WHAT ARE PROPERTY RIGHTS? - Chairman: Peter Millington, Fisheries Western Australia, Perth

Are ITQs Property Rights? Definition, Discipline and Discourse - R. Connor
The Legal Nature of Australian Fishing Licences - Are they Property Rights? - B. McFarlane
Rights Based Systems: Sovereignty and Property - C. Jensen
Property Rights in Relation to Fishing Licences in Australia from a Legal Perspective - D. Fitzpatrick
Balancing Security and Flexibility in Granting a Right to Catch Fish - B. Wylynko and L. McIntosh
ITQs - New Zealand and United States: Allocation Formula and Legal Challenges - W.J. Nielander and M.S. Sullivan
Fishing Rights: a Multidimensional Perspective - N. Taylor-Moore
Rights-based Fisheries Management in New South Wales, Australia - A. Goulstone
The Closure of the Port Phillip Bay Scallop Fishery - S. McCormack and R. McLoughlin

Are ITQs Property Rights? Definition, Discipline and Discourse - R. Connor

R. Connor
Centre for Resource and Environmental Studies
The Australian National University, Canberra, ACT 0200, Australia
<[email protected]>

1. INTRODUCTION

Individual transferable quota (itq) has existed for two decades now as a mature management concept. in the last ten years concern has been focused on the issue of whether ITQs (and variations known as IFQs, IVQs, etc.) should be considered property rights or whether this possibility should be specifically legislated against. The tone of the language relating to fishing quota instruments varies among implementing jurisdictions as do the legal implications of the various regimes for fishers and regulators.

In the US, where federal fisheries legislation now reflects the outcome of a major policy debate on this issue, the legal characterisation of quotas is as revocable privileges. In Australia, Statutory Fishing Rights have been created and in New Zealand, explicit property rights language is used for ITQs.

For those considering the introduction of quota-based management, the situation can appear confusing. Arguments from either side often seem to come from completely different bases with little cross-acknowledgment, except in opposition. Different fisheries can require specific management system design, but this accounts for little of the variation observed in the characterisation of the instrument at the generic, national level. There is a correlation in the three jurisdictions mentioned between the definition of ITQs and provisions in their respective constitutions regarding compensation for appropriation of property rights, but much remains different.

This paper examines the normative assumptions behind the contesting views of ITQs, and how extreme positions are created by the contestors. I use the device of a simple discourse analysis to characterise a few influential positions in the debate. I then attempt a conceptual mapping of the policy terrain, using the discourses as directional forces, and consider management alternatives and potential social, economic and ecological outcomes.

The first part of this paper recounts the legal and economic views of what constitutes property. Second, a characterisation is made of five positions on the spectrum of opinions on what ITQs are, or should be with respect to property rights. Three distinctive discourses that shape these positions and policy outcomes in fisheries management are outlined. The fourth section deploys the discourses as forces influencing policy instrument choice and management outcomes. This device is used to explore how competitive tensions between the discourses can create dichotomies and polarise debate on fisheries policy. An alternative conceptual model is suggested that may allow for more inclusive debate of sustainable fisheries management policy. Finally, conclusions are drawn on the struggle to define rights in fishing and on the requirements for a more unified policy discourse.

2. PROPERTY RIGHTS

Two key informing disciplines in the property rights debate are economics and law. Barzel (1997:3) distinguishes legal and economic property rights. "Economic rights are the end (that is, what people seek), whereas legal rights are a means to achieve the end. ... Legal rights play a primarily supporting role - a very prominent one, however, for they are easier to observe than economic rights."

This is an economist's view. It asserts that property rights are about defining and protecting economic interests; it seems a reasonable position. Although property rights can be used to protect what might be argued to be non-economic values, a majority of economists do not admit that non-economic values exist. For resources, rights are used to allocate their beneficial use to individuals or groups, excluding others. Property can be vested in the state, defined groups, or individuals. But what are the attributes of property?

From a legal view:

i. Property is a right not a thing. It is not something waiting to be discovered, but is a socially constructed convention supported by institutions of social choice such as the courts and legislative statute. However, rights can be submerged or ignored. This can happen due to the lack of examination of established doctrine - as in the case of indigenous land rights. In a sense, such rights exist, waiting to be discovered, are implicit in historical use, and in the precedent, logic and principles of the legal system, await recognition.

ii. Property is a bundle of rights or interests in an asset to use it and manage it. Where these are not held by the same individual, they can take a range of forms. These property interests have a long history in common law in relation to land, as freehold, leasehold, easements, usufruct, profit à prendre, rights of fishery in land (rivers and lakes), water appropriation, etc. However, there is little common law development with respect to sea fisheries in the western tradition due to principles established both by the Romans and later in the Magna Carta that prescribed open access (Scott 1988).

iii. Rights can be established and supported locally without official sanction, only to be fully recognised when tested by argument and precedent in the courts. The courts will use a range of criteria to make a judgement on whether property rights

iv. pertain, such as the ability to benefit by ownership, and the ability to capture changes in asset value, particularly by sale.

v. Rights can also be established or extinguished by statute. Statute and common law may come into conflict and the Courts will decide which will be dominant. The way Courts ultimately decide can be influenced by the make-up of the bench and the moral or philosophical inclination of judges. Hence the interpretation of the law is both normative and empirical as is the construction of legislation.

¹ Stockdale & Anor v Alesios & Ors [1999] VSCA 128 (25 August 1999).

² Yanner v Eaton [1999] HCA 53 (7 October 1999).

i. Property rights are analytical and prescriptive. The economist analyses the impacts of the dimensions of property rights and how they are defined in terms of economic incentives and outcomes. These dimensions include exclusivity, transferability, divisibility, duration, flexibility and quality of title (Scott 1988). Where such dimensions are restricted, rights are said to be attenuated. Each dimension has its effect, but limited or uncertain duration is a key feature of concern in the definition of ITQs.

ii. The concept of the economic externality is critical and the existence of externalities⁴ is taken to be evidence of incomplete property rights. By incomplete, what is meant is that not everything is included in the total set of property interests. If they were, the owners would defend their property against the imposition of costs by others, forcing them to internalise those costs. Unfortunately, in fisheries and their associated ecosystems, this is impossible (because of the difficulty in specification) except in the limit where a single owner controls all. In this case, defending the whole system means excluding others, or policing their behaviour to minimise costs imposed, which is in itself very costly. This is the situation the coastal state faces in being sovereign over resources.

iii. Property rights theorists propose that rights systems emerge and evolve when resources become scarce (Demsetz 1967) and economic scarcity is indicated by a positive value. However, the transaction costs of establishing systems of rights can be considerable, particularly where the resource users are dispersed and heterogeneous. When the benefits of establishing rights exceed the transaction costs of doing so, things should start to happen, as long as the costs can be shared appropriately. The activity undertaken by potential beneficiaries to have rights established has been called contracting (Libecap 1989). Critical aspects of contracting for rights are carried out in the law courts, in seeking judgements on how disputes over resources should be settled between claimants and whether particular interests comprise proprietary rights. Where litigation over resources increases, the development of property rights can be predicted.

iv. Economists recognise that property comprises of a bundle of rights. For example, in common pool resources such as fisheries, there may exist rights to beneficial use; a right to determine who has access; a right to decide management rules; and a right to alienate the whole bundle (Schlager and Ostrom 1992). These can be, and often are, split up and vested in different individuals or groups. It is asserted that for the full beneficial effect of property rights in defining economic interests to be accrued, all the sticks in the bundle must be held by a single owner (Edwards 1994). In most, if not all, cases of individual rights in fisheries resources, some of these rights are retained by the state or other social governance institution and the right to alienate the bundle is socially proscribed.

v. Most, if not all, economic property rights are attenuated to some degree, either by law (eg planning or licence rules), or by uncertainty about parameters, that is the rights are too costly to measure, police, enforce or exchange (Barzel 1997).

³ Professor Anthony Scott has for many years, and again at this conference, demonstrated that economists do study the legal view of property rights, but it is the specificity of legal consideration of circumstances in case law to which I refer here.

⁴ Externalities are costs or benefits to others that are not bourne by the firm or individual generating them and thus not counted by them. Economic efficiency (optimal allocation of scarce resources) cannot be achieved when these costs or benefits are not taken into account in the decision to carry out the economic activity in question. Negative externalities (costs imposed on others) will encourage more of the economic activity to occur than is socially optimal, and thus more of the externality will be generated.

However, questions may be asked as to whether social goals are always served by striving for unattainable perfectly defined and complete property rights. The normative basis of much advocacy of the economic model is that economic growth is good. Property rights allow increases in economic activity and surpluses, and this drives growth. In the age of full exploitation and sustainability, the growth model is again being questioned as the only alternative, and the purported need to squeeze the last dollar from each activity is ever more under scrutiny for uncounted costs of change, and trade-offs with other (non-market) values. This can lead to social resistance to the introduction of ITQs, and a contest to "frame" the discussion or constrain the implementation of ITQs through definition.

3. CONCEPTIONS OF ITQs

3.1 Fully privatised fisheries model

ITQs are a first step towards fully privatised fisheries, whereby certain stocks of fish, or large parts of ocean habitat, become private property including their full management rights. Some government role may remain to ensure residual public interests are protected.

3.2 Property rights in fishing model

ITQs should be defined as full and unattenuated (as far as possible) property rights - permanent, transferable, divisible, subject to registration of third party interests, etc. They should be subject to compensation when appropriate but not for changes in TACs or other sustainability management actions. ITQs are rights in fishing, rather than in the fish themselves and ownership of fish stocks is vested in the state (e.g. the current model in New Zealand)⁵.

⁵ There is room for a practical implementation between items as in the definitions given in Sections 3.1 and 3.2. This is the current goal for the New Zealand quota management system: the sole ownership corporation model, where quota holders become shareholders in management companies based on individual species, stocks, or quota management areas.

ITQs are a fishing licence endorsed so the holder can take a specified amount, or share, of available fish. The licence and the quota may transferred, sometimes independently and the quota may be divided. But the licence with quota is subject to revocation for breaches of conditions without compensation (as in the Australian Commonwealth⁶).

⁶ The South East Trawl Fishery (SETF) the only fishery under Commonwealth jurisdiction to which ITQs had been introduced in the first seven years empowering legislation in 1991 using this model initially. The legislation provides for more secure Statutory Fishing Rights (SFRs), but these are conditional on a management plan being agreed under specific requirements. This occurred for the SETF during 1998 and the process of allocating SFRs to replace endorsed permits commenced. SFRs are potentially more secure, with language in the Act referring to absolute ownership. However, the word "property" has been studiously avoided in policy and legislation and provision for discretionary revocation exists in the legislation. The statutory rights model would sit between those described in Sections 2 and 3.

ITQs are revocable privileges granted by the responsible agent of the state to use a resource that rightly belongs to the general public. Such resources are held only in trust by the government and can not be alienated⁷ (e.g. USA federal system).

⁷ These conceptions of ITQs that explicitly guard against the development of property rights tend not to consider the "bundle" analysis (Schlager and Ostrom 1992). They attempt to maintain a position that any form of private interest created in fishing comprises alienation of a trust resource. The explicit nature of the statutory construction of ITQs as non-property, seems to indicate a belief that the characteristics of property are in fact exhibited by ITQs, so that without such language they would be in danger of being declared to be property by the courts.

ITQs should not exist at all. They are an instrument of neo-liberal progressive ideology that endangers the fabric of both community and ecology. They commodify both labour and natural resources and recast human relations in socially negative ways. They entrench patriarchal dominance in fishing by vesting resource capital in existing male participants, thus locking out women. They are opposed by the "independent fisherman" to whom open access is a precious tradition.

4. EXPLAINING THE DIVERSITY OF VIEWS

Is this diversity of definitions of ITQs a problem? For those considering the application of ITQs, there is plenty of scope for confusion about how a framework should be structured and enabled. Second, the duration and security of rights is an essential issue for stakeholders and their incentives to invest in sustainable use. And last, this diversity may be symptomatic of something more basic going on beneath the surface. So how is the diversity to be explained? A first reaction might be that each fishery has its own problems and different answers are needed. But these policies are mainly set at the national level. For example, Canada uses a diverse range of quasi-property rights instruments in its fisheries, but there is political proscription of property rights language in the policy system. This explanation does not offer much light.

A second possible explanation lies in the legal implications and constraints on governments. Two legal issues are "constitutional takings" clauses and the "public trust doctrine". Many tensions exist within the above conceptions of ITQs and their practical implementations, particularly in the sections 3 and 4 models. Much effort has been taken to avoid calling ITQs property rights in these models and the policy action is to attempt to guard against property rights emerging in the common law where they might become recognised. This could amount to derogation or even extinguishment, of common law rights. This statutory action is ostensively to avoid the issue created by the takings clause of the 5^th Amendment to the US Constitution, and an adapted version of that clause used in section 51(xxxi) of the Australian Constitution that invokes compensation for the appropriation of property. However, the circumstances that might lead to this are rare particularly with proportional quotas⁸. In the Australian case, even with careful wording and definition, and before the mandated statutory rights were effected, the Commonwealth Government was compensating fishers for changes in the initial ITQ allocation formula for the South East Trawl Fishery. Further payments were made, 5 years after the event, for adversely affecting the value of licences by moving from tradable vessel capacity units to ITQs (Trebeck et al. 1996).

⁸ I query the circumstances under which the state's wish to use the power of uncompensated revocation could be justified. Under proportional quota, TACs can be adjusted as required to protect fish stocks. In Australia's South East Trawl Fishery, the TAC for gemfish was dropped from 3000t in 1988 to zero in 1993 following a stock collapse. Quota owners retain their share of the fishery as before and their tonnage entitlement will be restored as the fishery recovers. In the Port Phillip Bay scallop fishery, where ITQs are not applied, the cancellation of all licences and closure of the fishery was a result not of problems with the stock, but of competing values for use of the Bay's waters for navigation and recreation. Not only were licence holders compensated for the full market value of their licences, but if the state had not introduced specific legislation limiting their liability, findings from subsequent legal challenges strongly suggest that claims for compensation for total economic losses would have been upheld (supra note 2).

5. SUPPORTING DISCOURSES

5.1 Nature of discourses

If these legal arguments are not satisfying, how else to explain the diversity of views in relation to ITQs? In this section, I look at accounts of cause and effect that contribute to fisheries policy. This "discourse analysis" is too brief to provide firm explanatory links, but it offers a way to think about the policy dynamic that can provide insight into how such diversity in positions can arise, and whether this is a problem.

"A discourse is a shared way of apprehending the world. Embedded in language, it enables those who subscribe to it to interpret bits of information and put them together into coherent stories or accounts. Each discourse rests on assumptions, judgements, and contentions that provide the basic terms for analysis, debates, agreements, and disagreements... The way a discourse views the world is not easily comprehended by those who subscribe to other discourses. However,... interchange across discourse boundaries can occur, however difficult it may seem." (Dryzek 1997)

5.2 Economic rationalism

While the law is the arbiter of truth in what constitutes property rights, it is the insights of economics from which the ITQ debate arises (Gordon 1954, Moloney and Pearse 1979, Scott 1955, Scott 1979, Scott 1988, Scott 1989) and it is one set of economic ideas that drives the agenda toward the top of the discourses rated in Section 5.1. The apex to which economic rationalist arguments on the environment converge is to privatize everything - water, air, fish, etc. - and allow markets to allocate resources to their highest valued use. At this extreme, these ideals are clearly unachievable. However, economic rationalists advocate the development of institutional frameworks that bring one as close as possible to the ideal, namely, property rights and markets.

The logic of rationalist arguments can be compelling. One of the key concepts on which it rests is the idea of incentive compatibility, whereby institutions (particularly property rights and markets) should be constructed so as to provide incentives to economic actors to behave in ways that, in aggregate, fulfil the policy goals of society. This is Adam Smith's "invisible hand" principle, and is surely worth applying where it can be made to work. But, it does require society to have agreed goals first. Economic rationalism defines the single social goal as a bigger economic pie, which makes things easy, and the more the economy grows and the greater the efficiency the more there will be for everyone. Distributional issues are excluded as non-economic problems⁹. The natural relationship recognised by economic rationalism is competition (Dryzek 1997).

⁹ Different original distributions of resources result in differing efficient configurations of economic activity. Welfare economics explores the issues of which particular distribution might maximise social welfare, and recognises the fact that efficiency gains are not necessarily gains in social welfare. This issue is conveniently neglected by economic rationalists (Perman et al. 1996).

5.3 Administrative rationalism

Those who determine what gets decided and implemented as ITQ policy are the administrative and policy bureaucrats and government fisheries managers. Many have disciplinary backgrounds in economics or natural sciences, many others are career bureaucrats whose expertise is in machinery of government, program administration, etc. This is the natural home of the discourse of administrative rationality, which argues that complex social problem solving can only be achieved through problem reduction and disaggregation and the application of expertise-based hierarchy. The motivation of this discourse is of public interest. It philosophically opposes dispersed decision making such as market mechanisms. It believes in the legitimacy of administrative power and that the strengthened hand of government is what is required to deal with environmental problems. Based on the use of specialised expertise-based planning and decision making, administrative rationality also opposes discursive democratic mechanisms such as those based on the co-management. Bureaucratic hierarchies are not conducive to the free flow of information, and misunderstandings and duplication are common. The natural relationship recognised is that people should be subordinate to the state (ibid.).

Administrative rationalists are in a a bind in the tug of war between social stability and economic progress. The tendency is to defend the administrative state by attempting to retain control. As ITQs threaten to disperse some of that control to stakeholders, administrative rationalists would initially oppose them. Where ITQs become inevitable, the discourse would support conditioning of the instrument so as to retain a measure of administrative power. Administrative rationalism reveals its interests in retaining control in comments such as: "..the replacement, alteration or revocation of licences is integral to flexible administration. If licences are declared to be proprietary by the courts in Australia, the power to replace, alter or revoke them will be greatly impaired, as will the flexibility and long-term competitiveness of Australia's fishing industry" (McCamish 1995). This latter conclusion is precisely the opposite to that of the economic rationalist who advocates increased legal security of rights for the same reasons.

The administrative rationalist's position aligns to some extent with the interests of small-scale producers, but an inherent part of the small independent producers outlook is to hold the administrative state in contempt. Conflict with a range of stakeholders is inevitable for subscribers to this discourse. Where it holds sway in management agencies, a siege mentality may be discernible.

5.4 Social justice

The forces opposing privatisation are poised at the other end of the spectrum. On one hand, the anthropological and sociological critique of ITQs by academic authors, for example Davis (1996), Davis and Bailey (1996), Jentoft et al. (1998), McCay (1995a), Munk-Madsen (1998) Palsson (1998) Palsson and Helgason (1995), speak on behalf of concerns for social justice and equity, gender relations, and express concern over the extension of corporate control at the expense of small-scale local interests. This is a socially conservative position valuing stability of social relations over increased consumption and growth. This position reflects concern that, under ITQs, fisheries access will become controlled by the captains of industry, not the captains of fishing boats.

Allied with these concerns are small-scale producers who, often have a firm belief in the natural order and social justice of open-access regimes. In the USA this is supported by elements of Jeffersonian philosophy of a republic of independent producers, and the common law public trust doctrine (Macinko 1993, McCay 1995b). In Iceland it is supported by the constitution, which protects a right to work for all citizens. With fishing such a common source of employment in that country as to be almost synonymous with work, the denial of a citizen's right to fish by exclusion through a property rights regime is contentious and legally problematic. The motivation of the social justice discourse is the threat to local stability and social relations posed by the globalising economy and the rationale is to defend these values. The mechanisms used are community organisation for collective action and various forms of political action. The natural relationships recognised are community and self reliance.

It is important to note that the discourse that one subscribes to is not determined by the nature of one's employment, although there may be correlations. Not every bureaucrat is an administrative rationalist, and there are quite a few economic rationalists in government bureaucracies. In many sections of government there are also subscribers to a discourse of social justice. The relative strength of these discourses and others depends on the situation both within the policy system and in society at large. This has in turn been shaped by their histories. Further, the discourses described here are only a sample of the many active in fisheries policy debates.

6. MAPPING THE POLICY LANDSCAPE

6.1 Policy terrain

Figure 1 which can be constructed as a kind of conceptual experiment offers an aid to understanding how this sampling of discourses might contribute to policies on ITQs.

Assume a policy object P exists, with a mass proportional to the number of administrative rationalists in the policy system. This gives the system some inertia. Now a force (blue) can be applied to the policy object toward the right, by the discourse of economic rationalism. To the left a countervailing force, red, for social justice can be applied. To complete the map co-ordinate system, there is a green vertical axis, for "ecological rationality", a concept which the reader may define.

There are four quadrants towards which the policy object may move, depending on the definition of rights resulting from the contest between the forces. Social justice and economic rationality forces determine the horizontal position. But what are the requirements to move, e.g. into the upper right-hand quadrant. These include: property rights, good information, low transaction costs, and a low ratio of the discount rate to the growth rate of the stock. These factors contribute to good efficiency and ecological beneficial outcomes. But good social justice outcomes should be possible in combination with private rights too, as has been demonstrated, e.g. with Maori fishing rights in New Zealand. Perhaps another dimension to the diagram is needed?

If some of the necessary conditions were to fail badly, the end result might be in the lower right hand of the quadrant. This could happen with a species like orange roughy while other species under the same management regime remain in the top right quadrant. Where there is significant uncertainty over stock status or biology, or the degree of compliance of other fishers, or where high discount rates and low biomass growth rates imply economic losses from stock conservation, over-fishing may occur for economically rational reasons. This would not necessarily be worse for ecological rationality than the lower left quadrant, which represents the open access result. Here, fishers are free to exploit at will, unencumbered by government interference. This cannot be called an economically rational outcome, despite individual actors' decisions being rational. However, a sense of social equity can be maintained as whatever benefits there are in fishing are available to all. However, ITQs are not the only threat to the stability of this situation and declining incomes relative to the rest of the economy are a feature of this quadrant. There is also a continuing threat to ecological sustainability from open access, accentuated by technological developments that lower fishing costs.

Figure 1: Mapping the policy terrain

The upper left hand quadrant is the domain that values social justice and stability, but can offer enhancement of both economic and ecologically desirable outcomes in comparison to open access through common property systems and various co-management arrangements. Co-management is a concept with broad application and does not necessarily involve privilege of social stability values over economic efficiency. However, it does offer a basis on which to develop solutions that embed local group values where they might be threatened by completely individualised rights. In general, action in this quadrant of the map is a trade-off of potential efficiency gains to be more certain about the future of both social and ecological stability. This in no way excludes the use of property rights, individual or group held, well defined or otherwise. Management is likely to involve a mix of instruments, with fewer critical assumptions than apply in the upper right quadrant.

