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28N Rights March 2006


A Brief History of "28N Rights"
By Ministry of Fisheries

May 2006


 

Based on a paper provided by MFish 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 system, 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 that 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. 

Under the Fisheries Act 1996, these rights are carried forward and clarified under section 23. The implementation of the adjustments to holdings under the quota share system 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.  

 

What Stocks have 28N Rights?

The numbers I have on the history and current status of 28N rights were sourced from the databases last year and these are subject to change over time. Although no more rights have been discharged since then, if a client sells all of their quota in a stock the 28N rights disappear – that is, they are not transferable; they can only be redeemed to the original quota holder that had their PMITQ reduced, and they must have continuously owned ITQ in that stock since then. So, treat these numbers as a guide.

If you require further information on these rights, including names of who holds them, you will need to apply to FishServe – the quota registry.

The total rights derived from the pro rata reductions in the buyback stocks was around 5,000 tonnes – total required reduction was about 15,000t. There is a total of about 3,000 tonnes of rights still on the books.  Significant rights are still outstanding in HPB2, HPB3, PAU4, RCO3, SNA1, SNA8, TRE1, TRE7.

Table 1:

Discharged 28N rights

Stock Code

Date

Old TACC Amount (kg)

New TACC Amount (kg)

Before Increase s28n rights

Number of clients with s28n rights before increase

After Increase s28n rights

Number of clients with s28n rights after increase

BAR1

1/10/1996

9969500

11000000

778300

39

0

0

BNS3

1/10/1992

175000

350000

34600

13

0

0

BYX2

1/10/1991

1274300

1480000

157000

14

0

0

ELE3

1/10/1995

423600

500000

25300

24

0

0

GUR3

1/10/1991

524000

600000

33800

46

0

0

GUR7

1/10/1991

678200

815000

20300

36

0

0

LIN3

1/10/1994

2166600

2800000

4200

10

0

0

MOK1

1/10/1993

157400

200000

46800

50

4381

50

MOK1

1/10/1995

200000

400000

4072

45

0

0

MOK3

1/10/1992

71400

120000

11500

25

0

0

SNA2

1/10/1992

157400

250000

26000

17

0

0

SNA7

1/10/1997

160300

200000

58100

15

19334

15

SPO1

1/10/1991

688100

825000

13000

41

0

0

SPO2

1/10/1991

70900

85000

19500

23

5400

23

SPO3

1/10/1991

363900

430000

172300

71

106200

71

SPO3

1/10/2000

453900

600000

106864

28

0

0

SPO7

1/10/1991

294100

350000

48200

50

0

0

STA2

1/10/1991

37400

100000

6600

6

0

0

STA3

1/10/1991

733900

900000

14700

27

0

0

STA7

1/10/1991

527700

700000

500

3

0

0

ELE3

1/10/2002

825000

950000

300

1

0

0

SNA2

1/10/2002

252300

315000

1400

1

0

0

BNS2

1/10/2004

873400

1048000

104652

11

0

0

SCH3

1/10/2004

321905

387000

44900

19

0

0

SCH7

1/10/2004

533700

641000

71900

23

0

0

SCH8

1/10/2004

440600

529000

5500

7

0

0

SPO2

1/10/2004

72014

86000

3187

8

0

0

TAR2

1/10/2004

1632800

1796000

19300

5

0

0

TAR3

1/10/2004

1169470

1403000

49500

17

0

0

               

 

Total rights redeemed

1746,960

 

 

 

 

Table 2.

Quantity of 28N rights not redeemed: Oct 2004

Stock Code

Total 28N rights as at Oct 04 (kgs)

BAR1

78900

BCO4

700

BCO7

3700

BYX2

16470

BYX3

300

GMU1

29500

GUR1

85150

GUR3

6000

HPB1

1200

HPB2

32500

HPB3

51900

HPB7

3600

JDO1

6300

LIN2

7600

LIN7

111000

MOK1

2075

MOK3

1000

PAU2

419

PAU3

80

PAU4

26303

PAU5A

440

PAU5B

513

PAU5D

210

PAU7

8830

RCO3

189600

SCH1

38100

SCH2

2700

SKI2

43200

SKI7

152500

SNA1

533735

SNA7

17405

SNA8

933500

SPO1

500

SPO3

1000

SPO7

300

STA2

500

STA3

2900

TRE1

332000

TRE7

224500

WAR2

4000

WAR3

88900

   

Total

3040,030

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