1. 2017-2018 Cost Recovery Annual Report Trawl Rationalization Program
Agenda Item G.2.a
Supplemental NMFS Presentation 1
November 2018
Cost Recovery Annual Report
Trawl Rationalization Program
Christopher Biegel
Cost Recovery Program Coordinator
November 2018
WEST COAST REGION
The report was delayed from the traditional April meeting  presentation until the November meeting.
The extra time was taken to allow for several meeting/calls with industry to discuss their concerns with previous reports.
The report presentation will return to the standard April Council meeting.

2. What is the cost recovery program?
Cost recovery is the process by which NMFS recovers the incremental costs associated with the management, data collection, and enforcement of the Pacific coast groundfish trawl rationalization program
Cost recovery is required by the Magnuson-Stevens Fishery Conservation and Management Act (MSA) for all limited access privilege programs
Under MSA, cost recovery fees cannot exceed 3% of the value of the fishery .

3. Who is covered by the West Coast Cost Recovery Program?
At this time, all participants fishing in the Pacific coast groundfish trawl rationalization program, including
Shorebased Individual Fishing Quota (IFQ) Program
Mothership (MS) Cooperative (Coop) Program
Catcher/Processer (C/P) Cooperative Program .

4. How are Cost Recovery Fees Collected?
First receivers of fish caught under the groundfish trawl rationalization program (fish buyers) are required to submit the cost recovery fees collected to NMFS via Pay.gov (
Pay.gov can only collect fees using a credit/debit card or direct electronic bank transfers
Fees must be paid through Pay.gov. NMFS cannot accept payment directly by cash or check
The key is that fees can only be paid online through pay.gov. Credit/debit card or bank transfers can be used, checks or cash cannot.
The issue of “deposit principle” has come up. The regs do not make it clear that deposit principle may be used to refund cost recovery payments made on a credit card. We are working to adjust the regs to make it clear that credit card payments for cost recovery may be refunded with deposit principle from the required cost recovery bank account.
We have learned that an overpayment with a credit card is an easy fix if quickly reported but an overpayment with an ACH/bank transfer is not. That requires filling out forms and physically mailing them to NOAA Finance. This process can take several weeks.

5. 2018 Cost Recovery Fee Calculation
Fee percentage = the lower of 3% or (DPC/V) x 100
DPC – direct program costs, are the actual incremental costs for the previous fiscal year directly related to the management, data collection, and enforcement of each sector
V – total ex-vessel value of the fish landed by each sector
Incremental costs are those net costs that would not have been incurred but for the implementation of the trawl rationalization program
Ex-vessel value is determined by either actual prices from electronic reporting or based on the average price in the case of MS and C/P
The average price for MS and CP is based on the reported price for whiting from the IFQ sector.
When the MS sector returns to paying cost recovery fees we will base the average price for whiting on the data reported on the MS annual cost recovery reports.

6. 2018 Cost Recovery Fee Percentages
Fee percentages are
Shorebased IFQ Program: 3.0%
MS Coop Program: %
C/P Coop Program: %
(announced in 82 FR 61752, 12/29/2017)
As this report is being presented in November, we will soon have the fees for 2019 which will be published before the end of December.
Q: Will industry be able to provide input prior to the fees being announced?
A: We will be discussing industry involvement in the cost recovery process later in the presentation.
A: It could be that the CR committee needs to be restarted to provide a more structured venue. It also removes the ad-hoc nature of the way things are going.  They could look at the year in a glance document and discuss the incremental nature of the upcoming actions.

7. Direct Program Costs (DPC) of Management, Data Collection, and Enforcement
The DPCs for 2017 are based on the recoverable costs of employees’ time
This does not include expenses for travel, supplies, etc.
The recoverable costs of employees’ time are the incremental costs of those employees’ time
Time that would not have been incurred but for the implementation of the trawl rationalization program
NMFS employees have coded and tracked their time cards for time spent on the trawl rationalization program by sector (IFQ, MS, C/P) since 2011
Q:How does NMFS plan to avoid further issues with CR task codes being used for non recoverable tasks?
A: In the future, all changes to cost recovery tasks codes will be discussed and then implemented through the cost recovery coordinator to avoid confusion.
****Note about the G-tracking sheet?

