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1.1 The Purpose of This Study

In 1995, the National Marine Fisheries Service - Alaska Region (NMFS-AK) implemented a new Individual Fishing Quota (IFQ) program in Alaska's halibut and sablefish fisheries. The program had been developed by the North Pacific Fishery Management Council (NPFMC) and approved by the United States Secretary of Commerce.

The new IFQ program represents a dramatic change from the open access fisheries for sablefish and halibut that existed prior to 1995. The program continues to be controversial as many people have concerns about the potential changes that might occur because of the program. In 1995, the State of Alaska and the National Marine Fisheries Service formed an interagency study team to monitor and evaluate changes occurring under the new IFQ program. Several studies were initiated through this process.

The main purpose of this study is to document and analyze changes that occurred under the new sablefish IFQ program from initial allocation through the end of 1995 using data and information from computerized administrative records maintained by NMFS's Restricted Access Management (NMFS-RAM) Division. The major focus of this study is to report and analyze sundry changes in the distribution of QS holdings and QS holders that occurred during 1995 and to provide summary information on transfer and lease transactions. Some other topics and issues are also covered in this report and other ancillary data are utilized in the study.

Under present plans, this report will be revised and updated annually to provide an accurate summary of changes in the distribution of QS under the sablefish IFQ program. NMFS and NPFMC will use the study as part of their ongoing IFQ program monitoring effort and the summary reports should provide some of the information needed to help analyze issues and proposed program changes.

1.2 The Sablefish Fishery

Sablefish are demersal, living in waters on or near the bottom. Adults are typically found in waters from 400 to 1,000 meters on the continental slope and in or near underwater canyons and gullies. Sablefish are subject to directed fisheries by hook-and-line, longlines, pots, and trawls. Allocations of sablefish total allowable catch (TAC) among gear groups have been made since the eighties. Sablefish has also been taken as by-catch, particularly in trawl fisheries. There is little or no recreational fishery for sablefish. Sablefish from the directed fishery typically are landed in Alaska or processed offshore by floating processors or catcher processors.1

The responsibility for the management of the sablefish fisheries in the waters off of Alaska rests with the NPFMC and the U.S. Secretary of Commerce. Actual management is carried out by NMFS-AK.

Sablefish within waters under the jurisdiction of the State of Alaska are managed by the Alaska Department of Fish and Game (ADFG) under regulations and guidelines established by the Alaska Board of Fisheries. There are some significant sablefish fisheries within state waters and these have been placed under limited entry programs by the Alaska Commercial Fisheries Entry Commission (CFEC). Other sablefish fisheries occurring in state waters remain open access although IFQ permit holders who participate in these open access state fisheries must record their landings under the sablefish IFQ program and any harvest is subtracted against their IFQ.

FIGURE 1.2-1. Map of sablefish IFQ regulatory areas

1.3 Background on the Sablefish IFQ Program

In December of 1991, the NPFMC recommended an Individual Fishing Quota (IFQ) Program for management of the "fixed gear" sablefish and halibut fisheries off of Alaska. "Fixed Gear" was defined to include all hook and line fishing gears (longlines, jigs, handlines, and troll gear). The development of the program took place over a long time period. The NPFMC's IFQ plan for sablefish was approved as a regulatory amendment by the Secretary of Commerce in early 1993.

This sablefish IFQ program has to be considered one of the most ambitious IFQ programs ever attempted. The geographical area covered is quite large. If Alaska was superimposed on a map of the continental United States, the southern tip of Southeastern Alaska would lie on the east coast in the Carolinas, while the outer end of the Aleutians would lie on the West Coast in the area of Southern California.

The number of individuals involved was also very large as the fishery had been open access prior to implementation. NMFS-RAM data indicate that 1,041 separate persons initially received sablefish QS. To further complicate matters, the sablefish IFQ program was implemented simultaneously with a halibut IFQ program.

The new IFQ program is also very complex. The NPFMC wanted to achieve some of the benefits associated with IFQ management but was concerned that the program could lead to radical changes that would be deleterious to communities dependent upon the fishery. These concerns led the NPFMC to adopt many complicated rules and regulations in an effort to constrain the changes that could occur under the program.

Quota share (QS) units are the basic use-priveledge under the Alaska sablefish IFQ program and were issued to eligible applicants based upon their history of participation in the fishery. These QS were specific to each of three vessel classes and six sablefish IFQ management areas. Early each year, the TAC within each management area is divided among the QS holders in proportion to their QS holdings. This means that the amount of IFQ per unit of QS can vary by IFQ area and year depending upon the area's TAC and the total amount of QS outstanding. The numbers of QS and IFQs and the ratio of QS to IFQ for the different management areas in 1995 are summarized in Table 1.3-1.

Although the NPFMC was interested in the efficiency gains that could be obtained from an IFQ program, they were also interested in preserving some of the traditional character of the fishery. The IFQ program, includes many provisions, in addition to the general ones described above, which restrict the use-privileges associated with different types of QS.

