ALLOCATION OF HALIBUT 2002

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    A GOOD READ

    ALLOCATION OF HALIBUT FOR THE CANADIAN
    COMMERCIAL AND RECREATIONAL FISHING SECTORS
    IN THE PACIFIC REGION
    STEPHEN KELLEHER, Q.C.
    Vancouver, B.C.
    October 31, 2002
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    Table of Contents
    Page
    1. Mandate 3
    2. History and Nature of the Pacific Halibut Fishery 5
    3. History of Allocation 7
    4. Process Followed 9
    5. Position of the Commercial Sector 10
    6. Position of the Recreational Sector 12
    7. Observations 14
    8. Conclusions 15
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    1. Mandate
    I have been engaged by Fisheries and Oceans Canada to provide advice on two
    matters:
    1. An allocation arrangement of pacific halibut for the
    commercial and recreational fishing sectors; and
    2. How allocations may change over time.
    This report addresses these two questions. The report describes the nature of the
    pacific halibut fishery, the allocation efforts to date, the process in which I engaged, the
    position of the commercial and recreational sectors some observations and my conclusions.
    My terms of reference from Fisheries and Oceans Canada set out my tasks:
    Tasks
    To provide Fisheries and Oceans Canada with advice on an
    initial allocation arrangement of the halibut resource for the
    commercial and recreational fishing sectors as well as advice on
    how allocations may change over time. The advisor will be
    required to undertake the following tasks:
    1. Meet with Fisheries and Oceans to:
    · Review the goals and objectives of the process,
    · Identify background material and DFO resources
    required to establish allocation
    · Set a meeting timetable, and
    2. Meet with designated representatives from the Halibut
    Advisory Board and the Sport Fishing Advisory Board
    to seek their views on an allocation framework for
    halibut for the commercial and recreational fisheries.
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    3. Identify and engage other interests (e.g., nongovernment
    organizations, community participation)
    that need to participate in the process.
    4. Prepare a comprehensive report that:
    i) Provides advice and recommendations in the
    form of options on allocation for the commercial and
    recreational sectors and outlines the rationale for the
    advice.
    ii) Provides options describing how allocations can
    be adjusted or modified over time.
    iii) Describes how the recommended allocation
    arrangement would be implemented consistent with the
    following components:
    · International considerations. How the amount of fish
    to be allocated for harvest in Canadian waters is
    estimated by the International Pacific Halibut
    Commission through existing international
    processes, and how new allocation arrangements
    would affect this process.
    · First Nations. The Department has fiduciary and
    treaty obligations to First Nations. Departmental
    policy confirms this obligation and outlines that the
    Aboriginal right to fish for food, social and
    ceremonial purposes has priority, after conservation,
    over other uses of the resources.
    · Operational considerations. Catch data is essential to
    achieve conservation objectives and to monitor
    allocations. Therefore, there is a need to clarify
    whether basic catch reporting and monitoring
    standards in both sectors meet allocation
    requirements. Further, the progression of the
    British Columbia treaty process, negotiations related
    to fish, fishing arrangements, fisheries management
    and other matters are under discussion during treaty
    negotiations. Outcomes of these negotiations will
    set out fisheries resources to be provided to the First
    Nations under treaty. More clarity on the impact
    that treaty negotiations would have on allocation
    arrangements is required.
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    2. History and Nature of the Pacific Halibut Fishery
    There has been halibut fishing on the west coast of North America by First Nations
    for hundreds of years. Commercial fishing began some 125 years ago. As early as the
    1910’s concern respecting overfishing led to efforts by the governments of the United States
    and Canada to manage the resource. In 1923 they were successful in signing a convention
    resulting in the formation of the International Fisheries Commission. The Convention has
    been modified several times since then and the Commission is now called the International
    Pacific Halibut Commission.
    The Commission originally limited the season with a closure each year of three
    months. By 1932 it had become necessary to set catch limits.
    As the years went on the fleet grew in number and became more skilled. The
    seasons became shorter as it took less and less time for the fleet to reach the catch limit. In
    1953 a new convention provided for the establishment of separate seasons for Canada and
    the United States.
    In 1977 both countries enacted legislation extending jurisdiction over fisheries to 200
    miles from shore. This led to a bilateral protocol in 1979 which restricted Canadian and
    American fishers to their own waters.
