United States General Accounting Office Resources, Community, and Washington, DC 20548 Economic Development Division B-293711 October 20, 1999 The Honorable Don Young Chairman The Honorable George Miller Ranking Minority Member Committee on Resources House of Representatives Subject: Commercial Fisheries: Information on Federallv Funded Buvback Programs Federally funded fishery’ buyback programs are one tool available for managers of commercial fLshing resources to reduce excess f=hing capacity by purchasing from fishermen their fishing permits and, in some cases, their fishing vessels and related gear. Excess capacity can result from several factors, including legal decisions that may reduce the number of&h that can be caught, ecological factors such as changes in habitat that may also reduce the number of fish, or economic considerations such as the demand for fLsh. Excess capacity can lead to economic hardship for fishermen and to increased pressure on managers to allow catch limits above what the fLsheries can support. As agreed with your offlces, we are providing you with information on (1) the number, objectives, and key features of federally funded buyback programs since 1976; (2) the costs, sources of funds, and results of these programs; and (3) the key features and estimated costs of proposed federally funded buyback programs. On September 23,1999, we briefed your staffs on the results of our review and agreed to provide you with this report summarizing our fmdings. A copy of our September 23, 1999, briefing is included as enclosure I. The management of commercial fishing waters in the United States is divided among coastal states and the federal government. Coastal states manage fishing resources within 3 nautical miles of their borders. The federal government manages fishing resources extending from the state limit to 200 nautical miles from the U.S. coast. In 1996, there were 80,394 commercial fishing vessels and boats in U.S. marine waters. These boats landed 9.6 billion pounds of commercial fish at domestic ports, with an estimated value of $3.5 billion. Commercial fish include cod, flounder, and other groundfish; shrimp, crab, and other shellfish; and swordfish, tuna, and other highly migratory fish. In 1998, the federal government reported that for the 300 species for which it has data, 100 of the species were either overfished or approaching an over&shed condition. Number, Objectives, and Key Features of Past or Current Buyback Programs Since 1976, the federal government has authorized 10 buyback programs under a variety of laws, including the Interjurisdictional Fisheries Act of 1986, the Sustainable Fisheries Act of 1996, and the American Fisheries Act of 1998. The programs have generally focused on buying back federal or state fishing permits, and a few have included buying vessels or ‘A fLshexyis one or more stock (defined as one species or several species in a geographical area) of fish managed as a group. GAWKED-00-8R Commercial Fisheries Buyback Programs B-293711 placing restrictions on their use. The programs also have attempted to provide economic assistance to fishermen leaving the industry, to increase the profitability of fishermen remaining in the fishery, or to provide for the conservation of the fish stocks. The focus and basic features of the buyback programs are as follows: l Pacific Northwest salmon. There have been five separate programs for salmon since 1976, although none of the programs is currently active. All five of the programs purchased state fishing permits. One of these programs also purchased vessels, while another also paid a portion of a vessel’s value to the owner in exchange for the owner’s agreement not to return to commercial salmon fishing for 10 years. The state of Washington administered all five programs. Most of the vessels purchased were resold with restrictions. Others sunk in storage before they could be sold. l New En&md groundfish. There have been two separate programs since 1995 for these groundfish, neither of which is currently active. Both programs purchased federal fishing permits and vessels. The National Marine Fisheries Service (Fisheries Service) in the Department of Commerce’s National Oceanic and Atmospheric Administration, which administered both programs, required that the purchased vessels be scrapped, sunk, or transferred to activities other than fishing. l