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On September 30th the federal moratorium on individual fishing quota (IFQs) expired. The U.S. Congress enacted the moratorium in 1996 as part of the Sustainable Fisheries Act amendments to the Magnuson-Stevens Fishery Conservation & Management Act. The moratorium was intended to temporarily halt the implementation of this fishery management system because it had the effect of “privatizing” fish stocks -- a public trust resource -- to give time to sort out the various issues surrounding IFQs and to create rational standards for the program’s implementation.
The recognition of the magnitude of this change was keen at the time. Once a major public resource like the ocean harvest is divided up and put into private hands it is next to impossible (and extremely expensive) to reverse course and return those assets to public control. At a minimum, reversing course would require the government to buy back what are then “private property rights” at a great loss to the taxpayers. The moratorium was intended to make sure some safety standards were in place before we plunged willy-nilly into the uncharted unknown in an untested economic vehicle.
In the intervening six years, however, literally nothing except a National Research Council report has been done to craft those standards. Worse, the NRC report left as many questions unanswered as it tried to answer, and since then the National Marine Fisheries Service has flat out failed to develop any standards for IFQs or their implementation to recommend to Congress. NMFS seems to be telling Congress, in effect “Don’t worry, just trust us!”, which is hardly reassuring from an agency that has so badly bungled the conservation and management of our nation’s fisheries in the past.
INACTION IS NOT AN OPTION
The issue now before Congress and the fishing fleet is whether to let the moratorium just expire; whether to extend it for six months, a year, five years; whether to permanently ban any new IFQ system; or in the lame duck Congress whether to try to fashion some national standards for IFQs designed to answer a number of concerns about this management system. Congress, like the fishing industry, is also badly split on the issue. However, inaction is not an option. Allowing the privatization of a major resource in an economic free-for-all could lead to disaster.
The sides of the issue have been fairly well defined. On one side are the National Marine Fisheries Service, some of the Regional Fishery Councils and a number of resource economists and free market theorists wanting to push ahead with virtually unfettered IFQ systems to “rationalize” fishing effort, i.e., using IFQs as a means of reducing the number of vessels and participants. They are joined by the Gulf of Mexico snapper fleet, organizations representing West Coast trawlers and longliners, and by some groups representing fishermen or fleets fishing Alaska. One environmental group, Environmental Defense, which supports “market based solutions” for resolving resource issues, is also aggressively pushing IFQ systems as well as Marine Protected Areas (MPAs).
On the other side are a large number of commercial fishing groups on both the east and west coasts, from the Cape Cod Commercial Hook Fishermen’s Association to PCFFA, that have opposed IFQs, based in part on what they have already done to other fisheries in the U.S. and around the world. A good part of this opposition, too, is based on a fundamental lack of trust in government, specifically NMFS and the Regional Councils, and whether they will truly look out for the interests of the small to medium size family fishing operations in any IFQ system. They are joined in this opposition by most conservation groups and some public policy analysts who doubt whether the privatization of a public resource into IFQs would actually make it easier to conserve stocks, or who believe it would in fact make it much more difficult.
The arguments on both sides are well known by now. IFQ proponents argue that allowing a fisherman, or entity, to own a specific amount of quota would help to end “the race for fish,” would stop overcapitalization (in vessels and gear, anyway), would provide fishermen or entities a conservation incentive since they would now own part of the resource, and by ending “the race for fish” would make fishing safer and result in a better product with a higher market value – the latter, in part, because fishermen would supposedly then be able to fish when market conditions are best.
IFQ opponents point to the fact that these systems not only “rationalize” fisheries, but can lead to monopolies and gigantic “fish trusts,” similar to the sugar and oil cartels of the 19th century. Opponents also point to other privatization schemes in other resource areas that have inevitably resulted in increasing the concentration of the resource in fewer and fewer hands as a result of “economic cannibalism,” as the larger operations gobbled up the smaller. Opponents also cast doubt on whether any of the conservation goals such IFQ programs are supposed to serve can ever actually be realized through an entirely economics-driven mechanism.
