DEPARTMENT OF PUBLIC POLICY

POL 663: Ocean Policy and Law

Lecture 7: Offshore Resource Development Property Rights in the Ocean Introduction
In this section we begin to look at property rights in ocean resources in a bit more detail, moving from a focus on energy (our previous discussion) to focusing on other tangible things of value in the ocean. I think at the outset it is important to note that what is valuable in terms of ocean resources is something of a moving target from a definitional standpoint. Consider our preceding discussion about sources of energy production (the inputs of creating usable energy). Offshore reserves of oil and gas have traditionally been considered a valuable marine resource in terms of energy development. However, technological advancements (and we can think of technology here as a disruptive force) have increased the kinds of things found in and around the ocean that can be thought of as source inputs for energy development. Wind turbines are a great example; sited in certain ocean areas, the wind that is generated from heat differentials between the air and water provide the source input for creating electricity. In order to capture the wind, turbines must be placed in specific locations in the ocean, making not only the wind valuable, but also the specific location in the ocean where the turbine stands. Another example is the tidal energy created by gravitational fields; the tidal forces can be captured creating another value as an energy input.1 The point above is that the ocean can house a variety of valuable assets depending on a number of factors (demand, technological capacity, etc.). In this section we look at certain examples of things that are valued in the ocean, and the corresponding rules that apply to those things. To begin, we review the concept of property rights and consider how they differ depending on the location and attributes of the resource in question.

Property Rights Associated With Ocean Resources

The examples of wind and tidal energy help one understand the disruptive nature of technology. As technology advances, it allows us to expand our view of what might be considered an energy input, thereby disrupting our traditional definition of energy inputs (like gas and oil), while also disrupting what kinds things we might define as resources in the ocean (like wind and waves as energy inputs).

Page 2 of 14 Recall the different kinds of property rights based on two characteristics, divisibility and excludability, represented visually here:

Recall that the oceans are examples of public goods, at least in the sense that the lands and resources (things) contained in the ocean are owned by the public-at-large. Management of these publicly owned goods is accomplished primarily by government who acts as the trustee of the ocean resources, managing the resources for the benefit of current and future generations under the legal concept known as the public trust doctrine. In the active management of these resources, government can transmute (change or alter) the property right characteristics of ocean resources. For example, government can grant a license to certain private individuals giving them a right to take fish (arguably a resource) from the ocean; upon taking the fish the property right of the fish itself transmutes (changes) from a public good to a private good. The person who takes the fish is legally entitled because they have been granted permission by the government (via the license) who, in turn, has authority to grant permission by virtue of its capacity as trustee of the fish as a public resource.2 When the private individual captures the fish under the conditions set forth in the license (the correct species, sex, maturity, etc.), the act of capture is the event upon which the property right transfers. Without the express conditions being met, the capture is legally void and the act itself does not result in the
2

This is true so long as the government is acting wholly within its authority as trustee. There may be instances where the government transmuting ownership rights of the public resource to a private party is outside its authority as trustee and thus in violation of its obligations to the public as owner of the resource.

Page 3 of 14 transfer of property rights (a fish taken without a valid license does not become a private good by the act of taking the fish). The example of the fish can be applied to a variety of other ocean resources, some of which are more intuitive by nature and experience (like oil, gas, minerals), and some of which are less intuitive (like wind near the ocean surface, ecological habitat, historic artifacts, or other spatially important areas). Once we understand that the concept of a valuable resource in the ocean is fluid (pun intended!), we can expand our view of ocean resources from a policy standpoint. With this expanded view, we can overlay legal frameworks onto our concept of ocean resources and begin to think about the role of property rights in this context. In this section we are talking about defining property rights in relation to certain factors. One such factor was noted in our example above, legitimacy; the private fisherman has legitimacy when she captures a fish under a license granting her the legal ability to do so. Legitimacy helps to define the property right in question; with legitimacy the fish becomes private property, without legitimacy the fish remains public property taken illegally. Exploring the questions of legitimacy, we find that legal frameworks are a key consideration in identifying (and resolving) policy issues; depending on how the law is interpreted, the resulting property right of the resource is determined. So, for example, policy options that do not consider the effect of the legal status of marine resource utilization under different scenarios can miss important property right distinctions leading to unintended results. We had some discussion of this topic in the coastal land use and takings section. The legitimacy of the government action in regulating private land is a question of law that is bounded by constitutional principles, the Fifth Amendment on one side, and the Tenth Amendment on the other. The correct balancing of these interests is required when thinking about policy options: move too far in one direction and government legitimacy erodes. The same can be said here regarding property right definitions in marine resources; how the property right is being determined helps to justify (or invalidate) the legitimacy of the action.