8. Table 1. Incremental costs (DPC) associated with management, data collection, and enforcement of all sectors of the Trawl Rationalization Program, FY 2017 (October 1, 2016 to September 30, 2017).
Cost Category
West Coast Region (WCR)
Northwest Fisheries Science Center (NWFSC)
Office of Law Enforcement (OLE)
Total
(before adjustment)
Personnel 1
$899,470.66
$1,248,247.93
$73,339.20
$2,221,057.79
IFQ
$833,
$1,114,961.16
$67,228.15
$2,015,787.69 MS
$30,509.31
$93,864.77
$4,078.85
$128,452.93
C/P
$35,362.97
$39,422.00
$2,032.20
$76,817.17
1. Personnel costs include salary and benefits. The federal grant covering Pacific States Marine Fisheries Commission (PSMFC) personnel costs is included in the WCR column.
2. This value differs from the number published in the 2018 cost recovery fee Federal Register notice. This change is discussed on slide nine.
This table was revised to address industry concerns that we were continuously reminding them that we could be charging them more.
Q:  We do not appreciate the repeated reminders that NMFS could be charging us more?
A:  We removed the empty fields from table 1 as they did not add any value.  However, we retained the language discussing the types of things that were not charged because the information is relevant and could help inform an outside audience.

9. Changes from the Notice for the 2018 Fee Calculation Determination
IFQ Sector Only
$74, in contracting costs removed because these costs funded a database that supports both catch share and non-catch share fisheries
$89, charged to a task code where some staff recorded time for non-recoverable tasks. All costs associated with the task code were removed
Removal did not affect the 2018 fee percentage
IFQ DPC adjustment from the Federal Register notice (82 FR 61752)
$2,179, IFQ DPC total from Federal Register notice
-$163, Adjustment (removal of $74, and $89, from IFQ DPC)
$2,015, Adjusted IFQ DPC total
We included this explanation for the sake of transparency. It shows that we do take a hard look at the numbers, make adjustments as necessary, and work to makes sure that any mistakes are avoided in the future.
Q:How does NMFS plan to avoid further issues with CR task codes being used for non recoverable tasks?
A: In the future, all changes to cost recovery tasks codes will be discussed and then implemented through the cost recovery coordinator to avoid confusion.
Q: What if you find this sort of mistake in the future and it would effect a fee percentage?
A: We would look at how much of an impact the change would make and either publish a revised fee in the FR or carry any overpayments as a credit for the next fee calculation. Either way, any overpayments would be credited for the next fee calculation.

10. DPC for management, data collection, and enforcement of the trawl rationalization program by sector
West Coast Region
The West Coast Region (WCR) manages the trawl rationalization program by working on policy issues, drafting and implementing regulations, tracking the fishery, and issuing permits
Includes work done by WCR Groundfish Branch and Fisheries Permits Office
Includes WCR costs for work done by the Northwest Fisheries Science Center's Scientific Data Management (SDM) and Information Technology (IT) groups for work on the online IFQ system
Includes work done by the Pacific States Marine Fisheries Commission for the Catch Monitor Program
We will discuss the WCR in more detail as an example of how we have updated the way we show the tasks that are being counted towards cost recovery later in the presentation
Full details of this and the next two slides can be found in the report.

11. Northwest Fisheries Science Center (NWFSC)
DPC for management, data collection, and enforcement of the trawl rationalization program by sector continued
Northwest Fisheries Science Center (NWFSC)
NWFSC collects and analyzes data on the trawl rationalization program through observers on vessels and through economic and social surveys
Includes work done by the NWFSC Fishery Resource Assessment and Monitoring Program (FRAM) and additional employees paid through PSMFC contracts and grants
Full details can be found in the report.

12. NOAA’s Office of Law Enforcement (OLE)
DPC for management, data collection, and enforcement of the trawl rationalization program by sector continued
NOAA’s Office of Law Enforcement (OLE)
OLE enforces the requirements of the trawl rationalization program. Trawl rationalization enforcement technicians’ time was included in the 2018 fee calculation
Enforcement technician’s activities include, but are not limited to:
Tracking quota share and vessel account balances
Contacting vessel owners if an account is in deficit
Assisting with fishery declarations
Tracking fishing status through the vessel monitoring system
Full details can be found in the report.

13. Changes in task level detail
In response to comments from industry, we have included both a more detailed breakdown of costs by group and added more detail to the task level section of the report
Table 2 (page 6) details the incremental costs, hours, and number of staff, by program office
Page 9 includes tasks broken down by Group, Branch, and “Ongoing and Annual Tasks” and “Ad-hoc, Periodic, or One-time Tasks”
Examples of this are on the next several slides.