6.2 Property rights and social goals

Although the model suggests that social justice and economic efficiency are diametrically opposed, in reality individual rights can be combined with other group-based institutional arrangements to achieve policy goals. For example, within the near comprehensive ITQ management system in New Zealand, the remote Chatham Islands community maintains group ownership of some fishing quota through a trust. The quota is leased to community members and trust income is used for community infrastructure projects. Some dispute over what trust income should be spent on has arisen in this case, which is inevitable. Of course, it helps to have a set of social goals for which a consensus can be found and structure and process are required to build and maintain institutions at the community level.

The force exerted by particular discourses on policy direction will depend on circumstances and may be amplified or attenuated by such factors as the history of policy, agency rivalry, or policy fashion. In New Zealand, ITQs were introduced in a policy atmosphere of economic liberalisation in all economic sectors unleashed by the change of government in 1984. Regardless of the origins and foundation of ITQs, or the nature and history of the problems they were aimed at addressing, in New Zealand in the mid-1980s, if a policy proposal involved property rights, markets, and promises of reduced government regulation, it would have taken a great deal to stop. The nature of the New Zealand political system, having a unicameral parliament and (at that time) a two party system with enforced voting on party lines, gave strong and direct power to executive government to implement policy. In this environment, the social justice discourse was virtually drowned out by calls to leave it to the market. The small boat sector had certainly had some influence on policies under quota, but this has diminished with time. Few small communities were heavily dependent on fishing and little study has been made of resource dependency such as it is (Fairgray 1985 is the exception).

In the case of the Chathams, the government wanted desperately to stop the long standing direct subsidisation of the Islands' infrastructure. Endowment of the community with quota assets was seen as a means to reduce this ongoing and, in the prevailing ethos, rather distasteful liability. Hence the broader interests of economic rationalism assisted the local community to establish a means of protecting and allocating access of their own members to the fishery within the ITQ framework. The settlement of Maori fisheries claims in New Zealand is another example of the potential compatibility of individual rights and group interests, and one where the property rights nature of ITQs became the means to the final settlement of 150 year old social justice grievances of the indigenous people. Maori quota assets are currently managed for the benefit of all Maori people and will in the near future be allocated to 78 tribal (iwi) authorities to manage locally in their own interest.

6.3 Stability versus progress

As Seth Macinko (1993) has pointed out, the ideological struggle between small-scale producers and progressive capitalism is not new. He traces it through the development of the public trust doctrine in fisheries cases in the US in the 1820s. Neither is it confined to fishing. The industrial revolution made modern farming, forestry and fishing productive and efficient. In fishing this has allowed expansion to global ecological boundaries. But progress waits for no one and global competitiveness is now overtaking older industrial structures and production methods. The same spectre of decline now faces small-scale enterprises in these three primary industries around the world particularly in the industrialised western democracies. In the globalising economy, inefficiency is punished without mercy. Other producers with lower costs will seize markets, and industries producing substitutes for fish, such as chicken, pork and beef, have adjusted to reduce costs and increase productivity. Without the development of more effective institutions for managing fisheries, things will only get worse.

But traditions, employment and community are highly valued. The individualisation of fishing access rights without accompanying development of institutions for local collective action make small producers and their communities more vulnerable. Economy of scale and market power of large corporates will enable them to pick off individuals one by one as they hit a tough patch and sell their quota to get by. Internal conflict is promoted within communities as certain individuals become the legal holders of what have been seen as community assets. Resistance to enclosure does not solve the fisheries problem, but the concerns are real and understandable. The upper left hand quadrant of the policy map is where solutions for fisheries dependent communities need to be worked out. This does not preclude the use of ITQs, or other fishing rights, but it mandates the development of mechanisms that are able to provide local control of the trade-offs between stability and the advantages of change. Local co-management systems surely can work within wider system of individual rights, given support to develop the necessary institutions for collective action.

6.4 Interaction and interdependence

The world is interconnected and this is nowhere more apparent than in attempting to share fisheries across disparate value systems. Future social outcomes for small communities are less predictable under progressive management, but certainty over access for individual firms is increased under a property rights prescription. It is more difficult to predict reductions in biological uncertainty. ITQ systems create a stronger demand for information for the setting of TACs because of the value of rights, and incentives for stakeholders to pay for more research information are created by their ability to capture increases in the value of rights. However, this does not protect against the situation where, even with perfect information, the economic optimum would be achieved by mining the resource (Clark 1973). In this case appropriate decisions are vulnerable to the uncertainty surrounding fish stock assessments. Dryzek (1992) is not the first political scientist to comment to the effect that the "capitalist market imprisons both liberal democracy and the administrative state by ruling out any significant actions that would hinder business profitability". In this context it means one better be sure of one's ground before crossing the industry by reducing TACs. This may seem extreme, but an element of truth must be acknowledged, even if it is just to defuse the claim that ITQs magically create power for industry over governments - it exists in all economic sectors.

Could science and economics project us universally into the upper right-hand quadrant of the policy map even if social justice issues were ignored? There are serious doubts about such an assumption. The collapse of the northern cod stocks of Newfoundland and Labrador, one of the most productive, long standing, continuously harvested commercial fisheries on the planet has become a classic case of the failure of conventional science-based fisheries management (Finlayson and McCay 1998). Given that Canada and the US share the highest average living standards in the world and are arguably the best placed countries to bring modern scientific management and institutional change to bear on fisheries, this situation does not bode well.

However, it is institutional development, not science, that must bring about change, and the better definition of rights undoubtedly has an important role to play, whatever the social outcome desired. Hence the question is, if the conceptual model used here an adequate representation of the issues? The diagram is not far wrong in terms of the way people think. We have been raised in an era of the red and blue forces slogging it out for supremacy. But I propose that the model, although useful in thinking about the issues, is really the flat earth model. It places social equity and economic efficiency, justice and progress, in opposition. This may be a common way of thinking about the issues, or it may be a way of ignoring them. Few deny the need to include the efficiency criterion in fisheries policy, and if this means that social equity cannot be considered, then it will be ignored. On the other hand, where social issues dominate the political landscape, as for example in Atlantic Canada, it is difficult for property rights and efficiency issues to be admitted to the debate. Another dimension is needed in the framework when thinking about sustainable fisheries management. That might enable the opportunity for win-win-win outcomes instead of the best being a win-win-lose.

Figure 2: Another dimension to fisheries management

Figure 2 offers the potential to imagine win-win-win outcomes; it offers a new space for solutions that accommodate economic and ecological and social issues. Some imagination, or at least a suspension of disbelief, may be required to accept that this is possible. Many will cling to the cherished flat earth models on which their beliefs and careers in fishing, advocacy, management, discipline or politics have been built. We need to accept that the development of institutions to sustainably manage fisheries lags behind the current rate of their exploitation. This requires some humility, the acknowledgment of both the immense complexities of fishery systems and pervasive uncertainty in science, economics and politics. Pretending to have a universal answer will only set back the process of searching for real solutions to unique sets of local conditions.

7. CONCLUSIONS

Discourse analysis has provided some purchase on the forces underlying the fact that different jurisdictions define ITQs differently. In some contexts this amounts to a take-no-prisoners ideological contest. The potential win-lose outcomes are unlikely to be sustainable in the long-term and governments trying to hedge their positions by undermining security of rights in fishing as property may well be making things worse. The answer to management problems in particular fisheries is more likely to be found at the local level, if strongly protected property rights are able to be used when required as part of a mix of management instruments, neither hamstrung by, nor universally imposed from, the national level.

So, are ITQs property rights? There is no doubt that pressure is mounting for rights systems for fisheries management to evolve. This threatens certain established interests and values, which are represented in discourses with the policy debate. These discourses compete to frame the issues and define the terms, with ITQs being one of the bones to fight over. Given the lack of institutional development at the community level for the defence of group values in an environment of better-defined individualised exclusive access rights, resistance to enclosure is understandable. In many cases however the pressure for change will intensify and new property interests specific to fisheries are likely to evolve and gain recognition in law. Statutory definitions may inhibit and constrain specific conditions of rights, but this may be analogous to attempting to constrain fishing effort by prohibiting or regulating one technology. "Rights creep" may come to seriously challenge attempts by administrative rationalists and social justice advocates to stem the tide of property rights contracting.

The fisheries policy community must work diligently to create a more general discourse, a discussion, language and a shared way of apprehending the world that is inclusive of all voices. Leaving it to the market, the experts or the people alone can not cope with the complexity of the issues of modern fisheries management. All the human resources available are needed if a sustainable future is to be secured. The problem for fisheries policy makers is how to specify, or encourage, the development of institutions in a way that creates incentives to both protect resources from overexploitation and to use them more efficiently, but does not undermine other values that have co-evolved with fisheries systems. To move in this win-win-win space, policy makers must integrate economic theory and empirical evidence, specific social, economic and biological conditions, what is possible in statute and likely to be supported by the common law, and the cultural conditions and political realities of their constituencies. This complexity places high demands on policy systems and it is unlikely that traditional, centralised, administrative bureaucracies will cope with problem solving under these conditions. Decentralisation of decision making is required and this is the logic behind both market-based allocation systems and co-management models. Expertise and high level co-ordination are still required. Output controls will not stop being information demanding, but pervasive and irreducible uncertainty need to be more widely acknowledged, and flexibility, resilience and precaution built into management systems.

Expertise is also required in new areas. Institutional design, in structure and process even more than in the rules themselves, requires broadly informed expertise that takes in its purview more than just one disciplinary outlook. Serious attempts at long term social learning with such strategies as adaptive management need to be more widely applied. Skills in facilitation and communication are required to enable stakeholders to work through and resolve issues in ways that provide incentive and are supported by existing institutionals. The fear of a future in which rights in fishing are defined needs to be dissipated through identification and reduction of threats to existing values. Some values will inevitably be given up, but this should be the choice of the holders of those values.

Enlarging the product of our ecologically bounded economy is a broadly embraced imperative, but distributional issues loom ever larger in modern society, both within and between nations. Each deserves our attention, and the challenge is to develop the win-win-win institutional solutions that will take fisheries management into new positive policy spaces in the 21^st century.

8. LITERATURE CITED

Barzel, Y. 1997. Economic Analysis of Property Rights. Political Economy of Institutions and Decisions. Cambridge.

Clark, C.W. 1973. The economics of over-exploitation. Science, 181: 630-634.

Davis, A. 1996. Barbed wire and bandwagons: A comment on ITQ fisheries management. Reviews in Fish Biology and Fisheries, 6(1): 97-107.

Davis, A. and C. Bailey 1996. Common in Custom Uncommon in Advantage: Common Property, Local Elites, and Alternative Approaches to Fisheries Management. Society and Natural Resources, 9: 251-265.

Demsetz, H. 1967. Toward a Theory of Property Rights. American Economic Review, 57(2): 347-359.

Dryzek, J.S. 1992. Ecology and Discursive Democracy: Beyond Liberal Capitalism and the Administrative State. Capitalism, Nature, Socialism, 3(2): 18-42.

Dryzek, J.S. 1997. The Politics of the Earth: Environmental Discourses. Oxford University Press.

Edwards, S. 1994. Ownership of Renewable Ocean Reasources. Marine Resource Economics, 9: 253-273.

Fairgray, J.D.M. 1985. ITQ implications study: first report, Northland fishing communities 1984. FMP Series No. 13, New Zealand Fisheries Management Division.

Finlayson, A.C. and B.J. McCay 1998. Crossing the Threshold of Ecosystem Resilience: The Commercial Extinction of Northern Cod. In: C. Folke and F. Berkes (Editors), Linking Social and Ecological Systems: Institutional Learning for Resilience. Cambridge University Press.

Gordon, H.S. 1954. The Economic Theory of a Common-Property Resource: The Fishery. Journal of Political Economy, 62(2): 124-142.

Jentoft, S., B.J. McCay and D.C. Wilson 1998. Social theory and fisheries co-management. Marine Policy, 22(4-5): 423-436.

Libecap, G.D. 1989. Contracting for property rights. Cambridge University Press, Cambridge.

Macinko, S. 1993. Public or private?: United States commercial fisheries management and the public trust doctrine, reciprocal challenges. Natural Resources Journal, 33(Fall 1993): 919-955.

McCamish, C. 1995. Fisheries Management Act 1991: Are ITQs Property? The Federal Law Review, 22.

McCay, B.J. 1995a. Social and Ecological Implications of ITQs: An Overview. Ocean and Coastal Management, 28(1-3): 3-22.

McCay, B.J. 1995b. "That's Not Right": Resistance to Enclosure in Newfoundland Fisheries, Meetings of the International Association for the Study of Common Property, May 24-28 1995, Bodo, Norway.

Moloney, D.G. and P.H. Pearse 1979. Quantitative rights as an instrument for regulating commercial fisheries. Journal of the Fisheries Research Board of Canada, 36: 859-866.

Munk-Madsen, E. 1998. The Norwegian Fishing Quota System: Another Patriarchal Construction? Society & Natural Resources, 11: 229-240.

North, D. 1990. Institutions, Institutional Change, and Economic Performance. CUP, Cambridge.

Palsson, G. 1998. The vitual aquarium: Commodity fiction and cod fishing. Ecological Economics, 24(2-3): 275-288.

Palsson, G. and Helgason, A. 1995. Figuring fish and measuring men: The individual transferable quota system in the Icelandic cod fishery. Ocean and Coastal Management, 28(1-3): 117-146.

Perman, R., Y. Ma and J. McGilvray 1996. Natural Resource & Environmental Economics. Addison Wesley Longman, London and New York, 396 pp.

Schlager, E. and E. Ostrom 1992. Property-Rights Regimes and Natural Resources: A Conceptual Analysis. Land Economics, 68(3): 249-62.

Scott, A. 1955. The fishery: the objectives of sole ownership. Journal of Political Economy, 63: 116-124.

Scott, A. 1979. Development of Economic Theory on Fisheries Regulation. Journal of the Fisheries Research Board of Canada, 36: 725-741.

Scott, A. 1988. Development of Property in the Fishery. Marine Resource Economics, 5: 289-331.

Scott, A. 1989. Evolution of Individual Transferable Quotas as a Distinct Class of Property Right. In: Campbell and Waugh (Editors), The Economics of Fisheries Management in the Pacific Island Region. ACIAR.

Slade, D.C., R.K. Kehoe and J.K. Stahl 1997. Putting the public trust doctrine to work. Coastal States Organisation.

Trebeck, D., T. Battaglene, M. Exel, O. Harasymiw, and G. Hewitt 1996. Report of the South East Fishery Adjustment Working Group, To the Minister for Resources and Energy, Canberra.

The Legal Nature of Australian Fishing Licences - Are they Property Rights? - B. McFarlane

B. McFarlane
Piper Alderman Lawyers
GPO Box 65, Adelaide, SA 5001 Australia
<[email protected]>

1. INTRODUCTION

In order to determine the legal nature of the rights that fishers currently enjoy, it is necessary to consider what rights the State itself has in relation to fish stocks and fisheries. The term "State" here includes the Commonwealth and the Northern Territory. The State's rights in this area will vary depending on the geographic location of the fishery and the source of their rights. The focus of this paper is licensing in sea fisheries.

The paper examines the nature of an Australian fishing licence. It attempts to determine whether the licence is a property right, a right with some of the legal characteristics of property, or whether it is some different, and perhaps lesser, form of interest. Case law seems to cloud, rather than clarify the issue.

In the majority of instances, fishing licences are creatures of statute and are therefore susceptible to change. However, there are some rights to fish which are recognised at common law. For example, the right to take fish in inland waters can be subject to a profit à prendre. However, does such a concept extend to wild sea fisheries? An attempt is made to reconcile the common law and statutory rights to take fish and to determine if, in fact, Australian fishing licences are a property right.

2. THE RIGHT TO FISH STOCKS IN AUSTRALIAN STATES¹

¹ Unless otherwise specified, the term State(s) includes the Northern Territory.

² Blackstone, Commentaries (18th ed), Bk. 1 pp. 111-112.

³ Ibid.

Given the comments of Blackstone, it can be argued that the English common law position with respect to fish and fisheries would, at least initially, have been in force in each of the Australian colonies. Was there an English common law right to take wild fish or to own wild fish?

Prior to the Magna Carta, there seems to be no doubt that at common law the public had a right to fish in the tidal reaches of all rivers and estuaries, and the sea and arms of the sea within the territorial waters of the kingdom⁴. The exceptions to this principle were where the Crown, or some subject, had acquired a proprietary interest exclusive of the public right, or where Parliament had restricted the common law rights of the public. Following the Magna Carta, the public right could only be excluded or modified by an act of the legislature⁵.

⁴ See, for example, a discussion by the Privy Council of the origin of the right in A-G for British Columbia v A-G for Canada [1914] AC 153 at 169. For a discussion of what constitutes the territorial waters of the kingdom, see n10 and following.

⁵ Ibid at 170. See also Harper v Minister for Sea Fisheries (1989) 168 CLR 314 at 330 which confirms that because it is a public and not a proprietary right, it is amenable to abrogation or regulation by a competent legislature.

⁶ Halsbury's Laws of England (4th ed), Vol 18 para 652.

⁷ New South Wales and Victoria 1855, Tasmania and South Australia 1856, Queensland 1859 and Western Australia 1890. This process was achieved by means of the various letters patent for each State granted by Great Britain. At that stage the Northern Territory was annexed to South Australia. It did not become a State in its own right and after Federation its legislative capacity was controlled by the Commonwealth as one of its Territories.

⁸ The following Acts or their predecessors: The Constitution Act 1902(NSW), The Constitution Act 1975(Vic.), The Constitution Act 1934(Tas.), together with the Australian Constitutions Act (No.2) 1850 (Imp), The Constitution Act 1934(SA), The Constitution Act 1867(Qld.), and The Constitution Acts 1899 (WA).

One of the specific powers transferred to the Commonwealth dealt with fishing. The Constitution vested power in the Commonwealth to make laws for:-

"... peace, order and good Government of the Commonwealth with respect to:

(x) Fisheries in Australian waters beyond Territorial Limits".⁹

⁹ Section 51(x). There is some evidence in the convention papers that some States identified specific fisheries over which they wished to retain legislative competence.

3. THE STATES' TERRITORIAL LIMITS

As a matter of Customary International Law, a State retains sovereign rights in relation to waters of the sea that are waters of, or within any, bay, gulf, estuary, river, creek, inlet, port or harbour within the limits of the State. This customary position was confirmed by the United Nations Convention on the Law of the Sea "UNCLOS", which refers to these maritime areas as internal waters.¹⁰ Australia is a signatory to that convention and has ratified its position, so that the convention's provisions apply to all Australian States and Territories.¹¹

¹⁰ United Nations Convention on The Law of the Sea UN Doc. A/CONF.62/122, 21 ILM 1261(1982) Part 11 Article 7 which states "waters on the landward side of the baseline of the territorial sea form part of the internal waters of the state".

¹¹ Although the Convention was entered into in 1982, it didn't come into force until 16 November 1994.

"It is by this Act declared and enacted that the sovereignty in respect of the territorial sea, and in respect of the air space over it and in respect of its bed and sub-soil, is vested in and exercised by the Crown in right of the Commonwealth".¹³

¹² But did that claim of sovereignty amount to a claim of ownership or property in the sea? In Mabo No2 (Mabo and Others v The State of Queensland (1992) 175 CLR 1) the High Court found that it did not.

¹³ Seas and Submerged Lands Act 1973 (Cth) at Section 6. The territorial sea extends 12 nautical miles to sea from the low water line along the coast, except where it follows baselines deliniating the internal waters of a State or the internal waters of the Commonwealth.

¹⁴ Ibid - Sections 10 and 11 respectively.

i. the low watermark constituted the seaward boundary of the States

ii. the jurisdiction of the Commonwealth extended over fisheries both in the territorial sea and on the continental shelf, and

iii. the Commonwealth derived the power to legislate over off-shore areas from Section 51 (XXIX) of the Constitution.¹⁶

¹⁵ New South Wales -v- The Commonwealth (1976) 135 CLR 337.

¹⁶ The external affairs power.

¹⁷ For example Pearce -v- Florenca (1976) 135 CLR 507 at pp 513-521 and Robinson -v- The Western Australian Museum (1977) 130 CLR 283.

¹⁸ For example A Raptis & Son v The State of South Australia [1976-1977] 138 CLR 346.

¹⁹ This was collectively known as the "Offshore Constitutional settlement" (the "OCS").

By reference to particular articles in the UNCLOS, specific zones were established:

i. the adjacent territorial sea (or State territorial sea or Coastal waters), which extends 3 nautical miles from the baseline established in accordance with the provisions of UNCLOS.²⁰ The normal baseline used for establishing the breadths of the territorial sea is the low water line along the coast.²¹ This coincides with the definition of the States' boundaries used by the Commonwealth in the Seas and Submerged Lands Act

1973 (Cth). The States were given concurrent power to legislate with respect to this area.²² They were also given limited title to the sea-bed in these coastal waters.²³

ii. the territorial sea, which is now 12 nautical miles seaward from that baseline, having been extended from the original 3 nautical miles. The States' powers remain limited to the coastal waters

iii. the contiguous zone is the area between 12 nautical miles and 24 nautical miles seaward from the baseline from which the breadth of the adjacent territorial sea is measured²⁴

iv. the exclusive economic zone (EEZ) extends for a distance of 200 nautical miles from the baselines which establish the territorial sea.²⁵ It vests sovereign rights to the coastal State for the purposes of exploring and exploiting natural resources in the waters super adjacent to the sea-bed, on the sea-bed and below the sea-bed²⁶

v. the continental shelf is the area between 12 nautical miles and 200 nautical miles seaward from the territorial sea baseline and any areas of physical continental shelf beyond 200 nautical miles. Australia has the right to explore and exploit the living and non-living resources of the shelf.

²⁰ Supra n 10 at Part II, Territorial Sea and Contiguous Zones, Articles 5 and 7.

²¹ Infra n22 s1 and s4. It specifically excludes any area resulting from an increase in the width of the Territorial Sea (s4 (2)). The Coastal Waters of a State is defined to mean:

"That part of the territorial sea 3 nautical miles seaward from the baseline AND any sea that is on the landward side of any part of the territorial sea of Australia and is within the adjacent area in respect of the State but is not within the limits of the State".

²² Coastal Waters (State Powers) Act 1980 (Cth) No. 75 of 1980. The State is also given power to legislate for areas outside coastal waters where there is an arrangement with the Commonwealth in place. Those powers include power to make laws with respect to fisheries, as if the waters were within the limits of the State (section 5(a)). A recent example of a State exercising a power to legislate in this in-shore area is the declaration by the Government of South Australia of the Head of the Great Australian Bight as a conservation zone dedicated to the preservation of the Southern Right Whale.

