Upcoming Council Action on the Partial Coverage Observer Program

Next week in Homer, Alaska, the North Pacific Fishery Management Council will consider taking action on increasing the 1.25% observer fee to the full 2% allowed under the Magnuson Act. 

Partial Coverage Observer Fees

The crews of the Deep Sea Fishermen’s Union (DSFU) work on Fishing Vessel Owners’ Association (FVOA) vessels under negotiated contracts. All the members of FVOA and DSFU operate in the halibut and sablefish fisheries off Alaska. The vessel owners and DSFU crew pay landing fees in order to fund the partial coverage observer program. The fees are paid from the gross revenues of a fishing trip, collected by our shorebased processors who pay half of the overall fees.

The total fees collected by the National Marine Fisheries Service for partial observer coverage have been between 3.6 and 4.7 million dollars annually. Sixty-five percent of these fees have come from halibut and sablefish fishermen and processors.

See the joint letter below submitted by DSFU and FVOA detailing our concerns about the serious flaws of the Partial Coverage Observer program’s fee structure.

Since the partial coverage observer program was restructured in 2013, the program has cost much more than expected and coverage rates in high bycatch trawl fisheries have been inadequate. Observer costs have continued to increase and now stand at $1,380/seaday with increases to more than $1,600/seaday expected in the next few years.  

The inability of the partial coverage observer program to attract competitive bidding has resulted in observer daily cost from 2013 through 2019 being far in excess of what the original EIS projected and coverage levels not being achieved for the principal core fleets of traI and hook and line.

It is unacceptable to the members of DSFU and FVOA that the Council's EIS only presumes coverage costs and fees should be based on what appears to be bloated daily charges from a sole source observer company.

The vessel owners, crews and shoreside processors that pay for this observer program should not be penalized for the failure of NMFS/NOAA to contract a daily observer cost in line with the current market. The daily cost rates used in the 2019 EIS have no relation to existing market rates. If the Council accepts this, then the Council is capitulating to a sole source contract rate as the best that can be done. A contract procedure that is characterized by the multiple complications has been identified as a reason other observer companies are not interested in submitting bids.

The DSFU and FVOA recommend that the Council advise the NMFS to only contract the next extension for two additional years. It has come to our attention that the Department of Defense has been granted special statutory acquisition authority that streamlines the requirements and is especially useful to engaging small business entities to facilitate competition. Their authority is titled "Other Transaction Authority" (OTA) (see attachment).

The Secretary of Commerce has responded strongly to the President's call for streamlined regulations, and that Congress has focused increased attention on reforming acquisition regulations that discourage small business entry and inhibit competition, thereby imposing unjustifiable costs on the private sector and the government. We believe that there would be wide support from the affected fishing industry for this sort of reform being applied to the partial observer program.

There is no reason the federal government should be allowed to impose observer rates 2-4 times market rates directly to the vessel owners, crews and processors. Once the new acquisition authority has been granted, the Council can consider recommending a longer-term contract with the more competitive rates.

At their October meeting in Homer, the Council will vote on an amendment to raise fees. Alternatives include not raising the fees (status quo); raising fees equally for all sectors; and raising fees more in the trawl sector.     

Please let the Council know how you feel about paying more for this underperforming and unsupportable program and ask the Council to ask the Secretary of Commerce to seek from Congress statutory authority that would streamline contracting for the partial coverage observer program, thereby reducing the regulatory burden and increasing the opportunity for competition and the introduction of lower, market-based rates.

Comments are due by noon, Friday September 27.  You can upload your comments or send an email through this link, under agenda item C-2