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Statement of Need: The trawl rationalization program is intended to increase net economic benefits, create individual economic stability, provide full utilization of the trawl sector allocation, consider environmental impacts, and achieve individual accountability of catch and bycatch. This rule would establish the key components that would be necessary to implement the trawl rationalization program at the start of the 2011 fishery.

Summary of the Legal Basis: Section 303A of the Magnuson-Stevens Act.

Alternatives: The Pacific Fishery Management Council (the Council) prepared two environmental impact statement (EIS) documents: Amendment 20—Rationalization of the Pacific Coast Groundfish Limited Entry Trawl Fishery, which would create the structure and management details of the trawl fishery rationalization program; and Amendment 21—Allocation of Harvest Opportunity Between Sectors of the Pacific Coast Groundfish Fishery, which would allocate the groundfish stocks between trawl and non-trawl fisheries. These EISs covered a range of alternatives. The Regulatory Impact Review and Initial Regulatory Flexibility Analysis (RIR/IRFA) for this rule focuses on the two key alternatives—the No-Action Alternative and the Preferred Alternative. By focusing on the two key alternatives (no action and preferred) in the RIR/IRFA, it encompasses parts of the other alternatives and informs the reader of these proposed regulations. Under the no action alternative, the current, primary management tool used to control the Pacific coast groundfish trawl catch includes a system of two month cumulative landing limits for most species and season closures for Pacific whiting. This management program would continue under the no action alternative. The analysis of the preferred alternative describes what is likely to occur as a result of the proposed action. Under the preferred alternative, the existing shore-based whiting and shore-based non-whiting sectors of the Pacific Coast groundfish limited entry trawl fishery would be managed as one sector under a system of IFQs, and the at-sea whiting sectors of the fishery would be managed under a system of sector-specific harvesting cooperatives (coops).

Anticipated Costs and Benefits: The RIR/IRFA reviewed and summarized the benefits and costs, and the economic effects of the Council's recommendations. The major conclusions of the economic model suggest that (with landings held at 2004 levels), the current groundfish fleet (non-whiting component), which consisted of 117 vessels in 2004, will be reduced by roughly 50 percent to 66 percent, or 40 to 60 vessels under an IFQ program. The reduction in fleet size implies cost savings of $18 to $22 million for the year 2004 (most recent year of the data). Vessels that remain active will, on average, be more cost efficient and will benefit from economies of scale that are currently unexploited under controlled access regulations in the fishery. The cost savings estimates are significant, amounting to approximately half of the costs incurred currently, suggesting that IFQ management may be an attractive option for the Pacific Coast Groundfish Fishery. The increase in profits that commercial harvesters are expected to experience under the preferred alternative may render them better able to sustain the costs of complying with the new reporting and monitoring requirements. The costs of at-sea observers may reduce profits by about $2.2 million, depending on the fee structure. However, the profits earned by the non-whiting sector would still be substantially higher under the preferred alternative than under the no action alternative.

Risks: Under the no action alternative, cumulative landing limits for target species have to be set lower because the bycatch of overfished species cannot be directly controlled. Introducing accountability at the individual vessel level by means of IFQs provides a strong incentive for bycatch avoidance. There will likely be a lower motivation to "race for fish" due to coop harvest privileges. This is expected to result in improved product quality, slower-paced harvest activity, increased yield (which should increase ex-vessel prices), and enhanced flexibility and ability for business planning.