NE Multi-species Buyback Fishing Capacity Reduction under Section 312(b)-(e) of the Magnuson-Stevens Act Leo Erwin, Chief, NE Financial Services, NMFS/NOAA, Gloucester, MA Mike Sturtevant, Financial Assistance Specialist, Silver Spring, MD 11/22/2018

Topics of Discussion Types of Buyback Programs History of NOAA Buyback efforts Overview of Industry Funded Buyback Program What are the steps in 312 (b)-(e) How long does it take? 11/22/2018

Types of Buybacks General Concept: Removal of Most Fishing Capacity for the Least Amount Disaster Assistance vs. Capacity Reduction (MSA 312 (b)-(e)) Subsidized vs. Industry Funded MSA 312(b)-(e) vs. Special Legislation 11/22/2018

History of NOAA Buyback efforts NOAA has funded $46MM in Buybacks as disaster assistance since 1994 in Pacific Salmon, NE Multi-species, Texas Shrimp, and LI Lobster NE Multi-species Buybacks, 1995-97, 2001-2 NOAA completed a $90MM Buyback in BSAI Pollock authorized by special legislation which used MSA framework and was 83% financed 11/22/2018

History of NOAA Buyback efforts continued Congress has authorized under special legislation $146MM of pending programs in Bering Sea Crab (100% financed) and Pacific Coast Groundfish (78% financed) Pending Multi-species Buyback will be 83% industry financed and will be the first buyback attempted fully under MSA 312 (b)-(e) 11/22/2018

Industry Funded Buybacks Program is designed by industry and recommended by FMC Program must prevent over fishing or contribute to stock rebuilding and prevent any capacity removed from being replaced Plan specifications and the results of bidding must be approved by 2/3rds of permits holders who vote in a referendum If approved, Congressionally authorized loan is issued, bidders are paid, and a fee system to repay the loan is implemented 11/22/2018

What are the steps in a MSA 312 (b)-(e) Buyback? Business plan (section 600.1003 (n)) FMC request to NOAA (sections 600.1001 through 600.1003) NOAA Fisheries accepts or rejects request NOAA develops Implementation Plan and solicits public comment NOAA conducts a referendum of permit holders, if 2/3rds of voters approve the buyback specifications the process continues 11/22/2018

What are the steps in a MSA 312 (b)-(e) Buyback? continued NOAA publishes implementation plan, regulations, and solicits irrevocable bids. If bids conform to plan specifications the bids are accepted, the successful bidders are paid, their permits are revoked, and their vessels’ fisheries endorsement from USCG is permanently removed. Fee system is implemented if bidding succeeds. If bids do not conform to buyback specifications a second referendum may occur or the buyback is suspended. 11/22/2018

Business Plan The business plan is prepared by or for knowledgeable harvesters in the reduction fishery. The plan is a “roadmap” of the Buyback methodology. The plan contains the reduction specifications. The plan contains analyses based on historic and projected fishing revenues that demonstrates that the post reduction fishery can: repay the reduction loan, improve harvesting economics, and that the Buyback does not adversely affect other fisheries. 11/22/2018

Business Plan continued The plan must contain details of the buyback participants, including fish buyers. The plan must demonstrate that any capacity removed cannot be replaced and request appropriate reduction amendments to the FMP if required. Most importantly, the plan must demonstrate through a survey of potential participants that there is wide support for the business plan and its feasibility. 11/22/2018

FMC Request to NOAA The request is based on and includes the business plan. The request specifies the reduction fishery, projects the amount of reduction and what will be achieved, and details sources of funding. The request demonstrates how the FMP, after appropriate reduction amendment, will achieve required conservation goals and prevent removed capacity from being replaced. 11/22/2018

FMC Request to NOAA continued The request must include the actual reduction amendment , if required, or the FMC’s endorsement in principal of the reduction amendment specifications. The request must specify who the permit holders/harvesters are, and what their landings have been individually and in aggregate over the past five years. The request must specify the criteria for determining the types and number of fishing permits or permits and vessels that will be eligible under the program. 11/22/2018

NOAA Fisheries accepts or rejects the request NOAA accepts the request if it conforms to buyback requirements of section 600.1003. NOAA publishes Federal Register Notice requesting public comment which also lists the eligible voters. NOAA initiates the Buyback process after review of public comments and after it determines that the program will attain conservation objectives, will prevent removed capacity replacement, will be cost effective, and that the program has a realistic prospect of succeeding and repaying the reduction loan. NOAA rejects the request and provides guidance if the request does not comply with these goals. 11/22/2018

NOAA develops Implementation Plan NOAA publishes proposed implementation plan for public comment and holds public hearings in each affected state. Proposed implementation plan is based on business plan. Proposed implementation plan contains extensive detail on all aspects of program including eligibility, bidding, referendum, fees, and all other procedures. Final Implementation plan is published after review of public comments. 11/22/2018

NOAA Conducts Referendums NOAA issues ballots to permit holders. If 2/3rds of voters that vote approve program NOAA invites bids. If referendum rejects program, NOAA ceases process or requests that business plan be amended. If results of bids do not conform to buyback specifications NOAA may conduct a post-bidding referendum. 11/22/2018

Bids NOAA requests bids in accordance with implementation plan if results of referendum are positive. Bids are scored and ranked in accordance with the implementation plan. Bids are irrevocable and will be accepted if bidding results are within approved plan specifications. If bidding is successful, payments are tendered, fishing permits revoked, vessel titles are restricted or in some cases the vessels are scrapped and the fee system is implemented. 11/22/2018

Fee System Maximum fee is 5% of delivery value. Fees are reviewed and adjusted annually. Fees are collected by fish dealers and remitted to NOAA. Fees are collected to repay reduction loan over 20 years. Fees cease when reduction loan is fully repaid. Loan interest rate equals U.S. Treasury rates plus 2%. 11/22/2018

How long does it take? 11/22/2018