Conflicts Between Marine Resources

The text defines a number of property rights that exist in marine resources by categorizing different kinds of resources and discussing the history and current legal rules that apply to those resources. Examples include historic preservation and salvage, marine protected areas, and fisheries management; points will be made about these topics in greater detail below. Right now I want to draw our attention to conflicts that can arise among the various things in the ocean that can be labeled resources based on considerations and criteria mentioned above. Consider a situation where a particular area of the ocean contains a variety of resources that may compete with one another in how those resources might be utilized. We delved into this subject a bit when discussing federal consistency under the Coastal Zone Management Act (CZMA). Recall that state interests can sometimes conflict with federal interests in marine areas. If we look at the interests being discussed, we can see

Page 4 of 14 they are really focusing on different ways to utilize the marine environment. The example provided was when the federal government wished to utilize resources in federal waters (say the drilling for oil and gas), and that planned utilization had the potential to conflict with state utilization of what it was terming marine resources say the protection of a coastal underwater habitat, like a coral reef. In this example the parties in controversy (state and federal government) are focusing on different assets of the marine environment that are located in geographically distinct areas. Resolution often depends on how the law prioritizes uses; in the case of federal and state conflicts we discussed the role of the CZMA in helping to prioritize rights among the parties. Imagine a situation where the conflict between resource utilization exists in the exact same location of the ocean. For example, imagine an area of the ocean that has important attributes for wind development as one resource use, but also has important cultural, recreational, and aesthetic values that might be put in jeopardy if the wind resource is developed; this is the current example of Cape Wind, a wind turbine project in the works off the coast of Massachusetts over the last decade. Those interested in offshore energy development consider the site for the wind turbine farm to be important for a variety of reasons including: energy independence, sustainable energy development, climate change mitigation, and job creation. Opponents see the space as important for other reasons including the unobstructed view from the shoreline, the traditional use of the area for boating, and the cultural identify of the area for native people. The question we may consider is how might policy choose between these potentially competing values in the same location? Are some of these identified marine resources more valuable than others, and if so, how are we coming to that conclusion (how are we defining and analyzing value in the context of the issue presented)? The Cape Wind example provides an important conceptual framework for our understanding of how property rights and legal frameworks impact our policy analysis of the issue. For example, the proposed site of Cape Wind sits wholly in federal waters making the permitting for the activity primarily a federal function (taking away some of the states role in balancing these interests). However, we also know the CZMA (a federal law) provides deference to coastal state management plans when the proposed federal action might impact those defined state priorities. Thus, we must look to Massachusetts coastal management planning and determine if the wind project might impact state priorities. There are also environmental impacts that can be considered under other federal laws (like NEPA for instance), but we hopefully get the point; conflicts can occur within the same geographic space of the ocean, and in order to understand the policy options within those conflicts, an understanding of the legal landscape is necessary. With this foundational understanding we can turn to some of the details about specific marine resources in this section.

Historic Preservation and Salvage

So, who doesnt fantasize about finding some sunken Spanish Galleon off the coast of Florida ala Jack Sparrow! The riches, the intrigue, the mystique! We know there are people who spend small fortunes doing just this. Of course, they are subject to the same