Table 1.3-1. 1995 QS and TACs by management area.
1995 TAC in pounds 1995 ratio
Regulatory Area 1995 QS (adjusted for CDQs) of QS/IFQ
Southeast 68,528,249 12,985,094 5.277
West Yakutat 55,222,648 8,586,917 6.431
Central Gulf 110,855,516 15,167,648 7.309
Western Gulf 37,318,847 4,585,568 8.138
Aleutian Is. 31,126,431 2,910,072 10.696
Bering Sea 16,388,151 1,410,944 11.615

These restrictions will be discussed in detail in subsequent sections of the report. They include limits on who may buy QS, limits on the amount of QS that may be held by any one person, constraints on the amount of QS that may be fished from any one boat, and restrictions forcing some QS holdings to be transferred as a single "block."

The sablefish IFQ program was controversial before it began, and has remained controversial since it started. Proponents argue that an IFQ fishery will help to eliminate the race for the fish that takes place in an open access quota fishery. They argue that derby fisheries lead to the use of more capital and labor than is necessary to harvest the resource. Safety concerns, allocation conflicts, gear conflicts, deadloss from lost gear, and other problems are often associated with such fisheries.

In contrast, opponents of the sablefish IFQ program often point to the potential for shifts in landings patterns and IFQ holdings that will be deleterious to the economic base of their community or region. Concentration of IFQs or movements of IFQs and landings activity out of traditional fishing communities are cited as concerns. Secondary income and employment impacts from changes in landings patterns could harm some communities even if the overall program benefits are positive. Some persons also are concerned about the fairness of the initial allocation of IFQs and the potential to disrupt traditional patterns of social relationships.

1.4 Overview of This Report

This report uses NMFS-RAM administrative data and other data from fish ticket files and CFEC permit and license files to report on changes under the IFQ program during 1995. The report is organized into this introductory Chapter 1 and seven additional chapters.

Chapter 2

Chapter 2 compares and contrasts the actual initial distribution of sablefish QS based on the NMFS-RAM initial allocation file with the distribution of QS that would be predicted using the NMFS data set that was used to analyze the program before it was adopted. There are many reasons that these two distributions might be different. The focus of the chapter is simply to identify the differences between the distributions where they exist.

The distributions are compared by management area and the size of the initial QS allocation, by management area and vessel category, and by management area and resident type. Several resident type categories are used.

Chapter 3

Chapter 3 provides a broad overview of the distribution of sablefish QS at initial allocation and the distribution of QS at year-end 1995. An emphasis is placed on identifying the changes that occurred during 1995, the first year of the program.

Among the topics examined are changes in QS holdings and QS holders by management area and vessel class and changes by management area and resident type. Again, several resident type categories are used.

The chapter also examines changes in QS holdings by "block status," by size of holding category and by type of person holding the QS. The chapter also looks at new entrants during 1995.

Chapter 4

Chapter 4 takes a closer look at "swap," transfer, sweep-up, and lease transactions during 1995. The right to "swap" QS across catcher vessel categories was a special rule written for recipients of CDQ compensation QS for a non-CDQ area who had not received an initial allocation of any other QS for the area. Swaps permanently impact the distribution of QS across catcher vessel classes in an area.

QS transfer and lease rates during 1995 are examined by IFQ area and by IFQ area and vessel class. The extent of consolidation of QS holders during 1995 due to transfers can also be seen from tables in this chapter.

A special rule in the IFQ program allows for the "sweep-up" of sufficiently small blocks into a single block that is less than 3,000 pounds of a hypothetical sablefish IFQ in the area. This chapter also examines the impact of the sweep-up rule during 1995.

Chapter 5

Chapter 5 examines a number of topics related to sablefish QS transfers and leases. Answers to questions from the NMFS-RAM transfer application form are used in the analyses.

The chapter uses information from "priced sales" and leases to estimate QS prices, lease prices, and "implied" lease prices. While there is a paucity of pricing data, the tables in the chapter explore the variation in 1995 QS prices by vessel category, by block status, and by size of the block holding.

The chapter also provides data reports that categorize 1995 QS transfers as priced sales, other sales, gifts, trades, and other. The finance sources of priced sales transactions are examined. Summary data are also provided on the relationship between the transferor and transfer recipient on gift and sale transfers.

Chapter 6

The IFQ program holds the potential for fishermen to reduce the number of fishing operations by combining their QS holdings. While reducing the number of fishing operations was one of the goals of the program, excessive consolidation was also a concern. Chapter 6 provides a brief examination of the consolidation of QS holders onto fishing operations during 1995.

Chapter 7

Chapter 7 provides data on underages and overages during 1995. Again, NMFS-RAM catch data are used. A special examination is made of QS holders who did not increase or decrease their QS holdings during 1995 to see what proportion fished some of their IFQ and what proportion did not fish their IFQ at all.

Chapter 8

The IFQ program had the potential to bring about changes in the distribution of landings by place. Chapter 8 examines changes in sablefish landing patterns during 1995 by state and by Alaska census area when compared to the recent past.

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