²³ Coastal Waters (State Titles) Act 1980 (Cth) No. 77 of 1980. The Act gave to the States the same right and title to the property in the sea-bed beneath the coastal waters of the State and the same rights in respect of the space (including the space occupied by water above that sea-bed), as would belong to the State if that sea-bed were the sea-bed beneath waters of the sea within the limits of the State. However, the grant did not extend to complete sovereignty.

²⁴ Its relevance is that it allows Australia to exercise the control necessary to take enforcement measures for breaches of such things as customs, immigration and sanitary laws.

²⁵ Supra n 10 at Article 51.

²⁶ In addition, UNCLOS specifically deals with a whole range of other rights and responsibilities in this area.

²⁷ Supra n10.

²⁸ Seas and Submerged Lands Act 1973 Section 14.

Sovereignty has been referred to as "a legal, categorical and absolute condition. A territory either has sovereignty, or it does not have sovereignty. There is no halfway point for the sovereign conditions. A demonstrated capacity for self-government remains central for sovereign Statehood. Sovereignty is therefore a property of States. It reflects effective control over territory and independence from other States"^.29

²⁹ International Environmental Law and World Order Guru Swammy, Palmer & Weston 1994 West Publishing Co St Paul Minneapolis at p396.

"By 'exercising de facto administrative control' or 'exercising effective administrative control', I understand exercising all the functions of a sovereign government, in maintaining law and order, instituting and maintaining Courts of justice, adopting or imposing laws regulating the relations of the inhabitants of the territory to one and another and to the government. It necessarily implies the ownership and control of property whether for military or civil purposes, including vessels, whether lawships or merchantships. In those circumstances it seems to me that the recognition of the government as possessing all those attributes in a territory or not subordinate to any other government in that territory is to recognise it as sovereign, and for the purpose of international law as a foreign sovereign State".³⁰

³⁰ The Arantzazu Mendi [1939] AC 256 at 263-265, per Lord Atkin.

"The acquisition of territory is chiefly the province of international law; the acquisition of property is chiefly the province of the common law. The distinction between the Crown's title to territory and the Crown's ownership of land within a territory is made as well by the common law as by international law".³¹

³¹ Supra n 12 at 44.

"There is a broad distinction between proprietary rights and legislative jurisdiction."

What rights do the States claim over the natural resources? All States have traditionally asserted the right of ownership of their minerals and some other terrestial resources. Recently, every State in Australia has confirmed ownership of their natural resources in their respective Native Titles Acts³². But what is included within the term natural resources? Butterworths Australian Legal Dictionary gives one definition of natural resources:

"The stock of naturally occurring, as opposed to manmade, tangible and intangible substances which are capable of exploitation for commercial purposes. Examples are timber, land, oil, gas, minerals and mineral ores, coal, lakes and submerged lands. It includes native features of benefit for health, welfare and wellbeing such as parks and heritage items. The United Nations General Assembly has established a regulatory regime for the use of natural resources and recognise that States and peoples have permanent sovereignty over natural resources: GA RES 1803 (XVII). Resolution is accepted as customary international law: for example Texaco Overseas Petroleum Co & California Asiatic Oil Co v Libya (1977) 53 ILR 389."³³

³² Native Title Act 1994 (ACT) - Section 11, Native Title Act 1993 (Cth) - Section 212, Native Title (NSW) Act 1994 - Section 17, Native Title (Qld) Act 1993 - Section 17, Native Title (SA) Act 1994 - Section 39, Native Title (Tas) Act 1994 - Section 13, Land Titles Validation Act 1994 (Vic) - Section 14 and Titles Validation Act 1995 - Section 13

³³ Butterworths Australian Legal Dictionary.

"The principle that, under international law, people and nations have the right to own and control their natural wealth and resources; GA RES 1803 (XVII). Permanent sovereignty over natural resources is a basic constituent of the right to self-determination. The utilisation, development and naturalisation of natural resources must be pursuant to the national development and well being of the people and international economic co-operation must be based on respect for the sovereign right to natural resources; GA RES 1803 (XVII).

Article 56[1][a] of the United Nations Convention on the Law of the Sea confirms that in the exclusive economic zone (200 nautical miles seaward) the coastal state has sovereign rights to explore and exploit, conserve and manage the natural resources, whether living or non-living, of the waters superjacent to the seabed".

A search of Australian Legislation relevant to offshore areas suggests that the only definition of natural resources contained in any legislation is in Part I Section 5 of the Quarantine Act 1998. That provision defines natural resources as "the mineral and other non-living resources of the seabed and its subsoil". This seems to suggest that, at least at some levels, the term is limited. The only judicial comment on the subject appears to support that position.

7. THE STATE FISHERIES LEGISLATION

But does it include fish? Except for Tasmania and Victoria, none of the other States, the Northern Territory or Commonwealth Fisheries legislation have asserted a claim to ownership of the living marine resources. Tasmania made this claim in 1995 in their living marine resource legislation.³⁴ Under Section 9 of that Act it asserts:

"(1) All living marine resources present in waters referred to in Section 5(1)(a), (b) and (c) are owned by the State."³⁵

³⁴ Living Marine Resources Management Act 1995 Tasmania. Victoria asserts ownership of all wild fish, fauna and flora found in Victorian waters (s10(1) of Fisheries Act 1995 (Vic)). Consistent with the common law position, it then passes that ownership to any person who lawfully catches any wild fish (s10(2)).

³⁵ Ibid Section 9.

The waters referred to in Section 5 are as follows:

"(1) State waters are:

(a) Any waters of the territorial sea of Australia that are:

(i) within 3 nautical miles of the baseline by reference to which the territorial limits of Australia are defined for the purposes of international law; and

(ii) adjacent to the State; and

(b) Any marine of tidal waters that are on the landward side of that baseline and are adjacent to the State, except inland waters; and

(c) Any land which is swept by those waters to the highest landward extent."

8. THE CONCEPT OF PROPERTY

What then of the term "property"? It appears from the above that neither the States (apart from Tasmania and Victoria) or the Commonwealth claimed property in the wild fish stocks as they did with such things as minerals and forests. Rather they merely asserted a right to legislate with respect to the resource.

Earlier in this paper I identified that at common law there were only limited rights to ownership of wild animals and that the common law treated fish as analogous to wild animals. It was also recognised that the Crown did not assert ownership of the fish while they were in the wild. In effect they belonged to no one until they were caught and reduced into the possession of someone. At that point they became the property of that person.

A recent example of the difficulty with the Crown asserting "property" in wild things is the Queensland Fauna Act, the terms of which were considered by the High Court of Australia in Yanner v Eaton³⁶. That case involved the prosecution of an Aboriginal person for taking a protected species (crocodile) under the legislation. The defendant claimed that he was exercising traditional native title rights and accordingly, was not subject to the legislation.

³⁶ Yanner v Eaton [1999] 166 ALR 258.

The concept of 'property' is elusive and I do not propose anything more here than a brief overview for the purposes of clarification. Usually Property is treated as a "bundle of rights". But even this may have its limits as an analytical tool or accurate description, and it may be, as Professor Gray has said, that "the ultimate fact about property is that it does not really exist; it is merely illusion".³⁷ So too, identifying the apparent circularity of reasoning, from the availability of specific performance and protection of property rights in a chattel to the conclusion that the rights protected are proprietary, may illustrate some of the limits to the use of "property" as an analytical tool. No doubt the examples could be multiplied.

³⁷ Ibid at 9.

³⁸ Ibid.

³⁹ Ibid see Gleeson CJ, Gaudron, Kirby and Hayne JJ at pp8-13.

"We are also tending to limit the idea of discovery and occupation by making res nullius (e.g.: wild game) into res publicae and to justify a more stringent relationship of individual use of res communes (eg: of the use of running water for irrigation or for power) by declaring that they are the property of State or are 'owned by the State in trust for the people'. It should be said, however, that while in form our Courts and legislature seem thus to have reduced everything but the air and the high seas to ownership, in fact the so-called state of ownership of res communes and res nullius is only a sort of guardianship for social purposes. It is imperium, not dominium. The State as a corporation does not own a river as it owns the furniture in the State house. It does not own wild game as it owns the cash in the vaults of the Treasury. What is meant is that conservation of important social resources requires regulation of the use of res communes to eliminate friction and prevent waste, and requires limitation of the times when, places where, and persons by who res nullius may be acquired in order to prevent their extermination. Our modern way of putting it is only an incident of the 19^th Century dogma that everything must be owned.⁴¹

⁴⁰ Pound Introductions of the Philosophy of Law (rev ed) (1954).

⁴¹ Ibid at 111.

"Under the licensing system, the general public is deprived of the right of unfettered exploitation of the Tasmanian abalone fisheries. What was formally in the public domain is converted into the exclusive but controlled preserve of those who hold licences. The right of commercial exploitation of a public resource for personal profit has become a privilege confined to those who hold commercial licences. This privilege can be compared to a profit à prendre. In truth, however, it is an entitlement of a new kind created as part of a system for preserving of limited public natural resource in a society which is coming to recognise that, insofar as such resources are concerned, to fail to protect may destroy and to preserve the right of everyone to take what he or she will may eventually deprive that right of all content.

In that context, the commercial licence fee is properly to be seen as the price exacted by the public, through its laws, for the appropriation of a limited public natural resource to the commercial exploitation of those who, by their own choice, require or attain commercial licences".⁴²

⁴² At 325.

"If the right to fish for abalone were created in diminition of proprietary rights of the owner of the seabed and without the owner's consent, some question as to the validity of the law might have arisen, that a legislature of a State may not be competent to create proprietary rights over property beyond the boundaries of the State and to which the State has no title. That problem does not arise in this case, however, for the management of the fishery in accordance with Tasmania law, is arranged between the Commonwealth and Tasmania. If title be needed to support the fishing rights conferred on the abalone licenceholders, the arrangement made under the Act and the Commonwealth Act testifies to the consent of the Crown in right of the Commonwealth and of Tasmania to the creation of those right."⁴³

⁴³ Ibid at 335.

9. FISHERIES "PROPERTY" CASES

Although there have been a number of cases to which reference is often made as a basis of saying that the courts have accepted that fishing licences are property, it is submitted that those cases really do not take the matter to any conclusion. Rather they tend to use an analysis which is purposive. That is, the courts have analysed it within the confines of the particular case. The cases have therefore tended to confuse rather than assist with a clear understanding of the issue. Perhaps the High Court in Harper was close to the mark when it noted:

"This privilege can be compared to a profit à prendre. In truth, however, it is an entitlement of a new kind created as part of a system for preserving of limited public natural resource in a society which is coming to recognise that, insofar as such resources are concerned, to fail to protect may destroy and to preserve the right of everyone to take what he or she will may eventually deprive that right of all content".⁴⁴

⁴⁴ Supra n 43.

⁴⁵ Minister of State for the Army v Dalziel (1944) 68 CLR

⁴⁶ Pennington - V- McGovern - SA Abalone, Fitti - v - Minister for Primary Industries, Davey - v- Minister for Primary Industries, Bienke - v- Minister for Primary Industries - Cth Prawn, Kelly - v- Kelly - SA Abalone, Austell - v- Commissioner of State Taxation - WA Rock Lobster, Pike - v- Duncan - Vic Scallops and Harper - v- Minister for Sea Fisheries - Tas Abalone.

⁴⁷ Edwards and Deep Sea Arc Pty Ltd -v- Olsen & Ors (1996) 67 SASR 266e.

⁴⁸ Provided there is no statutory provisions to the contrary.

⁴⁹ Pennington -v- McGovern (1987) 45 SASR 27e.

10. WHAT THEN DO FISHERS HAVE?

As a fundamental principle of property law, you cannot give more than you have got. That means that if you have a limited form of title, you cannot grant to any other person any greater form of title than that which you currently have. For example, in pure property law terms, a person who holds a lease for a fixed term of years cannot grant to another person a lease of a greater number of years. The reason that issue is raised is because the State, in terms of fisheries, can only grant licenses which are consistent with their own title.

It is also clear that there are no common law rights which underpin fishing licences. Rather they derive all their authority from the statute that grants them. The nearest property concept that describes the right to take fish resources by way of a licence is that of a profit à prendre, although the concept is one which relates to land or something related to land. For example, the right to take wood or soil from the land. It is acknowledged that fish in inland waters are also capable of being the subject of a profit. However, the concept requires that the thing to be taken be capable of being "owned" at the time of the taking, and that it be in some way related to the land. Therefore, for these and other reasons, a profit is unlikely to assist in the analysis.

At present a licence holder appears to have the right to:

i. take fish from a defined region using defined equipment
ii. sell the fish taken
iii. have the licence renewed (arguably), and
iv. sell or transfer the licence.

It may be that a fishing licence is better described as a right in the nature of a profit à prendre, the defence of which relies on principles of equity rather than property law.

Whatever the ultimate characterisation of the rights, it is submitted that the focus on them being some form of property right, is generated from the protection sought rather than the source of the right in Australia. As Justice Gummow said in Yanner:

"Although appropriate to describe it as having a proprietary character, that is not because property is the basis upon which protection is given; rather this is because of the effect of that protection".⁵⁰

⁵⁰ Supra n 37 at 36; albeit describing intellectual property rights.

While there is no doubt that the use of rights-based notions has assisted in developing effective fishery management regimes in Australia, continued secure access to the resource remains a critical concern. It is submitted that what is needed is a more clearly defined legal framework (both legislative and judicial) to support that development. It may be that the issue of native title and claims to the sea and its resources will provide the stimulus for the Courts to clarify and possibly redefine the legal nature of Australian Commercial fishing licence.

Rights Based Systems: Sovereignty and Property - C. Jensen

C. Jensen
167 East Park Avenue
Wasilla, Alaska 99654 USA
<[email protected]>

1. INTRODUCTION

A successful rights-based system must draw a distinct line between sovereignty and property. The distinct goals of each principle must be defined and, because they compete with each other, these goals must be prioritized to avoid conflicts. Next, the system must develop management rules to achieve these goals: one set of rules for sovereignty, another for property and the third for interaction between the two. This structure stimulates a healthy tug-of-war between the competing principles. It produces a dynamic balance that makes the current management system reliable and, looking forward, reasonably predictable in the face of normal changes and therefore durable. If this lively interaction is lost, the game is over for the rights-holders.

2. CURRENT THEORY

2.1 Economic model

Figure 1 is a tool Dr. Scott has provided to help gauge the quality of property rights created through individual transferable quotas (ITQs) and other transferable licences in a rights-based system¹. We can also use this tool to compare the quality of rights created by different systems.

¹ More recently, Dr. Scott (1999) has added flexibility and divisibility to this model.

Figure 1: Economic model (Scott 1988) - Characteristics of property rights

An important finding, documented by using this model to study existing fisheries management programmes, is that systems that create the most property rights for their fishers have healthier fisheries and greater economic efficiency.

2.2 Working hypothesis

Many opinions have been offered to explain this finding. Most believe there is a relationship between private ownership, through rights-based allocations, and healthier fisheries. That view suggests fishers take better care of the resource, independently or through co-management with government, because they have an ownership stake in it.

In my view, better science and increasing environmental regulation are the more likely explanation for healthier fisheries. To some degree, limiting participation helps attain environmental goals. But, the common purpose of every rights-based system is economic: to limit access to increase the likelihood the remaining participants will make a living at the licensed activity. In turn, these licensees must comply with environmental regulations to maintain their licence rights. Compliance achieves sustainable stocks and other environmental goals.

As environmental goals increasingly encroach on economic rights, the licencees have a greater incentive to influence what goals are selected by government and the process by which these goals are to be achieved. To preserve the greatest economic rights, licensees develop an increasing capability to participate in the government management process. But, industry participation is the typical response to increasing government regulation of any activity. Thus, environmental stewardship and co-management are normal industry responses, whether or not the activity is controlled through rights-based allocations.

In this respect, the relationship between ownership and the environment seems tenuous. Increasing environmental regulation, as a cause, and a healthier resource, as an effect, seems a more likely explanation. Whether one participates as an owner or not is largely irrelevant. In any event, the ownership that a rights-based system provides to its licensees depends completely on the success of the system, as this paper demonstrates.

We can only progress if we examine rights-based systems in a valid framework. Today, the private sector has a huge investment that directly depends on the success of systems that use the rights-based model. Once the investment is made, the private sector has a limited ability to adapt to extreme changes in government management. For this reason, we have all our eggs in one basket.

We need to identify flaws in the management structure and fix them before they become serious problems and the solution is taken out of our hands. At the end of the day, without the licence, or the rights we thought we had bought, there is no business, only a pile of sticks and bricks, vessels and gear and miscellaneous equipment that has no equally productive use.

2.3 Question: how many property rights are enough?

Our task is to chart the future for rights-based systems. A loud cry for more (or, its synonym, better) private rights has resounded throughout this conference. It is based on an assumption: if some private rights rebuild resources and promote economic efficiency, more property rights will provide an even better result. To test this assumption, we must ask how many property rights does a system need to function optimally? Once we find the answer, we will have a viable rights-based model.

2.4 Perfect property eliminated

An important point can be quickly made using an extreme example. Here, we will use the concept of perfect property. Figure 2 below shows us what perfect property looks like in the economic model.²

² Scott (1999) did not design the model for this purpose.

Figure 2: Perfect property

Participants from Namibia, Zimbabwe, South Africa, Estonia, plus the Aborigines immediately recognized the meaning of the big black rectangle. Perfect property gives absolute control to the owners. It enables these owners to manage the activity to achieve their goals. Everyone else is excluded.

Absolute control is not a characteristic of property in the real world. Rights at the extreme ends of the model are not property rights. Thus, the optimal property rights will fall short of this extreme in the economic model.

2.5 Framework: the relationship between sovereignty and property

There has been a great deal of analysis on the subject of property in rights-based systems. There has been less analysis on how property works outside a rights-based management system. Perhaps that inquiry can point us in a fruitful direction.

If your government fell today, what would your property be worth? The answer is nothing. A government creates property and, as it goes, so goes your property. Hence, owners have a vested interest in the stability of the government that creates their property.

If your government allocates economic rights to only a few, what will happen? It will fail. Why? The huge group of excluded have no reason to support the government. So, a government must manage for the good of its community, not just its property owners. Sometimes, there are conflicts between the sovereign community and the property owners. Then, the government must make choices between the two. A government will thrive if it creates enough rights and, when deciding conflicts, its choices preserve a balance between the community and the property owners.

These examples illustrate the dynamic relationship between sovereignty and property. The same rules apply to a rights-based system, which functions according to the same principles. It might help to think of a rights-based system as a mini-sovereign system.

A successful system must incorporate the sovereignty-property dynamic if it is to endure. We will consider that general relationship here. But, this analysis does not evaluate particular systems, engage in comparisons of different systems, or recommend any specific course of action. Instead, it leaves that difficult task to those with a direct stake in the outcome, an approach which, in my experience, consistently yields the best result.

3. PROPERTY

3.1 Properties of property

Many speakers have examined property rights in specific systems. We have also heard about the historical development of property, including the rights-based fisheries model. This section takes the generic approach. It implies that property is the same in every nation of the world. The distinctions are simply a matter of degree. As such, property is a concept that is easily understood by everyone.

3.2 What is property?

Property is a man-made concept. Its purpose is to organize private relationships. Sovereigns create property. In the broad sense, a sovereign is a community that bands together for the common good of its members. In a technical sense, a sovereign exercises dominion over a specific group. This word is typically associated with government and I use this term here in that context.

A government usually creates property by making laws that create property rights. Standing alone, a property right is insignificant unless the owner has a way to enforce it. For this reason, the government must also make laws that give individuals a way to protect their property rights.

3.3 Property is a right, not a thing

Property is the legal right, not the thing to which the right refers. Specifically, property is a relation between an owner and others in reference to a thing (Cohen 1927). An example helps us understand the difference:

i. My neighbour. When I am leaning over my fence, talking with my neighbour, I point to the house behind me and ask, "How do you like my house?" In my relationship with my neighbour, I have all the rights to the house; to use, possess, encumber and convey it. That is why I refer to it as "my house" when I talk to him.

ii. My spouse. When I sit down with my spouse, we talk about "our house" because, in this relationship, my spouse and I share the legal rights to it.

iii. My banker. Later, I drop off my mortgage payment to my banker. In this relationship, my banker has property rights in the house. I gave him those rights when I signed my loan contract. My banker can enforce his property rights if I do not pay my debt. However, I keep my property rights to the house as long as I make my payments on time. So, my banker and I each have property rights to the house that are enforceable, by one or the other of us, but only if certain events occur.

A property right gives the holder the power to exclude others. If I have the legal right to possess a thing, I have the power to exclude others from possessing it. The same is true with the right to use, convey and encumber. This power is the way private relationships are organized. But, this power is never absolute. It competes with other property rights and, as we will see later, this private power is subordinate to public law.

3.4 Fisheries management systems

3.4.1 Property rights are created by licensing rules

New property rights are created by the licensing rules. All fisheries management systems create new property rights, not just systems that use transferable licences or allocations. A few examples demonstrate this point:

i. Today many systems manage fisheries through transferable licences, such as ITQs. If a licence rule says an ITQ is transferable, that rule creates certain property rights. For example, the rule creates the private right to receive payment when the ITQ is transferred.

ii. Although less obvious, a licence rule can create a property right even though a licence is not transferable. For example, there is a licence buy-back programme established under United States' fisheries law. Under it, the buy-back fund will pay money to retire access rights. So, this licence rule creates a property right to receive payment, even though the licence, itself, is not transferable.

iii. When a new rights-based system is designed, licence rules set out the requirements a fisher must meet to qualify for an access permit. Typically, one requirement is catch history. This licence rule creates a property right if it allows catch history to be transferred. Specifically, that rule authorizes a fisher to sell his catch history to another person before any licences are issued. Later, the buyer can apply for a licence in his own name.

3.4.2 Rights-based systems do not recognize property rights or provide rules to enforce those rights

Today, no rights-based system expressly states that licence rules create property rights. Instead:

i. Most systems define their licences as privileges, even though all recognize they are bought and sold in the marketplace everyday. And, a few of these systems record liens for the private sector on their licences. A lien cannot attach to a privilege.

ii. The regulations in a few systems assert that their licences are property, which is wrong. As between the sovereign and the licensee, the licence is always a privilege. The reason is explained in the following section on sovereignty. Even in a private relationship, the licence is only the thing that refers to the property rights, not the property.

These two deficiencies threaten both the management system and private investments made in reliance on those systems for obvious reasons. They leave key parameters to be decided outside the licensing system; namely, by the courts or in the political arena. These deficiencies can be corrected without disrupting the management system or the property rights it creates.

