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The Community Development Quota Program in Alaska (1999)

Chapter: 3 Overview of the Community Development Program

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Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
×

3
Overview of the Community Development Quota Program

The Community Development Quota (CDQ) program was implemented in 1992 and has made considerable resources from the Bering Sea fishery available to rural communities in western Alaska. The program allocates a set quota to participating communities and requires those communities to use any earnings to further economic development in the community through investments in fisheries-related industries, infrastructure, and education. The 56 communities initially certified as eligible organized themselves into 6 community groups called CDQ groups. The CDQ groups then formed partnerships with established corporations to participate in the highly industrialized Bering Sea fishery. Benefits generated have included direct revenues from the fishery as well as employment and increased opportunities for the development of fishing infrastructure. The CDQ program began with pollock, was followed by halibut and sablefish, and has since expanded to include crab and a combination of groundfish species, including Pacific cod and other flatfish known as the "Bering Sea multispecies complex."

Origin

The CDQ program emerged as a concept in the mid-1980s, when the Bering Sea groundfishery was transferred from the foreign to the domestic fleet. The new fishery was very profitable for the domestic fishermen. However, one segment of the community received little benefit: the Alaska Native fishermen of rural western Alaskan, who generally came from small villages needing economic development.

The CDQ program was proposed during Congressional hearings on the 1990

Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
×

reauthorization of the Magnuson Fishery Conservation and Management Act as a way of allowing rural western Alaska access to the fishery. However, the program was not included in the final version of the bill. Discussions about a community development program continued in the North Pacific Fishery Management Council (NPFMC) during debates on two related issues: the split of the allocation of pollock quota between inshore and offshore processing operations and the proposed individual fishing quota (IFQ) program for the halibut and sablefish fishery.

The allocation of pollock quota between inshore and offshore processing operations is central to the management of the North Pacific groundfish fishery. Currently, a percentage of the pollock quota is allocated to inshore, shore-based processing plants that harvest the pollock with their own vessels, or purchase their product from catcher vessels operating in the BSAI pollock fishery. The remainder of the harvest is currently allocated to an "offshore sector" consisting of catcher-processors that harvest and process the pollock on board, processing motherships that receive pollock for processing at sea from catcher vessels, and catcher vessels that deliver pollock to catcher-processors. The allocations between the inshore and offshore sectors has been contentious and a focus of considerable debate over the years. Likewise, the decision to create an individual fishing quota program for the halibut and sablefish fishery was a contentious and difficult decision. In some cases, the CDQ program was linked to negotiations over the inshore and offshore allocations and the consideration of the Alaskan halibut and sablefish IFQ program.

Discussions continued over the next few months and in April 1991 the Council adopted a specific CDQ plan for analysis by council staff and inclusion in the inshore-offshore allocation proposal. The final inshore-offshore proposal (Amendment 18 to the Bering Sea and Aleutian Island Fishery Management Plan) included as a subpart the establishment of a CDQ program in western Alaska and allocated 7.5 percent of the total allowable catch (TAC), or one-half of the reserve quota, to communities on the Bering Sea coast. The decision to allocate 7.5 percent of the TAC (one-half the reserve quota) appears to be a decision based on a combination of factors such as stock assessment, management goals, and political factors. It is not based on specific biological, economic, or social criteria. The 15 percent reserve quota for the TAC is also somewhat arbitrarily defined, but is based on expectations of what percentage of quota might be appropriate to serve as a buffer to prevent overfishing. The allocations to the other species later included in the CDQ program were derived through similar decision-making processes. The plan was approved by the Council in June 1991 and was forwarded to the Secretary of Commerce. On May 28, 1992, the Secretary of Commerce approved the amendment and promulgated implementing regulations (Box 3.1).

In December 1992, state and federal officials finalized the regulations and procedures for the CDQ program. (See Appendixes D and E for state and federal regulations.) In 1995, sablefish and halibut were included in the CDQ program.

Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
×

BOX 3.1 Summary of Key CDQ Program Elements A western Alaskan community is eligible for quota if the community:

  • is within 50 miles of the Bering Sea;
  • is an Alaska Native Claims community;
  • has residents who conduct 50 percent of their commercial or subsistence fishing activity in the Bering Sea; and
  • did not already have significant pollock activity.

The 56 communities* eligible under this definition organized themselves into 6 groups of varying sizes:

  • Aleutian Pribilof Island Community Development Association (APICDA);
  • Bristol Bay Economic Development Corporation (Bristol Bay or BBEDC);
  • Central Bering Sea Fishermen's Association (Central Bering Sea or CBSFA);
  • Coastal Villages Fishing Cooperative (Coastal Villages or CVFC);
  • Norton Sound Economic Development Corporation (Norton Sound or NSEDC); and
  • Yukon Delta Fisheries Development Association (Yukon Delta or YDFDA).
  • *  

    Akutan was added as the 57th community in 1996.

Also in 1995, the Council approved a three-year extension of the pollock program and the inshore-offshore allocation. The Council also approved the allocation of quota shares of other groundfish and crab to the CDQ communities in 19951. In the reauthorization of the Magnuson-Stevens Fishery Management and Conservation Act in 1996, the CDQ program was made a permanent program.

1  

The history of the multispecies CDQ program began in 1995 when the North Pacific Council approved the License Limitation Program in the groundfish and crab fisheries to prevent new participants from entering the fishery. As part of the License Limitation Program, the council recommended that all other fisheries resources managed under the Bering Sea Aleutian Island management plan be allocated to a CDQ program. However, due to the complexity of the program and other factors, a proposed rule for the multispecies CDQ was not published by the National Marine Fisheries Service (NMFS) until 1997. At this time, the crab CDQ, which had been a part of the multispecies groundfish CDQ was removed from the multispecies framework and harvesting in the crab CDQ fishery began in March 1998. A final rule for implementing the multispecies CDQ program was approved by NMFS in June 1998, and groundfish harvesting is scheduled to begin in October 1998. Some of the complexities that delayed the implementation of the multispecies CDQ are the difficulty in managing the complex quota allocations of the species, as well as the stringent requirements for the program including weighing catch at-sea, data reporting, and on-board observer requirements.

Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
×

CDQ Management Structure

Participation in the CDQ program requires an understanding of the complex institutional array that controls management of commercial fisheries in the Bering Sea and Aleutian Islands (BSAI). The six primary components of this institutional structure are:

  • the Magnuson-Stevens Fishery Conservation and Management Act;
  • the North Pacific Fishery Management Council;
  • the National Marine Fisheries Service;
  • the Alaska Board of Fisheries;
  • the Alaska Department of Fish and Game; and
  • the International Pacific Halibut Commission.

