BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 1114 (Allen) - Commercial fishing: swordfish
          
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          |Version: May 11, 2016           |Policy Vote: N.R. & W. 7 - 2    |
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          |Urgency: No                     |Mandate: Yes                    |
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          |Hearing Date: May 16, 2016      |Consultant: Narisha Bonakdar    |
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          This bill meets the criteria for referral to the Suspense File.


          Bill  
          Summary:  SB 1114 outlines timelines for phasing out drift gill  
          nets, and authorizes the California Department of Fish and  
          Wildlife (DFW) to issue deep-set buoy gear or similar gear to  
          take swordfish when that gear is authorized pursuant to federal  
          law.  The bill also establishes a protocol and incentives for  
          the issuance of the new permits. 


          Fiscal  
          Impact:  

           Approximately $2.2 million (special fund) for the Ocean  
            Protection Council. (See staff comments). 
           Unknown, but significant costs, to the Department of Fish and  
            Wildlife. (See staff comments). 

          Background:  
          
          The Fish and Game Code, beginning at section 8561, contains the  
          existing provisions of law regarding the drift gill net shark  







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          and swordfish fishery. Those provisions establish criteria for  
          permits, transfers of permits, the information required for  
          permits, size of nets and other gear restrictions, restricted  
          areas for gill net fishing, as well as additional provisions. 

          In addition, the State of California has fishery policies to  
          protect endangered sea turtles and other marine life by  
          prohibiting commercial swordfish shallow-set longline fishing  
          within state waters and federal regulations currently prohibit  
          commercial longlining for swordfish within 200 miles of the  
          coast. 

          The California Ocean Protection Council has supported the  
          research and development of alternatives for catching swordfish,  
          most notably deep-set buoy gear. The gear works by dropping  
          weighted hooks as deep as 1,200 feet below the surface, where  
          swordfish tend to stay during the daytime. When an indicator  
          float drops below the surface, fishermen immediately pull in the  
          line. 

          According to the DFW, the DFW issued 71 drift gill net permits  
          and 42 harpoon permits in 2015. It considers 26 fishermen to be  
          active drift gill net fishers, and 5 harpoon fishers are also  
          considered to be active. In 2015, the fleet landed approximately  
          132 metric tons of swordfish, shark and other marketable  
          species, valued at just under $800,000. Of that, 72.5 metric  
          tons were swordfish, with a value of $630,000. In comparison,  
          the US imported nearly 11,000 metric tons of swordfish valued at  
          nearly $90 million in 2015. 
          There are provisions under federal law for what are called  
          federal exempted fishing permits (EFP). These allow activities  
          that may otherwise be prohibited and in the case of California  
          swordfish, these permits allow the use of modified drift gill  
          net gear in the Pacific Leatherback Turtle Conservation Area.


          Proposed Law:  
            This bill:

          1.Makes findings and declarations outlining the environmental  
            damage caused by drift gill nets.

          2.Repeals, as of March 31, 2017, the existing section on  
            transferring drift gill net swordfish permits and replaces it  








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            with a new section that establishes conditions for transfers  
            that would become effective on the same date:  The permittee  
            permanently retires the permit by transferring the permit to  
            an entity engaged in retiring permits, or the permittee  
            exchanges the permit for deep set buoy gear permit. (Note: The  
            entity engaged in retiring permits is likely a nonprofit.) 

          3.Sunsets the current fee for drift gill net permits ($330) and  
            increases it to $1500. 

          4.Prohibits DFW from issuing new drift gill net shark and  
            swordfish permits after March 31, 2017. Permits for which the  
            DFW has not been notified of any landings for two successive  
            fishing seasons would be revoked. Permits that have been  
            revoked or surrendered or exchanged would not be transferred  
            or re-issued. Additionally, the bill defines "latent drift  
            gear net permit" as one for which no swordfish or thresher  
            shark landings were reported in at least 3 years between 2010  
            and 2015. 

          5.Defines an actively fished drift gill net permit as one under  
            which swordfish or thresher shark landings were reported in at  
            least 3 years between 2010 and 2015. It also establishes  
            thresholds of risk and acceptable take and provides options to  
            the DFW to assess the risk to protected marine wildlife based  
            on available information. 

          6.Authorizes the DFW to adopt regulations for a deep-set buoy  
            gear fishery for swordfish consistent with the terms of the  
            bill and federal law. 

          7.Authorizes the DFW to issue deep-set buoy gear or similar gear  
            to take swordfish pursuant to federal law when that gear is  
            authorized pursuant to federal law. 

          8.Establishes a protocol and incentives for the issuance of the  
            new permits, as follows: 

             a)   To an active drift gill net permit holder pursuant to  
               Article 16 of the Fish and Game Code.  
             b)   To a person who has fished with deep set buoy gear under  
               a federal exempted fishing permit since January 1, 2010. 
             c)   To a person who holds a valid swordfish permit pursuant  
               to Section 8394. 