The surf clam fishery in the Mid-Atlantic and New Zealand’s fisheries are cited by IFQ opponents as two examples of where fisheries have ended up under the control of a few entities and the small and mid-sized family fishing operations have been marginalized or pushed out entirely. In determining who is eligible for quota share, smaller producers have also often been eliminated at the outset by being denied an initial quota share, however small. Small producers were thus “rationalized” out of the system before the free market could even kick in. Opponents cite the North Pacific halibut IFQ fishery as one such example.
IFQ opponents also point out that most of these systems allow for shoreside interests to own quota, including banks or processors. Fishermen, they argue, then become nothing but “sharecroppers” under such systems, forced to fish under such conditions and terms as the quota owner -- “the man ashore” -- dictates. At that point, opponents argue, safety and conservation are thrown out the window, not to mention the betterment of an individual fisherman’s life. Allowing processors and banks to own quota, opponents assert, puts fishermen in the same economic condition as blacks and landless whites in the ante bellum South.
True, the North Pacific halibut and sablefish IFQ systems restricted quota ownership to actual fishermen, but just this past June the North Pacific Fishery Management Council adopted a “two pie” system for crab giving a handful of processors exclusive rights to 90 percent of that resource. If this is the direction the North Pacific Council is going, how much longer would the restrictions on quota ownership in the halibut and sablefish fishery remain in place – particularly when some of the larger fishermen quota owners begin to retire and figure they can make more money selling their shares to a processor or shoreside investor rather than to a fellow fisherman?
Many fishermen opponents also worry that unrestricted IFQs would result in “high-grading,” where fish are sorted through with the less valuable ones discarded as share holders work to land the most valuable of the fish within the confines of their quota. “Where is the conservation in this?” ask opponents.
Opponents also raise the issue of cost of entrance into an IFQ fishery, particularly for the young fisherman trying to get started. Even if quota share ownership is limited to fishermen, the high cost of entrance could leave a young fisherman with nowhere to go but to a processor or bank to get the money to buy quota shares. Thus, even if processors or banks are prohibited from directly owning quota, they can still exercise considerable control over a fisherman whose loan they hold, including the right to foreclose on that share if necessary to pay a debt.
IFQ opponents likewise argue that limited entry systems, coupled with buy-backs where fleets are grossly overcapitalized, can solve the same problems IFQs are designed to address, but without privatizing the resource. They say that trip limits and other existing management tools, if properly applied, can work as well any IFQ to achieve the same ends. Moreover, they point out that IFQs do nothing to protect or restore habitat and do not, in themselves, either prevent overfishing or rebuild stocks.
The IFQ opponents outside of the fishing fleet raise some slightly different arguments. They point to the fact that IFQs essentially permanently privatize a public resource. They are among a growing chorus beginning to question the wisdom of groups such as the World Bank pushing for the privatization of publicly-owned resources and services, including fish and water, as well as massive deregulation of everything from the airlines to energy.
Others IFQ opponents in this latter category, including Taxpayers for Common Sense, Friends of the Earth and Fish Forever, say that if IFQs are to proceed they should be done by public auction, much like the U.S. Government auctions timber in National Forests, oil and gas leases on the outer continental shelf or the public airwaves. They say there should be no give away of public resources, including fish. In such a system you can forget what your catch history was Bubba, you’re now going to bid for quota against that guy who could barely catch a fish, against a well-heeled processor, against an environmental “Friends of Whatever” for quota share. Such a system would probably be just fine with NMFS and the Regional Councils -- no more squabbling with noisy, smelly, disrespectful fishermen, just put the fish up for bid, sell ’em, wash your hands of it like Pontius Pilate and be done with it.
Finally, many opponents point to the high cost of IFQ systems and the fact that most of those higher costs for management and enforcement are externalized, i.e., they are paid for by taxpayers or out of programs or fees from other fisheries.
So there you have briefly some of the arguments pro and con for IFQs. Against that backdrop we currently have some fisheries that are desperate for solutions to the crises they are in, the Gulf snapper fishery and the west coast groundfish fishery in particular. These fisheries are in desperate shape and something needs to be done to help. Some believe that IFQs are an answer to these problems and are pushing hard to let the moratorium permanently expire. On the other hand, there are fishing groups that point out that IFQs are not just going to apply to snapper fishermen or the larger west coast trawl and longline vessels, and that these systems could be applied to any fishery, perhaps with serious unintended consequences, if the moratorium expires. Everyone is certainly in good faith, everyone wants solutions to these problems, but no one can accurately predict the outcome. That’s the rub. Now, is there any middle ground to all of this?
