G36 Transfer of Sablefish Community Development Quota Compensation Quota Share
Purpose and Need
The BSAI Community Development Quota (CDQ) program was proposed in conjunction with the IFQ program for sablefish and halibut management. The CDQ program apportioned designated percentages of the annual fixed gear total allowable catch (TAC) of sablefish and halibut to eligible Western Alaska communities, intending to provide near-shore communities with long-term, stable employment and access to the fishery resource. Apportioning part of the fixed gear TAC to communities reduced the amount of that TAC available for harvest by persons receiving annual allocations of IFQ. As a result, CDQ compensation quota shares (QS) were issued as partial compensation to persons who received (reduced) quota shares in CDQ areas.
Two problems were identified that inhibited the current transfer of CDQ compensation quota shares. Firstly, most CDQ compensation QS would be issued in allocations of less than 20,000 lbs and therefore would be blocked under the non-severable block provision (see GOA Amendment 35/BSAI Amendment 31). The block provision was added to the IFQ program to prevent excessive consolidation of fishing privileges. Blocked quota share, especially small blocks such as the CDQ compensation QS, is difficult to market because of the two-block limit. The second problem is that the IFQ program allowed transfer of quota shares only within the same vessel category, to prevent significant consolidation into large vessel operations. However, residents of CDQ areas traditionally employed smaller vessels than non-residents who received initially issued QS in the CDQ areas, making it difficult for residents of CDQ areas to increase their holdings as they must purchase larger vessels as well as initially issued QS in the larger vessel categories.
GOA Amendment 36 and BSAI Amendment 32 were proposed to relieve the unintended consequences of the IFQ transfer restrictions, which are contrary to the original purpose of providing CDQ compensation quota shares. Relieving transfer restrictions on initial recipients of CDQ compensation QS effectively increases the remunerative value of those shares and facilitates the full utilization of the allocated resources managed under the IFQ program.
Analysis
A 21-page RIR (final draft dated January 1995) was prepared for this amendment. Including the status quo, two alternatives addressing the block provision and three alternatives addressing the transfer across vessel length classes were considered. The option that was not chosen would have allowed “pooling” of quota shares with other compensation shareholders, as opposed to exempting CDQ compensation QS from the block provision in perpetuity. With regard to transfer across vessel length classes, the other alternative not chosen would have allowed a one-time trade across vessel classes as defined by a transaction involving initially-issued large vessel QS in CDQ areas and small vessel CDQ compensation QS in non-CDQ areas. The alternative chosen is more flexible by not defining the type of transaction allowed.
Regulation Summary
The amendment exempted some CDQ compensation QS from the block provision and allowed for a one-year period of relief (one-time transfer) from the restriction against transferring CDQ compensation QS across vessel length categories. Regulations state that if a person is issued CDQ compensation QS for an area where the person already has regular QS, then their CDQ compensation QS is combined with their existing QS and is either “blocked” or “unblocked” depending on the sum total of their QS (this makes much of the CDQ compensation QS unidentifiable after issuance). If a person is issued CDQ compensation QS for an area in which the person doesn’t have other QS, the QS is left unblocked. The exemption does not include Category “A” vessels (vessels of any length authorized to process IFQ species).
Results
Since the amendment was approved, coastal communities that rely on the small vessel fleet have benefitted by having IFQ in more accessible areas. The action did not significantly change the overall character of the fleet because CDQ compensation quota share accounted for only 3.5% of the total amount of quota share issued in the non-CDQ areas of the Gulf of Alaska. A report examining the distribution of all QS by block status showed that 69.2% of the QS in the BSAI was blocked at the end of 1998. In the Gulf of Alaska, percentage of blocked QS ranged from 7.6% in the Central Gulf to 20.1% in the Western Gulf. In addition, the amount of swappable CDQ compensation QS–catcher vessel QS that can be fished on any size vessel until its first transfer–declined sharply by year-end 1998, even though there were very few actual swaps of this type of QS to other vessel categories. Most of the decline came from regular transfers, where CDQ compensation QS also loses its swappable status. Over the 1995-98 time period there were only five swaps in Southeast area, four in West Yakutat, and three each in the Central and Western Gulf.