Individual Fishing Quotas:

Better Information Could Improve Program Management

GAO-03-159: Published: Dec 11, 2002. Publicly Released: Jan 10, 2003.

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To assist in deliberations on individual fishing quota (IFQ) programs, GAO determined (1) the extent of consolidation of quota holdings in three IFQ programs (Alaskan halibut and sablefish, wreckfish, and surfclam/ocean quahog); (2) the extent of foreign holdings of quota in these programs; and (3) the economic effect of the IFQ program on Alaskan halibut and sablefish processors.

All three IFQ programs have experienced some consolidation of quota holdings. Further, consolidation of surfclam and ocean quahog quota is greater than National Marine Fisheries Service (NMFS) data indicate, because different quota holders of record are often part of a single corporation or family business that, in effect, controls many holdings. Program rules may affect the extent of consolidation in each IFQ program. While the Alaskan halibut and sablefish program set specific and measurable quota limits, the surfclam/ocean quahog and wreckfish programs did not, relying instead on federal antitrust laws to determine whether any quota holdings are excessive. Without defined limits on the amount of quota an individual or entity can hold, it is difficult to determine if any holdings would be viewed as excessive. GAO did not identify any instances where foreign entities currently hold or control quota. While NMFS requires transfer applicants in the halibut and sablefish program to declare themselves to be U.S. citizens or U.S. entities, there is no similar requirement for the surfclam/ocean quahog and wreckfish programs. As a result, in these programs, the potential exists for the transfer of quota to foreign entities. The economic effects of the halibut and sablefish IFQ program are not uniform. Some processors were adversely affected by the IFQ program, while others benefited; however, it is difficult to quantify the actual effects. The only estimate of the program's economic effect on processors is a 2002 study commissioned by the state of Alaska. This study estimated that halibut processors experienced a 56 percent loss in gross operating margins. While GAO could not validate or replicate the study's results, its analysis of public data and the study's methodology raised several concerns about the reliability of the study's estimates. Also, the study did not take into account other factors that may affect profits, such as the diversity and value of other species processed.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: The Secretary of Commerce should, to ensure that quota holders meet eligibility requirements, such as being a U.S. citizen or entity, direct the Director of NMFS to collect and analyze information on quota holders, including who actually holds and controls the use of the quota and for whom financial institutions hold quota.

    Agency Affected: Department of Commerce

    Status: Closed - Not Implemented

    Comments: The Magnuson-Stevens Act (MSA) was reauthorized in January 2007. However, the National Marine Fisheries Service (NMFS) reports that it has not yet completed its analyses of the reauthorized act due to the complexities of the many different provisions and the need to obtain legal review. Since NMFS has not yet determined whether the reauthorized act enables NMFS to collect and analyze the data needed to determine who actually controls the use of quota shares, this recommendation is closed as not implemented.

    Recommendation: The Secretary of Commerce should, to help prevent an individual or entity from acquiring an excessive share of the quota in future IFQ programs, require regional fishery management councils to define what constitutes an excessive share for the fishery.

    Agency Affected: Department of Commerce

    Status: Closed - Implemented

    Comments: GAO found that while the Alaskan halibut and sablefish individual fishing quota (IFQ) program set specific and measurable limits on the amount of quota an individual or entity could hold, the surfclam/ocean quahog and wreckfish IFQ programs did not, relying instead on federal antitrust laws to determine whether any quota holdings are excessive. Without fishery-specific limits on quota holdings, it is difficult to determine whether any quota holdings in a particular fishery would be viewed as excessive, as prohibited by the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act). To help prevent an individual or entity from acquiring an excessive share of the quota in future IFQ programs, in December 2002, GAO recommended that the Secretary of Commerce require regional fishery management councils to define what constitutes an excessive share for the fishery. The Magnuson-Stevens Act was reauthorized and amended in January 2007. The act now requires that, in developing a limited access privilege program (e.g., an IFQ program), a council or the Secretary must establish a maximum share, expressed as a percentage of the total limited access privileges, which a limited access privilege holder is permitted to hold. GAO believes that this requirement will help prevent an individual or entity from acquiring an excessive share of the quota in future IFQ programs.

    Recommendation: The Secretary of Commerce should, to assist the regional fishery management councils in defining excessive share for a particular fishery, direct the Director of NMFS to provide guidance to the councils on the factors to consider when determining what constitutes an excessive share in future IFQ programs.

    Agency Affected: Department of Commerce

    Status: Closed - Implemented

    Comments: The Magnuson-Stevens Act was reauthorized in January 2007. The reauthorized act requires the regional fisheries management councils, in developing a limited access privilege program such as an individual fishing quota (IFQ) program, to determine what constitutes an excessive share of limited access privileges in the fishery. As a result of this congressional requirement, the National Marine Fisheries Service (NMFS) plans to provide guidance to the councils on the factors to consider when determining what constitutes an excessive share. As a result of the congressional action and the commitment on the part of NMFS, the intent of our recommendation has been substantially addressed.

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