Page 5 of 14 rules and regulations as everyone else. And, in America, we have no shortage of such rules and regulations! As you may have gleaned from the reading materials, salvage depends mostly on a question of property rights, and we know those property rights can be transmuted under certain rules from our discussion above. Under common law tradition, lost treasure was considered, in most instances, abandoned. Once abandoned, the treasure was capable of being retrieved by another. If done so, the materials on the ship would become the property of those who found it. This picture became dicey, as international custom allowed for ships flying under a particular flag to be the property of that nation (the ships were sovereigns of the nation in question).3 Under such situations, a lost ship was not thought of as abandoned, so a salvager could not claim immediate rights to the ship. However, in order to create an incentive for finding important sovereign properties, those who salvaged ships had legal entitlements to the bounty of this ship (they could claim the legal right of salvage).4 All of this became a bit more refined with the passage of the Abandoned Shipwreck Act of 1987. Under this federal law, ships became the property of the state in which jurisdiction they were found. This law gave the states special rights in the ship, subject to certain laws of salvage.5 What is interesting to me is the question of how these laws affect the incentives of individuals. Today, many states claim historical significance of certain shipwrecks within their jurisdiction. Moreover, governments are increasingly creating sanctuary areas in the ocean around certain shipwrecks of historical significance (consider Pearl Harbor). When we collectively engage in such actions, we limit what other marine activities can occur in the same area. So the area that is created as a marine sanctuary, for instance, may be designated for Reason A (its historical significance). The designation usually
3

In this case we have an additional property right at play in ocean waters. In addition to the natural things found in the ocean in a particular jurisdiction that are owned by the public and managed by the sovereign (government) for the publics benefit (our fish, minerals, oil, gas, and other examples), we can also have man-made things found in the ocean that retain their original ownership identify (the ship retaining its sovereign rights from its country of origin).
4

We can note that the legal rules under common law tradition provide a particular framework for the transition of property rights. Of course if we change the legal rules that apply, say for example moving from common law rules to specific statutory rules, then we alter the framework for the transition of property rights.
5

In this case, the legal rules change from common law to federal statute. Often these new rules reflect changes in preferences (policy directions) brought on by a number of political considerations that are influenced by changes in technology (capacity) and similar factors.

Page 6 of 14 results in limitations placed on the development and utilization of other marine resources in the same area, thus limiting policy options. Another example of the impact of how we choose to prioritize certain marine resources to the exclusion of others.

Marine Protected Areas

Within the last few decades, protection of marine areas has become a major theme of marine policy. We have begun to recognize the importance of marine food webs, and biological hot spots in the marine environment (like we do in the terrestrial environment for example the Amazon Rain Forest). With this recognition has come the development of laws aimed at protecting marine areas for various reasons. Sometimes the protecting is related to a specific event (like the USS Arizona National Park at Pearl Harbor); in this case the reason for the protection is closely tied with the human experience, cultural and historic. Other times, protection is related to significant biological and heritage values (for example, the Northwestern Hawaiian Islands Marine National Monument which represents one of the largest protected marine area in the world). The relatively recent establishment of this monument did not come without controversy. A sizeable fishing enterprise was displaced, as well as other activities within the region that conflicted with the purpose of the monument. Competing uses among marine resources within the same geographic area came into conflict and, not unlike our evolving zoning practices on land, the marine environment is beginning to become subject to competing demands as our capacity to interact with the marine environment increases in step with our understanding of what values exist in these areas.6 The point to remember is that we now have a general policy in the United States of assessing the various values of the marine habitat. In that vein, we will ultimately continue to reassess our priorities in the use of a given marine area. When we determine a specific value that requires protection, we have the policy and legal tool of marine protected areas to use at our disposal.

Fisheries
Target Fish Species is a term that is often used to refer to the kinds of fish we actively seek out in the ocean for commercial harvesting. In this section we look at the particular
6

The decision to prioritize marine protection over resource exploitation (like commercial fishing in this instance) is really one that must be analyzed within the policy context. As noted earlier, the variables that ultimately impact a decision to create a marine protected area are many, and these variables often compete with other interests in the same area. How one set of interests ends up being prioritized over another is a dynamic process in many cases, and this is particularly true when setting aside areas of the ocean for protection (like wilderness designations on terrestrial public lands). While we do not have time to explore the variables that influence these decisions in the greatest of detail, those of you who are interested should be encouraged to explore the history and development of these marine protected area designations.

