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Have opportunities or barriers to entering the fishery changed?

Indicators: Access and Exclusion

Key Findings

  • Prior to implementation of the Northeast Multispecies Sector Program, access to the groundfish fishery tightened in 1994 with implementation of a limited access program, and some fishermen left the fishery. Similarly, when the Northeast Multispecies Sector Program began in 2010, additional fishermen chose to leave the fishery.
  • In the initial allocation of the catch share program, a majority of shares for several allocated stocks were concentrated among the top 25 quota holders.
  • About a third of the fishermen enrolled in sectors do not catch allocated groundfish but instead transfer their entire quota to other fishermen.
  • The volume of ACE transfers for individual stocks has varied, with many stocks showing a decrease in transfers. The decreases are likely a response to lower annual catch limits.
  • Permit banks are being used to preserve fishing opportunities for fishermen who may otherwise be disproportionately affected by the consolidation of fishing effort that followed implementation of the Northeast Multispecies Sector Program.

Interactive Chart Story

Metrics

This indicator shows the degree to which people seeking to fish have access to fishing quota and how evenly catch shares are distributed among the fleet.

Analysis

Baseline: Before Catch Share Program

In response to stock declines and widespread overfishing, the government restricted access to the groundfish fishery in 1994 through a federal license limitation program (Management Framework). Access to the fishery was determined by a combination of vessel characteristics, including length, horsepower, and gross tonnage. Each limited access Northeast multispecies permit has maximum upgradeable baselines for each of those characteristics. Permits must be renewed annually, and they are transferable subject to the baseline upgrade limits. A permit is normally registered for use with a particular vessel at the time the permit is issued, renewed, transferred, or replaced. In addition, a days-at-sea (DAS) system to limit fishing opportunities was phased in over several years (Management Framework). The DAS system limited the number of days each permit could fish for groundfish in a year. Amendment 13 to the FMP implemented a DAS purchase and leasing program in 2004 that allowed vessel owners to consolidate DAS from two or more vessels onto one. However, DAS could only be sold within a vessel size class, or from a larger vessel to a smaller vessel.

During Catch Share Program

PSC Distribution

After the Northeast Multispecies Sector Program started in 2010, the limited access Northeast multispecies permits and baseline upgrade limits remained in effect. However, the program allowed all owners of vessels issued a permit to opt out of the DAS system by voluntarily joining a sector. Each permitted vessel that joins a sector is allocated a potential sector contribution (PSC) based on its groundfish catch during the catch history qualification years (Northeast Multispecies Sector Program). Persons who do not currently own a fishing vessel, but who retained the fishing and permit history of a vessel, are also allowed to participate in sectors, provided they have a Confirmation of Permit History. 

In the initial allocation of the Northeast Multispecies Sector Program, the majority of PSC for nine allocated stocks was concentrated among the top 25 quota holders (see chart above: PSC Distribution). The most concentrated stock was Georges Bank winter flounder, for which three entities controlled 36 percent of the total PSC. The least concentrated were Gulf of Maine cod and Southern New England/Mid-Atlantic yellowtail flounder, for which the top three entities controlled 12 percent and 11 percent, respectively.

One possible reason for the uneven distribution of PSC is the initial allocation formula used when the Northeast Multispecies Sector Program began. PSC allocations were based on fishermen’s catch histories during the time period 1996-2006 (Northeast Multispecies Sector Program). Individuals who chose to purchase additional DAS after they became transferable in 2004 increased their landings, which subsequently resulted in higher catch histories (and PSC allocations) during implementation of the Northeast Multispecies Sector Program; those who leased out DAS lowered their catch histories and PSC allocations.

In terms of sector allocations, in 2014, the percentage of the ACLs for the allocated stocks that NMFS distributed to a particular sector as ACE ranged from less than 0.01 percent for some stocks to 51 percent for redfish allocated to Sustainable Harvest Sector 1 (Sector ACE Allocation ).

In 2017, Amendment 18 to the FMP imposed accumulation limits to prevent the acquisition of excessive shares. However, the 15.5 percent cap on aggregate PSC and 5 percent cap on limited access Northeast multispecies permits did not reduce consolidation of holdings from the present level. Permit banks are assigned the same accumulation limit as other entities.

ACE Transfers

Annual catch entitlement (ACE) may be transferred between sectors, while PSC may be transferred only within sectors. ACE transfers must be reported to NMFS, but PSC transfers do not (Northeast Multispecies Sector Program). Although ACE is pooled within sectors by regulation, most sectors assign catch allowances to member vessels based on PSC allocations, and the buying and selling of ACE between sectors occurs almost universally at vessel or vessel affiliation level. However, all between-sector transactions of ACE need sector management as well as NMFS approval. Sector managers can submit ACE transfer requests to NMFS electronically via the Sector Information Management Module, a secure website used by sector managers and NMFS to communicate sector-specific information. ACE is exchanged between sectors for money, for ACE of another stock, or for any terms agreed to by the two sectors.

Some sectors trade their entire annual allocation of ACE. For example, Northeast Fishery Sector 4 trades all its allocation, most of which is transferred to Northeast Fishery Sectors 2 and 3. With respect to the groundfish fleet overall, roughly one-third of the fishermen enrolled in sectors do not catch allocated groundfish but instead transfer their entire quota to other fishermen.

