Fishing Vessel Buyback Program Part 1

Greetings Fishies!

I have noticed that some of you have had questions about the fishing fleet reductions, also known as “buy back.” What follows is information taken from different governmental websites.

Bering Sea and Aleutian Island crab fishermen voted to take a 30-year federal loan to pay 25 of their competitors to withdraw their vessels from fishing and relinquish both their fishing licenses and fishing histories. 273 of the 313 qualified voters cast timely ballots, with 80% approving the buyback's industry fee system, which will repay all of the buyback's $97.4 million cost.

NMFS published a reduction payment tender notice in the Federal Register November 2004. The bidders' fishing licenses and fishing histories were revoked and their vessels permanently restricted from fishing worldwide on December 27, 2004. The agency completed making payments to the 25 accepted bidders on January 19, 2005.

Fishermen remaining in the Bering Sea and Aleutian Island crab fishing industry will pay back the $97.4 million loan with a fee on future crab landings. NMFS published a final rule to implement the fee system and fee payment collection began in October 2005.

The fishing capacity reduction program for the crab fisheries managed under the Bering Sea/Aleutian Islands King and Tanner Crabs Fishery Management Plan reduced excess capacity and promoted economic efficiency. The program is authorized under both special legislation and existing NMFS regulations governing fishing capacity reduction programs. Its objectives include increasing harvesting productivity for crab fishermen who remain after capacity reduction, helping conserve and manage fishery resources, and encouraging harvesting effort rationalization.

FREQUENTLY ASKED QUESTIONS

These frequently asked questions provide a general overview of the buyback program.

What is the crab fisheries capacity reduction program?

The crab fisheries capacity reduction program, also called the crab "buyback" program, reduced excess fishing capacity and promoted economic efficiency in the Bering Sea and Aleutian Islands (BSAI) king and Tanner crab fisheries. Under this program NMFS bought License Limitation Program (LLP) crab licenses and fishing privileges of crab vessels. All fishing permits, fishery endorsements, and fishing histories associated with the crab vessel were revoked. NMFS has borrowed from the U.S. Treasury to make buyback payments to successful bidders. Remaining BSAI crab fishery participants will repay this loan over 30 years.

Which crab fisheries does the crab capacity reduction program cover?
This program bought LLP crab licenses and fishing privileges of crab vessels for the following BSAI crab fisheries that occur in federal waters:

Aleutian Islands brown king crab
Aleutian Islands red king crab
Bristol Bay red king crab
Snow crab (C. opilio)
Tanner crab (C. bairdi)
Pribilof Islands red and blue king crab
St. Matthew blue king crab

These are LLP endorsement fisheries. License holders whose licenses only have an endorsement for Norton Sound red king crab may not participate in the buyback program.

How did the buyback process work?

The buyback was implemented in a series of steps, as follows. All notices sent to license holders were published in the Federal Register and available on the web.

1. NMFS sent a list of potential qualifying bidders and referendum voters to all crab license holders.
2. License holders had 30 days to comment to tell us if any of this information was incorrect.
3. NMFS sent an invitation to bid and a bidding package to all qualifying bidders. Materials in the package explained exactly how to submit a bid.
4. Qualifying bidders submitted bids for buyback payments to NMFS.
5. NMFS scored the bids and accepted or rejected each bid based on terms explained in the final rule.
6. Also, NMFS calculated:
• the total gross value of the crab harvested by the vessels that successful bids will remove from each fishery.
• the loan amount for which each LLP endorsement fishery will be responsible, and
• the future repayment fee needed to retire that debt.
7. NMFS held a referendum so all crab license holders could vote to approve or disapprove the loan repayment fee. We provided voters the information necessary to make informed decisions on which to base their votes.
8. More than two-thirds of the license holders voted to approve of the fee, therefore NMFS is buying back the licenses and fishing privileges of the vessels.

How is the buyback funded?

Congress authorized a U.S. Treasury loan of up to $100 million to pay to successful bidders. Crab harvesters who remain in the crab fisheries will repay the entire loan, plus interest, to the government when they sell crab over the next 30 years.

Who could submit a bid?
Only a qualifying bidder, or a qualifying bidder and his/her co-bidder(s) could submit a bid. A qualifying bidder was defined as the person who holds a permanent, fully-transferable LLP crab license. The qualifying bidder could also own the crab vessel named on the LLP crab license. If the vessel was owned by another person, that person could be a co-bidder to the bid. Holders of interim crab licenses did not qualify to bid in the buyback program.

What was bid and bought back?

A bid included a permanent, fully-transferable crab LLP license, the crab fishing privileges of the vessel(s) named on that license, the complete fishing history of the vessel(s) whose history gave rise to that license, and any other licenses based on the history of that vessel(s) which were held by the bidder(s) when NMFS began to implements this program. All of these permits and privileges are permanently revoked by the program.

Here are the 25 boats:

Aleutian Rover - American Way - Arctic Eagle – Morzhovoi – Norseman

Diamond Head – Westling – Sirene - Kodiak Queen – Labrador - Shaman

Rebel - Norseman II - North Pacific - Northern Orion - Western Viking

Stormy Sea –Exito - Sea Spray - Lady Jessie - Silent Lady - Sitkin Island

Susitna - Secret Island -Zolotoi

Stay tuned!

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