To simplify a long story, your allocation request is too small. The long story, which is in the description for the IEC030I message, might give you some idea what to do, but this description is terribly obscure. What you have to do is figure out what your allocation should be, update your JCL, and try again.
Aren't you missing the DCB parameter? When defining a dataset as new you need to tell the operating system, such as : //dd1 dsn=name, dcb=(recfm=fb,lrecl=80,blksize=8000), space(cyl,2,2,rlse), disp=(new,catlg,delete)