Before the halibut IFQ program, there was considerable interest about the likely initial distribution of QS by resident type and about how that distribution would change over time. The topic continues to be important in regions of Alaska where commercial fishing is a substantial portion of the economic base.
This chapter summarizes and compares the distribution of QS at initial allocation with the distribution of QS at the end of 1995. The chapter examines changes in the distribution of QS by resident type, by size of QS holding, and by type of entity. The chapter also provides information on new entrants into the fishery during 1995.
The initial allocation of halibut QS to eligible applicants began towards the end of 1994.1 By the end of 1995, most of the initial allocation had been completed and some of the initially allocated QS had been transferred to different persons. Some of the transfers went to persons who had received initial allocations and resulted in consolidation of QS holdings. Other transfers went to new entrants.
This chapter provides a relatively simple set of tables on these topics. More detailed tables will be found in later chapters of the report. Chapters 4 and 5 will examine many transfer issues such as CDQ compensation swaps, sweep-up of QS into larger blocks, permanent transfers, leases of QS, and QS prices.
There are 30 different types of QS, defined by area and vessel category, under the halibut IFQ program. When blocking distinctions are added, the number of different types of QS increases further. Some CDQ compensation QS also contains a temporary attribute that allows the QS to be swapped across vessel categories within an area.2 Additionally, blocks of QS that are sufficiently small have a special "sweep-ability" attribute. The impacts of these different rules and attributes during 1995 will be examined later in this report.
The eight different halibut IFQ administration areas correspond with the eight IPHC management areas. Each of these has its own, distinct, halibut TAC. In each of these administrative areas, four distinct vessel classes are defined under the IFQ program. One vessel class consists of freezer vessels. The other three classes consist of catcher vessels of different size categories defined by overall vessel length. The small catcher vessel class contains vessels up to and including 35 feet, the medium catcher vessel class contains vessels above 35 feet up to and including 60 feet, and the large catcher vessel class contains vessels above 60 feet.
The product of eight management areas and four vessel classes gives a potential total of 32 different types of QS based solely on area and vessel class attributes. However, no halibut QS was issued in the 4D small vessel category or the 4E freezer vessel category. Thus, there were a total of 30 different combinations of QS defined by area and vessel category. Under most circumstances, QS from one area-vessel category combination cannot be used to fish in another area-vessel category combination.3 QS from one area may not be fished legally in another area.
The ratio of the total QS outstanding in an area to the TAC available to the IFQ fishery in the area is different from area to area.4 This means the amount of IFQ a person can harvest with a given amount of QS varies considerably between different areas. Because of this, summing QS across management areas is not very meaningful. It does make sense, however, to add QS across vessel classes within a management area, since any QS unit within a given area in a particular year translates into the same amount of IFQ.
Within each management area and vessel class combination, some QS is blocked and some QS remains unblocked under the rules of the IFQ program. The distinction is described in more detail in the next section on the allocation of QS. However, it should be noted that smaller amounts of QS were issued as blocks or parcels of QS that must be transferred as a unit and cannot be broken up on transfer.5 Under the IFQ program, there are limits on the number of blocks an entity can hold.
Some blocks are so small they cannot be fished feasibly, and catcher vessel blocks tend to be unleasable due to the interaction of block and leasing rules. Because the "blocking rules" raise important issues, this chapter has several tables that examine the distribution of blocked and unblocked QS.
This chapter focuses on changes in the distribution of QS among different resident types, changes in the distribution of QS by size of holdings, changes in the distribution of QS among different types of entities, and changes in the distribution between initial issuees and persons who received their QS through transfer. It deals with changes brought about through privately arranged, permanent transfers rather than through temporary leases.
The chapter examines the initial and year-end 1995 distribution of QS holdings and QS holders for a variety of resident classifications. Different tables highlight distributional changes by state of residence, by census area of residence (within Alaska), and by rural/urban and local/nonlocal resident type distinctions.
3.2 Initial Allocation of QS
QS were issued to eligible applicants who owned or leased vessels used to make landings of halibut during the years 1988, 1989, or 1990.6 Applicants who were eligible to apply received QS equal to the sum, in standardized halibut pounds, of their vessel(s)'s landings during their best five years out of the seven years from 1984 to 1990.7
Because more people fished during this period than would normally fish in any one year, and because they could each have received QS equal to their harvests in more than one year, the number of QS units issued in each management area was greater than the pounds of TAC in any given year. Thus it takes more than one QS unit to generate a pound of IFQ.