A successful system must expressly state that property rights are created by its licence rules. It must, also, provide that property law controls the enforcement of those rights with two exceptions:

i. Only the manager has the authority to transfer a licence. Private voluntary or involuntary transfers are prohibited. This rule makes sure the manager can control participation in the way that is required by the management-system rules. It also solves serious property problems that otherwise arise, including when a private transfer is made to an ineligible person. And, it prevents a secondary market solely for passive investment, speculation and manipulation.

ii. The manager will transfer a licence if the licence is eligible for transfer and the licencee is eligible to hold the licence under the management-system rules. This rule tells the private sector that the manager will not impermissibly intrude into private relationships or impose burdens that unnecessarily restrict property. It will work only if the system designers can accurately identify a limitation on property rights that is required to manage the fishery compared with a limitation that is not required to manage the fishery.

4. SOVEREIGNTY

4.1 The purpose of sovereignty

Sovereignty is the same in all nations. The distinctions are simply a matter of degree. As such, sovereignty is a concept that should be easily understood by all. The purpose of sovereignty is to impose limitations on individuals for the common good. These limitations create an orderly society. They are made through public law.

Public law is unlike property law, which orders private relationships. For example, a private law may allow you to buy a car, but public law can prevent you from driving it without a driver's licence. Or, private law may allow you to buy a factory, but public law can prevent you from operating the factory if it pollutes the air. In our context, private law may allow you to buy a vessel, but public law prevents you from going fishing unless you first get a government licence. So, the distinction between public and private law generally depends on the object to be achieved. Is the law trying to protect the community or to protect a particular individual?

4.2 The real reason licences are not property

In the big picture, the purpose of a sovereign is simply to govern. It has no other central purpose, such as to own property or be profitable. The power to govern is inherent and, as logic confirms, a sovereign cannot give that authority away. For example, a government can make a contract with a company to provide police services. But, a government cannot contract with a company to make the public safety laws. This basic principle of sovereignty is an absolute barrier to full privatization of commercial fisheries. Industry should recognize this barrier and adjust investment accordingly.

4.3 I paid for it, it's mine

A law is unenforceable if it gives away the government's power to rule. For example, a government can choose, but not be required, to pay fishers when the government decides to limit or end access-rights. Recently, the government of New Zealand went into the market place and bought back its licences to satisfy a court order related to Maori rights. Luckily, a good price was obtained. I will use this event to consider the big picture.

Certainly, a government can choose to buy-back its own licences. The economics of that decision are not entirely clear since, in most nations, the government initially issued transferable licences to fishers for free or a nominal charge. And, there seems to be no benefit to, later, buy those licences back at the taxpayers' expense. We can also see why a government might buy-back resources in a different situation. If a government owned natural resources in its jurisdiction and sold them, it might pay the new owner to buy the resources back at a later time. In this kind of transaction, the government is acting in a private capacity and the normal property rules apply.

However, no one owns the free-swimming fish. The futility of trying to exert ownership over something that swims away clearly makes this point. Instead, a government's authority over its fisheries is based on its power to manage affairs within its jurisdiction. A government is acting solely in its sovereign capacity in this arena. So, the important question is whether a government can be forced to pay licensees before it can manage its fisheries in a different way.

A fishing licence or an ITQ, is simply a tool to manage fisheries in the changing national interest. These licences regulate private participation to achieve national goals, such as sustained yield, economic efficiency and social benefits. The process of governing is dynamic. National goals change over time and, as they change, the sovereign adjusts its rules accordingly. For this reason, the sovereign retains the sole power to create, expand, limit or end private licence rights and does not have to pay the owner if their rights are diminished or terminated as a result.

What does this mean for rights holders? It means their property rights are only as good as the current licensing rules. It also means that fishing licences, or their allocation, is a privilege given by their government; a sovereign permission to engage in conduct that otherwise would be illegal. In a contest with the government, property law does not apply. Instead, one's remedies are limited to those expressly provided in the fisheries management system and, then, only if they do not require the government to buy back its right to govern.

4.4 The benefits of sovereign limitation on property rights

4.4.1 Sovereign community

To round out the picture, we must recognize the benefits we obtain from the sovereign principle of limitation. The ability of a government to change the way a country is run from time to time allows progress. It acts as a pressure valve when public needs shift. We know that governments that lack effective pressure valves fail.

More to the point, public rules create social order. Social order creates property value. Therefore, property rights are only as reliable and durable as the government system on which those private rights depend. So, what we lose in certainty on the private rights side, we gain through stability on the public side. These simple principles illustrate the mutually dependent relationship between sovereignty and property.

The sovereign community consists of those on whom a government depends for support. In our case, it includes commercial fishers, for-hire sport fishing businesses, recreational fishers, subsistence fishers, other marine users, environmental advocates, consumers, the public, other nations and so forth.

Each sector of the community has needs. Particular needs change over time. So, the government must remain able to adjust its management methods to respond to changing needs in its community. A rights-based system must have effective mechanisms to allow dynamic sovereignty to work with the least disruption to established property rights.

Rights holders should assist government in designing these mechanisms and work to put them in place before problems polarize the sovereign community. An essential requirement may be a strong connection to the local communities in which specific fisheries are conducted. And, licencees should recognize that changes implemented to achieve new sovereign goals may affect the licence conditions under which they can conduct their business operations.

4.4.2 Overcapitalization and aggregation of rights

"Overcapitalization" is the popular word for too much effort, measured by units of gear or in some other way. It was one scourge that limited access programmes and, later, rights-based systems were designed to remedy. Did they achieve this goal? The number of participants clearly diminished. So, the goal was achieved in that respect. But, limitation on the number of participants created something new. The value of a fishing operation shifted from the vessel to the newly created licence and, as rights aggregate into relatively fewer hands, the licence value increases proportionately. Was one form of overcapitalization traded for another?

Now, we will add another dimension. In open-access, assume one begins with a fishery that is not sustainable and suffers various problems, which is not always the case. With limited-access, the fishery begins to rebuild. With exclusive transferable allocations through the rights-based model, the fishery reaches sustainability. As the allocations continue to aggregate, the fishery may even become bountiful. At this point, there may be only a few fishers that control a vibrantly productive fishery; perhaps, one of the most productive fisheries in the world for the particular species. We have some fisheries today that fit these specifications.

One can all see how the picture has changed from open-access to aggregation of rights. The end result could easily be perceived as a government-created and controlled monopoly for a favored few. Of course, the fishers devoted their lives to building the fishery and their livelihoods depend on the level of allocations they acquired. But, the excluded think they should share or, at least, start paying rent. There are producers in South Africa today who have gone through this process and lost property rights. Until the entire sovereign community is included, the system is not complete. Whatever the reason, and in every case, the government gets to make the call.

5. SUMMARY

Today, there are six billion people on Earth. Twelve years ago there were one billion less. The United Nations projects that twelve years from now there will be one billion more. By any measure the world is experiencing staggering growth and the political response of nations, on a local and a global scale, may range from ominous to fruitful. Either way, it is going to be expensive.

Ways must be found to accommodate the population increases starting with the basic necessities of food, housing, health-care and energy. Today, many nations with the greatest projected growth have trouble feeding their current population. The role other nations play is important. And, issues of genetically modified foods, sustainable agriculture, forests and fisheries, clean air, water, land and energy, including non-fossil or more efficient fuels, biodiversity, global warming and the like, are real problems of today and not intellectual exercises.

On a more practical note, we must recognize that, with population growth, competition for everything (not just profit-making activities) increases and, in response, governments will be required to allocate increasingly scarce opportunities to a relative few. To this requirement, we must factor in the tendency for businesses to grow, which is a particular concern in many nations. The result, as we can already been seen, is that competition becomes increasingly ferocious among sectors.

The necessary policies will be set by governments and the solutions will be developed by the private sector or free market. In my view, our burgeoning population and growing businesses are the catalysts to develop new management techniques simply because what we use today will not work tomorrow.

At this juncture, rights-based systems offer the management tool of choice. Today, many nations control a large number of activities using the rights-based model. Nuclear power plants, hydro-projects, telecom-munications, broadcasting, air carriers and trucking, to name a few. Use of this model is a global trend that is strong and expanding with no end in sight. As opportunities diminish, there will be a premium for systems that divide opportunities and allow reallocations in a fair way. Of all the systems I have studied, I believe fisheries systems are the most likely to develop a rights-based model that will best meet the challenges of this millennium, along with producing a bountiful harvest for all to share.

6. LITERATURE CITED

Cohen, M. 1927. Property and Sovereignty, 13 Cornel L.Q. 8.

Scott, A.D. 1988. Conceptual Origins of Rights Based Fishing. In Neher et al.(eds.) Rights Based Fishing. Kluwer Academic Publishers, Dordrecht.

Scott, A.D. 2001. Introducing Property in Fisheries Management. In Use of Property Rights in Fisheries Management. Proceedings of the FishRights99 Conference. Freemantle, Western Australia, 11-19 November 1999. FAO Fisheries Technical Paper No. 404/1, FAO, Rome.

Property Rights in Relation to Fishing Licences in Australia from a Legal Perspective - D. Fitzpatrick

D. Fitzpatrick
Fitzpatrick Teale, 380 Bourke Street, Melbourne
Victoria, Australia 3000
<[email protected]>

1. INTRODUCTION

From a legal perspective there are many forms of property. Property¹ may be real² or personal, tangible or intangible, legal³ or equitable⁴. Examples of property include land, a chattel (eg. motor car), a debt, shares in companies, patents, trademarks, copyright, and depending on the circumstances, fishing licences.

¹ Property is a word which can be used to describe every type of right (i.e. a claim recognised by law), interest, or thing, which is legally capable of ownership and which has value (Butterworths Concise Australian Dictionary).

² "Real property" means land and "personal property" means chattels e.g. a motor car, a book etc. The Dictionary of Modern Legal Usage, 2^nd Edition, Brian Gardner, sets out the difference as follows:

"The distinction between real property and personal property is as old as Roman Law, but the curious terminology is much more recent. From the early 17^th Century on, land was commonly called real property and chattels were called personal property merely because land could be recovered specifically in a real action but chattels could be made the subject only of a damages action."

³ Legal property is the full and complete title as regards ownership or possession.

⁴ Equitable property is an interest in property enforced and created by the Courts in the situation where it would have been unconscionable for the legal owner of the property to retain the benefit of the property for him or herself. An example of legal and equitable interests in property is where land is in the name of A who holds the land on behalf of B who is the beneficial or true owner of the land. In this situation, A has the legal interest in the land and B has the equitable interest in the land. Both interests are a form of property.

2. CASE EXAMPLES

Over the years the Victorian Scallop Fishers have found themselves in Court on a number of occasions in an effort to protect and preserve their licences and livelihoods. The first case was John Manias & Ors V. Crabb & Ors (No. 7374 of 1991 Unreported decision of Marks J. of the Victorian Supreme Court) where the issue was whether the Victorian Minister for Fisheries had power under the Fisheries Act to prohibit licence holders from dredging for scallops in Port Phillip Bay. The Minister relied upon a regulation in the Scallop Regulations to prohibit fishing in Port Phillip Bay during 1991. A declaration was sought from the Court by the Port Phillip Bay licence holders that this regulation was beyond the power of the governor in council to make such a regulation. The regulation was held by the Court to be void. Justice Marks of the Victorian Supreme Court said:

"Dredging for scallop requires a vessel conformed and fitted out for the purpose. An essential assumption of the Act is that a licence and payment of its fees provides some security and safeguard for investment by its holder in boats and equipment required to operate it.

It would frustrate entirely any purpose of the Act if the law were to uphold the validity of delegated legislation which utterly frustrated and effectively confiscated the rights and property for which the Act provides.

The evidence shows that the licence itself is valuable property for which high sums may be paid."

In Harper v. Minister for Sea Fisheries and Ors (1989) 168 CLR 314 a Tasmanian abalone diver challenged a regulation made under the Tasmanian Sea Fisheries Act exacting a substantial licence fee payable each year for a commercial abalone licence and contended that it amounted to an excise⁵ and therefore was contrary to section 90 of The Australian Constitution. In the course of dealing with this contention, the High Court examined the provisions of the Tasmanian Fisheries Act. It held that a statutory right to exploit a limited natural resource (such as taking abalone or scallops) from the sea was a right akin to property. Brennan J. of High Court of Australia said:

"When a natural resource is limited so that it is liable to damage, exhaustion or destruction by uncontrolled exploitation by the public, a statute which prohibits the public from exercising a common law right to exploit the resource and confers statutory rights on licensees to exploit the resource to a limited extent confers on those licensees a privilege analogous to a profit a prende in or over the property of another."

⁵ To impose an excise or tax upon.

In the case Pennington v. McGovern (1987) 45 SASR 27, the Supreme Court of South Australia had to determine whether an abalone licence issued under the South Australian Fisheries Act constituted property and, therefore, was capable of being the subject of a trust. In arriving at its conclusion the Court held that the licence was proprietary in nature. Mr Justice King said:

"It is clear from the provisions of the Act and regulations to which I have referred that the licence in question is no mere personal, inalienable right. It is a transferable right, which is contemplated as having value. The limit of six licences renders it likely, as a matter of commonsense, that a licence will possess value".

".... the provisions or the regulations to which I have referred as to the contemplated value and transferability of the licence and as to the right to hold it notwithstanding that its exercise is subject to the direction and instructions of another, are all, to my mind, indicia of rights or property and I have no difficulty in reaching the conclusion that the rights conferred by the licence are proprietary in character."

"Whatever the position with the abalone permit, there can be no doubt that the abalone authority gave rise to valuable rights which were capable of being held for the partnership in such a way as to constitute partnership property: see Amber v. Bolton (1872) LR 14 Eq 427; O'Brien v. Komosaroff (1982) 150 CLR 310. Despite the fact that it could only be done indirectly and with the consent of the Director of Fisheries, it was plainly possible to make what was effectively the transfer of an authority for consideration, thus enabling a value to be placed upon it. This was so, notwithstanding that there were certain requirements in respect of an abalone authority which were personal to the holder, such as the requirement that he be medically fit to dive."

"I must say I would have thought that if a person bought this particular licence, he had an interest that could be called property in the ordinary meaning of the word as used by a layman: see Pollock B in The Smelting Company of Australia Ltd v. The Commissioner of Inland Revenue (1896) 2 QB 179 at 184."

i. Minister for Primary Industries & Energy & Ors v. Davey & Or. (1993) 47 FCR 151

ii. Fritti v. The Minister for Primary Industries & Energy & Anor (1993) 47 FCR 151

iii. Bienke & Ors v. The Minister for Primary Industries & Energy & Anors 135 ALR 128

The Court held that a fishing boat licence granted under the Fisheries Act 1952 (the old Commonwealth Fisheries Act) does not create an interest based on antecedent proprietary rights recognised by the general law. The licence represents a new species of statutory entitlement, the nature and extent of which depends entirely on the terms of the legislation. The Federal Court held that the units of fishing capacity allocated under the Northern Prawn Fishery Management Plan conferred only a defeasible⁹interest, subject to valid amendments to the Northern Prawn Fishery Plan under which they are issued. The making of such amendments is not to deal with property; it is the exercise of powers inherent at the time of its creation and integral to the property itself.

Another case is that of Gordon Laidler & Associates v. Hocking (Supreme Court of New South Wales), Young J. unreported 6 March 1995. This case involved a dispute between two joint venture parties. The issue was whether a fishing boat licence issued under the New South Wales Fisheries & Oyster Farms Act 1935 was property. The Judge held it was. This case contains a useful examination of the cases in Australia. The Judge highlighted the older view of a licence which was a permission to do something which would otherwise be illegal. If the licence was purely personal to the person to whom it is issued and could not be transferred, it was hard to categorise it as a proprietary right. The Court in referring to these cases stated that the classifications as to whether a licence was property tends to depend on whether the licence is transferable. Thus in R V Toohey; Ex Parte Meneling Station Pty Ltd (1982) 158 CLR 327 the High Court had to consider whether a grazing licence issued under Northern Territory Legislation constituted a right of property. The licence was not assignable, nor was there any applicable market for the transfer of the licence. The Court held that such a licence was not property.

The last case of relevance is the recent High Court was that of The Commmonwealth v. WMC Resources Limited (1998) HCA 8. The fact in this case was that WMC Resources was the holder of an interest in an exploration permit issued under Federal legislation to permit and encourage exploration for petroleum in defined areas of the Australian continental shelf. Subsequently, the Commonwealth agreed with the Republic of Indonesia to establish a zone of co-operation in an area of the disputed sea bed boundaries between the Island of Timor and Australia known as the Timor Gap. Some of the areas of exploitation provided by the permit fell within the zone and by subsequent Federal law were extinguished in order that new permits might be granted within the zone by a joint authority constituted by Australia and Indonesia. In relation to the permit, in the end it was acknowledged by the Commonwealth that it was proprietary in nature. It was noted that the rights of the permit was susceptible of exercise during the currency of the permit, the permit could be transferred and the interest in the permit may be created or assigned subject to approval. The High Court acknowledged that these qualities of the permit and WMC's interest in it are indicative of the proprietary character of the rights possessed by the WMC.

3. DISCUSSION

From the cases discussed above, the following is indicative of a statutory licence that is proprietary in nature:

i. Whether the licence is saleable or transferable (whether subject to approval or not).

ii. Whether an interest in the licence may be created or assigned.

i. Where the licence can be terminated upon notice by the Minister.

ii. Whether the licence is personal in nature.

The last case discussed here is the recent Scallop case in Victoria. Alesios v. The Honourable Stockdale & Ors (Supreme Court of Victoria, Unreported decision of Cummins J. 15 April 1988) and The Honourable Alan Robert Stockdale & Ors v. Alesios & Ors (1989) VSCA 128. In late 1996 the Victorian Parliament enacted legislation which had the following effect:

i. It cancelled scallop licences to take scallops in Port Phillip Bay in Victoria.

ii. It provided that a licence holder is entitled to be paid a sum of money which sum is to be determined by the Treasurer and the Minister for Fisheries.

A group of scallop fishers issued legal proceedings against the Ministers claiming that the Ministers must determine and pay full and proper compensation to each individual licence holder for the cancellation of their Port Phillip Bay scallop licences. The case was heard in March 1998 before Mr. Justice Cummins of the Victorian Supreme Court. His Honour found that the Ministers were wrong by not considering each licence holder individually and comprehending the consequential loss to each licence holder as a result of the cancellation of his or her Port Phillip Bay scallop licence.

It was argued on behalf of the scallop licence holders that these licences were property and therefore attracted the common law principle that a statute will not be construed to take away property without compensation unless the statute says so unequivocally. The Court held that the purpose of the common law principle of compensation is to protect the rights of subjects and the principle is to be scrupulously defended by the Courts and with vigilance. Such principle, however, will not avail licence holders unless the licence is property in nature. His Honour, after an analysis of the scallop licence, held that the licence was property in nature and accordingly attracted the common law principle of full compensation upon cancellation.

The Court further held that Parliament intended that:

i. the payment to be made to each licence holder reflects his or her loss of the benefit of the preannouncement market value of the licence, scallop boat, scallop equipment and commonwealth permit and the post announcement market value of same

ii. there be compensation for loss of a licence holder's business of dredging for, or taking and selling, scallops pursuant to the scallop licence.

This case is currently on appeal to the High Court. The case is a most unusual one where the Courts had to deal with the property of a citizen being taken away by a state government without payment of full and proper compensation. In the event that property were taken by the Commonwealth Government a fisher may be able to rely on Section 51(xxxi) of the Australian Constitution which allows for the acquisition of property on just terms.

There may well be a number of ways of implementing property rights-based fisheries. In my view in order to have strong property rights in a traditional limited-entry licensed fishery at least the following rights, entitlements and matters should be present in legislation:

i. The entitlement of the licence must be clearly defined.

ii. The licence should be automatically renewed when it expires.

iii. The licence should be freely transferable to another person (subject only to eligibility criteria) set out in legislation or a management plan.

iv. The licence should be able to be used as security for financial accommodation. Further, financial institutions should be able to register an interest over the licence and be protected under the provisions of an Act of Parliament.

v. The licence should become an asset of the holder's estate upon his death.

vi. In the case of a fishery involving a total allowable catch, the Minister should determine it after receiving advice from the management advisory committee in relation to that fishery.

vii. The management tools for the fishery should be set out in a management plan which can be enforced, where necessary by regulation, or as licence conditions.

viii. Full and proper compensation should be payable and a proper mechanism for payment of compensation should be set up where a licence holder can establish that there has been a reduction or diminution in the value of the licence (other than on biological grounds). An example of compensation could include any policy decision by a government to reduce, or diminish, fishing grounds or rights.

ix. These matters should be set out in an act of parliament and not in delegated legislation (i.e. regulation or management plan).

Balancing Security and Flexibility in Granting a Right to Catch Fish - B. Wylynko and L. McIntosh

B. Wylynko and L. McIntosh
Mallesons Stephen Jaques, Solicitors
Level 10 Central Park, 152 St George's Terrace
Perth WA 6000 Western Australia
<[email protected]>

1. INTRODUCTION

Of the 26 major commercial fisheries in Western Australia 23 have been rated "fully" or "over" exploited (FWA 1998)¹. As governments grapple with this type of problem, they are turning to alternative methods of regulation including the provision of private property rights to fish. This paper addresses the availability of using private property rights in the commercial fishing context.

¹ Fisheries Western Australia, State of the Fisheries Report 1997/1998. Literature cited.

The right to fish has traditionally been considered a form of property known as a profit à prendre². Classifying the right to fish as a profit meant that the owner of the land under the water containing the fish could grant fishing rights to anyone he chose. However, the notion that the right to fish at the seashore was a purely private right was qualified by another ancient notion - the common law right to fish.³

² Wickham v Hawker (1840) 7 M & W 63.

³ Neill v Duke of Devonshire 8 AC 135 at 177.

⁴ NSW v Cth (Seas and Submerged Lands Case) (1975) 135 CLR 337 at 419-420.

⁵ Harper v Minister for Sea Fisheries (1989) 168 CLR 314 at 330.

A profit à prendre is a property right which encompasses the right of a person to enter onto another's land and take part of the produce of that land⁶. The owner of a profit à prendre has a right of action against any person who disturbs that right. In addition, a profit may be registered and the holder may be able to mortgage against the profit. From a fisher's point of view; therefore, a profit à prendre would be very desirable. But, is a fishing right capable of being classified as a profit à prendre today?

