July 01, 2013

Conservation easements go fishing: The Nature Conservancy’s new legal toolbox for fisheries conservation

Historically, groundfish served as the economic backbone of fisheries along the Central Coast of California. Consequently, the decline of the groundfish fishery through the 1980s and 1990s resulted in significant negative economic impacts along the Central Coast, as local port businesses and processors started to close due to significant reductions in landings and revenue. Gleason, M., E. Feller, M. Merrifield, S. Copps, R. Fujita, M. Bell, S. Rienecke, C. Cook, A transactional and collaborative approach to reducing effects of bottom trawling. 27 Conservation Biology 470–479 (June 2013). In 2000, the collapse of the groundfish fishery exposed weaknesses in fishery management that restricted harvest opportunities and encouraged overreliance on certain fishing practices.

In California, The Nature Conservancy (TNC) responded to the collapse of the west coast groundfish fishery by establishing its Central Coast Groundfish Project in 2004. The project addresses both overfishing and inappropriate fishing practices by working with fishermen and coastal communities to develop sustainable ways to catch groundfish and to support the local economy and the ocean simultaneously. TNC’s team adapted legal tools developed and refined over 60 years of working in the terrestrial realm of conservation and applied these tools to the marine realm to achieve major advancements.

TNC has traditionally focused its conservation efforts on acquiring either the fee title to or a conservation easement on real property in a private transaction with a landowner. A conservation easement is in part an interest in land and in part a legal agreement that restricts the activities of landowners in perpetuity to protect conservation interests. California law (as well as the law of most states and the Internal Revenue Code) recognizes the validity of perpetual conservation easements held by specific permitted easement holders (usually nonprofit organizations or government agencies). See Cal. Civ. Code § 815 (West 2013) and 26 U.S.C. § 170(h) (2013). While many of the TNC’s easement acquisitions are funded by government grants, the easements themselves are private, consensual arrangements between the parties. In 2003, TNC found an opportunity to adapt these conservation strategies and apply them in the ocean to the declining central coast bottom trawl fishery.

Bottom trawling is a fishing technique that typically drags large weighted nets along the seafloor. In a mixed stock fishery, using this gear can result in bycatch (i.e., catch of non-target species) and modification of seafloor habitat. Overreliance on this fishing method has resulted in high bycatch rates, disruption of sensitive habitat, and depletion of certain fish stocks. In the mid 1990s, fishery managers reacted to this trend by imposing tighter restrictions on where and when fishing could occur, which, in turn, led to a drastic decline in the west coast groundfish fishery’s economic performance (Gleason et al. 2013).

When it initially undertook the Central Coast Groundfish Project, TNC sought to identify common interests and goals with industry, government, and individual fishermen. It then looked to its existing conservation toolkit, but no legal equivalents of conservation easements existed for the oceans. At that time, the National Marine Fisheries Service (NMFS) managed the west coast groundfish fishery under a “limited entry permit” system. These permits are transferable fishing licenses, permitting fishing using specific gear when seasonal closures are not in place. While permits can be bought and sold, there is no system for imposing recorded, permanent use restrictions on a permit.

TNC as a participant in the fishery

Borrowing from its experience on the land, in 2005 TNC embarked on a new legal strategy for conservation in the ocean. As a first step, TNC purchased trawl fishing permits and vessels from fishermen and, in exchange, those fishermen agreed to support the design and establishment of a number of no-trawl zones off California’s central coast totaling 3.8 million acres. The fishermen entered into Option Agreements, which provided that TNC would buy their vessel and/or permit at the time that the NMFS established the no-trawl zones. In addition TNC required the fishermen selling their permits or vessels to enter into non-competition agreements for a period of five years to foreclose the ability to engage in bottom trawling anywhere in U.S. waters. In total, TNC purchased six vessels and half of the permits available on the Central Coast—a total of 13 permits.

While the concept of “retiring” permits borrowed on the conservation easement concept, issues specific to fishery management posed new challenges for that approach. For example, fishing permits provide an opportunity to catch a portion of the total fishery’s total allowable catch (TAC). However, if a fishing permit is not used, the portion of the TAC that would have been harvested under that permit becomes available to the active fleet. TNC realized there was more potential conservation gain in redeploying the permits it had acquired under appropriate terms instead of shelving them. Borrowing from the conservation easement approach, in 2007, TNC leased a permit back to a trawl fisherman and required that the fisherman comply with geographic restrictions developed in collaboration with TNC scientists, as well as a suite of monitoring and reporting terms designed to verify the bycatch performance of the fishing vessel.

