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14. As part of setting the context for the expert consultation, Dr. John M. Ward presented an overview of fishing capacity issues and the situation in the U.S.A. His talk included some of the difficulties and problems that have occurred during the process of trying to develop and reach consensus on how to resolve situations of overcapacity.

15. The text that formed the basis of his talk follows.


16. In the United States (U.S.), the management of fishing capacity is recognized as a serious management problem that is deemed responsible for the overfishing of many domestic fish stocks. The necessity to reduce fleet capacity has been cited by the Assistant Administrator for Fisheries as one of the two major problems facing U.S. fisheries management. However, this problem must be resolved within a complex management environment that involves many management entities and different management goals and objectives established by Congress and state legislatures.

17. This complex management environment is a significant challenge to actually adopting and implementing capacity reduction programs.

18. The role of the National Marine Fisheries Service (NMFS) in this management program to eliminate overcapacity is to provide scientific information and advice in the form of:

19. As such, the NMFS program can be considered to be similar to other international capacity reduction programs - there are many different management entities and objectives. And, just as the FAO provides information and advice to its member countries that are trying to resolve their fish harvesting capacity problems, the NMFS provides information and advice to the eight federal fishery management councils about their many different fisheries.

Fishery Management Environment - Some of the legislation

20. Fisheries management in the United States has a myriad of goals and objectives, and these are based on a number of legal mandates including:

All of these provide various and sometimes conflicting management objectives.

21. For example, the MSFCMA uses ten national standards to define fisheries management in the exclusive economics zone (EEZ). Three of these standards deal with:

22. Conflicts in these national standards can result from negative impacts on fishing-dependent communities from reductions in landings to rebuild or maintain fish stocks.[4] While national problems such as fish harvesting capacity may exist, the regional variation in fisheries and fish stocks may require dramatically different solutions proposed by each fisheries management council to meet their management goals and objectives for a particular fish stock. Highly variable stocks in one region, for example, may require a level of excess capacity that is determined to be too high by a fishery management council in another region where stock recruitment is much more stable.

23. Judicial review is allowed under the MSFCMA. Law suites under the MSFCMA have been primarily based on the quality of the scientific advice given by biologists. These court cases have caused NMFS to focus its resources on biological stock assessment to ensure that the best possible utilization of stock assessment data was being employed in management decisions.

24. The impact of court decisions on the economics underlying fisheries management regulations has mainly been felt through the Regulatory Flexibility Act’s impact on small entities provisions. With the passage of the reauthorized Regulatory Flexibility Act, economic impacts on small entities (businesses generating less than $3 million per year) also became judicially reviewable.

Fishery Management Environment - The use of economics

25 In addition to the standards described above, the national standards maintain economic efficiency as a secondary consideration in the management of marine fisheries.

26. To ensure that management regulations are not dismissed by the federal courts, NMFS has had to devote more resources to fisheries economics. While more resources have been devoted to economics, the RFA does not currently require the mitigation of impacts; it only requires that impacts be clearly delineated. As a result, fishery managers, are made aware of impacts on small entities, but they do not actually have to change their management regulations to mitigate those impacts.

27. The Executive Order 12866 requires all federal regulations that have a significant impact on the U.S. economy to undergo a benefit cost analysis. In fisheries, the benefit cost analysis has rarely exceeded the threshold for significance, but this is beginning to change. Recent analyses using input/output models suggest that these thresholds may actually be exceeded in some severely managed fisheries such as New England groundfish and Gulf of Mexico shrimp fisheries. If a proposed regulation is determined to be significant, the review by the Office of Management and Budget is more careful, but it does not require substantial changes in the regulation to require that benefits exceed costs.

28. While economic goals and objectives exist, economics does not necessarily take a primary role in the management of marine resources in the U.S. Once information on costs and benefits are made available to fishery managers for their consideration, management regulations that are designed to achieve one objective at the detriment of other objectives can still be adopted.

29. For the overcapacity reduction management program, this management approach allows the adoption of regulations that may not be particularly successful in reducing overcapacity in the long run. That is, the maximization of net benefits is not a requirement of the management process. As a result, management regulations that are politically acceptable - but not effective at reducing overcapacity - can be adopted.

Fishery Management Entities

Federal Fisheries Management Councils

30. The eight federal fishery management councils were established under the MSFCMA. Initially, these served as regional fishery management advisors. Their role has evolved over time, and now they develop fishery management regulations that are then approved by the Secretary of Commerce after being reviewed by the National Marine Fisheries Service (Figure 1).