While it took time for a market for ACE to develop once the Northeast Multispecies Sector Program was implemented, transfer activity was fairly steady after mid-August of 2010. The volume of ACE transfers for individual stocks has varied, with many stocks showing a decrease in transfers (see chart above: Annual ACE Transfers by Stock). The decreases are likely a response to lower annual catch limits (ACLs) across a number of key stocks (Annual Catch Limits). NMFS has developed a website to view electronically groundfish sector-specific ACE trade information, including the sector transferring its allocation, the sector receiving the allocation, the live pounds of each stock transferred, the date the transfer was initiated and the date the transfer was completed. Initially, the website also provided financial information related to the exchanges, but this information was removed after NOAA General Council deemed it to be confidential.

One advantage of sectors is that harvest overages by individual sector members may be compensated for by reallocation within the sector, rather than through acquisitions of quota on the open market. All sectors have included in their operations plans a right of first refusal which applies to ACE transfers by its members, and some operations plans also include a right of first offer. There have been complaints that these sector restrictions on transfers may be depressing the liquidity of the ACE trading market, and affecting the relationship between ACE prices and ACLs for specific stocks.

NMFS estimated transfer prices for the allocated stocks. For some stocks, such as Georges Bank haddock, prices for ACE were at or near zero. The ACLs for those stocks were relatively high, but it was difficult for fishermen to harvest them because of low allocations of co-occurring stocks (Financial Viability of the Fishery: Landings). ACE of species with low allocations, such as cod and yellowtail flounder, traded at prices that at times exceeded half of the species’ ex-vessel prices.

Transfer data suggest that larger vessels were more likely than smaller vessels to be able to afford to buy ACE for non-target or constraining stocks, such as cod and George’s Bank yellowtail flounder, that allowed them to access target species, such as haddock. Landings and allocation data by vessel size category point to a broad shift of ACE from smaller to larger vessels (Financial Viability of the Fishery: Landings). The smallest vessel size category (less than 30 feet in length), most likely comprised of inactive skiffs, was a primary source of leased ACE. Additionally, permits with a Confirmation of Permit History were also a significant source of ACE. One indication of the broad shift of ACE from smaller to larger vessels is that while the largest vessel size category (more than 75 feet in length) was allocated 37 percent of all ACE in 2013, this size category caught 53 percent of total groundfish catch.

Some day-boat fishermen with smaller vessels are concerned that ACE transfers are leading to a groundfish fleet of larger vessels and fewer vessel owners (Number of Active Vessels). Under the catch share program, large vessels are allowed to purchase ACE from small vessels, which can price other small vessels out of the quota market.

Permit Banks

Permit banks are being used to preserve fishing opportunities for fishermen who may otherwise be disproportionately affected by the consolidation of fishing effort that has followed implementation of the Northeast Multispecies Sector Program (Number of Active Vessels). For example, several New England states received grant awards from NMFS to establish banks of limited access Northeast multispecies permits. Permit banks have also been established by nonprofit organizations through grants, loans, and mitigation funding. Amendment 17 to the FMP was completed in 2012 to further develop State-operated permit banks, and to streamline the administrative requirements these permit banks must meet to lease ACE to a sector. By 2013, permit banks owned more than 95 limited access Northeast multispecies permits.

Each permit bank has a unique mission, but they generally exist to help provide fishing opportunities for specific segments of the industry (e.g., specific ports, gear types, vessel sizes), with a larger aim of providing stability for the industry and fishing communities. Typically, the ACE and/or DAS associated with a bank’s permits are offered at below-market-rate prices to fishermen who intend to actively fish for groundfish and meet other eligibility criteria established by the permit bank. For example, the Maine Permit Bank requires that the recipient (buyer) of ACE operate a vessel less than 45 feet in length, operate their vessel from a community with no more than 30,000 residents, and land their catch in Maine. In contrast, The Nature Conservancy/Island Institute Community Permit Bank sells ACE to vessels of all sizes, gear types, and ports, with a focus on supporting collaborative research and developing gear configurations that are more selective than required (Financial Viability of the Fishery: Landings).

While permit banks have helped some fishermen acquire quota at sub-market prices, they are limited by the low volume of quota they can make available. In order to significantly increase their quota holdings, permit banks have to acquire permits with substantial allocations, which can be expensive.

Information Sources

Demarest, C. and A. Kitts. 2013. Trends in Groundfish Fishery Concentration, 2007-2013: Draft. Prepared for New England Fishery Management Council. Newburyport, MA.

Groundfish Plan Development Team. 2013. Groundfish permit banks. New England Fishery Management Council. Newburyport, MA.

Kitts, A. et al. 2011. 2010 Final Report on the Performance of the Northeast Multispecies (Groundfish) Fishery, (May 2010-April 2011). NMFS Northeast Fisheries Science Center Reference Document 11-19. Woods Hole, MA.

Murphy, T. et al. 2012. 2011 Final Report on the Performance of the Northeast Multispecies (Groundfish) Fishery, (May 2011-April 2012). NMFS Northeast Fisheries Science Center Reference Document 12-30. Woods Hole, MA.

Murphy, T. et al. 2013. 2012 Final Report on the Performance of the Northeast Multispecies (Groundfish) Fishery, (May 2012-April 2013). NMFS Northeast Fisheries Science Center Reference Document 14-01. Woods Hole, MA.

Murphy, T. et al. 2015. 2013 Final Report on the Performance of the Northeast Multispecies (Groundfish) Fishery, (May 2013-April 2014). National Marine Fisheries Service, Northeast Fisheries Science Center Reference Document 15-02. Woods Hole, MA.

National Marine Fisheries Service. 2015. Fishing Years 2015-2020 Northeast Multispecies Sector Operations Plans and Contracts: A Programmatic Environmental Assessment. Gloucester, MA.

National Marine Fisheries Service. 2017. Sector ACE Transfer Summary. Available online: https://www.greateratlantic.fisheries.noaa.gov/acetransfer/

Updated: April 2018

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