⁶ Australian Softwood Forests Pty Ltd v Attorney-General (NSW) (1981) 148 CLR 121

For a fish right to be eligible to be a profit à prendre, it must satisfy two criteria:

i. the fish must be capable of being classified as part of the land under the water and

ii. the fish must be shown to have been "taken from" the land.

⁷ Willimas v Hawker (1840) 7 M & W 63.

⁸ Also see Harper v Minister for Sea Fisheries (1989) 168 CLR 314 at 335.

However, a private property fish right in the form of a profit à prendre would probably be limited. In order to ensure sustainability, governments would likely regulate the amount or type of fish which could be caught.

For example, under the Endangered Species Protection Act 1992 (Cth) seven species of fish are listed as endangered, and six as vulnerable. It is an offence to take any of these fish from a Commonwealth area.⁹ When the Environment Protection and Biodiversity Conservation Act 1999 (Cth) comes into force, it will be an offence to take an action that will have a significant impact upon a listed species regardless of whether the species was in a Commonwealth area or not.¹⁰ If any fish species are added to this list in the future, and a fisher has a right to fish a quantity of that fish, that right will be effectively expropriated. Any of these regulations may have the effect of effectively expropriating or seriously affecting a fish right.

6. CONCLUSION

The right to fish was initially a profit à prendre granted by the owner of the land under the waters containing the fish. However, the courts recognised that in the tidal zones and offshore, the public had exercised a common law right to fish since time immemorial and this limited the Crown from granting an exclusive right to anyone. Nevertheless, the public common law right to fish could be overridden by specific legislation in effect bringing back the notion of a profit à prendre in fish.

The aim of a fish right is to ensure security for fishers and to ensure a sustainable fishery. The profit à prendre notion may provide a basis from which to do this, but regulators will have to read a fine line to achieve both these objectives.

ITQs - New Zealand and United States: Allocation Formula and Legal Challenges - W.J. Nielander and M.S. Sullivan

W.J. Nielander and M.S. Sullivan
Fisheries Management Consultancy International Ltd
116 Interlake Blvd, Lake Placid, Fla. 33852, USA
<[email protected] <mailto:[email protected]>> and <[email protected]>

1. INTRODUCTION

The United States has taken a cautious approach to implementing Individual Transferable Quotas (ITQs) in their fisheries by only implementing three ITQ programmes. New Zealand, on the other hand, decided that their fisheries management was going to be based on ITQs and created the legislation and management framework accordingly. As a result, there are only three examples in the United States to analyze and little case law. In New Zealand, most of their fisheries are managed by ITQs through the Quota Management Systems (QMS) and the regulatory and legislative framework was created by the same governmental entity, unlike the United States where the management plans are created by separate fishery management councils in conjunction with States. As a result, New Zealand's QMS legislation manages most of the fisheries under similar legislative and regulatory framework.

2. BACKGROUND - UNITED STATES

2.1 General fisheries management

In the United States, fisheries management in federal waters is managed primarily by Total Allowable Catches (TACs). Once the TAC for a particular fishery is reached for the fishing season, the fishery is closed for the remainder of the season. This form of fisheries management works well in some fisheries but not in others. In those fisheries where the season would be extremely short, ITQs or some other form of allocation of fisheries resources are more efficient.

In the United States, States regulate their fisheries within three nautical miles of shore and the federal government regulates fisheries from this limit out to the 200 mile, i.e. for the EEZ¹. New Zealand has no states or provinces so the government manages the fisheries throughout their range. This situation in the United States causes more complexity since there may be different authorities and laws pertaining to the same fish that move through federal and state waters. If an ITQ programme is implemented in the United States in federal waters and not in state waters, enforcement to determine where the fish are caught can be expensive and difficult.

¹ Off the west coast of Florida and the states along the Gulf of Mexico, state waters extend to nine nautical miles.

² The Magnuson Fisheries Management Act established eight regional fisheries management councils to manage fisheries in federal waters. 16 U.S.C. 1852. The purpose set forth in the Act is: "to establish Regional Fishery Management Councils to exercise sound judgment in the stewardship of fishery resources through the preparation, monitoring, and revision of such plans under circumstances (a) which will enable the States, the fishing industry, consumer and environmental organizations, and other interested persons to participate in, and advise on, the establishment and administration of such plans, and (b) which take into account the social and economic needs of the States." 16 U.S.C. 1801.

2.2 Atlantic surf clam and ocean quahog fishery

The regulations pertaining to Atlantic surf clam are in Volume 50 CFR (Code of Federal Regulations) 648.70. The original final rule implementing the surf clam ITQ fisheries set forth the application requirements to determine whether an owner would receive an ITQ quota³. Those conditions require that applicants must have had reported landings of surf clams or ocean quahogs between 1 January 1979 and 31 December 1988⁴. Initial allocations were made by species in the form of an allocation permit issued to the vessel owner, specifying the total number of bushels he or she was entitled to harvest based on the allocation percentage calculated pursuant to the regulations. There were several components involved in the initial allocation. These components were based on the historical catch (80%) and vessel size (20%).

³ 55 Fed. Reg. 24184 (June 14, 1990). The Comments and Responses summarized in the first six pages of the federal register cited herein sets forth the rationale for most aspects of the ITQ program for surf clam and ocean quahog. See pages 24184 through 24189, supra.

⁴ The original regulations were set forth at 50 CFR 652.20 (1990).

The vessel size component was determined by a cubic factor for each vessel, calculated from the vessel's length, width and draught. This factor was summed to give a fleet total. The relative size of each vessel to the total for the whole fleet was calculated by dividing each vessel's value by the fleet total. The vessel's historical performance contributed 80% of the allocation index and the vessel's physical size contributed 20%.

The result of the implementation of the ITQ system was that the number of vessels and the surf clam off-shore fleet shrank by 41%, to 75 vessels in 1991, an historical low since 1980. However, average productivity of the off-shore surf clam fleet under the ITQ system increased to a record level, as the fleet reduced its excess capital in the fishing capacity. In addition, three of the largest owners of surf clam ITQ increased their ownership from 48.5% to 50.6% of the total fishery.⁵

⁵ Id. At 23.

⁶ Id.

Wreckfish are a deep water, grouper-like fish taken by a directed fishery that began with two vessels landing fewer than 30 000lb in 1987. By 1989, over 2 000 000lb of wreckfish were caught by roughly 25 vessels. This increased to 4 000 000lb for the calendar 1990, landed by more than 40 vessels. This extreme increase from 30 000lb and two vessels in 1987 to 4 000 000lb and 40 vessels in 1990 gave rise to the Fishery Management Council determining some form of limited-entry programme was necessary (Gauvin, Ward and Burgess 1994). By 1991, there were approximately 90 vessels permitted for wreckfish, and a 2 000 000lb TAC was put into effect. Wreckfish appeared to be a ripe fishery for ITQs, since it was a small fishery with a small number of fishing vessels and few ports.

The final rule implementing the wreckfish ITQ programme became effective in April 1992. When the programme was implemented, shares of the fishery were allocated to historical participants based primarily on catch history. The eligibility criteria was that catches of at least 5000lb of wreckfish in either 1989 or 1990 had to be documented. Applicants were responsible for providing fish-house receipts and affidavits from fish-houses for their catches. Official landing records were used to verify submitted records. The initial allocation formula divided 50 of the 100 available percentage shares in direct proportion to the applicants' documented catch from 1987 to 1990. The remaining 50 shares were divided equally among eligible applicants; a total share for an applicant was the sum of the two sub-allocations.

In the initial allocation, a single business entity could not receive more than ten of the 100 percentage shares. The rationale for placing limits on the share sizes at the outset was to prevent an entity from receiving an initial share which might create an unfair advantage in terms of purchasing other shares entities.⁷

⁷ Id.

Fishermen's catches are tallied through the catch coupon system. Fishermen are issued coupons each year in 500-lb and 100-lb denominations, equaling the weight of wreckfish corresponding to the shareholder's percentage share of the annual TAC. Annual catch coupons are transferable among wreckfish shareholders only.

As a result of the initial allocation, 49 individuals received shares in 1992. Consolidation of the share began immediately. The number of shareholders declined to 37 by August 15, 1992, to 31 by June 1993, and to 26 by May 1994. Currently, there are 25 shareholders in the fishery, of which only three actively landed wreckfish in the 1998-99 season.⁸ Information from the industry suggests that some of the wreckfish vessels are involved in other, more profitable fisheries. There is no information to suggest that the fishery has declined. In fact, although only 210 800lb were landed in 1998, the TAC remains set at 2 000 000lb.⁹

⁸ Snapper Grouper Assessment Group Wreckfish Report, South Atlantic Fishery Management Council, February 2, 1999.

⁹ Id. at 3.

¹⁰ The landings were 4 161 965lb in 1989; 1 970 299lb in 1990; 1 926 088lb in 1991; 1 270 557lb in 1992; 1 144 726lb in 1993; 1 203 265lb in 1994; 644 887lb in 1995; 396 868lb in 1996; 248 084lb in 1997; and, 219 800lb in 1998. There were 308 trips in 1991 and only 36 reported trips in 1998. Id.

The most complex ITQ programme in the United States' federal waters is the fixed-gear Halibut and Sablefish Fishery off Alaska which went into effect in December of 1993 and January of 1994. It was called Individual Fishing Quotas (IFQ). Quota share (QS) is the percentage of share for the area. In order to qualify for quota share, a person had to prove, by means of registration, documentation, or bill of sale, that they owned the vessel and that the vessel had documented landings in 1988, 1989 or 1990.

The quota shares were issued in several vessel categories. These categories were freezer vessels of any length, catcher vessels greater than 60ft, catcher vessels lesser than or equal to 60ft, and catcher vessels lesser than or equal to 35ft. There were actually different IFQ regulatory areas in different-sized vessel quotas. Each qualified person's QS was assigned to a vessel category, based on the length of the vessel.

The annual allocation of IFQ to any person in the IFQ regulatory area is equal to the product of the total allowable catch of halibut of sablefish by fixed gear for that area, and that person's QS divided by the QS pool for that area. Overages¹¹ are subtracted from a person's IFQ. Expressed algebraically, the annual IFQ allocation formula is:

IFQpa = [(fixed gear TAC a - CDQ RESERVEa) x (QSpa/QS POOLa)] - Overage of IFQpa

¹¹ An overage occurs when an IFQ holder catches more than is entitled.

3. NEW ZEALAND ITQ FISHERIES

3.1 The Fisheries Act 1983

Unlike the US, ITQs have been introduced for most of New Zealand's major commercial fisheries. A total of 26 species were initially included in the quota management system in 1986, within a total of up to 10 separate quota management (fish stock) areas for each species. The 10 quota management areas incorporated all New Zealand fishery waters out to the limit of the EEZ. These 26 species accounted for approximately 83% by weight of all finfish taken in the commercial fishery in 1985 (Bogel and Dewees 1992). Since that time the number of ITQ species has increased to 42. The ITQ system is now the dominant management system, and it is stated Government policy to bring all future commercial fisheries into the QMS system.

The New Zealand ITQ system was introduced by the provisions of the Fisheries Amendment Act 1986 which substantially altered the Fisheries Act 1983. The New Zealand ITQ system involved the allocation to fishermen and fishing companies of individual transferable quotas, which were that person's or entity's share of the overall total allowable catch in a particular fishery.¹²

¹² ITQs were allocated upon entry to the ITQ system. For most finfish this was 18 September 1986, for paua, squid and jack mackerel it was 1 October 1987, for rock lobster 1 April 1990, and for southern scallop 1 October 1992.

¹³ s28B(1) Fisheries Act 1983.

¹⁴ s28C(1) Fisheries Act 1983.

¹⁵ s28C(3) Fisheries Act 1983.

¹⁶ s28E(1) Fisheries Act 1983. The procedure that was in fact adopted to work out provisional maximum individual transferable quotas was somewhat different to that contemplated by the legislation. Work began before the Amendment Act came into force on 1 August 1986. Regional objection committees were established, as was a national committee. The regional committees heard representations from fishermen. Primarily, the approach of the committees was to determine the historical catches of individual fishermen. Some adjustments were made to the figures of actual catches for reasons such as a change in the vessel used or the laying-up of the vessel for a certain period of the year. It is doubtful whether the committees regarded themselves as being competent to consider the commitment and dependence mentioned in s28E(3)(a), or whether they in fact did so. It seems that the attitude taken by the committees was such as to discourage the fishers from in fact placing any reliance on matters of that kind. When it came to the Director-General making his final decision on the provisional maximum individual transferable quota, the Director-General largely adopted the recommendation of the committee, confirmed in the meantime by the national committee, and may not himself have gone through the two-stage process contemplated by ss(1) and ss(3) of s28E. See Wardle v Attorney - General [1987] 1 NZLR 296, at 4.

¹⁷ Fisheries (Quota Management Areas, Total Allowable Catches, and Catch Histories) Notice 1986.

"the proportion that the commercial catch of the person in that quota management area of that species or class of fish as shown in the fishing returns of that person bears to the total commercial catch in that quota management area of that species or class of fish in previous years".¹⁸

¹⁸ s28E(1) Fisheries Act 1983.

"(a) persons who held fishing permits issued under the 1983 Act at the date of the declaration under s28B of this Act; and

(b) persons who held such permits within the previous 12 months or such longer period as the Director-General considers appropriate for special reasons relating to any particular case".¹⁹

¹⁹ s28E(2) Fisheries Act 1983.

²⁰ s28E(5) and s28L Fisheries Act 1983.

²¹ s28F Fisheries Act 1983.

²² The QMS was introduced at a time of growing recognition of Maori culture and the interests preserved by the Treaty of Waitangi. Following the landmark case Te Weehi v Regional Fisheries Officer [1986] 1 NZLR 680; (1986) 6 NZAR 114 (which held that s88(2) Fisheries Act 1983 had effectively preserved Maori fishing rights), and the decision in NZ Maori Council v A-G 8/10/87, Greig J, HC Wellington, CP 553/87, the High Court considered the effect of the promulgation and operation of the QMS on possible Maori fishing rights protected by s88(2) (see Ngai Tahu Maori Trust Board v A-G 2/11/87, Greig J, HC Wellington, CP 559/87; CP 610/87; CP 614/87). The Court concluded that it was arguable that s88(2) made the Treaty of Waitangi directly enforceable in an active rather than passive sense. With the wider provisions of Article 2 of the Treaty of Waitangi directly conflicting with the proprietary nature of the rights being conferred under s28C Fisheries Act 1983, the High Court issued a series of injunctions preventing the Minister of Fisheries bringing any further species under the QMS. As a result of these developments, and in order to bring rock lobster into the QMS, the Government passed the Maori Fisheries Act 1989 as part of an interim settlement, which required the Government to purchase 10% of quota under the QMS. The partial settlement cleared the way for the rock lobster fishery to be introduced into the QMS via the transitional use of Term Transferable Quota (TTQ). TTQs were subsequently converted into full ITQ. While the QMS initially ignited indigenous claims to large areas of fisheries, it also proved an effective means of resolving those claims. Following the temporary solution set out in the Maori Fisheries Act 1989 it was agreed that, after protracted negotiation by the Crown and Maori negotiators, Maori interests in commercial fisheries would be increased to 20% in a final settlement of all claims (colloquially referred to as "the Sealord deal").

²³ Refer sections 28BA, 28CA, 28DA, 28EA, 28FA, 28GA, 28HA, 28JA, 28KA, 28NA and 28OA Fisheries Act 1983.

²⁴ Part IIB Fisheries Act 1983 as inserted by the Fisheries Amendment Act (No 2) 1992. Part IIB has been largely repealed, primarily by the Fisheries Amendment Act 1995 (1995 No 51) and apart from specific provisions relating to the enhancement aspects of the fishery, is now administered under the same provisions as other ITQ fisheries.

²⁵ Schedule 1D Part III Fisheries Act 1983.

In August 1991 the Minister of Fisheries began a comprehensive review of the ITQ system and fisheries management by appointing an independent task force to make recommendations on the future development of fisheries legislation and associated structures in New Zealand. Although the task force delivered its report in April 1992²⁶, legislative and policy initiatives did not begin until late in 1994. On 6 December 1994 a new Fisheries Bill was introduced to Parliament and referred to the Primary Production Committee²⁷. It was not until 13 August 1996, however, that the new Fisheries Act 1996 was subsequently passed.

²⁶ Sustainable Fisheries, Report of the Fisheries Task Force, April 1992.

²⁷ This Fisheries Bill was the subject of considerable and detailed criticism. In December 1995 the committee made an interim report to the House, recommending substantial changes to the Bill.

Part IV of the 1996 Act, which governs allocation of ITQs, reflects the Government's policy of bringing all commercially harvested species into the QMS. Those species, which previously came under the QMS introduced by Part IIA of the Fisheries Act 1983, will continue to be subject to the provision of the ITQ system under the 1996 Act. Species that are brought under the ITQ by the 1996 Act also continue to be allocated on the basis of catch history.²⁸

²⁸ This is subject to the allocation of 20% of the quota of each species to the Treaty of Waitangi Fisheries Commission (he Commission) in accordance with the Government's commitment to Maori under the Deed of Settlement and the provisions of the Treaty of Waitangi (Fisheries Claims) Settlement Act 1992.

²⁹ Sections 30-41 Fisheries Act 1996.

³⁰ Sections 44-49 Fisheries Act 1996.

³¹ Sections 51-55 Fisheries Act 1996.

3.3 Declaration of stocks as subject to the quota management system³²

³² Sections 18 and 19 Fisheries Act 1996.

i. the QMA to which the notice relates

ii. the fishing year in respect of the stock (i.e. its start and end)

iii. whether the total allowable commercial catch (TACC) and the annual catch entitlement (ACE)³³ are to be expressed in meatweight or whole weight and

iv. such other matters as may be contemplated by the Act.

³³ Sections 65 to 74 Fisheries Act 1996 establish one of the fundamental changes to the QMS since its introduction in 1986. ACE - an annual catching right expressed in kilogrammes, is distinct from the underlying ITQ property right from which it is derived. All fishing of QMS species will be done under the authority of an ACE rather than an ITQ. In general terms, an ACE is generated at the commencement of each fishing year and is equivalent to the total ITQ held. The ACE held by a fisher then represents the proportion of the relevant TACC which the fisher may catch in that fishing year. The ITQ simply becomes a tradable perpetual harvesting right in the particular fishery which generates an annual right to an ACE.

³⁴ Sections 29 to 41 Fisheries Act 1996.

In respect of fisheries where there are no persons eligible to receive provisional catch history (by virtue of the undeveloped nature of that fishery or where there are remaining quota shares in a stock that have not been allocated), the remaining unallocated shares in the stock are allocated to the Crown.³⁵

³⁵ s49 Fisheries Act 1996, subject to the allocation of 20% to the Treaty of Waitangi Fisheries Commission.

i. an individual catch entitlement (ICE) being a catch limit before the introduction of the stock to the QMS allocated by permit, licence, regulation or notice is an annual amount of any stock to be taken exclusively by that fisher as at the date of the declaration bringing the species into the QMS or

ii. an eligible catch history over the first consecutive 12-month period commencing 30 September 1992 or such other period as set out in s33 of the Act.

³⁶ s 32 Fisheries Act 1996.

For those fishstocks not controlled by ICE at the time of introduction, PCH is calculated from the total weight of eligible catch³⁷ reported in the person's lawfully completed and furnished catch landing returns or catch effort landing returns in respect of the qualifying year or years as the case may be.³⁸ For the majority of cases, the qualifying years are set by the Act and are those commencing 1 October 1990 or 1 October 1991.³⁹

³⁷ For the purposes of s34 and Part XV of the Act, the term "eligible catch" is defined as the total weight of all the catch of the relevant stock lawfully taken and lawfully reported as landed, or otherwise lawfully disposed of by a person eligible to receive provisional catch history under s32 during the applicable qualifying years. This includes fish, aquatic life, or seaweed of the stock in question that was reported as bait.

³⁸ s34 Fisheries Act 1996.

³⁹ s33 Fisheries Act 1996.

In respect of stocks previously managed by ICEs, a commercial fisher is only eligible to receive provisional catch history if that fisher held ICEs for that stock at the date the stock is declared by notice under s18 to be subject to the QMS. The commercial fisher's provisional catch history is the equivalent of the commercial fisher's ICE for that stock for the fishing year in which the notice under s18 of the 1996 Act is published in the Gazette.⁴⁰

⁴⁰ s40 Fisheries Act 1996.

In respect of certain species listed in the Fourth Schedule to the Act, the requirement to allocate to the Treaty of Waitangi Fisheries Commission 20% of quota in each new stock introduced into the ITQ system⁴¹ gave rise to fishing industry opposition, on the basis that these fisheries were fully developed and that such an allocation would adversely affect existing commercial fishers. As a result, the 1996 Act provides that where, in respect of those stocks listed in the Fourth Schedule to the Act, the Chief Executive of the Ministry of Fisheries considers that the total amount of ICEs for that stock held by eligible commercial fishers will, or is likely to, exceed the equivalent of 80% of the shares in that stock, no further steps may be taken under the Act to allocate quota for the stock concerned.⁴² A further Act of Parliament will be required to introduce these species into the QMS.

⁴¹ s44 Fisheries Act 1996.

⁴² a39 Fisheries Act 1996.

4.1 United States ITQ Appeal Process

4.1.1 Regional characteristics

In the United States, each regional fishery management council developed an appeal process for the initial allocation of ITQs. These process were developed in the fishery management plans creating ITQs as a management tool in a particular fishery. A fishery management plan (FMP) is developed first, which may include ITQs or other management regimes, and the regulations are developed thereafter to implement the provisions of the FMP. Therefore, each ITQ programme has its own appeal process. This section will primarily address the appeal processes for Alaskan Pacific halibut and sablefish since wreckfish and surf clam programmes had, by comparison, limited appeal processes.

4.1.2 Alaska IFQ Programme Appeal Process

The appeal process in Alaska's halibut and sablefish ITQ fishery is specific compared to the appeal processes in the other ITQ fisheries in the United States^43. Initially, any person who is "directly and adversely affected by an initial administrative determination" may file a written appeal⁴⁴. The appeal must be submitted to the Regional Administrator of the particular region within sixty days after the date the determination was made⁴⁵. Before an appeal will be considered, the applicant must submit a concise statement of the reasons the initial determination⁴⁶ has a direct and adverse effect on the applicant and should be reversed or modified⁴⁷. If the applicant requests a hearing on any issue presented in the appeal, the request for a hearing must be accompanied by a concise written statement raising genuine and substantial issues of fact for resolution and a list of available and specifically identified evidence.⁴⁸

⁴³ See 50 CFR 679.43

⁴⁴ 50 CFR 679.43(b)

⁴⁵ 50 CFR 679.43(d)

⁴⁶ There are many reasons why an applicant may appeal the initial determination. However, most appeals are because the applicant did not receive any ITQ quota shares or because they did not receive the quantity of quota share anticipated.

