Comments Invited

We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2014-0523; Directorate Identifier 2014-NM-050-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments.

We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this proposed AD.

We received more than five reports of the forward drain lines of the engine struts being blocked with coked particles. Coked particles form when hydraulic fluid is exposed to, and degraded by, the high temperatures of the hot core zone of the engine and the hot pneumatic bleed ducts. In two events, fluids backed up into the electrical (left) side of the disconnect box assembly of the strut system, causing an electrical fault that resulted in a false overheat detection engine indicating and crew-alerting system (EICAS) message. Flammable fluids collecting in the electrical side of the disconnect box assembly of the strut system can cause an electrical fault for electrical components, and create a potential ignition source for trapped flammable fluids that can lead to fuel explosion.

In the other three events, flammable fluids backed up and pooled in the fluid (right) side of the disconnect box assembly of the strut system. Flammable fluids collecting in the disconnect box assembly of the strut system are a fire hazard because that area has no fire detection, containment, or extinguishing capability and with an ignition source can result in an uncontrolled fire in the strut. Also, flammable fluids pooling in the disconnect box assembly of the strut system can spill over onto the engine and initiate an engine fire in the engine core cavity compartment.

Hydraulic fluid collecting in the disconnect box assembly of the strut system can cause contamination and hydrogen embrittlement of the titanium structure resulting in cracks that can compromise the engine firewall by allowing a fire in the engine area to enter the strut; or by allowing flammable fluids to leak down and initiate an engine fire in the engine core cavity compartment, and also compromise the engine fire extinguishing system. Hydraulic fluid contamination, including contamination caused by hydraulic fluid in its liquid, vapor, and/or solid (i.e., coked) form, in the strut forward dry bay can lead to hydrogen embrittlement of the titanium fittings of the forward engine mount bulkhead and also the consequent inability of the fittings to carry engine loads, resulting in the loss or separation of an engine. Hydraulic embrittlement could also cause a through-crack formation across the fittings through which an engine fire could breach into the strut, resulting in an uncontained strut fire. We are proposing this AD to detect and correct blockage of forward strut drain lines, which could cause flammable fluids to collect in the forward strut area and potentially cause an uncontrolled fire or cause failure of engine attachment structure and consequent airplane loss.

On May 24, 2013, we issued AD 2013-11-14, Amendment 39-17474 (78 FR 35749, June 14, 2013), for certain The Boeing Company Model 777-200 and -300 series airplanes. AD 2013-11-14 currently requires repetitive general visual inspections of the strut forward dry bay for hydraulic fluid contamination, and related investigative and corrective actions if necessary. AD 2013-11-14 was prompted by reports of hydraulic fluid contamination found in the strut forward dry bay. The actions required by AD 2013-11-14 are intended to detect and correct hydraulic fluid contamination of the strut forward dry bay that could result in hydrogen embrittlement of the titanium forward engine mount bulkhead fittings, and the consequent inability of the fittings to carry engine loads, resulting in engine separation.

On April 12, 2011, we issued AD 2011-09-11, Amendment 39-16673 (76 FR 24354, May 2, 2011), for certain The Boeing Company Model 777-200 and -300 series airplanes. AD 2011-09-11 requires repetitive inspections for hydraulic fluid contamination of the interior of the strut disconnect assembly; repetitive inspections for discrepancies of the interior of the strut disconnect assembly, if necessary; repetitive inspections of the exterior of the strut disconnect assembly for cracks, if necessary; corrective action if necessary; and an optional terminating action for the inspections. AD 2011-09-11 resulted from reports of system disconnect boxes that have been contaminated with hydraulic fluid and, in one incident, led to subsequent cracking of titanium parts in the system disconnect assembly. We issued AD 2011-09-11 to detect and correct hydraulic fluid contamination, which can cause cracking of titanium parts in the system disconnect assembly, resulting in compromise of the engine firewall.

We reviewed Boeing Special Attention Service Bulletin 777-54-0027, Revision 1, dated September 12, 2013. For information on the procedures and compliance times, see this service information at http://www.regulations.gov by searching for and locating Docket No. FAA-2014-0523.

We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of this same type design.

This AD would require repetitive functional checks for blockage of the forward strut drain line, doing corrective actions (including cleaning or replacing any blocked drain lines) if necessary; and a one-time cleaning of certain forward strut drain lines. This proposed AD would require accomplishing the actions specified in the service information described previously.

The phrase “corrective actions” is used in this proposed AD. “Corrective actions” are actions that correct or address any condition found. Corrective actions in an AD could include, for example, repairs.

We consider this proposed AD interim action. The manufacturer is currently developing a modification that will address the unsafe condition identified in this AD. Once this modification is developed, approved, and available, we might consider additional rulemaking.

We estimate that this proposed AD affects 54 airplanes of U.S. registry.

We estimate the following costs to comply with this proposed AD:

We estimate the following costs to do any necessary replacements that would be required based on the results of the proposed inspection. We have no way of determining the number of aircraft that might need these replacements:

According to the manufacturer, some of the costs of this proposed AD may be covered under warranty, thereby reducing the cost impact on affected individuals. We do not control warranty coverage for affected individuals. As a result, we have included all costs in our cost estimate.

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.

We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This proposed regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify this proposed regulation:

(1) Is not a “significant regulatory action” under Executive Order 12866,

(2) Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),

(3) Will not affect intrastate aviation in Alaska, and

(4) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

Section 105(e) of the Federal Alcohol Administration Act (FAA Act), 27 U.S.C. 205(e), authorizes the Secretary of the Treasury to prescribe regulations for the labeling of wine, distilled spirits, and malt beverages. The FAA Act provides that these regulations should, among other things, prohibit consumer deception and the use of misleading statements on labels, and ensure that labels provide the consumer with adequate information as to the identity and quality of the product. The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers the FAA Act pursuant to section 1111(d) of the Homeland Security Act of 2002, codified at 6 U.S.C. 531(d). The Secretary has delegated various authorities through Treasury Department Order 120-01 (Revised), dated December 10, 2013, to the TTB Administrator to perform the functions and duties in the administration and enforcement of this law.

Part 4 of the TTB regulations (27 CFR part 4) allows the establishment of definitive viticultural areas and the use of their names as appellations of origin on wine labels and in wine advertisements. Part 9 of the TTB regulations (27 CFR part 9) sets forth standards for the preparation and submission of petitions for the establishment or modification of American viticultural areas (AVAs) and lists the approved American viticultural areas.

Section 4.25(e)(1)(i) of the TTB regulations (27 CFR 4.25(e)(1)(i)) defines a viticultural area for American wine as a delimited grape-growing region having distinguishing features as described in part 9 of the regulations and a name and a delineated boundary as established in part 9 of the regulations. These designations allow vintners and consumers to attribute a given quality, reputation, or other characteristic of a wine made from grapes grown in an area to its geographic origin. The establishment of AVAs allows vintners to describe more accurately the origin of their wines to consumers and helps consumers to identify wines they may purchase. Establishment of an AVA is neither an approval nor an endorsement by TTB of the wine produced in that area.

Section 4.25(e)(2) of the TTB regulations (27 CFR 4.25(e)(2)) outlines the procedure for proposing the establishment of an AVA and provides that any interested party may petition TTB to establish a grape-growing region as an AVA. Petitioners may use the same procedures to request changes involving existing AVAs. Section 9.12 of the TTB regulations (27 CFR 9.12) prescribes standards for petitions requesting the modification of AVAs. Petitions to expand an established AVA must include the following:

• Evidence that the region within the proposed expansion area boundary is nationally or locally known by the name of the established AVA;

• An explanation of the basis for defining the boundary of the proposed expansion area;

• A narrative description of the features of the proposed expansion area affecting viticulture, such as climate, geology, soils, physical features, and elevation, that make the proposed expansion area similar to the established AVA and distinguish it from adjacent areas outside the established AVA boundary;

• A copy of the appropriate United States Geological Survey (USGS) map(s) showing the location of the proposed expansion area, with the boundary of the proposed expansion area clearly drawn thereon; and

• A detailed narrative description of the proposed expansion area boundary based on USGS map markings.

TTB received a petition from Patrick L. Shabram, on behalf of John Sebastiano Vineyards and Pence Ranch Vineyards, proposing to expand the established Sta. Rita Hills AVA. The Sta. Rita Hills AVA (27 CFR 9.162) was established by T.D. ATF-454, published in the Federal Register on May 31, 2001 (66 FR 29476). 1

The Sta. Rita Hills AVA, which covers approximately 33,380 acres, is located in Santa Barbara County, California, between the towns of Lompoc to the west and Buellton to the east. The Sta. Rita Hills AVA and the proposed expansion area are located within the Santa Ynez Valley AVA (27 CFR 9.54), which is also entirely within Santa Barbara County. The Santa Ynez Valley AVA is, in turn, within the larger multicounty Central Coast AVA (27 CFR 9.75). The Sta. Rita Hills AVA and the proposed expansion area do not overlap any other established or proposed AVAs.

The proposed expansion area is located along a portion of the existing eastern boundary of the Sta. Rita Hills AVA. The proposed expansion would move a portion of the AVA's existing boundary further to the east, to a road within a north-to-south canyon, named “Cañada de los Palos Blancos,” located west of Buellton. The expansion area contains approximately 2,296 acres and three commercial vineyards, two of which are currently divided by the existing AVA boundary (the Rio Vista Vineyard and the John Sebastiano Vineyard).

According to the petition, the climate, topography, soils, and native vegetation of the proposed expansion area are similar to those of the established AVA. Unless otherwise noted, all information and data pertaining to the proposed expansion area contained in this document are from the petition and its supporting exhibits. (The expansion petition, its addendums, and its exhibits are posted for public viewing on the Regulations.gov Web site ( www.regulations.gov ) within Docket No. TTB-2014-0007 as “supporting documents.”)

The petition provides evidence that the proposed expansion area is associated with the name “Sta. Rita Hills.” The name “Sta. Rita Hills” is an abbreviation of “Santa Rita Hills,” which is the name of the major geographical feature of both the established AVA and the proposed expansion area. The petition notes that the USGS Board on Geographic Names defines the geographic feature known as the Santa Rita Hills as a ridge “bound on the south by Santa Ynez River and on the north by Santa Rita Valley, just east of the community of Lompoc.” A 1906 decision card, issued by the USGS Board on Geographic Names to define a geographic feature more specifically, describes the Santa Rita Hills as “[h]ills, between Santa Ynez and Santa Rita Valleys, east of Lompoc, extending to the mouth of the Cañada de los Palos Blancos, Santa Barbara County, Cal.” Evidence provided in the original Sta. Rita Hills petition and discussed in T.D. ATF-454 demonstrates that the hills are still known as the “Santa Rita Hills,” and that other features within the AVA share the “Santa Rita” name, including the hydrological feature known as the Santa Rita Uplands Basin and the historic Santa Rita Land Grant and Rancho Santa Rita.

As noted above, the petition proposes to move a portion of the existing eastern boundary of the Sta. Rita Hills AVA to a road located within the canyon known as Cañada de los Palos Blancos, and the proposed expansion area does not extend east of that canyon. Therefore, based on the definition of the Santa Rita Hills in the 1906 US Board on Geographic Names decision card, the proposed expansion area is located within the region defined as the Santa Rita Hills. Furthermore, although the boundaries of the proposed expansion area extend north of the Santa Rita Valley and south of the Santa Ynez River, TTB notes that the current Sta. Rita Hills AVA boundary also encompasses land north of the Santa Rita Valley and south of the Santa Ynez River, and the proposed expansion area boundaries do not extend any farther north or south than the current AVA boundaries.

The current eastern boundary of the Sta. Rita Hills AVA resembles a staircase with three “steps” that, progressing in a north-to-south direction, take the AVA's boundary progressively further to the east. The proposed expansion area abuts the middle and bottom “steps”. The existing boundary's bottom “step” currently splits the Rio Vista Vineyard, and the middle “step” currently divides the John Sebastiano Vineyard, placing a portion of these two vineyards within the proposed expansion area. The third vineyard within the proposed expansion area, Pence Ranch, is located east of the John Sebastiano Vineyard and west of the Cañada de los Palos Blancos. The locations of the three vineyards are marked on the map in Exhibit J of the petition.

The proposed expansion area's southeastern-most point marks the beginning point of its boundary and is located at the northeast corner of the bottom “step” formed by the current AVA boundary, at the peak of an unnamed 1,174-foot hilltop, south of Santa Rosa Road. The proposed boundary then proceeds northwest to the intersection of Santa Rosa Road and an unnamed, unimproved road east of a gaging station. The proposed boundary then follows the unimproved road west, crossing the Santa Ynez River, to the 320-foot elevation contour and continues along that meandering contour to an unnamed, unimproved road running along the bottom of the Cañada de los Palos Blancos. The proposed boundary then follows that unimproved road north-northwest through the canyon where the road then intersects with a jeep trail at the 1,635-foot elevation point, and the boundary finally proceeds northwest in a straight line to an unnamed hilltop with an elevation of 1,443 feet. The 1,443-foot elevation point is where the proposed boundary rejoins the current Sta. Rita Hills AVA eastern boundary, at the southeastern corner of the top “step”.

Although the terrain immediately to the east of the proposed expansion area is similar to the terrain within the proposed expansion area, the petitioner did not include this land in the proposed expansion area because the area east of the canyon is not known as “Santa Rita Hills.” Additionally, farther east beyond the proposed eastern boundary, the flat, level floodplain of the Santa Ynez River becomes broader and the hills begin to take on a north-south orientation, compared to the east-west orientation of the hills of the proposed expansion area and the Sta. Rita Hills AVA. The area immediately to the south and west of the proposed expansion area is the Sta. Rita Hills AVA, which has similar topography, climate, and soils, which will be discussed later in this document. The area to the north of the proposed expansion area contains the higher elevations of the Purisima Hills, which are also to the north of the current Santa Rita Hills AVA boundary.

According to the petition, the proposed expansion area contains the same climate, topography, soils, and native vegetation that distinguish the established Sta. Rita Hills AVA from the surrounding region. Because the established Sta. Rita Hills AVA is located to the immediate west and south of the proposed expansion area, the distinguishing features of the proposed expansion area will only be contrasted with the regions to the north and east.

According to the expansion petition and T.D. ATF-454, the defining characteristic of the established Sta. Rita Hills AVA is its cooler, marine-influenced climate. Cool air from the Pacific Ocean moves west-to-east across the Sta. Rita Hills AVA along two paths--the Santa Ynez River and the Santa Rita Valley. The Pacific air travelling through the AVA via the Santa Rita Valley exits the AVA through a narrow gap in the mountains along State Highway 246, which separates the Purisima Hills (to the north of the AVA) from the Santa Rosa Hills (to the south of the AVA). The marine air moderates the temperatures within the Sta. Rita Hills AVA and also brings nighttime and early-morning fog to the region. The moderated temperatures allow for the production of cool-climate wine grapes such as Chardonnay and Pinot Noir.