Texas shrimp. The program started in 1996 and is currently active. The program is purchasing state shrimp fuhing permits and is administered by the state of Texas. l BerinP Sea groundfish. The program, administered by the Fisheries Service, began in 1998 and is currently active. The program has purchased nine large vessels, together with the federal fishing permits for Bering Sea groundfish associated with the vessels, The vessels were used primarily for catching pollock. Eight of the vessels are being scrapped. The remaining vessel will be prohibited from fishing in U.S. commercial fmhing waters. l Glacier Bav (Alaska) Dungeness crab. The program began in 1999, is currently active, and is part of a larger effort to eliminate commercial fishing in some parts of Glacier Bay National Park and Preserve. The program will purchase state fishing permits and may also purchase one fishing vessel and related gear from participating fishermen. Purchased vessels and gear may be sold by the General Services Administration. However, the National Park Service, which is administering the program, has not yet determined how it will dispose of these items. Program officials expected to begin making payments to qualifying fishermen in September 1999. Costs, Sources of Funds, and Results of Past or Current Buyback Programs When completed, the 10 buyback programs will have cost a total of about $160 million. About $140 million (87 percent) of the costs will have been incurred since 1995, an indication of the increasing use of buyback programs. About $20 million of the costs were incurred in the late 1970s through the mid-1980s for programs to assist fishermen in the Northwest salmon industry. Of the total costs, about $80 million is funded through federal grants for economic assistance and relief to fishermen adversely affected by closures of fishing areas or natural disasters that reduced fish stocks. Most of the remaining costs are funded by a $75 million federal loan provided to Bering Sea groundfish fishermen to buy large fishing vessels specified by the American Fisheries Act. The loan is repayable over 30 years based on a fee tied to the 2 GAOfRCED-OO-08R Commercial Fisheries Buyback Programs B-29371 1 pollock caught by those left in the fishery. The remaining $5 million of the cost is funded by a combination of state and private funding. Taken together, the buyback programs have purchased over 3,000 fishing permits and have purchased or restricted the use of about 600 vessels.’ Individually, the size and cost of the programs have varied widely. For example, the Texas shrimp program spent about $1.6 m.iIlion to purchase several hundred fishing permits, while the Bering Sea groundfish program spent $90.2 million (a $75 mUion federal loan and $15.2 million in federal grants) to purchase nine vessels and fshing permits. Key Features and Costs of Proposed Buyback Programs Six additional buyback programs have been proposed by industry groups or the state of Washington. Preliminary cost estimates prepared by the sponsors of these proposals exist for five of the six programs. If implemented, these five programs could cost from about $150 million to $220 million. One of the programs, for Bering Sea/Aleutian Islands crab (estimated to cost from $45 million to $60 miXon), would be financed by a federal loan to purclhase federal fishing permits and would be administered by the Fisheries Service. A second program would involve a federal grant for about $32 miIlion to purchase salmon fishing licenses associated with June 1999 changes to an existing treaty with Canada. The state of Washington plans to administer the program. Three proposals, involving Atlantic swordfish, scallop, and shark, could cost in total from $70 million to $130 million. The financing, administration, and other features of these programs are still being determined. A Pacific groundfish proposal was submitted to the Fisheries Service but is now being reconsidered by an industry group. No cost estimate is available for the proposed program. Agency Comments We provided the Department of Commerce with a draft of this report for review and comment. The Department’s National Oceanic and Atmospheric Administration provided technical comments that clarified the number of species that are overfished, the status of selected proposed buyback programs, and the steps that the National Oceanic and Atmospheric