Sector Allocation: A Misguided Solution

On April 9, 2010, the National Marine Fisheries Service (NMFS) issued Amendment 16 to the New England Multispecies (groundfish) Fishery Management Plan, implementing what is known as “sector allocation.” In its simplest form, sector allocation is a method of allocating fishing privileges—the ability to harvest fish—to individual groups of fishermen, who are then able to use, buy, or sell those privileges. Sector allocation is a radical departure from traditional management practices in New England, and, after nearly three decades of pervasive overfishing, increasingly Draconian fishing regulations, and ongoing legal battles, it has the potential to signal a positive new direction for the New England groundfish fishery. Sector allocation fits within the broader category of “catch share” fishery management programs. NMFS defines “catch share” as “a general term for several fishery management strategies that allocate a specific portion of the total allowable fishery catch to individuals, cooperatives, communities, or other entities.” Generally, catch share programs contain two elements: (1) an output control—an annual limit on the total number of fish that can be harvested in a fishery, commonly referred to as the “total allowable catch”; and (2) a transferable allocation of that fishery’s annual catch limit to individual fishermen or vessels, commonly referred to as “quota.” Catch shares are part of “a global movement” in fisheries management toward a market-based approach to regulation and are deeply rooted in economic perceptions of property rights, efficiency, and stewardship. Accordingly, the theory behind catch shares is twofold: the use of output controls allows fisheries managers to directly limit fish mortality, while the allocation of transferable quota—in effect a quasiproperty interest—to individual fishermen incentivizes efficiency and stewardship through ownership of fishing privileges. The success of catch share programs is well documented. Although each individual program is unique, catch share programs have been implemented in over one hundred different fisheries worldwide. By and large, the evidence demonstrates that catch share programs effectively control overfishing, reduce overcapitalization of the fishery (generally through consolidation), and increase profits for remaining participants. Thus, there is little question as to the effectiveness of catch share programs as a fishery management tool. That success raises several issues, however. Catch share programs promote economic efficiency by creating a tradable market for quota. Almost inevitably, this entails consolidation of a fishery’s participants. But because the markets for quota are artificially designed by fisheries managers, the way in which managers initially allocate quota and dictate how that quota can be bought or sold becomes a determinative factor in how quickly and to what degree that consolidation occurs. Not surprisingly, in fisheries with a diverse array of participants, such as the New England groundfish fishery, building broad support for catch share programs is difficult. Catch shares raise other socioeconomic concerns as well. The individual allocation of fishing privileges alters the traditional perspective of viewing the seas as “commons”—a notion that still resonates with coastal New England fishing communities. Moreover, concerns over the consolidation of fishing effort and the perceived privatization of a public resource often elicit visceral reactions from fishermen, politicians, and community members who fear the loss of economic opportunity and cultural heritage from their region. These concerns have spawned significant debate as to whether the benefits of catch share programs outweigh their potential problems. Sector allocation is billed as an innovative solution to the issues raised by catch share programs, as well as an answer to the chronic overfishing of groundfish in the Gulf of Maine, for two reasons. First, sector allocation is a voluntary management program. Fishermen may choose to continue fishing under the existing regime, which regulates catch through limits on days-at-sea, or opt to join the sector program. Second, the sector program shifts the burden of determining quota allocation and implementing consolidation safeguards from the government to the fishermen. Sector members negotiate allocation through contractual agreements and are free to impose limits on consolidation of quota through those agreements; therefore, the design of the market structure is almost entirely up to the fishermen. Thus, on its face, the sector program maintains the benefits of a traditional catch share program (e.g., strict limits on fish mortality and increased economic viability) while providing flexibility for fishermen and fishing communities to find workable solutions to some of the more systemic problems of catch share programs (e.g., control over allocation and the rate at which consolidation occurs). This Comment advances the debate over catch share programs by considering whether sector allocation represents a potentially promising new direction for fisheries regulation. To do so, Part II explores the legal and historical framework that has set the stage for sector allocation and explains why fisheries managers in New England had little choice but to adopt the sector program. Next, Part III argues that sector allocation is an imperfect response crafted to accommodate a number of wellintended but poorly conceived legal constraints and, therefore, is not a promising innovation. Part IV concludes by recommending a modest reform to the sector program, while specifically addressing how the legal framework for catch share programs at the national level could be redesigned to retain its positive features while ameliorating some of its problems