Page 7 of 14 legal regime that surrounds one of the oldest resources for humans in the ocean, commercial fisheries. From a policy perspective, fishery management has presented a number of unique problems, most of which are connected to understanding the ecosystem dynamics of the target fish species. Indeed, the very notion of management stems from the idea that the resource can be over-utilized and therefore exploited to the point of collapse. Some of the characteristics that help to explain this phenomenon will be highlighted in describing the property rights attributed to fish in the ocean as we overlay the major legal frameworks that apply in this area. We can begin by noting a few important characteristics of fish that may be different from characteristics of other ocean resources described earlier: Fish are living organisms that reproduce. As such, they have unique lifecycles and population dynamics that vary between different species. This is important because, ultimately, managing fish as a resource means ensuring that humans are not extracting fish at a rate that exceeds replenishment. To understand this rate of extraction, detailed information is required about the lifecycle of particular fish species, including understanding things that can impact the species outside of human extraction (like predation, disease, and other factors that can influence overall population numbers). Most target fish species move, and some move over large distances. Beyond having naturally fluctuating populations, fish swim around to different areas of the ocean, which creates some interesting issues when we think about ownership rights. Most of the time ownership is defined by what is found in a particular geographic area. So what happens if a coastal state gives a license to capture a fish that is originally found in state waters (state jurisdiction) but is tracked and ultimately caught in federal waters? If the person does not have a license to take that fish in federal waters, then is the act illegal? Did the fish become the property of the federal jurisdiction when it moved from state to federal waters? Connected with the fact that fish reproduce (the first point above), fish also die. Unlike other resources that seem more static or stable over time (like oil for instance), the value of the fish exists mainly during the time it is alive, and in fact the value can be associated with a particular stage of life (for example caviar is, most often, fish eggs and thus represents the initial stages of life wait until the fish are borne and it looses the necessary characteristics from which the value derives).

So fish live, breed, die, and move around. These characteristics impact the way in which we ascribe value to the species creating important policy considerations, particularly when legal frameworks are overlaid onto policy questions. One simple example is to consider the impact of choosing to not harvest a population of commercial scallops because of concern about by-catch of other target species, say depleted New England Cod; because Cod has been overfished and the population of the species has crashed, policies have been implemented to protect the remaining populations in the hopes of

Page 8 of 14 seeing a rebound in its numbers. To help this process along large areas of habitat believed to be important breeding grounds for Cod have been protected from fishing. Many of these areas also contain other target fish species like the valuable (in high demand) sea scallop. Sea scallops, like other living things, have life cycles. Does it make sense to not harvest sea scallops in an area of high abundance (scallops dont move very far so they tend to stay in specific areas) in order to protect the New England Cod populations? What if this means allowing tens of millions of dollars worth of sea scallop to be lost because of old age (they simply die)? Is this a prudent use of the public resource as contemplated under the public trust doctrine? By not capturing the scallops before death, that specific harvest value is lost and cannot be recovered at another time; a prime example of how the shelf life (lifecycle) characteristic of this marine resource creates unique policy issues.7 Understanding some of these characteristics helps us place the management of commercial fish species as an ocean resource into a somewhat unique perspective. Because they move around, live, die, and exist in an environment (the ocean) that is hard to monitor with precision, there is a dynamic nature to understanding fish from a management perspective.8 Make some wrong assumptions about the population size,

Consider the alternative side of this argument looking at the protection of commercial fish species to support important ecological webs in the oceans. It is certainly arguable (there is strong evidence) that the diversity of living species found in the ocean are based on a complex set of interactions that have established a kind of equilibrium or balance over time. Directly intervening in this effort can have consequences on that established balance, in some cases creating an imbalance that can lead to a cascading effect where the lack of species diversity can cause extinction rates to increase. If we think about ecological diversity in the ocean as a resource, then we might see human intervention that diminishes this diversity as a violation of the public trust because the value is being wasted presently and, certainly, for future generations. This is not an argument that has been significantly advanced in the legal field, but the obligations of government under the public trust doctrine to not waste marine resources might be the foundations for such an argument, particularly as our understanding of the importance (value) of marine diversity in supporting life continues to develop over time.
8

Consider the following comparison. If you and I were given permission to log a certain amount of forest for the next fifty-years, we could arguably have the chance of being in business for the entire period. Indeed, we could survey the forest, know the types of trees, and how many are available for harvest. We could also determine growth patterns (and other relevant information), thereby determining our optimum harvest rates from year-to-year. This is quite literally impossible with fisheries. First, there is no proven way to know exactly how many fish are in your area at any given time. Even if there were a way, fish are transitory, and the numbers would constantly change. Maybe the easiest way to understand the difference is to think of this reality: when one looks at a mountainside full of trees, they see everything before them; when one looks at the ocean from above, they only see a reflection of themselves. It is very hard for us to know what