31. The regional fishery management councils specialize in the fisheries under their jurisdiction because the stocks and the fishers are fairly unique to each region. Each region’s management issues also differ, so regulations set in one region do not necessarily correspond to those in another region. In addition, the fishery management councils tend not to develop joint fishery management plans where stocks overlap. As a result, management regulations while similar in type differ in their application to different stocks or species of fish.

Figure 1. US Federal Fisheries Management Roles

State Fishery Management Commissions & Agencies

32. In addition to the fishery management councils, state fishery management commissions also have jurisdiction over some fish species and stocks that are found in the state territorial sea. The species under the state fishery management commissions are agreed upon by each state in that regional commission. These species generally represent a jointly controlled stock of fish. Other species contained in each state’s own territorial sea are managed by the respective state’s fishery management agency.

33. The end result is that different species of fish are managed by different entities for different purposes.

34. State fishery commissions and state agencies that could have jurisdiction over juvenile stocks of fish found in the EEZ under federal control have different guidelines for management than the fishery management councils. Management regulations that are imposed by one management entity can be ignored or even subverted by another entity resulting in the failure of either to achieve its management objective. As a result, there is a need for the different fishery management entities to coordinate their proposed management regulations if they want to ensure that their different goals are achieved.


35. Within the context of these multi-jurisdictional management authorities, fish harvesting capacity has become a crisis.

36. Numerous studies have been commissioned. Some have examined the role of federal investment subsidies in over-investing in capital used to harvest fish. Expert panels have looked at how studies of capacity utilization should be adapted to fisheries. Expert panels have also tried to determine - quantitatively or qualitatively - overcapacity levels in fisheries. Together, these studies have been used to develop definitions for, measures of, and a general understanding of the role of fish harvesting capacity in federally managed fisheries.

37. For example, the federal investment subsidy program for capital investment was found to have played a role in developing excess and overcapacity in the fish harvesting sector. However, due to a conservative policy for selecting participants in the program, its impact on capacity levels was not as severe as it could have been.

38. Similarly, a NMFS national task force report built upon the 1998 FAO Report of the Technical Working Group on the Management of Fishing Capacity[5], to define capacity and develop metrics to measures capacity levels in U.S. fisheries based on capacity utilization. This study identified three objective approaches to measuring capacity utilization levels in the fish harvesting sector. And, after an FAO technical consultation on capacity in Mexico City, a program to develop qualitative measures of overcapacity and quantitative measures of excess capacity was developed in the U.S.

39. The qualitative measures indicated that over fifty percent of the 77 fisheries review had indications of overcapacity. A preliminary review of the quantitative capacity utilization measures that were being constructed suggested that excess and overcapacity in fisheries should be considered two separate concepts because excess capacity is a short-run situation that corrects itself whilst overcapacity is a longer-run, pernicious situation that requires management change - and, indeed, changes in the management approach - to correct. An independent panel of experts who reviewed the capacity measurement project in the U.S. also confirmed this distinction between excess and overcapacity.

40. Two projects to quantify the levels of excess and overcapacity in U.S. fisheries, respectively, were undertaken as a result of the expert panel. The first study resulted in a report on excess capacity that is to be published in the Our Living Oceans series as a report on the status of economics in managing U.S. fisheries. The second report on overcapacity is due in 2003.

41. In the interim, a report to Congress estimating overcapacity in five domestic fisheries was completed in June of 2002. It suggested that it would cost approximately $1 billion (U.S.) to reduce the fleet size to a level that would eliminate overcapacity in the five fisheries studied. In addition, this report clearly differentiated between the levels of (temporary and short term) excess and (harmful, long term) overcapacity in each fishery.

42. These studies have been used to present information to the fishery management councils on the level of capacity utilization in fisheries. Based on the draft National Plan of Action[6], the fishery management councils will evaluate conditions in each fishery that has been identified as having an overcapacity management problem. The fishery management councils will determine what management actions they need to adopt to resolve the overcapacity problem in each fishery relative to the numerous management objectives that have been specified for each specific fishery.

43. Each proposed management regulation has to go through a public review process where stakeholders can provide input into the management process. Costs and benefits of proposed regulations have to be evaluated under Executive Order 12866, the calculation of economic and financial impacts are required under the Regulatory Flexibility Act, and under the MSFCMA. This information is provided to the fishery management councils for consideration in preparing their final rules. This analysis and the information from stakeholders need not be considered in formulating the final rules, but steps to mitigate impacts could be undertaken by the fishery management council at this point in the process. These final rules are then reviewed by the NMFS and then forwarded to the Secretary of Commerce for final approval.