Under the Fishery Conservation and Management Act of 1976 (FCMA, renamed the Magnuson-Stevens Fishery Conservation and Management Act in 1996), Congress established a fishery conservation zone extending from 3 to 200 nautical miles offshore. This fishery zone was subsequently incorporated into the U.S. Exclusive Economic Zone (EEZ) established by presidential proclamation. For fisheries inside of three miles, jurisdiction lies with the relevant coastal states. For fisheries in the EEZ, the Magnuson-Stevens Fishery Conservation and Management Act (MSFCMA) created a new management system consisting of eight regional fishery management councils, with the relevant council for fisheries off Alaska being the North Pacific Fishery Management Council.2

Under the MSFCMA, the NPFMC has limited authority over the fisheries of the Arctic Ocean, Bering Sea, and Pacific Ocean in the EEZ off Alaska. The nature of this limited authority is that Congress charged the Council with development of fishery management plans, and subsequent amendments, for these fisheries when necessitated by conservation and management concerns. Once the Council develops a plan, it is then submitted to the U.S. Secretary of Commerce for review and approval or disapproval. Typically, the councils, NMFS staff, and the National Oceanic and Atmospheric Administration (NOAA) general counsel coordinate with each other in developing fishery management plans and regulations. For approved plans, the U.S. Secretary of Commerce (acting through the National Marine Fisheries Service) is charged to develop implementing regulations and enforce those regulations. The CDQ program falls under two of the fishery management plans developed by the Council, the groundfish fishery in the BSAI area and the commercial king and Tanner crab fisheries. Council actions are intended to represent a delib-

2  

The other regional fishery management councils are the New England Council, the Mid-Atlantic Council, the South Atlantic Council, the Caribbean Council, the Gulf of Mexico Council, the Pacific Council, and the Western Pacific Council.

Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
×

erative policy process but these actions must also comply with an array of legal requirements. All fishery management plans and amendments devised by the Council must comply with the MSFCMA. In particular, the MSFCMA prescribes national standards for fishery management measures that must be adhered to when designing and selecting management measures. In addition to the MSFCMA, Council actions must also comply with other applicable law.

To further unravel the institutional matrix relevant to the CDQ program, it is useful to consider the conventional separation of the commercial fisheries of the BSAI into three groups: groundfish, crab, and halibut. In the vernacular of the Council "groundfish" refers to most of the commercially valued species of fish except salmon, herring, and halibut. Groundfish fisheries in the BSAI are managed by the Council and the National Marine Fisheries Service. The Council sets TAC levels for various target species fisheries that occur throughout the EEZ and state waters. The Scientific and Statistical Committee assists the Council by providing advice on the level of the allowable biological catch (ABC), from which the council sets a TAC lower than the ABC. State waters are effectively included in the federal BSAI groundfish management regime through a process of concurrent opening and closing of state waters keyed to federal openings and closings.

For the commercial crab fisheries in the BSAI, the principal regulating institutions are the Alaska Board of Fisheries, the Alaska Department of Fish and Game (ADF&G), and for specific measures, the Council. The Board of Fisheries and ADF&G manage the commercial crab fisheries of the BSAI in both state and federal waters. The Alaska Board of Fisheries has regulatory authority for fisheries within Alaska, and ADF&G provides technical, scientific, and managerial support to the Board of Fisheries. State management of the crab fisheries in federal waters occurs under authority delegated to the state by the Council. Notably, the Council retained authority over limited access and other forms of specific allocations (such as a crab CDQ allocation) in the BSAI crab fisheries. The MSFCMA and other applicable federal laws control both Council actions and actions pursued under authority delegated to the state by the Council.

The International Pacific Halibut Commission (IPHC) manages the commercial halibut fishery in the BSAI under authority provided by international treaty (the "Convention Between the United States and Canada for the Preservation of the Halibut Fishery of the Northern Pacific Ocean and the Bering Sea") and the Northern Pacific Halibut Act of 1982 (Halibut Act). The IPHC establishes seasons, determines TAC levels, and apportions the TAC between the United States and Canada. Under the Halibut Act, the Council is authorized to allocate the U.S. TAC established by the IPHC including the use of limited access regimes, such as the CDQ program.

The structure of the Council itself adds to the institutional matrix relevant to commercial fisheries in the BSAI. For the Council, Congress prescribed eleven voting members: six from Alaska, three from Washington, one from Oregon, and one representing the National Marine Fisheries Service. Congress also provided

Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
×

that the Council receive advisory input from a Scientific and Statistical Committee and an Industry Advisory Panel.

Eligible CDQ Communities

To participate, CDQ communities must be within 50 miles of the Bering Sea coast from the Bering Strait to the westernmost Aleutian island or located on islands in the Bering Sea. The communities must be certified as villages that meet the requirements of the Alaska Native Claims Settlement Act (ANCSA). The residents of the community must conduct more than half of their current commercial or subsistence fishing effort in the waters of the Bering Sea and Aleutian Islands. In addition, the community must not have developed previously a capability sufficient to support substantial fisheries, unless the community can show that CDQ benefits would be the only way to realize a return on previous investments. (The community of Unalaska was excluded under this provision.)

Fifty-six eligible communities were originally approved and the community of Akutan was added to the list of approved communities in 1996, when it demonstrated that the local community was not deriving significant benefit from the existing fishing infrastructure. These communities organized themselves into six development corporations, or CDQ groups, each with corporate fishing partners (Table 3.1). Table 3.2 provides an overview of population and economic statistics for these communities. In many of these communities, the levels of poverty and unemployment are significant. In some cases, measures of employment can be difficult to determine because of the limited employment opportunities that exist. This can lead to some inconsistencies when using traditional measures of employment, and the actual employment in these communities may be higher. The majority of eligible communities are small rural villages. Although it is not a requirement that only Alaska Native residents derive benefit from the program, with few exceptions the population of these communities is predominantly Alaska Native, and all of the villages are certified as an Alaska Native Claims community under the Alaska Native Claims Settlement Act. In most cases, the poverty and unemployment levels are high in these villages.

Description Of The Community Development Groups

The Aleutian Pribilof Island Community Development Association

The Aleutian Pribilof Island Community Development Association (APICDA) represents the villages of Akutan, Atka, False Pass, Nelson Lagoon, Nikolski, and St. George. Approximately 400 people live in these 6 villages. In 1998, APICDA received quota allocations of 16 percent of the quota for Bering Sea CDQ pollock, 10 percent of the CDQ quota for Aleutian Islands subarea CDQ sablefish, and various percentages of crab and other groundfish species

Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
×

TABLE 3.1 Community Development Quota Groups and Pollock Harvesting Partners in 1998

Groups

Partner

Aleutian Pribilof Island Community Development Association (APICDA)

Trident Seafoods Corporation Starbound Partnership

Bristol Bay Economic Development Corporation(BBEDC)

Arctic Storm, Inc.