FINDING MIDDLE GROUNDS
One of the ways of addressing the differences between IFQ proponents and opponents is to work together for a set of national standards for IFQ systems. That is what moratorium proponents were looking for in 1996, but have not gotten in six years. Remember, it was a moratorium, not a ban. Is there a way to allow IFQ programs to proceed – not just leaving them totally up to the whims of NMFS or the Regional Councils – to help those who want them while addressing the very real concerns of opponents?
Some IFQ proponents dismiss the need for standards, arguing that the details for each fishery should be left exclusively up to the Regional Councils and, besides (they say) there are ample protections already in the Magnuson-Stevens Act. These same proponents, however, are hard pressed to justify why anyone should completely trust NMFS or the Regional Councils and are equally hard pressed to identify specific existing statutory language that protects against the abuses that have already occurred under other IFQ systems.
Last year in Congress, bills by Senators Olympia Snowe (R-ME) and John Kerry (D-MA) advanced some concepts for national standards, including a provision for a referendum for holding a vote among the participants in the fishery to determine whether they wanted an IFQ or not. That proposed standard was aimed at addressing the fear among many that NMFS or the Regional Councils in their Pontius Pilate fashion would simply foist IFQs on every fishery to make their jobs easier. Standards of sorts, albeit weak ones, have already been offered in Senate Commerce Committee draft language and in the House Resources Magnuson-Stevens Act reauthorization bill.
The Marine Fish Conservation Network (MFCN) has also offered up a strong list of standards that was put together jointly by conservation and fishing groups. The influence of the fishing groups in the Marine Fish Conservation Network’s proposal can be seen in the fact that the auction proposal is only a back-up in that option and could be used only if approved by a referendum. The referendum language, too, is clearly a provision sought by fishermen. A copy of that MFCN language is at www.conservefish.org.
Responding to Congressional staff seeking to craft a compromise between weak or no standards if the moratorium expired and an extension of the moratorium, PCFFA has put together seven elements it felt were essential for those who have been opposed to IFQs to have in law, while at the same time allowing those desiring IFQs to be able to proceed with a workable, though not unfettered, system. That proposal (attached) is similar to what the Marine Fish Conservation Network proposed, but is different in a few ways. The most significant difference is that it spells out what would happen to a quota share holder if an IFQ system “sunsets” after a designated period, whether it’s 5, 7 or 10 years.
Many in the conservation community, as well as some fishing groups, are worried about what would happen if an IFQ system went badly wrong after a short time. What would happen if it were not doing what proponents claimed for it? The Network proposed a sunset date to deal with that possibility. The problem was that a fisherman investing in quota in good faith could be left holding the bag after the end of the program, or during its “evaluation” period would be uncertain whether he or she would be able to continue fishing in that system or whatever system replaced it. Language was clearly needed to assure that those operating in good faith and following the law would be protected, whether the system was continued after its “evaluation” period or in any system that followed, provided there were fish to support the fishery.
We would like to know what you think. Are the standards put forth here adequate to address concerns many have with IFQs? Are they too stringent or not stringent enough? Do these provide some middle ground for fishermen on both sides of the debate to be able to sit down and reach an accord on IFQs? What about the concerns raised by the Pew Oceans Commission in a letter by its chair Leon Panetta, to members of Congress? What are your thoughts?
At the time of this writing, it is unlikely there will be any action on reauthorizing the Magnuson-Stevens Act this year or in this Congress. There is likely, however, to be some action on IFQs in a lame duck session.
As for the fleet, let’s use some of the time given us to see if there’s not some middle ground we can agree on by way of standards that will address all of our concerns. It’s better we offer up the compromise ourselves than a few Congressional staffers developing them for us with little input and a divided industry. It’s time for us to start just getting along and getting on with the work at hand to try to satisfy everyone’s legitimate concerns.
Zeke Grader is PCFFA’s Executive Director and Pietro Parravano is PCFFA’s President, reachable at its Southwest Regional Office, PO Box 29730, San Francisco, CA 92129-0370, and by phone at: (415)561-5080; Glen Spain is PCFFA’s Northwest Regional Director, PO Box 11170, Eugene, OR 97440-3370, reachable by phone at: (541) 689-2000. PCFFA’s web site is: www.pcffa.org and its general email is: fish1ifr@aol.com.