Administration is taking to manage buyback programs (see enc. II). We incorporated the comments on overfished species and proposed buyback programs, but we did not include information on the management activities because our report does not evaluate the management of buyback programs. To develop the information for this report, we reviewed studies and data on buyback programs prepared by the Congressional Research Service, the Fisheries Service, and selected state agencies and university researchers. In addition, we interviewed officials from the Congressional Research Service, the Fisheries Service, the states of Washington and Texas, fishery management councils, and industry representatives. The interviews took place in the Washington, D.C., area; Gloucester and Woods Hole, Massachusetts; Seattle and Olympia, Washington; and Juneau and Gustavus, Alaska. We performed our review from July 1999 through September 1999 in accordance with generally accepted government auditing standards. ‘A total of 3,365 fishing permits have been purchased. The total includes an additional 458 permits purchased under the New England groundfish programs for other fisheries, including summer flounder, squid, mackerel, and scallop. These additional permits were purchased because the programs obtained all of the fishing permits associated with the vessels purchased. 3 GAOIRCED-00-OSR Commercial Fisheries Buyback Programs B-29371 1 Copies of this report are being sent to the Honorable William M. Daley, the Secretary of Commerce; Dr. James Bake, Director, the National Oceanic and Atmospheric Administration; and Penny Dalton, Assistant Administrator of the Fisheries Service. We will also make copies available to others on request. If you or your staff have any questions or need additional information, please call me at (206) 287-4800. Key contributors to this report include Kathleen Gilhooly, Robert Lilly, Timothy Minelli, and William Swick. James K. Meissner Associate Director, Energy, Resources, and Science Issues Enclosures - 2 4 GAO/RCED-OO-08R Commercial Fisheries Buybaclc Programs Enclosure I GAO Resources, Community, and Economic Development Division Federally Funded Buyback Programs for Commercial Fisheries Briefing for the House Committee on Resources September 23, 1999 GAWRCED-OO-08R Commercial Fisheries Buyback Programs Enclosure I GAO Background Overcapacity (excess fishing vessels, permits, and related gear) can result from legal, ecological, or economic factors. Programs that buy back fishing vessels and fishing permits attempt to reduce overcapacity. Buyback programs have been authorized or proposed under a variety of laws, including l Interjurisdictional Fisheries Act, l Sustainable Fisheries Act, and l American Fisheries Act. GAO/RCED-00-OSR Commercial Fisheries Buyback Programs Enclosure I GAO 0 bjectives l What are the number, objectives, and key features of federally funded buyback programs since 1976? l What are the costs, sources of funds, and results of these programs? l What are the key features and estimated costs of prooosed federally funded buyback programs? GAWRCED-OO-08R Commercial Fisheries Buyback Programs Enclosure I GAO Overview Ten buyback programs since 1976: l Objective mainly to reduce fishing overcapacity, - l All programs bought fishing permits, six also bought vessels or vessel restrictions. Funding mostly from federal grants and a loan: l $160 million to date ($140 million since 1995), l Over 3,000 permits bought, and l About 600 vessels or vessel restrictions bought. Six proposals: l Focus so far is on buying back permits. l Total cost about $150 million to $220 million. GAO/RCED-OO-08R Commercial Fisheries Buyback Programs Enclosure I GAO Buyback Programs: Number Ten programs since 1976 address l Pacific Northwest salmon: 5 (none active); l New England groundfish: 2 (none active); l Texas shrimp, Bering Sea pollock, Glacier Bay Dungeness crab: 1 each (all active). GAWKED-OO-08R Commercial Fisheries Buyback Programs Enclosure I G-0 Buyback Programs: Objectives Reduction of overcapacity, with the following additional objectives: l Short-term economic assistance to fishermen leaving the industry, l Increased profitability for the remaining fishermen, and l Conservation of fish stocks. GAO/RCED-OO-OSR Commercial Fisheries Buyback Programs Enclosure I GAO Buyback Programs: Key Features Number of Feature programs -. scope Bought