    At approximately the same time Fisheries and Oceans took steps to limit entry into
    the commercial fishery. The apparent intent was to protect stocks by stopping the
    expansion of catch capacity.
    This goal was not achieved. Instead license holders attempted to improve their
    competitiveness by using larger vessels, larger crews and more sophisticated equipment.
    The halibut fishery soon had all the characteristics of a fishing derby. By 1990 the
    season had shrunk from 82 days (in 1982) to six days. These developments had several
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    adverse effects: the fishery was intensive and therefore dangerous. Most of the catch ended
    up in the less lucrative frozen fish market. The catch consistently exceeded the Total
    Allowable Catch (“TAC”) set by the International Pacific Halibut Commission.
    In 1990 the commercial halibut industry developed an individual vessel quota
    (“IVR”) system. It was implemented by Fisheries and Oceans Canada in 1991. Each vessel
    was provided with a percentage of the Total Allowable Catch. This was based on the size of
    the vessel and the history of fishing. The quota holder could harvest the fish at any time
    over the season which ran from March to November.
    This IVQ system is regarded as a success by the commercial industry. It has led to
    conservation, improvements to fishing safety and increased economic benefits. Fishers can
    sell in the lucrative fresh fish market virtually throughout the season. The IVQ system
    remains in effect today.
    Since the IVQ has been introduced, the commercial sector has not exceeded the
    TAC.
    The halibut sport fishery was relatively small before 1973. The Commission did not
    consider it a significant concern in the management of the fishery. In 1973, after consulting
    Canadian and state governments, the IPHC adopted sport regulations.
    At that time halibut was incidental to salmon fishing for recreational fishers. Since
    that time the popularity of halibut fishing has increased substantially. As is discussed below
    the measurement of it is comparatively difficult and, to date, inexact. Nonetheless it is clear
    that sport fishing of halibut has increased dramatically.
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    3. Allocation Efforts to Date
    Fisheries and Oceans Canada has been working since 2000 with recreational and
    commercial interests on developing an allocation system. Dr. Edwin Blewett, a British
    Columbia economist, was engaged by Fisheries and Oceans Canada in 2000 to facilitate
    discussions between the two sectors. A series of meetings led to consensus on a number of
    principles:
    Principles Acceptable to Both Sectors
    Early in the discussions, both commercial and recreational
    representatives identified certain points that both sectors might
    be able to accept, assuming that their fundamental interests, as
    outlined above, could be satisfied. These are summarized in
    the following list.
    · Growth in one sector beyond its initial share should not be
    at the expense of the other sector.
    · Any allocation system should be kept as simple as possible
    to avoid if possible the need to calculate and trace “debits”
    and “credits”.
    · Should the need for additional quota (beyond initial shares)
    arise, transfer of quota between sectors would be based on
    the market system.
    · Any catch sharing arrangement must be protected from
    arbitrary and uncompensated infringements from any
    source that erodes the share of either sector.
    · An allocation sharing arrangement should be based on total
    mortality in all fisheries.
    · All Canadian TAC should be harvested. This implies that
    any recreational TAC not harvested by the recreational
    sector should be harvested by the commercial sector.
    · There should be an annual accounting of a catch sharing
    arrangement.
    · Settlement of any outstanding deficits or surpluses under a
    catch sharing agreement should occur reasonably
    frequently so that significant deficits/surpluses do not
    accumulate for a prolonged period of time and thereby
    grow to an onerous size.
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    · Credible and timely catch data are critical for managing the
    fishery properly and for managing any catch sharing
    arrangement developed by the sectors.
    · If recreational catch data are not available in-season,
    adjustments to accommodate a catch sharing agreement
    would have to occur in the subsequent season.
    · The Neah Bay/Swiftsure catch by US fishermen should not
    be recorded against the Canadian TAC. If it is, some sort
    of compensation should be worked out through
    international agreement.
    Beyond these principles, however, little agreement was achievable. The two sectors
    took starkly different positions on the percentage each sector should be allocated. As will be
    seen below, these positions have been maintained by the sectors in the discussions I have
    held. The parties also disagreed on how to reconcile surpluses and deficits.
    Dr. Blewett concluded that the facilitated discussions should not continue. The
    parties had exhausted the possibility of reaching mutually satisfactory arrangements for
    sharing halibut. He recommended a form of arbitration by an independent third party:
    I conclude that initial shares will have to be determined by an
    independent third party. If arbitrated initial shares are not such
    as to cause either sector to walk away from any voluntary
    process, it is possible that the sectors will be able to finalize an
    agreement on the process by which a sharing arrangement
    would operate. If either sector does quit the process, it too
    would have to be subject to arbitration.
