Sablefish now accounts for almost half of the trawl fleet’s
revenues. While revenues were increasing, so were fuel prices. Fuel costs are about 30 to
40 percent of the vessels’ revenues. The average 2005 to 2009 revenues were about $28 million,
or 22 percent greater than 2004. The average 2005 to 2009 fuel price was about $2.81,
70 percent greater than that of 2004. Therefore, it appears that 2009 fishery may not be that
much improved over that of 2004.
Based on the various models, ex-vessel revenues for the non-whiting sector of the limited entry
trawl fishery are estimated to be approximately $30 to 50 million per year under the preferred
alternative, compared to $22 to 25 million under the no action alternative. This revenue increase
is expected to occur in a rationalized fishery, because target species quotas can be more fully
utilized. Currently, in the non-whiting sector, cumulative landing limits for target species have
to be set lower because the bycatch of overfished species cannot be directly controlled.
Introducing accountability at the individual vessel level by means of IFQs provides a strong
incentive for bycatch avoidance (because of the actual or implicit cost of quota needed to cover
bycatch species) and prevents the bycatch of any one vessel from affecting the harvest
opportunity of others. In addition, under the preferred alternative, the non-whiting sector would
have control over harvest timing over the whole calendar year. Under the no action alternative,

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the non-whiting sector would continue to operate under two-month cumulative landing limits,
which reduces flexibility within the period, because any difference between actual limits and the
period limit cannot be carried over to the next period. Finally, the ability for vessels managed
under IFQs to use other types of legal groundfish gear could allow some increases in revenue by
targeting higher-value line- or pot-gear-caught fish. This opportunity would mainly relate to
sablefish, which are caught in deeper water, rather than nearshore species where state level
regulatory constraints apply.
The preferred alternative may also increase ex-vessel revenues of non-whiting trawl harvesters
by changing their bargaining power with processors over ex-vessel prices. Under the preferred
alternative, the current two-month cumulative limits structure of the non-whiting trawl fishery
would be replaced with QP that is available for a year, thereby extending the time horizon
harvesters have to negotiate prices with processors without losing available fishing opportunity.
The extended period would give harvesters greater latitude to hold out for better prices compared
to the no action alternative. However, these negotiations will also be affected by the availability
of target species, as well as the availability of bycatch.
Costs for the non-whiting sector of the limited entry trawl fishery are expected to decrease under
the preferred alternative because of productivity gains related to fleet consolidation. Productivity
gains would be achieved through lower capital requirements and a move to more efficient
vessels. Operating costs for the non-whiting sector are predicted to decrease by as much as
60 percent annually. Based on estimates of current costs, this percentage decrease represents a
$13.8 million cost reduction relative to the no action alternative.
The accumulation limits considered under the preferred alternative are not expected to introduce
cost inefficiencies in the non-whiting sector, provided that current prices and harvest volumes do
not decrease. However, the preferred alternative would impose new costs on the non-whiting
sector that would not be incurred under the no action alternative. First, a landings fee of up to
3 percent of the ex-vessel value of fish harvested would be assessed under the preferred
alternative to recover management costs, such as maintenance of the system of QS accounts.
Second, new at-sea observer requirements would be introduced, and vessels would have to pay
the costs of complying with these requirements, estimated at $500 a day if independent
contractors are hired. The daily observer cost could place a disproportionate adverse economic
burden on small businesses because such costs would comprise a larger portion of small vessels
costs than that of larger vessels.
The increase in profits that commercial harvesters are expected to experience under the preferred
alternative may render them better able to sustain the costs of complying with the new reporting
and monitoring requirements. The improved harvesting cost efficiency under the preferred
alternative may allow the non-whiting sector to realize profits of $14 to 23 million compared to
$0 or less under the no action alternative. In addition, a provision that allows vessels managed
under the IFQ program to use other legal gear (gear switching) would allow sablefish allocated
to the trawl sector to be sold at a higher price per pound, possibly contributing to increased
profits. The imposition of accumulation limits could reduce the expected increase in the
profitability of the non-whiting sector by restricting the amount of expected cost savings, and the
costs of at-sea observers may reduce profits by about $2.2 million, depending on the fee

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structure. However, the profits earned by the non-whiting sector would still be substantially
higher under the preferred alternative than under the no action alternative.
New entrants are likely to face a barrier to entry in the Pacific Coast groundfish limited entry
trawl fishery in the form of the cost of acquiring QS (or a co-op share in the case of the at-sea
whiting sector). This disadvantages them in comparison to those entities that receive an initial
allocation of harvest privileges. Small entities may be particularly disadvantaged to the degree
that they may find it more difficult to finance such quota purchases. Among the goals the
Council identified for the adaptive management program was to use the reserved non-whiting QS
to facilitate new entry into the fishery. In addition, the Council identified, as a trailing action, a
framework to allow the establishment and implementation of community fishing associations as
part of the adaptive management program. These entities could facilitate entry into the fishery
by leasing QS at below market rates, thereby leveling the playing field in terms of costs between
initial recipients of QS and new entrants.
The incremental effects of the preferred alternative on buyers and processors of trawl caught
groundfish are detailed Sections 4.9 to 4.10 of the Rationalization of the Amendment 20 Pacific
Coast Groundfish Limited Entry Trawl Fishery DEIS. Even though processors may have to pay
fishermen higher ex-vessel prices, processors may see cost savings under the preferred
alternative to the degree that rationalization allows greater control over the timing and location of
landings. Processors could use current plant capacity more efficiently, because available
information suggests that processing facilities are currently underutilized. Fleet consolidation in
the non-whiting sector could also provide cost savings for processors if landings occur in fewer
locations, thereby reducing the need for facilities and/or transport. The preferred alternative
would also impose new costs on processors that would not be incurred under the no action
alternative. Processors would be required to pay some or all of the costs of plant monitors, who
would verify landings. Similar to at-sea observers, these monitors would be independent
contractors rather than direct employees of the processing firm.
In the non-whiting processing industry, harvest volumes may increase because of a decrease in
constraining species bycatch and a subsequent increase in underutilized target species catch.
This boost in target species catch may increase utilization of processing capital and processing
activity. [It should be noted that if, under the current system, bycatch has been underreported,
with 100 percent observer coverage under the new system, the gains in increased target catches
may be less than expected.] Consequently, the possibility of capital consolidation in the nonwhiting shore-based sector may be lower than in the shore-based whiting sector. However, shifts
in the distribution of landings across ports as a result of fleet consolidation, industry
agglomeration, and the comparative advantage of ports (a function of bycatch rates in the waters
constituting the operational area for the port, differences in infrastructure, and other factors)
could lead to consolidation in processing activity at a localized or regional scale, as well as an
expansion in processing activity elsewhere. To mitigate harm to adversely impacted non-whiting
shoreside processors, the adaptive management program provides a mechanism to distribute nonwhiting QS to processors, thereby ensuring that some processors receive greater landings of
groundfish than would otherwise be the case.

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As noted above, the preferred alternative may reduce the power of non-whiting shoreside
processors to negotiate ex-vessel prices with harvesters. The larger harvest volume due to
bycatch avoidance may lower processor average costs, which could offset the negative effects on
non-whiting shoreside processors of a shift in bargaining power. In addition, processors could
purchase QS over the long term, thereby increasing their negotiation power. However, the
accumulation limits included in the preferred alternative would limit the ability of processors to
purchase substantial quantities of QS. Alternatively, the adaptive management provision could
be used to allocate QS to non-whiting shoreside processors, thereby providing them additional
leverage when negotiating terms with harvesters.
The allocation of 20 percent of the initial shore-based whiting QS to the shoreside processor
portion of the groundfish fishery would give these processors more influence in negotiations
over ex-vessel prices and would tend to offset the gains in bargaining power for harvesters. For
example, a processor could use QS to induce a harvester that is short of QP for a Pacific whiting
trip to make deliveries under specified conditions and prices. Because of a reduction in peak
harvest volume, however, fewer processing companies and/or facilities may be necessary to
handle harvest volumes of Pacific whiting, meaning some companies may find themselves
without enough product to continue justifying processing operations of Pacific whiting.
Revenues from harvesting and processing trawl-caught groundfish are expected to increase.
Total revenue from nonwhiting trawl fisheries was $25 million in 2007. Revenue is expected to
increase 1.1 to 1.6 times in a rationalized fishery, depending on bycatch rate reductions and stock
status. Revenue increases are mainly expected because, under rationalized fisheries, target
species quotas can be more fully utilized. Currently, in the nonwhiting sector, cumulative
landing limits for target species have to be set lower because the bycatch of overfished species
cannot be directly controlled. Introducing accountability at the individual vessel level provides a
strong incentive for bycatch avoidance (because of the actual or implicit cost of quota needed to
cover bycatch species) and prevents the bycatch of any one vessel from affecting the harvest
opportunity of others. Whiting fisheries are more directly managed through quotas and, in recent
years, by limits on bycatch. Beginning in 2009, bycatch limits have been established for each of
the three whiting sectors. For the shore-based and mothership whiting sectors, the fishery can
potentially close before the whiting allocation is fully harvested because a bycatch cap is
reached. [The catcher-processor sector currently operates as a voluntary co-op and is, therefore,
better able to coordinate harvest strategy to avoid reaching bycatch limits.] However, in general,
the whiting sectors have been able to harvest their sector allocations. Whiting vessels could
increase revenues due to improved product recovery as a result of the ability to better control
harvest timing. As mentioned above, the ability for vessels managed under IFQs to use other
types of legal groundfish gear could allow some increases in revenue by targeting higher-value
line or pot gear caught fish.
Harvester and possibly processor costs are expected to decrease because of productivity gains
related to fleet consolidation. Cost savings would be due to lower capital requirements and a
move to more efficient vessels in the nonwhiting sector. Costs are predicted to decrease by as
much as 60 percent annually, which, based on estimates of current operating costs, would
represent a $13.8 million decrease. Similar levels of consolidation are expected for shorebased
and mothership catcher vessels. Proposed mitigation measures could reduce these costs savings.

RIR/IRFA - 10

For example, a 1 percent quota share accumulation limit could reduce cost savings by as much as
20 percent. However, the accumulation limits considered in the alternatives are not expected to
introduce higher costs at current prices and harvest volume. The proposed action would
introduce some new costs. First, up to 3 percent of the value of landings may be assessed to
cover administrative and management costs. Second, new at-sea observer requirements would
be introduced and vessels would have to pay the cost, estimated at $350 to $500 a day.
Processors may see cost-savings to the degree that rationalization allows greater control over the
timing and location of landings. Processors could use current plant capacity more efficiently,
because available information suggests that processing facilities are currently underutilized.
Fleet consolidation could also drive some cost savings on the part of processors if landings occur
in fewer locations. This would reduce the need for facilities and/or transport. Under the
proposed action, processors would be required to pay the costs of plant monitors, who would
verify landings. These monitors would not be directly employed by the processing firm but,
similar to at-sea observers, would be independent contractors.
Rationalization of the groundfish trawl sector is expected to free up capital and labor because of
increases in productivity. [Since the basic input, trawl-caught fish, is subject to an underlying
constraint due to biological productivity, increases in labor and capital productivity are expected
to reduce the amount of those inputs needed.] However, from a national net benefit perspective,
these effects are neutral since capital and labor can be put to some productive use elsewhere in
the broader economy. Also, current groundfish fishery participants who receive QS (trawl
limited entry trawl permit holders and eligible shoreside processors) are compensated to the
degree that the asset value of the QS covers capital losses.
The tracking and monitoring costs of this program will be provided in more detail during the
“program components” rulemaking process. However, the RIR/IRFA to this rule contains some
preliminary estimates. After a transition period, initial estimates of the annual Federal and state
agency costs to run the shore-based fishery (including whiting) are about
$5 million. Based on the observer cost of $500 per day, the annual costs of observers is about
$4 million. At $350 per day, the compliance monitoring program is just over $1 million
annually. These figures add up to just over $10 million. From a cost-benefit viewpoint, if
consolidation leads to $14 million savings from reduced harvesting costs, and the new program
increases the tracking and monitoring costs of $10 million, there is a projected net gain of about
$4 million. This does not take into account expectations that costs will likely be reduced due to
consolidation or the increases in expected revenues discussed above.
While the effect of the preferred alternative on revenues and costs in the whiting sector of the
limited entry trawl fishery is more difficult to estimate, the lower motivation to “race for fish”
due to co-op harvest privileges is expected to result in improved product quality, slower-paced
harvest activity, increased yield (which should increase ex-vessel prices), and enhanced
flexibility and ability for business planning. The overall effect of these changes would be higher
revenues and profits for harvesters in the shoreside and mothership portions of the whiting
fishery in comparison to the no action alternative. Under the preferred alternative, some
consolidation may occur in the shoreside and mothership sectors of the Pacific whiting fishery,
though the magnitude of consolidation is expected to be less than in the non-whiting sector. The

RIR/IRFA - 11

existing catcher-processor co-op would continue under the preferred alternative, with effects on
the catcher-processor sector that look similar, or identical, to those of the no action alternative.
However, the change from a vessel-restriction under Amendment 15 to the permit-based limit of
Amendment 21 will provide additional flexibility that currently does not exist in the whiting
fishery.
This proposed rule would regulate businesses that harvest groundfish and processors that want to
process limited entry trawl groundfish. Under the RFA, the term “small entities” includes small
businesses, small organizations, and small governmental jurisdictions. For small businesses, the
Small Business Administration has established size criteria for all major industry sectors in the
U.S, including fish harvesting and fish processing businesses. A business involved in fish
harvesting is a small business if it is independently owned and operated, is not dominant in its
field of operation (including its affiliates), and has combined annual receipts that do not exceed
$4.0 million for all its affiliated operations worldwide. A seafood processor is a small business if
it is independently owned and operated, is not dominant in its field of operation, and employs
500 or fewer persons on a full-time, part-time, temporary, or other basis, at all its affiliated
operations worldwide. A business involved in both the harvesting and processing of seafood
products is a small business if it meets the $4.0 million criterion for fish harvesting operations.
A wholesale business servicing the fishing industry is a small business if it employs 100 or fewer
persons on a full time, part time, temporary, or other basis, at all its affiliated operations
worldwide. For marinas and charter/party boats, a small business is one with annual receipts not
in excess of $7.0 million. The RFA defines a small organization as any nonprofit enterprise that
is independently owned and operated and is not dominant in its field. The RFA defines small
governmental jurisdictions as governments of cities, counties, towns, townships, villages, school
districts, or special districts with populations of less than 50,000.
NMFS makes the following conclusions based primarily on analyses associated with fish ticket
and limited entry permit data, available employment data provided by processors, information on
the charterboat and tribal fleets, and available industry responses industry to ongoing survey on
ownership. Entities were analyzed as to whether they were only affected by the Amendment 21
allocation processes (non-trawl), or whether they were affected by both Amendments 20 and 21
(trawl).
The non-trawl businesses are associated with the following fleets: limited entry fixed gear
(approximately 150 companies), open access groundfish (1,100), charterboats (465), and the
tribal fleet (four tribes with 66 vessels). Available information on average revenue per vessel
suggests that all the entities in this group can be considered small.
For the trawl sector, there are 177 permit holders. Nine limited entry trawl permits are
associated with the catcher-processing vessels that are considered large companies. Of the
remaining 168 limited entry permits, 25 limited entry trawl permits are either owned or closely
associated with a large shore-based processing company or with a non-profit organization who
considers itself a large organization. Nine other permit owners indicated that they were large
companies. Almost all of these companies are associated with the shorebased and mothership
whiting fisheries. The remaining 134 limited entry trawl permits are projected to be held by
small companies. Three of the six mothership processors are large companies. Within the

RIR/IRFA - 12

14 shorebased whiting first receivers/processors, there are four large companies. Including the
shorebased whiting first receivers, in 2008, there were 75 first receivers that purchased limited
entry trawl groundfish. There were 36 small purchasers (less than $150,000); 26 medium
purchasers (purchases greater than $150,000 but less than $1,000,000); and 13 large purchasers
(purchases greater than $1.0 million). Because of the costs of obtaining a processor site license,
procuring and scheduling a catch monitor, and installing and using the electronic fish ticket
software, these small purchasers will likely opt out of buying groundfish, or arrange to purchase
fish from another company that has obtained a processing site license.
The major impacts of this rule appear to be on two groups: Shoreside processors, which are a
mix of large and small processors; and shore-based trawlers, which are also a mix of large and
small companies. The non-whiting shore-based trawlers are currently operating at a loss or, at
best, are breaking even. The new rationalization program would lead to profitability, but only
with a reduction of about 60 percent of the fleet. This program would lead to major changes in
the fishery. To help mitigate against these changes, as discussed above, the agency has
announced its intent, subject to available Federal funding, that participants would initially be
responsible for 10 percent of the cost of hiring observers and catch monitors. The industry
proportion of the costs of hiring observers and catch monitors would be increased every year so
that, once the fishery has transitioned to the rationalization program, the industry would be
responsible for 100 percent of the cost of hiring the observers and catch monitors by 2014.
NMFS believes that an incrementally reduced subsidy to industry funding would enhance the
observer and catch monitor program’s stability, ensure 100 percent observer and catch monitor
coverage, and facilitate the industries’ successful transition to the new quota system. In addition,
to help mitigate against the negative impacts of this program, the Council has adopted an
adaptive management program (CFA) in which, starting in year three of the program, 10 percent
of non-whiting QS would be set aside every year to address community impacts and industry
transition needs. After reviewing the initial effects of ITQ programs in other parts of the world,
the council had placed a short-term QS trading prohibition so that fishermen can learn from their
experiences and not make premature sales of their QS. The Council also envisions future
regulatory processes that would allow CFAs to be established to help aid communities and
fishermen.

RIR/IRFA - 13

Regulatory Impact Review and
Initial Regulatory Flexibility Analysis
Proposed Rationalization of the Pacific Coast Groundfish Limited Entry Trawl Fishery
AND Allocation of Harvest Opportunity BETWEEN Sectors of the Pacific Coast
Groundfish Fishery
National Marine Fisheries Service, Northwest Region
Initial Analysis May 2010
1. INTRODUCTION
This document is a Regulatory Impact Review (RIR) and Initial Regulatory Flexibility Analysis
(IRFA) that describes the expected economic impacts of selected alternatives contained in the
following two proposed amendments to the Pacific Coast Groundfish Fishery Management Plan:


Amendment 20—Rationalization of the Pacific Coast Groundfish Limited Entry Trawl
Fishery. Amendment 20 would create the structure and management details of the trawl
fishery rationalization program.



Amendment 21—Allocation of Harvest Opportunity Between Sectors of the Pacific Coast
Groundfish Fishery. Amendment 21 would allocate the groundfish stocks between trawl
and non-trawl fisheries.

The Northwest Region of the National Marine Fisheries Service (NMFS-NWR) is developing
regulations that will, if approved by the U.S. Secretary of Commerce, implement the plan
amendments. The rulemaking process must comply with Executive Order (EO) 12866 and the
Regulatory Flexibility Act (RFA). The RFA requires the agency to prepare and make available
for public comment an IRFA that describes the impact on small businesses, non-profit
enterprises, local governments, and other small entities. The IRFA aids the agency in considering
all reasonable regulatory alternatives that would minimize the economic impact on affected small
entities. The EO covers a variety of regulatory policy considerations and establishes procedural
requirements for RIRs that will contain analyses of the benefits and costs of regulatory actions.
Trawl Rationalization Program Structure
The trawl rationalization program would consist of (1) an individual fishing quota (IFQ) program
for the shore-based trawl fleet and (2) cooperative (co-op) programs for the at-sea trawl fleet.
The shore-based trawl fleet would include IFQ participants who land groundfish to shore-based
processors or first receivers. The at-sea trawl fleet would include fishery participants harvesting
whiting with midwater trawl gear (i.e., whiting catcher/processor vessels, whiting motherships,
and whiting catcher vessels associated with motherships). The co-op programs for the at-sea
trawl fleet are further divided as follows: (1) a single whiting catcher/processor co-op that
forms; and (2) one or more whiting mothership co-ops that may form. Vessels may also choose
to fish in an open access or non-co-op fishery that would be unaffiliated with a co-op. For the
co-op and non-co-op fishery, vessel owners pool their harvest together.