14. Table 2. Incremental costs, hours, and number of staff, by program office, FY 2017.
WCR example of Table 2
WCR
IFQ
Costs
Hours
Staff
Full time equivalent1
Groundfish
$121,463.24
2,227.5 5
1.1
Permits
$142,254.78
1,725 4
0.8
NWFSC Information Technology (IT)
$370,480.64
3,826 7
1.8
PSMFC
$199,361.00
Na5 2
C/P
Full time equivalent
$34,235.80
770.25 3
0.37
$1,127.17 19
0.01
NWFSC (IT) na MS
$28,739.69
660.25
0.32
$1,769.62
29.5
Total
$184,438.73
3,658.0 11
1.79
$145,151.57
1,774 8
0.82 Na
There could be some questions getting into the specifics of the hours or how industry gets to have a say. (see questions below).
Full time equivalent would be someone working 40 hours a week in the project. Most staff spend only some of there time working on recoverable tasks.
Q:  Exactly what tasks are OLE doing to account for the 30 hours charged to CP?
A: That is time spent consulting (document review, Council meeting participation, etc) on actions that are related to the CP sector.
Q: How is it determined that a task is considered recoverable?
A: We have added a section to the report which explains how tasks are determined to be incremental/recoverable.
Q: Will industry get to have the conversation about what should be considered recoverable before that determination is made by NMFS (example EM)?
A: It could be that the CR committee needs to be restarted to provide a more structured venue. It also removes the ad-hoc nature of the way things are going.  They could look at the year in a glance document and discuss the incremental nature of the actions.

15. Groundfish Branch Example of Ongoing and Annual Tasks
Rulemakings & Council Support – Developed rulemakings and participated in policy development at the Council for the trawl rationalization program and worked on associated implementation and analytical requirements, including:
Inseason actions to reapportion bycatch and modify at-sea allocations (MS, CP)
Cost recovery policy (ALL)
Program Support & Compliance (ALL)
Respond to requests for clarification of trawl rationalization program regulations (IFQ).
Permits Branch review of annual mothership and catcher/processor coop applications and reports (MS, CP)
Assisted Permits Branch, WCGOP, and OLE in monitoring compliance with trawl program regulations (ALL, mostly IFQ)
Website Updates – Prepare and update information for the West Coast Groundfish Trawl Catch Share Program website. .
Rulemaking & Council support
-Prepared inseason actions to reapportion bycatch and modify at-sea allocations, including a public notice (MS, CP).
-Cost recovery policy, fee percentage calculation and notice, preparation of annual report and presentation to Council (ALL).
Program Support & Compliance – Provided support to constituents to understand and comply with program requirements.
-Respond to requests for clarification of trawl rationalization program regulations by phone, , and in person (IFQ).
-Assisted the Permits Branch in the review of annual mothership and catcher/processor coop applications and reports (MS, CP).
-Assisted Permits Branch, WCGOP, and OLE in monitoring and investigation of compliance with trawl program regulations (ALL, mostly IFQ).
Website Updates – Prepare and update information for the West Coast Groundfish Trawl Catch Share Program website.
Inseason actions to reapportion quota pounds as a result of finalization of Pacific whiting quotas (“top-up”) or tribal reapportionment are not charged to cost recovery.

16. Groundfish Branch Example of Ad-hoc, Periodic, or One-time Tasks
Rulemakings & Council Support – Developed rulemakings and participated in policy development at the Council for the trawl rationalization program and worked on associated implementation and analytical requirements for specific rulemakings, including:
Final rule to reallocate widow rockfish quota share (IFQ)
2017 and 2018 Trawl Gear Modifications Exempted Fishing Permits (IFQ)
NEPA analysis to support the Trawl Gear Modifications Rule (IFQ)
Consideration for reallocating IFQ QP to the mothership sector (IFQ, MS)
Five-year Review of the Pacific Coast Groundfish Trawl Rationalization Program (IFQ, MS, CP)
Co-led the project team with Council and NWFSC staff
Prepared analysis
Presented at nine public hearings
Prepared and reviewed analysis and input on follow-on actions
Rulemakings & Council Support
-reallocate widow rockfish quota share, preparation of the final rule package, Paperwork Reduction Act package, NEPA analysis, outreach materials.
-2017 and 2018 Trawl Gear Modifications EFPs, NEPA analysis, analysis and guidance for Council discussions, implementation of monitoring and reporting procedures.
-NEPA analysis to support the Trawl Gear Modifications Rule.
-reallocating IFQ QP to the mothership sector - relayed implementation questions and issues to Council staff /advisory bodies
Five-year Review
-Co-led the project team with Council and NWFSC staff, holding project team meetings, coordinating analysis and development of the document.
-analysis, wrote, and edited review document.
-nine public hearings, and at CAB meetings. Prepared briefing materials and provided staff support for CAB and Council discussions.
-follow-on actions, preparing NMFS reports, and provided staff support for CAB meetings on these topics.

