Fishing Vessel Buyback Program Part 2

Geetings Fishies! As promised here is part 2:

How did NMFS score the bids?

Bids were scored according to two factors: the asking bid price and the estimated value of the vessel's crab harvests. The bid score equaled the bid asking price divided by the vessel's total harvest value. To calculate the total harvest value, NMFS first determined the number of pounds the vessel harvested each year in each LLP crab fishery during the most recent five years the fishery was open. This harvest amount was then multiplied by the average ex-vessel prices per pound for each fishery in each year. The value of harvests in fisheries not covered by the buyback program were not part of the bid score calculation.

NMFS ranked the bid's score against all others and accepted bids in reverse auction, starting with the lowest scoring bids. Lower bid scores represented better buyback "value" because lower scoring bids resulted in removal of more effort for less money than did higher scoring bids.

Can a vessel still be used to fish if NMFS accepted a bid on that vessel?

No. The fishery endorsement of the vessel named on the license will be revoked. No one will be able to use the vessel to fish (including tendering and other activities considered fishing) in a commercial fishery, for any species, anywhere in the world. Current and future owners could use the vessel for any other legal purpose.

What happens to fishing history?
All fishing history (also called catch history) from the vessel whose history gave rise to the crab LLP license is surrendered. This includes crab fishing history and any other fishing history earned by that vessel. Once a history is surrendered, no person may use the history to qualify for any future fisheries permit program, including the Crab Rationalization Program.

What about the LLP groundfish license?
NMFS permanently revoked any LLP groundfish licenses, and other federal fisheries licenses bought back, that are based on the history of the vessel whose fishing history gave rise to the crab LLP license.

How is the loan payment fee determined for each fishery?
Participants remaining in each crab fishery under this program are responsible for repaying, with interest, a portion of the $97.4 million loan over the next 30 years. Participants in each fishery will pay for a portion of the loan equal to that fishery's proportion of the total value of the BSAI crab fisheries. The fee to be paid in each fishery is capped at 5%. This means that participants in any given crab fishery will not pay back more than 5% of delivery value of crab in that fishery.

Who collects and submits loan payment fees to NMFS?
"Fish Buyers" are responsible for collecting fees and submitting them to NMFS to repay the buyback loan. Fish buyers are: vessels that process crab, shore side processors that receive crab from harvesters, and persons that buy crab harvested by catcher processor vessels.

Groundfish:

The groundfish fishing capacity reduction program, or vessel buyback, was implemented in 2003 by National Marine Fisheries Service (NMFS). The purpose of the program was to reduce the number of vessels and permits endorsed for the operation of groundfish trawl gear in order to increase productivity in the groundfish fishery, help financially stabilize the fishery, and conserve and manage fish. The program also involved fishing capacity reduction in the California, Oregon, and Washington fisheries for Dungeness crab and pink shrimp.

To participate in the voluntary program, groundfish permit holders bid for reduction payments, and NMFS scored each bid against the bidder’s past exvessel revenues. A reverse auction accepted bids whose amounts were the lowest percentages of revenues. This created reduction contracts. A referendum on the fees followed the bidding process. All seven fisheries (federal groundfish and Washington, Oregon, and California pink shrimp and Dungeness crab fisheries) voted in the referendum. A statutory formula assigned different weights to each fishery’s votes.

On December 4, 2003, accepted bidders were required to permanently stop all further fishing with the reduction vessels and permits. NMFS is revoking the relinquished Federal permits, and NMFS will advise California, Oregon, and Washington about the relinquished state permits. NMFS will also notify the National Vessel Documentation Center to revoke the reduction vessels’ fisheries endorsement, and will notify the U.S. Maritime Administration to restrict the vessels’ transfer to foreign ownership or registry.

Vessels participating in the program must be sold, scrapped, or converted to nonfishing purposes, and the owner must agree not to use the vessel for fishing again.

The program’s maximum cost is $46 million, of which a 30-year loan will finance $36 million. Future fish landing fees will be used to repay the loan. Each of the seven fisheries involved will pay fees at different rates. Congress appropriated the remaining $10 million of the program’s cost.

One hundred eight groundfish permit owners submitted bids. These totaled $59,786,471. NMFS accepted 92 bids. These totaled $45,752,471. The next lowest scoring bid would have exceeded the program’s maximum cost.

The accepted bids involved 92 fishing vessels as well as 240 fishing permits. Ninety-two of the permits were groundfish trawl permits, and 121 were crab and shrimp permits. The remaining 27 were other Federal permits.

NMFS received 1,105 timely votes in the referendum. After weighting, 85.85% of the votes approved the fees. The referendum was successful. The reduction contracts are in full force and effect.

Stay tuned for part three!

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