RIR/IRFA - 14

The IFQ program for the shore-based fleet would require NMFS to make an initial allocation of
harvest quota share (QS) (expressed as a percentage of the total sector amount) through a new
QS permit to current owners of limited entry trawl permits and shore-based whiting first
receivers who meet the qualifying criteria. Depending on a person’s limited entry trawl permit
history in qualifying years, the permit owner will receive an initial allocation for various target
species/species groups (approximately 20 species), some with area designations. In addition,
NMFS would allocate QS for overfished species based on a proxy of the amount of target species
allocated to the quota shareholder. Shore-based whiting first receivers will receive an initial
allocation of whiting only, based on their history of being the first receiver reported on state fish
tickets (with an opportunity to reassign their history). Each year, based on the optimum yield
(OY) amounts for each species and the amount of QS a holder has for a particular species/area,
NMFS would allocate quota pounds (QP) to the QS account. The QS owner, in turn, must
allocate QP to vessel accounts. Vessels are required to have IFQ or QP in an account to cover all
IFQ landings and discards incurred while fishing under this program. In order to comply with
the Magnuson-Stevens Fishery Conservation and Management Act (MSA), NMFS would track
ownership interest in QS to determine if individuals are within set accumulation limits, both at
the initial allocation stage and during the operation of the program. In Amendment 20, the
Pacific Fishery Management Council (Council) has adopted limits (by species group and area)
on the amount of QS an individual can control (i.e., control limits) and limits on the amount of
QP that may be registered to a vessel for use in a given year.
For the at-sea whiting component of the trawl rationalization program, the Council has adopted a
program that provides for a catcher-processor co-op and mothership co-ops that differ from how
the co-ops have operated in the past. The catcher-processor co-op will not require an initial
allocation of catch shares to individual vessels, provided that a co-op is established. However,
whiting catch shares for the mothership fleet (called catch history assignments) would initially be
allocated to qualifying limited entry trawl permits that were registered to catcher vessels in
qualifying years and which were used in the mothership whiting fishery. The catch history
assignments would be non-severable from the permit. Holders of qualifying permits that are
allocated a whiting catch history assignment may choose to participate in the mothership co-op
or non-co-op fishery. Similar to the shore-based IFQ program, NMFS would be required to track
permit ownership interests in the mothership sector to determine if individuals comply with
accumulation limits. For species subject to trawl rationalization, Amendment 21 would modify
the way annual harvest guidelines are distributed. Under the current allocation strategy
established in Amendment 6, a commercial harvest guideline (HG) is established. This
commercial HG is then divided between limited entry and open access. Under Amendment 21,
the limited entry fixed gear fishery would no longer receive a formal allocation. In addition, the
commercial HG would be changed to a general HG, which would also apply to recreational
fisheries.
Instead of deriving a commercial HG from OY, NMFS would establish a fishery HG applicable
to both commercial and recreational fisheries. The HG would be derived by reducing OY in the
manner currently described for the commercial HG, except that the recreational catch would not
be subtracted; it would be included in the fishery HG. NMFS would then divide the fishery HG
into allocations for the trawl and non-trawl fisheries. This differs from the current regime that
divides between limited entry and open access. For some species under the proposed program,

RIR/IRFA - 15

the recreational fishery and the limited entry fixed gear fishery would share in the non-trawl
allocation with the open access fleet. This proposed rule sets forth the specific percentages of
the fishery HG for covered species that would be allocated to the trawl and non-trawl fisheries.
In order to implement the recommended IFQ and Co-op programs, it would be necessary for
each of these trawl sectors to have a specific allocation of catch that could be divided among
participants. While this could be accomplished through the specification process under the status
quo, the council determined that a fixed allocation within the fishery management plan (FMP)
would be preferable because it would promote predictability and the type of stability that
facilitates successful relationships that make individual-based programs work. Thus, the Council
recommended formal allocations in Amendment 21. In addition, Amendment 21 would establish
total catch limits for Pacific halibut, as well as set-asides to accommodate the rationalized trawl
fleet. The total catch limits would protect the directed fishery for halibut, as well as reducing
overall halibut catch limits.
Species not covered by Amendment 21 would continue to be informally allocated through the
biennial specifications process.
Introductory Note on the Analysis
Due to the complexity of the proposed fishery management measures, the rule associated with
this analysis proposes only certain key components that would be necessary to have permits and
endorsements issued in time for use in the 2011 fishery and to have the 2011 specifications
reflect the new allocation scheme. Specifically, this rule would establish the formal allocations
set forth under Amendment 21 and establish procedures for initial issuance of permits,
endorsements, and quota shares under the IFQ and co-op programs. NMFS plans to propose
additional program details in a future proposed rule. Such additional details would include
program components applicable to IFQ gear switching, observer programs, retention
requirements, equipment requirements, catch monitors, catch weighing requirements, co-op
permits/agreements, first receiver site licenses, quota share accounts, vessel QP accounts, further
tracking and monitoring components, and economic data collection requirements. In order to
encourage more informed public comment, this proposed rule includes a general description of
these additional program requirements. NMFS is also planning a future cost-recovery rule based
on a recommended methodology yet to be developed by the Council.
To support the rulemaking described above, this analysis will be accordingly updated and
revised. However, this initial analysis will assess the entire program by drawing heavily upon
the Council’s November 2010 document “Rationalization of the Pacific Coast Groundfish
Limited Entry Trawl Fishery Draft Environmental Impact Statement,” including its “Appendix
H Preliminary Draft Regulatory Impact Review and Preliminary Initial Regulatory Flexibility
Analysis.” This analysis also updates the tracking and monitoring cost analysis found in
Appendix A, Section A-2.3.3, Analysis of Components, Elements, and Options for the Individual
Fishing Quota Alternative Trawl Individual Quota Components Analysis. This updated analysis
also includes a discussion of the tracking and monitoring costs of the mothership and catchprocessor sectors. This update is Attachment 1 to this document: “Update on Tracking and
Monitoring Costs.”

RIR/IRFA - 16

The analysis that follows constitutes both the RIR and IRFA as many of their required elements
are the same. In terms of meeting the analytical requirements of an RIR and IRFA, the analysis
adopts the following approach set forth in the 2007 Guidelines for Economic Reviews of National
Marine Fisheries Service Regulatory Actions:
At a minimum, the RIR and the [IRFA] should include a good qualitative
discussion of the economic effects of the selected alternatives. Quantification of
these effects is desirable, but the analyst needs to weigh such quantification
against the significance of the issue and available studies and resources.
Generally, a good qualitative discussion of the expected effects would be better
than poor quantitative analyses.
The next two sections further describe the considerations and requirements of a RIR and IRFA.
2. REGULATORY IMPACT REVIEW CONSIDERATIONS AND
REQUIREMENTS
NMFS requires the preparation of an RIR for all regulatory actions of public interest. The RIR
provides a comprehensive review of the changes in net economic benefits to society associated
with proposed regulatory actions. The analysis also provides a review of the problems and policy
objectives prompting the regulatory proposals and an evaluation of the major alternatives that
could be used to solve the problems. The purpose of the analysis is to ensure that the regulatory
agency systematically and comprehensively considers all available alternatives, so that public
welfare can be enhanced in the most efficient and cost-effective way. The RIR addresses many
of the items in the regulatory philosophy and principles of EO 12866.
The RIR is designed to determine whether the proposed action could be considered a significant
regulatory action according to EO 12866. EO 12866 requires that an RIR assess whether an
action would be a significant regulatory action and mandates that the RIR identify the expected
outcomes of the proposed management alternatives. An action may be considered significant if
it is expected to 1) have an annual effect on the economy of $100 million or more or adversely
affect in a material way the economy, a sector of the economy, productivity, competition, jobs,
the environment, public health or safety, or state, local, or tribal governments or communities; 2)
create a serious inconsistency or otherwise interfere with action taken or planned by another
agency; 3) materially alter the budgetary impact of entitlement, grants, user fees, or loan
programs or the rights and obligations of recipients thereof; or 4) raise novel legal or policy
issues arising out of legal mandates, the President’s priorities, or the principles set forth in the
EO.
The RIR analysis includes a description of management objectives, a description of the fishery,
statement of the problem, a description of each alternative considered in the analysis, and an
economic analysis of the expected effects of each selected alternative relative to the no action
alternative.
3. INITIAL REGULATORY FLEXIBILITY ANALYSIS CONSIDERATIONS AND

RIR/IRFA - 17

REQUIREMENTS
The RFA, 5 U.S.C. 603 et seq., requires government agencies to assess the effects that regulatory
alternatives would have on small entities, including small businesses, and to determine ways to
minimize those effects. When an agency proposes regulations, the RFA requires the agency to
prepare an IRFA that describes the impact on small businesses, non-profit enterprises, local
governments, and other small entities and make the IRFA available for public comment. The
IRFA is designed to aid the agency in considering all reasonable regulatory alternatives that
would minimize the economic impact on affected small entities. Under the RFA, an agency does
not have to conduct an IRFA and/or final RFA (FRFA) if an agency can certify that the proposed
rule will not have a significant economic impact on a substantial number of small entities. To
perform this certification, the agency has to state the basis and purpose of the rule, describe and
estimate the number of small entities to which the rule applies, estimate economic impacts on
small entities (by entity size and industry), and explain the criteria used to evaluate whether the
rule would impose “significant economic impacts.”
Under the RFA, the term “small entities” includes small businesses, small organizations, and
small governmental jurisdictions.
Small businesses. The Small Business Administration has established size criteria for all
major industry sectors in the United States, including fish harvesting and fish processing
businesses. A business involved in fish harvesting is a small business if it is
independently owned and operated and not dominant in its field of operation (including
its affiliates) and if it has combined annual receipts that do not exceed $4.0 million for all
its affiliated operations worldwide. A seafood processor is a small business if it is
independently owned and operated, not dominant in its field of operation, and employs
500 or fewer persons on a full-time, part-time, temporary, or other basis, at all of its
affiliated operations worldwide. A business involved in both the harvesting and
processing of seafood products is a small business if it meets the $4.0 million criterion for
fish harvesting operations. A wholesale business servicing the fishing industry is a small
business if it employs 100 or fewer persons on a full-time, part-time, temporary, or other
basis, at all its affiliated operations worldwide. For marinas and charter/party boats, a
small business is one with annual receipts that do not exceed $7.0 million.
Small organizations. The RFA defines a small organization as any nonprofit enterprise
that is independently owned and operated and is not dominant in its field.
Small governmental jurisdictions. The RFA defines small governmental jurisdictions as
governments of cities, counties, towns, townships, villages, school districts, or special
districts with populations of less than 50,000.

RIR/IRFA - 18

4. REGULATORY IMPACT REVIEW AND INITIAL REGULATORY
FLEXIBILITY ANALYSIS
4.1 Statement of the Problem, Including Reasons for Considering the Proposed Actions
This section summarizes the purpose and need for the proposed actions as discussed in Section
1.2 of the Rationalization of the Pacific Coast Groundfish Limited Entry Trawl Fishery DEIS
and Section 1.3 of the Allocation of Harvest Opportunity Between Sectors of the Pacific Coast
Groundfish Fishery DEIS.
Despite a program completed in 2003 to buy back groundfish limited entry permits and
associated vessels, management of the Pacific coast limited entry groundfish trawl fishery is still
marked by serious biological, social, and economic concerns similar to those cited in the U.S.
Commission on Ocean Policy’s 2004 report, An Ocean Blueprint for the 21st Century. The trawl
fishery is currently viewed as economically unsustainable due to the number of participating
vessels (excess capacity), a regulatory approach that constrains efficiency, and the status of
certain groundfish stocks, along with the measures in place to protect those stocks.
One major source of concern stems from the management of bycatch, particularly of overfished
species. Over the past several years, the groundfish management efforts of the Council have been
involved in drafting rebuilding plans for overfished species, minimizing bycatch, and specific
management of overfished species.
As highlighted in the following problem statement that the Council sent out for public review in
a June 2004 scoping document, these problems with capacity, economic inefficiency, and
bycatch management are interconnected with problems related to the ability to achieve OY; the
need for a precautionary management approach; and the need for a flexible system that allows
for variations and contingencies, long-term and short-term concerns for communities, and safety.
The problem statement is presented below:
As a result of the legal requirement to minimize bycatch of overfished species,
considerable harvest opportunity is being forgone in an economically stressed
fishery. The west coast groundfish trawl fishery is a multi-species fishery in
which fishermen exert varying and limited control of the mix of species in their
catch. The optimum yields (OYs) for many overfished species have been set at
low levels, placing a major constraint on the industry’s ability to fully harvest the
available OYs of the more abundant target species that co-occur with the
overfished species, wasting economic opportunity. Average discard rates for the
fleet are applied to project bycatch of overfished species. These discard rates
determine the degree to which managers must constrain the harvest of target
species that co-occur with overfished species. These discard rates are developed
over a long period of time and do not rapidly respond to changes in fishing
behavior by individual vessels or for the fleet as a whole. Under this system, there
is little direct incentive for individual vessels to do everything possible to avoid
take of species for which there are conservation concerns, such as overfished
species. In an economically stressed environment, uncertainties about average
RIR/IRFA - 19

bycatch rates become highly controversial. As a consequence, members of fishing
fleets tend to place pressure on managers to be less conservative in their estimates
of bycatch. Given all of these factors, in the current system there are uncertainties
about the accuracy of bycatch estimation, few incentives for the individual to
reduce personal bycatch rates, and an associated loss of economic opportunity
related to the harvest of target species.
The current management regime is not responsive to the wide variety of fishing
business strategies and operational concerns. For example, historically the Pacific
Council has tried to maintain a year-round groundfish fishery. Such a pattern
works well for some business strategies in the industry, but there has been
substantial comment from fishermen who would prefer to be able to pursue a
more seasonal groundfish fishing strategy. The current management system does
not have the flexibility to accommodate these disparate interests. Nor does it have
the sophistication, information, and ability to make timely responses necessary to
react to changes in market, weather, and harvest conditions that occur during the
fishing year. The ability to react to changing conditions is a key factor in
conducting an efficient fishery in a manner that is safe for the participants.
Fishery stock depletion and economic deterioration of the fishery are concerns for
fishing communities. Communities have a vital interest in the short-term and
long-term economic viability of the industry, the income and employment
opportunities it provides, and the safety of participants in the fishery.
In summary, management of the fishery is challenged with the competing goals
of: minimizing bycatch, taking advantage of the available allowable harvests of
more abundant stocks, increasing management efficiency, and responding to
community interest. “Taking advantage of the available allowable harvests”
includes conducting safe and efficient harvest activities in a manner that
optimizes net benefits over both the short and long term.
In addition to problems specified in the problem statement, the two DEISs also deal with issues
of foregone opportunities, stress within the management system, discard rates, and overfished
species.
With respect to allocation of harvest opportunity between sectors of the Pacific Coast groundfish
fishery, only long-term fixed allocations for Pacific whiting and sablefish north of 36° N latitude
exist. Currently there are established procedures for any species to be formally allocated between
commercial open access and limited entry sectors based on catch history for the license
limitation allocation period. However, these are rarely implemented due to constraints imposed
by management measures designed to rebuild overfished species. Allocating the available
harvest of groundfish species and species complexes occurs in the Council process of deciding
biennial harvest specifications and management measures; as such, these are considered shortterm allocations. Amendment 21 makes a formal allocation between sectors for the majority of
groundfish species, and it would, essentially, supersede these preexisting procedures in a single
action.

RIR/IRFA - 20

4.2 Description of the Management Objectives and Legal Basis for the Proposed Actions
This section summarizes the management objectives for the proposed actions as discussed in
Section 1.2 of the Rationalization of the Pacific Coast Groundfish Limited Entry Trawl Fishery
DEIS and Section 1.3 of the Allocation of Harvest Opportunity Between Sectors of the Pacific
Coast Groundfish Fishery DEIS.
The purpose of the proposed rationalization of the Pacific coast groundfish limited entry trawl
fishery is outlined in the following goal and objectives:
Goal: Create and implement a capacity rationalization plan that increases net economic benefits,
create individual economic stability, provide for full utilization of the trawl sector allocation,
considers environmental impacts, and achieve individual accountability of catch and bycatch.
Objectives: The above goal is supported by the following objectives:
1.
2.
3.
4.
5.
6.
7.
8.

Provide a mechanism for total catch accounting.
Provide for a viable, profitable, and efficient groundfish fishery.
Promote practices that reduce bycatch and discard mortality and minimize ecological
impacts.
Increase operational flexibility.
Minimize adverse effects from an individual fishing quota (IFQ) program on fishing
communities and other fisheries to the extent practical.
Promote measurable economic and employment benefits through the seafood catching,
processing, distribution elements, and support sectors of the industry.
Provide quality product for the consumer.
Increase safety in the fishery.

In summary, the trawl rationalization program is intended to increase net economic benefits,
create individual economic stability, provide full utilization of the trawl sector allocation,
consider environmental impacts, and achieve individual accountability for catch and bycatch.
The purposes of the proposed allocation of harvest opportunity between sectors of the Pacific
coast groundfish fishery are as follows:
1. To simplify or streamline future decisions by making formal allocations of specified
groundfish stocks and stock complexes. If approved, formal allocations would be fixed
and do not have to be decided through every biennial process or developed indirectly
through the structure of management measures.
2. To support rationalization of the Pacific coast groundfish limited entry trawl fishery.
Long-term, formal allocations of Amendment 21 groundfish species to the limited entry
trawl sectors would provide more certainty to these sectors by reducing the risk that these
sectors would be closed because of other non-trawl sectors exceeding their allocation.
Such certainty will be especially important under the proposed IFQ and harvest cooperative systems proposed under the trawl rationalization program, because it would

RIR/IRFA - 21

make it easier for fishermen to make long-range planning decisions based on the
allocation of harvest privileges. In addition, supporting rationalization of the limited entry
trawl fishery, which would require individual accountability of catch and bycatch, would
improve overall total catch accounting of groundfish species by the group with the largest
amounts of groundfish catch, the trawl sector. While allocations could be made biennially
to support trawl rationalization, this would be a more difficult and controversial process
than making those decisions in advance.
3. To limit the bycatch of Pacific halibut in future limited entry trawl fisheries. The
proposed action would place a total catch limit on Pacific halibut with the intent of
further minimization of Pacific halibut bycatch in Area 2A trawl fisheries. The action
would be consistent with the MSA mandate to minimize bycatch and would provide
increased benefits to Area 2A fishermen targeting Pacific halibut.
The introductory paragraphs in Section 1.1 of the Rationalization of the Pacific Coast
Groundfish Limited Entry Trawl Fishery DEIS and Section 1.1 of the Allocation of Harvest
Opportunity Between Sectors of the Pacific Coast Groundfish Fishery DEIS provide information
on the legal basis for the proposed actions. The trawl rationalization program would be a limited
access privilege program (LAPP) under the MSA, 16 U.S.C. §§ 1851–1891d, as reauthorized in
2007.
4.3 Description of Each Selected Alternative, Including the No-action Alternative
The term “selected alternatives” refers to the alternatives NMFS determined will be analyzed in
the RIR and IRFA. The selected alternatives for this RIR and IRFA are the no action alternative
and the Council’s preferred alternative. The effects of the other action alternatives that were not
selected are analyzed in the Rationalization of the Pacific Coast Groundfish Limited Entry Trawl
Fishery DEIS and Allocation of Harvest Opportunity Between Sectors of the Pacific Coast
Groundfish Fishery DEIS.
4.3.1 No Action Alternative
The analysis of the no action alternative describes what is likely to occur in the absence of the
proposed action. It provides a benchmark against which the incremental effects of the proposed
action can be compared. This section summarizes the description of the no action alternative
presented in Section 2.1 of the Rationalization of the Pacific Coast Groundfish Limited Entry
Trawl Fishery DEIS and Section 2.1.1 of the Allocation of Harvest Opportunity Between Sectors
of the Pacific Coast Groundfish Fishery DEIS.
Under the no action alternative, the current, primary management tool used to control the Pacific
coast groundfish trawl catch—a system of two-month cumulative landing limits for most species
and season closures for Pacific whiting—would continue. Only long-term fixed allocations for
Pacific whiting and sablefish north of 36° N latitude would exist―all other groundfish species
would not be formally allocated between the trawl and non-trawl sectors. Allocating the
available harvest of groundfish species and species complexes would occur in the Council
process of deciding biennial harvest specifications and management measures and, as such,
would be considered short-term allocations.
RIR/IRFA - 22

4.3.2 Preferred Alternative
This section summarizes the description of the preferred alternative presented in Section 2.4 of
the Rationalization of the Pacific Coast Groundfish Limited Entry Trawl Fishery DEIS and
Section 2.1.6 of the Allocation of Harvest Opportunity Between Sectors of the Pacific Coast
Groundfish Fishery DEIS.
Table 1 provides an overview of the elements of the trawl rationalization program under the preferred
alternative. The existing shoreside whiting and shoreside non-whiting sectors of the Pacific Coast
groundfish limited entry trawl fishery would be managed as one sector under a system of IFQs, and
the at-sea whiting sectors of the fishery (i.e., catcher-processor sector and mothership sector, which
includes motherships and catcher vessels) would be managed under a system of sector-specific
harvesting co-ops. The catcher-processor sector would continue to operate under the existing, selfdeveloped co-op program entered into voluntarily by that sector. A distinct set of groundfish species
and Pacific halibut would be covered by the rationalization program.
Table 1. Summary of elements under the no action alternative and preferred alternative for trawl
rationalization program.

