Metrics

This indicator measures access to and exclusion from catch shares and fishing opportunities and how evenly catch shares are distributed among the fleet).

Analysis

Baseline: Before Catch Share Program

Implementation of the 1994 federal license limitation program constrained access to the groundfish fishery by restricting vessel participation in the directed commercial groundfish fisheries off the coasts of California, Oregon, and Washington. The federal license limitation program was the primary means of limiting access during the baseline period (2002–2010), and many of the elements of the program continue to be required in the Shorebased IFQ Program.

Pacific Coast groundfish limited entry permits not only restricted the number of vessels that could participate in the groundfish fishery, they also carried maximum vessel length limits and were gear specific. For instance, a trawl endorsement was required to participate in the non-whiting and Pacific whiting trawl fisheries. Limited entry permits had to be renewed annually and were transferable for use on any vessel within the length restriction. During the baseline period, access to the trawl fishery was further tightened via the limited entry permit and vessel buyback program in 2003 (Management Framework).

Access to groundfish during the baseline period was also limited by bimonthly cumulative trip limits, which allowed a permitted vessel to land no more than a pre-determined amount of fish in each two- month period (Management Framework).

During Catch Share Program

The Shorebased IFQ Program limits participation in the shorebased groundfish trawl fishery to vessels registered to a limited entry permit with a trawl endorsement. QS were initially allocated to 166 limited entry trawl permits. These initial allocations were consolidated into 138 QS permits/accounts because many of these permits were owned by the same entity.

A permit owner’s initial allocation of QS was based on his/her permit’s catch history (Shorebased IFQ Program). The majority of groundfish trawl fishermen have family-run fishing businesses and hold only a single permit, meaning that each boat represents one or more fishing families. However, permit consolidation occurred during the baseline period as corporate ownership of vessels and permits has been increasing in recent decades. In particular, vertically integrated seafood companies have purchased several limited entry trawl permits over the past several years. As a result of this permit consolidation, a small number of entities acquired significant amounts of QS for target and overfished species. In addition, prior to the implementation of the Shorebased IFQ Program, The Nature Conservancy purchased permits and vessels in an effort to promote more sustainable fishing.

At the inception of the catch share program, the majority of QS for several IFQ species were concentrated among the top 25 quota holders. Furthermore, the top three quota holders for select species owned more than 50 percent of the available shares. The most concentrated species was cowcod south of 40°10′ N lat., which is an overfished rockfish undergoing a rebuilding process. Three quota holders controlled 57 percent of the total QS for this species. The second-most concentrated species was shortspine thornyhead south of 36° N. lat., followed by sablefish south of 36° N. lat., and bocaccio south of 40° N. lat. QS for yelloweye rockfish, another overfished species, was concentrated with 60 percent of the total shares allocated to the top 25 quota holders. It is estimated that the remaining three-quarters of quota holders received an average of five pounds of yelloweye rockfish allocation, which is equivalent to about one fish. The least concentrated QS was for sablefish north of 36° N. lat., with the top 25 quota holders controlling only about 36 percent of the QS and the top three quota holders controlling just 10 percent. In 2014, the moratorium on QS ownership transfers was lifted, and by the end of 2016, there were 172 QS permits/accounts. November 30, 2016 was the deadline for the divestiture of QS in excess of accumulation limits, with the exception of widow rockfish (Shorebased IFQ Program).

Under the catch share program, transfers of QP between vessels are permissible as a means to address short-term mismatches between catches and allocated shares (Shorebased IFQ Program). By 2012, a number of brokers offered online auctions for trading of QP, and NMFS began listing the specific QS and QP holdings of each quota holder online, enabling interested parties to search for potential buyers and sellers and allowing trading to occur in near real-time conditions (Shorebased IFQ Program). More recently, NMFS has further facilitated QP transactions by releasing a public QP price data tool that provides insight into market prices for QP trades based on data reported by quota holders. However, greater communication and transparency in the quota market are required for an efficient distribution of QP, whereby fishermen can readily rebalance their portfolio of quota holdings throughout the year to match catch levels. This improved alignment of QP supply and demand would result in less quota being left unfished at the end of the season (Financial Viability of the Fishery: Landings).

From 2011 to 2016, 19 percent of transfers involved cash compensation only, 13 percent were reported as barter, in which swaps of QP of different IFQ species occurred, or as a combination of cash and barter, 36 percent were “self-trades” in which individual QS holders transferred their annual allocations into vessel accounts or within a company, and 33 percent were other transfer types, including transfers made to and from risk pools, contractual arrangements where payment is a share of revenue when fish is landed, and gifts. The number of cash sale transfers increased each year during the first five years of the catch share program, from 377 in 2011 to 560 in 2015, and dropped to 517 in 2016 (See Chart: Number of Transfers by Type) . From 2011 to 2016, the most traded target species in terms of number of transfers not designated as self-trades were sablefish north of 36° N. Lat., petrale sole, and Pacific whiting (see chart: Number of QP Transfers by Species). Pacific halibut IBQ and canary rockfish were the most traded constraining species.

At the end of each year there is often substantial unused QP available for constraining species. QP prices of some of these species (e.g., canary and yelloweye rockfish) are high and a significant fraction of ex-vessel price (QP Prices by Species ). Fishermen are likely holding their constraining species QP in case they need it themselves. While catches of these species are rare, they tend to be highly uncertain, and can be concentrated when they occur. Moreover, QS owners who opt each year to sell their entire annual allocations to other fishermen may hold quota until the end of the season, when QP prices may be higher.

Lifting the restriction on QS transfers in 2014 created opportunities for fishermen who were not allocated QS to participate in the Shorebased IFQ Program, although these fishermen may face a barrier to entry from the cost of purchasing shares. To date, QS transactions usually involve large increments of quota and multiple species as an individual sells an entire portfolio, with most transactions involving amounts equivalent to more than 10,000 QP according to the NMFS Five-year Review of the catch share program. Small fishing operations may be particularly disadvantaged to the degree that they may find it more difficult to finance such purchases.

A number of coastal communities have established community fishing associations and community quota funds in order to create a pathway for new entrants into the groundfish fishery and to maintain access to the fishery by local fishermen. In 2014, for example, Morro Bay created the Morro Bay Community Quota Fund (MBCQF) The MBCQF functions by acquiring QS and groundfish limited entry permits and leasing them to eligible fishermen at prices lower than market value. With a loan from the California Fisheries Fund the MBCQF was able to purchase QS from The Nature Conservancy worth about $2 million. The advisory committee that oversees decision making by the MBCQF is led by local fishermen and representatives from the City of Morro Bay, academic community, and The Nature Conservancy. The MBCQF manages its overfished species through the risk pool operating in California (Financial Viability of the Fishery: Landings).

Among the goals of the catch share program was the use of reserved non-whiting QS to facilitate new entry into the groundfish trawl fishery (Shorebased IFQ Program). To date, however, the 10 percent of non-whiting QS that could potentially be set aside for this purpose has been issued to current QS holders in proportion to their non-whiting QS.

As part of the catch share program, 20 percent of the shorebased Pacific whiting quota allocation was given to eligible shorebased Pacific whiting processors (Shorebased IFQ Program). By 2015, these processors increased their holdings of shorebased Pacific whiting QS to 25 percent by purchasing additional QS from non-processors after the moratorium on QS trading ended. In addition, some shorebased Pacific whiting processors have purchased non-whiting groundfish QS. Processors use their Pacific whiting and non-whiting groundfish quota to support bargaining relationships with vessels that help secure deliveries.