Persons received their QS in a block if their QS would have resulted in less than 20,000 pounds of halibut given the 1994 TACs.8 Blocks could not be broken up for sale or lease. All the QS in a block would have to be sold as a single unit. There were also limits on the numbers of blocked and unblocked QS that could be held. A person could hold one or two blocks, but a person with more than one block could not hold any unblocked QS. Provisions were included to combine or "sweep- up" very small blocks below 1,000 pounds. These are discussed in the next section.
Blocks were introduced to accomplish social objectives of the program. Members of the NPFMC were concerned about protecting access to the fishery for small, part-time operators when they designed the program. The block system was designed to prevent all the quota from being accumulated into large aggregations. In addition, there was some hope that smaller blocks would sell for less per unit of QS than larger blocks or unblocked QS. As shown in Section 5.3, there is some reason to believe that smaller blocks do sell for less per QS.
The IFQ program included provisions to set aside part or all of the TAC in several Bering Sea management areas for what were called "community development quotas" (CDQs). Individuals who received QS in these areas retained the QS, but were faced with reduced TACs. In one Area, 4E, the entire TAC was used for CDQs.9
The IFQ plan contained provisions designed to compensate QS holders in these areas for the reduction in their harvests imposed by the CDQs. The goal of the plan was to spread the burden of the compensation among all fishermen receiving halibut QS in all management areas. Compensation was provided by giving fishermen from the CDQ areas (4B, 4C, 4D, and 4E) additional QS in each of the management areas in which CDQs were not allocated (2C, 3A, 3B, and 4A).
In many cases CDQ compensation QS recipients received small amounts of compensation in areas in which they had not previously fished. The NPFMC added a provision to allow the transfer of CDQ compensation QS across catcher vessel categories within a management area upon first transfer under certain conditions.10 This provision was added to make it easier for some persons to sell the CDQ compensation QS to receive their "compensation."
Because of this regulation, the total amount of QS within a vessel category in an area may change between the initial allocation and the end of 1995. This does not affect the management area totals, however, as the QS is being "swapped" between the catcher vessel categories within an area.
3.3 Year-end Distribution
Several types of transactions could change the distribution of QS holdings between the initial allocation and the end of the first year of the program. These include routine transfers, as well as transfers associated with sweep-ups, CDQ swaps, and court ordered transfers.
The tables included in this section show transfers due to permanent transfer activity. The transfers include sales, gifts, trades, and other. Formal leases of QS during 1995 are considered in Chapters 4 and 5.
The resolution of 1995 appeals and revocations affected the amount of QS included in a management area and vessel class. Although many appeals have been resolved and QS has been revoked during the first year of the program, appeals and revocations are treated here as changes to the initial allocation of the QS. This follows the practice of the RAM Division, which incorporated the impacts of appeals and revokes directly into its initial allocation file. As a result, the total area QS holdings in these tables do not change between the initial allocation and the end of the first year of the program.
As noted earlier, CDQ compensation QS increased the amount of small QS holdings in many areas. In the fall of 1995, the RAM Division began to allow "swaps" of the "swappable" portion of the CDQ compensation QS across catcher vessel classes within a management area. These swaps can lead to changes in the number of QS in different vessel classes within a management area, but cannot lead to a change in the total QS in the area. Many persons received such small blocks of QS that it was not practical for them to fish the blocks. The rules for the IFQ program allow persons who received QS equivalent to less than 1,000 pounds of a "hypothetical" halibut IFQ to combine their blocks into new permanent blocks so long as the new blocks were less than 1,000 pounds.11 These are called "sweep-up" transactions. The goal of the sweep-up feature is to reduce the number of very small unfishable blocks.
The program contains a number of rules designed to affect the nature of transfers and to limit the amount of QS aggregation. These rules are contained in the program regulations. However, it may be useful to summarize some of the more important here:
The persons who may buy catcher vessel QS are restricted. Only those who were originally issued QS or those who qualify by working for 150 days on the harvesting crew in any U.S. fishery may buy catcher vessel QS.12 Freezer vessel operations are not restricted in this way.
3.4 Changes in QS Holdings by Management Area and Vessel Class
Table 3.4-1 shows the total amount of QS, the total number of QS holders at initial issuance, and the total number of QS holders at the end of 1995 by management area. It also shows the average QS holdings per QS holder at initial issuance, and the average QS holdings per QS holder at the end of 1995.