Central Bering Sea Fishermen's Association (CBSFA)

American Seafoods Company

Coastal Villages Fishing Cooperative (CVFC)

Tyson Seafoods and Westward Seafoods

Coastal Villages Region Fund (CVRF)

 

Norton Sound Economic Development Corporation(NSEDC)

Glacier Fish Company, Ltd.

Yukon Delta Fisheries Development Association(YDFDA)

Golden Alaska Seafoods, Inc.

NOTE: Fishing partners may change over time.

(Tables 3.3, 3.4, and 3.5). The Atka Fishermen's Association, a group of halibut fishermen within the APICDA communities, harvests 100 percent of the CDQ allocation of halibut in the western Aleutian region (area 4B). APICDA has formed partnerships with Trident Seafoods Corporation, a processing company with operations throughout Alaska, and Starbound Partnership, the operator of the F/V Starbound for harvesting its pollock quota. APICDA jointly purchased a factory longliner, the F/V Rebecca B, with the Yukon Delta Fisheries Development Association for harvesting the halibut and sablefish quota. Since that time, the Rebecca B has been grounded, declared unsalvageable, and sunk. Additional details on the investments pursued by APICDA are provided in Appendix F.

Bristol Bay Economic Development Corporation

The Bristol Bay Economic Development Corporation (BBEDC) represents the villages of Aleknagik, Clark's Point, Dillingham, Egegik, Ekuk, King Salmon/ Savonoski, Manokotak, Naknek, Pilot Point, Port Heiden, South Naknek, Togiak, Twin Hills, and Ugashik. Approximately 5,300 people live in these 14 villages. The quota allocations for 1998 include 20 percent of the Bering Sea CDQ pollock, 25 percent of the Aleutian Islands subarea CDQ sablefish, 23 percent of the

Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
×

Table 3.2 Population and Economic Statistics of Approved Communities in CDQ Program (information from DCRA database)

Community

Population 1997

% Native Population

Median Value/ Home ($)

Total Households (Occupied)

Persons/ Household

Median Household Income ($)

%Unemployment

% Poverty

YDFDC

Alakanuk

651

95.80

34,200

121

5

17,708

26.80

29.40

Emmonak

820

92.10

46,300

161

4

25,625

34.60

20.90

Kotlik

543

97.00

40,600

101

5

20,417

36.60

17.70

Sheldon Point

177

92.70

14,999

27

4

16,250

13.00

56.20

NSEDC

Brevig Mission

265

92.40

101,700

53

4

15,000

35.30

24.70

Diomede

174

93.80

14,999

41

4

14,375

0.00

63.00

Elim

301

91.70

61,100

73

4

16,250

36.10

25.10

Gambell

653

96.20

39,400

120

4

15,938

16.80

46.40

Golovin

152

92.90

62,500

42

3

16,146

15.30

8.30

Koyuk

272

94.80

63,100

61

4

18,750

37.30

30.00

Nome

3,656

52.10

79,900

1,119

3

45,812

11.00

9.90

St. Michael

341

91.20

27,500

69

4

23,194

22.90

20.90

Savoonga

622

95.20

49,600

116

4

11,339

14.70

50.90

Shaktoolik

226

94.40

28,500

46

4

18,438

31.90

22.80

Stebbins

513

94.80

21,700

86

5

23,333

39.20

32.30

Teller

265

86.80

22,500

68

3

20,000

3.30

32.10

Unalakleet

803

81.80

65,000

207

3

34,531

19.20

11.60

Hooper Bay

1,012

96.00

24,300

190

4

18,125

41.70

43.50

Kipnuk

567

97.40

31,400

99

5

4,999

12.90

76.60

Kongiganak

349

97.30

14,999

60

5

33,250

16.30

30.30

Kwigillingok

333

95.00

17,300

62

4

14,500

9.20

43.10

Mekoryuk

192

99.40

76,400

63

3

14,792

16.70

31.50

Hooper Bay

1,012

96.00

24,300

190

4

18,125

41.70

43.50

Kipnuk

567

97.40

31,400

99

5

4,999

12.90

76.60

Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
×

Community

Population 1997

% Native Population

Median Value/ Home ($)

Total Households (Occupied)

Persons/ Household

Median Household Income ($)

%Unemployment

% Poverty

Kongiganak

349

97.30

14,999

60

5

33,250

16.30

30.30

Kwigillingok

333

95.00

17,300

62

4

14,500

9.20

43.10

Mekoryuk

192

99.40

76,400

63

3

14,792

16.70

31.50

Newtok

269

93.20

23,800

42

5

14,844

25.90

50.20

Nightmute

217

95.40

41,300

29

5

17,813

26.90

62.00

Platinum

41

92.20

14,999

22

3

23,056

8.00

35.80

Quinhagak

567

93.80

60,500

127

4

17,500

5.90

37.20

Scammon Bay

459

96.50

76,600

85

4

15,179

18.40

40.70

Toksook Bay

496

95.50

105,400

88

5

21,875

25.50

39.20

Tuntutuliak

351

96.70

28,300

70

4

14,444

6.40

46.00

Tununak

330

96.20

42,500

78

4

18,750

14.00

26.30

BBEDC

Aleknagik

226

83.20

112,500

57

3

21,875

14.30

28.80

Clark's Point

66

88.30

87,500

18

3

17,083

18.50

16.10

Dillingham

2,252

55.80

106,100

691

3

44,083

6.70

9.50

Egegik

127

70.50

33,800

48

3

20,625

24.30

34.10

Ekuk

2

33.30

0

1

3

0

0.00

0.00

King Salmon

478

15.50

143,800

158

3

54,072

5.80

3.00

Manokotak

387

95.60

41,300

90

3

20,500

16.10

28.60

Naknek

640

41.00

108,900

208

3

50,907

3.90

1.70

Pilot Point

115

84.90

93,800

17

3

38,750

0.00

12.90

Port Heiden

116

72.30

101,000

42

3

35,000

22.00

24.30

South Naknek

149

79.40

54,600

39

3

23,750

27.50

26.30

Togiak

762

87.30

32,500

151

4

15,000

23.10

46.30

Twin Hills

59

92.40

20,000

25

3

11,667

25.00

50.00

Ugashik

5

85.70

0

4

0

37,500

80.00

0.00

CBSFA

St. Paul

64

66.10

84,100

154

4

39,922

10.80

7.10

 

SOURCE: Alaska Department of Community and Regional Affairs, 1998.

Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
×

TABLE 3.3 Percent Allocations of the 7.5 percent TAC of Pollock

 

1992-93

1994-95

1996-98

APICDA

18

18

16

BBEDC

20

20

20

CBSFA

10

8

4

CVFC/CVRF

27

27

25

NSEDC

20

20

22

YDFDA

5

7

13

TOTALS

100

100

100

 

SOURCE: Alaska Department of Community and Rural Affairs, 1998

TABLE 3.4 1997 Percent Allocations of the TAC for Pollock, Sablefish, and Halibut

 

APICDA

BBEDC

CBSFA

CVFC/ CVRF

NSEDC

YDFDA

TOTAL

Pollock

16

20

4

25

22

13

 

Sablefish, Hook & Line-AI

10

25

 

25

30

10

 

Sablefish Hook & Line-BS

 

 

 

 

25

75

 

Halibut

Area 4B

100a

 

 

 

 

 

 

Area 4C

 

 

 

100

 

 

 

Area 4D

 

23

 

24

25

33

 

Area 4E

 

30

 

70

 

 

 

SOURCE: Alaska Department of Community and Regional Affairs, 1998.

a Atka Fisherman's Association

halibut in the western Bering Sea region (area 4D), 30 percent of the halibut in the eastern Bering Sea region (Area 4E), and various percentages of crab and other groundfish species (Tables 3.3, 3.4, and 3.5). BBEDC has formed partnerships with Arctic Storm, Inc., to harvest the pollock quota and the F/V Recovery for harvesting the halibut in the western Bering Sea (area 4D). BBEDC has also formed a partnership with Alaskan Leader, Inc., for harvesting part of their multispecies allocation and for the joint ownership of a freezer longliner, F/V

Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
×

Table 3.5 1998-2000 Percent Allocations of the TAC for Crab, Multispecies Groundfish, Bycatch, and Prohibited Species

 

APICDA

BBEDC

CBSFA

CVFC/ CVRF

NSEDC

YDFDA

TOTAL

Halibut

4B

100

0

0

0

0

0

100

4C

10

0

90

0

0

0

100

4D

0

23

0

24

26

27

100

4E0

30

0

70

0

0

100

 

Crab

Bristol Bay red king

20

20

0

20

20

20

100

Norton Sound red king

0

0

0

0

50

50

100

Pribilof red & blue king

0

0

100

0

0

0

100

St. Matthew blue king

50

12

0

12

14

12

100

Bering Sea C. opilio Tanner

10

19

19

17

18

17

100

Bering Sea C. bairdi Tanner

10

19

19

17

18

17

100

Sablefish & Turbot

Sablefish, hook & line-AI

15

20

0

30

20

15

100

Turbot-AI

18

18

5

14

26

19

100

Sablefish hook & line-BS

15

22

18

0

20

25

100

Turbot-BS

16

25

14

1

20

24

100

Pacific cod

16

20

10

17

18

19

100

Atka mackerel

Eastern

20

17

10

17

16

20

100

Central

20

17

10

17

16

20

100

Western

20

17

10

17

16

20

100

Yellowfin Sole

29

25

8

5

5

28

100

Flatfish

Other flats

20

20

10

15

15

20

100

Rock sole

10

20

10

20

20

20

100

Flathead

20

20

10

15

15

20

100

Squid

19

18

10

17

16

20

100

Other species

19

22

9

14

14

22

100

Other Rockfish

O.rockfish-BS

16

20

8

18

19

19

100

O.rockfish-AI

16

20

8

18

19

19

100

Arrowtooth

19

21

9

15

15

21

100

Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
×

 

APICDA

BBEDC

CBSFA

CVFC/CVRF

NSEDC

YDFDA

TOTAL

Pacific Ocean perch complex

True POP-BS

20

17

10

17

16

20

100

Other POP-BS

20

17

10

17

16

20

100

True POP-AI:

Eastern

20

17

10

17

16

20

100

Central

20

17

10

17

16

20

100

Western

20

17

10

17

16

20

100

Sharp/northern-AI

20

17

10

17

16

20

100

Short/rougheye-AI

17

20

9

17

18

19

100

Sablefish, trawl-AI

16

20

10

17

18

19

100

Sablefish, trawl-BS

16

20

10

17

18

19

100

Prohibited Species Quota

Halibut (mt)

20

22

8

13

14

23

100

Herring (mt)

17

17

16

17

17

16

100

Chinook salmon(#)

21

21

9

13

13

23

100

Other salmon(#)

23

23

8

11

11

24

100

C. bairdi-zone 1(#)

24

25

7

9

9

26

100

C. bairdi-zone 2(#)

24

25

7

9

9

26

100

Red king crab(#)

19

21

9

15

15

21

100

 

SOURCE: Alaska Department of Community and Regional Affairs, 1998

Bristol Leader. Resident fishermen using local vessels harvest the halibut in the eastern Bering Sea region (Area 4E). Additional details on the investments pursued by BBEDC is provided in Appendix F.

Central Bering Sea Fishermen's Association

The Central Bering Sea Fishermen's Association (CBSFA) represents the village of St. Paul in the Pribilof Islands. St. Paul has approximately 750 residents. The quota allocations for 1998 include 4 percent of the Bering Sea CDQ pollock, and various percentages of crab and other groundfish species (Tables 3.3, 3.4, and 3.5). The Pribilof Island Fishermen's Association, which included the villages of St. Paul and St. George and was a member of APICDA, harvested 100 percent of the halibut in the Pribilof Island region prior to 1997 (Area 4C). The village of St. George now receives its halibut allocation through the APICDA CDQ group. CBSFA has formed a partnership with American Seafoods to har-

Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
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vest the pollock quota. Additional details on the investments pursued by CBSFA are provided in Appendix F.

Coastal Villages Fishing Cooperative/ Coastal Villages Region Fund

The Coastal Villages Fishing Cooperative (CVFC) and the recently formed Coastal Villages Region Fund (CVRF) represent the villages of Chefornak, Chevak, Eek, Goodnews Bay, Kipnuk, Kongignak, Kwigillingok, Mekoryuk, Newtok, Nightmute, Platinum, Quinhagak, Scammon Bay, Toksook Bay, Tuntutuliak, and Tununak. Approximately 5,769 people live in these 17 communities. The quota allocations for 1998 include 25 percent of the Bering Sea CDQ pollock, 25 percent of the Aleutian Islands management subarea of CDQ sablefish, 24 percent of the halibut in the western Bering Sea region (Area 4D), 70 percent of the halibut in the eastern Bering Sea region (Area 4E), and various percentages of crab and other groundfish species (Tables 3.3, 3.4, and 3.5). CVFC/CVRF has formed a partnership with Tysons Seafoods and Westward Seafoods to harvest the pollock quota. Additional data on the investments pursued by CVFC/CVRF are provided in Appendix F.