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    4. Process
    The process was one of consultation. I met with Fisheries and Oceans Canada and
    received extensive written material from Fisheries and Oceans and from the International
    Pacific Halibut Commission. I then met separately with the two groups, the Commercial
    Sector Allocation Subcommittee of the Halibut Advisory Board and the Executive
    Committee of the Sport fishing Advisory Board. Both groups provided me with
    comprehensive written submissions outlining their respective positions and reasons. These
    submissions were provided to the other sector to give it an opportunity to reply.
    I also obtained useful background information from the International Pacific Halibut
    Commission.
    I have appreciated the cooperation of all concerned in assisting me to understand a
    complex industry and the competing interests involved in this undertaking.
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    5. Position of the Commercial Sector
    The commercial halibut sector’s proposal is that 95 per cent be allocated to the
    commercial sector and 5 per cent to the recreational sector. This proposal is based on an
    average of the catch share from 1979 to 2001. The sector argues that certainty and fairness
    can be achieved by basing initial allocations on historical catch shares. The sector put
    forward this data:
    Commercial
    Sector
    Recreational
    Sector
    1979 99.8% 0.2%
    1980 99.9% 0.1%
    1981 99.8% 0.2%
    1982 99.4% 0.6%
    1983 99.1% 0.9%
    1984 99.3% 0.7%
    1985 97.5% 2.5%
    1986 98.4% 1.6%
    1987 98.0% 2.0%
    1988 98.1% 1.9%
    1989 97.1% 2.9%
    1990 96.8% 3.2%
    1991 96.2% 3.8%
    1992 96.0% 4.0%
    1993 97.1% 2.9%
    1994 92.0% 8.0%
    1995 91.6% 8.4%
    1996 91.6% 8.4%
    1997 93.5% 6.5%
    1998 93.8% 6.2%
    1999 93.6% 6.4%
    2000 91.4% 8.6%
    2001 91.2% 8.8%
    Average 95.5% 4.5%
    The commercial sector naturally opposes any allocation which reduces the
    traditional catch share of the commercial fleet. It argues from a conservation standpoint
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    that this makes no sense. That is because the recreational halibut fishery is, by comparison
    to the commercial sector, uncontrolled. There are trip limits and possession limits but there
    are no controls on the number of trips that can be made or the amount of halibut that can be
    caught.
    The commercial sector argues that it has made substantial investments: vessels, gear
    and additional growth. The initial allocation by relying on historical catch shares will
    ensure that neither group is made significantly worse off or better off by the decision.
    The sector argues that the data indicates that in recent years there has been an
    uncompensated reallocation of halibut from the commercial to recreational sector.
    The sector argues that the lodge and charter businesses account for some two-thirds
    of the halibut harvested. These fishing businesses, unlike the commercial fishery, profit
    from the exploitation of fishing resources without paying a license fee or cost recovery levy.
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    6. Position of the Recreational Sector
    The recreational sector characterizes itself as a “reluctant participant” in this process.
    It feels that the present system works reasonably well.
    The recreational sector expressed a concern about being disadvantaged by the treaty
    processed with First Nations. Its concern is as treaties are concluded halibut will be
    transferred to First Nations either for food, social and ceremonial purposes or for economic
    use. This will affect the proportion available to recreational anglers. It says the commercial
    sector has been assured that treaty fish will come from quota purchased from current IVQ
    holders. The share for recreation is defined by reference to the amount left to the
    commercial sector after it has been compensated for transfers to First Nations.
    The recreational sector argues that the inefficiency of sport anglers means that the
    total sport catch inevitably changes slowly and that the recreational sector has little ability to
    increase its catch. In declining abundance recreational share will rise. It will decline when
    abundance increases.
    The basic position of the recreational sector is that an allocation of 20 per cent
    should be assigned to the recreational sector. It points to a 50 per cent share in the
    American states to the south and close to 20 per cent in Alaska.