As the table shows, the numbers of QS holders declined over the year in five areas while the average QS holding increased. These changes affected Areas 2C, 3A, 3B, 4A, and 4B. There was no change in numbers of QS holders or in the average size of QS holdings in Areas 4C, 4D, and 4E. Drops in the number of QS holders ranged from 3% in Area 4B to 10% in Area 2C.
For various reasons the number of persons eligible to receive QS was larger than the number of permit holders typically made landings in the fishery in any one year. Table 3.4-2 compares the average number of CFEC interim-use permit holders who made landings in each management area from 1990 to 1994 (this number can be found in Table 6-1,) with the number of persons receiving an initial allocation of QS (from Table 3.4.3,) and the number of unique persons recording landings in 1995 (also from Table 6-1).
The large number of QS holders in 1995, coupled with declining TACs in many management areas, and CDQ compensation in management Areas 4B to 4E, meant that the average TAC per QS holder in 1995 was less than the average harvest per permit holder in the years 1990 to 1994. Table 3.4-3, below, compares the average harvest per permit holder in the years 1990-1994 (from Table 6-1) with the average 1995 TAC per initial QS recipient (the TACs come from Table 7.1-1).
Tables 3.4-4 and 3.4-5 elaborate Table 3.4-3 to show the initial and 1995 year-end distributions of QS and QS holders by management area and vessel category. The amount of QS at the initial allocation and at the end of 1995 may be different because under some conditions persons receiving catcher vessel CDQ compensation QS can "swap" that QS to another catcher vessel category. This issue is dealt with more fully in Section 3.6 of this chapter and in Section 4.2 of Chapter 4.
The amounts of freezer vessel QS were the same at initial allocation and at the end of the first year in all areas. QS compensation swaps do not affect this vessel category. The percentage of an area's total QS held as freezer vessel QS ranged from zero in Area 4E to 8% in Area 4D.
The number of persons holding freezer vessel QS rose in Areas 3A, 3B, and 4A and stayed constant in Areas 4B, 4C, and 4D. Average holdings fell in areas in which the number of QS holders rose. Average freezer vessel holdings were relatively large, but were exceeded in each area by the average QS holdings for at least one of the catcher vessel categories.
The amount of large (over 60 feet) catcher vessel QS rose in Areas 3A, 3B, and 4A, fell in Area 2C, and was unchanged in other areas. This indicates that net swaps of CDQ compensation were positive into large vessels in 3A, 3B, and 4A, and were negativesin 2C. There was no change in the other areas since there were no CDQ compensation issued in those other areas. All changes due to swaps were small.
The number of persons holding large catcher vessel QS fell by three percent to nine percent in Areas 2C through 4B. There was no change in the other areas. The largest fall was nine percent in Area 2C. Average large catcher vessel QS holdings rose in all areas where the number of QS holders fell. This was due both to falls in numbers of QS holders, and (except in 2C and 4B) to increases in QS in this vessel class.
The amount of medium (36-60 feet) catcher vessel QS rose in Areas 2C and 3A and was unchanged elsewhere. As in the large vessel QS, these changes were due to CDQ compensation swaps. Again, these changes were relatively small.
The numbers of medium catcher vessel QS holders declined by three to ten percent in Areas 2C to 4B and were unchanged elsewhere. The largest decline, 10% occurred in Area 2C. Average holdings of medium catcher vessel QS rose due to declines in numbers of QS holders and (in Areas 2C and 3A) to increases in QS for this vessel class.
The amount of small (35 feet or less) catcher vessel QS fell in Areas 2C to 4A and was unchanged elsewhere. These decreases were relatively small, the largest was about two percent in Area 3B. The declines in small vessel QS, with the tendency to increases in the larger vessel category QS, indicate that small number of CDQ compensation swaps tended to move QS to larger vessel categories.
The number of small catcher vessel QS holders fell in Areas 2C to 4A and was unchanged elsewhere. The largest decrease was 16 percent in Area 4A. Average small catcher vessel QS holdings rose in Areas 2C to 4A; the reduction in the amount of QS was evidently more than offset by the decreases in the numbers of QS holders.
TABLE 3.4-1. Comparison of QS and QS holders at initial allocation and year-end 1995 by IPHC management area
3.5 Changes in the Distribution of QS by Resident Categories
3.5.1 Changes in the Distribution of Halibut QS by State.
Table 3.5.1-1 shows how the distribution of QS holdings in each management area changed among the states from initial issuance through year-end 1995. It contains information on the initial and year-end QS holdings by residents of each state in each management area, the change in QS holdings, the percentage change, and the percent of the QS in each area held by residents of each state at initial issuance and at the end of 1995.