Element
Catch Control
Tool

Initial
Allocation and
Qualification

Accumulation
Limits

No-action Alternative
two-month cumulative trip
limits for non-whiting
trawl sector
Seasonal management for
whiting trawl sector
None

None

Preferred Alternative
IFQ program for shoreside whiting and nonwhiting trawl sectors (trip limits for non-IFQ
species)
Harvesting co-operatives for at-sea whiting
sector
For shoreside fisheries for use 1994 to 2003
catch history Equal sharing of 1994 to 2003
buyback history in non-catcher-processor
sectors (except the incidentally caught
overfished species other than canary)
Rebuilding stocks and halibut allocated on a
bycatch rate/pro-rata
Mothership catcher vessel endorsement and
allocation based on 1994 to 2003 catch
history; Mothership permit: at least 1,000 mt
in two years from 1997 to 2003
Shoreside non-whiting sector: 2.7% control
limit and 3.2% vessel use limit
Shoreside whiting sector : 10% control limit
and 15% per vessel limit
Mothership sector: Cannot process more
than 45%
Mothership catcher vessel sector: 20%
control limit and 30% usage limit
Catcher-processor sector: none

RIR/IRFA - 23

Table 2 cont. Summary of elements under the no action alternative and preferred alternative for
trawl rationalization program.
Element
No-action Alternative
Preferred Alternative
None
None, but entities must divest overage QS at
Grandfather
the end of year four
clause
None
Annual mothership declaration requirement
Processor
Initial
20% shoreside processor allocation of
Allocation / Coshoreside whiting
op Affiliations
No processor allocation of non-whiting
groundfish
Select groundfish species and Pacific halibut
Species Covered All groundfish
in shoreside sector
Select groundfish species in at-sea sector; Atsea sector bycatch is allocated at co-op level
Four
Three
Number of
Trawl Sectors
None
10% QS set aside for shoreside non-whiting
Adaptive
groundfish species
Management
Trip limits vary by area;
None
Area
Management
main split at 40⁰10’ N
latitude
None
Carryover exists; allowance decreases if OY
Carry-over
declines
Limited Entry, Pacific
Limited entry, mothership permit, catcherPermits
Whiting Vessel License
processor endorsement, mothership catcher
vessel endorsements
At the start of the IFQ program, quota shares (QS) would initially be allocated to fishery
participants based on catch/processing history during a catch history qualification period, 1994 to
2003. After the first two years of the program, shareholders will be free to buy and sell the QS
thus distributed. QS represent a proportion, or percent, of the total allowable catch (which is
called the optimum yield [OY]in groundfish management) of different groundfish stocks. Each
year, these shares are converted from a percent to a quantity by issuing QP based on the
OYs/annual catch limits established for the year. The amount of groundfish caught by a limited
entry trawl vessel, even if it is subsequently discarded, must be matched by an equivalent
quantity of QP. The QP is expended in this way, with the matched amount deducted from the
vessel’s account.
Harvesters in the shoreside sector would receive all the initial allocation of non-whiting QS
(minus any amount held back for the adaptive management program in future years) and
80 percent of whiting QS. Processors in the shoreside sector would receive the remaining
20 percent of whiting QS.
Both QS and QP would be perfectly divisible and tradable. However, to prevent a particular
individual, corporation, or other entity from acquiring an excessive QS, accumulation limits
RIR/IRFA - 24

would restrict the amount of QS any single entity may hold or control (the control limit) and the
amount of QP that can be placed on a vessel during a given year to cover catch (the vessel limit).
These limits would vary between whiting and non-whiting groundfish. For mothership catcher
vessels, a usage limit would act similar to a vessel limit. The preferred alternative includes a twoyear moratorium on QS sales, followed by a two-year period over which entities receiving an
initial allocation of QS in excess of the limits can and must divest their excess QS to any willing
receiver.
An adaptive management program that would reserve 10 percent of non-whiting QS for the
shoreside sector could be used to address a variety of objectives, such as creating incentives for
bycatch reduction and use of habitat-friendly gear, mitigating adverse impacts to processors and
fishing communities, and helping second generation fishermen/new entrants. During the first
two years of implementation of the preferred alternative, the adaptive management QP would be
passed through to QS holders in proportion to their holdings. Allocations of other species’ QP
under the program would begin in the third year, based on further specification of adaptive
management program objectives and mechanisms.
These regulations would modify the existing limited entry permit system and would replace the
Pacific whiting vessel license system with a series of endorsements. In 2009, NMFS
implemented Amendment 15, which required a Pacific whiting vessel license for any vessel
participating in either the shorebased or at-sea whiting fisheries. These licenses were issued to
limit the number of vessels in the whiting fishery based on participation history in these fisheries.
Under the trawl rationalization program, the Pacific whiting vessel licenses will permanently
expire and will be replaced by a new mothership permit and new catcher/processor and
mothership catcher vessel endorsements for existing Pacific Coast limited entry permits.
[Although the Pacific whiting vessel license restricts what vessels can participate in the whiting
fishery, these new endorsements convert the at-sea fisheries into a series of limited entry
fisheries with tradable permits and endorsements.]
For the mothership catcher vessels, the years 1994 to 2003 would be used for endorsement
qualification, and the best 8 out of 10 years from 1994 to 2003 would be used for catch history
assignment. Mothership catcher vessels would be required to declare which co-op they will join
before the beginning of the fishing year. They would then be obligated to assign their catch to the
associated mothership processor for that fishing season. In any subsequent year, they could
change their affiliation without first participating in the non co-op fishery through the pre-season
declaration. Provision for a non co-op fishery would still be included in the program structure.
Any vessel not wishing to affiliate with a co-op could participate in the non co-op fishery and
deliver to any willing mothership processor. Since the catcher-processor sector would continue
to operate as a single voluntary co-op, catch history assignment is unnecessary; the co-op would
have access to the full sector allocation. Should the catcher-processor co-op fail because, for
example, the co-op does not manage harvest such that allocations are repeatedly exceeded, the
catcher-processor sector would be managed under a system of IFQs, and an equal amount of QS
would be issued to each permit with a catcher-processor endorsement.
Amendment 20 would include a tracking and monitoring program to ensure that all catch
(including discards) would be documented and matched against QP. The Council specified that

RIR/IRFA - 25

observers would be required on all vessels, and shoreside monitoring (catch monitors) would be
required during all off-loading (100 percent coverage). Compared to status quo monitoring, this
would be a monitoring and observer coverage level increase for a large portion of the trawl fleet,
particularly nonwhiting shoreside vessels. As a result, more accurate estimates of total mortality
would be expected to benefit stock conservation goals, as well as other goals discussed herein.
Amendment 20 would require NMFS-certified, at-sea observers on each vessel. These include
shoreside catcher vessels, mothership catcher vessels, mothership processors, and catcherprocessors. Because this is a new program, ensuring adequate observer coverage would be
particularly important for monitoring the complex suite of allocations. Observers aboard vessels
would be required to account adequately for catch and bycatch in the fishery. Among his or her
duties, the observer would record fishing effort and estimate total, retained, and discarded catch
weight by species; determine species composition of retained and discarded catch (non-whiting
vessels) and document the reasons for discard; record interactions and sightings of protected
species; take biological samples from tagged fish and discards, and estimate viability of Pacific
halibut. Observers would be essential to monitor IBQ in the fishery, including IBQ weighing
and discarding.
An increase in observer and catch-monitoring coverage requirements would result in increased
costs over the status quo observer program costs. There would be a combined status quo, pay-asyou-go industry funding, and an agency-funded observer and catch monitor system, as required
for each sector. The agency has announced its intent, subject to available Federal funding, that
participants will initially be responsible for 10 percent of the cost of hiring observers and catch
monitors. The industry proportion of the costs of hiring observers and catch monitors will be
increased every year so that, by 2014, once the fishery has transitioned to the rationalization
program, the industry will be responsible for 100 percent of the cost of hiring the observers and
catch monitors. NMFS believes that an incrementally reduced subsidy to industry funding will
enhance the observer and catch monitor program’s stability, ensure 100 percent observer and
catch monitor coverage, and facilitate the industries’ successful transition to the new quota
system.
Amendment 20 would require that first receivers—shoreside processors and other entities that
receive groundfish from IFQ harvesters—sort, weigh, and report all landings of IFQ species
under a catch monitoring plan. First receivers will be required to hire NMFS-certified catch
monitors to verify all shoreside deliveries of IFQ species; ensure that species are sorted
according to Federal species of species group; ensure that the fish are weighed on periodically
tested, state-certified scales; and record and submit catch data daily.
To ensure that the QP program goals are met and landings are tracked, first receivers will be
required to submit electronic fish tickets using software provided by the Pacific States Marine
Fisheries Commission. Further, vessels will be required to continue to use vessel monitoring
systems for purposes of indicating location of the vessels and to make declarations. In addition,
there are plans to develop and require an electronic vessel logbook, but this component will not
be immediately implemented.
To ensure that program goals to track transferrable QS and QP are met, NMFS is also developing

RIR/IRFA - 26

an online accounting system for the tracking and trading of QS by owner and for the tracking,
trading, and use of the QP that result from these quota shares by vessels.
The preferred alternative for the proposed allocation of harvest opportunity between sectors of
the Pacific coast groundfish fishery is as follows:








Make long-term, formal allocations of the following species between the non-treaty
limited entry trawl sectors and non-treaty, non-trawl sectors: lingcod, Pacific cod,
sablefish south of 36⁰ N latitude, Pacific ocean perch, widow rockfish, chilipepper
rockfish, splitnose rockfish, yellowtail rockfish north of 40⁰10’ N latitude, shortspine
thornyhead (north and south of 34⁰27’ N latitude), longspine thornyhead north of 34⁰27’
N latitude, darkblotched rockfish, minor slope rockfish (north and south of 40⁰10’ N
latitude), Dover sole, English sole, petrale sole, arrowtooth flounder, starry flounder, and
Other Flatfish.
Determine a scheme for an initial shoreside trawl sector allocation to the shoreside
whiting and shoreside non-whiting sectors of above species other than darkblotched
rockfish, Pacific ocean perch, and widow rockfish, as well as sablefish north of 36⁰ N
latitude.
Apportion the limited entry trawl allocation of darkblotched rockfish, Pacific ocean
perch, and widow rockfish to the four current trawl sectors (shoreside non-whiting,
shoreside whiting, at-sea whiting mothership, and at-sea whiting catcher-processor).
Consider yield set-asides to accommodate the projected bycatch of above species other
than darkblotched rockfish, Pacific ocean perch, and widow rockfish by the two at-sea
whiting trawl sectors (motherships and catcher-processors).
Determine a total catch limit of Pacific halibut in Area 2A trawl fisheries to limit the
future bycatch of this prohibited trawl species.

4.4 Description of the Fishery and All Affected Entities, Including the Small Entities to Which
the Proposed Actions Apply
This section summarizes stakeholder profiles presented in Chapter 3 of the Rationalization of the
Pacific Coast Groundfish Limited Entry Trawl Fishery DEIS and Section 3.4 of the Allocation of
Harvest Opportunity Between Sectors of the Pacific Coast Groundfish Fishery DEIS.
4.4.1 Description of the Fishery
The Pacific Coast groundfish fishery as a whole comprises several different major sectors,
defined by fishing gear, species targeted, and regulatory context. In addition to the limited entry
trawl fleet, there are open access and the fixed gear fleets. Recreational fishermen also harvest
groundfish. For the limited entry trawl fleet, the list of current target species includes flatfish,
roundfish, thornyheads, and a few species of rockfish. Primary flatfish target species include
petrale sole and Dover sole. Roundfish target species include Pacific whiting, Pacific cod, and
sablefish. Some rockfish species, especially Pacific ocean perch and widow rockfish, were
important trawl targets until the mid 1990s. However, seven rockfish species are currently
declared overfished under the MSA. The need to rebuild these stocks to a healthy size has led to
various harvest constraints on groundfish fisheries, and rockfish are generally no longer a target
RIR/IRFA - 27

of these fisheries.
The groundfish trawl fishery is subject to a license limitation program (referred to as limited
entry) implemented in 1992. Groundfish fixed-gear fisheries—using longline and pot gear—are
managed under a complementary limited entry program. Most of the Pacific coast commercial
groundfish harvest occurs in the limited entry fisheries. Some retention of groundfish is allowed
without a limited entry permit; these vessels comprise the open access sector. The gears used by
the open access sector include longline, vertical hook and line, troll, pot, setnet, trammel net,
shrimp and prawn trawl, California halibut trawl, and sea cucumber trawl gears.
The limited entry trawl fishery is divided into two broad sectors: a multispecies trawl fishery,
which most often uses bottom trawl gear (hereafter called the non-whiting fishery), and the
Pacific whiting fishery, which uses midwater trawl gear. The non-whiting fishery is principally
managed through two-month cumulative landing limits along with closed areas to limit
overfished species bycatch.1 Fishery participants target the range of species described above with
the exception of Pacific whiting. By weight, the vast majority of trawl vessel groundfish is
caught in the Pacific whiting fishery. In contrast, the non-whiting fishery accounts for the
majority of limited entry trawl fishery ex-vessel revenues. On average from 2000 to 2005,
Pacific whiting accounted for about 75 percent of the quantity of groundfish landed in the limited
entry trawl fishery but only 21 percent of the value due to their relatively low ex-vessel price.
Non-whiting trawl vessels deliver their catch to shoreside processors and buyers located along
the coasts of Washington, Oregon, and California. They tend to have their homeports located in
towns within the same general area where they make deliveries, though there are several cases of
vessels delivering to multiple ports during a year. Some Pacific whiting trawl vessels are catcherprocessors, which, as their name implies, process their catch on board, while other vessels in this
sector deliver their catch to shoreside processors or motherships that receive Pacific whiting for
processing, but do not directly harvest the fish.
Over time, landings in the limited entry trawl fishery have fluctuated, especially on a speciesspecific basis. Pacific whiting has grown in importance, especially in recent years. Through the
1990s, the volume of Pacific whiting landed in the fishery increased. In 2002 and 2003, landings
of Pacific whiting declined due to information showing the stock was depleted and the
subsequent regulations that restricted harvest in order to rebuild the species. From 2003 to 2007,
estimated Pacific whiting ex-vessel revenues averaged about $29 million. In 2008, these
participants harvested about 248,000 tons of whiting worth about $63 million in ex-vessel
revenues based on shoreside ex-vessel prices of $254 per ton—the highest ex-vessel revenues
and prices on record. In comparison, the 2007 fishery harvested about 224,000 tons worth
$36 million at an average ex-vessel price of about $160 per ton.
While the Pacific whiting fishery has grown in importance in recent years, harvests in the nonwhiting component of the limited entry trawl fishery have declined steadily since the 1980s. Ex1

The non-whiting fishery currently uses bottom trawl gear exclusively. However, in the past there have been
fisheries targeting widow rockfish and other rockfish species with midwater gear. Due to the need to limit
catches of overfished species, these fisheries have been closed. However, once overfished species stocks are
rebuilt, the fisheries could reopen.

RIR/IRFA - 28

vessel revenues in the fishery peaked in the mid 1990s at over $60 million. Following the
passage of the Sustainable Fisheries Act (1996) and the listing of several species as overfished,
harvests became increasingly restricted, and landings and revenues declined steadily until 2002.
Since 2002, ex-vessel revenues have stabilized at around $23 to $27 million per year (Figure 1).
In 2007, the Council estimates that 159 trawlers landed 94,000 mt of groundfish, earning
$37 million in ex-vessel revenues, for an average of $234,000 per vessel.
Figure 1. Shoreside landed pounds and ex-vessel revenue from whiting and non-whiting groundfish
caught using trawl gear.

Limited entry trawl vessels make most of their landings in Oregon. During the 2004 to 2006
period, the Oregon ports that received the largest amounts of landed weight and revenue were
Newport, Astoria, and Charleston/Coos Bay, Oregon. Eureka, Fort Bragg and Crescent City,
California; Brookings, Oregon; and Bellingham Bay, Blaine and Neah Bay, Washington
comprise the remaining top 10 largest ports for trawl vessel landings. Non-whiting landings and
revenues by non-tribal trawlers in Oregon are significantly larger than the other two states. A
detailed description of west coast fishing communities and their economic dependence on the
groundfish fishery is found in the Final Environmental Impact Statement for Biennial Harvest
Specifications and Management Measures (PFMC and NMFS 2009).
Non-whiting trawl vessels deliver their catch from targeted trips to 63 shoreside processing
companies located in all three Pacific coast states. Thirty-six to forty-six of these companies
received non-whiting groundfish in any one year from 2004 to 2006. There are few major nonwhiting groundfish processing centers on the Pacific coast. Only seven cities processed more
than 1 percent of coast wide landings, and the largest processing center, Astoria, Oregon,
accounted for more than two-thirds of processing activity by weight of landed fish. In 2008,
Pacific whiting trawl vessels landed their catch at 16 first receivers located in ports in all three
states. Between 8 and 16 of these companies received whiting in any one year from 1997 to
2008. Since processing Pacific whiting requires specialized equipment, most whiting processing
plants process whiting only.

RIR/IRFA - 29

Limited entry fixed gear vessels use longline and fish pots (traps) to target groundfish. Limited
entry fixed gear vessels principally target sablefish. Limited entry fixed gear vessels may also
participate in open access fisheries or in the limited entry trawl fishery. Directed open access
vessels use various non-trawl gears to target particular groundfish species or species groups.
Longline and hook and line gear are the most common open access gear types used by vessels
directly targeting groundfish and are generally used to target sablefish, rockfish, and lingcod. Pot
gear is used for targeting sablefish, thornyheads and rockfish. Like the limited entry trawl fleet,
limited entry fixed gear vessels and directed open access vessels deliver their catch to ports along
the Washington, Oregon, and California coast.
In addition to commercial and tribal participants, state-managed recreational fisheries harvest
groundfish. These recreational fisheries are managed by a series of seasons, area closures, and
bag limits. Recreational groundfish fisheries occurring off the Pacific coast accounted for about
22 percent of all recreational anglers and 12 percent of trips.
Recreational fishing is an important economic contributor to the Pacific coast in general, and to
some communities specifically. The recreational fishing fleet is composed of charter and private
vessels. The private fleet typically consists of vessels owned by residents living in or near areas
where they fish. The charter boat fleet is a for-hire fleet that plays a large role in the tourism
sector of many Pacific coast communities. Opportunities to fish on a charter vessel can be a
substantial draw for tourists considering a visit to the coast. The distribution of resident and nonresident ocean anglers among the Pacific coast states in 2000, 2001, and 2002 demonstrates the
geographic importance of recreational fishing. Southern California has more than twice the
number of resident recreational marine anglers than the next most populous region, Washington
State. While most of the recreational anglers are residents of those states where they fish, a
significant number of anglers are also non-residents. Oregon had the largest percentage of nonresident ocean anglers in all three years.
About 525 charter boats made up the charter boat fleet in 2005. This is a decrease of almost
30 percent from the 753 charter vessels estimated in the Council’s 2005/2006 Groundfish
Specifications EIS. Estimates of numbers of private boats are unavailable. Recreational fishing in
the open ocean generally declined slightly between 1996 and 2003; however, charter effort
decreased while private effort increased during that period. Part of this increase likely resulted
from longer salmon seasons associated with increased abundance during the period.
The Makah, Quileute, Hoh, and Quinault Tribes off the Washington coast participate in tribal
commercial, ceremonial, and subsistence fisheries for groundfish according to their treaty rights.
Participants in the tribal commercial fishery use gear similar to non-tribal commercial fisheries
operating off Washington. Groundfish caught in the tribal commercial fishery is typically sold
through the same markets as non-tribal commercial groundfish catch. The harvest of the four
tribes is taken into account when OYs are established. For a few species (sablefish and whiting,
for example) a share of the OYs for groundfish species taken in their fisheries is explicitly
allocated. For most species, expected tribal harvest levels are taken into account in setting
regulations for other sectors, but there is no allocation to the tribes. For those species allocated to
the tribes, and for other species for which expected harvest levels are identified, the tribes

RIR/IRFA - 30

oversee the prosecution of their fisheries separate from the management of other groundfish
fishery sectors.
4.4.2 Estimate of the Number of Small Entities to Which the Proposed Action will Apply
The following discussion provides information on the number of small and large businesses that
participate in the Amendment 20 Trawl Rationalization Programs. Information from the
following sources was reviewed, in addition to information found in the Amendment 20 DEIS,
other Council documents, and industry publications (these publications are used to assess size as
well as affiliations):





NMFS NWFSC Survey of Limited Entry Trawlers (ex-vessel revenue estimates)
NMFS Annual Process Product Survey (employment estimates)
Pacific States Marine Fisheries Commission Pacific Fishery Information Network—
Processor/First Receiver purchases of groundfish from limited entry trawlers (ex-vessel
revenues)
NMFS NWR Ownership Survey (respondents classify themselves as large or small)

The NMFS Northwest Fisheries Science Center surveyed limited entry trawlers that delivered to
shoreside plants or to motherships in 2004. [The survey did not include catcher processors or
motherships.] These sources paint slightly different but consistent pictures of the size of the
participants. The discussion provides two perspectives—one that addresses the entities affected
by the intersector allocation decisions of Amendment 21 (all major fishing groups that harvest
groundfish) and another that address the groups affected by implementation of the trawl
rationalization program (shorebased processors, shorebased trawlers, mothership processors and
catcher vessels, and catcher-processors).

