New England Fisheries
New Groundfish Amendment Falls Far Short Of Its Goal
NOAA Fisheries unfortunately approved Amendment 18 to the Northeast Multispecies Fishery Management Plan at the end of April. One primary goal of the amendment had been to address concerns of fleet consolidation in the groundfish industry by limiting permit accumulation. Consolidation is worrisome because it eliminates diversity in the fleet and/or allows individuals to exercise market power.
These concerns have been repeatedly raised and gone unanswered since the full catch share program was approved and implemented in 2009. At least through the early parts of the process, it seemed that Amendment 18 could remedy unintended consequences of the catch share program by helping the fishermen who had been locked out of the fishery. It does nothing of the sort.
The limit is misapplied and is too high
The new rule sets a 15.5 percent potential sector contribution (PSC) limit – essentially a quota cap for individual entities – for all allocated stocks in aggregate. There are two main issues with this rule (not to mention that it disregards the expert economic and social analysis that was conducted during development of the amendment): one, the limit is an average across all groundfish stocks, and two, the limit is far too high.
First, averaging the quota cap across all stocks more or less facilitates consolidation and increases the likelihood of market control. Instead, the quota cap limits should have applied to each stock in the groundfish complex. Consolidation is a particularly important issue in multispecies fisheries because overall harvests or areas open to harvest are often dictated by the importance of protecting the stock with the lowest abundance.
Take the example of Atlantic cod. The stock is at its lowest abundance in recorded history but is frequently caught with much more abundant stocks such as pollock. If an individual can hold a large portion of PSC for Atlantic cod, they may not only have the ability to control targeted catch of cod, but they will also have a control on other groundfish sectors that need PSC for their cod bycatch.
Second, analysis from the Environmental Defense Fund shows that a 15.5 percent cap is far too high because individual entities would still be able to accumulate 30 percent of three key choke species: witch flounder, Gulf of Maine cod, and plaice. If controlling nearly one-third of the PSC for these species is not excessive consolidation, what is?
Under the new rules, an individual entity can also acquire more of the PSC than the 15.5 percent as long as they “shelve” the excess portion. “Shelving” the excess portion does not solve anything; it is still taking access to that PSC away from others. Amendment 18 creates the functional equivalent of a monopoly with what should be a public resource.
Agency reassurances are anything but that
In addition to a PSC limit, Amendment 18 also implements a 5 percent permit cap on total ownership of groundfish permits. The agency decision relies a number of times on this permit cap in support of its approval of Amendment 18; however, the value of the cap is fundamentally undermined by the fact that it applies to all the groundfish permits, not just the active permits, which is a much smaller number. The “5 percent cap” would still allow an entity to own nearly 15 percent of the most valuable permits.
Another reassurance the agency decision clings to is the requirement for arms-length transactions regarding PSC, thereby theoretically precluding collusive behavior between fishing entities to circumvent the prescribed limits. Frankly, it is difficult, if not impossible, to have much confidence in NOAA Fisheries even identifying collusive behavior, let along doing anything about it. The fact that the largest groundfishing operation in the region–Carlos Rafael’s—was persistently engaged in illegal fishing activities accompanied by the profound lack of transparency associated with the sector through which he does much of his business belies the agency’s capacity in this area.
In Amendment 18, NOAA Fisheries succinctly identifies why it approved Amendment 18: “Amendment 18 is designed to fairly and equitably prevent the acquisition of excessive shares as the fishery consolidates.”
But that was just one of the stated and needed purposes of Amendment 18. The other two were “to promote resilience and stability of fishing businesses by encouraging diversification and quota utilization … and to encourage active and thriving fishing ports throughout the Northeast.” Amendment 18 failed to promote any of those purposes.
Even before Amendment 18 was finalized, it had become clear that it wasn’t about what it said it was about, and any agency assurance that they cared about fleet diversity evaporated when decision time rolled around. So often in New England, fishery amendments fall far short of their goals – and they can still get approved. Is it any wonder that few active fishermen show up at meetings anymore? What’s the point?