RAM division records contain data on the current mailing address for the person to whom QS belongs. The RAM Division did not retain old mailing address information when mailing addresses were changed.15 For this reason, the current mailing address on the RAM records has been assumed to be the place of residence for QS holders both at initial issuance and at year-end 1995.
Table 3.5.1-1 shows that Alaskans received more QS than did persons from other states in six of the eight management areas and received over half of it in five of the eight. Alaskan percentages ranged from 12% in Area 4D to 91% in Area 4E.
During 1995 Alaskan holdings increased by about 1% in Area 2C, 2% in Area 3A, and 3% in Area 4B. There was also an increase of less than one percent in Area 3B and a decrease of less than one percent in Area 4A. There were no changes in the other areas.16 At the end of 1995, Alaska residents held a majority of the halibut QS in Areas 2C, 3A, 3B, 4C, and 4E.
The next most important state with respect to QS holdings was Washington, followed by Oregon. Persons from Washington held the majority of QS in Areas 4B and 4D both at initial issuance and at year-end 1995. The percentage of QS held by persons from Oregon ranged from 2% in Area 2C to 13% in Areas 4C and 4D. These percentages held both at initial issuance and at year-end 1995.
Table 3.5.1-2 provides similar information on resident type of QS holders by management area. In addition to information on each state's numbers, percentages, and changes in QS holders in each area, the table provides information on the sizes of average QS holdings at initial issuance and at the end of 1995.
Persons from Alaska represented the majority of QS holders both at initial issuance and at year-end 1995 in all IFQ areas except 4D. The percentage of QS holders who were from Alaska ranged from 31% in Area 4D to 94% in Area 4E both at initial issuance and at the end of 1995.
The number of persons from Alaska who held QS dropped during 1995 in Areas 2C, 3A, 3B and 4A, rose by one person in Area 4B, and stayed the same in Areas 4C, 4D, and 4E. The number of Alaska QS holders dropped by about nine and ten percent in Areas 2C to 4A. This decline in QS holders generally followed the pattern of the overall first-year decline in QS holders in these areas due to consolidations through transfers. The percentage of QS holders who were from Alaska remained unchanged from initial issuance through year- end 1995 in Areas 2C, 3B, 4C, 4D, and 4E, rose in Areas 3A and 4B, and fell in Area 4A. All of the percentage changes that occurred were small, approximately one percent.
The average size of QS holdings for residents of all states (except for "other" in 2C) rose in Areas 2C to 4B, from initial issuance through year-end 1995, reflecting the reductions in number of QS holders. There were no changes in the number of QS holders in Areas 4C to 4E, and therefore there were no changes in average holdings in these areas.
Average QS holdings could vary considerably between states in some management areas. For example, in Area 3A Alaska residents received average initial allocations of about 48,000 QS, while Oregon residents received average initial allocations of about 123,000 QS and Washington residents received average initial allocations of about 109,000 QS. This example of average QS holdings by state helps to explain why the percentage of an IFQ area's total QS holders who are from a particular state and the percentage of an IFQ area's total QS holdings by persons from a particular state can be different.
3.5.2 Changes in the Distribution of QS by Census Area.
This section presents four tables with data on both the initial distribution of QS holdings and the year-end 1995 distribution of QS holdings by IFQ management area and resident category. The resident categories used in the tables are the 1990 Alaskan census areas plus a nonresident category for QS holders from other states. Entities that hold QS were assigned to a resident category based upon NMFS-RAM address information.
The first two tables group the information for each area by the resident category of the QS holders. These tables are useful for looking at the status of the holdings of persons in a particular resident category in the different areas. The second two tables group the information by the area. These tables are more useful for comparing the different resident categories within a management area.
The first two tables in this section, Table 3.5.2-1 and Table 3.5.2-2, are sorted by resident category and by IFQ management area. The focus of these tables is on the "resident category". The first table looks at the distribution of QS among the resident categories, the second looks at the distribution of QS holders among the resident categories.
Table 3.5.2-1 provides a summary on the QS holdings of each resident category in each of the different halibut IFQ management areas. For each resident category and IFQ management area, the table provides the initial QS holdings, the 1995 year-end QS holdings, the change in QS holdings during the year, and the percentage change in QS holdings. The table also shows the percentage of the total QS in the IFQ area that was initially issued to persons in the resident category as well as the year-end 1995 percentage of the QS in the IFQ area held by persons in the resident category.