TTB notes that T.D. ATF-454 does not include climate data from within the Sta. Rita Hills AVA or the region immediately to the east of the Sta. Rita Hills AVA, which is now the location of the proposed expansion area. Instead, T.D. ATF-454 includes data from Lompoc, the town adjacent to the western border of the AVA, and from Lake Cachuma, which is farther east of the proposed expansion area and within the easternmost portion of the Santa Ynez Valley AVA. TTB notes that Lake Cachuma is near the region that now contains the Happy Canyon of Santa Barbara AVA (27 CFR 9.217). T.D. ATF-454 states that the region around Lake Cachuma is significantly warmer than the Sta. Rita Hills AVA because “the coastal influence is not nearly as pronounced in the Santa Ynez Valley east of Highway 101 and the Buellton Flats.” TTB notes that U.S. Highway 101 runs north-south through the town of Buellton, approximately 4 miles due east of the current Sta. Rita Hills AVA's eastern boundary, as measured from the point where State Route 246 crosses that boundary as shown on the USGS Los Alamos and Solvang quadrangle maps. Lake Cachuma and the Happy Canyon of Santa Barbara AVA are approximately 15 miles east of Highway 101. T.D.-ATF-454 also states that the regions east of U.S. Highway 101 typically do not grow Pinot Noir or Chardonnay because the climate is more suitable for growing grapes that require “significantly higher temperature * * * for adequate ripening,” such as Cabernet Sauvignon, Cabernet Franc, Merlot, Sauvignon Blanc, and Mourvedre.

At the time the Sta. Rita Hills AVA was established, viticulture did not exist within the proposed expansion area, and the eastern boundary of the Sta. Rita Hills AVA was believed to be the limit of the marine-moderated climate that was suitable for growing cool-climate wine grapes such as Pinot Noir. However, three vineyards are now established within the proposed expansion area, and all three vineyards grow Pinot Noir, demonstrating that a marine-moderated climate does extend beyond the existing eastern boundary of the Sta. Rita Hills AVA. Additionally, marine fog is common within the proposed expansion area at night and in the early morning during the growing season, as it is within the Sta. Rita Hills AVA. As evidence, the petition includes a photo of fog settled over the Pence Ranch Vineyards, the easternmost vineyard within the proposed expansion area.

The petition also includes temperature data from five weather stations located within the Sta. Rita Hills AVA (Locations A, B, C, D, and E), one weather station located within the proposed expansion area (Location F, between the John Sebastiano Vineyard and the Pence Ranch Vineyard), and one weather station (Location G) within the Ballard Canyon AVA (27 CFR 9.230). TTB notes that the Ballard Canyon AVA is approximately 4 miles northeast of Buellton and is closer to the Sta. Rita Hills AVA and the proposed expansion area than Lake Cachuma is. The locations of each of the weather stations are shown on a map in Exhibit G of the expansion petition. Table 1, shown below, lists the growing season (April through October) degree day heat summations  2 for the seven weather stations. Although the petition also includes data from 2007, 2010, and 2011 for Locations A, B, E, and G, Table 1 includes only data from 2008 and 2009 because those are the only two years for which data was available from all seven stations. The additional temperature data is in the petition, which may be viewed online at the Regulations.gov Web site ( www.regulations.gov ) within Docket No. TTB-2014-0007.

The data in Table 1 shows that within the Sta. Rita Hills AVA, degree day unit accumulation varies depending on the location. Locations in the western portion of the AVA accumulate fewer degree day units over the course of the growing season than locations in the eastern portion, and all locations within the Sta. Rita Hills AVA have fewer degree day units than the Ballard Canyon AVA farther to the east.

The table also shows that the proposed expansion area is cooler than the Ballard Canyon AVA and warmer than most locations within the Sta. Rita Hills AVA except Location E, which is located in the southeastern portion of the Sta. Rita Hills AVA, directly south of the proposed expansion area. Although only data from 2008 and 2009 is included in Table 1, the petition includes additional data gathered from the Location E station during 2007, 2010, and 2011 that shows Location E has consistently warmer temperatures than the other locations within the Sta. Rita Hills AVA. A map of current vineyard locations within the Sta. Rita Hills AVA, included as Exhibit J of the petition, shows the Location E station is in an area of active viticulture with at least five vineyards nearby. An internet search by TTB showed that all of the vineyards shown on Exhibit J as being near the Location E station grow Pinot Noir, indicating that even though the temperatures near the Location E station may be warmer than other locations within the Sta. Rita Hills AVA, the temperatures are still cool enough to allow for the production of cool-climate grapes such as Pinot Noir that are characteristic of the AVA.

Finally, the data also shows that degree day unit accumulations within the Sta. Rita Hills AVA are not entirely uniform and generally increase from east to west. For instance, there is a difference of 507 degree days between the average accumulations for the coolest station, Location A, and the warmest station, Location E. By comparison, the difference between the average accumulations for Location A and Location F, located within the proposed expansion area, is 456, placing the proposed expansion area within the degree day range found within the existing Sta. Rita Hills AVA.

The petition also included graphs showing the average monthly high temperatures for the same seven locations during the 2008 and 2009 growing seasons. The graphs indicate that the average monthly highs for the proposed expansion area are within the range of temperatures for the five stations within the existing Sta. Rita Hills AVA. Additionally, the average October highs within the proposed expansion area and the five Sta. Rita Hills locations were almost identical for both years, with temperatures ranging from 80 to 81 degrees F for 2008 and approximately 75 to 76 degrees F for 2009.

At the time the petition was submitted, climate data from within the proposed expansion area was only available from 2008 and 2009. However, in 2012, a private weather station was placed at the Pence Ranch Vineyards within the proposed expansion area (Location H), slightly farther to the east than the previous weather station located within the proposed expansion area (Location F). The year for which data from an entire growing season was available was 2013, and the petitioner submitted the data as Addendum 5 to the petition. Growing season data for 2013 was also gathered from two weather stations previously used, Location D (John Sebastiano Vineyards, within the Sta. Rita Hills AVA) and Location G (within the Ballard Canyon AVA). Location D was chosen because it was the easternmost weather station still existing within the Sta. Rita Hills AVA and could be expected to have temperatures similar to that of the proposed expansion area. Table 2, shown below, compares the degree day heat summations for the three stations.

Although the 2013 degree day heat summations within the proposed expansion area are greater than those from the station within the Sta. Rita Hills, the summations are more similar to those within the established AVA than those within the Ballard Canyon AVA, farther to the east. There is only a 4.7 percent difference between the 2013 summations for the proposed expansion area (Location H) and the Sta. Rita Hills AVA (Location D), while the 2013 summations for the Ballard Canyon AVA (Location G) are 14.4 percent higher than those of the proposed expansion area. The petitioner notes that the 4.7 percent difference between Location H and Location D is within the variability found in the analysis of temperature data from locations solely within the Sta. Rita Hills. For example, degree day heat summations from 2008-2011 at Location E, in the southeastern corner of the AVA, were an average of 5.1 percent higher than those at Location D, in the northeastern corner of the AVA. The petitioner also states that the 2013 degree day heat summations for Location H, within the proposed expansion area, are lower than both the 2007 and 2008 summations for Location E, which were 3,360 and 3,363, respectively. These comparisons demonstrate that while the proposed expansion area may accumulate more degree days than several of the weather station locations within the Sta. Rita Hills AVA, there are locations within the AVA that do reach higher annual degree day summations than the proposed expansion area.

Finally, the petitioner submitted two graphs showing the 2013 daily degree day accumulation for Locations D, H, and G. The graphs show that although Location H (within the proposed expansion area) has a higher growing season degree day accumulation than Location D (within the existing Sta. Rita Hills AVA), degree day accumulations are similar for the two stations for every date, with many dates showing identical numbers and a few showing slightly lower accumulations at Location H. By contrast, the graph comparing the proposed expansion area (Location H) to Ballard Canyon (Location G) shows a significantly higher daily degree day total for Ballard Canyon, very few days showing close to or equal degree totals, and no days showing fewer totals for Ballard Canyon. In sum, this data further demonstrates that the temperatures within the proposed expansion area are more similar to those of the Sta. Rita Hills AVA than those of the regions farther to the east, such as the Ballard Canyon AVA.

T.D. ATF-454 describes the topography of the Sta. Rita Hills AVA as “an oak-studded, hill-laden maritime throat that runs east to west, a few miles east of Lompoc to a few miles west of the Buellton Flats.” Elevations within the AVA range from approximately 180 feet to 1,700 feet. The Santa Ynez River and its floodplain valley run east-to-west through the southern portion of the AVA, and the east-to-west Santa Rita Valley is in the northern portion of the AVA. The river and the Santa Rita Valley provide conduits for cool Pacific Ocean air to enter and travel across the AVA. East of the Santa Rita Valley is the narrow wind gap that separates the Purisima Hills from the Santa Rosa Hills.

After the marine air exits the AVA, either via the wind gap or the Santa Ynez River valley, it becomes warmer and drier as it travels farther inland. Because of the difficulty in pinpointing an exact point at which the cool marine air characteristic of the AVA begins to diminish, T.D. ATF-454 states that the original eastern boundary was drawn based on “viticultural viability (primarily hillside and alluvial basin plantings) and the coastal influence suitable for cool-climate still winegrape production.”

The proposed expansion is comprised primarily of rolling hills. As noted above, the U.S. Board of Geographic Names considers the proposed expansion area to be geographically part of the Santa Rita Hills. The southeastern corner of the proposed expansion area does include a small portion of the flatter Santa Ynez River alluvial floodplain, between State Highway 246 and Santa Rosa Road, where the floodplain narrows significantly. Elevations within the proposed expansion area range from 280 feet along the Santa Ynez River to a 1,443-foot hilltop where the northern boundary of the expansion area rejoins the existing Sta. Rita Hills AVA boundary.

The proposed expansion area's location along the Santa Ynez River and directly east of the Santa Rita wind gap allows cooling marine air to enter the proposed expansion region. The expansion petition speculates that the original Sta. Rita Hills eastern boundary was drawn where the valley of the Santa Ynez River narrows significantly because it was presumed at the time of the original petition that the narrowing of the valley restricted the flow of cool air from moving farther east. However, the expansion petition states that the narrowing of the valley instead acts as a funnel and intensifies the movement of cool air inland. Additionally, the small wind gap east of the Santa Rita valley provides an additional channel for cool air reach the proposed expansion area.

T.D. ATF-454 states that the most common soil types within the Sta. Rita Hills AVA are “loams, sandy loams, silt loams, and clay loams” which contain “large percentages of dune sand, marine deposits, recent alluvium, river wash, and terrace deposits * * *.” T.D. ATF-454 contrasts these soils types with those of the region farther to the east, which contain “a higher percentage of gravelly and clay loams.”

According to the expansion petition, “[w]ithin the Sta. Rita Hills AVA, no one soil type is dominant and a wide variety of soils exist * * *.” However, the soils of the proposed expansion area are “not inconsistent with” the soils of the Sta. Rita Hills AVA. An analysis of soils from the Pence Ranch Vineyard conducted by Terra Spase, a leading viticulture analysis company, showed that the surface soils were primarily of loam and clay, with pockets of silty clay loam and loam. Subsurface soils range from clay to sandy clay loam.

A map included with the petition and based on a National Resource Conservation Service soil survey also shows that the soils within the proposed expansion area are consistent with those of the Sta. Rita Hills AVA. The map shows that the most prevalent soils within the proposed expansion area are of the Tierra, Linne, and Chamise series, which are also prevalent in the region of the Sta. Rita Hills AVA adjacent to the proposed expansion area. Other soil series found in both the proposed expansion area and the Sta. Rita Hills AVA include Corralitos, Arnold Sand, and Mocho series. The map further indicates that the most prevalent soil series (Tierra, Linne and Chamise series) in the proposed expansion area are not as prevalent farther to the east, near Buellton.

In summary, the expansion petition states that although no one type of soil dominates both the Sta. Rita Hills AVA and the proposed expansion area, the soils do further demonstrate the similarities between the proposed expansion area and the Sta. Rita Hills AVA.

T.D. ATF-454 describes the hillsides of the Sta. Rita Hills AVA as “oak-studded.” Oak trees are also present within the proposed expansion area. Although T.D. ATF-454 mentions that the hills of the Sta. Rita Hills AVA are covered with oaks, the expansion petition further explains that with regard to the oaks in the established AVA, the majority of them are live oaks. By contrast, the petition continues, valley oaks become more numerous in the warmer regions east of U.S. Highway 101, and live oaks are virtually absent, for example, within the Happy Canyon of Santa Barbara AVA, approximately 8 miles east of Buellton. The petitioner states that, consistent with the established AVA, live oaks, but not valley oaks, are present within the proposed expansion area, providing further evidence that growing conditions are similar within the proposed expansion area and the existing Sta. Rita Hills AVA.

The Santa Ynez Valley AVA was established by T.D. ATF-132, published in the Federal Register on April 15, 1983 (48 FR 16252). The Santa Ynez Valley AVA encompasses the Sta. Rita Hills AVA, as well as the Ballard Canyon AVA and the Happy Canyon of Santa Barbara AVA.

According to T.D. ATF-132, the Santa Ynez Valley AVA is the valley that contains the Santa Ynez River and is bound by the Purisima Hills and San Rafael Mountains to the north, Lake Cachuma and the Los Padres National Forest to the east, the Santa Ynez Mountains to the south, and the Santa Rita Hills to the west. Vineyards are planted on elevations ranging from 200 feet along the Santa Ynez River to 1,500 feet in the foothills of the San Rafael Mountains. The Santa Ynez Valley AVA has less marine influence from the Pacific Ocean than the more coastal regions to the west because the hills to the west of the region prevent much of the marine influence from reaching deep into the valley, resulting in a less moderated climate and overall warmer temperatures than those of areas closer to the coast. However, even without a heavy marine influence, fog is still common at elevations between 1,000 and 1,200 feet.

The proposed expansion area has elevations similar to those of the larger Santa Ynez Valley AVA. However, because of its smaller size, the proposed expansion area lacks the diversity of topography found within the larger AVA. The gently rolling hills of the proposed expansion area are more similar to the Sta. Rita Hills AVA. Like the larger Santa Ynez Valley AVA, the proposed expansion area is also warmer than regions closer to the coast. However, the proposed expansion area is cooler and receives more marine influence and fog than the Ballard Canyon and Happy Canyon of Santa Barbara AVAs farther to the east within the Santa Ynez Valley AVA, making the climate of the proposed expansion area similar to that of the Sta. Rita Hills AVA.

The large, 1 million-acre Central Coast AVA was established by T.D. ATF-216, published in the Federal Register on October 24, 1985 (50 FR 43128). The Central Coast AVA encompasses all or portions of the California counties of Santa Barbara, San Luis Obispo, Monterey, San Benito, Santa Cruz, Santa Clara, San Mateo, Contra Costa, and San Francisco, and it contains 28 established AVAs. T.D. ATF-216 describes the Central Coast AVA as extending from Santa Barbara in the south to the San Francisco Bay area in the north, and east from the Pacific coast line to the California Coastal Ranges. The only distinguishing feature of the California Coast AVA addressed in T.D. ATF-216 is that the included counties experience marine climate influence due to their proximity to the Pacific Ocean.