⁴⁷ 50 CFR 679.43(f)

⁴⁸ Id.

⁴⁹ 50 CFR 679.43(o)

⁵⁰ 50 CFR 679.43.(o)(5)

⁵¹ The Alaska Regional Office of the National Marine Fisheries Service has a web site that lists the appeals decisions relating to the IFQ program. It is a very thorough site that lists the issues involved in the appeals. See: www.fakr.noaa.gov/appeals/default.htm

⁵² 161 F.3d 584 (9^th Cir. 1998).

The Fifth Amendment to the United States Constitution provides: "...nor shall any person be deprived of life, liberty or property, without due process of law; nor shall private property be taken for public use, without just compensation." In order to be deprived of procedural due process, there would have to be (a) a protectable liberty or property interest in obtaining the IFQ permit; and (b) a denial of adequate procedural protections.⁵³

⁵³ Id. at 588. See Board of Regents v. Roth, 408 U.S. 564, 569-71 (1972).

⁵⁴ It is not the intention of this paper to address the issue of whether ITQs are "property" for purposes of "taking without just compensation." This issue could be the topic of a paper by itself.

4.1.3 Atlantic surf clam and ocean quahog ITQ appeal process

The appeal process in the Surf Clam fishery was simple compared with the Halibut and Sablefish ITQ situation. In the surf clam fishery, the only grounds set forth in the regulations for appeal of the initial ITQ allocations is that data used by the Regional Administrator or the calculation is incorrect⁵⁵. All appeals made for initial allocations are not made to an appellate officer. Instead, they are made to the Regional Administrator who is the same person who made the initial determination. This system, obviously does not provide a great deal of confidence to the applicants. The applicant may request an appeal. The Regional Administrator's decision of the appeal is final agency action, which can then be appealed to the United States' District Court.

⁵⁵ 55 Fed. Reg. 24194 (June 14, 1990).

4.2.1 Fisheries Act 1983

The Fisheries Act 1983 provided for the establishment of a Quota Appeal Authority (QAA)⁵⁶ to which persons could appeal against allocation or failure to allocate PMITQ.⁵⁷ The grounds of Appeal were broadly set out as being⁵⁸:

i. the amount of the PMITQ allocated to that person and

ii. the failure or refusal of the Director-General to allocate any PMITQ to that person.

⁵⁶ The Quota Appeal Authority consists of a Chairman (being a person who has held a practising certificate as a barrister or solicitor for at least 7 years), one member appointed after consultation with the Fishing Industry Board and one member who could not be an officer or employee of the Ministry. The members of the Quota Appeal Authority were appointed by the Minister for a term of 3 years or less (s28A Fisheries Act 1983).

⁵⁷ s28H initially provided that an Appeal had to be made within 28 days of notification of the disputed allocation or such longer period as the Quota Appeal Authority allowed. This was subsequently narrowed by the Fisheries Amendment Act 1991 to 3 months.

⁵⁸ s28H. Fisheries Act 1983, both for affected persons and the Director-General.

⁵⁹ Jenssen v Director-General of Agriculture and Fisheries 16/9/92, CA313/91 (per Cooke P, at p2). See also Wardle v A-G [1987] 1 NZLR 296, 300.

⁶⁰ s28I Fisheries Act 1983.

⁶¹ See for example Gunn v Quota Appeal Authority [1993] NZAR 102.

⁶² s28I(4) as inserted by s2 Fisheries Amendment Act (No 3) 1992

i. in accordance with law and principle

ii. in accordance with natural justice so far as procedure is concerned and

iii. on an assessment of the facts that was open to a reasonable Authority (the Courts could not, however, simply substitute its own view of the facts).⁶³

⁶³ Jenssen v Director-General of Agriculture and Fisheries 16/9/92, CA 313/91 per Cooke P, at pp 2, 3.

⁶⁴ Wardle v A-G [1987] 1 NZLR 296, 300 (CA).

The appeal procedures under the 1996 Act are significantly more limited in scope or nature when compared with the procedures under the Fisheries Act 1983.

The QAA ceased to exist and is replaced by a Catch History Review Committee (CHRC) established under Part XV of the Act⁶⁵. The Act restricts the grounds on which any person, including the Chief Executive, may appeal to the CHRC or apply to the High Court for a review. The grounds on which a person can appeal are defined as⁶⁶:

"(a) in the case of any stock for which PCH was allocated:

(i) a decision of the Chief Executive to the effect that the person is or is not a commercial fisher who has an ICE entitling the person to an allocation of PCH; or

(ii) an allocation of PCH that is different from the amount to which the person is entitled under the Act:

(b) in any other case:

(i) a decision of the Chief Executive to the effect that the person is or is not eligible to receive PCH either because that person held or did not hold a fishing permit or controlled fishery licence at the appropriate qualifying time; or

(ii) a decision of the Chief Executive to the effect that the person has, or does not have, eligible catch in the qualifying year or years entitling the person to be allocated PCH; or

(iii) a decision of the Chief Executive as to the quantum of eligible catch reported in any eligible returns made by any person eligible to receive PCH, on the ground that -

(a) the information on the relevant returns held by the Chief Executive has been incorrectly recorded by the Chief Executive; or

(b) the Chief Executive has excluded fish, aquatic life, or seaweed that was lawfully taken and lawfully reported in eligible returns from the person's eligible catch; or

(iv) an allocation of PCH that is different from the amount to which the person is entitled under s34 of this Act".

⁶⁵ Sections 283 to 293 Fisheries Act 1996.

⁶⁶ s51 Fisheries Act 1996.

5. JUDICIAL CHALLENGES TO UNITED STATES' ITQ LEGISLATION

Unfortunately for legal analysts, there have been few challenges to ITQ programmes in federal waters in the United States. There are only two federal cases analyzing allocation of federal ITQ fisheries management measures. The first case to determine a federal ITQ allocation programme is Sea Watch International, et al. v. Mosbacher.⁶⁷ The Sea Watch case was initiated by fishermen and seafood processors alleging serious economic harm from the new ITQ management plan in regulations. The plaintiffs argued that the decision to limit access to the quahog and surf clam fisheries was not supported by the evidence in the administrative record, and therefore was arbitrary and capricious and not in compliance with the United States Magnuson Fishery Conservation and Management Act.⁶⁸

⁶⁷ 762 F.Supp. 370(D.D.C. 1991).

⁶⁸ 16 U.S.C. 1801 et seq (1998).

"The new quotas do not become permanent possessions of those who hold them, any more than landing rights at slot-constrained airports become the property of airlines, or radio frequencies become the property of broadcasters. These interests remain subject to the control of the federal government which, in the exercise of its regulatory authority, can alter and revise such schemes, just as the Council and the Secretary have done in this instance.⁷⁰"

⁶⁹ Supra, note 70 at 375.

⁷⁰ Supra, note 70 at 376.

The plaintiffs in Sea Watch further contended that the implementation of the ITQ programme was in violation of the National Standard of the Magnuson Fishery Conservation and Management Act. National Standard 4 provides that conservation and management measures shall not discriminate between residents of different states⁷¹. If it becomes necessary to allocate, or assign fishing privileges among various United States fishermen, such allocation shall be fair and reasonable, and reasonably fair and equitable to all such fishermen, reasonably calculated to promote conservation and carried out in such a manner that no particular individual, corporation, or other entity requires an excessive share of such privileges⁷². In addressing the Plaintiffs' contention that the ITQ system was in violation of National Standard 4, the court found that such National Standard does not require that allocations of quotas to fishermen be made by calculating the exact historical catch of each fisherman on an individual basis. However, the court further found that the plaintiffs/fishermen failed to demonstrate that the use of past histories was irrational or in violation of the Magnuson Fishery Conservation and Management Act or other applicable law.

⁷¹ 18 U.S.C. 1851

⁷² 16 U.S.C. § 1851(a)(4).

The final argument by the plaintiffs that the ITQ plan violates the National Standards of the Magnuson Fishery Conservation and Management Act in that the new regulations resulted in consolidation, contrary to National Standard 4 (that prohibits excessive shares). Plaintiffs alleged that two fishermen now hold ITQs totaling 40% of the annual catch quota for ocean quahogs, and that fragmentation of the remaining shares would necessarily result in further consolidation. The court found that: "This figure does give pause, although the broad number may not be economically significant⁷³." The court went on to discuss that there is no definition of "excessive shares," and that the Secretary of Commerce's judgment of what is excessive is given significant weight by the court⁷⁴. Therefore, the court found that the administrative record reflected that the government considered the problem and addressed it by providing an annual review of the industry concentration of quotas. The court in the Sea Watch found that the government had provided an adequate administrative record of the decision-making process and, therefore the ITQ programme was held not to be arbitrarily capricious.

⁷³ Sea Watch, supra, at 377.

⁷⁴ Id. at 377.

The court analyzed the allocation scheme whereby the qualifying fishers had to have had landings of halibut or sablefish during 1988, 1989, or 1990. The quota share was based on the person's highest total landings of halibut during 1984 to 1990. The court, in this case immediately commented that it appeared to be unfair against the fishermen. The court stated in the first few pages of the case that:

"The regulatory scheme has a practical effect of transferring economic power over the fishery from those who fished to those who owned or leased fishing boats. For these reasons, among others, the case is troubling and difficult⁷⁵."

⁷⁵ Alliance Against IFQs v. Brown, 84 F.3d 343, 345 (9^th Cir. 1996).

⁷⁶ 16 U.S.C. § 1853(b)(6)(A).

⁷⁷ Alliance Against IFQs v. Brown, 84 F.3d 343, 347 (9^th Cir. 1996).

⁷⁸ 16 U.S.C. § 1851(a)(4).

⁷⁹ 84 F.3d, 343, 349.

The Court obviously had difficulty with holding in favor of the government because it was apparent that fishermen would be significantly affected by the IFQ programme. The Court stated:

"This is a troubling case. Perfectly innocent people going about their legitimate business in a productive industry have suffered great economic harm because the federal regulatory scheme changed. Alternate schemes can easily been imagined. The old way could have been left in place, but whoever caught the fish first, kept them, and seasons were shortened to allow enough fish to escape and reproduce. Allocation of quota shares could have been on a more current basis, so that the fishermen in 1996 would not have their income based upon the fish they caught before 1991. Quota shares could have been allocated to all fishermen, instead of to vessel owners and lessees, so that the non-owning fisherman would have something valuable to sell to their vessel owners. But we are not the regulators of the North Pacific halibut and sablefish industry. The Secretary of Commerce is. We cannot overturn the Secretary's decision on the grounds that some parties' interests are injured.⁸⁰"

⁸⁰ Alliance Against IFQs v. Brown, 84 F.3d 343, 349 (9^th Cir. 1996)

6. JUDICIAL CHALLENGES TO NEW ZEALAND ITQ LEGISLATION

6.1 Fisheries Act 1983

As was to be expected, a number of technical legal challenges initially arose regarding the eligibility of persons or companies for allocation. One of the first successful challenges concerned the "ownership" of catch histories and therefore the entitlement to allocation of PMITQs. In Montgomery v A-G⁸¹, the High Court held that the Director-General could not refuse to make an allocation to a person who came (or should have been recognised as coming) within the terms of s28E(2) only because the relevant returns were furnished in the name of another person. The Court helpfully noted that how returns furnished in the name of one person were to be treated when there are two or more competing claimants was a matter for the Director-General to consider and decide (and, one might be tempted to add, inevitably be reviewed on).

⁸¹ 28/3/88, Henry J, HC Auckland CP 1445/86, p15.

⁸² [1993] NZAR 102.

⁸³ Notwithstanding that part-time fishermen were not seen as the major cause of the decline of fish stocks, or as landing a significant amount of fish, the group was perceived as having the greatest potential to increase effort and that it was appropriate to remove this possibility before the fisheries were rebuilt. In the event, some 2260 licence holders were to be excluded. (see Ackroyd, Hide and Sharp 1990).

"(3) In determining any provisional maximum individual transferable quota the Director-General may, where the Director-General is satisfied in a particular case that the provisional maximum individual transferable quota determined under subsection (1) of this section would be unfair having regard to -

(a) the commitment to, and dependence on, the taking of fish of that species or class in that quota management area by the person at that date of the declaration under section 28B of this Act; and

(b) the other provisional maximum individual transferable quota (if any) allocated to that person, - allocate a different provisional maximum individual transferable quota to the person".

The Appellate Courts focused on the meaning to be attributed to the phrase "commitment to, and dependence on".

Initially, the Courts took a relatively cautious approach to reviewing the decisions of the QAA. In Jenssen v Director-General of Agriculture and Fisheries⁸⁴, the High Court considered an appeal against the QAA's refusal to grant the appellant an ITQ for orange roughy. The appellant had no qualifying commercial catch history and was reliant on the provisions of s28E(3). However, the appellant had spent in excess of $NZ100 000 outfitting his fishing boat in preparation for long-term fishing of orange roughy. The Authority declined to issue a quota under s28E(3) as the appellant had not exhibited sufficient commitment to justify allocation of a quota. The Court, after reviewing the history of the legislation, held that the Authority's conclusion was justifiable and one that was open to it on the facts.

⁸⁴ 14/10/91, McGechan J, HC Wellington, CP 1035/90.

⁸⁵ 10/3/92, Barker J, HC Auckland M714/90.

⁸⁶ 18/3/92, Heron J, HC Wellington CP 892/90.

⁸⁷ 16/9/92, CA 313/91.

⁸⁸ This section was inserted, as from 18 December 1992, by s3 Fisheries Amendment Act (No 3) 1992 (1992 No 137). Sections 3(2) and (3) of that Act provided that nothing in s28ZGA(a) or s28ZGA(b) affected any application for review or other civil proceedings made or commenced before 16 September 1992 and nothing in s28ZGA(d) or s28ZGA(e) affected any civil proceedings filed before 5 October 1992.

"(a) the amendment effected by the Fisheries Amendment Act (No 3) 1992 had purported to deprive them of access to the Court to secure a declaration or decision concerning claimed substantive rights, infringing a fundamental constitutional principle;

(b) they retained such rights under the original ITQ system introduced by the Fisheries Amendment Act 1986 which, as interpreted by the Court of Appeal in Jenssen, entitled them to allocation of quota; and

(c) Parliament lacked power to deprive the Court of its authority to hear a citizen's claim to have a legal right enforced".

⁸⁹ [1996] 3 NZLR 480.

The High Court found it unnecessary to respond in detail to an alternative submission that Parliament had no power to remove the plaintiff's substantive rights, as no authority was advanced in support of that proposition and there being no protection of property rights equivalent to the Fifth Amendment to the US Constitution against uncompensated "takings" of personal property, s28ZGA was held to meet the relevant constitutional safeguard for property rights in New Zealand. The safeguard in question was from ch 29 of the Magna Carta (by virtue of s3(1) and the First Schedule to the Imperial Laws Application Act 1988):

"No freeman shall be... disseised of his freehold or liberties, or free customs... but... by the law of the land".

On the issue of the retrospective effect of the legislation, the High Court adopted the decision of Mason CJ in Polyukhovich v Commonwealth of Australia⁹⁰ which held that, in the absence of a constitutional prohibition, it is not beyond the powers of Parliament to enact retrospective laws.

⁹⁰ (1991) 172 CLR 501, 534.

In October 1997, 11 new species were brought into the ITQ system under the new allocative provisions of the Fisheries Act 1996⁹¹. While various appeals have been filed against PCH allocations made by the Chief Executive and appeals are being currently heard and determined by the CHRC, no substantive appeals to the High Court have yet occurred.

⁹¹ Fisheries (Declaration of New Stocks Subject to Quota Management System) Notice 1997.

Even the past scope for technical challenges as to whether persons have been wrongly excluded from eligibility for PCH has been severely curtailed by the provisions of the Act retrospectively validating past permitting decisions⁹². There may well be some challenges launched by persons who filed reviews of past permitting decisions within time to avoid the retrospective validating provisions of the Act, but these by their very nature will ultimately be exausted and will have little on-going precedent value.

⁹² s329 Fisheries Act 1996.

Legislation in the United States prohibited approval and implementation of ITQ programmes in federal fisheries until 1 October 2000⁹³. However, the study required by the Sustainable Fisheries Act to be performed by the Academy of Sciences has been completed and recommends a lifting of the ban. Therefore, the United States may have more ITQ programmes in federal waters within a few years. This will provide more diversity to study the affects and perhaps further litigation.

⁹³ 16 USC 1853(d)(1)(A) 1996.

There is no doubt that every effort should be made during the legislative and regulatory drafting stages to minimize possible litigation exposure. Unfortunately, ITQs are, at times, so valuable that individuals risk litigation costs for the possibility of obtaining initial or additional quota. Therefore, regardless of the allocation formula adopted, the following principles should be followed to minimize the scope for successful legal challenges:

i. A thorough record leading to the allocative decisions should be meticulously documented

ii. the allocation formula and resulting process should allow the exercise of some discretion to address gross examples of unfairness and

iii. consideration should be given to implement more stringent time frames within which legal challenges must be timely filed and concluded.

Ackroyd, P., R. Hide and B. Sharp 1990. New Zealand's ITQ System: Proposal for the Evolution of Sole Ownership Corporations: A Report to MAFish, August 1990, p. 21.

Bogel, R. and C. Dewees 19.. Putting Theory Into Practice: Individual Transferable Quotas in New Zealand Fisheries, Society and Natural Resources, Vol 5, pp. 179-198.

Christy F.T. Jr. 1979. Fisherman Quotas: A Tentative Suggestion for Domestic Management, Occasional Paper No 19, Rhode Island: Law of the Sea Institute.

Clark, I., P. Major and N. Mollet 1985. The Development of New Zealand's ITQ Management System, Rights Based Fishing, NATO ASI Series, Kliwer Academic Publishers, 1989, pp. 117-145.

Clark, I., P. Major and N.Mollett 1988. Development and Implementation of New Zealand's ITQ Management System, 5 Mar Res Econ 325.

Clark, I. and A. Duncan 1986. New Zealand's Fisheries Management Policies - Past, Present and Future: The Implementation of an ITQ-Based Management System. Proceedings of the Workshop on Management Options for North Pacific Longline Fisheries 118.

Gauvin, J.R., J.M. Ward and E.E. Burgess 1994. Description and preliminary evaluation of the wreckfish (Polyprion americanus) fishery under individual transferable quotas. Marine Resource Economics 9(2) 99-118.

Ministry of Agriculture and Fisheries (New Zealand) 1985. ITQs A Chance for Change, Fisheries Bulletin, MAF Fisheries Management, Vol 1, No 3, December 1985.

Moloney, D.G. and P.H. Pearse 1979. Quantitative Rights as an Instrument for Regulating Commercial Fisheries 36 J. Fish Res Board Can 859.

Wang, S.D. and V.H. Tank 1993. The Performance of US Atlantic Surf Clam and Ocean Quahog Fisheries under Limited Entry and Individual Transferable Quota Systems. Fishery Analysis Division. National Marine Fisheries Service. May 1993.

Fishing Rights: a Multidimensional Perspective - N. Taylor-Moore

N. Taylor-Moore
Fisheries Group, Department of Primary Industries
P.O. Box 3129, Brisbane, Queensland 4001, Australia
<[email protected]>

1. INTRODUCTION

Society now demands ecologically sustainable use of aquatic resources. However, a growing number of different user groups are seeking greater access to these resources. As this access expands, overcrowding, ecosystem degradation and community dissatisfaction occurs. The fishing sector cannot be managed in isolation from these other user groups. Use of aquatic resources by any one sector has repercussions on all other users and managing the effects of these intra-sector and inter-sector demands requires a holistic strategic approach. An approach with a multidimensional perspective is the widely accepted ecological sustainable development (ESD) paradigm, which provides a framework for understanding the complex nature of fishing rights.

For the purpose of this paper, 'sector' means a group of users seeking similar objectives from aquatic resources, such as commercial fishers, recreational fishers, scuba divers, reef walkers, fish farmers and marina developers. Intra-sector means within specific fisheries, for example, commercial and recreational fishers targeting the same species or trawl and crab fishers targeting the same species. Inter-sector means different user groups, such as fish farmers, irrigators, tourists, amenity users and habitat modifiers using these aquatic resources to meet different wants and needs, which are not always compatible.

Therefore, each user group has a desired set of outcomes arising from the use of aquatic resources. Each sector has a set of 'rights' associated with these desired outcomes. These sets of 'rights' are a continuum of natural justice rights, customary rights, statutory rights, specific sector rights and property rights. Each sector demands their 'rights' but needs to understand that rights are by nature dynamic, relative to circumstance and time, not absolute, and can be rescinded. Each sector's set of rights may differ to those of other sectors. For example, rights related to a fishing ethic may differ from those rights based on the conservation philosophy of the users of the Great Barrier Reef. Rights are pervasive, complex and multidimensional in nature and thus not easily defined.

Generally, the significance of aquatic sector rights in the context of fisheries management depends on the degree of exclusivity inherent in the right granted to one sector that may determine the type of impact affecting the 'rights' of another. This degree of exclusivity is the key to understanding fishing rights.

2. WHAT ARE FISHING RIGHTS?

2.1 Operational aspects of rights

Fishing rights are nested within aquatic resource rights. These aquatic resource rights can be categorised by the degree of exclusion attached to them (after van de Elst 1997 and Symes 1998) as:

i. open access rights - no exclusion rights attached to any user group

ii. limited access rights - specific user groups have limited exclusion rights

iii. private property rights - private sector has exclusive rights

iv. communal rights - specific communities have exclusion rights

v. nation state rights - exclusion rights held on behalf of its citizens and

vi. global rights - exclusion by agreement of nation states.

Four generic aquatic resource rights are identified to illustrate the complex nature of fishing rights: harvest rights, use rights, conservation rights and management rights. Aquatic resource user groups, and specifically fishers, would expect these rights to exist under a modern rights-based management regime. These rights are briefly explained below with examples of the exclusive actions, which are statutory explicit, implied or socially acknowledged.

Harvest rights are mainly the right to take fish (recreational fishing, commercial fishing and charter fishing licences), for ownership of the resource (ITQs), to sell fish (commercial fishing licences) and to own transferable licences (commercial fishing licences). Others rights include access to specific species (recreational fishing licences) and access to specific locations (indigenous fishing areas and recreational only fishing areas). Harvest rights also include the right to water supply (off-stream irrigation permits), the right to collect aquaculture broodstock (fish farm permits), the right to enter new fisheries (exploratory and developmental fishing licences) and the right to compensation for loss of harvest rights.