Experiments with gear switching

Prior to 2011, west coast groundfish fishery permits were designated by gear type, meaning that a trawl permit could only be used to deploy trawl gear. This prevented fishermen with trawl permits from experimenting with gears such as hook and line or traps. In 2007, TNC along with its unique coalition forged in the central coast, convinced the Pacific Fishery Management Council to grant TNC experimental fishing permits to test the benefits of switching from trawl gear to non-trawl gear. TNC then entered into leases with six fishermen that required the fishermen to: (1) use alternative gear such as traps, pots, hook and line, or long line gear; (2) work with TNC to develop and implement fishing plans; (3) comply with geographic and species restrictions in those fishing plans; and (4) carry human observers onboard every trip. The gear-switching experiment resulted in the significant reduction of bycatch of five of the six most vulnerable and overfished species and proved that a harvest model targeting lower volumes of high value, high quality fish was a viable option for the fishery.

The latest effort: “Risk pools”

In 2011, the NMFS implemented an “Individual Fishing Quota” (IFQ) system in the west coast groundfish fishery. Fisheries Off West Coast States; Pacific Coast Groundfish Fishery Management Plan; Amendments 20 and 21; Trawl Rationalization Program, Final Rule, 75 Fed. Reg. 78,343–78,427 (Dec. 15, 2010). Under the IFQ system, trawl permit holders (including TNC) were allocated transferable “quota shares,” which generate an exclusive right to harvest or transfer a certain amount of annual “quota pounds” based on the TAC for the fishery. The IFQ program also included a blanket gear switching authorization, providing fishermen with flexibility in how they harvest their quota pounds. Instead of operating under seasonal closures or trip limits, fishermen are able to plan their harvest activities across the entire year and can wait for good weather or when fish prices are high. Additionally, fishermen benefit from rebounding fish stocks because as stocks increase, they will receive larger amounts of quota pounds under their quota shares. NMFS has issued quota shares for 30 species. There are caps on the amount of quota shares any single person can own or control to prevent excessive consolidation in the fishery.

A key challenge for the entire fishery under the IFQ system is the extremely limited supply of “overfished species” quota that constrains the harvest of more abundant species and the economics of the fishery. There are eight federally designated “overfished species” in the west coast groundfish fishery. In order to rebuild these species, fishery managers have set very low annual TACs for them, resulting in very small amounts of quota pounds being allocated across the fishery. Fishermen are at high risk of exceeding their quota for these overfished species while attempting to harvest more abundant target species. If they do, they must either purchase additional quota for overfished species (which can be very expensive) or stop fishing for the season.

TNC has been working with two local fishing associations (the Fort Bragg Groundfish Association and the Central California Seafood Marketing Association) to adapt the concept of insurance risk pools to address these circumstances. The two associations formed a “risk pool” for all the members of their associations pursuant to an annual agreement. The agreement requires members to pool their overfished species quota pounds and create fishing plans (in collaboration with TNC) that minimize the harvest of overfished species through gear diversification, spatial planning, and other fishing prescriptions. In return for adaptively managing and complying with those fishing plans, the fishermen are “covered” for their incidental catch of any overfished species instead of having to go to the open market where overfished species quota can be prohibitively expensive or unavailable. If incidental catches do occur, the risk pool agreement ensures that spatial information is shared across the membership using an application developed by TNC called eCatch that allows fishermen to enter logbook information using iPads and see maps of overfished species harvests by all members of the risk pool. The fishing associations, in coordination with TNC, use the eCatch information to update and adapt the fishing plans. TNC, in addition to leasing its quota pounds for target species to individual fishermen, is also leasing all its quota pounds of overfished species to the members of the risk pool.

The results of the first two years of operation of the risk pool have exceeded initial expectations. In order to measure the risk pool’s performance, the manager of the risk pool collects and tracks important fisheries-dependent data on quota holdings and landings. In 2011 and 2012, the members of the risk pool privately managed the annual fishing rights for over 10 million quota pounds and kept their annual usage of overfished species quota to a much lower level than the rest of the groundfish fleet. For example, in 2012 risk pool members kept their bycatch ratio of overfished species to target species to 0.48 percent (i.e., 4.8 pounds of overfished species were caught for every thousand pounds of target species), while the rest of the non-whiting groundfish fleet had a bycatch ratio of 1.25 percent (i.e., 12.5 pounds of overfished species per thousand pounds of target species). The concept of risk pooling has caught on in the west coast groundfish fishery and there are now four separate risk pools operating under similar agreements.

Through the Central Coast Groundfish Project, TNC has pioneered a new role in marine conservation using a portfolio of legal tools traditionally employed for land-based conservation. TNC believes there is opportunity to replicate and apply similar solutions to fisheries’ problems around the world where overharvesting, destructive fishing practices and inefficient management are costing the world economy more than $50 billion each year. See The World Bank, The Sunken Billions: The Economic Justification for Fisheries Reform (2009). Fishery reform breakthroughs can be achieved by identifying common ground with resource users and building collaborations to find innovative solutions among individual fisherman, local communities, industry, state and federal agencies, and nonprofits.