17. Determination of incremental tasks
NMFS employees determine which tasks are incremental through discussions with supervisors and consultations with senior policy consultants and/or general counsel, if necessary
This happens as soon as possible in the process to ensure that time is being recorded appropriately 
Some tasks are partially incremental in which case staff allocate their time into incremental and non-incremental hours
An example of quick determination is: when the Council begins talking about a new groundfish action, we would discuss whether the action would be considered incremental as soon as possible.
Q:What is the plan to include more industry members in discussions on cost recovery?
A: We are happy to have additional calls or meetings to discuss cost recovery and would like to include anyone who is interested in being part of the discussion.
Q: Will industry get to have the conversation about what should be considered recoverable before that determination is made by NMFS (example EM)?
A: WE NEED AN ANSWER FOR THIS It could be that the CR committee needs to be restarted to provide a more structured venue. It also removes the ad-hoc nature of the way things are going.  They could look at the year in a glance document and discuss.

18. Determining the Value of the Fishery (V)
“V” is calculated for each sector using Shorebased IFQ Program ex-vessel price from electronic fish ticket data in the Pacific Fisheries Information Network (PacFIN) and on the retained catch estimates (weight) from the observer data (as reported in PacFIN from NORPAC observer data).
This is the value of all fish for IFQ but only whiting for CP and MS.
While the practice is to only count retained catch, the regs are not fully clear about that. We are working to adjust the regs to make it clear that only retained fish and not discards are counted.
We have discovered that the regs seem to say that we should be including all groundfish for MS and CP but until we come up with a plan to address the issue we shouldn’t bring it up.

19. Calculating the Fee as a Percentage of Total Fishery Value
Fee percentage = the lower of: 3% or (DPC/V) x 100
Shorebased IFQ Program: 3.0% = the lower of 3% or ($2,015,787.69/$46,206,889.00) x100
MS Coop Program: % = the lower of 3% or (-$132,607.08/$12,214,290.70) x 100
C/P Coop Program: % = the lower of 3% or (-$111,622.07/$21,314,877.96) x 100.
Because fees cannot be set using a negative percentage, the fee percentages for the MS Coop Program and the C/P Coop Program were set at 0.0%.
Due to continued carryover from the fee adjustment, the MS sector should have one more year of 0% and the CP will have one to two more years of 0%.

20. MS Pricing for the C/P Coop Program
For 2018, NMFS calculated the MS pricing for the C/P Coop Program to use as a proxy is $ 0.09/lb for Pacific whiting
The average price per pound of Pacific whiting as reported in PacFIN from the Shorebased IFQ Program was used as a proxy for the MS pricing
True MS average price per pound was planned to be calculated from the MS Coop Program Annual Reports. However, because the MS cost recovery fee has been set to zero percent, there were no reports to submit so the proxy method was used again for the 2018 MS pricing .

21. Fees Recovered from Fishing Year 2017
The following sector-specific fees have been paid through pay.gov for 2017 catch.
2017 Fees recovered
Shorebased IFQ Program
$1,714,857.13
MS Coop Program
$0.00
C/P Coop Program
Total .

22. Use of cost recovery funds
Payments received by NMFS as a result of cost recovery are deposited in the Limited Access System Administrative Fund as required by the Magnuson-Stevens Act
Funds deposited in this account are available only to the Secretary of Commerce and may only be used to administer and implement the Magnuson-Stevens Act in the fishery in which the fees were recovered
Therefore, all cost recovery fees recovered by the WCR to date will be used for current and future management, data collection, and enforcement of the trawl rationalization program similar to as described in the fee calculation section of the annual report
While funds come in on a by sector basis. The funds are as used collectively for management of the trawl program as a whole.

23. Pre-Catch Share Program Cost Estimates
NMFS was asked to provide
Agency costs for the trawl sector prior to rationalization
Information on possible cost savings provided by the Catch Share Program
Insufficient information exists to calculate an accurate estimate of pre-catch share program costs
An initial review of total groundfish actions was completed but more work would be needed to refine
-During discussions with industry members and the GAP, NMFS was asked to provide a pre-trawl rationalization (catch share) program costs estimate, in detail, and details on cost saving provided by the program.
-Currently the WCR uses a “but for” approach when determining costs. This approach looks at incremental costs that would not have been incurred but for the implementation of the catch share program and is consistent with the “with and without” language in “The Design and Use of Limited Access Privilege Programs” tech memo.
-We have evaluated how to calculate pre-catch share program costs, and after discussions with WCR and NWFSC staff, including the SFD economist, and NMFS Headquarters staff, we have decided that an attempt to determine sector specific costs pre-catch share at this point would be time-consuming, inaccurate, and not informative.
-This is due to the unavoidable estimations that would have to be made.  An analysis based almost entirely on estimates would not provide any new helpful information that could be acted upon.
-A review of total groundfish actions was completed, however, before diving deeper to determine which were related to trawl and summarizing the types of actions covered under the rule-makings, we wanted to solicit feedback to determine if this information would be of interest. Would be a high workload. .

24. Thank You Questions? Christopher Biegel WEST COAST REGION
WCR – Portland, OR
WEST COAST REGION