Depending upon the IFQ Program, Management Costs Were Higher or Lower Than Pre-IFQ Costs

Estimated IFQ management costs for fiscal year 2003 varied by program  and, according to fishery managers, when compared with pre-IFQ  management costs, were higher for the halibut and sablefish program and  lower for the surfclam/ocean quahog program. Also, according to fishery managers, both the fishery  management councils and NMFS incurred additional costs associated with  the development and implementation of the halibut and sablefish and  surfclam/ocean quahog IFQ programs. IFQ Management Costs Varied by Program

We aggregated cost estimates for each IFQ program on the basis of  information provided by various organizations and estimated that the  management costs for fiscal year 2003 ranged from a high of at least $3.2  million for the halibut and sablefish program to a low of $7,600 for the  wreckfish program. While NMFS does not systematically track IFQ management costs  and cost data on fishery management activities prior to the IFQ program  are incomplete, fishery managers said the overall costs of managing the  halibut and sablefish fisheries were higher under the IFQ program than  under the previous management system. NMFS Has Not Recovered IFQ Management Costs as Required

In 1996, the Magnuson-Stevens Act was amended by the Sustainable  Fisheries Act, requiring NMFS to collect a fee to recover the “actual costs  directly related to the management and enforcement of any individual  fishing quota program” and limiting the fee to 3 percent of the ex-vessel  value of the fish harvested. However, at the time of our review, NMFS had not  implemented cost recovery for the surfclam/ocean quahog and wreckfish  IFQ programs. According to NMFS officials, they had not recovered  surfclam/ocean quahog or wreckfish management costs as required under  the act, because (1) cost recovery has not been a priority for the  surfclam/ocean quahog program and (2) very few people were fishing  wreckfish, and they believe that recovering program management costs  would be an economic burden for these fishermen. However, NMFS has  interpreted the term to be limited to the costs that would not have been  incurred but for the IFQ program (i.e., the incremental costs). However, there is another way to interpret “actual costs directly related to”  an IFQ program, that is, full costs. Under a “full cost” approach, NMFS  could have recovered more than the $3.2 million recovered for fiscal year  2003. Several Methods Are Used for Sharing Costs between Government and Industry

Several methods are used for sharing IFQ management costs between  government and industry; each method has advantages and disadvantages. These methods principally fall into three categories—user fees, quota  set-asides, and devolution of services from government to industry. Quota Set-Asides

Under the quota set-aside method, the government sets aside (i.e., does not  allocate) a certain amount of quota each year, leases it to fishermen, and  then uses the revenue to pay for IFQ program management costs. Finally, since the Magnuson-Stevens Act does not define  “actual costs directly related to the management and enforcement” of an  IFQ program and NMFS has interpreted the term to mean incremental  costs, NMFS may be recovering fewer costs than the Congress intended. For this report, we  reviewed domestic quota programs to (1) determine the costs of managing  (i.e., administering, monitoring, and enforcing) IFQ programs and how  these costs differ from pre-IFQ management costs; (2) determine what, if  any, IFQ management costs are currently being recovered by the  Department of Commerce’s National Marine Fisheries Service (NMFS); and  (3) assess ways to share the costs of IFQ programs between government  and industry.
Why GAO Did This Study

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.

What GAO Found

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.