Norton Sound Economic Development Corporation

The Norton Sound Economic Development Corporation (NSEDC) represents the villages of Brevig Mission, Diomede/Ignaluk, Elim, Gambell, Golovin, Koyuk, Nome, St. Michael, Savoonga, Shaktoolik, Stebbins, Teller, Unalakleet, Wales, and White Mountain. Approximately 7,745 people live in these 15 communities. The quota allocations for 1998 include 22 percent of the Bering Sea CDQ pollock, 30 percent of the Aleutian Island management subarea of CDQ sablefish, 25 percent of the Bering Sea management subarea of CDQ sablefish, 20 percent of the halibut in the western Bering Sea region (area 4D), and various percentages of crab and other groundfish species (Tables 3.3, 3.4, and 3.5). NSEDC has formed a partnership with Glacier Fish Company, Ltd., to harvest the pollock quota, and in October 1997 acquired a 50 percent share in the Glacier Fish Company for approximately $40 million. Additionally, NSEDC and Glacier Fish Company jointly own a freezer longliner, the F/V Norton Sound, to harvest the CDQ sablefish quota. The halibut quota is harvested by fishermen from Nome, Savoonga, and other villages using local vessels. Additional data on the investments pursued by NSEDC are provided in Appendix F.

Yukon Delta Fisheries Development Association

The Yukon Delta Fisheries Development Association (YDFDA) represents the villages of Alakanuk, Emmonak, Kotlik, and Sheldon Point. Approximately 1,700 people live in these 4 communities. The quota allocations for 1998 include

Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
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13 percent of the Bering Sea CDQ pollock, 33 percent of the halibut in the western Bering Sea region (Area 4D), 10 percent of the Aleutian Islands management subarea of CDQ sablefish, 75 percent of the Bering Sea management subarea CDQ sablefish, and various percentages of crab and other groundfish species (Tables 3.3, 3.4, and 3.5). YDFDA has formed a partnership with Golden Alaska Seafoods, Inc., to harvest the pollock quota. The halibut and sablefish quotas are harvested by local residents using vessels owned by YDFDA. Additional data on the investments provided by YDFDA are provided in Appendix F.

Allocation Of Quota

The amount of fish quota allocated to western Alaskan communities is 7.5 percent of the total allowable catch of Bering Sea multispecies fishery, 20 percent of the BSAI sablefish, and various percentages of the halibut in Bering Sea management Areas 4A though 4E. The program was recently expanded to include Pacific cod, Atka mackerel, turbot, yellowfin sole and several other species of flatfish, as well as king, Tanner, and snow crab. Under the multispecies program, CDQ groups will be allocated a total of 7.5 percent of the quota. Bering Sea opilio, bairdi, and king crab will be phased in at 3.5 percent in 1998, 5 percent in 1999, and 7.5 percent in 2000.

The State of Alaska evaluates applications and recommends quota allocation for each CDQ applicant. The U.S. Secretary of Commerce and NPFMC review the state's recommendations and the Secretary of Commerce makes the final authorization for CDQ applicants to harvest quota. The maximum award to any group is 33 percent of the overall 7.5 percent CDQ allocation. The criteria used to allocate quota are addressed in Chapter 4.

In 1994, past performance was included in the criteria for allocations. For the 1996-1998 period, significant adjustments in the allocated quota were made on the basis of past performance. For example, pollock allocations were reduced for central Bering Sea and increased for Norton Sound and Yukon Delta (Table 3.3). Table 3.3 provides greater detail on the full range of reallocations.

Phases of CDQ Development

The primary purpose of the CDQ groups is to determine the best use of the allocations provided to them. This simple purpose requires considerable deliberation because each group must decide which activities are best suited for its region and constituents. Examination of CDQ activities since 1992 indicates that four phases have occurred:

  • Phase I: Formation and governance
  • Phase II: Organization direction and plan development
Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
×
  • Phase III: Plan implementation
  • Phase IV: Performance review and revision

While there have been certain defining elements to each of these phases of development, some activities begun in phase I have necessarily continued through the other phases. Each phase has been characterized by its own distinctive, essentially non-recurring activity as well. This section will identify the range of program activities that have occurred in Phases I-IV.

Phase I: Formation And Governance

Formation

Activities include identification of member communities, structure of governance, by-laws, and, if necessary, incorporation. The type of organization chosen (cooperative, for-profit corporation, nonprofit corporation) often has distinctive influences on the subsequent direction of the group. Many CDQ groups have created a network of subsidiaries (some as for-profit corporations), partnerships, and joint venture arrangements, which they see as best suited to carrying out the different activities.

Governance

This includes setting up a management organization with a decision-making structure and executive leadership, establishing financial oversight capability, establishing recognized ties to appropriate federal and state bureaucracies, and developing acceptable Community Development Programs. It also means setting up legal arrangements for contracts and ensuring the fiduciary responsibility of the CDQ group.

For the existing CDQ groups, Phase I occurred mainly in the summer and early fall of 1992. Each of the eligible communities was required to hold meetings at which fishermen were selected to represent the community (State of Alaska, 1995). Subsequently, six applicant CDQ groups emerged ''based primarily on geographical proximity and cultural boundaries" (State of Alaska, 1995, p. 11). To some extent, experience with the corporate model used in ANSCA villages guided the structure of the CDQ groups. There is substantial variability in the groups largely due to the lack of specificity in federal and state regulations about how communities were to organize or implement the quotas. The election procedures used by the CDQ groups are established in bylaws and are similar. All of the groups have established criteria for membership on the board of directors that guides the CDQ group. Most of the groups require that a representative on the board of directors be a permanent resident of the region or village from which they are elected for a certain period of time, and a certified commercial or

Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
×

subsistence fisherman. The representatives are elected to the board of directors through recognized governing bodies in the communities such as the traditional council, Elder's council, City Council, local village corporation, or the Indian Reorganization Act council. Typically, each village is allowed to elect one representative to the board of directors. Representatives on the board of directors typically serve for two or three year terms, although in some cases the terms of office are not specified. Several of the CDQ groups also have term limits for elected representatives.

