A Brief History of “28N Rights”

May 2006 (Based on paper provided in March 2006)

Origin and Law in respect of 28N Rights

These rights originate under section 28N and 28OE of the Fisheries Act 1983. These sections were part of the major amendment to the Act that introduced the quota management system (QMS) in 1986.

Although referred to as 28N rights, the rights arise under other sections (s.28T and s.28OE). However, it is in respect of the uncompensated reductions to provisional maximum individual transferable quota (PMITQ) under s.28N that the rights were granted – hence the tag. The short version goes like this:

In preparation for commencement of the quota management system in 1986, commercial fishers’ reported catch history was assessed. Fishers could choose the best 2 of 3 qualifying years to ensure that individuals were not penalised for one bad year, and the average of these two years was used. However, this meant that the total of those assessed catch histories, recorded as PMITQ, was generally greater than the highest total catch for any of the qualifying years for the stock in question. So, aside from any reductions to total catch required for sustainability reasons, in most stocks reductions to PMITQs were also required just to get the total of catch rights back to the old TACs.

For some inshore species, the Government offered to receive tenders to buy packages of PMITQ from fishers. Many of the tenders were for amounts greater than the government valuations indicated the rights were worth and were refused. About a third of the required reductions for those species were bought. In a second round, the Government offered fishers 80% of what they had paid in the first round as a last chance to sell rights back, under condition that if insufficient rights were offered the next move would be uncompensated pro rata reductions. About another third was bought. A total of $42 million was spent on the buy-back.

Those that chose not to sell, and to have their rights reduced without compensation, became entitled (originally through section 28T, later replaced by 28OE) to have those reduced PMITQ rights restored in the future as quota, should the TACC for the relevant stock be increased. The procedure followed is that the 28N rights are recorded for each fisher as a tonnage, and so when a TACC for a stock is increased, any outstanding 28N rights are honoured first before other quota holders receive an increased catch allocation.

28N rights are not transferable. They can only be redeemed to the original quota holder that had their PMITQ reduced, and that quota holder must have continuously owned ITQ in the relevant stock.

Under the Fisheries Act 1996, these rights are carried forward and clarified under section 23. Implementation of the adjustments to holdings under the Fisheries Act 1996 is a bit complicated but boils down to the same thing – 28N right holders get first dibs when a TACC increase happens until all those rights are discharged.

Rebuilding Stocks

28N rights only work within the TACC. That is, they are not additional to a TACC and don’t force any action like reductions or increases in TACCs. They only become operative - causing a redistribution of quota shares among quota owners - when a TACC is increased.