Page 9 of 14 natural mortality, breeding conditions, or the impacts of human fishing effort on the population, and you have a potential recipe for disaster; the collapse of actively managed fisheries around the world stands in testament to this statement. Considering all of these variables, we can look to the actual system we have for fisheries management, and then we can come back to some of these points for further consideration. Fishery Management Policy in the United States The major source of fisheries management in the United States derives from the Magnuson-Stevens Fisheries Conservation and Management Act (MSA), a federal law that attempts to create management in a decentralized manner by delegating the development of management recommendations to regional councils across the U.S. Each council is made up of a mix of stakeholders from various backgrounds in the fishing industry; some stakeholders are from the industry itself, some are political appointments, and some represent environmental concerns. The concept behind the council system is that representatives from various interests in the fisheries of the region work collaboratively to determine how to manage the resource for a given unit of time (usually a fishing season). The guidelines for making management decisions are based on meeting broad policy goals (referred to as national priorities) outlined in the MSA, and the framework for meeting these goals is through a maximum sustained yield filter, meaning the goals should be met while always maximizing the amount of target fish species taken in a given season. One question we can ask here (in conjunction with the information provided in the readings) is how exactly does a council determine maximum sustained yield for a given fishery? In theory the maximum sustained yield is some number of the fish species that can be taken by human effort that does not otherwise put the survival (or diminishment of the background population) of the species into jeopardy. Another way of saying this is the council is charged with figuring out how many of the fish in a given stock can be taken without diminishing the stocks ability to survive the take and also to continue to maintain a healthy population level. Based on what we have state previously about understanding the dynamic nature of fish populations you can likely see that this assessment is difficult to do with precision (if not impossible). This is where the role of science becomes critical in the assessment phase. Under the MSA federal law, maximum sustained yield is determined by the best available science. This means that regional councils must use science as the foundation upon which to set quotas of target species take each year. In an ideal world, science would provide the council with perfect information about the species population, including such information as the natural mortality of the species in a given year9, the is going on in the marine environment below the surface, and this remains a major obstacle to fisheries management.
9

This includes assumptions about knowing the life cycle of the target species in detail, and then also knowing the particular stresses exhibited on the species for a particular

Page 10 of 14 actual population of that species in a particular stock, and the amount of human induced take (both intentional and incidental) that can occur without impacting the stocks ability to replicate its numbers for future generations (so there are fish to take from the population in the future). In a less than ideal world, this information is not readily known and understood, at least not with the precision assumed in the law. Thus, managers often place into their scientific assessments a precautionary measure, reducing the calculated total take by a certain percentage to allow for uncertainty about factors that can impact the mortality and thus population of the target species. Now consider that the calculation of allowable take is based in some measure of the best available science (which does not mean the science is entirely accurate on any given species it just means the best information we have on that species), and the calculation itself is done by scientists and others that are not necessarily members of the regional council.10 The final distilled information is then given to the regional council members for their consideration and vote. We can hypothesize that, at this stage, the information that is given to the larger regional council is often sophisticated for many council members (remember where regional council members come from) and thus, in many ways, is likely deferred to by members when making decisions about stock assessments, mortality, and thus what is a reasonable quota of take for the upcoming season under the statutory principles of maximum sustained yield. Under such an iterative process, from year-to-year, we can further assume that new information can lead to some drastic changes in the quotas set for certain species; this often occurs when the actual landings of target fish species are low, as that new information itself informs assumptions about populations (along with new research on population size and health if this is occurring in parallel with the landings). Changes in the allowable take from year-to-year can lead to difficulty for those participating in the fishery. For example, assume a fishery that has the following total allowable catch for 3 years as follows:

year. For example, even assuming science could determine the normal background rate of mortality of the species, that particular population might be under acute stresses in a given year; a rare disease like fin rot may be attacking the population causing a higher mortality rate in a particular season.
10

Most regional councils now employ subcommittees of experts in certain fields in order to help make sense out of the information that helps to form the basis of decisions made about the amount of target fish species that can be taken in a given year. For example, science and statistical subcommittees are often comprised of academic and professionals in various fields relevant to understanding the science behind the numbers and the calculation of the numbers. This committee often interprets primary data created by government scientists (usually NOAA Fisheries staff), but also interprets data submitted by academic institutions and other reports that may be established on relevant target species stock in the primary literature.