RIR/IRFA - 31

Amendment 21 Analysis:
Amendment 20 directly regulates the groundfish trawl, mothership, and catcher-processor fleets
and shorebased trawl groundfish processors whereas Amendment 21 affects not only those
groups, but the other groundfish fleets—fixed gear and open access because of the allocation
rules. These businesses are associated with vessels that either target groundfish or harvest
groundfish as bycatch (including vessels that participate in the limited entry (trawl and fixed
gear), open access, or charter boat portion of the groundfish fishery), or are associated with
processors and buyers of groundfish (including shoreside and at-sea processors). These rules also
affect companies that own and fish the limited entry trawl permits and the companies that lease
these permits.
NMFS NWR issued 399 limited entry permits at the beginning of 2010. These permits include
177 endorsed for trawl (172 trawl only, 4 trawl and longline, and 1 trawl and trap-pot); 199
endorsed for longline (191 longline only, 4 longline and trap-pot, and 4 trawl and longline); 32
endorsed for trap-pot (27 trap-pot only, 4 longline and trap-pot, and 1 trawl and trap-pot). Of the
longline and trap-pot permits, 164 are sablefish endorsed. Of these endorsements, 117 are
stacked on 45 vessels. Because not all affected groups operate under the Federal limited entry
permit, a review of participation in groundfish fisheries based on actual harvests provides a
broader perspective.
Chapter 3 of the DEIS provides the following estimates. In 2007, there were six motherships
supplied by 20 mothership catcher vessels with many vessels also delivering shoreside. Nine
catcher-processors also fished and processed. About 159 trawlers fished in either the limited
entry or open access fisheries. The limited entry fixed gear fleet was composed of 130 hook and
line vessels and 20 pot vessels. The open access fleet is composed of several gear types—644
hook and line vessels, 57 net vessels, 180 pot vessels, 151 salmon troll vessels, and 32 trawlers.
From 2004 to 2006, there were 63 different first receivers of trawl-caught groundfish. During
2007, 14 first receivers purchased whiting from 37 shorebased trawlers.
Although not directly regulated by these rules, tribal fleets participate in this fishery. According
to Chapter 7 of the 0910 Groundfish Specifications EIS, the tribal fleet consists of approximately
66 vessels: longline (52), whiting trawl (4), and non-whiting trawl (10). The 2009 Review of
Ocean Salmon Fisheries indicates that there were 465 salmon charterboats. These are presumed
to be vessels that also will fish for groundfish. In 2007, 142 vessels were issued halibut licenses.
Therefore, this rule affects an estimated 2000 business entities—permit holders, vessels, and first
receivers that would be directly regulated by the proposed rule. No small organizations or small
governmental jurisdictions would be directly regulated by the proposed actions. Although not
directly regulated by this proposed rule, approximately 20 fishing communities that range from
small towns to major cities are indirectly affected by this rule because of the potential reduction
in the number of first receivers/processors and limited entry trawlers, as well as resulting
changes in where fish is landed to be processed. In general, these 2,000 entities are presumed to
be small with the exceptions noted below based on various analyses.
Non-Trawl Sectors—The following discussion provides small business estimates for groundfish
fishery participants that are affected by Amendment 21’s allocation policies, but do not qualify

RIR/IRFA - 32

to participate in Amendment 20’s trawl rationalization programs. NMFS has very limited
information on the companies associated with the following fleets However, it is expected that
these companies (unless these vessels are owned or affiliated with large entities), are most likely
to be classified as small companies based on average annual ex-vessel revenues that are far
below the $4.0 million level. In 2007, the average limited entry fixed gear hook and line vessel
earned $88,000 in groundfish revenues; limited entry fixed gear pot vessels earned about
$200,000 in groundfish revenues, and the average open access vessel earned about $7,000 in
groundfish revenues. Most of the 1,100 open access vessels target other fisheries. In 2007,
salmon trollers averaged $11,000 in salmon revenue per vessel, shrimp trawlers $157 million in
shrimp revenues, crab pot vessels $157,000 in crab revenues, and purse seiners $269,900 in
coastal pelagic species revenues.
Current revenues for charterboats are unavailable. However, the Pacific States Marine Fisheries
Commission surveyed approximately 12 percent of the charter and head boats licensed to operate
in California, Oregon, and Washington on their 2000 operations. Vessels were categorized
according to the region in which they were home ported: southern California (for homeports
from the Mexican border to Point Conception), northern California (for homeports north of Point
Conception to the Oregon border), Oregon, and Washington. Vessel size class was defined in
terms of vessel length: “small” for lengths of 15 to 30 feet, “medium” for lengths of 31 to 49
feet, and “large” for lengths greater than 49 feet. The estimates of average revenues from all
types of recreational activities, including fishing and whale watching charterboat estimates,
ranged from $7,000 for small Oregon vessels, $131,000 for medium Washington vessels,
$184,000 for large Northern California vessels, and $770,000 for large Southern California
vessels, the largest in the coastal fleet. These estimates confirm that that those charterboats most
likely to fish for groundfish qualify as small entities.
Amendment 20 Analysis:
NWFSC Survey: During 2004, 116 limited entry trawlers fished on the West Coast, but did not
participate in the whiting fishery during 2004. Of these 116 limited entry trawlers, 71 responded
to the NWFSC’s cost-earnings survey. Among the 71 respondents, the average total revenue
from all sources (west coast landings, Alaska landings, at sea deliveries, etc) was $368,271.
None of the 71 respondents had revenue exceeding $2,000,000 in 2004. Twenty-six limited
entry trawlers fished in the shoreside whiting fishery during 2004 (this figure does not include
five limited entry trawlers that had positive whiting landings worth less than $2,500). Of these
26 vessels, the NWFSC received 19 responses to the cost earnings survey. Adding all sources of
revenue collected by the cost earnings survey (revenue from landings in locations other than the
west coast, at-sea deliveries, and other sources of revenue) to west coast landings revenue
reported in PacFIN shows that these 19 vessels had average revenue of $971,871from all
sources. Of the 19 survey respondents, the three vessels with the greatest total revenue all earned
between $1.7 million and $1.8 million during 2004.
Of the seven limited entry trawl vessels that fished as catcher vessels for motherships in the atsea whiting fishery and did not have any west coast landings, none had revenue exceeding
$4,000,000. These seven vessels had average revenue of $1,624,488 million, and one vessel had
revenue of $3.6 million. Of the five limited entry vessels that fished as catcher vessels for

RIR/IRFA - 33

motherships in the at sea whiting fishery and made shoreside whiting landings in 2004, none had
revenue over $4 million in 2004. The five vessels had average revenue of $1,554,283 and
included three vessels with revenue of $1.7 million to $1.8 million (the same three vessels as
noted in the response to the previous question).
Annual Processed Products Survey-Employment Estimates for 2009: This voluntary survey was
sent to primary processors and secondary processors in Oregon and Washington, 11 companies
of which were primary processors of groundfish. Respondents to this survey, among other
things, are to provide monthly estimates of employment. Only one of the shorebased processors
reported employing more than 500 employees in any one month. Three of these processors are
associated with the same parent company, and, collectively, these companies employ more than
500 employees. Therefore, out of nine companies in Oregon and Washington, seven companies
are small and two are large. Catcher-processor and mothership companies were also surveyed.
These vessels employ from 100 to 140 employees per vessel.
Chapter 3 of the Amendment 20 DEIS: Processing companies are not necessarily first
receivers—they may process fish initially delivered to a buyer who then sells the fish to the
processor. The Pacific Fishery Management Council staff indicates that from 2004 to 2006
(Table 3-53 DEIS), 63 shoreside companies received non-whiting. In 2008, 6 companies were
first receivers of whiting for a total of 69 companies that received groundfish from 2004 to 2008.
Three of these companies have multiple state operations (Table 3-42 DEIS). The companies that
receive nonwhiting vary widely in terms of the volume received. Nearly 70 percent, or 44
companies, received fewer than 50 mt during the three-year period (Table 3-45 DEIS). A large
proportion of these companies receives but does not process nonwhiting; they include
restaurants, wholesalers and retailers, or distributors. Of the remaining 19 companies that
received more than 50 mt, only 7 received more than 1,000 mt. One received more than 5,000
mt, and one received more than 20,000 mt. The companies that receive whiting also vary widely
in terms of the volume received. Five firms received more than 10,000 mt each during the
period, including three with more than 30,000 mt. At the other end of the scale, 4 of the 13 firms
received less than 1,000 mt during the period (Table 3-38 DEIS).

PSMFC PacFIN—Small Purchaser Analysis: NMFS reviewed the 2008 and 2009 purchases of
limited entry trawl groundfish by first receiver. The results for both years are similar, so only the
2008 results are discussed. In 2008, 75 first receivers purchased limited entry trawl groundfish.
There were 36 small purchasers (less than $150,000), 26 medium purchasers (purchases greater
than $150,000 but less than $1,000,000), and 13 large purchasers (purchases greater than $1.0
million). When the trawl rationalization program is implemented, to continue buying limited
entry trawl groundfish, these purchasers will have to obtain a processor site license that includes
requirements to submit electronic fish tickets, provide a catch monitoring plan, and schedule a
catch monitor. Assuming that a catch monitor costs $350 per day and assuming that the start-up
costs of applying for a license, developing a plan, and obtaining the electronic fish ticket
software are an additional $350, the total initial start-up cost is about $700. [Note that, in the
first few years, the costs of catch monitors will be subsidized in part by NMFS.] Further
assuming that undertaking these steps only makes financial sense if the start-up cost is less than
0.5 percent of the groundfish purchased, than a processing site /first receiver would have to

RIR/IRFA - 34

purchase about $140,000 to break even financially based on these assumptions. Therefore, many
of the 36 small purchasers are likely to stop purchasing groundfish from limited entry trawlers as
a result of this program. Five of these small purchasers bought less than $10,000 worth of
limited entry trawl groundfish. The majority of these small purchasers were not major
purchasers of other fish (21 of these small purchasers bought less than $150,000 of fish
[groundfish and non-groundfish] in total with 14 of these first receivers, purchasing less than
$10,000 in limited entry trawl groundfish). This is not to say that all of these purchasers will go
out of business as result of these rules. NMFS does not know how dependent these businesses
are on groundfish because the agency does not have data on all sources of income (fishery and
non-fishery) of these first receivers. In addition, these companies could make arrangements to
purchase fish from another company that has obtained a processing site license or groundfish
harvested by fixed gear.
NMFS Ownership Survey: The NMFS Northwest Regional Office is in the final stages of
completing a voluntary ownership survey. Respondents to this survey were asked if they
consider themselves small businesses or non-profit organizations based on the definitions above.
In February 2009, this form was sent to the 177 limited entry permit holders and associated
vessels (approximately 150 vessels—not all permits have vessels attached to them.) This form
was also sent to the six mothership processors who have Pacific whiting vessel licenses and to
the 14 first receiver/shorebased processors who hold 2009 first receiver whiting exempted
fishery permits. Thirty-three limited-entry permit holders, thirty-six trawlers, 1 mothership
processor, and six shorebased whiting first receivers/processors have yet to respond to this
survey. Based on this survey, review of available information on those companies who have yet
to respond or on those few companies who responded to the survey but did not respond to the
small business question, the following characterization of the industry is provided. The nine
limited entry trawl permits that are associated with the catcher-processor vessels are considered
large companies. [According to the Pacific Whiting Conservation and Whiting Co-operative
website, www.pacificwhiting.org, the catcher-processor fleet is made up of three companies that
operate ten vessels. Of these companies, two have wholesale sales from whiting, Pollock, and
other products that are at least $500 million—see the Seafood Business Magazine discussion
below. The remaining company is assumed to be a large business because in addition to the two
whiting catcher-processors operate off Alaska along with other company vessels.] Of the
remaining 168 limited entry permits, 25 limited entry trawl permits are either owned or closely
associated with a large, shorebased processing company or with a non-profit organization that
considers itself a large organization. Nine other permit owners indicated that they were large
companies. Almost all of these companies are associated with the shorebased and mothership
whiting fisheries. The remaining 134 limited entry trawl permits are projected to be held by
small companies. Three of the six mothership processors are large companies. There are four
large companies within the 14 shorebased whiting first receivers/processors.
Seafood Business Magazine (www.seafoodbusiness.com—archives): In the whiting fishery (atsea and shoreside), many of the processing companies involved are closely affiliated with the 10
ten seafood suppliers with wholesale sales of ranging from about $500 to $1 billion. These
companies tend to be involved with Alaska fisheries, and some have major foreign affiliations.
[See “In the can: North America's seafood suppliers grow sales despite fears of an economic

RIR/IRFA - 35

downturn,” May 5, 2008; and “Bottom Dollar: The Top 25 North American seafood suppliers
had a strong 2008, but the future is in question,” June 19, 2009]
Amendment 20 and Amendment 21 Summary Conclusion: NMFS makes the following
conclusions based primarily on analyses associated with fish ticket and limited entry permit data,
available employment data provided by processors, information on charterboat and tribal fleets,
and available industry responses to ongoing surveysd on ownership. Entities were analyzed as to
whether they were only affected by the Amendment 21 allocation processes—non-trawl—or if
they were affected by both Amendments 20 and 21—(trawl). The non-trawl businesses are
associated with the following fleets: limited entry fixed gear (approximately 150 companies),
open-access groundfish (1,100), charterboats (465), and the tribal fleet (four tribes with 66
vessels).
Available information on average revenue per vessel suggests that all the entities in this group
can be considered small. For the trawl sector, there are 177 trawl vessel permit holders. Nine
limited entry trawl permits are associated with the catcher-processing vessels, which are
considered large companies. Of the remaining 168 limited entry permits, 25 limited entry trawl
permits are either owned or closely associated with a large shorebased processing company or
with a non-profit organization that considers itself a large organization. Nine other permit
owners indicated that they were large “companies.” Almost all of these companies are
associated with the shorebased and mothership whiting fisheries. The remaining 134 limited
entry trawl permits are projected to be held by small companies. Available information suggests
that the at-sea and shorebased processing sectors consists of few large firms, a few moderate-size
firms, and a considerable number of small firms. Four of the six mothership processors are large
companies. Within the 14 shorebased whiting first receivers/processors, there are four large
companies, including, the shorebased whiting receivers, in 2008, 75 first receivers purchased
limited entry trawl groundfish. There were 36 small purchasers (less than $150,000), 26 medium
purchasers (purchases greater than $150,000 but less than $1,000,000), and 13 large purchasers
(purchases greater than $1.0 million). Because of the costs of obtaining a processed processor
site license, procuring and scheduling a catch monitor, and installing and using the electronic fish
ticket software, these small purchasers will likely opt out of buying groundfish or make
arrangements to purchase fish from another company that has obtained a processing site license.
4.5 Economic Analysis of the Expected Effects of Each Selected Alternative Relative to the Noaction Alternative, Including the Costs of Compliance for Small Entities
The economic impacts of the selected alternatives are detailed in Chapter 4 of the Rationalization
of the Pacific Coast Groundfish Limited Entry Trawl Fishery—Amendment 20 DEIS (TRAT
DEIS) and Chapter 4 of the Allocation of Harvest Opportunity Between Sectors of the Pacific
Coast Groundfish Fishery—Amendment 21 DEIS (ISADEIS). The allocation of harvest
opportunity between sectors under the preferred alternative does not differ significantly from the
allocation made biennially under the no action alternative. The primary economic effect of the
long-term, formal allocation under the preferred alternative is to provide more certainty in future
trawl harvest opportunities, which would enable better business planning for participants in the
rationalized fishery.

RIR/IRFA - 36

Expected Effects of Amendment 21—Intersector Allocation
The allocation of harvest opportunity between sectors under the proposed regulation does not
differ significantly from the biennial allocation under the no action alternative. The primary
economic effect of the long-term, formal allocation under the proposed regulations is to provide
more certainty in future trawl harvest opportunities, which would enable better business planning
for participants in the rationalized fishery. As described elsewhere, the trawl rationalization
program could create an incentive structure and facilitate more comprehensive monitoring to
allow bycatch reduction and effective management of the groundfish fisheries. In support of the
trawl rationalization program, the main socioeconomic impact of Amendment 21 allocations is
longer-term stability for the trawl industry. While the preferred Amendment 21 allocations do
not differ significantly from status quo ad hoc allocations made biennially, there is more
certainty in future trawl harvest opportunities, which enables better business planning for
participants in the rationalized fishery. This is the main purpose for the Amendment 21 actions.
The economic effects of Amendment 21 arise from the impacts on current and future harvests.
The need to constrain groundfish harvests to address overfishing has had substantial
socioeconomic impacts. The groundfish limited entry trawl sector has experienced a large
contraction, spurred in part by a partially federally subsidized vessel and permit buyback
program implemented in 2005. This $46 million buyback program was financed by a
congressional appropriation of $10 million and an industry loan of $36 million. About 240,
groundfish, crab, shrimp permits were retired from state and Federal fisheries—there was a
35 percent reduction in the groundfish trawl permits. To repay the loan, groundfish, shrimp and
crab fisheries are subject to landings fees. Follow-on effects of the buyback have been felt in
coastal communities where groundfish trawlers comprise a large portion of the local fleet. As
the fleet shrinks and ex-vessel revenues decline, income and employment in these communities
is affected. Fishery-related businesses in the community may cease operations because of lost
business. This can affect non-groundfish fishery sectors that also depend on the services
provided by these businesses, such as providing ice and buying fish. An objective to the trawl
rationalization program is to mitigate some of these effects by increasing revenues and profits
within the trawl sector. However, because further fleet consolidation is expected, the resulting
benefits are likely to be unevenly distributed among coastal communities. Some communities
may see their groundfish trawler fleet shrink further as the remaining vessels concentrate in a
few major ports.
Species subject to Amendment 21’s allocations would be lingcod, Pacific cod, sablefish south of
36° N. lat., Pacific ocean perch, widow rockfish, chilipepper rockfish, splitnose rockfish,
yellowtail rockfish north of 40° 10’ N. lat., shortspine thornyhead (north and south of 34° 27’ N.
lat.), longspine thornyhead north of 34° 27’ N. lat., darkblotched rockfish, minor slope rockfish
(north and south of 40° 10’ N. lat.), Dover sole, English sole, petrale sole, arrowtooth flounder,
starry flounder, and Other Flatfish. While the preferred Amendment 21 allocations of these
species do not differ significantly from status quo ad hoc allocations made biennially, there is
more certainty in future trawl harvest opportunities, which enables better business planning for
participants in the rationalized fishery. This is the main purpose for the Amendment 21 actions.

RIR/IRFA - 37

Amendment 21 would formally allocate a subset of the harvest guideline to the four trawl
sectors: SS (whiting and non-whiting), mothership, catcher vessel, and catcher-processor. With
to the species subject to Amendment 21’s allocations, this would leave the limited entry fixed
gear, open access, and recreational fisheries in a pool that would divide the remaining HG (via
the biennial specification process). [The open access component of the groundfish fishery
consists of fishermen who target groundfish without limited entry permits and fishermen who
target non-groundfish fisheries that incidentally catch groundfish.] In general, the allocations are
based on catch history from 2003 to 2005 and the recommendations of the Groundfish Allocation
Committee. The Council believed that a relatively recent catch period should form the basis for
deciding sector allocations since discards during this period were better informed, and current
management strategies, such as specification of rockfish conservation areas, are more likely in
the near future. However, the Council made modifications for several species. For chilipepper
rockfish south of 40º10’ N. lat., Amendment 21 contains a higher non-trawl allocation. This is
intended to provide greater non-trawl access to this healthy stock off California. Amendment 21
would not allocate longspine thornyhead south of 34° 27’ N. lat. to the trawl fishery. Longspine
thornyhead are an incidentally caught species south of 34° 27’ N. lat., and the available yields
are not projected to constrain any of the groundfish fisheries there that incidentally catch these
fish. Amendment 21 would allocate a much higher percentage of the available yield of starry
flounder to non-trawl sectors (50 percent) than recommended by the Groundfish Allocation
Committee. The catch history of starry flounder is highly uncertain, but they are significantly
caught in nearshore trawl fisheries and recreational fisheries on the West Coast. The Council
thought a 50:50 trawl and non-trawl sharing of the available harvest of starry flounder was the
fairest allocation. Amendment 21 includes a higher non-trawl allocation of species in the Other
Flatfish complex than recommended by the Groundfish Allocation Committee (10 percent vs. 5
percent). While most of these species are dominant to the trawl fishery, there are some species,
such as Pacific sanddabs, that are significantly caught in non-trawl fisheries. The Council
believed a higher non-trawl share of the available harvest of Other Flatfish species would better
preserve non-trawl fishing opportunities.
Based on ex-vessel revenue projections, Table 4-18 (ISADEIS) shows the potential 2010 yield
to trawl and non-trawl (including recreational) sectors under the Amendment 21 alternatives and
the potential 2010 value of alternative trawl allocations. Under the no action alternative, the
projected ex-vessel value of the trawl allocation is $56 million, while the projected ex-vessel
value of the Council’s preferred alternative is $54 million—indicating a potential increase to the
non-trawl sectors and a potential decrease to the trawl sector.
In addition to the species above, halibut would also be specifically allocated to the trawl fishery.
The proposed regulations include a halibut trawl bycatch reduction program in phases to provide
sufficient time to establish a baseline of trawl halibut bycatch and to allow harvesters to explore
methods (e.g., adjustments to time and/or area fished, gear modifications) to reduce halibut
bycatch and bycatch mortality. Pacific halibut cannot currently be retained in any U.S. or
Canadian trawl fisheries per the policy of the IPHC. The Council’s intent on setting a total catch
limit of Pacific halibut in Area 2A trawl fisheries is to limit the bycatch and progressively reduce
the bycatch from these limits to provide more benefits to directed halibut fisheries. The program
establishes a limit for total Pacific halibut bycatch mortality (legal-size and sublegal fish) by
using an IBQ in the trawl fishery. The initial amount for the first two years of the trawl