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             d)   Two additional deep-set buoy gear permits may be issued  
               to each actively fished drift gill who fished pursuant to a  
               federal exempted fishing permit if that federal permit is  
               surrendered within two years of a future federal  
               authorization to use deep-set buy gear or similar gear. 
             e)   One additional deep-set buoy gear permit may be issued  
               to each actively fished drift gill net permit holder and  
               each person who fished under a federal exempted fishing  
               permit if the drift gill permit is surrendered within 4  
               years of the upcoming federal authorization to use deep set  
               buoy gear or similar gear. 
             f)   One permit may be issued to a person who held a latent  
               drift gill permit prior to January 1, 2017. 
             g)   No additional permits other than those mentioned in  
               (b)-(f), above, may be granted until 5 years after deep set  
               buoy hear or similar gear is authorized under federal law.  
               The DFW would be able to issue additional permits to  
               accommodate additional fishing effort and demonstrated  
               demand if no more than a negligible risk to protected  
               marine wildlife is shown. 

          1.Charges DFW creating measures and incentives to avoid and  
            minimize the incidence of derelict deep-set buoy gear left at  
            sea which may include provisions for registration and labeling  
            gear as well as incentives for the retrieval and retention of  
            gear. 

          2.Requires the DFW to establish a new fee at or below a rate  
            sufficient to cover the costs of the DFW and to transfer the  
            new permits. 

          3.Directs the Ocean Protection Council (OPC) to provide funding  
            for the innovation and adoption of sustainable commercial  
            fishing methods in the swordfish fishery which may include  
            assistance in purchasing deep-set buoy gear for persons with  
            an exempted fishing permit as of January 1, 2016, issued by  
            the National Marine Fisheries Service and for the first 10  
            persons who exchange their drift gill net permits for deep-set  
            buoy gear. The OPC is also directed to develop marketing and  
            propose business structures to support a high and stable price  
            for swordfish landed pursuant to these new provisions. 


          Staff  








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          Comments: Staff notes that the OPC would have to fund this bill  
          from remaining Proposition 84 funds. All Proposition 84 funds  
          have been appropriated to date. Non awarded funds have been  
          designated for various purposes by the OPC. Of those funds, up  
          to $3 million has been identified to support sustainable  
          fisheries. 
          OPC notes that, of those remaining funds, urgent and high  
          priority topics continue to significantly impact California  
          communities including advancing research behind harmful algal  
          blooms and the impacts to the marine ecosystem (such as domoic  
          acid and Dungeness crabs), ocean acidification impacts to  
          fisheries and coastal communities; and creating an electronic  
          database for our fisheries information in the state. 

          OPC costs include: 

           $306,000 pilot observer program (assuming cost estimates from  
            the Pfleger Institute of Environmental Research (PIER) EFP of  
            $612 per day, 5 day average trip, for approximately 100 trips  
            in each of two years. 


           $140,000 for gear for 10 additional fishermen. This bill sets  
            the expectation that the first 10 fishermen to transfer their  
            permits would receive funding to change to deep set buoy gear.  
            PIER cites a cost of $4,000 per set of 10 buoys and it could  
            up to $10,000 per boat in retrofits to allow for the new gear.  
            This funding estimate would provide equipment and retrofits  
            for 10 license holders. Beyond the first 10 























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                 applicants, this program would have cost pressures for  
               upwards of 15 active license holders and 50 non-active  
               license holders. 


                 $40,000 for training. PIER and CDFW have recommended new  
               entrants be trained similar to how EFP participants were  
               initially trained in the use of the gear. 


           $1.5 million for marketing. The bill calls for a marketing  
            program to sustain a high price for swordfish caught under  
            this program. The OPC does not have expertise in creating  
            nationwide marketing programs for sustainable fisheries and  
            would have to contract out this activity. 


           $200,000 for OPC to manage the grant program, training  
            program, and marketing contract. 

          DFW's costs include: 

           Outreach regarding new rules. 

           Implementation of new permitting structure. This will require  
            detailed analysis by the Department's Marine Region, License  
            and Revenue Branch and Law Enforcement Division, and  
            investigations similar to other limited entry permit changes. 

           Enforcement activities necessary to implement the new fishery  
            and enforce accordingly. This will likely include increased  
            workload due to increased permit appeals through the  
            administrative hearing process. 

           Rulemaking proceedings. 

          Staff notes that the bill increases the baseline drift gill net  
          renewal fee (from $460.50 to $1,500 annually) and authorizes  
          CDFW to establish fees for deep-set buoy gear permits to recover  
          costs. However, it is unclear whether this authority can be  
          practically applied. This bill removes the $1,500  
          transferability fee and requires CWFW to revoke latent permits  
          (approximately 2/3 of current permits). To fully recover costs  








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          from the remaining drift gill net and buoy gear permits, the  
          fees would have to be set at a level that could render the  
          fisheries economically unprofitable.




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