Persons from Alaska census areas that were local to a halibut IFQ area tended to receive a significant portion of the QS from that local area. However, the persons in these resident categories sometimes increased and sometimes decreased their QS holdings in these adjacent IFQ management areas during 1995.
For example, persons from the Wrangell-Petersburg Census Area received large initial allocations of QS for "local" halibut IFQ Area 2C. During 1995, their holdings of QS for Area 2C also increased from 28.8% of the total QS for Area 2C at initial issuance to 30.3% of the QS for Area 2C at year-end 1995. In contrast, the QS holdings of persons from the Wrangell-Petersburg area declined in more distant halibut IFQ management areas during 1995.
Similarly, persons from the Kodiak Island Borough Census Area received large initial allocations of QS for adjacent halibut IFQ Areas 3A and 3B. However, during 1995 the amount of QS for Area 3A held by persons from the Kodiak Island Borough Census Area declined slightly. In contrast, during 1995 holdings of QS for Area 3B by persons from the Kodiak Island Borough resident category increased.
Persons from the nonresident category received initial allocations of QS for all halibut IFQ areas. During 1995, the amount of QS held by nonresidents decreased slightly in all halibut IFQ areas except for Area 4A.
Table 3.5.2-2 provides somewhat similar information on QS holders. The table provides a summary, by resident category, on the number of QS holders in each halibut IFQ area. The table shows the initial number of QS holders, the 1995 year-end number of QS holders, the change in the number of QS holders during the year, and the percentage change in the number of QS holders, for each resident category and IFQ management area.
For each resident category and IFQ management area, Table 3.5.2-2 also shows the initial average QS holdings, the 1995 year-end average QS holdings, the change in average QS holdings during 1995, and the percentage change in average QS holdings in 1995. The table includes the initial and year-end percentages of total initial QS recipients for the IFQ management area for each resident category.
Table 3.5.2-2 demonstrates that there was some consolidation of QS holdings and a reduction in the number of QS holders in 1995 for most resident categories and IFQ management areas. In the few cases where the number of QS holders in an IFQ management area from a particular resident category increased during 1995, the increases were very small.
The decline in the number of persons in a resident category tended to lead to increases in the average QS per QS holder for that resident category. However, some resident categories showed decreases in average QS holdings for some IFQ management areas during 1995 even when the number of QS holders had declined.
The last two tables in this section, Table 3.5.2-3 and Table 3.5.2-4, are sorted by IFQ management area and by resident category within an IFQ management area. Thus the focus of these latter tables is on the "IFQ area." These are better tables to discern the distribution of QS holdings and QS holders among the resident categories within an IFQ area.
Table 3.5.2-3 provides the same information as Table 3.5.2-1 except the data are sorted and presented in this different fashion. The table provides a summary of the amount and percentage of the QS for a particular IFQ area that were held by persons from each resident category at initial issuance and at year-end 1995.17
Similarly, Table 3.5.2-4 provides the same information as Table 3.5.2-2 but again the data are sorted and presented in this different fashion. The table shows the amount and percentage of the QS holders for a particular IFQ area for each resident category at initial issuance and at year-end 1995. It also shows how the average QS holdings for a particular IFQ area changed during 1995 for persons from the different resident categories.
3.5.3 Changes by Management area, rural-urban, local-nonlocal
This section examines the distribution of QS using five resident types that were originally developed by Langdon to study permit holdings under Alaska's limited entry program. These resident types have since been used by the Commerical Fisheries Entry Commission to monitor distributional changes under Alaska's limited entry program.18 The five resident types are defined as follows:
AK Rural Local (ARL) A person residing in an Alaska rural community which is local to the IFQ management area for which the QS applies;
The decision rules for designating rural/urban and local/nonlocal classifications are detailed in the appendix. Alaska communities were classified as local or nonlocal to halibut management areas using the following rules:
Alaska communities were classified as rural or urban based largely on census data. All communities with more than 2,500 people, according to the 1990 U.S. population census, were classified as urban. Communities were also classified as urban if they were connected by highway to an urban center of 6,000 to 20,000 persons and were within 20 air miles of that urban center. In addition, communities were classified as urban if they were within 40 highway miles of an urban center greater than 20,000 persons.
Table 3.5.3-1 provides the initial distribution and year-end 1995 distribution of QS by area and resident type. For each resident type within an area it also shows the initial and year-end percentage of the area's QS held by that resident type, and the change in QS held by that resident type during the year.