RIR/IRFA - 38

rationalization program would be calculated by taking 15 percent of the Area 2A total constant
exploitation yield (CEY) as set by the International Pacific Halibut Commission (IPHC) for the
previous year not to exceed 130,000 lbs per year for total mortality. For example, if the trawl
rationalization program went into effect in 2013, the trawl halibut IBQ would be set at 15 percent
of the Area 2A CEY adopted for 2012 or 130,000 lbs per year, whichever is less, for 2013 and
2014 (years one and two of the program). Beginning with the third year of implementation, the
maximum amount set aside for the trawl rationalization program would be reduced to
100,000 lbs per year for total mortality. This amount may be adjusted downward through the
biennial specifications process for future years.
Currently there are no total catch limits of Pacific halibut specified for the west coast trawl
fishery. Trawl bycatch of Pacific halibut, therefore, does not limit the trawl fishery. It would
apply a halibut bycatch reduction program in phases to provide sufficient time to establish a
baseline of trawl halibut bycatch under the new rationalization program and for harvesters to
explore methods (e.g., adjustments to time and/or area fished, gear modifications) to reduce both
halibut bycatch and bycatch mortality. By limiting the bycatch of Pacific halibut in the limited
entry trawl fisheries, Amendment 21 would control bycatch and could provide increased benefits
to Washington, Oregon, and California fishermen targeting Pacific halibut. Reducing the trawl
limit would also provide more halibut to those who participate in the directed tribal, commercial,
and recreational halibut fisheries.
The Council’s preferred alternative uses a halibut-abundance-based method for setting the initial
trawl allocation by keeping it tied to a percentage of the CEY, but adds a maximum limit on the
allocation amount. The initial limit is set at 130,000 lbs, which represents an approximate
reduction of 50 percent from the total bycatch estimate provided by the Northwest Fisheries
Science Center for the most recent year (2007) If the proposed regulations were applied to the
total CEY in 2007 and compared to the actual mortality recorded for 2007, the trawl fishery
would find itself about 20,000 lbs short. Similarly, if these regulations were applied in 2008 and
2009, the amount of halibut allocated to the trawl sector would fall short of actual harvests by
204,000 and 161,000 pounds, respectively.
The Council decided to apply the 130,000-pound limit over a four-year period to give the trawl
industry more time to learn strategies (and areas) for minimizing their Pacific halibut bycatch.
Since this may become the most constraining bycatch species for the rationalized trawl fishery
on the northern shelf, this extra adjustment period before the further downward modification of
the total catch limit to 100,000 pounds is considered for the fifth year. Additionally, allowing
more flexibility for considering a new total catch limit of Pacific halibut in future processes to
decide biennial management measures was considered necessary because the limit is lower than
the bycatch observed under the WCGOP, and it was unclear how such a stringent limit might
affect the fishery. It may turn out that the socioeconomic impacts are too great under these
stringent limits, and the Council may ultimately decide to increase the total catch limit.
Conversely, the trawl industry may adjust well to these lower limits, and the realized bycatch of
Pacific halibut will be lower than the prescribed total limits of 130,000 or 100,000 pounds. In
that case, the Council may want to adjust the future total catch limit downward from 100,000
pounds to provide more benefits to Area 2A directed halibut fisheries. In either case, the Council
preferred the flexibility of deciding future total catch limits of Pacific halibut in the biennial

RIR/IRFA - 39

specifications and management measures process to avoid a more lengthy and burdensome FMP
amendment process for making these decisions. Reducing the maximum limit to 100,000 lbs
beginning the third year of the program provides an additional incentive for harvesters to modify
their fishing behavior to reduce bycatch and/or bycatch mortality. Information from the
Canadian IFQ program indicates that trawl fishermen can voluntarily implement measures to
reduce bycatch by avoiding areas known to produce high volumes of halibut, and reduce bycatch
mortality by reducing their tow time. Reducing the trawl limit would also provide more halibut
to those who participate in the directed tribal, commercial, and recreational halibut fisheries.
If the total CEY from the stock assessment prior to trawl rationalization implementation reflected
relatively low abundance (e.g., 640,000 lbs), this would produce an initial trawl allocation of
96,000 lbs. While this is considerably less than what the trawl fishery has caught in previous
years, it would also be applied to an exploitation yield lower than what Area 2A has experienced
in the past 10 years. This helps ensure that the primary use of halibut is to provide fish for the
directed tribal, commercial, and recreational fisheries. If abundance were higher and along the
lines of the amounts produced by the 2004 and 2005 assessments (e.g., more than 1 million lbs),
the trawl allocation would be capped at 130,000 lbs.
When the Canadian government rationalized its British Columbia groundfish fishery in 1996, an
arbitrary cap of 1 million pounds was set for halibut bycatch mortality in that trawl fishery.
Halibut bycatch mortality before prior to rationalization was about 1.5 million pounds. The first
year of the quota program, halibut bycatch mortality was reduced to about 300,000 pounds.
Several factors were the decline of the cod fishery (and a decline in associated halibut bycatch),
harvester avoidance behavior, and 100 percent observer coverage, combined with slower fishing
practices that allowed the observer to measure every halibut caught and released. Information
from the Canadian IFQ program indicates that trawl fishermen can voluntarily implement
measures to reduce bycatch by avoiding areas known to produce high volumes of halibut and can
reduce bycatch mortality by reducing their tow time (which prevents halibut from being crushed
in the trawl cod end).
General Effects of Amendment 21 Trawl Rationalization
The focus of the remaining economic analysis is on the effects of rationalization of the Pacific
Coast groundfish limited entry trawl fishery. Below is a summary of the incremental differences
(in economic terms) between the proposed action and no action alternative discussed in these
draft environmental impact statements. The economic analysis in Chapter 4 of the Amendment
20 FEIS relies predominantly on available fish ticket information (landings and revenues).
Section 4.2.1.3 notes the following data limitations:


Cost and earnings data for individual harvesters are available only for a single year.



Cost and earnings data for individual processors are unavailable.



Comprehensive primary data on processed products and product prices are unavailable.



Final market demand for groundfish products is not well known.



Data showing the total catch (landings plus discard) of groundfish by individual vessels is
unavailable.
RIR/IRFA - 40

Because of the lack of quantitative data, an overall comprehensive model was not feasible.
Instead, a set of models designed to focus on specific issues was developed, or are already
available. These include the following:


A model showing the effects of the initial allocation of QS in a trawl IFQ program



A model assessing the expected amount of fleet consolidation



A model illustrating the potential for geographic shifts in fishery patterns



A model illustrating the potential to reduce the catch rate of overfished species and the
associated potential for increased target species catch and revenue



A qualitative comparative advantage model illustrating the potential for regions to be
negatively or positively impacted by rationalization



Available stock assessments showing stock abundance over time under various harvested
quantities



An ecosystem-based model describing the impact on the biological and ecosystem
components of the environment resulting from changes in fishing behavior and catch

To illustrate the benefits of the TIQ program, a model projecting the expected amount of fleet
consolidation in the shoreside non-whiting fishery was developed. It incorporates the model that
illustrates the potential for the fleet to reduce bycatch and potentially increase the amount of
target species harvested. This later model is based primarily on bycatch reduction experiences in
the Pacific whiting fishery and as carried out in the arrowtooth flounder fishery under an
exempted fishing permit. The major conclusions associated with both these models are provided
below.
Consolidation under the alternatives will be a key impact mechanism. This model provides
projections of consolidation in the fishery and the effects of that consolidation. The model is
based on work published by Weninger and Waters (2003).
Ex ante benefit estimates (estimates prior to the action) are obtained by using a two-step
methodology. The first step predicts the harvesting practices expected to prevail under an IFQ
system. This first step will predict post-QS allocation equilibrium harvesting practices including
the folloiwng:





Groundfish harvest per vessel
Number of vessels needed to harvest limited entry trawl groundfish catch
Which vessels remain in the groundfish fishery and which vessels exit
Nongroundfish harvest per vessel

The model is designed to address the fact that trawlers harvest many species (multiple outputs).
It uses fish ticket data and the data from the recently completed West Coast Limited Entry Cost
Earnings Survey sponsored by the NMFS Northwest Fisheries Science Center.

RIR/IRFA - 41

Estimates of potential economic benefits are generated based on the predicted harvesting
practices from the first step analysis. Because the west coast nonwhiting groundfish fishery is
not a derby fishery, it is expected that economic benefits will come through cost reductions and
increased access to target species that arise from modifications in fishing behavior (overfished
species avoidance). The key output of this analysis is an estimate of post-rationalization
equilibrium harvesting cost.
Changes in harvesting costs can arise from three sources. First, the total fixed costs incurred by
the groundfish trawl fleet change as the size of the fleet changes. Since many limited entry
trawlers incur annual fixed costs of at least $100,000, reductions in fleet size can result in
substantial cost savings. In other words, fewer vessels in the fishery will lead to decreased costs
through a decrease in annual fixed costs. Second, costs may change as fishery participation
changes and participants no longer incur diseconomies of scope (such as the costs of frequently
switching gear for participating in multiple fisheries). Third, costs may change as vessels are
able to buy and sell quota to take advantage of economies of scale and operate at the minimum
point on their long-run average cost curve (i.e., the strategy that minimizes the cost of
harvesting).
Using the model developed through this project, it is possible to compare the following:




Harvesting costs under the current regulatory system
Harvesting costs under an “unconstrained” IFQ system
Harvesting costs under an IFQ system where fleet rationalization is constrained through
program design features such as quota accumulation caps

The major finding associated with this model and the cost-earnings survey is the following:
Net revenues for nonwhiting trawl vessels were estimated by Lian, Singh, and
Weninger in 2008 (Lian et al. 2008). Estimates of net revenues were generated
using a cost earnings survey conducted by the Northwest Fisheries Science Center
that collected cost data from trawlers operating in 2004. These cost earnings data
were matched with PacFIN fish ticket data to derive estimates of net revenue
generated by vessels active in the fishery during 2004.
The major conclusions of Lian, Singh, and Weininger are the following:
Our results suggest that (with landings held at 2004 levels), the current groundfish
fleet (non-whiting component) which consisted of 117 vessels in 2004, will be
reduced by roughly 50% to 66% to 40-60 vessels under an IFQ program. The
reduction in fleet size implies cost savings of $18- $22 million for the year 2004
(most recent year of the data). Vessels that remain active will, on average, be
more cost efficient and will benefit from economies of scale that are currently
unexploited under controlled access regulations in the fishery. The cost savings
estimates are significant, amounting to 60% of the costs incurred currently,
suggesting that IFQ management may be an attractive option for the Pacific Coast

RIR/IRFA - 42

Groundfish Fishery. We find that mid-sized boats, 60—70 feet in length , are
relatively cost efficient and therefore most likely to remain active under the IFQ
management of the program; smaller (40-50 feet) and larger vessels (80 feet and
above) are likely to leave the fishery. ….(Liann, et al, 2008 page 330)
Our analysis reveals, however, that projected cost savings are sensitive to the
design elements of the IFQ program. In particular, we show that restrictions on
the total quota that can be harvested by individual vessels, or restrictions on quota
trading across vessel length classes, can significantly reduce estimated benefits
(cost savings) of switching to IFQs. Our estimates suggest that benefits decline
by roughly $3.8 million (18.4% ) per year if a 1% cap on quota ownership at the
vessel level is imposed, and by as much as $2.14 million (10.4%) per year under
restrictions on harvest permit trading across vessel classes. (page 330).
Further calculations provide additional insights on the economic conditions under
controlled access regulations. Assuming a 10% annual return to the vessel capital
investment, estimates indicate that the 2004 groundfish fleet incurred a total cost
of $38.789 million. The PacFIN data indicate fleetwide revenue at roughly
$36.275 million in 2004, and, therefore, fleet wide losses of $2.514 million.
Based on a lower 5% return to vessel capital, the results suffets that the
groundfish fleet merely broke even in 2004; i.e., dockside revenues were offset by
the fleet wide harvesting costs….(page 337).
The results suggest a switch from the current controlled access management
program to IFQs could yield a significant increase in resource rents in the Pacific
Coast Groundfish fishery. For instance, our analysis finds that the 2004
groundfish catch generated zero resource rent. Instead, it could have yielded a
substantial positive rent at $13.574 million (page 340).
The Council’s analysis draws upon the conclusions of Lian et al., presented below:
These estimates indicate that the average nonwhiting trawl vessel makes zero
economic profit. Simply put, zero economic profit means that there are no profits
being generated in the fishery above what would be considered a normal wage
plus the costs of operating and maintaining a vessel. While the average vessel
makes close to zero economic profit, some vessels do make profits while others
may actually lose money and would be better off (financially speaking) leaving
the fishery (Rationalization of the Pacific Coast Groundfish Limited Entry Trawl
Fishery FEIS,page 128 FEIS).
Indeed, research by Lian, et al. (2008), indicates the nonwhiting trawl fleet may
be overcapitalized by more than 50 percent (Rationalization of the Pacific Coast
Groundfish Limited Entry Trawl Fishery FEIS), page 273 FEIS.
Based on results from Lian et al. (2008), harvesters in the nonwhiting sector
generate no economic profit from harvest activity. While it is unclear whether

RIR/IRFA - 43

processors generate any economic profit from processing of nonwhiting
groundfish, it is clear that if profits exist in the industry, harvesters are not
realizing those profits. This suggests that, if profits exist in the harvesting and
processing of nonwhiting groundfish, harvesters lack much bargaining power in
negotiations over ex-vessel prices with processors (Rationalization of the Pacific
Coast Groundfish Limited Entry Trawl Fishery FEIS, page 276).
In addition to increased revenue being generated in the fishery, the consolidation
likely to occur in the nonwhiting sector is expected to lead to substantial cost
savings. Cost savings occur because of less capital, but also because the fleet is
expected to consolidate toward the most efficient vessels. The fleet reduction and
cost efficiency model shows the consolidation that may occur could diminish the
number of vessels by 50 to 66 percent, or to a nonwhiting fleet size that is
somewhere on the order of 40 to 60 vessels. This predicted cost savings is fairly
sensitive to the design elements of the program and is also dependent on the
quantity of species harvested. This consolidation is predicted to decrease costs of
harvesting nonwhiting groundfish by as much as 60 percent annually (before
incorporating the cost of at-sea monitoring). Using information from recent
years, this may mean a cost savings of approximately $13.8 million. Imposing
accumulation limits can restrict the amount of expected cost savings substantially.
Retaining the vessel length endorsement may restrict cost savings by 10 percent,
though this may be lower since harvesters can bundle permits and change the
length endorsement. If a 1 percent accumulation limit is placed on vessels, cost
reductions may be restricted by approximately 20 percent.2 At-sea monitoring
costs add an additional cost burden to vessels that is not currently incurred. If atsea monitors cost vessels $350 per day, this may tend to reduce the size of the
fleet from the 40 to 60 vessels expected and increase the average size of vessels
remaining. This is because additional costs of fishing will mean the optimal fleet
size is smaller. The average size of vessels in the fleet is increased with a daily
observer cost because such costs comprise a larger portion of small vessels costs
than that of larger vessels. At-sea observers will also reduce fleet-wide profits.
The fleet reduction and cost efficiency model illustrates that at-sea observers may
cost the nonwhiting fleet $2.2 million if all vessels in the fishery operate near
capacity (Rationalization of the Pacific Coast Groundfish Limited Entry Trawl
Fishery FEIS, page 290).
Section 4.6.2.1, Rationalization of the Pacific Coast Groundfish Limited Entry Trawl Fishery
FEIS, describes the major benefits of the trawl rationalization for shorebased non-whiting
fishery, excerpted below:
Trawl harvesters in the nonwhiting sector may be substantially affected by
the rationalization of the west coast trawl fishery. The individual
accountability measures and harvesting privileges associated with the
rationalization alternatives are likely to induce substantial changes in the
2

The lowest accumulation limit in the alternatives of 3 percent is not expected to impose cost inefficiencies on
the nonwhiting trawl sector so long as prices and available harvest volumes do not decrease.

RIR/IRFA - 44

way vessels prosecute fishing activities. In the nonwhiting trawl fishery,
substantial impacts are likely to occur because of the constraining nature
of overfished species and the perceived reward that is associated with
avoiding those stocks that may come in the form of increased catch of
target species, which are currently underutilized because of weak stock
management. The bycatch rate change model is used to show the amount
of additional target species that can be leveraged as the nonwhiting trawl
fleet reduces encounters with overfished species. The output of this model
indicates that the fleet may generate severalmillion dollars in additional
ex-vessel revenue under a rationalization program compared to Alternative
1 activity if ex-vessel prices remain constant.
Increased profits and fleet consolidation
Some of the expected increase in ex-vessel revenue is likely to occur almost
immediately after the fishery is rationalized. However, the fleetwide estimates
are best perceived as a longer-term outcome of rationalization that will occur as
the fleet modifies gears and fishing location, the flow of quota through the market
occurs in a way so that it reaches the more successful vessels, and processing
companies find buyers for the potential increase in product quantity. This is
likely to be a gradual effect where ex-vessel revenue increases over time before
reaching full potential. The length of time it takes for the increased harvest
volume to be absorbed by the processing sector may also depend on the number
of processing entities harvesters have the opportunity to sell their catch to. The
requirement that the entire catch be off-loaded at a single processor restricts—to
some degree—the number of processing companies that harvesters deliver to. By
relaxing this requirement, harvesters may be able to sell their catch to more than
one buyer at a time, and if these buyers have relatively different access to
markets, being able to sell catch to more than one buyer will make it more likely
that an increase in catch can be absorbed by the market more quickly.
Figure 4-7 illustrates the potential range of ex-vessel revenues in the nonwhiting
trawl fishery generated under a rationalization program compared to Alternative 1
if ex-vessel prices remain unchanged. The range of values presented is meant to
bracket the range of uncertainty within the model while still providing realistic
estimates. The uncertainty presented in this figure does not capture the risk posed
by thin market conditions that may be present in an IFQ program because of
species with low trawl allocations.

RIR/IRFA - 45

Approximate
value with
elimination of
regulatory
discard

$40,000,000

Value with
low reduction
in bycatch
rate

Value with
medium
reduction in
bycatch rate

Value with
high
reduction in
bycatch rate

260%
240%
220%

$30,000,000

200%
180%

$20,000,000
160%
140%

$10,000,000

120%
$0

Percent of Status Quo Exvessel Revenue

Exvessel Revenue by Scenario

$50,000,000

100%
Status Quo

Low

Med Low

No Change in Bycatch Rate

Med High

High

With Reduction in Bycatch Rate

Exvessel Revenue

Percent of SQ Revenue

Figure 4.7. Potential ex-vessel revenue in the nonwhiting trawl fishery under rationalization.
Note: Bars are intended to represent uncertainty due to potential variations in ABCs and OYs.

In addition to increased revenue being generated in the fishery, the consolidation
likely to occur in the nonwhiting sector is expected to lead to substantial cost
savings. Cost savings occur because of less capital, but also because the fleet is
expected to consolidate toward the most efficient vessels. The fleet reduction and
cost efficiency model shows the consolidation that may occur could diminish the
number of vessels by 50 to 66 percent, or to a nonwhiting fleet size that is
somewhere on the order of 40 to 60 vessels. This predicted cost savings is fairly
sensitive to the design elements of the program and is also dependent on the
quantity of species harvested. This consolidation is predicted to decrease costs of
harvesting nonwhiting groundfish by as much as 60 percent annually (before
incorporating the cost of at-sea monitoring). Using information from recent
years, this may mean a cost savings of approximately $13.8 million. Imposing
accumulation limits can restrict the amount of expected cost savings substantially.
Retaining the vessel length endorsement may restrict cost savings by 10 percent,
though this may be lower since harvesters can bundle permits and change the
length endorsement. If a 1 percent accumulation limit is placed on vessels, cost
reductions may be restricted by approximately 20 percent.3 At-sea monitoring
costs add an additional cost burden to vessels that is not currently incurred. If atsea monitors cost vessels $350 per day, this may tend to reduce the size of the
fleet from the 40 to 60 vessels expected and increase the average size of vessels
3

The lowest accumulation limit in the alternatives of three percent is not expected to impose cost inefficiencies
on the nonwhiting trawl sector so long as prices and available harvest volumes do not decrease.

RIR/IRFA - 46

remaining. This is because additional costs of fishing will mean the optimal fleet
size is smaller. The average size of vessels in the fleet is increased with a daily
observer cost because such costs comprise a larger portion of small vessels costs
than that of larger vessels. At-sea observers will also reduce fleet-wide profits.
The fleet reduction and cost efficiency model illustrates that at-sea observers may
cost the nonwhiting fleet $2.2 million if all vessels in the fishery operate near
capacity. If some relatively marginal producers remain in the fishery, the cost
will be higher. Table 2 illustrates the effect of various factors on profitability.
Table 2. Factors affecting profitability.

Effect of
Consolidation

Improves harvesting cost efficiency. May allow the fleet to realize
profits of ~$14 to $23 million compared to $0 or less under Alternative 1.

Effect of
No effect unless vessel limit is smaller than ~2.5 percent. A 1 percent
Accumulation Limits vessel limit restricts potential cost efficiency by ~20 percent
Effect of Permit
Length Endorsement

Restricts cost efficiency by ~10 percent, or imposes costs of ~$1.5 to $3
milliona

Effect of At-Sea
Observers

Increases average vessel size slightly. Decreases fleet size slightly. May
reduce profits by ~$2.2 million depending on fee structure.

a) This estimate was modeled based on the idea that QS would be restricted from trading across vessel size classes. That
restriction is not part of the options contained in the existing alternatives. Therefore, this estimate does not apply to the existing
alternatives for rationalization of the trawl fishery.

Figure 4-8 shows potential fleet-wide profit if all vessels are operating at their
most cost effective point. The results in this figure use the fleet-wide revenue
estimates shown above in conjunction with the cost-savings and consolidation
model. The results show profit under unconstrained cost conditions, profit with a
vessel length restriction (i.e., retaining the permit length endorsement), and profit
with a vessel length restriction and at-sea observers. Although not shown in the
figure, for reference purposes Alternative 1 profits in the fleet are estimated to be
between zero and a loss of approximately $2 million annually.