The board of directors can also elect officers to aid in the administration of the CDQ groups, including a President, Vice President, Secretary and Treasurer. Additionally, most of the CDQ groups have provisions to allow the hiring of an Executive Director who can act on behalf of the Board of Directors. Some of the CDQ groups have provisions allowing the formation of committees and a few of the CDQ groups have provisions allowing for the addition of other villages to the group, although such villages would still need to qualify for acceptance to the CDQ program under state and federal guidelines.

Phase II: Organization Direction and Plan Development

Organization Direction

The next phase of the CDQ evolution was the determination of organization goals and objectives and the implementation process. The Congressional mandate for the CDQ program that appears in the 1996 Magnuson-Stevens Act reauthorization provides a basic template for looking at activities that CDQ groups have undertaken. This enabling legislation clarified the primary goals of CDQ programs as well as the procedures to be followed to receive the allocation and its benefits. Both federal and state guidelines were established for the plans that CDQ groups were required to prepare to qualify for allocations. The initial program was developed under the direction of the North Pacific Fishery Management Council in the early 1990s with the primary aim to provide communities with the means to develop ongoing commercial fishing activities.

These goals include expansion of employment opportunities in commercial fishing and processing and an increase in capital investment in fishing, processing, and infrastructure. To meet these goals, each CDQ group developed its own approach and tailored its program through local interpretation of needs while following the directives of state program managers.

The setting of group direction required the group to develop long-term goals and more specific project-related goals. This process was conducted primarily by the elected board with input from others in the western Alaska region who were familiar with the fisheries and the economic, social, and cultural characteristics of BSAI villages.

The long-term goals of all the CDQ groups tend to be broad statements such

Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
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as "stabilize, enhance, and diversify the economy. . . by participating in the Bering Sea groundfish industry" and "maximize the social and economic benefits. . . from the harvesting and processing of Bering Sea fisheries." Four of the CDQ groups indicate that a goal for their group is to be a self-sustaining and continuing institution. Three plans address broader economic development objectives beyond commercial fishing. Two groups specify participation in fisheries management institutions to insure the viability of the resources. The specific goals of each group demonstrate significant diversity as might be expected given the resources, history, and cultures of the communities. This variability will be demonstrated in the discussion of Phase III.

Plan Development

To qualify for quota allocations, federal regulations require CDQ groups to submit detailed plans outlining their characteristics, capabilities, and intentions, which require major investments in the acquisition of information, some of it sophisticated and technical. In order to complete these plans, CDQ groups often hire consultants to assist in plan preparation. Some of these individuals have been retained as operational staff. In one case, actual operation of the CDQ group has been contracted to a consulting organization.

Federal CDQ regulations require three types of information: community development information, business information, and a statement of the managing organization's qualifications. The information required under each heading is substantial. Under community development information, topics to be covered include description of projects; allocation requested; project schedule; employment, vocational and educational programs; existing infrastructure; capital uses; short- and long-term benefits; and business information.

In certain of these areas, highly detailed information is required. For employment, the following information must be provided: number of individuals to be employed, the nature of the work provided, the number of employee-hours anticipated per year, and the availability of labor from local communities. Business information includes everything from harvesting methods through product mix to audit control provisions and plans to prevent quota overages. Under managing organization's qualifications are requirements for letters of support from the governing body of each community as well as demonstration of the relationship between the CDQ applicant and the managing organization.

Once completed, the plans are then submitted to the State of Alaska, which reviews the plans for compliance with federal and state guidelines and may return a plan for revision if pertinent information is missing. The state recommends allocation to the governor, who has the option of changing it. Once the state has decided on an allocation, the Council is also consulted.

Although the National Marine Fisheries Service is required to perform a final review of the plans prior to their approval and authorization, this has been

Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
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basically a pro forma step to date (Ginter, 1997). Given the limited amount of federal oversight, the state process can be controversial because the allocation of quota shares has a multimillion-dollar impact on the CDQ groups. This decision-making process has become highly controversial in the last two cycles of applications and review because of the reallocation of pollock quota from one group to another and the lack of specific reasons given for the shift.

The weighty demands of complying with the planning regulations have resulted in multivolume submissions by the CDQ groups. This, in turn, has translated into a substantial role for consultants and considerable dedication of CDQ group funds to the planning process. These costs, plus additional costs for developing annual plans, maintaining information on harvest levels, exercising fiscal control, and ensuring legal and fiduciary obligations, lead to a rather costly administrative overhead.

An unintended consequence of the plan development and monitoring process has been the location of primary offices of CDQ groups outside western Alaska in Anchorage, Juneau, and Seattle. Only one of the CDQ groups maintains its head office in a community in its region. Most of the fishing companies that partner with CDQ groups in the harvesting of pollock have their headquarters in Seattle, so coordination between CDQ groups is also facilitated by the location of offices outside of the region. An unfortunate consequence of this is that CDQ group administrators become isolated from the daily circumstances in their villages. Over time, residence out of the region may lead to poor communication, cultural dissociation, and may be inconsistent with the goals of the CDQ program.

The planning process has now been through five cycles. Expansion of the CDQ program to BSAI halibut and sablefish in 1995 resulted in awards for halibut to seven organizations. In the fall of 1995, the federally approved three-year extension of the pollock program led to another round of allocations. In September 1997, plans encompassing allocations of additional groundfish stocks and crab were submitted by the CDQ groups and the state made its recommendations to NMFS in early 1998. These allocations were made to the CDQ groups for a three year period from 1998-2000. The harvesting of the crab allocation began in March 1998 and the harvesting of groundfish allocations is scheduled to begin in October 1998.

Phase III: Plan Implementation

Activities undertaken to implement CDQ plans began with the first pollock harvests in the late fall of 1992. However, even before harvests occurred, CDQ groups had a number of things to do. They had to determine the level of staffing necessary to carry out their plans and hire qualified personnel. They then had to develop a process for connecting with fishing firms interested in partnering with them.

Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
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Staffing

A fundamental feature of the operation of CDQ groups is that some contractual relationships between CDQ groups and fishing companies are required to implement harvest of the pollock quotas. The reason for this is that the coastal village residents of western Alaska have very little knowledge about the Bering Sea offshore trawl fisheries. In fact, to a certain extent, these fleets have been regarded as the enemy over the last 20 years due to their bycatch of salmon and herring, species that are critical to the subsistence and commercial economies of the villagers. Familiarization with the industry was accomplished by pursuing contacts acquired largely at North Pacific Fishery Management Council meetings or through other segments of the fishing industry with western Alaskan operations.