44. The NMFS also provides information and advice to the regional fishery commissions on fish harvesting capacity to ensure that state agencies and regional commissions coordinate their activities to reduce overcapacity in fisheries. However, regional fishery commissions and state agencies have different procedures for implementing regulations that do not require the approval of the Secretary of Commerce to implement. As a result, measures proposed for federally managed fisheries could have direct and induced impacts on state regulated fisheries.

45. One missing factor, in this management approach, is the lack of policy analysis for fishery managers. Such a policy assessment could provide fishery managers with effective capacity reduction management programs that would eliminate overcapacity while increasing net benefits to the nation.

46. For example, there is currently a proposed vessel or fishing license or permit buyback program to reduce capacity. This is despite the fact that the General Accounting Office’s assessment of the buyback programs in the New England groundfish fishery found them to be ineffective in reducing overcapacity simply because many latent permits were activated after the buyback program ended. (For example, some fishermen moved from groundfish into the lobster fishery while others purchased new fishing vessels for the groundfish fishery.) This approach is particularly difficult to apply in the Gulf of Mexico shrimp fishery where there are currently no access controls on new entrants (no limits on new entrants), thereby making a buyback program particularly costly and ineffective in controlling overcapacity. In addition to such problems, this management approach can never have an enduring impact on overcapacity because it only treats a symptom of the regulated open access management of marine resources and does not address the underlying cause of a lack of property rights for the in situ resource.

47. Other approaches such as incentive blocking and incentive adjusting regulations need to be assessed to determine if they might be more successful in eliminating overcapacity. Incentive blocking regulations - such as days at sea, trip limits, and restrictive total allowable catch levels - can reduce overcapacity but only in the short run. As stocks recover and the cost per fish landed declines, profits increase and a derby fishery ensues, thereby causing overcapacity to increase. The end result is a reduction in net benefits for the fishery.

48. In contrast, incentive adjusting regulations such as ITQs, permit stacking, and co-management can increase the costs of harvesting fish by capturing the resource rent in the management instrument held by each fisher. These systems create the incentive to conserve capital, labor, and the in situ resource as part of trying to maximize profits of whatever catch amount is allowed.


49. In the USA, the solutions to overcapacity that are proposed by the respective fishery management councils and adopted by the Secretary of Commerce will be based on discussions between representatives of stakeholder groups with input from scientific analyses. The information and analysis used to define, develop metrics for, and measure capacity levels in U.S. fisheries must be scientifically objective to ensure that the impacts of management regulations designed to reduce overcapacity are accurately estimated.

50. Even with objective information and analysis, however, it is likely that regulations to reduce overcapacity will be the result of a political agreement representing compromise between different groups. This is because some groups will suffer losses and be upset by these losses, while others will receive the benefits of capacity reduction programs.

51. Congress creates its role in fisheries management by legislatively directing actions of the NMFS and by directing which projects will be undertaken. It does this through the budgetary process by specifically allocating funds to them. In addition, stakeholder groups or even individuals with political influence can, when dissatisfied with the result of the fishery management council process, approach Congress to have it intervene on their behalf.[7] Congress can even set up a new form of fisheries management outside the council system such as it did by establishing individual processor quotas for Alaskan crab processors. Thus, actions by Congress can directly affect efforts to reduce overcapacity in fisheries if and when the fishery management council does not adequately address the concerns of politically powerful stakeholder groups.

52. In the end, it is the managers who will have to be aware of impacts to stakeholders, so that they can design capacity reduction programs that mitigate these impacts and, thus, ensure that the capacity reduction program is successful.

[4] This can happen when using the precautionary approach of setting biomass levels such that maximum sustainable yield is a limit instead of a target.
[5] FAO. 1998. Report of the Technical Working Group on the Management of Fishing Capacity, La Jolla, CA, USA, April 15-18. FAO Fisheries Report. No. 586. Rome, FAO. 57pp.
[6] National Marine Fisheries Service (2002 in press). “United States National Plan of Action for the Management of Fishing Capacity.” Draft Final Report, Office of Sustainable Fisheries, National Oceanic and Atmospheric Administration, U.S. Department of Commerce, Silver Spring, Maryland, November, 32 pp.
[7] For example, Congress placed a moratorium on the use of individual transferable quotas in the red snapper fishery in 1997.

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