RIR/IRFA - 47

$25,000,000

Net Profit

$20,000,000

$15,000,000

$10,000,000

$5,000,000

$Existing Catch Level

LOW

MED

HIGH

Catch Scenario

Profit Under Unconstrained Harvesting Cost
Profit with with Length Restriction
Profit w/ Length Restriction & At-Sea Observers

Figure 4-8. Estimated fleetwide profit in a rationalized nonwhiting trawl fishery.

The above information shows that when potential cost savings are combined with
the projected increase in gross revenue displayed in Figure 4-7, actual revenues to
catcher-vessels and permit holders may increase by several million. Empirical
evidence from other programs suggests that consolidation and the associated cost
savings could occur quite rapidly after the fishery is rationalized.
The consolidation and cost efficiency model shows that the most efficient vessels
for harvesting nonwhiting trawl groundfish are approximately 60 to 70 feet in
length. Smaller vessels tend to be limited by the effectiveness of harvest capacity
per vessel size while larger vessels tend to operate in an area where costs are
increasing more rapidly per scale compared to harvest effectiveness. Vessels that
are larger or smaller may find it more profitable to sell QS and leave the fishery
rather than remain in the fishery.
Current Status of the Fishery—Changes Since 2004
This discussion is in addition to the information provided in the Rationalization of the Pacific
Coast Groundfish Limited Entry Trawl Fishery FEIS. As the “Consolidation” model is based on
the fishery, it may be useful to provide current trends in the fishery. [The indicators below are
landings, ex-vessel prices, and revenues from PacFIN, fuel prices collected by PSMFC, and U.S.
export prices for whiting and sablefish shipped from the Seattle Customs District. PacFIN data
include tribal harvests and revenues.]
In 2004, the shorebased non-whiting trawl fishery generated about $30 million in
ex-vessel revenues. But according to NWFSC cost estimates, this fishery was at
best breaking even or perhaps suffering a loss of up to $2 million.
RIR/IRFA - 48

Since 2004, shorebased non-whiting trawl fisheries have increased their revenues to
about $40 million
The increases in shorebased revenues have come from increased landings of flatfish
and sablefish and significant increase in sablefish ex-vessel prices. Sablefish now
accounts for almost half of the trawl fleet’s revenues.
While revenues were increasing so were fuel prices. Fuel costs are about 30 to
40% of the vessels revenues (Table 4-43 DEIS). The average 2005-2009 revenues
were about $28 million—22 percent greater than of 2004. The average 2005-2009
fuel price was about $2.81—70% greater than that of 2004. Therefore, it appears
that 2009 fishery may not be that much improved over that of 2004.
The indicators below also show the growth in whiting revenues due to increased
landings and ex-vessel prices stimulated by high export prices. Note that after
reaching a peak in 2008 of $0.11 per lb in 2008, the 2009 price for whiting has
fallen to $0.05 per lb in 2009.

RIR/IRFA - 49

Recent Indicators of Fishery Trends
Revenues ($1000)

2004
2005
2006
2007
2008
2009

All Groundfish
44,526
52,640
58,673
59,401
91,517
46,146

2004
2005
2006
2007
2008
2009

Shoreside
Total
30,327
35,969
40,150
40,806
48,184
38,356

2004
2005
2006
2007
2008
2009

All Groundfish
237,779
281,352
284,133
238,852
274,104
149,241

2004
2005
2006
2007
2008
2009

Shoreside
Total
117705
130904
146569
113710
93643
76999

All Whiting
21,680
28,786
34,425
32,602
58,495
14,104
Shoreside
Whiting
7,481
12,115
15,902
14,007
15,162
6,314
Landings (Tons)
All Whiting
216,557
259,499
264,728
216,583
248,221
121,465
Shoreside
Whiting
96,483
109,051
127,164
91,441
67,760
49,223

RIR/IRFA - 50

At-Sea Whiting
14,199
16,671
18,523
18,595
43,333
7,790
Shoreside
Non-Whiting
22,846
23,854
24,248
26,799
33,022
32,042

At-Sea Whiting
120,074
150,448
137,564
125,142
180,461
72,242
Shoreside
Non-Whiting
21,222
21,853
19,405
22,269
25,883
27,776

2004
2005
2006
2007
2008
2009

2004
2005
2006
2007
2008
2009

2004
2005
2006
2007
2008
2009

Flatfish
12,259
13,384
12,771
14,362
15,673
14,042

Shoreside Trawl Revenues ($1000)
Rockfish
Sablefish
3,358
5,355
3,045
5,916
3,006
7,387
3,322
8,126
4,625
11,457
4,430
12,449

Flatfish
13,329
14,012
12,606
15,417
17,250
18,655

Shoreside Trawl Landings (Tons)
Rockfish
Sablefish
2,949
2,435
2,675
2,407
2,352
2,537
2,768
2,489
3,733
2,891
4,077
3,061

Ex-Vessel Trawl Prices, Fuel Prices and Export Prices
($/gallon, $/lb)
Petrale
Dover Sole
Sole
Whiting
Sablefish
$0.36
$1.03
$0.05
$1.00
$0.37
$0.91
$0.05
$1.12
$0.37
$1.01
$0.06
$1.32
$0.37
$1.00
$0.07
$1.48
$0.37
$1.01
$0.11
$1.80
$0.33
$0.91
$0.05
$1.85
June Fuel Prices
Newport
Oregon
$1.65
$2.00
$2.70
$2.50
$2.98
$2.21

Export Prices
Seattle Customs District
H&G Whiting
Sablefish
$0.54
$2.82
$0.54
$2.55
$0.74
$3.61
$0.74
$4.12
$0.90
$4.38
$0.88
$4.59

RIR/IRFA - 51

Non-whiting Trawl Sector: In summary, ex-vessel revenues for the non-whiting sector of the
limited entry trawl fishery are estimated to be approximately $30 to 50 million per year under the
preferred alternative compared to $22 to 25 million under the no action alternative. This revenue
increase is expected to occur in a rationalized fishery because target species quotas can be more
fully utilized. Currently, in the non-whiting sector, cumulative landing limits for target species
have to be set lower because the bycatch of overfished species cannot be directly controlled.
Introducing accountability at the individual vessel level by means of IFQs provides a strong
incentive for bycatch avoidance (because of the actual or implicit cost of quota needed to cover
bycatch species) and prevents the bycatch of any one vessel from affecting the harvest
opportunity of others. In addition, under the preferred alternative, the non-whiting sector would
have control over harvest timing for the whole calendar year. Under the no action alternative, the
non-whiting sector would continue to operate under two-month cumulative landing limits, which
reduce flexibility within a two-month period (because any difference between actual limits and
the period limit cannot be carried over to the next period). Finally, the ability for vessels
managed under IFQs to use other types of legal groundfish gear could allow some increases in
revenue by targeting higher-value line- or pot-gear-caught fish. This opportunity would mainly
relate to sablefish, which are caught in deeper water, rather than nearshore species where state
level regulatory constraints apply.
The preferred alternative may also increase ex-vessel revenues of non-whiting trawl harvesters
by changing their bargaining power with processors over ex-vessel prices. Under the preferred
alternative, the current two-month cumulative limits structure of the non-whiting trawl fishery
would be replaced with QS that is available for a year, thereby extending the time horizon
harvesters have to negotiate prices with processors without losing available fishing opportunity.
The extended period would give harvesters greater latitude to hold out for better prices compared
to the no action alternative. However, it should also be noted that these negotiations will also be
affected by the availability of target species, as well the availability of bycatch.
Costs for the non-whiting sector of the limited entry trawl fishery are expected to decrease under
the preferred alternative because of productivity gains related to fleet consolidation. Productivity
gains would be achieved through lower capital requirements and a move to more efficient
vessels. Operating costs for the non-whiting sector are predicted to decrease by as much as 60
percent annually. Based on estimates of current costs, this percentage decrease represents a $13.8
million cost reduction relative to the no action alternative.
The accumulation limits considered under the preferred alternative are not expected to introduce
cost inefficiencies in the non-whiting sector, provided that current prices and harvest volumes do
not decrease. However, the preferred alternative would impose new costs on the non-whiting
sector that would not be incurred under the no action alternative. First, a landings fee of up to
3 percent of the ex-vessel value of fish harvested would be assessed under the preferred
alternative to recover management costs, such as maintenance of the system of QS accounts.
Second, new at-sea observer requirements would be introduced, and vessels would have to pay
the costs of complying with these requirements, estimated at $500 a day if independent
contractors are hired. The daily observer cost could place a disproportionate adverse economic
burden on small businesses because such costs would comprise a larger portion of small vessels
costs than that of larger vessels.

RIR/IRFA - 52

The increase in profits that commercial harvesters are expected to experience under the preferred
alternative may render them better able to sustain the costs of complying with the new reporting
and monitoring requirements. The improved harvesting cost efficiency under the preferred
alternative may allow the non-whiting sector to realize profits of $14 million to $23 million
compared to zero or less under the no action alternative. In addition, a provision that allows
vessels managed under the IFQ program to use other legal gear (gear switching) would allow
sablefish allocated to the trawl sector to be sold at a higher price per pound, possibly contributing
to increased profits. The imposition of accumulation limits could reduce the expected increase in
the profitability of the non-whiting sector by restricting the amount of expected cost savings, and
the costs of at-sea observers may reduce profits by about $2.2 million depending on the fee
structure. However, the profits earned by the non-whiting sector would still be substantially
higher under the preferred alternative than under the no action alternative.
New entrants are likely to face a barrier to entry in the Pacific Coast groundfish limited entry
trawl fishery in the form of the cost of acquiring QS (or a co-op share in the case of the at-sea
whiting sector). This disadvantages them compared to those entities that receive an initial
allocation of harvest privileges. Small entities may be particularly disadvantaged to the degree
that they may find it more difficult to finance such quota purchases than larger-scale harvesters.
Among the goals the Council identified for the adaptive management program was using the
reserved non-whiting QS to facilitate new entry into the fishery. In addition, as a trailing action,
the Council identified a framework to allow the establishment and implementation of community
fishing associations as part of the adaptive management program. These entities could facilitate
entry into the fishery by leasing QS at below market rates, thereby leveling the playing field in
terms of costs between initial recipients of QS and new entrants.
Whiting Sector. While the effect of the preferred alternative on revenues and costs in the whiting
sector of the limited entry trawl fishery is more difficult to estimate, the lower motivation to
“race for fish” due to co-op harvest privileges is expected to result in improved product quality,
slower-paced harvest activity, increased yield (which should increase ex-vessel prices), and
enhanced flexibility and ability for business planning. The overall effect of these changes would
be higher revenues and profits for harvesters in the shoreside and mothership portions of the
whiting fishery compared to the no action alternative. Under the preferred alternative, some
consolidation may occur in the shoreside and mothership sectors of the Pacific whiting fishery,
though the magnitude of consolidation is expected to be less than in the non-whiting sector. The
existing catcher-processor co-op would continue under the preferred alternative, with effects on
the catcher-processor sector that look similar, or identical, to those of the no action alternative.
However, the change from a vessel-restriction under Amendment 15 to the permit-based limit of
Amendment 21 will provide additional flexibility that currently does not exist in the whiting
fishery.
Trawl Groundfish Processors. The incremental effects of the preferred alternative on buyers
and processors of trawl-caught groundfish are detailed Sections 4.9 and 4.10 of the
Rationalization of the Pacific Coast Groundfish Limited Entry Trawl Fishery FEIS. Even though
processors may have to pay fishermen higher ex-vessel prices, processors may see cost savings
under the preferred alternative to the degree that rationalization allows greater control over the

RIR/IRFA - 53

timing and location of landings. Processors could use current plant capacity more efficiently,
because available information suggests that processing facilities are currently underutilized. Fleet
consolidation in the non-whiting sector could also provide cost savings for processors if landings
occur in fewer locations, thereby reducing the need for facilities and/or transport. The preferred
alternative would also impose new costs on processors that would not be incurred under the no
action alternative. Processors would be required to pay some or all of the costs of plant monitors,
who would verify landings. Similar to at-sea observers, these monitors would be independent
contractors rather than direct employees of the processing firm.
In the non-whiting processing industry, harvest volumes may increase because of a decrease in
constraining species bycatch and a subsequent increase in underutilized target species catch. This
boost in target species catch may increase utilization of processing capital and processing
activity. [It should be noted that if bycatch has been underreported under the current system, with
100 percent observer coverage under the new system, the gains in increased target catches may
be less than expected.] Consequently, the possibility of capital consolidation in the non-whiting
shoreside sector may be lower than in the shoreside whiting sector. However, shifts in the
distribution of landings across ports as a result of fleet consolidation, industry agglomeration,
and the comparative advantage of ports (a function of bycatch rates in the waters constituting the
operational area for the port, differences in infrastructure, and other factors) could lead to
consolidation in processing activity at a localized or regional scale and an expansion in
processing activity elsewhere. To mitigate harm to adversely impacted shoreside non-whiting
processors, the adaptive management provision provides a mechanism to distribute non-whiting
QS to processors, thereby ensuring that some processors receive greater landings of groundfish
than would otherwise be the case.
As noted above, the preferred alternative may reduce the power of shoreside non-whiting
processors to negotiate ex-vessel prices with harvesters. The larger harvest volume due to
bycatch avoidance may lower processor average costs, which could offset the negative effects on
shoreside non-whiting processors of a shift in bargaining power. In addition, QS could be
purchased by processors over the long term, thereby increasing processor’s negotiation power.
However, the accumulation limits included in the preferred alternative would limit the ability of
processors to purchase substantial quantities of QS. Alternatively, the adaptive management
provision could be used to allocate QS to shoreside non-whiting processors, thereby providing
them additional leverage when negotiating terms with harvesters.
The allocation of 20 percent of the initial shoreside whiting QS to the shoreside processing
portion of the whiting fishery would give these processors more influence in negotiations over
ex-vessel prices and would tend to offset the gains in bargaining power for harvesters. For
example, a processor could use QS to induce a harvester that is short of QP for a Pacific whiting
to make deliveries under specified conditions and prices. However, because of a reduction in
peak harvest volume, fewer processing companies and/or facilities may be necessary to handle
harvest volumes of Pacific whiting, meaning some companies may find themselves without
enough product to continue justifying processing operations of Pacific whiting.
The annual co-op declarations under the preferred alternative are expected to give motherships
some certainty over delivery volumes from catcher vessels in the upcoming year, but little

RIR/IRFA - 54

leverage in negotiations over prices or profit sharing.
Captains and Crew. The incremental effects of the preferred alternative on the employment and
safety of the captains and crew of limited entry trawl vessels are detailed in Section 4.7 of the
Rationalization of the Pacific Coast Groundfish Limited Entry Trawl Fishery FEIS. The fleet
consolidation expected to occur under the preferred alternative would result in a decrease in the
number of captain and crew jobs; however, those who retain jobs in the fishery are expected to
receive higher wages due to higher vessel profit margins. The increased financial ability of
vessel owners to invest in safety equipment and conduct vessel maintenance, together with
increased vessel operational flexibility, are anticipated to improve safety conditions on board
trawl vessels.
Nontrawl Commercial Harvesters and Processors. The incremental effects of the preferred
alternative on nontrawl commercial harvesters and processors are detailed in Section 4.8 of the
Rationalization of the Pacific Coast Groundfish Limited Entry Trawl Fishery FEIS. Nontrawl
harvesters include those targeting groundfish with other gear types and those that do not target
groundfish. Since groundfish are an important part of Pacific coast landings, relatively few
processors specialize exclusively in nongroundfish species. The preferred alternative may have a
number of spillover effects on these harvesters and processors, including the following:






Fleet consolidation and increased harvest timing flexibility may allow vessels in the nonwhiting sector of the limited entry trawl fishery to be made available for use in nontrawl
fisheries, increasing participation in those fisheries and adversely affecting the economic
performance of nontrawl harvesters.
Reduction in trawl catch of Pacific halibut (a prohibited species) allows more catch
opportunity in target fisheries, thereby increasing ex-vessel revenues in the directed
halibut fisheries.
Gear switching to target sablefish with fixed gear under trawl quotas could increase
competition on fishing grounds, a potential cost increase for nontrawl harvesters.
If the fleet consolidation expected in the non-whiting sector under rationalization
concentrates trawl landings in fewer ports, the loss of fishing-related port infrastructure
could increase costs for nontrawl harvesters and processors in those ports.

Recreational Harvesters. The incremental effects of the preferred alternative on recreational
harvesters are detailed in Section 4.5.3 of the Rationalization of the Pacific Coast Groundfish
Limited Entry Trawl Fishery FEIS. Fleet consolidation in the non-whiting sector that is expected
to occur under the preferred alternative could reduce the availability of fishing-related
infrastructure in specific ports. It is, however, unlikely that this reduction would substantially
affect the types of services and amenities upon which recreational harvesters depend (e.g.,
charter operations, boat ramps, bait suppliers, tackle shops) or the quality of the recreational
fishing experience.
Fishing Communities. The FEIS describes the status quo of fishing communities as the
following :
A summary of major themes presented in public testimony during the 2007-08 groundfish

RIR/IRFA - 55

specification process (PFMC 2006) includes comments on the following:










The negative cumulative effects of both Federal regulations (such as closed areas, fathom
restrictions, season restrictions, and VMS) and nonfederal actions (cable crossings,
proposed state restrictions) on fisheries, businesses, and communities
Crumbling infrastructure (processors, buyers, ice plants, and businesses that support
processors closing or consolidating, docks and harbors not being maintained; market
infrastructure collapsing);
Recreational and commercial fishing vessels going out of business or being forced to
diversify;
Fishing-related businesses, such as gear stores, boat repair shops, tackle shops, and
fishing equipment manufacturers, and nonfishing-related businesses, such as hotels,
restaurants, and car dealerships, feeling the impacts of reduced fishing income, including
laying off employees or closing
Decreasing tax bases due to business closures
Increasing social tensions in communities, such as psychological impacts, marital
tension, divorce and suicide
Difficulty in making business decisions and planning for the future
Further dependence on groundfish due to salmon cutbacks

The fleet consolidation that is expected to occur under the preferred alternative, particularly in
the non-whiting sector, could have a negative economic effect on some coastal communities
where groundfish trawlers are an important component of the local fishing fleet (in terms of local
purchases, not necessarily number of vessels). As the fleet size shrinks, the remaining vessels
would concentrate in a few major ports. Income and employment in those communities that
experience a decline in local fleet size could be adversely affected. Fishery-related businesses in
the community may cease operations because of lost business. Smaller, specialized retailers (e.g.,
ice suppliers, ship chandlers, cold storage facilities, fuel docks) would be especially vulnerable to
a decreased demand for fishing-related goods and services inputs. Businesses unrelated to fishing
may also feel the impacts of reduced fishing income in the community. Some of these effects
would be mitigated by the higher profits expected to be earned by trawl harvesters under the
preferred alternative. However, because fleet consolidation is expected, the benefits of increased
vessel profitability are likely to be unevenly distributed among coastal communities. Tracking
and monitoring costs may affect ports with low landings or intermittent landings, as there may be
logistical issues with deploying catch monitors and observers.
The table below summarizes the comparative advantage of non-whiting communities under the
preferred alternative. Ports at a disadvantage from consolidation and geographic shift have a
relatively inefficient fleet (vessels with a relatively long travel time to fishing grounds, those
with relatively unsuccessful operators, costly vessels, and inefficiently sized vessels contribute to
the “fleet efficiency” score in the table below), insufficient infrastructure, and are adjacent to
fishing grounds with high constraining overfished species abundance (“bycatch dependence” in
the table below). The table also includes a positive or negative score for “initial allocation of
groundfish,” as determined by the initial allocation estimates.

RIR/IRFA - 56

Table 3. Comparative advantage of non-whiting trawl communities under the preferred alternative.
Fleet
Bycatch
Shore-based
Initial
Dependent
Efficiency
Infrastructur
Allocation
Score
Port
Area Score
e
of Groundfish
Score
†
Bellingham
?
-++
+
*†
Neah Bay
--Westport*†
+
+
Astoria*†
+
+
++
++
+
*†
Newport
+
++
+
Charleston (Coos
Bay) *†
+
+
++
+
+
*
Brookings
+
+
+
*†
Crescent City
+
+
*†
Eureka
+
+
+
+
+
Fort Bragg*†
+
+
+
San Francisco
++
+
*†
Moss Landing
-+
+
Princeton/Half
Moon Bay*
-+
+
*†
Morro Bay
?
+
*Small governmental jurisdiction based on Small Business Administration standard. No small governmental
jurisdictions would be directly regulated by the proposed actions.
†
Community that is “vulnerable” due to a high dependence on fishing activity and/or a relatively low resilience to
change.

