Sablefish Individual Fishing Quota Share Blocks
Purpose and Need
The IFQ program, implemented in 1995, 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 31. Amendment 31 implemented the Modified Block Proposal, which was intended to reduce the maximum potential consolidation relative to the existing IFQ program by significantly increasing the theoretical minimum number of quota shareholders and thereby easing the transition from open access to IFQs.
The purpose of this amendment was to provide for the long-term productivity of the sablefish and halibut fisheries, as specified in the Magnuson-Stevens Act and the Halibut Act. 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 GOA Amendment 35. 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 associated transaction costs.
Regulation Summary
The Modified Block Proposal provided that initial allocations of QS that represent less than 20,000 lb 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 31 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. The total number of initial issuees (unique number of people) in the halibut fishery in 1995 was 4,827, reduced to 3,795 by the end of 1998. The total number of issuees in the sablefish fishery was 1,048, reduced to 919 by the end of 1998. The number of unique vessels landing halibut and sablefish before the IFQ program was 3,450 and 1,139 in 1994, and by 1998 the number of vessels was reduced to 1,601 and 449, respectively.