1.REFERENDUM. A referendum vote must be held for the permit holders (if applicable) and current participants in the catching and landing of fish in any fishery for which an IFQ is proposed to vote, first, on whether to proceed with development of an IFQ program and then vote a second time to approve any such program. Approval should require a super majority or a two-thirds vote in favor.
2.FAIR AND EQUITABLE DISTRIBUTION OF QUOTA SHARES. Quota shares should be allocated in a fair manner to all of those persons currently participating in the catching and landing of fish in a fishery and, if applicable, current permit holders, for which an IFQ is proposed. Since the quota is to be divided into shares there is no reason to arbitrarily eliminate small producers; rather, they should have the opportunity to buy additional share to make their fishery economically viable or have the right to sell out. No Regional Council should have the right to arbitrarily determine whom among current participants in a fishery will or will not be assigned a quota.
3.PREFERENCE FOR THOSE ENGAGED IN THE CATCH AND LANDING OF FISH. Preference for quota shares in any initial allocation and any transfers thereafter should be for those individuals engaged aboard a vessel in the catching and landing of the fish. The reason for this is simple: if conservation is to be promoted, or safety-at-sea improved, those persons on board the fishing vessel should own the quota shares, not a third party ashore such as a processor or bank that is removed from the at-sea operation of catching and landing of fish. If quota shares end up in the hands of shoreside interests, fishing men and women are relegated to a sharecropper status.
4.STRICT LIMITS ON THE AMOUNT OF QUOTA HELD. Congress needs to define what constitutes an excessive quota share, and then specify caps on how much quota in a fishery any one individual may own or otherwise control. This is essential to prevent monopolization of the fishery by a few entities, such as what happened in New Zealand.
5.TIME LIMIT. A time limit of 5 (a typical time for leasing of Federal property) to 7 years should be imposed on any IFQ program. After that, the program should be independently reviewed for its effectiveness and, depending on the findings, either scrapped or renewed. The investment of those who participate in good faith in a fishery should be protected by assuring that if they comply with or exceed conservation or other standards their right to continue participating in the fishery, subject to resource availability, will be protected either through renewal of their IFQ quota or any system subsequently replacing an IFQ program.
6.PERFORMANCE STANDARDS. IFQs are touted by proponents as a better means of managing and conserving fisheries, improving safety-at-sea, etc. If Congress is to allow a granting of a quasi-property right or actual property right to the fishery through IFQs, then the public ought to demand that the benefits promised for these fisheries are achieved. Performance standards should be required for each IFQ system for fostering conservation and improving safety-at-sea.
7.SELF-SUPPORTING. Finally, each IFQ system should fully bear the costs of implementing, managing and enforcing the program. Taxpayers, or other fishery programs, or non-participating fishing men and women should not be required to underwrite the costs of implementing any IFQ program.
The moratorium expired September 30, 2002, and we [Pew Oceans Commission] strongly believe Congress should articulate certain national principles prior to adjournment to guide future quota programs regional fishery councils might propose.
First, based on its discussions around the country, the Commission strongly believes that public ownership and the public trust nature of fishery resources should be the point of departure for any discussion or policymaking concerning IFQs, or for that matter, the allocation of any type of fishing privileges. Marine fish are the property of the American people, are held in trust for them by federal and state governments, and should be managed to preserve the full range of their benefits for present and future generations.
Second, the Commission learned that IFQs are not primarily a conservation tool. Conservation needs in a fishery must be assured through establishing total allowable catches and other management measures to address bycatch, habitat protection and other conservation concerns. If the circumstances in a fishery are appropriate, IFQs are complementary allocation mechanisms that can increase the effectiveness of the main conservation tools rather than replace them.
We have also heard from fishermen that they want their voices heard in the allocation process. Thus, we suggest that all allocation mechanisms be subject to a double referendum where a super-majority of the permit/license holders in a fishery must approve through their votes the initial development and final approval and implementation of the allocation mechanism included in the plan.
The Commission has learned that properly monitored and enforced IFQs and community quotas (CQs) can be an effective allocation mechanism for appropriate fisheries. Where they are chosen to allocate direct catch limits, they should reflect the following set of standards:
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