The adaptive management provision could be used to mitigate adverse impacts to communities,
particularly ports with non-whiting processors. Directing the adaptive management quota to
specific communities that have demonstrated harm, or a likely harm, could maintain fishing
activity in a community that may otherwise stand to lose that activity. In addition, the preferred
alternative includes other mechanisms that could mitigate adverse impacts to communities, such
as a two-year moratorium on QS transfers, a five-year review that includes a community
advisory committee, accumulation limits and a two-year review of some of the limits, the
opportunity for communities to receive an initial QS allocation by acquiring a trawl permit, and a
trailing action to establish community fishing associations.
The allocation of 20 percent of the initial shoreside whiting QS to the shoreside processing
portion of the whiting fishery would give these processors more influence over the location of
landings by enticing or directing harvests to existing plants even if the harvesters prefer to fish in
other areas. However, consolidation in the processing sector is still expected to occur, and this
consolidation of shoreside whiting processors will have an effect on communities.
Communities have been evaluated according to whether they are “dependent,” “engaged,”
“resilient,” or “vulnerable.” Most studies use the term “dependence” to mean a community’s use
of a particular resource (for example, whiting or flatfish). “Engagement” is used to describe a
community’s use of a more general resource (for example, fisheries). The term “resilience” is

RIR/IRFA - 57

used to describe a community’s ability to adapt to change. “Vulnerable” areas are communities
that are either highly engaged or highly dependent and that have relatively low resilience.
This information is useful for considering impacts to communities in cases where changes in
fishing activity have different degrees of impact on a community. In such cases, a moderate
change in fishing activity occurring in a vulnerable community may be considered a substantial
impact, while a moderate change in fishing activity in a less vulnerable community may be
considered relatively inconsequential. The projected effects of the trawl rationalization program
on the communities is described in Table 4 (Table 4-71 of the FEIS):
Table 4. Summary of the impacts of rationalization on communities.
Community
General Impacts
Vulnerability
Vulnerable.
Benefits from initial
Medium
allocation, allocation of IFQ
dependence and
Bellingham
to processors; but close to
medium
high bycatch area.
resilience.
Anacortes

Seattle

Neah Bay

Westport

Ilwaco

Not strongly affected by
rationalization due to nature
of fishery (at-sea catcherprocessors)
Not strongly affected by
rationalization due to nature
of fishery (at-sea whiting),
diversity and size of
community
At risk of losing trawl fleet.
Receives less than average
in initial allocation. May
experience reduction in
landings if processors are
allocated quota.
Would receive less than
average initial allocation.
Processor could benefit
from processor QS.
Consolidation could remove
nonwhiting activity from
port.
Primarily a whiting port.
Receives less than average
initial allocation of
nonwhiting. Processor could
benefit from QS.

Not vulnerable.

Not vulnerable.

Cumulative Impact Notes
Long-term decline in natural resources
employment, but diversified economy.
Population has grown 14% since 2000.
Increasing gentrification. Young
population.
Long-term decline in natural resources
employment. Increasing tourism and
retiree destination. Population has
grown 14% since 2000. Should benefit
from whiting amendments (10 & 15).
Diversified economy with strong
fishing infrastructure. Population has
grown 5% since 2000. Should benefit
from whiting amendments (10 & 15).
Increasing gentrification.

Extremely
vulnerable.

Relatively heavy reliance on natural
resource jobs. Impacted by 2008
salmon closures. Near marine
sanctuary and wave energy site. Olderthan-average population.

Vulnerable.
Fairly dependent
on groundfish
fishery, but fairly
resilient.

Tourism and natural resources both
historically important to economy.
Impacted by salmon closure. Luxury
boatbuilding, important to economy,
could be affected be economic
downturn.

Vulnerable. Low
dependence on
groundfish, but
low resilience.

Increasing population (5%). Olderthan-average population. Impacted by
2008 salmon closure. Should benefit
from whiting amendments (10 & 15).

RIR/IRFA - 58

Table 4 cont. Summary of the impacts of rationalization on communities.
Community
General Impacts
Vulnerability

Astoria/Warrenton

Expected to benefit from
rationalization, with large
initial allocation and
possibly increased
harvesting and processing
activity.

Astoria is
vulnerable;
Warrenton is not.
Medium to high
resilience.

Newport

Expected to benefit from
rationalization, with large
initial allocation and
possibly increased
harvesting and processing
activity.

Vulnerable. Very
dependent on
groundfish
fisheries, but also
fairly resilient.

Coos Bay/
Charleston

Expected to benefit from
rationalization, with large
initial allocation and
possibly increased
harvesting and processing
activity.

Somewhat
vulnerable.
Dependent on
groundfish with
medium
resilience.

Brookings

Would benefit slightly from
initial allocation. Currently
no processors of trawl
groundfish; processing
could be less likely to move
to Brookings under
rationalization.

Not vulnerable.
Dependent on
groundfish, but
high resilience.

Crescent City

Would receive lower-thanaverage initial allocation.
Relatively inefficient fleet;
however, scores well on
bycatch dependency, which
could mitigate other factors.

Vulnerable;
relatively
dependent on
groundfish, with
medium
resilience.

RIR/IRFA - 59

Cumulative Impact Notes
General long-term decline in natural
resources employment. Astoria
population stable; Warrenton
population increasing. Slightly olderthan-average population. Impacted by
2008 salmon closures. Should benefit
from whiting amendments (10 & 15).
Increasing tourism (with
accompanying low-paying jobs) and
increasing gentrification, especially in
Astoria. Some population leaving to
find higher-paying jobs.
General long-term decline in natural
resources employment. Active tourist
industry and increasing gentrification.
Older-than-average population.
Slightly increasing population.
Impacted by salmon closure. Should
benefit from whiting amendments (10
& 15). Wave energy projects have
been proposed for nearby waters.
Heavily dependent on natural resource
economy. Impacted by salmon closure.
Should benefit from whiting
amendments (10 & 15). Slight
population increase since 2000. Olderthan-average population. Large wave
energy project proposed for nearby
waters.
General long-term decline in natural
resources employment. Greatly
increasing population (23.8% between
1990-2000, 15.9% between 20002007), many retirees. Much older-thanaverage population. Heavily reliant on
recreational fishing. Impacted by 2008
salmon closures.
General long-term decline in natural
resources employment. Many large
rent-paying vessels removed by 2003
trawl buyback. Reliant on tourism.
Slightly increasing population.
Impacted by salmon closure.

Table 4 cont. Summary of the impacts of rationalization on communities.
Community
General Impacts
Vulnerability

Eureka

Would receive higher-thanaverage initial allocation.
Located in low-bycatch
area.

Vulnerable;
relatively
dependent on
groundfish, with
medium
resilience.

Fort Bragg

Would receive higher-thanaverage initial allocation.
Located in low-bycatch
area. However, a relatively
inefficient fleet.

Vulnerable;
relatively
dependent on
groundfish, with
medium
resilience.

San Francisco

Princeton/
Half Moon Bay

Moss Landing

Would receive higher-thanaverage initial allocation.
Strong infrastructure.
However, located in a highbycatch area. May lose
some of its relatively
inefficient fleet.
Initial allocation may be
higher or lower than
average, depending on
allocation formula. Located
near high bycatch area.
Relatively inefficient fleet
(some vessels may be lost),
but strong infrastructure
may mitigate these factors.
Would receive higher-thanaverage initial allocation.
May experience reduction in
landings if processors are
allocated quota. Inefficient
fleet near high bycatch area.

Cumulative Impact Notes
General long-term decline in natural
resources employment; reliant on
tourism, timber, and fishing. Sixteen
groundfish vessels retired through
trawl buyback. Decreasing population
(3%). Impacted by salmon closure.
Four wave energy projects are
proposed for nearby state and Federal
waters.
General long-term decline in natural
resources employment (large mill
closed in 2002). Decreasing population
(3%). Older-than-average population.
Impacted by 2008 salmon closure.
Increasing gentrification. Three wave
energy projects are proposed for
nearby state and Federal waters.
Several marine protected areas located
in nearby waters.

Not vulnerable.

Decreasing population (2%). Ongoing
gentrification of fishing facilities.
Wave energy projects proposed for
nearby waters (mainly bay). Impacted
by 2008 salmon closure.

Not vulnerable.

Historically dependent on tourism;
active tourist industry. Slightly
increasing population; older-thanaverage population. Increasing
gentrification. Near Monterey Bay
Sanctuary and newly designated
California MPAs.

Vulnerable;
somewhat
dependent on
groundfish, with
low resilience.

Historically reliant on sardine and
other fisheries. Near Monterey Bay
Sanctuary and newly designated
MPAs. Affected by 2008 salmon
closure.

RIR/IRFA - 60

Table 4 cont. Summary of the impacts of rationalization on communities.
Community
General Impacts
Vulnerability
Currently no trawlers are
trawling out of Morro Bay.
Permits bought out by
Vulnerable.
Nature Conservancy.
Medium
Impossible to predict how
dependence on
Morro Bay
efficient fleet may be in
groundfish, but
future. Would receive less
highly resilient.
than average initial
allocation of QS.

Cumulative Impact Notes
Active tourist industry. Slightly
decreasing population. Increasing
gentrification. Impacted by salmon
closure. Five groundfish vessels
participated in buyout. New MPAs
located in nearby waters. One wave
energy project currently proposed for
nearby waters.

One of the key indicators of community health is the unemployment rate. Unfortunately,
because many of these communities are small, current unemployment rates cannot be found.
However, there are current estimates for the counties in which these communities reside. [The
data below are taken from the Local Area Unemployment Statistics, U.S. Department of Labor,
Bureau of Labor Statistics Databases –see www.bls.gov .]
These trends show that, relative to 2004, unemployment rates were declining but then increased
significantly in 2009, mirroring the general trend in the overall U.S. economy. The implication
is that vulnerable communities are becoming more vulnerable.

RIR/IRFA - 61

Trends in Unemployment Rates By County of Home Port
(% Unemployed)
Washington

2004
2005
2006
2007
2008
2009
Oregon

2004
2005
2006
2007
2008
2009
California

2004
2005
2006
2007
2008
2009

Clallam
Neah Bay
7.1
6.5
5.8
5.7
6.8
9.6

Grays Harbor
West Port
8.3
7.5
6.9
6.9
7.4
12.6

Pacific
Ilwaco
7.7
7.1
6.4
6.9
6.6
12.2

Whatcom
Bellingham
5.8
5.0
4.5
4.1
4.9
8.0

State
6.2
5.5
4.9
4.6
5.4
8.9

Clatsop
Astoria
6.8
5.8
5.0
4.7
5.1
8.9

Lincoln
Newport
8.1
8.1
6.0
5.5
6.5
10.4

Coos
Coos Bay
9.0
7.6
6.7
6.6
8.1
12.0

Curry
Brookings
7.5
7.0
6.8
6.5
7.8
13.1

State
7.3
6.2
5.3
5.1
6.5
10.7

Del Norte
Cresent City
8.1
7.5
6.9
7.5
8.7
12.2

Humboldt
Eureka
6.5
6.1
6.5
5.9
7.2
11

Mendocino
Fort Bragg
6.4
5.8
5.2
5.5
6.8
10.5

Monterey
Moss Landing
8.3
7.3
6.9
7.1
8.4
11.9

State
6.2
5.4
4.9
5.2
7.2
11.4

RIR/IRFA - 62

Tribal Fisheries. The incremental effects of the preferred alternative on treaty tribe harvesters
are detailed in Section 4.15 of the Rationalization of the Pacific Coast Groundfish Limited Entry
Trawl Fishery FEIS. Under the preferred alternative, tribal groundfish fisheries are expected to
generate at least the same level of ex-vessel revenues and personal income as generated under
the no action alternative. Loss of port infrastructure due to harvester and processor consolidation
could affect tribal fisheries disproportionately. As shown in Table 4-69 of the FEIS, the port of
Neah Bay appears to be at a particular disadvantage under the preferred alternative because of its
lack of fleet efficiency, lack of shore-based infrastructure, and the high degree of dependence
that vessels in this port have on areas defined as “high bycatch.”
Seafood Consumers. The incremental effects on seafood consumers are considered in Section
4.5.4 of the Rationalization of the Pacific Coast Groundfish Limited Entry Trawl Fishery FEIS.
Under the preferred alternative, consumers of groundfish products could benefit from greater
availability of target species and new product forms. Given that the current management strategy
is focused on a year-round fishery via bimonthly trip limits, there may be little change in the
seasonal availability of groundfish products. However, due either to the high bycatches of
rockfish species or to high catches of petrale sole preseason, the traditional winter petrale sole
fishery has been greatly restricted or closed down as occurred in 2007. These closures affect the
availability of petrale sole to the consumer. Under the preferred alternative, closures of major
fisheries are unlikely to happen. The major product form for whiting in recent years has been
H&G whiting. This product is mainly for the Eastern European markets. The other groundfish
products generally have close substitutes available from elsewhere in the global supply chain.
For example, seafood processors have testified to the competition from imported tilapia.
Therefore, for most consumers of fresh and frozen seafood products, there is probably little
difference between the preferred alternative and no action alternative.
Nonconsumptive and Nonuse Values. The incremental effects on nonconsumptive and nonuse
values are considered in Section 4.5.5 of the Rationalization of the Pacific Coast Groundfish
Limited Entry Trawl Fishery DEIS. The preferred alternative may reduce bycatch of overfished
stocks, which could enhance the value of wildlife viewing experience for nonconsumptive users.
Nonuse values are affected by the impact of harvest on the status of fish stocks. To the degree
that the preferred alternative is more effective than the no action alternative in constraining trawl
sector harvests to levels expected to improve stock status, nonuse values would be enhanced. It
was not practicable to monetize theses changes in nonconsumptive and non-market values;
however, they are treated qualitatively in order to provide a complete accounting of costs and
benefits attributable to the preferred alternative.
Management Agencies. The incremental effects on management agencies were detailed in
Section 4.16 of the Rationalization of the Pacific Coast Groundfish Limited Entry Trawl Fishery
FEIS. Public expenditures for monitoring and enforcement are expected to increase under the
preferred alternative compared to the no action alternative. Some of these costs would be
covered by industry directly (at-sea observer and plant monitor costs) or indirectly through a
landings fee. At the state and Federal level, the total expenditure is estimated to range from
approximately $2.8 million to $5.6 for startup of the program based on fiscal years 2010 and

RIR/IRFA - 63

2011 first quarter expenditures. After a period of transition, annual program costs are expected
to be in the neighborhood of about $5.0 million annually.
4.5.2 Summary of Net Benefits to the Nation
Table 5 summarizes the net benefits to the nation under the preferred alternative based on a
qualitative and quantitative assessment. Improvements in the economic performance of
harvesters in the Pacific Coast groundfish limited entry trawl fishery may be substantial as a
result of expected cost efficiencies created by fleet consolidation, increased flexibility in harvest
timing, and increase in the harvest of underutilized target species due to incentives to reduce
bycatch. Those harvesters who choose to exit the fishery would receive financial compensation
from selling their permit or share of the resource. The improvement in the economic
performance of processors in the fishery may also be substantial due to increased processing of
target species, increased season length and processor consolidation. An initial allocation of QS to
shoreside whiting processors is expected to replace the lost capital value potentially occurring
among these processors due to a decline in processing demand.
The preferred alternative may also result in a shift in the balance of bargaining strength between
harvesters and processors. This shift, in turn, can affect the distribution of efficiency gains. By
providing harvesters with a guaranteed harvest opportunity over a longer period compared to the
no action alternative, the preferred alternative may change the relative bargaining power between
processors and harvesters by giving harvesters greater latitude to hold out for better ex-vessel
prices. On the other hand, an initial allocation of whiting QS to whiting processors will tend to
enhance their negotiation power with harvesters over prices. In addition, the adaptive
management provision provides a mechanism to distribute non-whiting QS to processors,
thereby mitigating harm to adversely impacted shoreside non-whiting processors.
Fleet consolidation would result in a decrease in the number of captain and crew jobs; however,
those who retain jobs are expected to receive higher wages due to higher vessel profit margins.
Increased vessel profits and operational flexibility are anticipated to improve safety conditions
onboard trawl vessels. Fleet consolidation may lead to the spillover of excess vessels into
nontrawl commercial fisheries that are operationally similar, thereby increasing competition in
those fisheries. Fishing communities will be affected differentially, depending on whether fleet
and processor consolidation results in a concentration or loss of vessels and commercial
infrastructure.
The main socioeconomic impact of the long-term, formal allocations of specified groundfish
stocks and stock complexes among sectors of the Pacific Coast groundfish fishery is increased
stability for the limited entry trawl fishery. While the allocations under the preferred alternative
do not differ significantly from status quo allocations made biennially, there is more certainty in
future trawl harvest opportunities, which enables better business planning for participants in the
rationalized fishery.

RIR/IRFA - 64

Table 5. Summary of net social benefits of the preferred alternative relative to the no action alternative.
Qualitative Assessment
Trawl Harvesters and Processors
Change in Costs
+/Change in Revenues
+
Change in Profitability
+
Captains and Crew
Change in Employment and Wages
Change in Fishing Vessel Safety
Nontrawl Commercial
Harvesters and Processors
Change in Costs
Change in Revenues
Recreational Harvesters
Change in Value of Recreational
Fishing Experience
Tribal Fisheries
Change in Revenues and Costs
Fishing Communities
Change in Concentration of Vessels
and Commercial Infrastructure
Seafood Consumers
Change in Prices
Change in Quantity/Quality of
Seafood Products
Nonconsumptive and Nonuse
Values
Change in Values Associated with
Healthy Fish Stocks
Management Agencies
Monitoring and Enforcement Costs

Quantitative Assessment
~$13.8 million decrease for non-whiting
sector due to productivity gains related to fleet
consolidation, but at-sea observe requirements
will increase costs by ~$2.2 million
$5-22 million increase in ex-vessel revenues
for non-whiting sector
$14-23 million increase in profits for nonwhiting sector, not including at-sea observer
costs

+/+

+
+/-

0
0

+/0
+

+
+

$5.0 million for startup of the program, $6.5
million for the first few years of the program,
and perhaps falling to $4.0 to $4.5 million

4.6 Description of the Projected Reporting, Recordkeeping, and Other
Compliance Requirements of the Proposed Rules
The preferred alternative has reporting, recordkeeping, and other compliance requirements. A
tracking and monitoring program would be necessary to ensure that the total catch (including
discards) is accurately documented and matched against QP. All vessels in the shoreside nonwhiting and whiting sectors would be required to carry at-sea observers to monitor sorting and
discarding of the catch and shoreside landings. There would also have to be an electronic system
to report bycatch and landings, which may be integrated with the current state fish ticket

RIR/IRFA - 65

(landings reporting) system. Plant monitors would be required to ensure that the electronic fish
tickets are accurate.
A new reporting requirement related to the tracking of quota shares and QP in the shoreside
sector. Current requirements for motherships, mothership catcher vessels, and catcher-processors
would continue to be in effect. However, a new program for the mandatory submission of
economic data by both the shoreside and at-sea whiting sectors would be implemented to
facilitate monitoring IFQ and co-op program performance.
In addition to the catch reporting and monitoring requirement, the preferred alternative would
impose other compliance requirements. A landings fee of up to 3 percent of the ex-vessel value
of fish harvested would be assessed to recover costs of management, data collection and analysis,
and enforcement activities. Second, new at-sea observer requirements would be introduced, and
vessels would have to pay the costs of complying with these requirements, estimated at $350 to
$500 a day.
4.7 Identification of Relevant Federal Rules that may Duplicate, Overlap, or
Conflict with the Proposed Rules
There are no relevant Federal rules that may duplicate, overlap, or conflict with this action.
4.8 Description of Significant Alternatives to the Proposed Rules
Each IRFA shall also contain a description of any significant alternatives to the proposed rule
that accomplish the stated objectives of applicable statutes and that minimize any significant
economic impact of the proposed rule on small entities.
There are no significant alternatives to the proposed rule that accomplish the stated objectives of
applicable statutes and that minimize any of the significant economic impact of the proposed rule
on small entities.
The proposed action includes provisions that would have a beneficial impact on small entities. It
would create a management program under which most recent participants in the Pacific Coast
groundfish limited entry trawl fishery (many of which are small entities) would be eligible to
continue participating in the fishery and under which the fishery itself would experience an
increase in economic profitability. Small entities choosing to exit the fishery should receive
financial compensation from selling their permit or share of the resource. To prevent a particular
individual, corporation, or other entity from acquiring an excessive share of the total harvest
privileges in the program, accumulation limits would restrict the amount of harvest privileges
that can be held, acquired, or used by individuals and vessels. In addition, for the shoreside
sector of the fishery, an adaptive management program would be allocated an amount of harvest
privileges that could be used to mitigate any adverse impacts, including impacts on small
entities, that might result from the proposed action.

RIR/IRFA - 66

The following is excerpted from “Analysis of Components, Elements, and Options for the
Individual Fishing Quota Alternative Trawl Individual Components Analysis, Appendix A to
the Pacific Coast Groundfish Limited entry Trawl Fishery Environmental Impact Statement.”
Under the MSA, the Council is required to consider entry-level fishermen, small vessel owners,
and crewmembers, and in particular the possible allocation of a portion of the annual harvest to
individuals falling in those categories. No special provisions have been identified for analysis
given that new entry is addressed indirectly by allowing crew, captains and others to acquire QS
in small increments.
Section 303A(c)(5)(C) of the MSA requires that in developing a LAPP, the Council do the
following:
Include measures to assist, when necessary and appropriate, entry level and small vessel
owner-operators, captains, crew, and fishing communities through set-asides of
harvesting allocations, including providing privileges, which may include set asides or
allocations of harvesting privileges, or economic assistance in the purchase of quota.4
The MSA requires that the Council consider, and, if appropriate, provide additional measures to
benefit the named groups. The Council has considered these groups and certain other elements
of the program have been designed with impacts on these groups in mind, including the
following:
1. Allocating based on the history of the permit, allowing new entrants to receive a greater
initial allocation than they would if the allocation were based just on their personal
history in the fishery (Section A-2.1.1).
2. Including an equal allocation component as part of the initial allocation formula for
permits, this will benefit historically smaller producers (Section A-2.1.3).
3. Not including a minimum holding requirement provision, this might be more difficult for
smaller vessels to comply with than larger vessels (A-2.2.1).
4. Specifying a broad class of eligible owners, that includes crews and fishing communities
(Section A-2.2.3.a).
5. Specifying that the QS/QP be highly divisible so as to facilitate the acquisition of QS/QP
in small increments by crewmembers, those that have just entered the fishery, and
operators of small vessels (Section A-2.2.3.d).
6. Including provisions for a set-aside, as needed to support an adaptive management
program that may be used at some future time to address community concerns or create
other incentives to benefit the groups listed in 303A(c)(5)(C) or for other purposes
(Section A-3).
The TIQC also debated and reported to the Council options for a loan program and a provision
that would allocate shares forfeited through a use-or-lose provision to new entrants. The TIQC
did not recommend that the Council adopt the loan program because the rationalization program
already has high costs and the program would act as a subsidy that might drive up QS prices.
4

An Assisted Purchase Program may be developed to aid in financing quota purchase by small vessel
fishermen and first time purchase by entry-level fishermen (MSA – 303A(g)(1)).