Both the proposed expansion area and the Sta. Rita Hills AVA have marine-influenced climates, with cooler temperatures and more fog than regions farther inland. However, neither the proposed expansion area nor the Sta. Rita Hills AVA is as cool and wet as the regions within the Central Coast AVA that are closer to the coastline.

TTB concludes that the petition to expand the boundaries of the established Sta. Rita Hills AVA merits consideration and public comment, as invited in this notice of proposed rulemaking.

See the narrative boundary description of the petitioned-for expansion area in the proposed regulatory text published at the end of this proposed rule.

The petitioner provided the required maps, and they are listed below in the proposed regulatory text.

Part 4 of the TTB regulations prohibits any label reference on a wine that indicates or implies an origin other than the wine's true place of origin. For a wine to be labeled with a viticultural area name or with a brand name that includes an AVA name, at least 85 percent of the wine must be derived from grapes grown within the area represented by that name, and the wine must meet the other conditions listed in 27 CFR 4.25(e)(3). If the wine is not eligible for labeling with an AVA name and that name appears in the brand name, then the label is not in compliance and the bottler must change the brand name and obtain approval of a new label. Similarly, if the AVA name appears in another reference on the label in a misleading manner, the bottler must remove or revise the misleading reference and obtain approval of a new label. Different rules apply if a wine has a brand name containing an AVA name or other viticulturally significant term that was used as a brand name on a label approved before July 7, 1986. See 27 CFR 4.39(i)(2) for details.

The approval of the proposed expansion of the Sta. Rita Hills AVA would not affect any other existing viticultural area, and would not affect any bottlers currently and properly using “Sta. Rita Hills,” “Santa Ynez Valley,” or “Central Coast” as an appellation of origin or in a brand name. The expansion of the Sta. Rita Hills AVA merely would allow vintners to use “Sta. Rita Hills” as an appellation of origin for wines made with grapes grown within the proposed expansion area if the wines otherwise meet the eligibility requirements for the use of the appellation.

TTB invites comments from interested members of the public on whether it should expand the Sta. Rita Hills AVA as proposed. TTB is specifically interested in receiving comments on the similarity of the proposed expansion area to the established Sta. Rita Hills AVA. In addition, given the location of the proposed expansion area and the Sta. Rita Hills AVA within the existing Santa Ynez Valley and Central Coast AVAs, TTB is interested in comments on whether the evidence submitted in the petition regarding the distinguishing features of the proposed expansion area sufficiently differentiates it from the existing Santa Ynez Valley and Central Coast AVAs.

• Please submit your comment to TTB on or before the comment period closing date of October 6, 2014. Comments sent by U.S. mail must be postmarked on or before the comment period closing date.

• Please provide specific information in support of your comments. Mere statements of opposition to or support for this proposal are not helpful to TTB in evaluating the merits of the expansion petition and its evidence.

• Your comment must reference Notice No. 145 and include your name and mailing address. TTB does not accept anonymous comments.

• Your comment must be in English, be legible, and be written in language acceptable for public disclosure. Please note that, as explained below, all comments sent to TTB are part of the public record and will be made available for public viewing.

• TTB does not acknowledge receipt of comments, and TTB considers all comments as originals.

• In your comment, please clearly state if you are commenting for yourself or on behalf of an association, business, or other entity. If you are commenting on behalf of an entity, your comment must include the entity's name as well as your name and position title. If you comment via Regulations.gov, please also enter the entity's name in the “Organization” blank of the online comment form. If you comment via postal mail or hand delivery/courier, please submit your entity's comment on letterhead.

You may submit comments on this notice of proposed rulemaking by using one of the three methods listed below. Comments sent by other methods, including email or FAX, will not be considered by TTB.

• Federal e-Rulemaking Portal: You may send comments via the online comment form posted with this notice within Docket No. TTB-2014-0007 on “Regulations.gov,” the Federal e-rulemaking portal, at http://www.regulations.gov. A direct link to that docket is available under Notice No. 145 on the TTB Web site at http://www.ttb.gov/wine/wine-rulemaking.shtml. Supplemental files may be attached to comments submitted via Regulations.gov.

• Please note: You will know that your comment has been successfully submitted if you receive a tracking number from the Regulations.gov system (for example “1jy-89zb-i7k5”). Your comment will not immediately appear on Regulations.gov for public viewing since TTB first evaluates all comments before posting them publically to the Regulations.gov Web site. For complete instructions on how to use Regulations.gov, visit the site and click on the “Help” tab.

• U.S. Mail: You may send comments via postal mail to the Director, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW., Box 12, Washington, DC 20005.

• Hand Delivery/Courier: You may hand-carry your comments or have them hand-carried to the Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW., Suite 200-E, Washington, DC 20005.

You may also write to the Administrator before the comment closing date to ask for a public hearing. The Administrator reserves the right to determine whether to hold a public hearing.

All submitted comments and attachments are part of the public record and subject to disclosure. Do not enclose any material in your comments that you consider to be confidential or inappropriate for public disclosure.

TTB will post, and you may view, copies of this notice, the proposed Sta. Rita Hills expansion petition, its addendums and exhibits, the original Sta. Rita Hills petition and its exhibits, and any public comments received about this proposal on the Federal e- rulemaking portal, Regulations.gov ( http://www.regulations.gov ), within Docket No. TTB-2014-0007. A direct link to that docket is available on the TTB Web site at http://www.ttb.gov/wine/wine_rulemaking.shtml under Notice No. 145. You may also reach the relevant docket through the Regulations.gov search page at http://www.regulations.gov. For information on how to use Regulations.gov, click on the site's “Help” tab.

All posted comments will display the commenter's name, organization (if any), city, and State, and, in the case of mailed comments, all address information, including email addresses. TTB may omit voluminous attachments or material that the Bureau considers unsuitable for posting.

You may also view copies of this notice of proposed rulemaking, all related petitions, maps and other supporting materials, and any comments that TTB receives about this proposal by appointment at the TTB Information Resource Center, 1310 G Street NW., Washington, DC 20005. You may also obtain copies at 20 cents per 8.5- x 11-inch page. Please note that TTB is unable to provide copies of USGS maps or similarly sized documents that may have been submitted as part of either the original Sta. Rita Hills petition or the petition to expand the Sta. Rita Hills AVA. Contact TTB's information specialist at the above address or by telephone at 202-453-2270 to schedule an appointment or to request copies of comments or other materials.

TTB certifies that this proposed regulation, if adopted, would not have a significant economic impact on a substantial number of small entities. The proposed regulation imposes no new reporting, recordkeeping, or other administrative requirement. Any benefit derived from the use of a viticultural area name would be the result of a proprietor's efforts and consumer acceptance of wines from that area. Therefore, no regulatory flexibility analysis is required.

It has been determined that this proposed rule is not a significant regulatory action as defined by Executive Order 12866 of September 30, 1993. Therefore, no regulatory assessment is required.

Karen A. Thornton of the Regulations and Rulings Division drafted this notice of proposed rulemaking.

For the reasons discussed in the preamble, TTB proposes to amend title 27, chapter I, part 9, Code of Federal Regulations, as follows:

For further information, please see the information provided in the direct final action, with the same title, that is located in the “Rules and Regulations” section of this Federal Register publication.

Throughout this document “clean data determination” and “determination of attainment” are used interchangeably, “Agency” may be used to imply the EPA, and “3-year period” represents three (3) consecutive calendar years. For detailed information regarding this proposed rulemaking action, EPA prepared a Technical Support Document (TSD). The TSD can be viewed at http://www.regulations.gov.

On November 12, 2008 (73 FR 66964), EPA established a 2008 primary and secondary Pb NAAQS at 0.15 micrograms per cubic meter (μg/m 3 ) based on a maximum arithmetic 3-month mean concentration for a 3-year period. See 40 CFR 50.16. On November 22, 2010, (75 FR 71033), EPA published its initial air quality designations and classifications for the 2008 Pb NAAQS based upon available air quality monitoring data for calendar years 2007-2009. These designations became effective on December 31, 2010. 1 The Lyons Area, which is located in Berks County and is bounded by Kutztown Borough, Lyons Borough, Maxatawny Township, and Richmond Township, was designated nonattainment for the 2008 Pb NAAQS. See 40 CFR 81.339.

On March 31, 2014, the Commonwealth of Pennsylvania, through the Pennsylvania Department of Environmental Protection (PADEP), submitted a letter requesting EPA to make a determination that the Lyons nonattainment area has attained the 2008 Pb NAAQS, based on certified, quality-assured, and quality-controlled air monitoring data from 2011 through 2013.

EPA is proposing to determine that the Lyons Area has “clean data” for the 2008 Pb NAAQS. This proposed action is based upon certified, quality-assured, and quality-controlled ambient air monitoring data for the 2011-2013 monitoring period that shows that the Area has monitored attainment of the 2008 Pb NAAQS.

If this proposed determination of attainment is made final, the requirements for the Lyons Area to submit an attainment demonstration together with RACM (encompassing reasonably available control technologies (RACT)), an RFP plan, contingency measures for failure to meet RFP goals, and any other planning SIP requirements related to attainment of the 2008 Pb NAAQS will be suspended. Attainment deadlines would be suspended until such time, if any, that EPA subsequently determines that the Area has violated the 2008 Pb NAAQS. The Agency's proposal is consistent with EPA's regulations and with its longstanding interpretation of subpart 1 of part D of the Clean Air Act (CAA).

Following enactment of the CAA Amendments of 1990, EPA promulgated its interpretation of the requirements for implementing the NAAQS in the general preamble for the Implementation of Title I of the CAA Amendments of 1990 (General Preamble). See 57 FR 13498, 13564 (April 16, 1992). In 1995, based on the interpretation of CAA sections 171 and 172, and section 182 in the General Preamble, EPA set forth what has become known as its “Clean Data Policy” for the 1-hour ozone NAAQS. See Memorandum from John S. Seitz, Director, Office of Air Quality Planning Standards, “RFP, Attainment Demonstration, and Related Requirements for Ozone Nonattainment Areas Meeting the Ozone National Ambient Air Quality Standard” (May 10, 1995). In 2004, EPA indicated its intention to extend the Clean Data Policy to the fine particulate matter (PM 2.5 ) NAAQS. See Memorandum from Steve Page, Director, EPA Office of Air Quality Planning and Standards, “Clean Data Policy for the Fine Particle National Ambient Air Quality Standards” (December 14, 2004). 2

EPA has applied its interpretation under the Clean Data Policy in many rulemakings, suspending certain attainment-related planning requirements for individual areas, based on a determination of attainment, or “clean data” determination. See 69 FR 21717 (April 22, 2004) (San Francisco Bay Area, 1-hour ozone), 75 FR 6570 (February 10, 2010) (Baton Rouge, Louisiana, 1-hour ozone), 75 FR 27944 (May 19, 2010) (Coso Junction, California, PM 10 ), 77 FR 52232 (August 29, 2012) (Bristol, Tennessee, Pb), 78 FR 66280 (November 5, 2013) (Bellefontaine, Ohio, Pb). For more information about the history, rationale and application of the Clean Data Policy, see 77 FR 35653-35654.

EPA also incorporated its interpretation under the Clean Data Policy in its implementation rules. See Clean Air Fine Particle Implementation Rule, 72 FR 20586 (April 25, 2007); Final Rule To Implement the 8-Hour Ozone National Ambient Air Quality Standard—Phase 2, 70 FR 71612 (November 29, 2005). The Court of Appeals for the District of Columbia Circuit (D.C. Circuit) upheld EPA's rule embodying the Clean Data Policy for the 1997 8-hour ozone standard. NRDC v. EPA, 571 F.3d 1245 (D.C. Cir. 2009). Other courts have reviewed and considered rulemakings applying EPA's Clean Data Policy, and have consistently upheld them. Sierra Club v. EPA, 99 F. 3d 1551 (10th Cir. 1996); Sierra Club v. EPA, 375 F. 3d 537 (7th Cir. 2004); Our Children's Earth Foundation v. EPA, No. 04-73032 (9th Cir. June 28, 2005 (Memorandum Opinion)), Latino Issues Forum v. EPA, Nos. 06-75831 and 08-71238 (9th Cir. March 2, 2009 (Memorandum Opinion)).

EPA's Clean Data Policy represents the Agency's interpretation that certain requirements of subpart 1 of part D of the CAA are, by EPA's terms, not applicable to areas that have attained the NAAQS before the applicable attainment date. 3 The specific requirements that are inapplicable to an area attaining the standard are the requirements to submit a SIP that provides for implementation of all: RACM, RFP, and contingency measures for failure to meet deadlines for RFP and attainment by the attainment date.

It is important to note that an area's obligation to submit an attainment demonstration and related planning submissions is suspended only for so long as the area continues to attain that standard. If EPA subsequently determines, after notice-and-comment rulemaking, that the area has violated the standard, the requirements for the State to submit a SIP to meet the previously suspended requirements would be reinstated. It is likewise important to note that the area remains designated nonattainment pending a further redesignation action.

Under EPA regulations at 40 CFR 50.16, the 2008 primary and secondary Pb standards are met when the maximum arithmetic 3-month mean concentration for a 3-year period, as determined in accordance with 40 CFR part 50, Appendix R, is less than or equal to 0.15 μg/m 3 at all relevant monitoring sites in the subject area. Specifically, 40 CFR part 50, Appendix R establishes that in order to determine compliance with the 2008 Pb NAAQS, a design value for each monitor is compared to the NAAQS level. Therefore, the 2008 Pb NAAQS is met at a monitoring site when the identified design value is valid and is less than or equal to 0.15 μg/m 3 . The design value for the 2008 Pb NAAQS is the highest valid 3-month arithmetic lead concentration for the 38-month period consisting of the most recent 3-year calendar period (36 months) plus the two preceding months for a total of 36 3-month periods.

Only data from Federal Reference Method (FRM) or Federal Equivalent Method (FEM) monitors meeting the requirements of 40 CFR part 58 and submitted to EPA's Air Quality System (AQS) can be used in calculating a design value. A lead design value that meets the 2008 Pb NAAQS is considered useable (e.g. valid) if it encompasses 36 consecutive valid 3-month means from a monitoring site. On the other hand, a violating lead design value that is greater than the NAAQS level is useable no matter how many valid 3-month means in the 3-year period it encompasses; that is, a violating design value is useable even if this highest 3-month mean is the only valid 3-month mean in the 3-year time frame.

Additionally, a 3-month mean is considered complete and valid if the average of the data capture rate of the three individual monthly means (3-month data capture rate) is greater than or equal to 75 percent. As an exception, a 3-month mean that does not meet this completeness requirement can still be considered valid and complete, if it passes either of the two “data substitution” tests identified in section (4)(c)(ii) of 40 CFR 50, Appendix R. Additional explanation of EPA's monitoring requirements to determine compliance with the 2008 Pb NAAQS can be found in the TSD for this proposed rulemaking action.