Table 3.5.3-2 provides similar information on the initial and year-end 1995 distribution of QS holders by area and resident type. The table includes data on the change and percentage change in the number of QS holders by area and resident type. The table also includes data on the percentage of QS holders in each area from each resident type and their average QS holdings both at initial issuance and at year-end 1995.
As can be seen, number of QS holders declined and the average QS holdings increased in most of the non-CDQ areas and resident type. This again indicates that some consolidation of QS holdings occurred during 1995.
3.6 Changes in Holdings by Block Status
This section examines the initial and 1995 year-end distribution of QS by block status. Four categories of QS are examined. These are "blocked," "unblocked," "swappable CDQ compensation QS," and "unswappable CDQ compensation QS." Section 4.2 provides a more thorough discussion of rules governing CDQ compensation QS.
Persons received their initial allocation of QS in a non-divisible "block" if their area QS was worth less than 20,000 pounds of a hypothetical IFQ that was calculated using 1994 TACs and the QS pool as of October 17, 1994. Blocked QS units have to be transferred as a unit under the rules of the program. Moreover, a person can hold a maximum of two blocks in an IFQ area. If a person holds any unblocked QS for an IFQ area then the person can only hold one block of QS.20
These blocking rules were meant to generate a type of QS that would be unattractive to large operators trying to build a more full-time halibut fishing operation. It was expected that this would preserve fishery opportunities for small scale part-time halibut fishing operations. The block accumulation limits also reduce the opportunities for consolidation of fishing operations. Some hoped that QS in blocks would have a lower price per QS than unblocked QS and would reduce the cost for small-scale, part-time fishermen entering the fishery. This issue is examined in Section 5.3 of this report.
Some blocks are very small and may be relatively unattractive to even small scale fishermen. Leasing rules interact with block rules to make it almost impossible to lease blocked catcher vessel QS. Program rules only permitted the lease of 10% of a QS holder's catcher vessel QS. Since blocks must be transferred as a unit, a person who holds blocked catcher vessel QS usually is not able to lease any of it.21 For these reasons, the amounts of QS issued as blocks are an important aspect of the IFQ program.
Table 3.6.1 provides summary data on the initial and 1995 year-end distribution of QS by IFQ area and block status. The "after 1995 swap" allocation of QS is identical to the initial allocation of QS at the IFQ area level.22 The table also shows the initial and 1995 year-end percentage of QS held in the area by block status and the change and percentage change in the amount of QS by block status during 1995.
Large amounts of QS were blocked. The percentage blocked varied widely by area, from 35% in Area 3A to 100% in Area 4E. A majority of the QS was blocked in Areas 2C, 3B, 4A, 4C, and 4E.
CDQ compensation QS was issued initially in non-CDQ Areas 2C through 4A. This CDQ compensation QS represented about 2% of the total QS in each of these areas. If the recipient held no other QS in an area, the catcher vessel CDQ compensation QS was unblocked and "swappable" to another catcher vessel class upon the first transfer. If the person held other QS in the area, the CDQ compensation QS was "unswappable". Such CDQ compensation QS was rolled into the person's other QS for the area and was blocked or unblocked based upon the size of the person's summed holding.23
The amount of both blocked and unblocked QS increased during 1995 in non-CDQ Areas 2C through 4A, as the unswappable CDQ compensation QS was all rolled into other QS holdings of the recipients at initial allocation.24 Some of the increase was also due to "swappable CDQ compensation QS" being swapped and transferred. Under the program rules, only the original owner has the right to "swap" such QS.
Table 3.6-2 provides similar data on the initial and year-end distribution of QS holders by area and block status. The number and percent of blocked QS holders and CDQ compensation QS holders declined in Areas 2C through 4B. The number of "unblocked" QS holders appears to rise in Areas 2C through 4A. However, this is due largely to the reclassification of portions of the unswappable CDQ compensation QS.
Table 3.6-3 elaborates on Table 3.6-1 to provide data on block status by vessel category. It provides summary data on the initial and 1995 year-end distribution of QS by IFQ area, vessel category, and block status. The tables also show the "after 1995 swaps" and 1995 year-end percentage of QS held in the area and the change and percentage change in the amount of QS during 1995 by vessel category and block status.25
As can be seen from the table, the smaller and medium vessel categories have higher percentages of blocked QS than the freezer-longliner and large catcher vessel categories in most areas. Freezer vessels did receive some CDQ compensation QS in Areas 2C through 4A. However, all freezer vessel CDQ compensation QS was unswappable. Thus their CDQ compensation QS was "rolled in" to their other holdings at initial issuance.