    The proposal is based on the premise that this allocation process should recognize
    the “anticipated needs” of the recreational sector for the foreseeable future. It bases its
    argument on the anticipation of the IPHC that abundance will decline by 10 per cent per
    year. Based on an abundance in 1998 of 14,132,000 lbs. and recreation catch being
    maintained at 930,000 lbs. a 10 per cent allocation would put the recreational sector in
    difficulty after one more year. At 15 per cent a deficit is reached after 2005. Even 20 per
    cent only takes the fishery until 2008.
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    The recreational sector does not accept that after it exceeds 20 per cent it ought to be
    responsible for compensating commercial quota holders. The need for compensation only
    arises because of the creation of IVQ’s by government. Therefore any compensation ought
    to be publicly funded.
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    7. Observations
    A couple of matters were brought to my attention which are not part of my mandate
    but bear mentioning in this report.
    1. There is a debate between the commercial and recreational sectors regarding
    the respective contribution of each sector to the economy or well-being of Canada. This
    may be a matter for consideration in the future. It is certainly not within my current
    mandate to make a determination about allocation by drawing any conclusions about the
    economic contribution of either sector.
    2. The Sport Fishing Advisory Board does not accept any distinction between
    “ordinary resident anglers” and the “commercial sport fishery”. It argues that it is
    individuals who purchase a license and thereby acquire the right to go fishing. Charter
    operators and lodges provide a service to the recreational angler.
    The Board is technically correct in making this point. But the anglers who fish
    without using lodges or fish charter businesses make up some 33 per cent of the recreational
    halibut fishery. In any future discussion with stakeholders it would be useful to attempt to
    include this group.
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    8. Conclusions
    (a) Options on Allocation.
    The commercial and recreational sectors provide allocation options that are
    described above. I conclude that neither sector makes a compelling case and that a third
    option must be considered.
    The position of the recreational sector really comes down to no allocation at all. I
    say that because it argues that 20 per cent be allocated but there is no need to compensate it
    when less than 20 per cent is achieved. Then as the biomass decreases in several years, the
    recreational sector will exceed 20 per cent. At that stage it opposes any notion of
    compensation from it to the commercial sector.
    The numbers chosen by the two sectors are not possible to justify. The commercial
    sector proposes 5 per cent for the recreational sector. The recreational sector proposes that
    it be allocated 20 per cent.
    The difficulty with the 5 per cent figure is that it is based on data over the last 22
    years. As I explain below the data is suspect. As the data from the recreational sector has
    improved, the numbers have been rising.
    I conclude that the initial allocation should be, as much as possible, a neutral event.
    By that I mean that neither sector should receive a windfall. Neither sector should be
    significantly disadvantaged. To adopt the position advocated by either sector would have
    both consequences: it would be a windfall to the sector whose position was selected and
    would substantially disadvantage the other sector.
    The third option, and the option I recommend, is to base the allocation on current
    data. Over 2000 and 2001, the commercial catch and the recreational catch averaged
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    10,627,000 lbs. and 1,018,000 lbs., respectively, totaling 11,645,000 lbs. (plus wastage and
    First Nations’ food, social and ceremonial). The recreational share was just under 9 per
    cent. In my view that is a useful figure for allocation in the future.
    (b) How options can be adjusted or modified over time.
    A successful process of allocation depends on effective monitoring and record
    keeping. Currently the catch data from the commercial sector is of high quality. Log books
    document the catch; vessels hail out before fishing and hail in at the end of fishing; the
    commercial sector pays for an independent third party who weighs and tags each halibut.
    In addition, there is a program of at-sea monitoring. The commercial sector also described
    to me the development of a video monitoring system which will provide greater levels of atsea
    coverage.
    The catch data from the recreational sector is not of this quality. While the data has
    improved over the last several years it is not nearly as reliable as the commercial data. The
    difficulty was highlighted in the 2000 Annual Report of the International Pacific Halibut
    Commission:
    Tough to count in Area 2B
    Sport harvests along the British Columbia coast of Area 2B are
    estimated by a variety of means, none of which is completely
    satisfactory. As interest in halibut sport fishing increases in
    B.C. waters, the importance of a scientifically-based catch
    estimate intensifies. Right now, one of the estimates used by
    the IPHC is the 1.5 million-pound catch figure, which is based
    on DFO’s National Postal survey of sport harvests for 1995.