The Lyons Area consists of two monitoring locations, Lyons Boro with a single FEM monitor and Lyons Park with two collocated FEM monitors. The Commonwealth of Pennsylvania submitted into EPA's AQS database quality assured, quality controlled, and certified air quality monitoring data for 2011-2013 for the 2008 lead NAAQS. EPA has reviewed this ambient air monitoring data for lead for the Lyons Area in accordance with the provisions of 40 CFR part 50, Appendix R. The monitoring data evaluated for the Lyons Area corresponds to the 36 3-month means collected during the thirty-eight (38) months from November 2010 to December 2013, which is the most recent certified, quality-assured, quality-controlled data available for the Area. Table 1 shows the 2011-2013 lead design values for the Lyons Area monitors, which are based on 36 3-month means for this 3-year period.

Consistent with the requirements contained in 40 CFR part 50, EPA's review of these data indicates that the Lyons nonattainment area has attained the 2008 Pb NAAQS, with a 2011-2013 design value of 0.05 μg/m 3 for the Area. Additional information on EPA's evaluation of the 2008 Pb NAAQS air quality data for the Lyons Area can be found in the TSD for this rulemaking action.

EPA is proposing to determine that the Lyons nonattainment area for the 2008 Pb NAAQS has attained the 2008 Pb NAAQS. EPA has reviewed the ambient air monitoring data for Pb, consistent with the requirements contained in 40 CFR part 50 and recorded in the EPA Air Quality System database for the Lyons Pb nonattainment area.

If EPA finalizes this proposed determination of attainment, the requirements for the Lyons Area to submit an attainment demonstration, associated RACM, an RFP, contingency measures and other planning requirements related to attainment of the standard shall be suspended for so long as the Lyons area continues to attain the 2008 Pb NAAQS.

This action proposes to make a determination of attainment based on air quality, and would, if finalized, result in the suspension of certain federal requirements, and would not impose additional requirements beyond those imposed by state law. For that reason, this proposed action:

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);

• does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq. );

• is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. );

• does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and

• does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

In addition, this proposed determination of attainment for the Lyons Area for the 2008 Pb NAAQS does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the state, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.

Section 305(a) of the Magnuson-Stevens Fishery Conservation and Management Act (MSA) requires that the Secretary of Commerce maintain a list of all fisheries operating in the U.S. EEZ and all fishing gear used in such fisheries (16 U.S.C. 1855(a)). This section of the MSA further prohibits any person or vessel from employing fishing gear or engaging in a fishery not included on the List of Fisheries “without giving 90 days advance written notice to the appropriate Council.” Fishery management councils are authorized to submit changes to the list to the Secretary of Commerce as each council deems appropriate, after which the Secretary must publish a revised list after providing notice of the changes to the public and after providing an opportunity for public comment on those changes (16 U.S.C. 1855(a)(4)). These requirements became part of the MSA with the enactment of the 1996 Sustainable Fisheries Act and are implemented in Federal regulation at 50 CFR 600.725(v) and § 600.747. The regional lists in 50 CFR 600.725(v) include not just fisheries that are managed under Federal fishery management plans (FMPs), but also state-managed fisheries that may occur within the Federal waters.

From 2010-2013, the Council and its advisory bodies worked on a new Fishery Ecosystem Plan (FEP), which the Council finalized in April 2013. During its FEP discussions, the Council reviewed all of the fisheries occurring within the West Coast EEZ and determined that it needed to closely review and update the List of Fisheries at 50 CFR 600.725(v), Section VI, which lists fisheries that occur within the U.S. West Coast EEZ. The Council has not updated its section of the list since 1999 (64 FR 40781, July 28, 1999). At its September 2013 meeting, the Council finalized recommendations to NMFS for updating its section of the List of Fisheries to ensure that it accurately reflects gear currently used in West Coast fisheries. On October 1, 2013, the Council transmitted its recommended revisions to the List of Fisheries to NMFS. With this notice, NMFS proposes to amend Federal regulations in accordance with the Council's recommendations, with no additional changes or edits.

The changes to the List of Fisheries proposed via this action primarily reflect the Council's 1997 conversion and expansion of the Northern Anchovy FMP to a Coastal Pelagic Species FMP and 2003 adoption of a Highly Migratory Species FMP, both of which shifted several species from state to Federal management. Proposed revisions to the List of Fisheries would provide more accurate detail on the types of gears used in the listed fisheries, and would remove Pacific saury ( Cololabis saira ) from the list of species expected to be fished in the West Coast EEZ. There have been no commercial landings of Pacific saury since 1980. The proposed revisions to the List of Fisheries are not expected to exclude any currently operating fisheries. NMFS welcomes comments on the accuracy and currency of list revisions proposed by this action.

While reviewing and developing recommendations to revise the List of Fisheries for the U.S. West Coast EEZ, the Council necessarily took a close look at NMFS regulations explaining the entire MSA process at § 305(a). Of particular interest to the Council was the question of restricting new fisheries that could “compromise the effectiveness of conservation and management efforts under [the MSA]” (16 U.S.C. 1855(a)(5)). The Council expressed interest in continuing to allow for innovation in the development of new fisheries within the EEZ, yet also wanted to ensure that new fisheries could not compromise the Council's ongoing fishery conservation and management efforts. To balance these interests, the Council outlined a process in the FEP Appendix for persons wishing to develop new fisheries to follow so that the Council would receive timely needed scientific information on those potential fisheries. That process, in the FEP's Appendix at Section A.1.1, recommends that U.S. citizens wishing to initiate new fisheries not on the List of Fisheries should approach the Council with an application for an Exempted Fishing Permit (EFP) and a science plan for that EFP, describing the data to be collected by the EFP fishery and the likely analyses needed to assess the potential effects of converting the fishery to an FMP fishery. This EFP application process is similar to processes the Council uses to allow fisheries participants to explore new gear types and configurations within existing fisheries. In assessing whether a new fishery could compromise existing Council conservation and management efforts, the Council intends to look at the effects of the fishery on: Any Council-managed species; species that are the prey of any Council-managed species, marine mammal species, seabird species, sea turtle species, or other species listed under the Endangered Species Act (ESA); habitat identified as essential fish habitat or otherwise protected under one of the Council's FMPs, critical habitat identified or protected under the ESA, or habitat protected by state or tribal management programs; species subject to state or tribal management within 0-3 nautical miles offshore of Washington, Oregon, or California; or, species that migrate beyond the U.S. EEZ. The FEP Appendix and its EFP process provide an expression of the Council's intent, but do not compel or bind the Council or the public beyond what is already required by the MSA and federal regulations. Therefore, this notice does not seek public comment on the FEP or its Appendix.

Pursuant to section 304(b)(1)(A) of the MSA, the NMFS Assistant Administrator has determined that this proposed rule is consistent with the four PFMC FMPs, other provisions of the MSA, and other applicable law, subject to further consideration after public comment.

This proposed rule has been determined to be not significant for purposes of Executive Order 12866.

The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration that this proposed rule, if adopted, would not have a significant economic impact on a substantial number of small entities.

The MSA requires the Secretary of Commerce to maintain a list of all fisheries under the authority of each fishery management council and all fishing gear used in such fisheries (16 U.S.C. 1855(a)). The Magnuson-Stevens Act also prohibits the use of any gear or the participation in a fishery not on the List of Fisheries without advance notice to the appropriate fishery management council (see 50 CFR 600.725(v) and 600.747). Section VI of the List of Fisheries at 50 CFR 600.725(v) lists fisheries that occur within the U.S. West Coast EEZ, the Pacific Fishery Management Council's (Council's) geographic area of authority. The Council has not updated its section of the list since 1999 (64 FR 40781, July 28, 1999.)

This proposed rule would implement the Council's recommendations that NMFS update its section of the List of Fisheries to properly represent current fisheries and gear authorized for use within the Council's geographic area of authority. The intent of this action is to update the List of Fisheries, so that the Council could ensure that it would be notified if anyone were interested in pursuing a new fishery for a currently unexploited species. Under this action, the list would more narrowly describe all existing fisheries; fisheries that no longer exist will be removed, but every fisherman fishing today would be covered by the list. In the future, any new fishery may commence after the fisherman gives the Council at least 90 days' advance notice (unless NMFS undertakes a regulatory process to restrict the proposed fishery).

The Small Business Administration (SBA) has established size standards for all major industry sectors in the U.S. including commercial finfish harvesters (NAICS code 114111), commercial shellfish harvesters (NAICS code 114112), other commercial marine harvesters (NAICS code 114119), for-hire businesses (NAICS code 487210), marinas (NAICS code 713930), seafood dealers/wholesalers (NAICS code 424460), and seafood processors (NAICS code 311710). A business primarily involved in finfish harvesting is classified as a small business if it is independently owned and operated, is not dominant in its field of operation (including its affiliates), and has combined annual receipts not in excess of $20.5 million for all its affiliated operations worldwide. For commercial shellfish harvesters, the other qualifiers apply and the receipts threshold is $5.5 million. For other commercial marine harvesters, for-hire businesses, and marinas, the other qualifiers apply and the receipts threshold is $7.5 million. A business primarily involved in seafood processing is classified as a small business if it is independently owned and operated, is not dominant in its field of operation (including its affiliates), and has combined annual employment not in excess of 500 employees for all its affiliated operations worldwide. For seafood dealers/wholesalers, the other qualifiers apply and the employment threshold is 100 employees.

No business, small or large, would be affected by this rule. The proposed action is not expected to have any direct or indirect socioeconomic impacts because it would not require fishery participants or fishing communities to alter how they operate in the fisheries, nor would it change who is permitted to participate in West Coast fisheries, nor would it alter available harvest levels for any West Coast species. Because no business would be affected by this rule, the issue of disproportionality, under which we consider whether the regulation would place a substantial number of small entities at a significant competitive disadvantage to larger entities, does not arise. Because the rule would not affect the profits, either positively or negatively, of any entity, the potential for the regulations to reduce the profits of any small entities also does not arise.

A small organization is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field. No nonprofit organization, small or large, is addressed or affected by this proposed rule. Small governmental jurisdictions are governments of cities, counties, towns, townships, villages, school districts, or special districts, with populations less than 50,000. This proposed rule does not address and would also not affect any small governmental jurisdictions.

This action is expected to have minor, if any, effects on regulated entities. All known fisheries are included on the updated List of Fisheries and NMFS does not know of any new fisheries that are likely to commence in the foreseeable future. Should a fisherman wish to start a new fishery in the future, the minor effects expected from this rule would be that the fisherman would be required by the MSA to notify the Council of his intent to begin fishing. This action does not contain any reporting, record keeping, or any other compliance requirements for either small or large entities. No duplicative, overlapping, or conflicting federal rules have been identified.

Based on the disproportionality and profitability analysis above, this rule, if adopted, will not have a significant economic impact on a substantial number of these small entities. As a result, an initial regulatory flexibility analysis is not required and none has been prepared.

This proposed rule was developed after meaningful collaboration, through the Council process, with the tribal representative on the Council. NMFS is not aware of any Treaty Indian tribe or subsistence fisheries in the EEZ other than those listed in § 600.725(v). This action does not supersede or otherwise affect exemptions that exist for Treaty Indian fisheries.

For the reasons discussed in the preamble, 50 CFR part 600 is proposed to be amended as follows:

Atlantic sharks, including smoothhound sharks, are managed under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), and the authority to issue regulations has been delegated from the Secretary to the Assistant Administrator (AA) for Fisheries, NOAA. On October 2, 2006, NMFS published in the Federal Register (71 FR 58058) final regulations, effective November 1, 2006, implementing the 2006 Consolidated HMS FMP, which details management measures for Atlantic HMS fisheries. The implementing regulations for the 2006 Consolidated HMS FMP and its amendments are at 50 CFR part 635. This proposed rule addresses implementation of Amendment 9 to the 2006 Consolidated HMS FMP.

Except for restrictions on finning, smoothhound sharks were not managed by the Federal government before 2010. In the 1999 FMP for Atlantic Tunas, Swordfish, and Sharks (1999 FMP), NMFS included smoothhound sharks in a Federal fishery management unit that included deep water and other sharks to prevent finning of all of these species. These species of smoothhound sharks were removed from the fishery management unit in the 2003 when NMFS amended the 1999 FMP in Amendment 1, since these sharks became protected from finning under the Shark Finning Prohibition Act (67 FR 6124, February 11, 2002). In 2008, the Atlantic States Marine Fisheries Commission (ASMFC) adopted management measures for smoothhound sharks in state waters; the ASMFC measures became effective in January 2010.

In 2010, through Amendment 3, NMFS determined that smoothhound sharks were in need of federal conservation and management measures. NMFS included smoothhound sharks within the HMS-managed stocks because of the wide geographic distribution and range of smoothhound sharks and because NMFS has management authority over HMS, including “oceanic sharks,” under the Magnuson-Stevens Act. Details about NMFS' authority and decision to manage smoothhound sharks can be found in the Final Environmental Impact Statement (EIS) for Amendment 3. At that time, “smoothhound sharks” referred to a species complex consisting of smooth dogfish and Florida smoothhounds (75 FR 30484, June 1, 2010). The final rule implementing Amendment 3 published in June 2010 and delayed the effective date of the smoothhound shark management measures until approximately 2012, pending approval for the data collection under the Paperwork Reduction Act (PRA) by the Office of Management and Budget (OMB). NMFS delayed the effective date also to provide time to implement a permit requirement, for NMFS to complete a BiOp under section 7 of the ESA, and for affected fishermen to change business practices, particularly as they related to keeping the fins attached to the carcass through offloading (June 1, 2010, 75 FR 30484). OMB approved the PRA data collection in May of 2011, and NMFS met informally with smoothhound shark fishermen along the east coast in the fall of 2010.

In January 2011, the President signed the SCA (Pub. L. 111-348). This legislation requires that all sharks, except for smooth dogfish ( Mustelus canis ), landed from federal waters in the United States be landed with their fins and tail naturally attached to the carcass. It included, however, a limited exception for smooth dogfish ( Mustelus canis ), stating that the amendments made by the SCA do not apply to an “individual engaged in commercial fishing for smooth dogfish ( Mustelus canis ) in that area of the waters of the United States located shoreward of a line drawn in such a manner that each point on it is 50 nautical miles from the baseline of a State from which the territorial sea is measured, if the individual holds a valid State commercial fishing license, unless the total weight of smooth dogfish fins landed or found on board a vessel to which this subsection applies exceeds 12 percent of the total weight of smooth dogfish carcasses landed or found on board.” Public Law 111-348, section 103(b)(1). Throughout this document, the term “fins” includes both the tail and the fins of the shark.

Also, in 2011, NMFS published a final rule regarding trawl gear (August 10, 2011, 76 FR 49368). The HMS trawl rule, among other things, allowed for the retention of smoothhound sharks caught incidentally with trawl gear, provided that total smoothhound shark catch on board or offloaded does not exceed 25 percent of the total catch by weight.