Use rights are made up of: the right to modify aquatic habitat (mangrove permits); right to visit specific sites (tourist permits); right for passive recreation (dive permits); right to destroy aquatic resources (land planning approvals); right to modify stream flows (water planning approvals); and rights to obtain amenity (assumed rights).

Conservation rights consist of the right to maintain ecological flows in riverine systems; the right to provide fish-ways; the right to set aside conservation areas in aquatic ecosystems; the right to have multiple-use areas; the right to protect endangered species; and the right to manage threatened species.

Management rights include: rights-based management; the right for stakeholders to be recognised in the management planning decision making process, the right of formal conflict resolution processes, the right of fishers to negotiate, the right for compensation for impacts of exclusion; and the right for all aquatic sectors to be involved.

2.2 Fishing rights and the ecological sustainable development paradigm

The challenge facing Australian fisheries management is the adoption of a holistic and sustainable approach to the management of aquatic resources through a fisheries ecosystem management framework. This framework is the ESD paradigm: conserving our ecosystems in the pursuit of current and future welfare of Australian citizens. Underpinning this framework are seven guiding policy principles, accepted by Australia. These are:

i. decision making processes should effectively integrate both long and short-term economic, environmental, social and equity considerations

ii. where there are threats of serious or irreversible environmental damage, lack of full scientific certainty should not be used as a reason for postponing measures to prevent environmental degradation

iii. the global dimension of environmental impacts of actions and policies should be recognised and considered

iv. the need to develop a strong, growing and diversified economy, which can enhance the capacity for environmental protection, should be recognised

v. the need to maintain and enhance international competitiveness in an environmentally sound manner should be recognised

vi. cost effective and flexible policy instruments should be adopted such as improved valuation, pricing and incentive mechanisms and

vii. decisions and actions should provide for broad community involvement on issues which affect them" (Environment Australia 1992).

i. ecological dimension (sustainable ecosystems, bycatch reduction, threatening processes modified, endangered and threatened flora and fauna species protected)

ii. biological dimension (sustainable fisheries, fisheries habitat protection)

iii. industrial dimension (diversification of fishing operations, changes in fleet structure and industry infrastructure)

iv. economic dimension (viable fishers and seafood industry, seafood supply, compensation for adjustments, resource security and planning security)

v. social dimension (increased recreational fishing opportunities, fair access by all user groups)

vi. governance dimension (system of property rights, formal fisheries management planning processes)

vii. political dimension (reduced conflicts, acceptance of decisions)

viii. cultural dimension (maintaining communities and lifestyles, indigenous community co-management) and the

ix. psychological dimension (aesthetic and amenity values maintained, maintaining sense of community).

2.3 Rights-based management paradigm

Rights-based management objectives such as the above can be achieved through the implementation of a series of aquatic resource management strategies. Examples from the range of these strategies include:

i. access controls (areas and fishing platforms such as beaches, zoning through marine and national parks)

ii. tenure controls (land-use planning approvals, licences, fish shares, permits, approvals to modify habitat)

iii. input controls (gear, fishers and vessels)

iv. output controls (on quantity to be taken such as bag limits and quotas, periods and transferability)

v. temporal and spatial controls (seasonal and area closures, fisheries reserves, environmental reserves, refugia)

vi. species controls (species protection, spawning areas, translocation strategies, totem species and size limits) and

vii. finance controls (such as access fees, quotas levies, cost recovery, economic rent, peak body support, and licence fees).

Such outcomes can be planned and unplanned. The management planning process needs a set of guiding principles to achieve these desired outcomes. Guiding principles should highlight the uncertainties and risks of applying inappropriate measures and of setting unachievable or unmeasurable objectives. This strategic approach is proposed as a rights-based management paradigm. The linkages are illustrated in Figure 1.

The ten following guiding principles should underpin a rights-based management paradigm for aquatic resources and therefore for fisheries management. This paradigm is not found as an entity in any Australian fisheries legislation.

i. Formal planning processes with specific management objectives, measurable outcomes and formalised Management Plans, including a monitoring, compliance and surveillance program, as the basis of aquatic management

ii. risk management with decision rules based on multiple performance indicators and reference points and best available information

iii. clarification of resource security for all users of the marine environment

iv. conflict resolution processes available for all parties

v. equity and social justice for all affected parties

vi. a formal and systematic inclusive consultation process, which will lead to better and 'owned' decisions through equal opportunity for greater stakeholder and civic participation in decision making using formal negotiating frameworks

vii. community empowerment through extension/ education/awareness action

viii. flexible decision making organisational arrangements incorporating options such as self governance, market-driven models, expert policy groups, co-management and integrated planning

ix. formal institutional learning for fisheries agencies and stakeholders by case studies and

x. multidimensional evaluation frameworks for management planning and for evaluation" (Taylor-Moore 1995, 1998).

Figure 1: A rights-based aquatic resource management Matrix of ESD based outcomes

Ecological Sustainable Development (ESD)	Aquatic Resource Management Measures (e.g. licence fees - Finance controls)
Dimensions and Objectives of ESD (e.g. Financial viability of fishing fleet) (Economic dimension)	Type I and Type II Outcomes (creation or redistribution of fishing rights)

3. A MULTIDIMENSIONAL PERSPECTIVE OF FISHING RIGHTS

3.1 Introduction

Changes in policy based on the above rights-based management paradigm may lead to a redistribution of fishing rights resulting in the long-term ecological sustainable development of aquatic resources. Changes of fishing rights as an outcome of these regimes or policies are inherent in many aquatic resource management and policy regimes. For example, a policy change such as the introduction of a reef tax on tourist operators in exchange for long term access rights to specific reefs, does not affect on the rights of commercial fishers: i.e. a Type I outcome. However, a policy to give mooring rights to tourist operators on a specific reef will extinguish or reduce the rights of reef fishers to access that same reef; i.e. an inter-sector redistribution of fishing rights or Type IIa outcome. On the other hand, the creation of recreational only fishing areas will transfer commercial fishing effort to other areas, an intra-sector redistribution of fishing rights or a Type IIb outcome. This paper does not consider Type I outcomes as fishing rights are neither created nor redistributed. The emphasis lies on Type II outcomes, the creation or the redistribution of fishing rights.

The implementation of this paradigm can be illustrated through a holistic framework. This enables managers and stakeholders to identify and evaluate the relationships between the measures available for managing aquatic resources, the multidimensional context within which these management decisions are made and the Type I and Type II outcomes for the fisheries sectors (Figure 1). Changing a sector-specific aquatic resource policy, which creates Type II outcomes, will increase the demands by all affected parties for the development of rights-based fisheries management.

Consider the ESD approach given in Figure 1. Policy changes and their impact on fishing rights can be explained through two general cases. Case 1: using the matrix rows to show changes in fishing rights within a specific ESD dimension/objective using a range of management measures. Case 2: using the matrix columns to show changes in the impacts of a specific management measure on fishing rights given a range of ESD dimensions and objectives. Table 1 provides a broad range of these potential types of changes, specific cases and fishing rights inherent in the outcomes arising from aquatic resource management.

3.2 General case 1

Each row of Figure 1 and Table 1 provides a range of measures available to achieve specific ESD-based objectives for the management of aquatic resources. For example, in the ecological dimension an objective such as maintaining aquatic biodiversity within aquatic ecosystems could be achieved through a range of aquatic resource management strategies, all of which create a reduction in the right of commercial fishers to access fish stocks - Type IIa outcomes.

Some strategies include using access controls such as conservation zones in marine parks to protect threatened habitats, which leads to exclusion of fishers; or applying tenure controls through limited entry licences to exclude classes of fishers to fish stocks. Other strategies include input controls, through gear modification requirements, such as turtle excluder devices (TEDs) and bycatch reduction devices (BRDs) that reduce access by fishers to potentially profitable fish biomass. Or the use of output controls, such as total allowable catches (TAC) and individual transferable quota (ITQs), which reduce the take of specific species. The application of temporal controls reduces conflicting use of specific waters resulting in reduced take during fish aggregation periods. Other means are financial controls that impose permit fees on certain classes of fishers and species controls that place certain species on restricted export schedules, both of which transfer effort to other species.

3.3 General case 2

Each column of Figure 1 and Table 1 specifically highlights the ESD dimension that may be affected by the application of a specific control measure and the potential changes in fishing rights. For example the application of access controls, through the creation of recreational-only fishing areas changing, or removing, the rights of commercial fishers to those fish stocks.

Access controls on the main natural resource example of the ESD matrix are affected by many factors:

i. ecological dimension where the protection of endangered species rights creates a reduction of commercial fisher rights to bycatch species

ii. biological dimension where the lack of access to national parks or beaches could lead to a reduction of commercial fisher rights to target specific species

iii. industrial dimension - loss of access to marine parks causing a structural adjustment of fleet infrastructure and thus loss of commercial fisher rights to harvest specific species

iv. economic dimension - the need for compensation for the loss of fishing rights through creating refugia

v. social dimension - where fisher family rights are reduced as fishers have to move to other fishing because of the closure of their current location

vi. psychological dimension - the right of fishers to obtain satisfaction from certain fishing styles is diminished when fishers are forced to change their fishing location and

vii. cultural dimension - where the rights of indigenous people are lost through the granting of fishing access to sacred sites.

Table 1 is proposed as an example of the combination of strategic options available to policy makers and the potential outcomes of these interactions. It is a useful approach to analysing policy options and changes leading to a redistribution of fishing rights. These include:

i. rights to modify aquatic habitats through local authorities and other coastal management planning processes that increase the number of marinas, canal estates, golf courses, etc.

ii. rights to use fisheries habitat shifting from the fishing sectors to other users to achieve tourism benefits

iii. rights of fishers to security of access to marine park resources in exchange for a reduction of fishing effort to enhance biodiversity

iv. rights of coastal communities to economic development as population shifts create demands for broader social objectives where fishing rights can be reduced as local authorities seek to close rivers to commercial fishers or where they are increased through demands for more seafood outlets and fisheries infrastructure such as boat ramps

v. rights of indigenous communities for decision making empowerment as local fish resources are sold to commercial fisheries under quota

vi. rights of fishing sector power and decision making shifting to include other aquatic resource users

vii. right access to fishing areas reduced as the commercial sector adjusts or restructures through rationalisation and buy-back schemes to accommodate the demands of conservationists to protect endangered species and habitat

viii. rights to offstream water users increased to meet the social and economic objectives of water needs for irrigation and human consumption through water infrastructure projects and

ix. rights of the community to a cleaner environment increased as psychological objectives are meet through environmental impact studies required from aquatic resource based infrastructure such as aquaculture farms and cage culture in coastal waters.

Table 1
Impacts of aquatic resource management policy on fishing rights

ESD dimensions	Aquatic resource management measures
	Access controls	Tenure controls	Input controls	Output controls	Temporal, spatial controls	Species controls	Financial controls
Biological	preditor/prey relationships maintained sustainability of target species	sunset clause leading to long term target biomass levels	latent effort realised pressure on target species	sustainable limits; stock size uncertainty	protection of spawning stocks; single user area	commercial species protected; health and disease reduceds	research levies financing monitoring programs
Ecological	ponded pastures habitat loss by development national park access	tenure of access building stewardship of ecosystem	bycatch reduction devices reducing key threatening processes	bycatch of protected species reduced	key habitats protected by marine park zoning	inappropriate translocations reduced	internalising of externalities
Economic	loss of income and regional growth from area closures needing compensation and resource security	windfall gains from buy back schemes	reduced financial viability of fishers through input control inefficiencies	concentration of ownership seafood supply reduced	closures affecting tourism and seasonal incomes	fishing gear adapted to commercial only species	cost recovery or economic rent providing adjustment incentives
Governance	marine park management planning	property rights to protect long term seafood supply	licences to use types of fishing gear	quota management regime	surveillance programme	compliance and enforcement	payment of fishery rents
Social	family dislocation to meet increased amenity demands	dislocation and continued conflict with recreational sector if property rights not in place	competitive fishing gear and different sector rules	bag limits and angling licences changing style of operations	sectoral expectations based on areas set aside for recreational fishers	creed of greed	consultation costs
Political	community support based on fisher and community expectations	self adjustment reducing conflict and changing community perceptions	shark meshing to protect beaches changed due to capture of dolphins	recreational TAC to match commercial TAC	local Government area closures causing resource partitioning	'cuddly' species protected	peak organisation support for input into planning processes
Psychological	community acceptance of less access to sensitive sites	husbandry ethic expected as trade off for long term licences	less fishers that can be seen in sensitive areas	fish stocks are better off	closures lead to better visual effects	feel-good effects from endangered species protection	willingness to pay for controls
Cultural	indigenous sacred sites access limited seen as loss of historical activity	community commercial fisheries	traditional hunting gear redefined to meet modern activities	indigenous TAC as part of commercial TAC	indigenous fishing areas	totem species	support for indigenous input into planning

4. CONCLUSION

The nature of fishing rights is complex and far more significant than the narrow concept of property rights in fisheries management. An holistic approach to understanding their significance in aquatic resource management can be achieved by using ecological sustainable development (ESD) as the policy making framework. The paper provides a general introduction to this concept and a few examples of how this process could work.

5. LITERATURE CITED

Environment Australia 1992. National Strategy for Ecological Sustainable Development. Australian Government Publishing Service.

Symes, D. 1998. Property Rights and Regulatory Systems in Fisheries. Fishing News Books, 1-16.

Taylor-Moore, N. 1995. Fisheries Management Planning in the 1990s. Proceedings of the Second National Fisheries Managers Workshop, Bribe Island Queensland. Queensland Fisheries Management Authority, 1-14.

Taylor-Moore, N. 1997. The Allocation of Inshore Marine and Estuarine Fish resources in Australia: the need for a Precautionary Decision-making Paradigm? In Hancock, D.A. Developing and Sustaining World Fisheries Resources - The State of Science and Management. Proceedings Second World Fisheries congress, Brisbane. Australian Society for Fish Biology, 352-357.

Taylor-Moore, N. 1998. Adjustment of Queensland fisheries: a draft policy for restructuring the Queensland commercial fishing fleet. Queensland Department of Primary Industries. pp. 37.

Van Elst, R. 1997. How Can Fisheries Resources Be Allocated? In Hancock, D.A. Developing and Sustaining World Fisheries Resources - The State of Science and Management. Proceedings Second World Fisheries congress, Brisbane. Australian Society for Fish Biology, 426-427.

Rights-based Fisheries Management in New South Wales, Australia - A. Goulstone

A. Goulstone
Commercial Finfish, NSW Fisheries
Fisheries Management Division
PO Box 21, Cronulla 2230, New South Wales, Australia.
<[email protected]>

1. INTRODUCTION

New South Wales (NSW) is located on the east coast of Australia and has a coastline approximately 1350km long. The prevailing East Australian Current which runs from Queensland in the north to Victoria in the south mixes warm tropical waters with cooler temperate waters. The continental shelf adjacent to NSW is narrow compared to other States in Australia and indeed other countries. These environmental conditions provide for the existence of a range of commercial fisheries that is relatively small by volume but extremely diverse in terms of the number of species taken (over 130) and the gear types used.

Such diversity in species, fishing methods and environmental conditions makes designing a sound and equitable rights-based management regime a difficult task. The current regime in NSW involves about 30 different types of commercial fishing endorsements, each of which authorises a different type of fishing within nine defined commercial fisheries. There are approximately 1800 licensed commercial fishers.

Despite the introduction of management rules for the first time through the enactment of the Fisheries Act 1865, the development of a rights-based scheme is a very new development in NSW. Limited licensing was only introduced in 1982 and most fisheries have been largely open access up until very recently.

Significant changes were made to the management regime in 1994 with the introduction of a new Fisheries Management Act. This Act provided a radical new framework for managing commercial fisheries by issuing a perpetual right to licence holders in the form of shares - the new framework is termed 'share management fisheries'. Not surprisingly, the debate over the proposal to introduce a full property rights system for commercial fisheries was a lively one.

As a comprehensive analysis of the share management fishery framework has already been undertaken (Young 1996), I will provide more of a comparative review of the two management frameworks currently available. I will also outline the novel approach that I believe was taken in issuing fishing rights in NSW through the allocation of validated catch history. But first, a brief history of management in NSW to put it all into context.

2. HISTORY OF FISHERIES MANAGEMENT IN NEW SOUTH WALES

Commercial fishing commenced in NSW estuaries in the mid 1800s. The introduction of the Fisheries Act 1865 was a response to concerns of overfishing. This saw the commencement of seasonal and area closures on commercial fishing. A Royal Commission on Fisheries in 1879 resulted in the introduction of the Fisheries Act 1881, which provided for inter alia the regulation of fishing gear including controls on the mesh sizes of nets, and, importantly for rights-based management, for the licensing of fishers and fishing boats (NSW Fisheries 1999; adapted from Wilkinson 1997).

Fishing licences were relatively easy to obtain throughout most of the 20^th Century and limits on individual fisheries only commenced in real terms from 1980 onwards. While the licensing of fishers and their boats had been underway for over 50 years, it wasn't until 1982 that a freeze on the issue of new boat licences was introduced. This freeze was consolidated in 1987 when the Government decided not to issue any further personal fishing licences in order to prevent speculation by investors.

Throughout this period, licences were renewed annually and were subject to cancellation if a fisher failed to spend the major portion of their time, or earned the major portion of their income, from fishing. This provided little security for the industry as fishers were sometimes required to prove their financial details and licences could potentially be cancelled at each annual renewal. The requirement forced fishers to work harder than they may have wanted or apply more fishing pressure on the resource than was desirable.

The abalone dive fishery was the first fishery in NSW to which entry by new fishers was limited; this occurred in 1982. Later, in 1989, a quota system was introduced for abalone and divers were issued an equal amount of individual quota. Prawn trawling in the five major estuary systems was limited in the mid-1980s, and at the same time steps were taken to restrict prawn trawling in offshore oceanic waters (beyond 3 nautical miles). The next of the State's fisheries to be put under restricted access was the rock lobster fishery (a trap fishery) which saw limits on the number of participants introduced in 1993 and a individual transferable quota scheme introduced in 1994.

A common theme in all of the above fishery restrictions was that future access was defined by examining the historical involvement of fishers in each fishery through historic catch records.

3. FISHING RIGHTS UNDER THE NEW LEGAL REGIME

After a long public consultation period during which the issue of property rights for commercial fisheries received a great deal of attention, the Fisheries Management Act 1994 was passed by the Parliament. The Act was controversial because it contained a new "share management fishery" scheme that enabled the issue of a full property right (or 'shares') to eligible fishers, and was the first scheme of this type developed in Australia. The Act also retained provisions for an alternative limited access management framework termed "restricted fisheries" which provides a less secure fishing right.

The old scheme where licences were subject to administrative assessment and possible refusal of renewal on an annual basis was abolished and relaced by an automatic licence renewal process. Despite the inclusion of the new share management provisions, this change to the licensing regime was a significant enhancement to the rights and security of the industry. No longer are fishers subjected to annual licence renewal assessments and the Minister now has limited grounds upon which to refuse a renewal application, primarily related to breaches of the Act.

The primary difference between the share management fishery scheme and the restricted fishery scheme is that shares are issued in perpetuity and shareholders have a statutory right to compensation if the Government decides to close the fishery and cancel the shares. No such compensation provisions apply in restricted fisheries. A summary comparison between the restricted fishery and share management fishery frameworks is provided in Table 1.

While the share management scheme provides a greater property right, this comes at a cost to shareholders. The increased cost is a result of the Government's current policy to collect the full attributable costs of management in share management fisheries and a legal requirement for shareholders to pay a "community contribution" (synonymous with the payment of a resource rent). The community contribution is a payment for the privileged and secure access of shareholders to a community-owned resource and the revenue is deposited directly into the Government's general consolidated fund.

Table 1
Comparison of the restricted fishery and share management fishery frameworks

Variable	Restricted fishery	Share management fishery
Property right	Validated catch history which gives rise to an "Entitlement"	Shares
Access right	Endorsement	Endorsement
Property right tradeable?	Yes, subject to transfer policy	Yes, subject to the management plan
Statutory compensation payable?	No	Yes, if shares are cancelled
Statutory management plan required?	No	Yes, 5 year plans(the plan can only be reviewed if criteria for review set within the plan are met)
Appeal mechanism	Statutory review panel	Statutory review panel
Management cost recovery	Partial, moratorium on additional cost recovery for term of 1st plan	Full cost recovery
Community contribution payable?	No	Yes

In a share management fishery, it is the ownership of shares that determines whether a person is eligible to hold a commercial fishing licence and an endorsement to operate in a particular fishery. The management plan for a share management fishery can:

i. set a minimum holding of shares required before fishing is permitted to take place;

ii. set a higher minimum shareholding for new entrants than for existing fishers and/or

iii. periodically increase the minimum holding of shares required by all fishers.

In the way that a share fishery management plan can use shareholdings to determine relative access levels, 'catch history' can be used to determine the level of access in a restricted fishery. For example, the level of catch history for a species could determine the quantity of quota allocated to a person or the amount of gear able to be used. In other words, both regimes are forms of fractional licensing schemes whereby the property right is kept separate from the right to access the resource (see Figure 1).

Catch history has been the primary mechanism for allocating property rights and access rights in NSW fisheries. It can form the basis for the issuing of shares in a share management fishery, although the formula used to issue shares can also take into account any other entitlements existing in a fishery before it becomes a share management fishery.

4. ALLOCATION OF CATCH HISTORY

The process of allocating catch history to fishers involved a close examination of the historic catch records that had been submitted to NSW Fisheries¹ and the development of quite detailed and complex policies to address the diversity in fishing operations that exist in the State. The traditional concept of using exclusively either the catch history of a boat or the catch history of a fisher for allocating rights would have resulted in an inequitable allocation. For instance, while the owner of a large, high investment ocean trawler would expect to receive the underlying history of that vessel upon purchase, a typical estuary fisher who uses multiple small punts (of relatively little value) would not expect to pass any catch history on with the sale of each boat.

¹ Catch returns were required to be submitted on a monthly basis by each licensed fisher, including information about the boats they had fished from during the month.