state fishing permits 7 Bought vessels or vessel restrictions 6 Bought federal fishing permits 3 Eligibility Hold a permit or be eligible to do so 10 Have significant participation in the industry 4 Impacted by a court case or other factors 3 Other 3 Participant selection Ratio of bid to amount of catch or income lost 4 Lowest bid or order of receipt of application 4 Catch information or time holding- .permit 2 Other Provisions for restricting reentry to fishing F&entry of individuals allowed if permits obtained Reentry of vessels banned or temporarily banned 6 Reentry of individuals temporarily banned 2 Administration State of Washington National Marine Fisheries Service National Park Service State of Texas 11 GAWRCED-OO-08R Commercial Fisheries Buyback Programs Enclosure I GAO Buyback Programs: Amounts and Sources of Funds hogm 8oum of funds (in millions) .- kderel Federal Sate 0th~ Total gm lcan WashirQtm salrlanl (1976 t~1981, iJl3r0unzJs $4.5 $2.5 V.0 washqtm tirrcil /1961 to 1966) 12.8 12.8 ~egMsalmm (1963 to 1986) 0.7 0.7 WasMgtm salmon (1996to1997)MthrcuKis 9.3 9.3 washingtmsalmm p3!x) Both Kulds 3.5 $1.2 4.7 NewEngbndm plot (1995 to 1996) 1.9 1.9 New Ergland golJfKffii 11996 to 1998) 23.0 23.0 Texas sMt$ p396 to Dresent) 1.4 0.8 0.2 24 Bering sea pollo& j1933 tolxesent) 15.2 $75.0 90.2 Glacier Bay L!urgenessaabb (1999 to wSent) 8.0 8.0 Total so.3 $75.0 90 $27 $160.0 aAccwdi~tothernaMpementdr~fcrtheTexaspogam,asdSeptemberi,l999,the sMehad~about$l.E~llionmitsshrirrpkrybadcprogam. &cut$7O,WOofa$1.4millii federalgatiforthepfcgamrerwnedwsperU. Th3progamhasspent$264.ooOin.state furdsand$30,000inpivatefundsmthebt@a& Theprogamhasatxut$64O,CCOavai&blein statetuKs10contiNIBbuybadcdfatsandwillcontinuet0receiveabout8170,M)oamoallyfrom state fishing license fees Aboul S125.ooO remalw available from pwate sources to fund bu@ack effotts “AsdSeptember1,1999,theGladwBayDungeness~abComnerdalCorrpensatimRogram hadndplxdkd oxtpnsatim to Cungeness crab fishermen. The National Park Service eqz&s to begin fmviding axqxnstim to fishermen by the end of September. The $6 rrillim dted in the table refers to fwde apfxcgiated for the program. 12 GAO/RCED-00-OSR Commercial Fisheries Buyback Programs Enclosure I G-0 Programs to Buy Back Permits Only: Results and Costs Dollars In thousands Program Number of Buyback Administrative Total cost permits cost cost purchased Washington salmon (1976 IO 1981) Round 3 of 3 198 $967 $33 $1,000 Oregon salmon (1983 to 1986) 133 5645 $71 $716 WashIngton salmon (1995 to 1997) Both rounds 438 a957 $242 $9,199 Washington salmon (1998) Both rounds 391 $4,586 $83 $4,669 Texas shrimp’ (1996 IO present) 369 $1.622 $6 81,628 ‘Cost figures are as of September 1, 1999. 13 GAOIRCED-OO-08R Commercial Fisheries Buyback Programs Enclosure I GAO Programs to Buy Back Permits and Vessels: Results and Costs Dollars in thousands Program Number of Number of Buyback Administrative Total permits vessels cost cost cost purchased bought or restricted Washmgton salmon -- (1976 to 1981) Rounds 1 and 2 of 3 231 252 $5,165 $683 $5,848 Washington salmon (1981 tol986) 1,059 257 $12.089 S696 $12,785 New England groundfish pilot 11’ 11 D (1995 to 1996) $1.890 91.890 New England groundfish (1996 to 1998) 68O 68 $22,500 $500 $23.000 Bering Sea pollock (1998 to present) 9 9 $90.000 $200 $90,200 “in addltlon to the groundflsh permits purchased, tnese programs also acquired 458 permtts for other fisheries. The permits were associated with the vessels purchased. bAdministrative cost was not available. 14 GAOAKED-OO-OSR Commercial Fisheries Buyback Programs Enclosure I GAO Proposed Buyback Programs: Number and Scope l Six additional programs have been proposed. Costs are subject to change. Proposed program Estimated costs (millions) Bering Sea/Aleutian Islands $45 to $60 crab Pacific salmon $32 Atlantic swordfish $18 to $20 Atlantic scallop $40 to $60 Atlantic shark $12 to $50 Pacific groundfish Not available GAO/RCED-00-OSR Commercial Fisheries Buyback Programs Enclosure I GAO Examples of Proposed Buyback Programs: Key Features Program Feature’ Bering Sea/Aleutian Pacific Salmon Islands Crab Funding 20-year federal loan Federal grant supplemented mechanism repayable by industry by Washington State funds Eligibility All permit holders Puget Sound and coastal fishermen affected by treaty Method of Ratio of asking price Ranked based on historical selection to catch, or lowest catch information asking price for permit Re-entry Vessels surrender Participants restricted from restrictions future fishing rights re-ent+y for 10 years Administration Fisheries Service Washington State ‘Features are based on latest business plan or proposed rule submitted to the National Marine Fisheries Service and are subject to change. 