In November 2011, NMFS published a final rule (76 FR 70064, November 10, 2011) that delayed the effective date for all smoothhound shark management measures in both Amendment 3 and the 2011 trawl rule indefinitely to provide time for NMFS to consider the smooth dogfish-specific provisions in the SCA, and for NMFS to finalize a Biological Opinion on the federal actions in Amendment 3, among other things.

Since that time, the 2012 Atlantic Shark Biological Opinion (2012 Shark BiOp) on Federal actions in Amendment 3 has been completed. Except for consideration of the smooth dogfish-specific measures in the SCA, all reasons for delaying implementation of Amendment 3 and the 2011 HMS trawl gear rule have been addressed and completed. Thus, NMFS is ready to make effective previously-finalized smoothhound shark measures from Amendment 3 and the 2011 HMS trawl gear rule. In addition, new landings information and data about the smoothhound shark fishery has become available. Draft Amendment 9 considers that new information and data, and considers resulting adjustments to the quota based on that information, as well as considering implementation of smooth dogfish-specific provisions of the SCA. Draft Amendment 9 is amending the HMS FMP because of the significant modification to the Atlantic smoothhound shark quota based upon updated landings information.

During the development of Amendment 3 in 2009, molecular and morphological research indicated that Florida smoothhound ( Mustelus norrisi ) had been historically misclassified as a separate species from smooth dogfish ( M. canis ). Additionally, the Southeast Fisheries Science Center (SEFSC) advised that there were insufficient data at the time to separate smooth dogfish and Florida smoothhound into two separate species, and that they should be treated as a single stock until scientific evidence indicated otherwise. Accordingly, in Amendment 3, NMFS decided to manage both Florida smoothhound sharks and smooth dogfish together as “smoothhound sharks” because of this taxonomic correction and based upon SEFSC advice. Since the finalization of Amendment 3 in 2010, additional scientific information has become available from the SEFSC regarding species identification of smoothhound sharks. This updated scientific data shows that M. norrisi (Florida smoothhound), M. canis (smooth dogfish) and M. sinusmexicanus (Gulf smoothhound) are separate species, and that there may be additional smoothhound species in the Gulf of Mexico.

The majority of the landings in the commercial smoothhound fishery currently occur in the mid-Atlantic region. Scientific evidence indicates that smooth dogfish are almost exclusively the species found in this area and along the coast throughout the Atlantic region; however, there have been a very limited number of Florida smoothhounds reported off of southern Florida. In the Gulf of Mexico region, all three Mustelus species are commonly found off Florida in the Gulf of Mexico. The best available scientific information collected for the upcoming SEDAR 39 stock assessment for smoothhound sharks indicates that smooth dogfish are likely the only smoothhound shark species found along the Atlantic coast. In the Gulf of Mexico, however, there are at least three different smoothhound species, with no practical way to distinguish among them. For more information, see Draft EA for Amendment 9.

Identification between these species is difficult, and all three species' ranges overlap in the Gulf of Mexico. The most commonly used macroscopically visible external characteristics, such as dermal denticle and labial furrow differences, cannot be reliably used for species identification. Some limited success has been achieved by using other external characteristics, such as hyomandibular pore distribution, but misidentification is still common, especially for juvenile specimens. Data examined for the ongoing SEDAR 39 smoothhound stock assessment found that during shark surveys, Florida smoothhound was only correctly identified 40 percent of the time and Gulf smoothhound was only correctly identified 64 percent of the time, with the greatest identification difficulty occurring between Gulf smoothhound and smooth dogfish. Thus, it is unlikely that shark fishermen and enforcement officers would be able to tell these three species of smoothhound sharks apart without genetic analyses to differentiate between the three species. For more information, see Draft EA for Amendment 9.

Because of the overlap in range between the different species and the extreme difficulty in distinguishing among the three species, NMFS will continue to group all the smoothhound species (all Mustelus species within the U.S. EEZ of the Atlantic, Gulf of Mexico, and Caribbean) together within the term “smoothhound sharks” for management purposes and will manage them as a complex. As a result, this proposed rule expands the definition of smoothhound sharks that NMFS previously adopted in Amendment 3 to an inclusive reference to Mustelus species. The SCA, however, explicitly limits the fin-removal exception to commercial fishing for smooth dogfish, identifying the species by scientific name. Given the above issues, NMFS examines two alternatives for applying the exception for smooth dogfish: one that applies the exception along the Atlantic Coast and the Florida Coast in the Gulf of Mexico, and a second that would apply the exception along the Atlantic Coast but not the Florida Coast in the Gulf of Mexico. Given the challenges posed by correctly identifying different smoothhound shark species, the specificity of the SCA's application, and the presence of multiple smoothhound shark species in the Gulf of Mexico, NMFS is requesting public comment on alternatives for implementing and enforcing the SCA smooth dogfish exception.

In addition to proposing to implement exceptions found in the SCA that specifically apply to smooth dogfish, this rule would also establish an effective date for previously-adopted shark management measures finalized in Amendment 3 (June 1, 2010, 75 FR 30483) and the 2011 HMS trawl rule (August 10, 2011; 76 FR 49368). These measures include increasing the previously-adopted commercial quota for smoothhound sharks based on updated scientific information and data, implementing limited exceptions from certain provisions of the SCA that specifically apply to smooth dogfish, implementing Term and Condition 4 of the 2012 Shark BiOp, which required either net checks or soak time restrictions in the Atlantic shark gillnet fisheries, and reducing the VMS requirements for shark gillnet fishermen.

NMFS prepared a draft EA, RIR, and an IRFA, which present and analyze anticipated environmental, social, and economic impacts of each alternative contained in this proposed rule. A summary of the alternatives considered and related analyses are provided below. The complete list of alternatives and related analyses are provided in the draft EA/RIR/IRFA. A copy of the draft EA/RIR/IRFA prepared for this proposed rule is available from NMFS (see ADDRESSES ).

Amendment 3 finalized certain conservation and management measures for smoothhound sharks. As described above, implementation of these measures was delayed indefinitely. This action will implement an effective date for the previously-delayed Amendment 3 management measures for smoothhound sharks, including:

• A research set-aside quota;

• An accountability measure (AM), which closes the fishery when smoothhound shark landings reach, or are expected to reach, 80 percent of the quota;

• A requirement for a dealer permit to purchase smoothhound sharks;

• A requirement for dealers to report smoothhound shark purchases;

• A smoothhound permit requirement for commercial and recreational fishing and retention;

• A requirement for vessels fishing for smoothhound sharks to carry an observer, if NMFS selects them;

• A requirement for vessels fishing for smoothhound sharks to comply with applicable Take Reduction Plans pursuant to the Marine Mammal Protection Act; and

• A requirement for commercial vessels to sell catch only to federally-permitted shark dealers.

In addition, this action addresses an effective date for the smoothhound shark management measures in the 2011 HMS trawl rule published on August 10, 2011 (76 FR 49368). As described above, the HMS trawl rule allowed, among other things, for the retention of smoothhound sharks caught incidentally with trawl gear, provided that total smoothhound shark catch on board or offloaded does not exceed 25 percent of the total catch by weight.

When Amendment 3 was finalized, smoothhound shark data was available through 2007, although there was no stock assessment for the species. Updated information is now available—in some cases as recently as 2013—although data on the number of participants, total catch, fishing techniques, spatial and temporal availability, etc., are still incomplete because of the lack of mandatory reporting requirements for this shark species. Data can be expected to improve in the future with implementation of the previously-delayed Amendment 3 requirements for a Federal permit, dealer reporting, and observer coverage as well as completion of the current smoothhound shark stock assessment. As stated in Amendment 3, NMFS' goal has been to characterize and collect data on the smoothhound fishery while minimizing changes in the fishery until it can be better assessed and additional management measures can be developed. Thus, as described in the final rule for Amendment 3, NMFS established a smoothhound shark quota using the best data available at that time equal to the highest reported annual landings between 1998 and 2007, plus two standard deviations in order to account for any underreporting due to the lack of smoothhound shark reporting requirements and to follow advice from the Northeast and Southeast Fisheries Science Centers (June 1, 2010, 75 FR 30484).

Since publishing Amendment 3, NMFS has received updated reported landings data from the Atlantic Coastal Cooperative Statistics Program (ACCSP) that warrants adjusting the quota established in Amendment 3, using the same methodology presented in Amendment 3 but with the new data. This quota adjustment would be done through an amendment to the 2006 Consolidated HMS FMP. Additionally, NMFS has begun conducting a smoothhound shark stock assessment (79 FR 17509, March 28, 2014; 79 FR 23327, April 28, 2014). In this action, NMFS analyzes quota alternatives ranging from the status quo (the quota calculated in Amendment 3) to adjusting the quota based on updated landings information to establishing the quota based on quota scenarios that could result from the ongoing stock assessment. Additional environmental analyses and regulatory action may be considered if warranted by the stock assessment outcomes, or depending on the magnitude of any resultant changes in management approaches. Landings from both the directed and incidental smoothhound shark fisheries would count against the adopted quota.

The preferred alternative in this proposed rule would establish a smoothhound quota of 1,739.9 mt dw, which is equal to the maximum annual landings from the 10 most recent years available at this time (i.e., 2004-2013) plus two standard deviations. The quota alternative that was finalized in Amendment 3 was selected because NMFS, with guidance from the NEFSC and SEFSC, determined that adding two standard deviations to the maximum annual landings was the best way to account for any underreporting in the fishery while minimizing changes in catch levels and catch rates in the smoothhound shark fishery. While the quota under the current preferred alternative is higher than the quota calculated in Amendment 3, it caps the quota at a level that reflects the current operation of the smoothhound shark fishery without allowing the quota to increase in the future if reported landings increase. As stated when establishing this methodology in Amendment 3, since landings data could be underestimated due to underreporting, setting the quota above current reported landings levels should allow the fishery to continue at current levels, minimizing changes to the fishery while collecting information on catch and participants.

In the short-term, this preferred alternative is expected to have neutral direct ecological impacts on the smoothhound stock, as the quota-setting approach was designed to bring the species under Federal management while minimizing immediate changes in the fishery. The preferred alternative could have long-term direct minor adverse ecological impacts due to a potential for increased landings of smoothhound compared to other alternatives with lower quotas. In the preferred alternative, allowable effort and landings would be higher than the quota set under Amendment 3; however, the allowable landings would more accurately represent current fishing activity and would be constrained with a cap that prevents future growth of the fishery. Implementing such a cap on landings would help ensure that the smoothhound stock is maintained at a healthy level. This preferred alternative appropriately adjusts the Amendment 3 quota and remains within the intended outcome of the range of alternatives considered in the Amendment 3 rulemaking. The intent of Amendment 3 was to minimize changes in catch levels and catch rates in the fishery to allow for the collection of catch and participant information pending completion of a stock assessment to guide Federal management. A smoothhound shark stock assessment is currently being conducted. NMFS believes it is imperative to bring smoothhound sharks under Federal management as quickly as possible, particularly given that time has passed since Amendment 3 was first published. Although a smoothhound shark stock assessment is currently underway, NMFS is proceeding with developing a quota based on landings history to avoid any further delays in federally managing this stock. As explained below, this rulemaking considers another alternative that would further adjust the quota(s) if necessary based on this stock assessment if it is available before publication of the final rule.

The preferred smoothhound quota alternative would result in potential annual revenues in the entire fishery of $3,016,460 (3,835,784 lb. of meat, 460,294 lb. of fins) assuming an ex-vessel price of $1.72 lb. for fins and $0.58 for meat. Setting the quota at current landings levels with room for presumed underreporting should allow the fishery to continue throughout the year, rather than be closed for part of the year, allowing NMFS to collect year-long information that can be used in future stock assessments. NMFS anticipates direct moderate, beneficial short- and long-term socioeconomic impacts with implementing a quota based on maximum reported recent annual landings plus two standard deviations to allow for a buffer for potential unreported landings during that time to reflect actual landings. This would allow the fishery to continue at the landings rate and level reported in recent years. Under this alternative, NMFS anticipates the fishery would operate as it currently does, resulting in indirect, moderate beneficial socioeconomic impacts in the short- and long-term for shark dealers and processors. The preferred alternative accounts for recent trends in the fishery and the best available landings data as recalculated and reported by ACCSP, reflects recent behavior in the fishery, and provides an appropriate buffer to account for underreporting in the fishery. Additionally, providing a maximum cap on the fishery would allow fishermen, dealers, and processors to make better business decisions based on a more predictable yield (assuming that the fishery is fished to near-full capacity each year).

NMFS is also considering three other quota alternatives that are not preferred at this time. The first would not adjust the commercial smoothhound shark quota, and would instead implement the quota as calculated in Amendment 3. This alternative is not preferred because it does not use the best available information and would result in premature fishery closures, inconsistent with the objectives in Amendment 3 and in this Amendment, which are to bring smoothhound sharks within Federal management, collect data to improve future management measures, and minimize changes to the fishery in the meantime. The second alternative considers a rolling quota that would recalculate the quota each year based on the previous 5 years of available landings data. This rolling quota alternative was not preferred because the quota could grow, expanding the fishery without limit, which could lead to unsustainable fishing levels. The third quota alternative would implement a TAC and smoothhound shark quota(s) consistent with the results of the 2014 smoothhound shark stock assessment if the results become available before publication of the final rule for this action. This alternative is based on a possible range of quota recommendations that reasonably could be expected to result from the assessment. The potential range of quota recommendations from the assessment are quota(s): (1) Equal to approximately one-half the Amendment 3 quota (357.8 mt dw); (2) approximately equal to the Amendment 3 quota; (3) half way in between Amendment 3 and the proposed quota, or 1,227.7 mt dw; and (4) larger than Amendment 3, approximately equal to or greater than the quota under preferred alternative (1,739.9 mt dw). Because the stock assessment is not yet final and it is unknown if it will be available before the final rule for this action publishes, NMFS does not prefer this alternative at this time. Additional environmental analyses and regulatory action may be considered, if warranted by the stock assessment outcomes or depending on the magnitude of any resultant changes in management approaches.

The SCA amended the Magnuson-Stevens Act to provide greater protection from illegal “finning” of sharks. Shark finning is the practice of taking a shark, removing a fin or fins (whether or not including the tail), and returning the remainder of the shark to the sea. Among the provisions in subsection 103(a) of the SCA is a requirement that all sharks landed from federal waters in the United States be maintained with the fins naturally-attached to the carcass through offloading. Subsection (b), however, provides the following exception: “The amendments made by subsection (a) do not apply to an individual engaged in commercial fishing for smooth dogfish ( Mustelus canis ) in that area of the waters of the United States located shoreward of a line drawn in such a manner that each point on it is 50 nautical miles from the baseline of a State from which the territorial sea is measured, if the individual holds a valid State commercial fishing license, unless the total weight of smooth dogfish fins landed or found on board a vessel to which this subsection applies exceeds 12 percent of the total weight of smooth dogfish carcasses landed or found on board.” The SCA provides that “State” has the same meaning as in section 803 of Public Law 103-206 (16 U.S.C. 5102), which refers to “Maine, New Hampshire, Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Pennsylvania, Delaware, Maryland, Virginia, North Carolina, South Carolina, Georgia, Florida, the District of Columbia, or the Potomac River Fisheries Commission.” To implement the exception, this proposed rule considers three issues: Catch composition, state permit requirements, and geographic applicability of the exception—and explores alternatives for each issue. If a federally-permitted shark fisherman does not qualify for this exception under the SCA, he will be required to land smooth dogfish with the fins naturally attached. Note that although several Atlantic coast states have laws addressing shark fins, those state laws as of the date of this proposed rule provide an exception for smooth dogfish, and so present no conflict with the SCA as applied to smooth dogfish, whether or not the SCA exception applies.