Table 3.6-4 elaborates on Table 3.6-2 to provide data on QS holders by vessel category and block status. The table provides data on the initial and year-end distribution of QS holders by area, vessel category and block status.
3.7 Changes in Holdings by Size of Holding
The potential for consolidation of QS into a few hands was a concern of the NPFMC when they developed the IFQ program. While some consolidation of QS holdings was felt to be desirable, many persons felt that consolidation might be deleterious if it went "too far".
The IFQ program contains several provisions designed to constrain consolidation of QS holdings. For example:
Table 3.7-1 summarizes QS holdings at initial issuance and at year-end 1995 by IFQ areas by the relative size of the holding. Each line provides information for all the persons whose QS holdings fall within a certain range of percentages of the total QS for the management area. Thus, the first line in the table contains information for all the persons who held less than a half percent of the QS for Area 2C. The table shows that the QS holdings of all persons in Area 2C fell into this range at initial issuance. By year-end 1995, approximately 1% of the QS holdings were in the one-half to one percent range due to transfer and consolidation.
As can be seen in the table, the distribution of QS holdings by size of holding varied by IFQ area:
At the end of 1995, the amounts of QS held by persons with holdings under a half percent of the total area QS dropped in Areas 2C, 3A, 3B, 4A, and 4B, and was unchanged elsewhere.
Table 3.7-2 provides similar information on the number of QS holders at initial issuance and at year-end 1995 by IFQ area and the relative size of the holding. The table shows that most persons in Areas 2C to 4B received less than a half percent of the total QS and that relatively few persons held larger amounts. The numbers of persons holding less than a half percent dropped by 4% to 12% in Areas 2C to 4B. The numbers holding between a half percent and 1% increased in Areas 2C to 4A. The numbers holding one percent or more decreased in Areas 3B and 4A. In other areas and holdings size categories, there were no changes.
Large percentages of QS holders had relatively small holdings. In most management areas most persons initially received a half percent or less of the initial allocation of QS. In two areas, 2C and 3A, everyone did. In six areas, the number of persons receiving 0.5% or less was a majority. In Areas 4C and 4D, they made up a third of the recipients.
There were relatively few large holders. No one person received more than 10% of the QS in any of the management areas. Some persons received from 5% to 10% in each of the management Areas 4B, 4C, 4D, and 4E. The percentage of recipients receiving one or more percent of the QS in an area ranged from zero in Areas 2C and 3A to 45% in Area 4D. In Areas 4C and 4D there were less than 100 initial recipients, making holdings greater than 1.0% inevitable for some persons.
3.8 Changes in QS Holdings During 1995 by Type of Person.
Under the new halibut IFQ program, individuals, partnerships, solely owned corporations, corporations, and other types of entities are defined as "persons" who may hold QS. This section examines the distribution of QS during 1995 by the type of person holding the QS.
Table 3.8-1 summarizes information on the distribution of QS by IFQ area and type of person. Table 3.8-2 provides similar information on the number of persons holding QS. Table 3.8-3 and Table 3.8-4 provide similar information, but break the data out by vessel category and by management area. These tables provide information on the following types of QS holders:
Corporations and partnerships that were initial catcher vessel QS recipients could use the QS and IFQ and (except in the Southeast area, Area 2C) could buy additional QS for use. The QS had to be used on a vessel owned by the corporation or partnership and operated by one of its employees. In Area 2C, corporations and partnerships that were initially issued catcher vessel QS could fish what they were issued, but they could not increase their fishable holdings through transfer.29
Corporations and partnerships that are not initial catcher vessel QS recipients cannot acquire catcher vessel QS by transfer. If a corporation or partnership that was not an initial issuee comes into possession of catcher vessel QS, perhaps following a default on a loan, it would not be able to fish with the QS.30
A corporation or partnership, except for a publicly held corporation, would lose the rights to fish its initial allocation and to buy additional QS and IFQ if a new shareholder or partner were added (except for court appointed trustees acting on behalf of shareholders or partners who became incapacitated). In these cases, QS would have to be transferred to an individual before it could be fished again.31
The rules governing corporate or partnership holdings of freezer vessel QS are not as strict as those for catcher vessels.
