For the second time, Congress has decided to compensate bottomfish and lobster fishers for financial losses associated with federal regulations that limit commercial fishing opportunities in the Northwestern Hawaiian Islands.
In January, President George Bush signed the Consolidated Appropriations Act, which included an earmark of $6,697,500 – inserted by Hawai`i Sen. Daniel Inouye – to compensate federally permitted commercial bottomfish and lobster fishers who will be displaced by the fishing regulations for the Papahanaumokuakea Marine National Monument in the Northwestern Hawaiian Islands. Under the 2006 presidential proclamation that created the monument, commercial lobster fishing harvests have been capped at zero, and all commercial bottomfish and pelagic species fishing must end by June 15, 2011.
In justifying the appropriation, the conference committee stated in its report, “For more than 30 years, fishing in the Monument area has been carefully managed by the Western Pacific Fishery Management Council based on the best available scientific information. During that time, limited and highly regulated sustainable fisheries have provided lobsters and bottomfish to Hawai`i and U.S. consumers…. The Presidential proclamation will end all commercial fishing in the Monument as of June 15, 2011. The amended bill provides specific authorization to the Secretary of Commerce to provide compensation to fishery participants who will be displaced by the 2011 closure.”
Under the act, the commerce secretary must create regulations that allow individuals with valid federal lobster and bottomfish permits to be compensated for no more than the economic value of the permits. The regulations must also provide for additional compensation, at the option of the permit holder, based on the value of a permit holder’s fishing vessel and gear, so long as the permittee agrees not to use the vessel for fishing in the future.
The $6.7 million grant will be administered by the National Marine Fisheries Service’s Fisheries Research and Management program. William Robinson, administrator for the NMFS Pacific Islands Regional Office, says that his office is still working out how the money will be distributed and plans to publish a proposed rule for the disbursement in the next few months. The proposed rule will include a methodology for determining the economic value of bottomfish and lobster permits, he says.
There are a little over a dozen lobster permits and about eight bottomfish permits within the monument. “If there’s enough money for all permittees, they’ll get all the money [for vessels, permits, and gear], but if not, they would get less,” he says.
With regard to the vessel and gear compensation, Robinson says that his office is also working on a methodology for determining those amounts.
When asked whether he thought it was a worthwhile program, Robinson told Environment Hawai`i, “There’s not a whole lot I can say. Congress has decided that the fishermen whose careers are being ended potentially or that their fishing opportunities are being eliminated by the establishment of the monument are entitled to compensation for lost income. That’s not an uncommon thing. There are other precedents for it around the country.”
(One example is the compensation package, approved by Congress in the late 1990s, for Alaska’s Dungeness crab fishery, which was impacted by regulations intended to protect Glacier Bay. Eligible fishermen were allowed to receive the greater of $400,000 each or the fair market value of their commercial fishing permits. Like the NWHI bottomfish and lobster fishers, the Glacier Bay permittees were also eligible to receive fair market value for their gear and a vessel. Unlike Hawai`i’s package, the Dungeness crab fishermen could receive, in addition, the value of foregone net income based on their earnings between 1987 and 1998. On top of that, $23 million was made available to compensate fish processors, fishing vessel crew members, communities, and others impacted by the regulations.)
The First Round
While compensating fishermen for economic losses associated with federal actions is not unusual, NWHI bottomfish and lobster fishers have already received considerable closure-related aid. In early 2007, the state’s Division of Aquatic Resources began disbursing a $5 million federal grant, encumbered in 2003, for fisheries disaster relief to fishermen or fishing groups affected by federal fishing restrictions or closures, which at the time included the President Bill Clinton’s establishment of the NWHI Coral Reef Ecosystem Reserve (which later became the Papahanaumokuakea monument) and the 2000 closure by NMFS of the NWHI lobster fishery to prevent overfishing. (Before then, the lobster fishery had been closed on a year-to-year basis since the mid-1990s.)
In its 2003 application for the grant, the DAR had proposed setting aside $1.68 million to purchase permits from fishermen forced or intending to leave a fishery, but later decided that it would be too difficult to determine the market value of the non-transferable permits. Instead, NWHI bottomfish and lobster fishers ended up receiving hundreds of thousands of dollars in direct aid. In addition, NWHI bottomfishermen were to receive a significant portion of more than $1 million in research grants under the program.
Now, although the lobster fishery has been closed for more than eight years and only a handful of active NWHI bottomfish fishers remain, Congress earmarked $6.7 million for these same permittees by claiming that the 2006 establishment if the Papahanaumokuakea Marine National Monument further harms them.
In the 1990s, the NWHI lobster fishery was valued by NMFS at about $5 million and the NWHI bottomfish fishery was worth about $1 million. But times have changed. The economic value of the lobster fishery sank to nothing when it closed eight years ago. And the net income in 2003 for all NWHI bottom fish vessels combined came to just $300,000 by 2003, according to a November 2006 Honolulu Advertiser opinion piece by Jay Nelson of the Pew Charitable Trusts.
According to Inouye spokesman Mike Yuen, the $6.7 million earmark was necessary because compensation for the NWHI bottomfishers via the federal Fisheries Disaster Relief Program was not included in a supplemental funding bill.
“This was the only vehicle,” he said.
With regard to the payouts in 2007, Yuen was not able to explain by press time how those were considered with regard to the current appropriation. In any case, he said, “It all goes back to the fact that their livelihood was being shut down.”
Pick a Number
Whatever the value of the fishery is today, the difficulty in determining the value of its permits may be a major stumbling block for any permittee seeking compensation under the act. In its Winter 2008 newsletter, the Western Pacific Fishery Management Council notes that NWHI fishermen are concerned that because the act limits compensation to the economic value of the permit, they could receive little or no compensation.
The newsletter states, “Typically, the economic value of a permit is based on two things, the revenues generated by the permit and the price someone is willing to pay to obtain that permit, according to NWHI permit holder [and former council president] Jim Cook. Since NWHI lobster permits are currently subject to a zero harvest quota, the economic value of Cook’s permit may be worthless. NWHI bottomfish permits could be equally worthless since permits cannot be transferred to another individual and the fishery will cease to exist after June 2011.
“Fishermen are hopeful that NMFS will take a flexible approach and design a program that will consider the revenues of each permit holder of the fisher as a whole in determining fair compensation.”
Despite these obstacles, the council voted at its March meeting in Guam to write a letter to NMFS with a copy to Sen. Inouye regarding compensation for additional displaced NWHI fishery participants such as sport fishing tour operators and pelagic fishermen.
The letter, which was addressed to Robinson and sent on May 1, stated that council member Rick Gaffney had identified recreational fisheries based on Midway as another affected fishery. Pelagic troll and handline fisheries may have also been impacted by the monument designation, the council wrote. The council also asked Robinson to “seek clarification on the intent of the compensation package.”
In a phone interview with Environment Hawai`i, Yuen indicated that although compensation for lost revenue is not mentioned in the act, the $6.7 million amount was based on an estimate of revenue lost as a result of the monument designation. When it was pointed out that the lobster fishery has been closed since 2000, Yuen said he was referring only to the lost revenue of the NWHI bottomfish fishers. He added that he was not clear on why the lobster fishers were included and was unable to get clarification by press time.
— Teresa Dawson
Volume 18, Number 12 June 2008
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