7 Distribution of QS by Blocking Factor, CDQ Compensation QS, CDQ Compensation QS "Swaps"
QS Blocks
The halibut IFQ program created non-severable "blocks" of QS that work to constrain how much QS can be aggregated. Persons received their QS in a block at initial allocation if their QS would have resulted in less than 20,000 pounds of halibut, given 1994 TACs.1 Blocks cannot be broken up for sale, meaning all the QS in a block has to be sold as a single unit.2 A person can hold no more than two blocks, and a person with two blocks cannot hold any unblocked QS. The regulations allow persons to combine, or "sweep-up", more than two blocks if their combined total is worth less than 3,000 pounds of a hypothetical halibut IFQ.3 These sweep-ups are discussed in more detail in Chapter 8.
CDQ Compensation QS
The IFQ program also included provisions to set aside part or all of the TAC in Areas 4B, 4C, 4D, and 4E for community development quotas (CDQs). Individuals who received QS in these areas were faced with reduced TACs.4 The IFQ plan contained provisions designed to compensate QS holders for the reduction in their harvests imposed by the CDQs. The goal of the plan was to spread the burden of the compensation equally among all fishermen from all areas who received halibut QS. Compensation was provided by giving fishermen from the CDQ areas (Areas 4B, 4C, 4D, and 4E) additional QS in each of the management areas in which CDQs were not allocated (Areas 2C, 3A, 3B, and 4A).
CDQ Compensation QS "Swaps"
In many cases persons received CDQ compensation QS in areas where they had not previously fished or were issued QS. The Council addressed this situation by adding a provision to allow the transfer of catcher vessel CDQ compensation QS across catcher vessel categories within a management area, upon first transfer, and under certain conditions.5 This "swapping" provision was added to make it easier for persons to sell their CDQ compensation QS.
If a recipient of CDQ compensation QS held no other QS in the area on the date the CDQ compensation QS was issued, the catcher vessel CDQ compensation QS was unblocked and "swappable" to another catcher vessel upon the first transfer. This rule facilitates the transfer of CDQ compensation QS. If the person held other QS in the area, the CDQ compensation QS was "unswappable," and was rolled into the person's other QS holding for the area and was either blocked or unblocked, depending upon the size of the person's summed holding.6
Because of the CDQ compensation "swap" regulation, the total amount of QS within an area- vessel category combination may change from initial allocation to the end of 1996. This does not affect the management area totals, however, as QS is only being swapped between catcher vessel categories within an area.
7.1 QS Blocks, CDQ Compensation QS, and Swappable CDQ Compensation QS
Table 7-1a provides summary data on the initial and 1996 year-end distribution of QS by IFQ area and block status. It also shows the distribution of CDQ compensation QS and how much of it was swappable or non-swappable. The overall change and percent change are also given by area and block status. Note that the total number of QS units declined slightly after initial issuance because of revocations.
The distribution of QS by block status can change over time due to: 1) Swap transfers of CDQ compensation QS; 2) Non-swappable CDQ compensation QS being rolled into the person's existing QS holdings; 3) Administrative appeals that change the catcher vessel category; 4) Administrative revocations of QS.
Table 7-1a indicates that large amounts of QS were issued as blocks. The percentage varied widely by area, from 35.3% in Area 3A to 100% in Area 4E. More than half the QS was blocked in Areas 2C, 3B, 4A, 4C, and 4E. CDQ compensation QS was issued in Areas 2C through 4A and represented about 2.1% of the total QS in each of these areas. The CDQ non-swappable QS was rolled into the other blocked or unblocked holdings of initial recipients. The amount of swappable CDQ compensation QS also decreased as it was transferred after initial issuance. The net result of these changes can be seen in the year-end 1996 column.
Table 7-1b contains much of the same information as Table 7-1a, except it shows the number of persons rather than the amount of QS by area and block status. The table also indicates net changes in the number of QS holders from initial issuance through the end of 1996.
It is important to note that the sum of the initial QS holders in Table 7-1b is greater than the number of unique persons who were issued QS for that area. This is because a person is issued non-swappable CDQ compensation QS when they already hold either blocked or unblocked QS in the area. Table 7-1b records persons who initially received non- swappable CDQ compensation QS in the row for CDQ Non-Swappable; however, they are also recorded in either the Blocked or Unblocked rows, because their initial QS allocation falls into one of these categories as well.
The relative proportions of persons who received swappable or non-swappable CDQ compensation QS varied by area, depending upon whether persons had received other QS units in the area. For example, in Area 3A 146 persons received swappable CDQ compensation QS and 168 persons received non-swappable CDQ compensation QS. In contrast, in Area 2C 273 persons received swappable CDQ compensation QS and only 42 persons received non-swappable QS.