Proposal Process

A bid process was established to determine a package of benefits that a fishing partner was willing to offer a particular CDQ group. Bid packages were solicited from various firms and the initial discussions were carried out in the fall of 1992. The fundamental component of the proposal was the price a bidder was willing to pay for the right to harvest the pollock. This price could be fixed or could be based on the market price at the open-access fishery. An additional element in the cash component of a proposal might be profit sharing following the actual sale of a finished product. Thus, a complicated matrix of financial choices could confront the CDQ group's board of directors when evaluating proposals with a different mix of options. Additionally, the board had to determine whether to commit to a long-term, multiyear relationship at the outset or whether to proceed on a more conservative basis of one or two years.

While it is conceivable that a proposal could have been made on a strictly cash basis for a group's allocation, several factors militated against such a course of action. In addition to money, CDQ groups were also interested in obtaining jobs for residents, given that unemployment is a serious problem. Thus, packages from bidders including number of jobs, level of pay, duration, and associated amenities (housing, transportation, food, training, and opportunities for advancement) were particularly important to CDQ boards of directors.

Another consideration, not necessarily as important as job opportunities, was the opportunity to obtain equity in vessels or firms, and in several instances, proposals offered CDQ groups these opportunities. These relationships, discussed elsewhere in this report, have had mixed results.

An additional proposal consideration was the amount of training and management opportunities offered that would permit the CDQ group to develop rapidly the capability to manage the full range of their operations. Opportunities for training in other areas of the seafood harvesting and processing industry were considered to be positive aspects of bid proposals. The outcome of the bid pro-

Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
×

posal process was generally to establish a long-term relationship with a single significant partner rather than dividing the quota among several offers.

Plan Activities

Activities conducted to date by CDQ groups can be grouped into the following "project types" (State of Alaska, 1995, p. 17):

  • Administration
  • General business development
  • Employment
  • Equity investments
  • Processing plant
  • Infrastructure
  • Access enhancement
  • Loan programs
  • Fishery development
  • Education programs
  • Other

A detailed description of the specific investment pursued by the CDQ is provided in Appendix F.

Administration—All CDQ groups have established administrative structures by hiring personnel to conduct the business of the group. There has been a high degree of stability in the executive functioning of most of the CDQ groups, however CBSFA has undergone extensive changes in its executive organization. CDQ groups that have employed persons familiarity with conditions in the villages and the commercial fisheries have been able to function effectively in the new environment.

New administrative activities are underway to manage the multispecies CDQ allocations that were awarded in September 1997, and the fishing season began in October 1998. CDQ groups are required to develop procedures to report target species and bycatch-species harvest levels to the National Marine Fisheries Service and, in essence, to manage their own quota allocations.

It is noteworthy that five of the six CDQ groups have located their main office outside the region they represent. While giving the CDQ groups closer contact with fishing companies and state managers, it has limited their ability to be in touch with and respond to local concerns. Particularly problematic in this regard is effectively providing information to local villages about the CDQ groups and their programs. Many villagers are not aware of the groups or are confused about some of their programs.

Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
×

General Business Development—Several CDQ groups viewed their mandate to promote local development in a broad fashion. At least two groups proposed to use royalty funds from pollock partnerships to establish businesses that are at best tangentially related to commercial fishing. These programs have not been viewed favorably by state program overseers, who have required businesses to have some significant connection to commercial fishing.

Some examples of general business development conducted by CDQ groups are enhancement of salmon and herring marketing, creation of an Alaska seafood investment fund, establishment of vessel haul-out and storage businesses, and seafood waste conversion. Several of these efforts are in the planning stages and have not yet been implemented.

Employment—All CDQ groups have embarked on programs to provide jobs of various kinds for residents of their communities. All have used their allocation quotas to leverage employment on factory trawlers. While these have been entry level positions, the timing of the work (January to March) has generally fit well with the schedules of villagers from communities where subsistence activities represent an important element of their lifestyle.

A second area of fisheries employment is in shore-based processors of salmon, crab, herring, and halibut. These jobs are generally the result of a cooperative arrangement in which CDQ funds have been invested with an already existing business, or have been used to purchased and revitalize a business. Included in this sector are jobs in ice plants and as dock workers.

Equity Investments—All six of the CDQ groups have made equity investments of one kind or another, and several have set up for-profit subsidiaries.

Fishing vessels have been a common equity investment. Some ventures have been the outright purchase of vessels that are then leased to village residents for participation in local fisheries. Others have been joint venture arrangements with already existing commercial fishing vessels in which the CDQ group purchases a share of the vessel. In most cases, the CDQ groups have purchased less than a majority share of the vessels already operating in the fishery. Partnership arrangements have been established with a variety of different vessels using a range of fishing gear.

One group has taken the process further by building new boats and training village residents in their construction. This has the added benefit of providing new skills in welding and other aspects of boat-building.

Factory trawlers have also been joint-venture equity investments of several CDQ groups. Two of these investments have continued for a number of years while a third, the major investment of one CDQ group, has gone bankrupt, and the CDQ for-profit group established to run the enterprise is presently in an uncertain status. (See Box 3.2).

Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
×

BOX 3.2 Coastal Villages Fishing Cooperative

The Coastal Villages Fishing Cooperative (CVFC) was established in 1992 as a for-profit corporation for the purposes of participating in the CDQ program. CVFC began to negotiate with Golden Age Fisheries to form a partnership to harvest its pollock allocation. From this partnership, the Imarpiqamiut Partnership (IP) was formed as the manager and owner of the factory trawler, F/V Brown's Point. In exchange for 50 percent ownership in the IP, CVFC dedicated all of the quota it was allocated from 1992-1995. The IP made substantial investments in vessel and processing infrastructure; however, the partnership did not prove profitable.

In 1996, the State of Alaska hired a consultant to review the financial status of the Brown's Point. Subsequent analysis by the State of Alaska of various financial records indicated that the IP was failing to provide royalties to CVFC under its 1997 pollock "A" season contract, and that the royalties that were supposed to have been collected were significantly below the market rate. Concerns were raised that the processing privileges for the pollock allocation were inappropriately assigned. The CVFC had attempted to permanently convey its pollock processing privileges to the IP, which would have caused a significant long-term loss in revenue to CVFC. The state was further concerned when it learned that the creditors of the IP were anticipating foreclosing on the Brown's Point.

In late 1997, the state found that because the Brown's Point was undergoing foreclosure proceedings, many of the milestones and goals in CVFC's 1996-1998 Community Development Plan (CDP) would not be met. The state recommended to the National Marine Fisheries Service that unless there were significant changes in the management of the pollock quota, specifically the dissolution of the IP, that the CVFC's 19961998 Community Development Plan for pollock should be terminated. The state recommended that the pollock quota allocation be terminated

Processing Plants—Shore-based processing plants have been an important activity for three CDQ groups in isolated areas, where a lack of local processing had prevented development of commercial fishing activities. In other cases, older abandoned facilities have been renovated or brought into production. In some cases, investment has improved functioning facility. In at least one instance, an entirely new processing plant was established in a village where processing had never existed. Floating processing facilities have been a third category of equity investment pursued by one group.