Page 11 of 14 Year 1 Year 2 Year 3 : : : 100 units 200 units 50 units

Further assume you are a fisher with a catch share right in this fishery for 10% of the total allowable catch.11 Under these assumptions, let us look at how the information provided can impact our behavior relative to the fishery in question.12 In year 1 we are able to harvest 10 units of target fish species (10% of 100 units). We can assume that 10 units results in a set dollar amount of value (gross income) given the supply and demand for the particular fish landed (establishing the price per unit of fish). Whatever amount 10% of the allocation is creates certain incentives for us; if it results in a large profit we act in a certain way, whereas if it results in a small profit (or even a net loss) we likely act differently. Let us assume 10% of 100 units of fish results in a healthy profit margin for us. This profit may create incentives for us to reinvest some of the profit in the business, say for example in getting a larger boat or more efficient gear. These costs are undertaken as investments, believing future allocations of catch shares will be at least as good as the first year, and the price per unit of fish will remain stable over time (demand will remain high). Moving away from the details of the example for a moment, we may view the assumptions of constant supply and demand with a critical eye and assess whether they are reasonable. Indeed, it may be that relying on calculations about population levels of a wild species that is hard to understand seems, fundamentally, unreasonable. If science cannot easily determine the fluctuations of the population over time, how reasonable is it for commercial fishers to gamble on such assumptions? Those of us who are risk
11

You have a license by government to go out and catch 10% of whatever quota is set by government. This license may be given to you in different ways. You may be purchasing the right each year from the government, or you may be given this percentage in perpetuity. The point is the right to fish can be given to you in a variety of ways, ranging from a right of access (like a toll good property right) to a private property right (like a private good) from our property rights characteristics. Under the public trust doctrine, what matters most is that the government if yielding benefits for the public by giving this 10% right of access to the fishery to you; the public is benefitting from having access to the fish resources (directly through buying the fish, or indirectly through the economic revenue generated by the activity). In addition, the public is benefitting because it does not have to pay for the capture of the resource, rather you spend your own resources (your own time and money) to go fishing. Thus, on balance, the benefits are assumed to equal (or exceed) the costs. Considering the fish resource is assumed to be sustainable (the population replicates if you dont deplete the population to the point of extinction), the deal becomes even better for the public (because the fish will be replaced in the near future).
12

Remember, policy is very much connected to behavior patterns; ideal policy initiatives incorporate behavior patterns into decision-making.

Page 12 of 14 adverse by nature may find such a gamble highly unreasonable (and even irrational). But remember, it is assumed that capturing the fish (and selling it in our market system) is realizing a public good because the resource has a shelf life; if we do not capture the resource, then the monetary direct value of that resource is lost to old age and death by, inevitably, natural causes. The alternative, it would seem, would be to nationalize fisheries and have the government (i.e., us) take the risk of stock collapse by paying for the inputs into the system (the boat, energy, time and effort in capturing the fish). Putting aside the issues of nationalization as a policy direction for the moment, we can simply assume that private- public partnership in fishery management is the system of choice. That said, let us return to the example. If 10% of 100 units of fish landed results in healthy profits, then assuming other variables remain constant (particularly demand and therefore price per unit of fish), year 2 will result in a higher profit margin because 200 units of fish are allowed to be taken and 10% of 200 units yields 20 units of fish for us (double last years landings). If effort per unit of fish caught remains stable (the cost does not increase per unit of fish landed), then our profits will double in year 2 and likely create further incentives of investment. This is particularly true if the stock assessment and management strategy for the fishery has steadily increased year after year for several years; the steady increases over time reinforce a belief that the system will continue to provide for high yields of fish. Year 3 represents the problem year and thus highlights a major policy implication/consideration for us in the example. Unlike years 1 and 2, year 3 results in a quota being set at 50 units of fish, of the year 1 quota and of the year-2 quota. Depending on profit margins this could be devastating for us as we are limited share of the total quota, in this case 5 total units of fish (10% of 50 units). The basis for this lowered quota is likely new information that leads to some revelation about the target species population health that was not apparent in how the quotas were set for years 1 and 2. We have already discussed the variables that might lead to this revelation, including the fact that we dont know very much about many of these species, they are hard to follow in real-time (because they live under the water), and our best science is really a best guess about population size and health. So our new allocation may make it near impossible to turn a profit. In fact, if the trend of lowered quotas continues for another year to two, we may simply be unable to continue fishing as a business. Under this drawn out example is it any wonder why the MSA as a management scheme represents one of the more difficult policy approaches in our federal system?