All persons who received non-swappable CDQ compensation had their compensatory QS rolled into their other initial holdings, as Table 7-1b indicates. The number of persons holding swappable CDQ compensation QS has also dropped substantially. Note that this type of QS is no longer swappable after its first transfer, regardless of whether it is "swapped" to a different catcher vessel category or is transferred within the vessel category.
The overall number of QS holders has decreased in all areas except Areas 4C, 4D, and 4E. Most of this decrease was probably due to persons consolidating QS holdings. However, the number of persons holding unblocked QS has increased in all areas except Areas 4B and 4E, where the number remained unchanged.
Table 7-2 repeats information presented in Tables 7-1a and 7-1b, but only presents the data associated with swappable CDQ compensation QS. It shows, by area, the initial issuance and 1996 year-end amounts of CDQ compensation QS and the numbers of persons who held this type of QS. The table helps to demonstrate that substantial transfers of CDQ compensation QS have occurred since initial issuance.
In Area 2C, 500,532 swappable QS units remained at the end of 1996, indicating 54.2% of the total swappable QS issued had been transferred, either with or without a "swap" in vessel category. In Area 3A, 86.8% of the swappable CDQ compensation QS had been transferred (699,183 QS units), and in Areas 3B and 4A, 86.9% and 44.3% of the respective swappable CDQ compensation QS had been transferred. Likewise, the number of persons holding swappable CDQ compensation QS has dropped since initial issuance as this type of QS has been transferred.
Table 7-3 breaks out swappable CDQ compensation QS by area and catcher vessel category, showing the distribution of swappable QS at both initial issuance and year-end 1996. The table illustrates how much QS has been "swapped" from each vessel category in a management area. It also shows how much swappable CDQ compensation QS has changed hands in regular transfers within a vessel category without being swapped. Recall that swappable CDQ compensation QS loses its swappable status upon its first transfer, regardless of whether it has been swapped to a different catcher vessel category or has merely changed hands through a regular transfer. A comparison between the amount of swappable QS initially issued and the amount remaining at the end of 1996 indicates a decrease in most areas and catcher vessel categories. The table also shows how administrative revocations have changed the amount of swappable CDQ compensation QS.
Table 7-4 shows the changes, due to swaps only, in the distribution of swappable CDQ compensation QS by area and vessel category. The table provides more detail on the number of swaps and amount of QS swapped to and from each vessel category. The table does not include changes to swappable QS that occurred due to administrative appeals or revocations. The table demonstrates that CDQ compensation QS swaps tended to move QS to larger vessels, especially in Areas 3A, 3B, and 4A.
Table 7-5 lists the initial and year-end distribution of all QS by area and vessel category. It shows how much QS has changed between catcher vessel categories, and compares swap changes of CDQ compensation QS to administrative appeals, revocations, and other actions that may change the amount of QS in a vessel category. It is important to consider that Table 7-5 indicates the net QS changes due to appeals only if they resulted in changes between vessel categories, and not the net result of all appeals that have occurred since initial issuance.
Apart from swaps, appeals, and revocations, other actions that may change the amount of QS in a vessel category include a regulation that was effective until February 24, 1997. This regulation allows catcher vessel QS to be redesignated to a new vessel length category if it has been traded for CDQ compensation QS.7 By the end of 1996, one person had used this regulation to trade and redesignate 141,360 QS units in Area 4C for a similar amount of CDQ compensation QS in Areas 3A and 3B. Other actions that are accounted for in column seven of Table 7-5 appear to involve errors made during the administrative transfer process.
Table 7-5 again indicates how swaps of CDQ compensation QS have resulted in changes to the distribution of QS between catcher vessel categories within management areas 2C, 3A, 3B, and 4A; however, administrative appeals and revocations have also impacted the redistribution of QS across catcher vessel categories in these areas. The net effects of all these changes have been relatively small, however, compared to the total amount of QS in the areas.
Table 7-1a. Halibut Initial Allocation and Year-end 1996 QS by Area, Block, and CDQ Status
Table 7-1b. Halibut QS Holders: Initial Allocation and Year-end 1996 QS Holders by Area, Block, and CDQ Status
Table 7-2. Net Changes in Swappable QS and Number of Persons Holding Swappable QS, From Initial Issuance Through 1996, By Area
Table 7-3. Swappable Halibut QS: Net Changes From Initial Allocation to Year-end 1996, By Area and Vessel Category
Table 7-4. Swappable Halibut CDQ QS: Swaps From/To Vessel Categories, By Area
Table 7-5. Initial and Year-end 1996 Halibut QS: Net QS Changes in Vessel Categories Due to Swaps, Revocations, Appeals, and Other Factors.