Table 3.8-1 shows the initial and year-end 1995 distribution of QS by IFQ area and type of person. The information is primarily organized by management area. Data are supplied on the initial QS issued to each type of owner in each management area, the QS held at year-end by each type of owner, the change in QS held, the percent change, and the percentage of Area QS held by each type of owner at initial issuance and at year-end. The table shows that:
Table 3.8-2 provides similar information on the number of persons holding QS by area and type of entity. In non-CDQ Areas 2C through 4A, the number of persons declined for all types of entities except new individuals entering into the fishery as "IFQ crew." The declines in QS holders were largely due to the consolidation of QS holdings that occurred during 1995. The declines in QS holders led to only minor changes in the percentage distribution of total QS holders in most areas by type of entity. The most noticeable changes were the decline in the percentage of QS that was held by individuals who were initial issuees and the increase in the percentage of QS held by crew who were new individuals entering the system.
In Tables 3.8-3 and 3.8-4 the categories of estates, individuals, one owner corporations, and crew are reported as a single, consolidated "effective individual" category. These tables show the management areas and vessel classes in which corporate, partnership, and effective individual QS holdings are most common. Table 3.8-3 looks at the amount of QS held and 3.8-4 looks at the numbers of persons holding QS. These tables are sorted by type of QS holder, vessel category, and management area.
Table 3.8-3 provides the initial QS, the year-end 1995 QS, the change and the percentage change in QS during 1995 for the each person type, vessel category, and management area combination. It also shows the percentage of total QS for the vessel category and area that was held by each person type at initial issuance and at year-end 1995.
As noted, Table 3.8-4 shows the numbers of QS holders of the different types. Data are supplied on the numbers of QS holders of each type that were initial issuees and that held QS at year end, the change and percent change in the numbers of holders, the percent of each vessel class and area's QS holders that were of that type at initial issuance and at the end of the year, and the average QS holdings for that holder type, area, and vessel class combination at original issuance and the end of the year.
3.9 New Entrants During 1995.
Other sections of this report examine the net result of consolidations and transfer activities that occurred during 1995. Some of the transfers that occurred during 1995 went to initial issuees and some transfers went to new entrants. The tables in this section look at the distribution of QS at year-end 1995 by area to see what portion of the QS is still held by initial issuees and what portion is held by new entrants. The data suggest that significant numbers of persons who were not initial issuees for an area were able to obtain QS for the area by year-end 1995.
The IFQ program provides for free transferability of QS, subject to several constraints designed to temper consolidation and ensure preservation of opportunities for the smaller-boat and part-time portion of the fleet that existed under open access. These constraints are discussed in other sections of this report.
Free transferability allows participants to enter and exit the fishery at times opportune to them. Free transferability also provides a means for economically efficient consolidations to occur and a means for new persons to enter the fishery. This section examines the extent to which new entrants entered the halibut fishery as QS holders during 1995.
Table 3.9-1 shows the amount of QS and the percentage of QS by area which is still held by initial issuees as of year-end 1995. The table provides the number of remaining initial issuees in each area, the percentage these initial holders represent of all QS holders, and the average QS holdings of these initial QS holders.
The table also shows the amount and the percentage of halibut QS by IPHC area which is held by new entrants to the area as of year-end 1995. The table provides the number of new entrants to each area, the percentage these new entrants represent of all QS holders, and the average QS holdings of these new entrants.
As can be seen from the table, new entrants held a variable amount of QS at year-end 1995, from 0% in Area 4E to 9% in Area 4A. The number of QS holders in an area at year-end 1995 who were new entrants to the area also varied from 0% in Area 4E to 6% in Areas 2C, 3A, and 4A. With the exception of Area 4E, the data suggest that significant numbers of new persons were able to enter the halibut fishery in 1995. Some of the new QS holders in an area during 1995 were initial issuees in other halibut areas or received an initial allocation of sablefish IFQ. This can be seen in Table 3.9-2, which examines more closely the new entrants in each IPHC area.
Table 3.9-2 provides data on the total QS and the total number of persons holding QS at year-end 1995 by IPHC area. The table also shows the number of remaining initial issuees at year-end 1995 and the percentage of QS holders which they represent.
The table also examines new entrants in each area. New entrants are defined as entities that were not initial recipients of QS in an area, but held QS for that area at year-end 1995. However, some of the new entrants in an area were initial recipients of QS in another area or for another species. This can be seen by looking at the other columns in Table 3.9-2.
For example, in Area 3A there were 168 new entrants who held QS as of year-end 1995. Of these persons, 155 were "new holders" of halibut QS and 154 were entirely new entrants to the IFQ program. The numbers imply that 13 of the 168 new entrants in Area 3A were initial issuees of halibut QS in some other area and 14 of the 168 new entrants in Area 3A were initial issuees of some other type of halibut or sablefish QS.
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