16 GAO/RCED-00-08R Commercial Fisheries Buyback Program Enclosure I G-0 Scope and Methodology Reviewed studies by Fisheries Service overcapacity tel!sk force, Congre ssional - Research Serv ,ice, and universi t)/ researchers. Analyzed reports on buyback programs prepared by federal and state agencies. Interviewed officials in Fisheries Service, National Park Service, and state agencies. Met with fishery management council and industry representatives proposing new programs. 17 GAWRCED-OO-08R Commercial Fisheries Buyback Programs Enclosure II Comments From the Detmrtment of Commerce UNITS0 STATES OEPARTMENT OF COMMER National Oceanic end Atmosphario Administrstic CHIEF FINANCIAL OFFICEWCHIEF AOMINISmATIVE OT=FII: Mr. James K. Meissner Associate Director Energy, Resources and Science Issues Resources, Community and Economic Development Division United States General Accounting Office Washington, D.C. 20548 Dear Mr. Meissner: I am pleased to enclose the Department of Commerce's comments on the General Accounting Office's draft report entitled, "Commercial Fisheries: Information on Federally Funded Buyback Programs." These comments were prepared in accordance with the Office of Management and Budget Circular A-SO. Sincqrely, Enclosure 18 GAO/RCED-00-8B Commercial Fisheries Buyback Program Enclosure II COMMENTS Draft Repon on Commercial Fisheries: Information on Federally Funded Buyback ProTams (GAO/WED-OO-08R) Nowonp. 1. GAO Report: Page 2, top of the page “In 1995,the federalgovernmentclassified56 of the201 federally managedfish stocksasover fished.” N0.U Response: The National Maxine FisheriesService(NMFS) recommends that a better source for this data is the “Report to Congress,Statusof the Fisheriesof the United States,” October 1998,publishedby NMFS. In 1998,basedon criteria specifiedin Magnuson-Stevens Act, the NMFS in Its Report to Congresson the “Statusof Fisheriesof the United States,”classified90 speciesas“overfished,” 200 species“not overfished,” 10 species“approachingan overfished condition,” and for 544 species,the statuswith respectto overfishing was“unknom.” Now on p. 15. GAO Report: Page 11 Proposed Buyback Programs: Number and Scope NOAA Response: Two industry fundedbuyback proposalshave beensubmittedto the NMFS: Bering Sea/Aleutian Islandscrab fishery and the Pacific proundfishfishery. The industry is reconsideringboth proposalsdue to lowerthananticipatedTotal Allowable Catch projectionsfrom NM%. Estimatedloanamountsof the current proposalsare $50 to 585 million. Four proposalsare at various stagesof developmentby the industry: swordfish, shark,scallopandPacific salmon. Estimatedloansand/orappropriatedcostsof theseproposals(there are no estimatesfor sharkat thistime) are $92 million.’ NOAA Comments: The 1996SustainableFisheriesAct [SFA (Public Law 104-297)]which re-authorizedthe Magnuson-StevensFishery ConservationandManagementAct authorizedNMFS to administerappropriationfundedor industry fundedbuyback programs. NMFS publishedproposedtiamework regulationsfor buybackson February 11, 1999. The commentperiod endedApril 12,1999, and a final rule is underdevelopment. Buybacks are one of the fisheriesmanagementtoolsto control fishing capacity. Last year, NOAA electedto explicitly addressovercapacityin it’s strategic planningprocess. Towardsthat end,NOA established a performancemeasure underthe element“Build SustainableFisheries”to reducethe numberof over capitalized fisheriesby 15% by 2004. A NMFS TaskForce hasbeenformed to developdefinitions, measures,and categoriesof capacityin commercialand recreationalcapture fisheries. (141347) 19 GAO/RCED-00-8B Commercial Fisheries Buyback Program Ordering Information __- The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. VISA and Mastercard credit cards are accepted, also. 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Commercial Fisheries: Information on Federally Funded Buyback Programs
Published by the Government Accountability Office on 1999-10-20.
Below is a raw (and likely hideous) rendition of the original report. (PDF)