Purpose and Need

In 1992, the Council approved the Community Development Quota (CDQ) Program to provide communities in western Alaska a fair and reasonable opportunity to participate in the BSAI groundfish fisheries, to expand their participation in salmon, herring, and other nearshore fisheries, and to help alleviate the growing social and economic crises within these communities. Under Federal regulations, the eligible communities have formed six non-profit corporations (CDQ groups). The program is allocated a specific percentage of the total allowable catch for each Bering Sea fishery, which is further allocated among the CDQ groups. The CDQ groups manage and administer the CDQ allocations, investments, and economic development projects for the benefit of their member communities. At the time the Council approved the CDQ Program, it established that the program was to provide the means for starting or supporting commercial fisheries business activities to support fisheries-related economies in these communities. Since implementation in 1992, the groups have matured significantly and gained valuable experience in managing their fisheries and related investments. This level of experience and the subsequent desire for increased autonomy by the groups spurred concerns with the general administration and government oversight of the program. In addition, recommendations from the National Research Council and proposed Congressional legislation introduced similar issues to be addressed by the Council, including that of relaxing the requirement that all CDQ revenues must be spent on fisheries-related projects. As the Council recognized the program’s rapid growth and evolving nature, it determined that an evaluation of some of the general policy issues related to the program was warranted. The Council formed a CDQ Policy Committee to identify issues of concern and propose alternatives for analysis. 

Based on the committee’s recommendations, the following issues were analyzed in Amendment 71: 

Issue 1: Determine the process through which CDQ allocations are made Issue 

2: Periodic or long-term CDQ allocations Issue 

3: Define the role of government in oversight of the CDQ Program Issue 

4: CDQ allocation process - Type of quotas Issue 

5: CDQ allocation process - The evaluation criteria Issue 

6: Extent of government oversight (definition of a CDQ project) Issue 

7: Allowable investments by CDQ groups (fisheries-related restriction) Issue 

8: Other administrative issues

Analysis

A 217-page RIR/IRFA and appendices (public review draft dated May 15, 2002) were prepared for this amendment. The analysis outlined several alternatives, options, and suboptions for each of the eight issues. The analysis of alternatives was guided by the problem statement, which stated that some of the policy and administrative aspects of the program may need to be restructured to adapt to changes, or may need to be clarified in Federal regulations, so that they will best suit the long-term goal of the program. Among the alternatives analyzed were options to modify the original statement of purpose of the CDQ Program, which is “to allocate CDQ to eligible western Alaska communities to provide the means for starting or supporting commercial fisheries business activities that will result in an ongoing, regionally-based fisheries-related economy,” to include a secondary purpose of strengthening the non-fisheries related economy in the region.

Regulation Summary

The Council’s preferred alternative on Amendment 71 included the following: 

1) further define the allocation process in Federal regulations, including an expanded State hearing and public comment process; 

2) establish a fixed allocation cycle of 3 years, with a provision allowing the State to reallocate mid-cycle under extraordinary circumstances;

3) amend the BSAI FMP to limit the government’s responsibility in the program to six specific elements; 

4) revise and condense the evaluation criteria used to make the allocations and publish them in Federal regulations;

5) clarify that government oversight extends to subsidiaries controlled by the CDQ groups, as defined by >50% interest and effective management control; 

6) allow each CDQ group to annually invest up to 20% of its previous year’s pollock royalties in non-fisheries related economic development projects within the CDQ region; 

7) amend the overall purpose of the program to include a secondary purpose of strengthening the nonfisheries related economies in the region; and 

8) simplify the quota transfer and alternative fishing plan process. In addition, NMFS added provisions to formally identify in Federal regulations the process for appealing a Federal administrative determination (i.e., a CDQ group’s appeal of an allocation decision).

Results

In addition to the 8 components identified in the Regulation Summary, NMFS added provisions to formally identify in Federal regulations the process for appealing a Federal administrative determination (i.e., a CDQ group’s appeal of an allocation decision).

---

Additional Resources