G35 Sablefish Individual Fishing Quota Share Blocks
Purpose and Need
The IFQ program, implemented in 1995 under GOA Amendment 20 (BSAI 15), assigned the privilege of harvesting a percentage of the sablefish and halibut quota (in the form of quota shares) to specific individuals with a history of harvest in the fisheries. Quota shares (QS) could be transferred, allowing people who did not receive an initial allocation to buy into the fishery. Concern over the potential for excessive consolidation of quota shares, the projected reduction of the longline fleet, and the social and economic effects on coastal communities, shore-based processors, and fishermen, was the impetus for Amendment 35 (BSAI Amendment 31). Amendment 35 implemented the Modified Block Proposal, which was intended to reduce the maximum potential consolidation relative to the IFQ program by significantly increasing the theoretical minimum number of quota shareholders and thereby easing the transition from open access to IFQs.
As halibut and sablefish fall under two different management authority, (sablefish under the Magnuson-Stevens Act and halibut under the authority of the Halibut Act), only sablefish are included in the Groundfish FMP. The purpose of this amendment was to provide for the long-term productivity of the sablefish (and halibut) fisheries. In addition to sustaining the health of the fisheries, the Council needed to address the issue of protecting small producers, part-time participants, and entry-level participants who tend to disappear because of potential excessive consolidation under an IFQ program. The amendment is intended to protect the viability of these small entities without interfering with the opportunities currently available under the IFQ program for larger operations.
Analysis
A 283-page EA/RIR/IRFA (final draft dated May 25, 1994) was prepared for this amendment and adjoining BSAI Amendment 31. The analysis reported that without a block amendment (no action), the IFQ program could potentially reduce the number of halibut and sablefish quota share fishermen to 200 and 100, respectively. Three separate block proposals were considered to ameliorate this problem. The two alternatives that were not chosen would have created unique, variable size blocks or partial blocks that could be transferred across catcher vessel classes, resulting in increased search and transaction costs of persons who want to sell or buy additional quota share. The alternative chosen also allows persons to purchase relatively small amounts of unblocked quota share, but lowers the transaction costs associated with blocked quota share.
Regulation Summary
The Modified Block Proposal provided that initial allocations of QS that represent less than 20,000 lbs of IFQ in the implementation year will be issued as a block, 2) QS that represents 20,000 lbs or more of IFQ in the implementation year will be “unblocked”, and 3) QS in a block cannot be separated and must be transferred as a block. Fishermen can own up to two blocks of halibut and two blocks of sablefish QS in each area, but persons holding any amount of unblocked QS are limited to one block of QS per area. A sweep-up provision allowed fishermen to combine small amounts into fishable amounts: halibut blocks can be combined to a sum of less than 1,000 lbs and sablefish blocks can be combined until the sum reaches 3,000 lbs. The amendment also clarified that blocked and unblocked quota share would be transferable subject to the approval of the NMFS Regional Director. Because the Modified Block Proposal created the potential that some QS would become non-transferable because the size would exceed the quota share use limits established in prior regulations (50 CFR 676.22 (e)(f)), the alternative also allowed for the transfer of a quota share block exceeding the use limits by providing that one block could be divided into two blocks.
Results
Amendment 35 created both blocked and unblocked quota shares based on the 1994 quota. As anticipated, there has been some consolidation of quota share to fewer persons than received quota share by initial issuance, but significantly less so than if the block proposal had not been added. According to the 20-Year Review of the IFQ Program, the total number of initial issuees (unique number of people) in the halibut fishery in 1995 was 4,534, reduced to 2,522 by 2014. The total number of issuees in the sablefish fishery was 1,054, reduced to 836 by 2014. The number of unique vessels landing halibut and sablefish before the IFQ program was 3,450 and 1,139 in 1994, and by 2014 the number of vessels was reduced to 920 and 315, respectively.
In 1996, Amendment 43 increased the sweep-up levels for small QS blocks for Pacific halibut and sablefish to 3,000 lbs and 5,000 lbs, respectively. These management measures were raised again in 2007 under Amendment 67.