As the previous discussion demonstrates, equity investment strategies have

Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
×

unless the partners and key creditors dissolved the partnership. CVFC appealed the recommendation, stating that it had reached a suitable dissolution agreement with its key creditors to pay off approximately $1.5 million in outstanding debt. In January 1998 the state agreed to rescind its recommendation to terminate the allocation, if CVFC dissolved the IP and reached agreements with its creditors.

Since that time, the Coastal Villages Region Fund (CVRF), a successor to CVFC has been formed to manage the CDQ allocation. The state required CVRF to review and reform its management structure and procedures. CVRF contracted with an independent company to perform the management review. This review provided several recommendations to CVRF and the state has required that these recommendations be implemented prior to the 1999-2000 pollock allocations to be made in September 1998. CVRF has considered the recommendations and has begun to implement them. The CVRF has opened a new office in Anchorage and has hired a financial officer and several managers to oversee the program. The State continues to monitor developments in CVRF closely, specifically communication within the CVRF organization, communication between the state and CVRF, contract negotiation, control over quota, and contract management.

The events in CVFC indicate that the state oversight and the threat of quota termination resulted in changes in the management of CVFC's quota. The mechanism that the state used to create change, recommending the termination of quota allocation unless certain criteria were et, appears to be working. The situation with CVFC points out that regular reviews of the CDQ groups and how they are managing their quota can provide useful information to both the state and CDQ managers. Conceivably, earlier review may have indicated problems in the management of CVFC's quota allocations and could have minimized their financial debt.

varied among the CDQ groups. Some groups have pursued a number of relationships in diversifying their options. One group was initially quite cautious and put off investment until the second funding cycle of the program. At present, they are one of the most active investors and have developed five equity investments in different fisheries.

Infrastructure—The development of fisheries infrastructure has been a major activity of five of the six CDQ groups. One CDQ group, operating in a region with a century-old history of commercial fisheries, has a relatively well-devel-

Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
×

oped infrastructure. Nevertheless, the group has recognized the importance of maintenance and ongoing improvement by establishing an investment fund for future use.

The most frequently undertaken project in the early years of a CDQ program is dock development or improvement. Dredging of harbors has been accomplished in two areas, two communities have received ice delivery systems, while another community has obtained a vessel storage facility. There are additional plans to develop two more buying stations, upgrade a dock, and build a boat ramp.

Infrastructure projects, including roads, storage facilities, and water treatment facilities, have been an especially good way for CDQ groups to demonstrate leadership and creativity by joining forces with regional, state, and federal agencies to leverage CDQ funds and to achieve greater impact.

Access Enhancement—Because of sales to fishermen outside the local area, the Alaskan limited access program for salmon and herring fishery has in several cases lost permits. Lack of access to capital and information about the availability of permits has prevented village residents from purchasing permits. Several CDQ groups have established objectives to assist residents in their areas to gain access to these fisheries.

One group has taken the view that information is the most important missing element and has established a service to link local permit sellers to residents in the region interested in purchasing permits. Another group has established a fund to purchase IFQs in the Alaskan halibut and sablefish fisheries to be fished on the CDQ group's vessels. Two groups intend to establish loan funds to allow residents to purchase either permits or IFQs. Finally, one group is acting as a guarantor to the state for permit purchases through the state loan programs.

Loan Programs—More traditional loan programs for vessels and gear are being run by all six groups. Two have also established small business loan programs for residents wishing to get into fishery support businesses.

Fishery Development—This category includes several activities, each quite different from the other. One CDQ group is examining ways to rehabilitate certain salmon populations, which traditionally have been important to the regional economy. Other groups are initiating fisheries in locations where there has been no commercial fishery. Three groups are investing in exploratory fishing research. Three groups are seeking ways to create new products from their fisheries.

Education Programs—Two basic forms of educational investments in the human capital of village residents have played a prominent role in CDQ activities of all six groups. Educational scholarships, typically about $1,000 per year, have been provided to qualified local residents. These cover any kind of educational

Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
×

program at two- to four-year institutions. The general rationale for this non-fishery activity is that it benefits local communities through improved expertise and earning potential.

The second form of human capital development, for training programs, have focused on skills necessary to participate in jobs on offshore vessels. This training has tended to be in such technical areas such as production line work, refrigeration, machine maintenance, and other jobs related to the technical functioning of the offshore factory trawl fleet. Training for higher level positions on factory trawlers has not yet materialized. One group has proposed development of an observer training program, which could be a good way for village residents to move into the management sector.

Other—One group has established a disaster relief fund to buffer against bad fishing seasons or other disasters that could affect members of their villages.

Phase IV: Performance Review And Revision

CDQ groups have examined their performance and opportunities at several different junctures in their short histories.

A significant component of the performance review is the assessment of how well the group meet the basic guidelines established by the state. This, in turn, is rolled into the periodic cycle of plan development, submission, and defense. These steps have led to plan revision, including elimination or modification of certain programs and activities. Some of these changes have come at the behest of state overseers, while others have been the outgrowth of internal review.

One interesting development has been the interaction among the CDQ groups themselves, me of which have an ongoing exchange of information about guidelines, legal responsibilities, and the state oversight process. In addition, several CDQ groups have initiated small cooperative ventures. More interactive developments are possible, particularly development of forthcoming techniques for managing the new multispecies CDQ allocations.

It is possible, however, that the competitive framework established by the state to reallocate quota share at each renewal cycle could work to preclude cooperation. One way this could be avoided would be to reward cooperation that produces positive results.

Suggested Citation:"3 Overview of the Community Development Program." National Research Council. 1999. The Community Development Quota Program in Alaska. Washington, DC: The National Academies Press. doi: 10.17226/6114.
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This book reviews the performance and effectiveness of the Community Development Quotas (CDQ) programs that were formed as a result of the Sustainable Fisheries Act of 1996. The CDQ program is a method of allocating access to fisheries to eligible communities with the intent of promoting local social and economic conditions through participation in fishing-related activities. The book looks at those Alaskan fisheries that have experience with CDQs, such as halibut, pollock, sablefish, and crab, and comments on the extent to which the programs have met their objectives—helping communities develop ongoing commercial fishing and processing activities, creating employment opportunities, and providing capital for investment in fishing, processing, and support projects such as infrastructure. It also considers how CDQ-type programs might apply in the Western Pacific.

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