The Lessons of Offshore Resource Management

We rely on private individuals to become willing participants in a system where they have little control over the allocation of the resource. The reason why is the resource itself is public in nature, not private. We may give the users access rights to the resource, and even a right to capture a percentage of the resource itself, but ultimately the resource is controlled at the federal level. If the resource is static, then there is a greater likelihood of calculating the risks involved in resource development and exploitation. Offshore oil and gas exploration is one example where initial research helps

Page 13 of 14 to identify deposits of the material offshore, and the risk is associated with assumptions made about the size of the resource; once the resource has been proven, there is little risk in the continued extraction. Fisheries are more difficult to manage because of the complexity of the living species; no one expects oil and gas to reproduce like we do fish, and the oil and gas are less subject to variability of the known quantity. Moreover, factors can evolve over time that further constrains the amount of target species that can be extracted. While this is also true of other resources (like the Deep Horizon Oil Spill leading to a moratorium of offshore oil and gas development), fisheries are a particularly dynamic example of moment-to-moment management where consistency is extremely difficult to censure over time. The lessons from a policy standpoint are many. First, we can understand the relationship between the property rights established in offshore marine resources generally, the legal limitations based on those property rights, and the implications of the characteristics of certain marine resources in establishing policy directions. The fact that marine resources are public property means the resource requires particular management under the trustee obligations inherent in the public trust doctrine. Government is required to manage the property rights in such a way that maximizes benefits for the public both today and tomorrow. For certain resources that are static, this management might be somewhat easier, at least in theory. However, for resources that are dynamic (like fish populations) the management also becomes dynamic leading to situations like those described in our hypothetical above. What is important to note here is that the law provides a number of limitations when it comes to offshore resource development, and those limitations are subject to change over time. For example, the leasing of offshore areas for oil and gas development may, over time through better science and insights into cause and effect, come into conflict with other policy priorities, such as climate change. If it does, then other legal mechanisms (like the federal consistency requirement under the CZMA) may play a role in the capacity of the government to continue leasing the development of this resource. We have seen examples of changes in policy direction for certain offshore resources in this section, like the evolving definition and rights of ownership and salvage of marine resources; often these changes in policy directions coincide with technology advancements. Finally, our legal frameworks are often tied to better understandings of our environment. Fishing quotas are set to reflect the best information we have about the target species populations; as new information comes to light, we adapt our system to accommodate this information. Such a reactive policy can never really provide optimum insurance to its users, often resulting in frustration for those who find themselves on the wrong side of the bet. Some of us may be left with an unresolved feeling about this process, even to the point where we might ask ourselves if there is a better way of managing dynamic marine resources? Some have argued adamantly for the privatization of offshore resources as a potential solution; divest the government of ownership rights so that private citizens can take on the responsibility of calculating how to best manage the risk inherent in these resources. For high risk resources like fish, this might mean managing the fishing effort

Page 14 of 14 to always be well below what seems a reasonable threshold to ensure the population is not placed at serious risk of collapse. Otherwise the private-public partnership is doomed to failure because the variability of populations (and lack of precision in understanding this ahead of time) creates an untenable control solely in the discretion of the public entity, leaving the private partner to internalize the costs associated with these decisions.13 At the heart of this discussion is really one about acknowledging the challenges that exist in public resource utilization. One unique characteristic of such resources is the concept that they live on in perpetuity for humankind; the resources are managed sustainably so that they exist for future generations. We can reflect on the impact this overarching goal has on policy in the field of marine resource utilization a difficult field to understand, and for some, even more difficult to operate in. END OF SECTION.

13

Often government has made a decision to bail out failing fishing industries (mitigate the costs) when the total allowable catch determination results in economically harmful reductions to individual quotas. The bail out is meant, in part, to acknowledge the risks placed on the private partner in this management scheme.