The New England Fishery Management Council has raised a red flag over indications that market dynamics in the virtual commodification of the groundfishery is yielding a concentration of catch shares' ownership in a small number of hands.
After hearing a staff report that 41 percent of the allocation of Georges Bank winter flounder is now controlled by three entities, the council voted to ask the National Marine Fisheries Service to publish a "control date" beyond which the acquisition of permits "may be treated differently than permits acquired before the control date," according to written summary by the council of its meeting last month in Portsmouth, N.H.
Whether and how NMFS might decide to limit concentration of ownership of the groundfishery was put off pending the completion of a staff "white paper on fleet diversity and accumulation limits."
The catch share regimen, known as Amendment 16, was approved and launched last May 1 without any rules to control concentrations of ownership.
Councilor David Goethel's made the motion for the "control date," which was approved on a 9-4, non-roll, call vote.
"What we just did was put people on notice, sent up a warning shot, that as of a certain date, any transfer may be treated differently," he said.
Goethel told the Times on Tuesday he made the motion after hearing a staff report on fleet diversity and concentration of ownership.
According to the report by fisheries analyst Anne Hawkins on Jan. 27, three permit owners had gained control over 41 percent of Georges Bank winter flounder, which is a so-called "choke" species, while three entities also owned 25 percent of one other stock which was not named and 10 percent to 20 percent of 11 other stocks.
SeafoodNews.com editor and publisher John Sackton reported Tuesday that the concentrated ownership of Georges Bank winter flounder gives the dominant owners potential gatekeeper control on who gets to fish the rest of the stocks on Georges.
But Vito Giacalone, policy director for the Northeast Seafood Coalition, said he believed the large owners of catch share quota were longstanding participants in the groundfishing industry and should not be thought of as speculators.
Tom Nies, the council's chief fisheries analyst, advised its members in Portsmouth that the creation of a control date did not mean the government was implicitly affirming the sanctity of allocation acquired before such date.
Although the catch share system functions as if it were an individual tradeable quota or ITQ system — with shares owned and secure — the council did not put the catch share idea to a referendum vote of the participants as the Magnuson-Stevens Act requires of ITQs.
Goethel described Hawkins' report as "sobering."
"We don't have enough information to do much with it, but the preliminary indication is that we have a relative handful of individuals controlling a great deal of fish. I find that very troubling as an individual," said Goethel, a New Hampshire resident and groundfisherman.
Opposition to Goethel's motion came from James Odlin, a Maine council member and the owner of a sizeable fleet, and Maggie Raymond, director of the Associated Fisheries of Maine.
Odlin said he believed the control date motion creates an unintended consequence; no problems for owners of his scale but difficulties for small-sized groundfishermen who might have a hard time selling their quota and leaving the business.
"Why do we need accumulation limits?" asked Raymond. "Do we know what excessive consolidation means?" She continued that the council website is rife with documents over the years proclaiming that "consolidation is a wonderful thing."
Odlin abstained from voting.
Sally McGee, a council member on the staff of The Nature Conservancy, supported Goethel's motion as "the fair thing to do," for the signal it sends, and the "pressure it puts" on the council to do something with accumulation limits rather than leaving it completely up in the air.
The impact of the catch share system approved in June 2009 and implemented in May 2010 is the subject of a landmark federal suit. The challenge to Amendment 16, filed by the cities of Gloucester and New Bedford and industry interests from Maine to North Carolina, is expected to be heard in a Boston courtroom in March.
Among the complaints against the system is that it discriminates against classes of stakeholders in violation of National Standard 4 in the Magnuson-Stevens Act, which requires that all allocations be "fair and equitable."
The council and NMFS have agreed to have their staffs work on the details of the control date. There was no indication when the date would be set.
Richard Gaines may be contacted at 978-283-7000 x3464 or rgaines@gloucestertimes.com.
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