Individual Fishing Quotas:

Management Costs Varied and Were Not Recovered as Required

GAO-05-241: Published: Mar 11, 2005. Publicly Released: Apr 11, 2005.

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Overfishing may have significant environmental and economic consequences. One tool used to maintain fisheries at sustainable levels is the individual fishing quota (IFQ), which sets individual catch limits for eligible vessel owners or operators. This is GAO's third study on IFQ programs. For this study, GAO determined (1) the costs of managing (i.e., administering, monitoring, and enforcing) IFQ programs and how these costs differ from pre-IFQ management costs; (2) what, if any, IFQ management costs are currently being recovered by the National Marine Fisheries Service (NMFS); and (3) ways to share the costs of IFQ programs between government and industry.

Fiscal year 2003 management costs varied considerably among IFQ programs. According to fishery managers, halibut and sablefish program costs were higher and surfclam/ocean quahog program costs were lower, when compared with pre-IFQ management costs. Although complete cost information was not available, GAO aggregated cost estimates from information provided by NMFS and other organizations involved in IFQ-related activities and estimated that fiscal year 2003 IFQ management costs were at least $3.2 million for the Alaska halibut and sablefish program, $274,000 for the surfclam/ocean quahog program, and $7,600 for the wreckfish program. While NMFS does not systematically track the costs of managing IFQ programs and does not have complete information on pre-IFQ management costs, fishery managers said management costs were greater under the halibut and sablefish IFQ program than under pre-IFQ management, in part, because of the IFQ program's complex rules. In contrast, fishery managers said costs were less under the surfclam/ocean quahog IFQ program than under pre-IFQ management, in part, because the simplicity of the program's design made it easier to monitor compliance. Moreover, according to fishery managers, NMFS incurred additional costs for the development and initial implementation of both programs. NMFS is not recovering management costs as required by the Magnuson- Stevens Act for two of the three IFQ programs. Under the act, as amended by the 1996 Sustainable Fisheries Act, NMFS is required to recover the "actual costs directly related to the management and enforcement" of all IFQ programs. NMFS has implemented cost recovery for the halibut and sablefish program, but it has not done so for the surfclam/ocean quahog or wreckfish programs. NMFS officials said that cost recovery for the surfclam/ocean quahog program has been a low priority and very few people were fishing wreckfish. Also, the Magnuson-Stevens Act does not define "actual costs directly related to the management and enforcement" of an IFQ program. NMFS has interpreted the term to mean those costs that would not have been incurred but for the IFQ program (i.e., the incremental costs). However, another way to interpret the term "actual costs directly related to" is full costs. Under a "full cost" approach, NMFS could have recovered more costs of managing the IFQ program. Several methods are used for sharing IFQ management costs between government and industry. These methods principally fall into three categories: user fees, quota set-asides, and devolution of services. Under user fees, government recovers costs by collecting a fee from the quota holder or fisherman. Under a quota set-aside, government can set aside (i.e., not allocate) a certain amount of quota each year, lease the set-aside quota to fishermen, and use the revenue to pay for program management costs. Finally, under devolution of services, management services previously performed by government, such as monitoring compliance with individual catch limits, are transferred to industry.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Matter for Congressional Consideration

    Matter: If the Congress would like NMFS to recover other than incremental costs, it may wish to clarify the IFQ cost recovery fee provision of the Magnuson-Stevens Act.

    Status: Closed - Implemented

    Comments: The Magnuson-Stevens Act was reauthorized and amended in January 2007. However, Congress made no change to the cost recovery fee provision for individual fishing quota and other limited access privilege programs to clarify that Congress would like the National Marine Fisheries Service (NMFS) to collect other than incremental costs. In November 2007, NMFS issued guidance to the fishery management councils stating that relevant costs to recover are the incremental costs.

    Recommendations for Executive Action

    Recommendation: To comply with the cost recovery requirements of the Magnuson-Stevens Act, the Secretary of Commerce should direct the Director of NMFS to implement cost recovery for all IFQ programs.

    Agency Affected: Department of Commerce

    Status: Closed - Implemented

    Comments: In November 2007, NMFS issued guidance to the fishery management councils stating that cost recovery must be implemented for all limited access privilege programs, including individual fishing quota (IFQ) programs. To do so for existing IFQ programs requires that regional fishery management councils amend the relevant fishery management plans and promulgate implementing regulations through a public notice and comment process. In July 2009, NMFS reported that councils have begun the process to amend the management plans for surfclam/ocean quahogs and wreckfish--the two IFQ fisheries for which NMFS had not implemented cost recovery at the time of GAO's report.

    Recommendation: To comply with the cost recovery requirements of the Magnuson-Stevens Act, the Secretary of Commerce should direct the Director of NMFS to develop guidance regarding which costs are to be recovered and, when actual cost information is unavailable, how to estimate these costs.

    Agency Affected: Department of Commerce

    Status: Closed - Implemented

    Comments: In November 2007, the National Marine Fisheries Service issued guidance to the fishery management councils regarding the costs to be recovered for limited access privilege programs, such as individual fishing quota programs, and, when actual cost information is unavailable, how to estimate these costs.

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