Thursday, May 10, 2012

A New Critique of Sector Allocation

If you're interested in fisheries law, you may want to check out a comment in the most recent issue of the Ocean and Coastal Law Journal, Maine's one and only specialty journal.  The author (Shannon Carroll, a graduating 3L, former commercial fisherman, and former recreational fishing guide) critiques New England's recent experiment with a "sector allocation" trading program.

A little background may help put the issue in context.  Fisheries regulation, perhaps to a greater extent than any other area of environmental or natural resources law, has seen a dramatic shift toward market-based instruments.  After initially meeting with resistance, individual fishing quota programs have become all the rage.  And while fishery management has produced more than its share of debacles, multiple studies have concluded that the enthusiasm for IFQ programs has ample basis in fact as well as theory.  But a standard fear of IFQs is that even if they will create a more sustainable, economically efficient fishery--which tends to make economists and environmentalists happy--they will do so through consolidation, which will push some fishermen out of business and will turn many of those who remain into employees of larger fishing interests rather than independent small business owners.

Sectors therefore sound like an enticing alternative. The basic idea of a sector, as implemented for the New England groundfish fishery, is to allocate fishing shares not to individuals but to groups.  The groups would retain some control over membership, over the method of allocating fishing shares within the group, and over self-policing, potentially preserving some of the autonomy, control, and connections to local communities that might be lost under an individual quota program. It all sounds like a rather appealing compromise. At least, that's what I thought until I read Shannon's comment.

Though he is generally sympathetic to the arguments in favor of catch share programs, he draws a very different conclusion about sectors.  In a nutshell, here it is:

"Understanding the legal rationale for sectors will, in turn, help demonstrate that sectors are not the innovative solution they are touted to be, but, rather, a cleverly crafted program designed to evade [Congress's] referendum requirement and still comply with legal requirements."

There's much more to it, and I won't try to summarize the arguments or proposed reforms here.  But if you're interested in fisheries, or in market-based environmental regulation more generally, I recommend giving the comment a look.  The cite is 17 Ocean & Coastal L.J. 163.

-Dave Owen

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