    The Pacific Region of Canada’s DFO, seeking a more accurate
    estimate, combined results of several creel survey and logbook
    programs and derived a different estimate – this one far lower –
    of 44,400 halibut, or 959,000 round pounds (719,000 pounds
    net). It is very possible that the mail surveys, on which the
    National DFO survey bases its estimates, are too high, since the
    more avid and successful anglers tend to return more
    questionnaires than less avid and successful folks. It is also
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    possible that the alternate Pacific Region estimate is too low,
    because it is based on a number of partial estimates rather than
    on a comprehensive reporting or sampling program. Clearly
    each may be biased in different directions, and for assessment
    purposes we seek the most accurate figure.
    In my view efforts must continue to be made to improve this data. It is beyond the
    scope of this report and well beyond my expertise to recommend specific ways in which the
    data could be improved. But it appears to me that better recreational data is obtained in
    Alaska through Alaska Fish and Game’s state wide harvest survey. The five year survey in
    Canada could be used to supplement the creek surveys and logbook records maintained by
    Fisheries and Oceans Canada. It may be as well that charter operators and lodges could be
    more closely monitored to ensure that log books are fully completed.
    This, then, is a principal way in which allocation may change over time. The
    recommendation I make in this report is based on the data that is available. If improved
    data established that the actual recreational catch in 2000 and 2001 was higher, for example,
    than the current data discloses, it is my recommendation that the allocation should be
    adjusted accordingly.
    Allocation may also change in the future based on an exchange of IVQ between the
    commercial and recreational sectors. At present, of course, this is not possible. Moreover,
    the Sport Fishing Advisory Board resists any change in this direction. But this possibility
    may be a useful method of addressing problems in a decreasing biomass. Both sectors
    should be discussing the possibility of developing a method of exchanging IVQ.
    What should occur if the recreational or commercial sector exceeds the allocation?
    In the commercial sector the IVQ system ensures that a predetermined amount of halibut
    will be harvested. The recreational sector is far less predictable. It depends on decisions by
    anglers to fish for halibut and the availability of fish.
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    One possibility is compensation by one sector to another. Although that model may
    exist in other fisheries, it is problematic in halibut. Individual recreational license holders
    can hardly incur liability for what the sector as a whole accomplishes. Although I
    recommend above that the possibility of exchange of IVQ be considered in the future, that is
    not a current option.
    My view is that in each year Fisheries and Oceans Canada should determine what
    share was achieved. If the recreational sector does not obtain its allocation that should be
    credited to a nominal account. It can be drawn upon in the future when its allocation is
    exceeded.
    The recreational sector may exceed its allocation. That is not unlikely. The
    International Pacific Halibut Commission projects a decline in abundance. In the absence
    of any notion of individual quota, the allocation must be brought into line through a process
    of consultation with stakeholders. The options for Fisheries and Oceans Canada to consider
    include new management measures such as closing areas to recreational anglers and
    reducing daily limits or possession limits, imposing annual limits and restricting fishing
    times and areas.
    A further possibility would be the mid-season closure of recreational halibut fishing.
    That is seen by the Sport Fishing Advisory Board as the least desirable option. I fully agree.
    (c). Other components.
    · International Considerations
    The process I have described is not inconsistent with the International Pacific
    Halibut Commission’s procedures.
    The commercial TAC is currently determined as follows. The IPHC determines the
    harvestable surplus available in Canada, Area 2B. Deducted from that is an amount
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    allocated to First Nations for food, social and ceremonial purposes pursuant to Section 35 of
    the Constitution Act, commercial wastage and by-catch mortality. The Commission then
    deducts the estimated recreational catch. What is left is the commercial TAC. The
    recreational catch is estimated by reference to the previous year.
    Under the procedure advocated in this report, the Commission would start as it
    presently does with the harvestable surplus. Again, First Nations food, social and
    ceremonial allowance would be deducted, as would bi-catch mortality. The remaining
    amount would be the catch limit for both commercial and recreational. An amount would
    be allocated to recreational. The commercial allocation would have deducted from it
    commercial wastage, leaving the commercial TAC.
    · First Nations
    The plan I have described takes account of food, social and ceremonial fish. In
    addition, if treaty obligations are incurred, consideration must be given to compensating not
    only commercial IVQ holders but the recreational sector.
    · Operational Considerations
    In my terms of reference there is mention of the need for catch reporting and
    monitoring standards which meet allocation requirements. I have addressed in an earlier
    part of this paper the importance of improving catch records and monitoring.
    All of which is respectfully submitted this 31st day of October, 2002.
    STEPHEN KELLEHER, Q.C.
     

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