NMFS considered four Catch Composition sub-alternatives to address the SCA text regarding “an individual engaged in commercial fishing for smooth dogfish ( Mustelus canis ).” Because the SCA specifies that the exception applies when an individual is fishing “for” smooth dogfish as opposed to fishing “for” other species and incidentally catching smooth dogfish or simply “when fishing,” the proposed rule examines alternatives that limit the exception to those fishing for smooth dogfish, i.e., fishing with the object of commercially harvesting smooth dogfish.

Under the preferred sub-alternative, smoothhound sharks must make up 75 percent of the retained catch on board a vessel to constitute a trip fishing “for” smooth dogfish. Implementing a target catch requirement of 75 percent smooth dogfish would preclude fishermen on trips for other species but who incidentally catch smooth dogfish from removing smooth dogfish fins at sea. Only those fishermen fishing for smooth dogfish as defined by this rulemaking would be allowed to remove the fins of the species while at sea. Under this preferred sub-alternative, no sharks other than smooth dogfish could be retained when smooth dogfish fins are removed at sea. This requirement would ensure that no other shark species are on board with fins removed, ensuring consistency with other provisions of the SCA. This sub-alternative would likely have direct short- and long-term minor beneficial impacts. Indirect ecological impacts to species caught with smooth dogfish would likely both be neutral in the short- and long-term, because fishing effort or rates are not expected to change under this sub-alternative. The only changes that would occur under this sub-alternative would be in fisheries for other species that incidentally catch smooth dogfish. Fishermen in these incidental fisheries do not plan trips around smooth dogfish; rather, they engage in fishing operations based on the target species availability and market. Therefore, a prohibition on at-sea fin removal of smooth dogfish fins in the incidental fishery would not be expected to alter effort. Indirect impacts are generally positively correlated with effort. Effort would not likely be affected, and indirect impacts would be neutral. Since this sub-alternative would be unlikely to have adverse ecological impacts and provides some flexibility in retained catch, NMFS prefers this sub-alternative at this time.

Because some fishermen catch smooth dogfish while fishing for other species, the preferred catch composition sub-alternative is likely to have short- and long-term direct, minor, adverse socioeconomic impacts since it would reduce flexibility in which species may be retained, though not to the extent that other alternatives would. The number of mixed species trips where fishermen could take advantage of the fins-attached exception would decrease. However, this sub-alternative provides more flexibility than other sub-alternatives, specifically the sub-alternative that examines a 100-percent smooth dogfish catch composition requirement for the exception to apply. For these reasons, NMFS prefers this sub-alternative at this time.

NMFS also considered three other catch composition sub-alternatives. The first would not implement any catch composition requirement, allowing the fins of smooth dogfish to be removed at sea regardless of the composition of the rest of the catch, provided no other sharks are retained. This measure was not preferred because it would not limit the at-sea processing allowance to “fishing for smooth dogfish,” consistent with the SCA. Second, NMFS considered a 25-percent smooth dogfish catch composition for at-sea processing, which would allow some fishermen who are fishing for species other than smooth dogfish and catching smooth dogfish incidental to those fishing activities to use the limited exception. This measure was not preferred because it would not limit the at-sea processing allowance to individuals “fishing for smooth dogfish,” consistent with the SCA. Third, NMFS considered a 100-percent smooth dogfish catch composition for at-sea processing. Although this sub-alternative would even more narrowly limit the fins-attached exception to fishermen only “fishing for smooth dogfish,” consistent with the SCA, it would remove all flexibility in retained catch on board vessels that remove smooth dogfish fins at sea, possibly increasing dead discards without providing any clear benefits beyond the preferred sub-alternative. For this reason, NMFS does not prefer that sub-alternative at this time.

NMFS considered two State Fishing Permit sub-alternatives to address text in the SCA exception regarding “if the individual holds a valid State commercial fishing license.” The preferred sub-alternative would require federally-permitted smooth dogfish fishermen to possess a State commercial fishing license that allows fishing for smooth dogfish in order to be able to remove smooth dogfish fins at sea. A “valid state commercial fishing license” would be any state license that allows the individual to engage in commercial fishing for smooth dogfish, whether it is dogfish-specific or a general shark permit or a general commercial fishing permit. This sub-alternative recognizes variations in state fishing permit processes that allow commercial fishing for smooth dogfish.

NMFS is also examining a sub-alternative based on a more narrow application of the exception. The language in the smooth dogfish-specific provision of the SCA states that it applies to an “individual engaged in commercial fishing for smooth dogfish . . . if the individual holds a valid State commercial fishing license.” Sub-alternative 2 would interpret this more narrowly to mean that the individual has a smoothhound-specific State commercial fishing license, since the exception applies only to “individuals engaged in commercial fishing `for' smooth dogfish.'” By requiring a smooth dogfish-specific permit and not a general state commercial license, NMFS would be further ensuring that the individual is one “engaged in commercial fishing for smooth dogfish,” which NMFS interprets as narrowing the limited at-sea fin removal allowance only to those fishing for smooth dogfish. Requiring a smooth dogfish-specific State fishing permit would likely lead to direct and indirect short and long-term neutral ecological impacts since this sub-alternative would not increase fishing effort. Because not all states have smooth dogfish-specific permits, NMFS does not prefer this alternative at this time but is seeking comments, particularly from the States, about their preferences and what approach would work best in conjunction with their state approach to permitting and state fishery objectives.

NMFS considered two alternatives for Geographic Application of the SCA exception: Applying the exception along the Atlantic Coast and the Florida Coast in the Gulf of Mexico, and applying the exception only along the Atlantic Coast. As explained earlier, as a practical matter, smooth dogfish and other smoothhound species are essentially indistinguishable in the field, and while the Atlantic population is entirely smooth dogfish but for the occasional Florida smoothhound, the Gulf of Mexico population includes all three species. The best available scientific information indicates smooth dogfish are the predominant smoothhound species along the Atlantic coast (only a handful of Florida smoothhound have ever been recorded in the Atlantic, and those have been near southern Florida). In the Gulf of Mexico, however, there are at least three different smoothhound species, with no practical way to readily distinguish among them. The non-preferred sub- alternative would apply the smooth dogfish exception 50 nautical miles from the baseline of all the States that fall under the SCA definition of “State,” including the west coast of Florida in the Gulf of Mexico. This sub-alternative could result in smoothhound sharks other than smooth dogfish indirectly falling under the exception, because they cannot be distinguished from smooth dogfish, which would violate the specific requirements of the SCA and pose enforcement difficulties. The preferred sub-alternative would apply the exception only along the Atlantic Coast where the population is almost entirely smooth dogfish, but not in the Gulf of Mexico—even on the Florida Coast. By limiting the exception to the Atlantic region, as specified at § 635.27(b)(1), this sub-alternative would ensure that the exception would only apply where the population is almost entirely smooth dogfish, reducing identification problems and inadvertent finning violations. NMFS expects neutral direct and indirect short- and long-term ecological impacts because, at this time, there is no commercial fishery for smooth dogfish in the Gulf of Mexico. For the same reason, NMFS expects neutral direct and indirect short- and long-term socioeconomic impacts. NMFS prefers this sub-alternative at this time because it simplifies enforcement and compliance without adverse impacts.

On December 12, 2012, following consultation under section 7(a)(2) of the Endangered Species Act (ESA), NMFS determined that the continued operation of the Atlantic shark and smoothhound shark fisheries is not likely to jeopardize the continued existence of Atlantic sturgeon, smalltooth sawfish, or any species of ESA-listed large whale or sea turtles. In order to avoid take prohibited by Section 9 of the ESA, NMFS must comply with the Reasonable and Prudent Measures (RPMs) and the Terms and Conditions (TCs) in the 2012 Shark BiOp. NMFS has reviewed the 2012 Shark BiOp and associated TCs and has determined that the current regulations meet the specifications of all the TCs except for TC 4, which requires either net checks or soak time restrictions in the Atlantic shark gillnet fisheries. Therefore, this rulemaking considers measures that would ensure the Atlantic shark gillnet fisheries operate consistent with TC 4 in the 2012 Shark BiOp.

NMFS proposes to establish a soak time limit of 24 hours for fishermen using sink gillnet gear and a 2-hour net check requirement for fishermen using drift gillnet gear in the Atlantic shark and smoothhound shark fisheries. Drift gillnets would be defined as those that are unattached to the ocean bottom with a float line at the surface, and sink gillnet gear would be defined as those with a weight line that sinks to the ocean bottom, has a submerged float line, and is designed to be fished on or near the bottom. Most smoothhound shark gillnet fishermen would be required to limit soak times to 24 hours, since they primarily use sink gillnet gear. This requirement would not significantly change smoothhound shark fishing practices. With regard to other Atlantic shark fishermen, fishermen who use sink gillnet gear would be required to limit soak times to 24 hours and those that use drift gillnets would be required to perform net checks at least every 2 hours. Currently, all Atlantic shark fishermen that use gillnet gear to fish for or who are in possession of any large coastal, small coastal, or pelagic shark, regardless of gillnet type, are required to perform net checks at least every 2 hours (see § 635.21(e)(3)(v)). During the net checks, fishermen are required to look for and remove any sea turtles, marine mammals, or smalltooth sawfish. Only a few Atlantic shark limited access permit holders use gillnet gear and the proportions of each type (e.g., sink or drift) vary in any one year. Fishermen are not required to report the type of gillnet gear used, so the proportion of each type is best estimated using data from observed gillnet trips, although it is important to note that not all observed trips targeted sharks. From 2009 through 2012, the portion of gillnet trips that used sink gillnet gear ranged from a low in 2009 of 47 percent, up to 87 percent, 100 percent, and 93 percent in 2010-2012, respectively. For a variety of reasons (e.g., reduced LCS retention limits and gillnet gear fishing restrictions), it appears that the fishery has moved predominately to sink gillnet gear. Under the preferred alternative, shark gillnet fishermen that use sink gillnet gear would no longer be required to perform net checks at least every 2 hours under this alternative. Instead, they would be required to limit soak times to 24 hours. In the 2002 rulemaking that implemented the net checks (July 9, 2002, 67 FR 45393), NMFS stated that the net checks would be unlikely to impact the bycatch of species that are not protected resources. This statement was made because the net checks do not require fishermen to remove or disentangle any animals except protected species during the net checks, thus, non-protected resource bycatch species would be unlikely to be removed from the net. In the 2012 BiOp, the requirement to use either net checks or the 24 hour set limitation was determined to ensure that any incidentally taken ESA-listed species are detected and released in a timely manner, reducing the likelihood of mortality.

As such, this preferred alternative would likely result in short- and long-term direct minor adverse ecological impacts because the target species, sharks, could remain in the gillnet for longer periods of time before being released, reducing the chances of a live release. Similarly, this alternative could result in short- and long-term indirect neutral ecological impacts to non-target, incidentally caught fish species and bycatch because net checks do not require fishermen to remove or disentangle any animals except protected species during the net checks. This alternative would likely have, however, short- and long-term minor beneficial impacts on protected resources since it would implement one of the Terms and Conditions of the 2012 Shark BiOp to minimize impacts on protected resources. Since this alternative complies with the Biological Opinion, has only minor adverse direct and indirect ecological impacts to other species, and allows all smoothhound shark gillnet fishermen to continue current fishing practices, NMFS prefers this alternative at this time.

This action would likely result in neutral short- and long-term direct socioeconomic impacts. Smoothhound shark fishermen, who typically use sink gillnets, would be required to limit soak times to 24 hours and as discussed above, this requirement is unlikely to significantly alter smoothhound shark fishing practices. Drift gillnet fishermen, who are more likely to target Atlantic sharks rather than smoothhound sharks, would be required to check their nets at least every 2 hours, as is currently required. Thus, this alternative is unlikely to have any socioeconomic impacts to Atlantic shark and smoothhound shark fishermen since it would not change current fishing practices. Similarly, this alternative would likely result in neutral short- and long-term indirect socioeconomic impacts since supporting businesses, including dealers and bait, tackle, and ice suppliers, should not be impacted. The preferred alternative would impact the approximately 31 vessels that annually direct on smoothhound sharks with gillnet gear. Since this action would have minimal economic impact but is still consistent with the 2012 Shark BiOp, and thus sufficiently protects protected resources, NMFS prefers this alternative at this time.

NMFS also considered three other alternatives to implement the 2012 Shark BiOp gillnet requirements in the Atlantic shark fisheries. First, NMFS considered not implementing the requirements, but does not prefer this alternative because it would not be consistent with the 2012 Shark BiOp. Second, NMFS considered requiring smoothhound shark fishermen to conduct net checks at least every 2 hours to look for and remove any protected species. This measure was not preferred because it would change current fishing practices, reducing efficiency and landings, thus reducing profitability, without reducing the likelihood of mortality of protected species per the 2012 BiOp. Third, NMFS considered different requirements based on permit type. It would establish a gillnet soak time limit of 24 hours for smoothhound shark permit holders. Under this alternative, fishermen holding both an Atlantic shark limited access permit and a smoothhound shark permit would have to abide by the 24-hour soak time restriction and conduct net checks at least every 2 hours. This would disadvantage smoothhound shark fishermen holding both permits relative to smoothhound shark fishermen only holding a smoothhound shark permit without ecological benefits to protected resources. For this reason, this measure is not preferred at this time.

This proposed rule would also revise the requirement to use VMS by shark fishermen using gillnet gear. Currently, Federal directed shark permit holders with gillnet gear on board are required to use VMS, regardless of vessel location. This requirement was implemented as part of the 2003 Amendment 1 to the 1999 FMP to ensure shark gillnet vessels were complying with the Atlantic Large Whale Take Reduction Plan (ALWTRP) time/area closures and observer requirements (50 CFR 229.32). The ALWTRP requirements apply only to Atlantic directed shark limited access permit holders with gillnet gear on board in the Southeast U.S. Monitoring Area. At the time of implementation in 2003, NMFS determined that requiring all gillnet fishermen with a directed shark permit to use VMS regardless of geographic location would simplify compliance and outreach, particularly if these fishermen regularly fished different regions, including in the Southeast U.S. Monitoring Area. Since then, however, it has become apparent that while some of these fishermen fish multiple regions, many do not fish in or even near the Southeast U.S. Monitoring Area. Thus, this rulemaking considers measures to bring the VMS requirements in-line with the requirements of the ALWTRP.