RIR/IRFA - 67

The use-or-lose provision was not included as part of the package because of implementation
obstacles. The TIQC also noted that providing a central lien registry would facilitate obtaining
financing by increasing security in the collateral, reducing risk and therefore lower interest rates.
This would benefit new entrants. Such a registry, while required by the MSA, has not been
implemented.
Much of the focus in developing the program is on the impacts of those who are currently in the
industry and who will benefit from receiving an initial allocation of QS. Those individuals will
be in an economically stronger situation. The value of the QS they receive will be a stream of
resource-related rents (additional profits). Because of the infusion of wealth provided by the QS,
they will likely be in an economically better position to bear the brunt of increasing fuel prices,
program costs, and, if it should occur, declines in the available harvest. As holders of the QS,
they will also accrue the benefits that occur from factors that increase the value in the fishery.
However, over the long term, the constituents of the commercial fishery who come before the
Council will be those who at one time or another have been new entrants. New entrants who
choose to own QS will have paid an amount for their QS based on the best projections of future
profits after taking into account expected fuel prices and other production costs, including
observer costs, expected ex-vessel prices for raw fish, expected harvest levels, and, significantly,
the cost of the QS. If it turns out that costs are greater than expected or revenue is less than
expected, they will not have the same revenue buffer initial QS recipients have. Under such
circumstances, a new entrant may experience below-normal levels of profit, possibly even
similar to those seen in the status quo fishery. At the same time, if costs are lower or revenues
higher, they will experience a higher than expected return that will not be dissipated by increased
competition. Thus, the IFQ program provides some expectation of more stable profits even for
second-generation participants that choose to own QS. However, second-generation participants
need not necessarily take on the risk of QS ownership.
The need to acquire quota will add to costs for second-generation owners, as compared to those
who came before. In addition to paying for the physical capital (vessel, etc.) they will have to
acquire QP each year and may choose to do so by making a capital investment in QS (by
acquiring QS). By owning their own QS they would control their risk with respect to changing
QP prices. However, by holding their own QS they will bear risk and reward from the changing
value of the QS asset (increases, if there is a trend toward higher vessel costs or lower revenue,
or decreases if conditions move in the other direction). If there were not an IFQ program,
entering the fishery would require less of an investment but revenues would likely be lower.
Assuming that all extra profits (resource rents) under status quo are dissipated, the fishery would
have similar downside risks but less upside potential as compared to a fishery managed with
IFQs. Upside potential would be lower under status quo because higher than expected profits
would likely be dissipated by increased competition. If a harvester enters the fishery and
chooses not to acquire QS, but rather to lease QP, the capital investment will be lower, they will
not risk the potential decline in value of the asset they purchase, they will have a more limited
benefit from any long-term improvement in economic conditions in the fishery, and, if they are
able to be competitive, will fish at a normal profit level through QP they buy during the season
or are provided by processors. [Note: a normal profit implies zero economic profit but sufficient
profit to compensate for their investment.]

RIR/IRFA - 68

4.9 RIR Significance Questions
The RIR Guidelines require a review of the following four questions. Responses to those issues
are provided.
1) Will the rule have an annual effect on the economy of $100 million or more or adversely
affect in a material way the economy, a sector of the economy, productivity, competition,
jobs, the environment, public health or safety, or state, local, or tribal governments or
communities?
The proposed action is expected to have a positive effect on the national economy, although
it is unlikely to exceed $100 million annually. Economic profit from the non-whiting sector
of the Pacific Coast groundfish limited entry trawl fishery is estimated at about $14 million
to $23 million, although various proposed measures (accumulation limits, at-sea observers)
would reduce this profit somewhat. While similar estimates of changes in profits are not
available for the whiting sector, the lower motivation to “race for fish” due to co-op harvest
privileges is expected to result in improved product quality, slower-paced harvest activity,
increased yield (which should increase ex-vessel prices), and enhanced flexibility and ability
for business planning. The overall effect of these changes would be higher revenues and
profits for harvesters in the shoreside and mothership portions of the whiting fishery.
Improvements in the economic performance of processors in the Pacific Coast groundfish
limited entry trawl fishery may also be substantial due to increased processing of target
species, increased season length, and processor consolidation. An initial allocation of QS to
shoreside whiting processors is expected to replace the lost capital value potentially
occurring among these processors due to a decline in processing demand.
Fleet consolidation would result in a decrease in the number of captain and crew jobs;
however, those who retain jobs are expected to receive higher wages due to higher vessel
profit margins. Increased vessel profits and operational flexibility are anticipated to improve
safety conditions on board trawl vessels. Fleet consolidation may lead to spillover of excess
vessels into nontrawl commercial fisheries that are operationally similar, thereby increasing
competition in those fisheries. Fishing communities will be affected differentially,
depending on whether or not fleet and processor consolidation results in a concentration or
loss of vessels and commercial infrastructure.
The main socioeconomic impact of the long-term, formal allocations of specified groundfish
stocks and stock complexes between sectors of the Pacific Coast groundfish fishery is
increased stability for the limited entry trawl fishery. While the allocations under the
proposed action do not differ significantly from status quo allocations made biennially, there
is more certainty in future trawl harvest opportunities, which enables better business planning
for participants in the rationalized fishery.

RIR/IRFA - 69

The proposed action does not present a risk to long-term productivity. As discussed above,
productivity is expected to increase through fleet consolidation and other factors. The gains are
expected to continue over the long term.
2) Will the rule create a serious inconsistency or otherwise interfere with action taken or
planned by another agency?
No inconsistencies or conflicts with the activities of other agencies have been identified.
3) Will the rule materially alter the budgetary impact of entitlement, grants, user fees, or
loan programs or the rights and obligations of recipients thereof?
The MSA (§303A(e) and §304(d)(2) provides that up to 3 percent of the ex-vessel value of
fish harvested under a limited access privilege program may be assessed to recover costs of
management, data collection and analysis, and enforcement activities. The assessment of
such a fee is included as part of the proposed action in order to cover management costs, such
as maintenance of the system of quota share accounts. In 2006, the Federal government
established a loan program to purchase groundfish limited entry trawl permits and associated
vessels and retire them from the fishery to reduce capacity. This buyback program is based
on both a grant to subsidize the cost and a loan program whereby remaining fishery
participants pay a landings-based fee to retire the upfront cost. The proposed action will not
alter this obligation and fishery participants will continue to pay the landings fee.
4) Will the rule raise novel legal or policy issues arising out of legal mandates, the
President's priorities, or the principles set forth in the EO?
The Council considered various arrangements for obligating catcher vessels participating in
co-ops to deliver to certain processors. In particular, the co-op proposal for shoreside whiting
vessels included provisions for obligating deliveries that were found to be outside NMFS’s
legal authority. However, this proposal was not included in the preferred alternative. The coop program proposed for the mothership sector, which was included in the preferred
alternative, was structured in a way to avoid potential legal issues. Otherwise, the proposed
action is consistent with the President’s priorities as reflected in the NOAA Administrator’s
emphasis on the use of catch share programs in fishery management.

RIR/IRFA - 70

Attachment 1

Update to the Tracking and Monitoring Costs of the Program
Tracking and Monitoring Program
A key feature of the trawl rationalization program would be a shift from the current catch
accounting system for the shoreside sector that uses fleetwide estimates of discards based on an
observer sampling system that has 20 percent coverage to an ‘individual accountability’ system
where all catch by shoreside vessels would count against participants’ shares, including both
retained and discarded catch based on 100 percent observer coverage on vessels and 100 percent
compliance monitoring in the plants. Under the current management system, shorebased
fishermen fish against bimonthly trip limits and annual fleetwide quotas and have no direct
accountability for discards. Under the proposed system, shorebased fishermen would fish
against “individual” quotas against which their discards would count. Within the whiting
fishery, there will be two major changes. Shoreside whiting vessels will no longer be monitored
by cameras as they will be required to have observers. Catcher-vessels that deliver to
motherships are currently unmonitored; these vessels, too, will be required to carry observers.
Amendment 20 would include a tracking and monitoring program to ensure that all catch
(including discards) would be documented. For shoreside vessels, catch would be matched
against QP; for the at-sea co-ops, catch would be matched against sector amounts. The Council
specified that observers would be required on all vessels, and shoreside monitoring (catch
monitors) would be required during all off-loading (100 percent coverage). Compared to status
quo monitoring, this would be a monitoring and observer coverage level increase for a large
portion of the trawl fleet, particularly nonwhiting shoreside vessels.
The Council recommended providing NMFS with the flexibility to develop a monitoring
program that would achieve the objectives of the QP program. NMFS is working closely with
the states and the Council to develop the details of the tracking and monitoring program, as
reported by Pacific States Marine Fisheries Commission (PSMFC) at the April 2010 Council
meeting. The details of the program will be proposed in the upcoming program components rule.
As reported by PSMFC, the following tracking and monitoring components will be addressed.
Amendment 20 would require NMFS-certified, at-sea observers on each vessel. This
requirement includes shoreside catcher vessels, mothership catcher vessels, mothership
processors, and catcher-processors. Because this is a new program, ensuring adequate observer
coverage would be particularly important for monitoring the complex suite of allocations.
Observers aboard vessels would be required to adequately account for catch and bycatch in the
fishery. Among his or her duties, the observer would record fishing effort and estimate total,
retained, and discarded catch weight by species or species group; determine species composition

of retained and discarded catch (non-whiting vessels), and document the reasons for discard;
record interactions and sightings of protected species; take biological samples from tagged fish
and discards; and estimate viability of Pacific halibut. Observers would be essential to monitor
IBQ in the fishery, including IBQ weighing and discarding.
An increase in observer and catch-monitoring coverage requirements would result in increased
costs over the status quo observer program costs. There would be a combined status quo, pay-asyou-go industry funding and agency-funded observer and catch monitoring system, as required
for each sector. The agency has announced its intent, subject to available Federal funding, that
participants initially be responsible for 10 percent of the cost of hiring observers and catch
monitors. The industry proportion of the costs of hiring observers and catch monitors will be
increased every year so that, by 2014, once the fishery has transitioned to the rationalization
program, the industry will be responsible for 100 percent of the cost of hiring the observers and
catch monitors. NMFS believes that an incrementally reduced subsidy to industry-funding will
enhance the observer and catch monitor program’s stability, ensure 100 percent observer and
catch monitor coverage, and facilitate the industries’ successful transition to the new quota
system.
Amendment 20 would require that first receivers—shorebased processors or other entities that
receive groundfish from IFQ harvesters[spf1] sort, weigh, and report all landings of IFQ species
under a catch monitoring plan. First receivers will be required to hire NMFS-certified catch
monitors to verify all shoreside deliveries of IFQ species, ensure that species are sorted into
Federal species groups, ensure that the fish are weighed on state-certified scales that are tested
periodically and record and submit catch data daily[spf2].
To ensure that the QP program goals are met, and landings are tracked, first receivers will be
required to submit electronic fish tickets using software provided by the Pacific States Marine
Fisheries Commission. Further, vessels will be required to use VMS to indicate vessel locations
and to make declarations. In addition, there are plans to develop and require an electronic vessel
logbook, but this component will not be immediately implemented.
To ensure that program goals are met to track transferrable QS and QP, NMFS is also developing
an online accounting system for the tracking and trading of QS by owner and for the tracking,
trading, and use of the QP that result from these quota shares by vessels.
The agency will collect fees to cover the administrative costs of issuing the quota shares, permit
endorsements (one-time fee and annual renewal), and first receiver site licenses (annual).
Amendment 20 would allow for assessing cost recovery fees of up to
3 percent of ex-vessel value, consistent with 303A(e) of the MSA. The costs to be recovered
would be the agency’s costs of management, data collection, analysis, and enforcement
activities. The Council will develop the methodology required by 303(A)(e) in a trailing action.

NMFS plans to propose additional program details in a future proposed rule. Such additional
details would include program components applicable to IFQ gear switching, observer programs,
retention requirements, equipment requirements, catch monitors, catch weighing requirements,
coop permits/agreements, first receiver site licenses, quota share accounts, vessel quota pound
accounts, further tracking and monitoring components, and economic data collection
requirements. In order to encourage more informed public comment, this proposed rule includes
a general description of these additional program requirements. NMFS is also planning a future
cost-recovery rule based on a recommended methodology yet to be developed by the Pacific
Fishery Management Council.
Tracking and Monitoring Costs
The costs of the program can be broken into three categories:
Agency Implementation Costs (one-time costs to develop the tracking and monitoring
programs)
Agency Annual Costs (state and Federal costs associated with running the Program when
fully implemented)
Direct Observer and Monitoring Costs (daily costs associated with hiring observers and
plant monitors)
These costs are shown in the table below. They are based on converting quarterly estimates
developed for the Federal fiscal year budget process. While funds may be received in one
quarter, they may not be expended in that quarter. Estimates of agency implementation costs
were based on funds received during FY 2010 and first quarter of FY 2011. As programs
develop, in some cases using this approach to estimate implementation cost may yield estimates
that are too high and in other cases too low. As the fishery progresses and programs adapt, new
features will have to be developed, while others will be corrected or phased out. For example,
the quota share trading system, while initially developed for 2011, will not be tested until 2013
because the trading in quota shares is prohibited for the first two years. There may also be
implementation costs associated with the Adaptive Management Programs or the Community
Fshery Association Program. As programs develop, agency costs may increase because of the
transition from old programs to new programs where, for a period of time, both programs have to
be maintained (see attached figure).
Agency Implementation Costs
These are one-time additional costs to NMFS and the states to implement the program. For
managing the program, these include developing the initial issuance processes (historical
database development, initial application forms, the appeals processes), permitting processes and
development of the shorebased total catch accounts (electronic fish tickets, compliance monitor

reports, and observer discard estimates) and shorebased, vessel accounting systems). Based on
review of NMFS Alaska and Northeast Region programs, NMFS estimates that there may be
over 100 appeals. States will also incur some implementation costs for upgrading their catch
tracking systems to meet the new electronic reporting requirements. The federal enforcement
program will have to train new officers and staff and pay their salaries while in training. State
enforcement programs will also have to train new officers and staff, but these costs[spf3] are
included in annual costs. Both the NWR and NWFSC will have to expand their monitoring
programs and develop the necessary infrastructure (IT, equipment, training, and office space. It
may cost more than $12,000 to equip an observer with a laptop, motion-compensated scale,
safety gear, and raingear. It costs about $2000 to equip a compliance monitor with gear and a
computer. Approximately 100 observers and 60 to 80 plant monitors will have to be equipped
and trained for the first year of implementation.
Agency Annual Costs
These are recurring state and federal costs associated with running the program when fully
implemented. For the NMFS NWR Management Office, these costs include five positions for
managing the permitting processes, quota share accounts, vessel accounts, catch monitoring
program, and cost-recovery program. PSMFC and NMFS NWR will continue to expend about
$200,000 annually to maintain the IT aspects of electronic fish ticket, total catch databases, quota
share, and vessel accounts. States will continue to receive $200,000 each for managing state fish
ticket system and for increased port sampling needs. For the Federal enforcement office, these
costs fund four positions. For state enforcement, $800,000 is planned to be provided to the three
states because of increased enforcement levels. The trawl rationalization program is complex,
and there will be a initial need for high enforcement presence. These costs may decline once the
program matures, and participants develop better understanding and acceptance of the
regulations. These enforcement costs may also decline as a result of the expected consolidation
of the fleet. Other costs may change as a better understanding of the roles of compliance
monitors, port samplers, and enforcement agents develops, and the roles are revised to avoid
duplication or to better complement each other. With respect to the Observer and Economic
Data Collection Programs, the Northwest Fisheries Science Center will expend funds associated
with about five positions. PSMFC will continue to receive grants for debriefing positions and
gear. In addition, contracts for collecting economic data will be developed. The total cost is
expected to be approximately $5.0 million by FY 2013. [Note that inflationary effects are taken
into consideration.]
Direct Observer and Compliance Monitor Costs—Estimates by Fleet
Observer-Shoreside Non-whiting: In 2008, there were 2,166 actual non-EFP trawl trips. The
number of trips has ranged from a high of 3,486 to a low of 2,088 between 2002 and 2008.
Therefore, for purposes of analysis, we will assume 2,300 trips. The average trip length has been
3.3 days (trips are usually no longer than five days but range from one to eight days in length).

This yields about 7,600 sea days. The cost of an observer is estimated to be $500 a day based on
conversations with the observer providers. Due to the logistical complexities of the west coast
groundfish fleet and the high number of unknowns, there is considerable risk for the providers,
and they estimate that the cost per sea day at $500 per day. This is higher than in the North
Pacific but lower than the $510 estimates associated with the Northeast Region’s industry-funded
scallop observer program. This estimate leads to a direct annual cost for the shorebased nonwhiting fishery of about $3.8 million. Unit costs of observers are a function of the ability to
work with the observer providers and make arrangements to lower costs. At the September 2009
Pacific Fishery Management Council meeting, the NWFSC provided information suggesting that
if an observer is placed on a monthly stipend under which the observer is expected and
guaranteed to work 20 days, the average daily rate of the observer could be lower (Agenda Item
E.6.B Supplemental NWFSC Powerpoint September 2009 “Thoughts on Costs”).
Observer-Shoreside Hake: In 2008, 590 trips were taken. Using this value and $500 as the daily
observer cost, the total cost is $295,000.
Observer-Mothership Catcher Vessel: It is estimated that they will fish for 30 sea days. Using
15 participants and 30 sea days each yields 450 total sea days. At $500 per day, this would yield
an observer cost of $225,000. If the season were 60 days with
20 participants, at $500 per day for an observer, the total cost would be $600,000
Mothership Processors and Catcher-Processors: The NWFSC estimates the current at-sea costs
of observers for both the Mothership and Catcher-Processor fleets is about $600,000.
Catch monitors: For the non-whiting fishery, if there are 7,600 sea days, and the average trip is
3.3 days, then a projected 2,300 trips that will have to be monitored. This implies that if a catch
monitor can monitor one trip per day the direct annual compliance monitor cost would be about
$800,000 at $350 per day. For the whiting fishery, if there are 14 processors and a 60-day
season, there will be 840 processing days and potential cost of $300,000. If the season is 30
days, then the costs would be about $150,000. For approximation purposes, these estimates were
rounded up to a total of $1.3 million.
The total of the direct cost observers and compliance monitors for the shoreside component is
$5.4 million (observers, shoreside non-whiting, $3.8 million; observer shoreside hake, $300,000;
and catch monitors, $1.3 million). The total costs for the observers in the mothership and
catcher-processor fishery is about $1.2 million (observer-mothership catcher vessel, $600,000
and mothership processors and catcher-processors, $600,000). The initial grand total of the
direct costs of observing and monitoring this fishery is about $6.6 million.
The agency has announced its intent, subject to available Federal funding, that participants
would initially be responsible for
10 percent of the cost of hiring observers and catch monitors. The industry proportion of the
costs of hiring observers and catch monitors would increase every year so that, by 2014, once the

fishery has transitioned to the rationalization program, the industry would be responsible for 100
percent of the cost of hiring the observers and catch monitors. NMFS believes that an
incrementally reduced subsidy to industry funding would enhance the observer and catch
monitor program’s stability, ensure 100 percent observer and catch monitor coverage, and
facilitate the industries’ successful transition to the new quota system.
The initial observer and catch monitoring costs projections (shoreside, $5.4 million and at-sea
whiting, $1.2 million) do not reflect two cost lowering effects: the effects of consolidation and
as the industry increasingly bears the burden of paying for the observer and catch monitors and
the ability of the industry to work with observer and compliance monitor providers to reduce
costs. It is not unreasonable to expect a 25 percent reduction in costs to a level of $5.0 million
annually as a result of these effects. 

Observer Program Transition to TRat
Transition
Fixed Gear & Open 
Access

Current
Limited Entry Trawl
Fixed Gear & Open 
Access
Limited Entry Trawl

At‐Sea Hake Observer 
Program

Implemented
Fixed Gear & 
Open Access
Trawl IQ program

At‐Sea Hake Observer 
Program
Develop Trawl IQ 
Program
Develop Hake Catcher 
Vessel Program
Develop Shoreside Hake 
IQ Observer Program

Hake Catcher Vessel 
Program
Shoreside Hake IQ
Observer Program
At‐Sea Hake Coop
Observer Program

Develop At‐Sea Hake 
Coop Observer Program