Purpose and Need

This amendment, along with a regulatory amendment for halibut, was deemed necessary to increase the consolidation (“sweep-up”) levels for small quota share (QS) blocks for Pacific halibut and sablefish managed under the IFQ program. Amendment 35, implemented in 1995, included a sweep-up provision that allowed halibut blocks to be combined until the sum reached 1,000 lbs and sablefish blocks to be combined until the sum reached 3,000 lbs. The IFQ longline industry reported that those sweep-up levels did not equal the harvest of a viable fishing trip, and proposed a moderate increase in these levels to allow greater amounts of QS to be swept-up into economically “fishable” amounts, without overly increasing consolidation or allowing the creation of large-sized blocks. This action was intended to maintain consistency with the objectives of the IFQ program (i.e., prevent excessive consolidation of QS, maintain diversity of the fishing fleet, and allow new entrants into the fishery), while increasing the program's flexibility by allowing a moderately greater amount of QS to be “swept-up” into larger amounts that can be fished more economically.

Analysis

A 32-page EA/RIR (Secretarial review draft dated November 27, 1996) included a range of alternatives of setting the sweep-up level at 1,000, 3,000, and 5,000 lb for halibut and 3,000, 5,000, and 7,000 lb for sablefish. The Council rejected the status quo levels (the lowest) and the highest levels. The analysis concluded that a moderate increase in the sweep-up levels would likely increase the transfer of very small, blocked QS to crew and small boat fishermen who seek to increase their holdings. While some price increases in small block shares might have occurred, a price differential was projected to remain between smaller and larger QS blocks. If the ability to transfer and consolidate small blocks would increase, then the number of unfished blocks would decrease.

Regulation Summary

Amendment 43 increased the sweep-up levels for small QS blocks for Pacific halibut and sablefish from a 1,000 lb (0.45 mt) maximum for Pacific halibut and 3,000 lb (1.4 mt) maximum for sablefish to a 3,000 lb (1.4 mt) maximum and a 5,000 lb (2.3 mt) maximum, respectively. Two other changes were recommended to accompany these increases: 

1) The base year TAC for determining the pounds would be the 1996, rather than 1994, TAC which was used for the first sweep-up levels

2) Once QS levels are established for the appropriate regulatory areas based on the 1996 TAC, those QS levels would be fixed and codified. This would eliminate any confusion as to the appropriate sweep-up level in pounds, which would fluctuate with changes in the annual TAC.

The maximum number of QS units that may be consolidated into a single QS block in each IFQ regulatory area is shown in the above table.  

Results

Following implementation of Amendment 43, the number of sweep-up transactions increased substantially related to the higher sweep-up limits. The number of sweep-up transfers has decreased since the first four years of the IFQ Program across all IFQ areas, from an average of 40 sweep up transfers between 1995 and 1998 to an average of 13 transfers between 2011 and 2014 for halibut, and from an average of 8 sweep up transfers between 1995 and 1998 to an average of 3 transfers between 2011 and 2014 for sablefish.

This trend is aligned with intuition in that the easiest opportunities for coordinating sweep-up transfers would have likely occurred in the first several years following the IFQ Program, as some initial QS recipients were exiting and others were consolidating QS. However, this decrease in sweep up transfers may also be due to the manner in which the RAM database tracks sweep-up transfers by new entrants. 

In 2007, Amendment 67 further amend the halibut quota share (QS) block program to increase the halibut sweep-up limits in Area 2C and Area 3A.