NMFS proposes to require Federal directed Atlantic shark limited access permit holders with gillnet gear on board to use VMS only in the vicinity of the Southeast U.S. Monitoring Area, pursuant to ALWTRP requirements. This action is expected to have neutral short- and long-term direct and indirect ecological impacts. These VMS requirements are an enforcement tool for complying with the ALWTRP requirements and would not affect catch. VMS requirements do not impact incidentally caught species. The preferred alternative would likely provide short- and long-term moderate beneficial impacts for protected resources, because it maintains the requirement to have VMS on board when gillnet fishing in the U.S. Southeast Monitoring Area, as required in the ALWTRP. The difference between this alternative and the No Action alternative is that this alternative would limit the VMS requirement for Atlantic shark permit holders using gillnet gear to the vicinity of the Southeast U.S. Monitoring Area. Requirements to minimize large whale interactions would not change, only the geographic area of the VMS requirement. For this reason, protected resource impacts resulting from the preferred alternative are the same as for the no action alternative. Thus, because this alternative maintains the VMS requirements for large whales consistent with the ALWTRP, and at the same time reduces adverse socioeconomic impacts, NMFS prefers this alternative at this time.

This change to the VMS gillnet requirement would have short- and long-term direct minor beneficial socioeconomic impacts. Atlantic shark gillnet fishermen fishing in the vicinity of the Southeast U.S Monitoring Area would still incur the installation costs of the VMS, but data transmission would be limited to those times when the vessel is in this area. Furthermore, shark gillnet fishermen outside of this area that do not fish in the vicinity of the Southeast U.S Monitoring Area would not need to install a VMS unit or, if they already have one, maintain the VMS unit or replace a malfunctioning one. Thus, the socioeconomic impacts from this alternative, while still adverse, are of a lesser degree than those under the No Action alternative. This alternative would likely result in neutral short- and long-term indirect socioeconomic impacts since supporting businesses including dealers and bait, tackle, and ice suppliers would not be impacted. Since this alternative is more in line with the requirements of the ALWTRP, and because it would reduce socioeconomic impacts while still maintaining beneficial ecological impacts for protected whale species, NMFS prefers this alternative at this time.

Currently, the Atlantic shark fishery observer program is administered by the NMFS Southeast Fisheries Science Center (SEFSC). However, because a portion of the commercial smoothhound shark fishery occurs in the Northeast region, there is a possibility that the smoothhound shark observer program could be run by the NMFS Northeast Fisheries Science Center (NEFSC). The two regional science center observers programs differ in the way they notify fishermen of their selection to carry an observer. The SEFSC notifies fishermen in writing at the time of selection. This process is currently in the 50 CFR part 635 regulations. The NEFSC does not require written notification of selection and any vessel holding an applicable permit can be selected. Thus, NMFS is proposing changes to the observer regulations in 50 CFR part 635 to incorporate the relevant portions of the Northeast observer regulations found at 50 CFR part 648. In this action, NMFS proposes to update the regulatory text to incorporate the observer selection process used by the NEFSC into the current selection process used by the SEFSC. These proposed changes are administrative in nature, will not have any biological, economic, or social impacts or impacts on the physical environment and are not anticipated to affect the current fishing level or practices in commercial highly migratory species fisheries, and, therefore, are not further analyzed in this document.

Comments on this proposed rule may be submitted via http://www.regulations.gov, or mail, and comments may also be submitted at a public hearing. NMFS solicits comments on this proposed rule by November 14, 2014 (See DATES and ADDRESSES ). We will announce the dates and locations of public hearings in a future Federal Register notice.

Pursuant to the Magnuson-Stevens Act, the NMFS Assistant Administrator has determined that the proposed rule is consistent with the 2006 Consolidated HMS FMP and its amendments, other provisions of the Magnuson-Stevens Act, and other applicable law, subject to further consideration after public comment.

NMFS prepared a draft EA for Draft Amendment 9 that discusses the impact on the environment that would occur as a result of this proposed action. In this proposed action, NMFS is considering measures for the smoothhound shark fishery, smooth dogfish, and the Atlantic shark gillnet fishery. A copy of the EA is available from NMFS (see ADDRESSES ).

This proposed rule has been determined to be not significant for purposes of Executive Order 12866.

This proposed rule contains a collection-of-information requirement subject to review and approval by the Office of Management and Budget (OMB) under the Paperwork Reduction Act (PRA). This requirement has been submitted to OMB for approval.

The Federal commercial smoothhound shark permit requirement analyzed in Amendment 3 will become effective upon the effective date of a final rule. NMFS submitted a PRA change request to OMB to add this permit to the existing HMS permit PRA package (OMB control number 0648-0327). OMB subsequently accepted the change request to add the Federal commercial smoothhound shark permit to the HMS permit PRA package.

Public comment is sought regarding: Whether this proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; the accuracy of the burden estimate; ways to enhance the quality, utility, and clarity of the information to be collected; and ways to minimize the burden of the collection of information, including through the use of automated collection techniques or other forms of information technology. Send comments on these or any other aspects of the collection of information to (enter office name) at the ADDRESSES above, and by email to OIRA_Submission@omb.eop.gov or fax to (202) 395-7285.

Notwithstanding any other provision of law, no person is required to respond to, and no person shall be subject to penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB control number.

An initial regulatory flexibility analysis (IRFA) was prepared, as required by section 603 of the Regulatory Flexibility Act (RFA). The IRFA describes the economic impact this proposed rule would have on small entities if adopted. A description of the action, why it is being considered, and the legal basis for this action are contained at the beginning of this section in the preamble and in the SUMMARY section of the preamble. A summary of the analysis follows. A copy of this analysis is available from NMFS (see ADDRESSES ).

This proposed action is designed to implement the smooth dogfish provisions of the Shark Conservation Act of 2010 and to implement the smoothhound sharks measures in Amendment 3 to the 2006 Consolidated HMS FMP (75 FR 30484, June 1, 2010) and the 2011 Atlantic HMS Trawl Rule (76 FR 49368, August 10, 2011) that are currently on hold. This action also reexamines the smoothhound shark quota that would be implemented along with the Amendment 3 measures. NMFS has updated landings data that could necessitate a recalculation of the quota. See Section 1.3 of the Draft EA for Amendment 9 for more information.

On December 12, 2012, consistent with Section 7(b)(4) of the ESA, NMFS determined that the continued operation of the Atlantic shark and smoothhound shark fisheries is not likely to jeopardize the continued existence of Atlantic sturgeon, smalltooth sawfish, or any species of ESA-listed large whale or sea turtles. In order to be exempt from take prohibitions established by Section 9 of the ESA, NMFS must comply with the RPMs and TCs listed in the 2012 Shark BiOp. One purpose of Amendment 9 is to propose measures to implement the 2012 Shark BiOp TCs that are specific to the Atlantic shark and smoothhound shark fisheries. See Section 1.3 of the Draft EA for Amendment 9 for more information.

Currently, Federal directed shark permit holders with gillnet gear on board are required to use VMS regardless of vessel location. This requirement was originally implemented to comply with the ALWTRP requirements at 50 CFR 229.32. However, these requirements require federal directed shark permit holders with gillnet gear on board to use VMS only when fishing in a certain area in the South Atlantic. Thus, another purpose of this rulemaking is to examine measures to bring current VMS regulations for Federal directed shark permit holders using gillnet gear in-line with the current requirements of the ALWTRP at 50 CFR 229.32. See Section 1.3 of the Draft EA for Amendment 9 for more information.

The management goals and objectives of this action are to provide for the sustainable management of smoothhound sharks and Atlantic shark species under authority of the Secretary consistent with the requirements of the Magnuson-Stevens Act and other statutes which may apply to such management, including the ESA and the Marine Mammal Protection Act (MMPA). The management objectives are to achieve the following:

• Implement the smooth dogfish provisions of the SCA.

• Implement other measures, as necessary, to ensure that the smooth dogfish provisions of the SCA do not negatively impact the sustainable fishery of other shark species.

• Reexamine the smoothhound shark quota in light of updated landings data.

• Implement the Term and Condition of the 2012 Smoothhound Shark and Atlantic Shark Biological Opinion related to gillnet impacts on ESA-listed species.

• Reexamine Atlantic shark gillnet VMS regulation in compliance with the ALWTRP, per the MMPA.

Section 603(b)(3) of the RFA requires Agencies to provide an estimate of the number of small entities to which the rule would apply. On June 12, 2014, the Small Business Administration (SBA) issued a final rule revising the small business size standards for several industries effective July 14, 2014 (79 FR 33647; June 12, 2014). The rule increased the size standard for Finfish Fishing from $19.0 to 20.5 million. NMFS has reviewed the analyses prepared for this action in light of the new size standards. Under the former, lower size standards, all entities subject to this action were considered small entities; thus, they all would continue to be considered small entities under the new standards. NMFS does not believe that the new size standards affect analyses prepared for this action and solicits public comment on the analyses in light of the new size standards. Under these standards, NMFS considers all Atlantic HMS permit holders subject to draft Amendment 9 to be small entities.

As discussed in Section 6.1 of the Draft EA for Amendment 9, NMFS does not have exact numbers on affected commercial fishermen. The smoothhound shark commercial permit has not yet been created, so NMFS does not know how many smoothhound shark fishermen will be impacted. An annual average of 275 vessels reported retaining smooth dogfish through VTR from 2003-2012. This is NMFS' best estimate of affected smoothhound shark fishermen.

While the retention of sharks in federal waters requires one of two limited access commercial shark permits, these permits do not specify gear type, such as gillnets. For this reason, NMFS does not know the exact number of affected shark gillnet fishermen. As of July 11, 2013, there are 216 directed shark and 261 incidental shark permit holders. Logbook records indicate that there are usually about 10 Atlantic shark directed permit holders that use gillnet gear in any year. However, the universe of directed permit holders using gillnet gear can change from year to year and could include anyone who holds an Atlantic shark directed permit.

As of July 11, 2013, there are 96 Atlantic shark dealers. These dealers could be affected by these measures to varying degrees. Not all of these dealers purchase smoothhound sharks and those that do are concentrated in the Mid-Atlantic region. NMFS will know more about the number of affected dealers when smoothhound reporting requirements go into place. Similarly, not all of these dealers purchase Atlantic sharks caught with gillnet gear. The number is likely low and is concentrated in Florida and the Gulf of Mexico.

NMFS has determined that the proposed rule is not likely to affect any small governmental jurisdictions. More information regarding the description of the fisheries affected, and the categories and number of permit holders can be found in Chapter 3 of the Draft EA for Amendment 9.

Under section 603(b)(4) of the RFA, Agencies are required to describe any new reporting, record-keeping and other compliance requirements. The Federal commercial smoothhound shark permit requirement analyzed in Amendment 3 to the 2006 Consolidated HMS FMP will become effective upon the effective date of this rule. NMFS submitted a PRA change request to OMB to add this permit to the existing HMS permit PRA package (OMB control number 0648- 0327). OMB subsequently accepted the change request to add the federal commercial smoothhound shark permit to the HMS permit PRA package.

On November 15, 2013, NMFS published a final rule (78 FR 68757) that modifies declaration requirements for Atlantic shark fishermen using VMS. The final rule implements requirements for operators of vessels that have been issued Atlantic HMS permits and are required to use their VMS units to provide hourly position reports 24 hours a day, 7 days a week (24/7). The final rule implements requirements allowing the operators of such vessels to make declarations out of the fishery when not retaining or fishing for Atlantic HMS for specified periods of time that encompass two or more trips. These changes alter the burden estimates under the existing HMS permit PRA package (OMB control number 0648-0327).

Under section 603(b)(5) of the RFA, agencies must identify, to the extent practicable, relevant Federal rules which duplicate, overlap, or conflict with the proposed rule. Fishermen, dealers, and managers in these fisheries must comply with a number of international agreements, domestic laws, and other FMPs. These include the Magnuson-Stevens Act, the Atlantic Tunas Convention Act, the High Seas Fishing Compliance Act, the Marine Mammal Protection Act, the Endangered Species Act, the National Environmental Policy Act, the Paperwork Reduction Act, and the Coastal Zone Management Act. This proposed rule has also been determined not to duplicate, overlap, or conflict with any other Federal rules.

One of the requirements of an IRFA is to describe any alternatives to the proposed rule which accomplish the stated objectives and which minimize any significant economic impacts. These impacts are discussed below. Additionally, the RFA (5 U.S.C. 603(c) (1)-(4)) lists four general categories of “significant” alternatives that would assist an agency in the development of significant alternatives. These categories of alternatives are: (1) Establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) clarification, consolidation, or simplification of compliance and reporting requirements under the rule for such small entities; (3) use of performance rather than design standards; and, (4) exemptions from coverage of the rule for small entities.

In order to meet the objectives of this proposed rule, consistent with the Magnuson-Stevens Act, ATCA, and the ESA, NMFS cannot establish differing compliance requirements for small entities or exempt small entities from compliance requirements. Thus, there are no alternatives discussed that fall under the first and fourth categories described above. NMFS does not know of any performance or design standards that would satisfy the aforementioned objectives of draft Amendment 9 while, concurrently, complying with the Magnuson-Stevens Act. As described below, NMFS analyzed several different alternatives in this proposed rulemaking and provides rationale for identifying the preferred alternative to achieve the desired objective.

The alternatives considered and analyzed are described below. The IRFA assumes that each vessel will have similar catch and gross revenues to show the relative impact of the proposed action on vessels.

With regard to the implementation of the SCA, NMFS considered two alternatives. Alternative A1, which would not implement the smooth dogfish-specific provisions of the SCA and would instead implement the fins attached requirement finalized in Amendment 3, and Alternative A2, which proposes to implement the smooth dogfish-specific provisions of the SCA and has sub-alternatives that address the specific elements of the smooth dogfish-specific provisions.

Alternative A1 would not implement the smooth dogfish-specific provisions of the SCA and would require all smooth dogfish to be landed with fins naturally attached. This alternative would change current fishing practices since smooth dogfish caught in the directed and incidental fisheries are fully processed while at sea. As a result, this Alternative A1 would likely lead to reduced landings and a lower ex-vessel price since the product would not be fully processed. This could lead to adverse socioeconomic impacts.

Under Alternative A2, the preferred alternative, an allowance for the removal of smooth dogfish fins at sea would increase efficiency in the smooth dogfish fishery and provide a more highly processed product for fishermen to sell to dealers. Quantifying the financial benefits is difficult since baseline effort and increases in efficiency cannot be calculated, but the benefit would not exceed $585,516, the ex-vessel value of the entire smooth dogfish gillnet fishery. The benefit to individual vessels is likely equal to the average annual per vessel revenues from smooth dogfish caught in the directed sink gillnet fishery was which was $15,365.

Supporting entities, such as bait and tackle suppliers, ice suppliers, dealers, and other similar businesses, could experience increased revenue if the efficiency of fin removal at sea results in a higher quality product. However, while supporting businesses would benefit from the increased profitability of the fishery, they do not solely rely on the smooth dogfish fishery. In the long-term, it is likely that changes in the smooth dogfish fishery would not have large impacts on these businesses.

