By Lauren Sommer Boskofsky, partner and Jed Ullrich, summer associate
Recreational halibut fisheries in Alaska are managed jointly by the International Pacific Halibut Commission (IPHC), the North Pacific Fishery Management Council (Council), and the National Marine Fisheries Service (NMFS), an agency under the National Oceanic and Atmospheric Administration (NOAA). The IPHC sets the overall total allowable catch and season by regulation, while the Council and NMFS allocate the catch among user groups.
The IPHC has jurisdiction over all halibut fishing in the U.S. and Canada, including Area 2C and Area 3A, covering Southeast and Southcentral Alaska, respectively. In 2004, the Council first implemented a harvest target for guided sport halibut fishing in these areas. The target was exceeded once in Area 3A and every year in Area 2C, until 2011 when NMFS implemented the federal Charter Halibut Limited Access Program (the Program) creating a limited-entry fishery within Area 2C and Area 3A.
The Program sought to stabilize the fishery in these areas by limiting the number of charter vessels allowed to participate through a permitting system designed to reduce the number of permits in circulation over time. According to NOAA, the Program’s goals include “to increase the value of the resource, limit boats to qualified active participants in the guided sport halibut sector, and enhance economic stability in rural coastal communities.”
Under the Program, any person operating a vessel to guide halibut charters in Area 2C or Area 3A is required to have a valid federal Charter Halibut Permit (CHP) onboard. CHPs were initially distributed to existing charter operators that had a history of participation in the fishery based on their logbook entries from two specific seasons.
These CHPs were either “transferable” or “non-transferable.” Non-transferable CHPs are less common, and are, as the name implies, non-transferable: they may not be sold or transferred. Once the original holder of a non-transferable CHP dies or (if an entity) ceases to exist or has new ownership, the CHP is returned to NMFS and is extinguished.1
The majority of CHPs initially issued were transferable, meaning the CHP owner may transfer the CHP by sale, gift, or inheritance.2 In all cases, the transfer must be submitted to NMFS for approval using its prescribed transfer application form. Significantly, with one exception, NMFS will not approve a transfer if it would result in the recipient owning, holding, or controlling more than five CHPs.3
The one exception to the five CHP limit applies when a CHP holder that was initially issued more than five transferrable CHPs transfers all of the CHPs initially issued to a recipient that does not already own any CHPs, and the transfer is done in connection with the sale of the entire charter vessel business.4 This exception is not available to a CHP holder that was initially issued more than five CHPs and previously sold one or more of their CHPs before selling their charter business. In order to remain transferrable as a block, all the transferrable CHPs issued must be transferred together. For example, an individual or business that was issued eight transferrable permits cannot sell or gift one and then transfer the remaining seven as a block. In this case, the initial holder could transfer up to five of their CHPs to the person acquiring the charter business, if the recipient did not own, hold, or control any other CHPs.
Intrepid operators seeking to expand their business cannot simply establish a second business or purchase CHPs through another person. When determining if a CHP transfer is permitted, NMFS asks if the recipient person has an “affiliation” with a person who already owns, holds, or controls five CHPs.5 If the recipient is affiliated with a person who already owns, holds, or controls five CHPs, NMFS considers them the same person and aggregates their CHP ownership for purposes of the five CHP limit.
The definition of affiliation is very broad, and covers ownership, control, and the power to exert control. For ownership, NMFS looks at both direct and indirect ownership of 10% or greater, no matter how far removed from the CHP recipient in an organization’s ownership structure. If the recipient’s ownership – again, direct or indirect – overlaps 10% or more with an existing CHP owner, they are the same person for the purposes of the five CHP limit.
For control, the rules include a long list of relationships that constitute control, most of which focus on the CHP holder’s control over the person fishing the CHP.6 If the recipient of a proposed transfer already has control over CHPs and the transfer would result in them owning, holding, or controlling more than five CHPs, the transfer is prohibited.
In sum, the five CHP limit covers a broad range of transfers and should be examined closely if the recipient is already involved in the fishery beyond the initial issuance and the narrow charter vessel business purchaser exception is inapplicable. The CHP transfer process in many cases is straightforward, however, transfers can quickly become complicated due to the five CHP limit, and the complex regulations implementing it.
This article does not anticipate every potential transfer situation and is not a substitute for legal advice. If you have a question about a CHP transfer, contact your attorney or call LBB at 907-276-5152 and we will do our best to assist you.
1 See 50 CFR 300.67(j)(3) (2024) (a CHP is invalidated when: the holder dies, if an individual; or, the holder “dissolves or changes”, if an entity); see also 50 CFR 679.42(j)(4)(i) (2024) (definition of “change”).
2 CHP leasing is disfavored but is allowed. As of this writing, leasing CHPs does not constitute a transfer that requires NMFS approval.
3 See 50 CFR 300.67(j)(1) (2024) (“A person may not own, hold, or control more than five (5) charter halibut permits except [for initial recipients issued more than five (5) permits]. NMFS will not approve a transfer application that would result in the applicant that would receive the transferred permit holding more than five (5) charter halibut permits except as provided by paragraph (j)(6) of this section.”)
4 50 CFR 300.67(j)(6) (2024).
5 See 50 CFR 300.67(j)(2) (2024); 50 CFR 679.2 (2024) (definition of “affiliation”).
6 See 50 CFR 679.2 (2024) (meaning of “control” within definition of “affiliation”).
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