To address this complexity, a policy was first developed in consultation with industry representatives. Given the diversity in fishing operations, the policy evolved substantially over time to cater for unforseen circumstances. Particular difficulties were faced when determinations had to be made with respect to whether catch history had transferred with boat licences during the 1986 to 1993 validated catch history period. The policy included (NSW Fisheries 1994, 1996):

i. Identifying the scope of each person's fishing business². This entailed an assessment of each fishers' operation to determine if they held one or more fishing businesses and to identify the boat licences that were associated with each business. Two or more businesses were normally only awarded if the fisher had clearly separate ocean and estuary operations, or if they owned multiple large vessels that had been operated separately in the past;

ii. Examining the catch history attributable to each business, which fell into two categories:

· personal history - generally, personal catch history applied in circumstances where the fisher was the primary unit of effort. This included estuary and beach fishing, and boats involved in mixed estuary/ocean activities. A fishers personal history comprised all of his/her catches taken from general purpose vessels and

· boat history - boat history applied where the boat was the primary unit of effort. This included estuary prawn trawlers and larger ocean going vessels. These boats are referred to as boat history vessels.

iii. Making a determination in relation to each licensed boat as to whether it was a boat history vessel or a general purpose vessel;

iv. Allocating all the catches taken from a boat history vessel to the current owner of the vessel (including catches recorded by employee skippers). Catches taken from boats categorised as general purpose vessels are considered part of the personal history of the fisher who took the catch, irrespective of the boat owner.

² From the 1900 or so licensed fishers and some 3500 licensed fishing boats.

Under the 1994 Licensing Policy, a person had to purchase an existing fishing business that contained a minimum level of validated catch history to obtain a new commercial fishing licence. The policy aimed at consolidating fishing businesses and ensuring that new participants had to replace actual fishing effort, rather than purchasing a licence that had been unused, or little used, since 1986. The policy proved successful in forcing the amalgamation of many smaller and inactive fishing businesses and is still in place today. The policy promoted the trading of validated catch history and established catch history as a vital foundation for the development of property rights in NSW.

5. THE IMPLEMENTATION OF SHARE MANAGEMENT FISHERIES AND RESTRICTED FISHERIES

Upon the introduction of the new Act, the Liberal Government of the day decided to apply the share management fishery scheme to all major NSW commercial fisheries. The first step in the process was to define specific boundaries for each fishery (by species, method, area, etc), then establish advisory committees to develop criteria for issuing shares. The defined fisheries that were established are listed in Table 2.

Table 2
Defined NSW commercial fisheries

Abalone	Ocean trap and line
Lobster	Ocean hauling
Ocean prawn trawl	Estuary prawn trawl
Ocean fish trawl	Estuary general

Some fisheries, such as abalone, lobster and estuary prawn trawl had been previously defined and subjected to limited access so no changes were required to their definition. New definitions were needed for some of the other large and more complex fisheries such as estuary and ocean trap fishing because access to these methods was still available to all licensed commercial fishers.

In March 1995, a new Labor Government was elected into power. They were more cautious about issuing long term property rights in fisheries and quickly established a review into the implementation of share management fisheries.

The review was conducted from June to August 1995 and it found that, inter alia, the abalone and lobster fisheries should proceed directly to a share management scheme as the rights were already well defined and the management direction well established. The review noted the substantial amount of administration and time required to establish a full share management fishery and recommended that the priority for the other fisheries should be to limit access in the first instance (using the restricted fishery framework) to prevent opportunistic increases in fishing effort. The review also recommended that a scoping process should be undertaken for these fisheries during which the long term management direction should be determined before perpetual property rights are issued. Needless to say, the review recommendations were accepted. Table 3 summarises the results of the share management fishery review.

The advantage of implementing a restricted fishery regime prior to becoming a share management fishery is that the management structure or direction can be altered if needed without having to redefine the fishery (and expose the Government to large-scale compensation) or undertaking a major review of the plan as would be required under the share management scheme. This is important in newly managed fisheries as fishing activities can change, often unpredictably, in response to new management rules and an adaptable regime is obviously preferable.

6. CONTINUING DEVELOPMENT OF RIGHTS

Since the review into the implementation of share management fisheries, the abalone and lobster fisheries have proceeded through the provisional stages of share management and the development of a management plan is nearing completion. At present, shares are issued on a provisional basis in those fisheries, however, they will be replaced with final shares when the management plans commence.

A process was undertaken to declare the remaining fisheries as restricted fisheries, ending in March 1997. The process included establishing steering committees for each fishery to establish eligibility criteria and an application and assessment process. In most cases validated catch history was used as the basis for determining access to (part of) each new restricted fishery.

Table 3
Action following the review into the implementation of share management fisheries

Abalone		Share management fishery
Lobster
Estuary prawn trawl		Remain as a restricted fishery
Ocean hauling - beach hauling sector
Ocean prawn trawl
	- offshore sector
	- inshore sector	New restricted fishery
	- deepwater sector
Ocean hauling - purse seine sector
Ocean trap and line
Ocean fish trawl
Estuary general

The restricted fishery entry criteria were set at a relatively low level in order to be inclusive rather than exclusive. This generated concern that too many endorsements would be issued and that licences previously operated at a low level would be transferred to fishers who could operate at much greater levels of effort. It was this concern that led to the introduction of an "interim transfer policy" which requires fishing businesses to be transferred as an entity (i.e. no licence splitting) and limits each business to only one transfer (NSW Fisheries 1999b).

The purpose of the interim transfer policy is to allow the limited transferability of fishing businesses while NSW Fisheries, in consultation with each Management Advisory Committee, develops longer term criteria for the transfer of entitlements. Discussions are now taking place in some fisheries about the development of more stringent catch history criteria to be applied upon the transfer of a fishing business to prevent the activation of latent (or unused) fishing effort and restructure fisheries over time.

7. DISCUSSION

Despite the differences between the share management fishery and restricted fishery frameworks, both schemes embody a form of property right. There is no doubt that the concept of share management provides a stronger and more secure property right for commercial fishers, but this comes at a financial cost to fishers and results in a system that arguably is less adaptive to change.

Shares are clearly the 'property' in a share management fishery, just as validated catch history can be considered the property in the majority of restricted fisheries. Catch history is limited, tradeable, and more often than not, determines whether access to a fishery is granted. Indeed, despite not benefiting from statutory compensation provisions, validated catch history has assumed a significant monetary value ever since it was used as a criteria for new entrants to gain a commercial fishing licence.

The use of catch history as a basis of determining access to a fishery or for the allocation of shares in a share management fishery is favoured because:

i. It is equitable, as fishers who correctly recorded their catches throughout the years gain advantages over fishers who black-marketed product and failed to properly declare their catch. It also recognises the rights of fishers who have historically relied on a fishery compared to those who only fish in a fishery periodically.

ii. It can be used effectively to define scaled access to resources, by allocating more access to fishers with a greater catch history.

iii. With the development of appropriate policies, it can be used to prevent the activation of latent fishing effort or to facilitate an industry funded restructure program for a fishery.

One of the detractions of using catch history as a rights allocation tool is that future data are likely to be biased by fishers who over-report catches in the hope that they will be considered in future allocations. Despite using an historical validated catch history period in NSW (i.e. 1986 to 1993) over-reporting is suspected to be occurring. The validation of catch data with market records, observer data or fishery independent data will most probably become important over the coming years for monitoring fish stocks.

8. LITERATURE CITED

Fisheries Management Act 1994. http://www.austlii.edu.au/au/legis/nsw/consol_act/fma1994193/

NSW Fisheries 1994. Licensing Policy - June 1994.

NSW Fisheries 1996. Licensing Policy - Version 2 - November 1996.

NSW Fisheries 1999a. Fishery profile: Estuary General Restricted Fishery.

NSW Fisheries 1999b. Discussion paper - Options for new transfer rules in the Ocean Trap and Line Fishery - August 1999.

Wilkinson, J. 1997. Commercial fishing in NSW: Origins and development to the early 1990s. NSW Parliamentary Library Research Service.

Young, M.D. 1996. The design of fishing-right systems - the NSW experience. Ocean and Coastal Management. 28(1-3): 45-61.

The Closure of the Port Phillip Bay Scallop Fishery - S. McCormack and R. McLoughlin

S. McCormack and R. McLoughlin
Fisheries Victoria
GPO Box 500 East Melbourne
Melbourne, Victoria 3002, Australia
<[email protected]>
<[email protected]>

1. INTRODUCTION

Port Phillip Bay is a large shallow embayment in southeast Australia adjacent to the cities of Melbourne and Geelong. A combined population in excess of four million people reside around the Bay and it is a major recreational area supporting a large recreational fishery and many other aquatic sports. A variety of species of fish and shellfish have also been commercially harvested for over a century and in 1963 a winter/spring dredge fishery for scallops was established. Initially scallop-dredging was carried out without attracting adverse comment as most of the boats engaged in the fishery were relatively small and not highly visible.

A rapid increase in the use of Port Phillip Bay for boating and recreational fishing occurred during the 1960s and 1970s. A large benthic-feeding snapper (Pagrus auratus) was one of the main recreational target species. While there is no specific point in time when it began, it was clear that by the mid 1980s there was a high level of concern in the community about the effect that scallop-dredging was having on the seabed of Port Phillip Bay. Much of this concern related to the (perceived) indirect negative impacts of scallop-dredging on recreational fishing for species like snapper although, increasingly, there was sound evidence that scallop-dredging causing severe effects on benthic communities in the Bay (e.g. Currie and Parry 1994).

In response to these concerns an attempt was made by the Victorian Government to close Port Phillip Bay to scallop-dredging in 1991. This action was successfully challenged in the Supreme Court by the scallop industry and fishing resumed in the following season.

In 1996 it was announced that, as part of an initiative to promote Port Phillip Bay as a recreational and tourist area, scallop-dredging was to cease in the following year. Licences would be cancelled and they would be bought back from operators in the fishery. This time however, the Victorian Government legislated for the closure and a process by which compensation would be paid. This action was again successfully challenged by the industry in Supreme Court when, while not arguing against the ability of the Government to close the fishery, they argued on the basis that the amount of compensation was inadequate and had not taken into account the differing interests of individuals. A subsequent appeal by the Victorian government overturned this decision.

This paper does not attempt to fully document either the complete history of the Port Phillip Bay Scallop Fishery or the arguments about the property-right component of the commercial fishing licences that provided for this activity. However of significance is that the Port Phillip Bay scallop fishery is probably the first, and certainly the most valuable commercial fishery in Australia, to be closed by specific legislation. Thus the events that led to this closure combined with arguments that followed in the Supreme Court are of widespread interest to both participants in, and managers of, commercial fisheries.

2. HISTORY OF THE FISHERY

Despite there being some knowledge of the existence of scallops beds in Port Phillip Bay and there being lucrative domestic and overseas markets for scallops it was not until September 1963 that a commercial dredge-fishery was established. In that year the then Fisheries and Wildlife Department published information on the extent of the beds and described the methods used in Tasmania for the capture and processing of scallops. A number of boats left Tasmania where the scallop fishery was in decline to try their luck in Port Phillip Bay. The results could be described as spectacular and many boats - possibly in excess of 200 - joined the fishery, often from other sectors of the fishing industry.

For the period 1963/4 the total Australian landings for scallops totalled 2953t live shell weight with the bulk of the catch coming from Tasmanian and Queensland waters. The Port Phillip Bay scallop-dredge fishery, which started in September 1963, increased the level of national production to 6988t the following year. At its peak in 1966-67 landings of 13 289t shell weight were recorded from Port Phillip Bay.

In 1968 a new Fisheries Act was introduced which provided for a specific Scallop Fishing Licence. Boats that were employed in the fishery immediately prior to the 18 December 1967 were entitled to be issued with a scallop licence for dredging in Port Phillip Bay. Some 160 licences were issued. Many of these licences were subsequently not renewed, presumably because the holders had concerns about the long-term prospects for the fishery.

With the future obviously uncertain many fishermen and their boats returned to their former fisheries or left the industry altogether. At this time the majority of boats in the fishery did not exceed 15m in length with a variety of hull design and wheelhouse configurations. There was considerable investment by the processing sector in plant and equipment as demand for scallops remained high in local and overseas markets.

The decline in the fishery in 1970 was the catalyst for boats to look elsewhere in Victoria for scallops and eventually extensive new beds were found off Lakes Entrance. While many of the boats that worked in Port Phillip Bay were unsuitable for the demands of commercial fishing in Bass Strait, approximately 70 made the journey to Lakes Entrance and commenced dredging for scallops from that port. Licences were issued to about 30 local boats to fish for scallops in Bass Strait waters adjacent to Lakes Entrance. The boats that stayed in Port Phillip Bay were eventually denied the opportunity to work Bass Strait as that component of the Victorian Scallop Fishery was also closed to additional entrants.

Eventually Port Phillip Bay again produced scallops although the peak catches of 1966 and 1967 were never repeated. The combination of landings from Port Phillip Bay and Lakes Entrance increasingly became necessary to sustain the catching and processing sectors of the industry. Many of the smaller boats that were adequate for working in the relatively sheltered waters of Port Phillip Bay found the going a lot tougher at Lakes Entrance. Fishermen, realising that to be viable in the fishery which now had separate but interlinked components, started to upgrade their boats to be able to work more distant and rougher waters. Thus the larger, more sea-worthy boats capable of working scallop beds that were being discovered some distance from Lakes Entrance also started entering the Bay fishery by replacing the smaller Port Phillip Bay boats.

This change in the fleet configuration occurred gradually during the 1970s but received a major impetus in the early 1980s when a speculative investment company purchased a large number of the existing licences and scrapped the boats they were attached to. New steel boats capable of fishing for scallops anywhere in Bass Strait now entered the fishery. Most of the licences that were purchased also had the right to dredge in Port Phillip Bay as part of their entitlement and they fished there when it was more profitable than operating in Bass Strait.

The investment company eventually folded but the boats that were built and the licences attached stayed, leaving the fishery with a fishing capacity well in excess of the available stock (McLoughlin 1994).

3. FLEET STRUCTURE

The Victorian scallop fishery had three distinct licensed sectors:

i. Some 30 generally small boats, less than 15m in length, and mainly of wooden construction that stayed in Port Phillip Bay and chose not to make the journey to Lakes Entrance. When that component of the fishery was closed in 1971 their licences were limited to fishing in Port Phillip Bay.

ii. Approximately 64 boats that, by virtue of the fact that they originally fished in Port Phillip Bay and then relocated to Lakes Entrance in 1970, were issued with a licence to fish both components of the fishery. They held what became known as All Victoria Waters Scallop Licence.

iii. A third group of approximately 30 boats were licensed to fish only in waters adjacent to Lakes Entrance. These were "local" boats that were issued licences in 1970/71 to fish the newly found scallop beds adjacent to their home port.

Bigger boats towing larger dredges, often the same dredge that was used in the ocean, were in contrast to the original operators in the fishery that worked smaller boats with small dredges. Many of the dredges were fitted with a tooth-bar which attracted specific criticism. No doubt there were a range of issues that led to growing concern about the dredge fishery and by the mid 1980s the fishery was regularly subject to criticism about the adverse effect that dredging had the bed of Port Phillip Bay. Scientific work in the early 1990s (McLoughlin et al. 1991) showed that dredges also had a deleterious effect on scallops as well as non-target species and added fuel to the growing debate about the impact of the dredges in the Bay.

4. COMMUNITY DEBATE

Irrespective of the changes that happened to the configuration of the scallop fleet, the growing community awareness of environmental issues combined with the popularity of Port Phillip Bay as a major recreational amenity for the state, focused attention on the dredge fishery. Recreational fishers in particular blamed scallop-dredging for what was perceived to be a decline in their catches of fish of which snapper was the main species.

As an adjunct to the scallop-dredge fishery in Port Phillip Bay some boats also dredged for the common blue mussel and in some years annual catches exceeded 2000t (shell weight). This fishery was closed in the mid 1980s because of the concern over the effect that dredging was having on the hard, or reef substrate, where mussels were found. Also aquaculture of mussels was developing as a new industry and it was expected that in time it would be able to replace the dredge fishery. Those boats that had fished for mussels received no compensation and were required to fish exclusively for scallops if they wished to remain in the industry.

After a good season in 1987 which followed a long period of profitability, the fishery went into a slump in 1988 and was closed entirely for 1989 and 1990. The then Fisheries and Wildlife Department had been periodically surveying scallop beds in Port Phillip Bay since the early 1970s and was able to predict fairly accuracy what the prospects would be annually for the industry. With general support from industry it was agreed that the fishery would not open until it was clear that the beds had recovered and could support a resumption of dredging.

As with the catching sector of the fishery, management of the fishery had evolved over the years and had, by necessity, become quite dynamic. In any one year there may have been 6 separate openings and subsequent closures of sectors of the fishery, all of which required changes to the Fisheries Regulations which controlled the operations of the fishermen. Changing Regulations quickly to respond to the constantly changing state of the fishery became an expensive, onerous and time-consuming task. Given the rapidity of necessary changes to the Regulations, fishery managers often required specific exemptions from normal regulatory processes, including the need for a Regulatory Impact Statement which, in Victoria, is required for most subordinate legislation.

In the late 1980s the Fisheries Act was amended to provide for the issue of Fisheries Notices, which enabled the responsible Minister, after consultation with the industry, to issue Notices to open and close the fishery, thereby greatly reducing the workload in managing the fishery.

In 1991 surveys showed that there were commercially harvestable beds of scallops in Port Phillip Bay. Scallop fishers were expecting that the then Minister responsible for fisheries would duly issue a Fisheries Notice "opening" the season and importantly set the daily catch-limit. The industry had been consulted as required by the relevant legislation, was aware of the abundance of scallops, and prepared itself to commence fishing.

In May of 1991 the Minister announced that he would not open the fishery. The basis for this decision was a response to community concerns about the impact of scallop-dredging on the bed of Port Phillip Bay. The scallop fishermen found themselves with a licence issued under the Fisheries Act 1968 that enabled them to employ a boat to take scallops for sale by dredging in Port Phillip Bay. However without there being a Fisheries Notice on issue there was no opening date set for the commencement of fishing and no daily catch limits in place.

This decision not to allow scallop fishing in Port Phillip Bay was successfully challenged by the industry in the Supreme Court. While a number of factors were taken into account by the Court, it found that the licences were issued for the fishery (i.e. to specifically dredge for scallops in Port Phillip Bay) and that licences were issued to provide for the commercial harvesting of fish (subject to the provisions of that Act and Regulations, Fisheries Notices, etc.) and that it was reasonable for fishermen to expect to be able to go fishing. That is, that the Minister could not issue licences and then not allow licence holders to fish when there was ostensibly no stock management issue.

Scallop fishing continued in Port Phillip Bay on a seasonal basis until 1996 when on 11 March a joint announcement was made by the Premier of Victoria and the Minister for Conservation and Environment relating to a number of issues concerning Port Phillip Bay. It was announced for the scallop fishery that - "the Government has pledged to end scallop dredging in the Bay by repurchasing all existing licences by the end of next year, at an estimated cost of $10 million". The Minister for Conservation and the Environment stated in the announcement that "Because of heightened community concern about its impact, no new licences to dredge scallops would be issued and all existing scallop licences repurchased".

In 1996 legislation was passed to:

i. Close the fishery

ii. Cancel all relevant licences and,

iii. Pay an amount to licensees to be determined by the Minister and the Treasurer.

In an article in the Professional Fishermen's Magazine which was published in June 1998, industry solicitor David Fitzpatrick summarised the judgement as follows - "The Court found that the Ministers made a mistake by not considering each licence-holder individually and they should have comprehended the consequential loss of each licence-holder.

The Court also found that the most fundamental determinative flaw in the conduct of the Ministers is that it is predicated on the erroneous view of the nature and incidents of the licence which was cancelled by the legislation. The Ministers argued that the scallop licences were not propriety in nature. The Court found that a scallop licence issued under the provisions of the Fisheries Act 1968 for dredging for or taking scallops for sale is propriety in nature and thus attracts the common law principle of full compensation upon cancellation."

In a footnote to the above article it was stated that licence holders would probably receive between $A300 000 and $A400 000 over and above the $A120 000 already awarded.

This time the Government appealed the decision and the judgement was overturned in the Court of Appeal on 25 August 1999. No attempt is made here to summarise the judgement which runs to 23 pages but the following key issues are presented below:

i. The Court of Appeal considered that the Common Law could not be applied to the licence cancellation because it was specifically authorised by statute, which overrode common law entitlements in this case.

ii. There could have been limited access to common law entitlements had the Ministers made an arbitrary, or unreasonable, decision on the amount to be paid in respect of each licence. In this case the Minister had established a Working Party of senior officers of the Department which heard submissions from all licensees who wished to make representations and who also commissioned independent valuations of the licences. The Court considered that acting on advice from the Working Party, the Ministers had made a reasonable determination and that the requirements for procedural fairness had been met.

iii. An important issue was that the case relied upon the proper interpretation of the statute and that the Government's interpretation of the statute was correct. In reaching this conclusion the Court considered the wording of the statute itself and also the Parliamentary debates, in particular the Minister's Second Reading Speech, a statement of intent as to the purposes of the amended legislation.

In hindsight, it is clear that the 25-year history of this fishery is littered with numerous examples of reactive and aggressive stakeholders, litigious industry participants, a focus on industry management rather than fish stock management and ultimately a decisive role for community interests in Government decision-making. Notwithstanding this however, it is clear that once community interest in sustainability and resource-sharing issues was reflected in government policy-making, the fate of the fishery was clear. This is reflected in the bulk of the recent legal debate, with the debate shifting from argument about the 'rights' afforded by the licence to argument about the appropriate level of compensation for the loss of the licence. In general terms the courts have decided in this case that a form of property-right exists in a licence until specific legislation removes that property-right.

That the bulk of recent argument has been about the financial aspects of the decision to close the fishery is consistent with experience elsewhere (e.g. National Research Council - USA 1999). Capture fisheries are difficult to manage in economic terms, mainly because of poorly-defined property-rights. This has two main consequences. Firstly, there is little incentive to fish conservatively to maintain stocks at some optimum level, and instead the pressure is on fishers to catch their maximum share of the available resource. Secondly, fleet and processing over-capacity becomes the norm as fishers look to maximise their catch or efficiency of catching. Moreover, fisheries management becomes increasingly difficult in the face of declining margins and profitability of the participants in the fishery who become overly reactive to changes that may lead to reduced incomes. It is clear that both these consequences occurred in the Port Phillip Bay scallop fishery and that many lessons need to be heeded.

6. LITERATURE CITED

Currie, D.R. & G.D. Parry 1994. The impact of scallop dredging on a soft sediment community using multivariate techniques. Memoirs of the Queensland Museum 36(2): 315-326.

McLoughlin, R.J., P.C. Young, R.B. Martin & J. Parslow 1991. The Australian scallop dredge: estimates of catching efficiency and associated indirect fishing mortality. Fisheries Research 11: 1-24.

McLoughlin, R.J. 1994. Management of the Bass Strait scallop fishery. Memoirs of the Queensland Museum 36(2): 307-314.

National Research Council - USA. 1999 'Sustaining Marine Fisheries'. Committee on Ecosystem Management for Sustainable Marine Fisheries, Ocean Studies Board. 164pp.