Under Sub-Alternative A2-1a, smooth dogfish could make up any portion of the retained catch on board, provided that no other sharks are retained. This sub-alternative would authorize smooth dogfish fishermen to retain any non-shark species of fish while still availing themselves of the at-sea fin removal allowance. Smooth dogfish are often caught incidentally during other fishing operations, thus this sub-alternative would allow fishermen to maximize the profitability of each trip and allow individual operators the flexibility to make decisions, before the trip and while on the water, as to the retained catch composition that would maximize ex-vessel revenues. Under this alternative, fishermen could remove smooth dogfish fins at sea during any type of trip including those trips that are directing on other non-shark species. This alternative would maintain the current practice in the fishery and vessels could continue to have ex-vessel revenues of $585,516 per year in the smooth dogfish gillnet fishery.

Under Sub-Alternative A2-1b, fishermen could avail themselves of the at-sea fin removal allowance only if smooth dogfish comprise 25 percent of the retained catch on board. This sub-alternative would authorize smooth dogfish fishermen to retain some non-shark species of fish while still availing themselves of the at-sea fin removal allowance. Smooth dogfish are often caught incidentally during other fishing operations, thus this sub-alternative would allow fishermen to increase the profitability of each trip and allow individual operators the flexibility to make decisions, before the trip and while on the water, as to the retained catch composition that would increase ex-vessel revenues. This increase in flexibility would be to a lesser extent than Sub-Alternative A2-1a, which would not have a catch composition requirement, but greater than the other sub-alternatives that limit the fins-attached exception to the directed fishery. This sub-alternative would decrease total ex-vessel revenues relative to the current level of $585,516 per year in the smooth dogfish gillnet fishery.

Under Sub-Alternative A2-1c, a preferred sub-alternative, fishermen could avail themselves of the at-sea fin removal allowance only if smooth dogfish comprise 75 percent of the retained catch on board. NMFS chose this threshold because in other HMS fisheries, 75 percent retention of the target catch is considered a trip where the fisherman is fishing for that species. Thus, implementing a target catch requirement of 75 percent smooth dogfish would limit the at-sea fin removal allowance to those fishing for smooth dogfish. Because some fishermen catch smooth dogfish while fishing for other species, this sub-alternative is likely to reduce flexibility in which species may be retained and would decrease the number of mixed species trips where fishermen could take advantage of the at-sea fin removal allowance. Between 2003 and 2012, an annual average of 275 vessels landed smooth dogfish, but only around 30 vessels targeted smooth dogfish in any given year. For this reason, NMFS estimates that approximately 245 vessels in the mixed species fishery would be impacted by sub-Alternative A2-1c.

Sub-Alternative A2-1d would require smooth dogfish to comprise 100 percent of the retained catch on board the vessel in order for fishermen to avail themselves of the at-sea fin removal allowance for smooth dogfish. This sub-alternative would eliminate the ability of mixed trips to take advantage of the at-sea fin removal, and would reduce flexibility in deciding which species to retain on each fishing trip. However, the approximately 30 vessels (annual average 2003-2012) that target smooth dogfish often only retain smooth dogfish due to the processing practices in place. Thus, these fishermen would only have smooth dogfish on board and would not be impacted by a 100 percent smooth dogfish requirement, and would benefit from the ability to remove the smooth dogfish fins at sea.

Sub-Alternative A2-2a would require federal smoothhound permitted fishermen to obtain a smooth dogfish-specific state commercial fishing license in order to be able to remove smooth dogfish fins at sea. The requirement to obtain a smooth dogfish-specific state commercial fishing license may be more difficult for fishermen who are in states that do not have smooth dogfish-specific permits in place. This sub-alternative would result in the increased burden on fishermen to obtain another permit, and depending upon the state, could result in an additional permit charge. Since most permits are valid for one year, fishermen would likely need to renew the permit each year for as long as they wish to retain smooth dogfish and remove the fins while at sea. Because not all states have smooth dogfish-specific permits, NMFS does not prefer this alternative at this time but is seeking comments, particularly from the States, about their preferences and what approach would work best in conjunction with their state approach to permitting and state fishery objectives.

Sub-Alternative A2-2b, the preferred alternative, would require fishermen to hold any state commercial fishing permit that allows retention of smooth dogfish. It is likely, however, that most smooth dogfish fishermen already hold this type of state permit and would be unaffected by this requirement. This sub-alternative would likely be the most straightforward for regulatory compliance since the permit requirement would be the simpler than sub-alternative A2-2a. Thus, NMFS prefers this sub-alternative at this time but is seeking comments, particularly from the States, about their preferences and what approach would work best in conjunction with their state approach to permitting and state fishery objectives.

NMFS considered two alternatives for Geographic Application of the SCA exception. Under Sub-Alternative A2-3a, the exception would apply along the Atlantic Coast and the Florida west coast in the Gulf of Mexico. As explained earlier, as a practical matter, smooth dogfish and other smoothhound species are indistinguishable. The best available scientific information indicates that smooth dogfish are likely the only smoothhound shark species along the Atlantic coast. In the Gulf of Mexico, however, there are at least three different smoothhound species, with no practical way to distinguish among them. This sub-alternative would apply the smooth dogfish exception 50 nautical miles from the baseline of all the States that fall under the SCA definition of “State.” This sub-alternative could result in other smoothhound sharks indirectly falling under the exception, because they cannot be distinguished from smooth dogfish. NMFS does not expect any impacts from this alternative because there is no commercial fishery for smooth dogfish in the Gulf of Mexico at this time. However, NMFS does not prefer this sub-alternative at this time because, if a fishery does develop, species misidentification could result in enforcement action.

Under Sub-Alternative 3b, the preferred sub-alternative, the exception would only apply along the Atlantic coast and not the Florida west coast in the Gulf of Mexico. By not extending the exception into the Gulf of Mexico, this sub-alternative would ensure that the smooth dogfish fins attached exception would only apply along the Atlantic Coast where the population is almost entirely smooth dogfish, reducing identification problems and inadvertent finning violations. NMFS does not expect any impacts from this alternative because, at this time, there is no commercial fishery for smooth dogfish in the Gulf of Mexico. NMFS prefers this sub-alternative at this time because it simplifies enforcement and compliance without adverse impacts.

NMFS considered 4 alternatives to the smoothhound quota alternatives. Alternative B1, which would implement the smoothhound shark quota finalized in Amendment 3; Alternative B2, which would establish a rolling quota based on the most recent five years of landings data; Alternative B3, the preferred alternative, which would calculate the smoothhound quota using the same method as in Amendment 3 but would use updated smoothhound landings information; and Alternative B4 which would establish smoothhound shark quotas that reflect any necessary adjustments as a result of the 2014 smoothhound shark stock assessment.

Alternative B1 would implement the quota finalized in Amendment 3 (715.5 mt dw), which was based on the calculation of quotas from a historical period in the fishery (1998 to 2007) and adding two standard deviations. Current reported smoothhound shark landings are higher than the quota level in Alternative B1. As such, implementing this quota would prevent fishermen from fishing at current levels, resulting in lost revenues. In 2011, the most recent year when landings exceeded the Amendment 3 quota, smoothhound shark landings totaled 2,078,251 lb dw (ACCSP data), resulting in revenues across the entire smoothhound shark fishery of $1,634,337 (2,078,251 lb of meat, 249,390 lb of fins). Implementation of the Amendment 3 quota (715.5 mt dw) would result in ex-vessel revenues of only $1,240,460 (1,577,391 lb of meat, 189,287 lb of fins), which is $393,877 less than 2011 ex-vessel revenues. Both of these estimates assume $1.72/lb for fins, $0.58/lb for meat based on 2013 HMS dealer data, and a 12 percent fin-to-carcass ratio from the SCA. Seventy-six percent of all landings in the smoothhound shark fishery come from sink gillnets, and there are approximately 82 vessels that use sink gillnet gear to fish for smoothhound sharks. Assuming an average of 82 sink gillnet vessels fishing for smoothhound sharks, the quota in this alternative would result in annual ex-vessel revenues of $15,128 per vessel, which is less than current ex-vessel revenues of $19,931 per vessel. This is an average across all directed and incidental sink gillnet vessels and this individual annual vessel ex-vessel revenue may fluctuate based on the degree to which fishermen direct on smoothhound sharks.

The quota in Alternative B1 does not accurately characterize current reported landings of smoothhound sharks. The VTR data for the Northeastern United States shows that an average of 31 vessels between 2002 and 2012 directed on smoothhound shark. These vessels likely fished opportunistically on multiple species of coastal migratory fish and elasmobranches, and it is unlikely that any sector within the fishing industry in the Northeast (fisherman, dealer, or processor) relies wholly upon smoothhound sharks. Longer-term impacts are expected to be neutral given the small size of the fishery and the generalist nature of the sink gillnet fishery.

Alternative B2 would establish a rolling smoothhound shark quota set above the maximum annual landings for the preceding five years; this quota would be recalculated annually to account for the most recent landing trends within the smoothhound complex (2015 quota would be 1,663 mt dw based on 2009-2013 data). The 2015 quota under this alternative would likely result in annual revenues of $2,883,139 (3,666,250 lb of meat, 439,950 lb of fins) assuming an ex-vessel price of $1.72 lb for fins and $0.58 lb for meat based on 2013 HMS dealer data. Seventy-six percent of all landings in the smoothhound shark fishery come from sink gillnets, and there are approximately 82 vessels that use sink gillnet gear to fish for smoothhound sharks. Assuming an average of 82 sink gillnet vessels fishing for smoothhound sharks, the quota in this alternative would result in individual vessel annual revenues of $35,160, which is more than current ex-vessel revenues of $19,931 per vessel. This is an average across all directed and incidental sink gillnet vessels, and this individual annual vessel revenue may fluctuate based on the degree to which fishermen direct on smoothhound sharks.

Per the intent of Amendment 3, smoothhound management measures are designed to characterize and collect data while minimizing changes in catch levels and catch rates in the fishery. This goal necessitates a quota near actual exploitation levels. Thus, setting the quota above current landings levels should allow the fishery to continue, rather than be closed, allowing for NMFS to collect more information that can be used in future stock assessments. Alternative B2 is consistent with the intent of Amendment 3, which was to minimize changes to the fishery while information on catch and participants was collected. Because landings in the smoothhound shark fishery are likely underreported, it is unclear at this time whether the increase in reported landings is due to existing smoothhound fishermen reporting in anticipation of future management or increased effort (e.g., new entrants into the fishery). While a rolling quota would cover all current reporting and likely cover all underreporting of landings, the fishery could grow exponentially if reported landings continue to increase over consecutive years, possibly resulting in stock declines and in turn a potential loss of revenue to the fishing industry. The rolling quota could also lead to lower quotas in consecutive years if landings decrease over time. Thus, the changing nature of the rolling quota could lead to uncertainty in the fishery and could cause direct and indirect minor adverse socioeconomic impacts in the long term.

Alternative B3, the preferred alternative, would create a smoothhound quota equal to the maximum annual landings from 2004-2013 plus two standard deviations, and would equal 1,739.9 mt dw. This alternative establishes a smoothhound quota two standard deviations above the maximum annual landings reported over the last ten years, which is the method used to calculate the smoothhound shark quota that was finalized in Amendment 3. This quota would result in potential annual revenues in the entire fishery of $3,016,460 (3,835,784 lb of meat, 460,294 lb of fins) assuming an ex-vessels price of $1.72 lb for fins and $0.58 for fins based on 2013 HMS dealer data. Seventy six percent of all landings in the smoothhound shark fishery come from sink gillnets, and there are approximately 82 vessels that use sink gillnet gear to fish for smoothhound sharks. Assuming an average of 82 sink gillnet vessels fishing for smoothhound sharks, the quota proposed in this alternative would result in individual vessel annual revenues of $36,786. This is an average across all directed and incidental sink gillnet vessels and this individual annual vessel revenue may fluctuate based on the degree to which fishermen direct on smoothhound sharks.

Consistent with the intent of Amendment 3, the preferred alternative B3 would set the quota above current landings levels to allow the fishery to continue throughout the year, rather than be closed for part of the year. This would allow NMFS to collect year-round fishery data that could be used in future smoothhound shark stock assessments. Because landings in the smoothhound fishery are likely underreported, it is unclear at this time whether the increase in reported landings is due to existing smoothhound shark fishermen reporting in anticipation of future management or increased effort. Under this alternative, NMFS anticipates the fishery would operate as it currently does. Alternative B3 accounts for recent trends in the fishery and the best available landings data as recalculated and reported by ACCSP reflects recent behavior in the fishery, and provides an appropriate buffer to account for underreporting in the fishery. Alternative B3 provides for more stability in the fishery due to a quota that does not change from year to year as in alternative B2. Additionally, providing a maximum cap on the fishery would allow fishermen, dealers, and processors to make better business decisions based on a more predictable yield (assuming that the fishery is fished to near-full capacity each year).

Alternative B4 would implement a smoothhound shark quota consistent with the results of the 2014 smoothhound shark stock assessment, if the results become available before publication of the final rule for this action. For the entire smoothhound shark complex, there are four possible outcomes: (1) One or more of the stocks is found to be overfished but not experiencing overfishing; (2) one or more of the stocks is found to be experiencing overfishing but not yet overfished; (3) one or more of the stocks is found to be overfished and experiencing overfishing; or (4) all stocks are found to not be overfished or experiencing overfishing (healthy). A smoothhound shark quota that is based on the results of a stock assessment would provide short and long-term ecological benefits and the resulting sustainable fishery will ensure long-term socioeconomic benefits for the smoothhound shark fishermen. Unless the stock assessment indicates that current fishing levels are unsustainable, short-term negative socioeconomic impacts are unlikely to result from this alternative. However, the stock assessment is not yet available and NMFS is unsure if it will be available before the final rule for this action publishes. Therefore, NMFS does not prefer this alternative at this time.

In order to implement the TCs of the 2012 Shark BiOp in the smoothhound shark fishery, NMFS considered 4 alternatives. The No Action alternative, which would not implement TC 4 of the 2012 Shark BiOp; C2 which would require smoothhound shark fishermen to conduct net checks at least every 2 hours; C3 which would require smoothhound shark fishermen to limit their gillnet soak time to 24 hours and those smoothhound shark fishermen that also have a Atlantic shark limited access permit to check their nets at least every 2 hours; and C4 which would require smoothhound and Atlantic shark fishermen using sink gillnet to soak their nets no longer than 24 hours and those fishermen using drift gillnets to check their nets at least every 2 hours.

Alternative C1 would not implement the BiOp term and condition requiring all smoothhound shark permit holders to either check their gillnet gear at least every 2.0 hours, or limit their soak time to no more than 24 hours. This alternative would likely result in short- and long-term neutral direct socioeconomic impacts. Under Alternative C1, smoothhound shark fishermen would continue to fish as they do now and so this alternative would not have economic impacts that differ from the status quo. Similarly, this alternative would likely result in neutral short and long-term indirect socioeconomic impacts since supporting businesses including dealers and bait, tackle, and ice suppliers would not be impacted.

Alternative C2 would require smoothhound shark fishermen using gillnet gear to conduct net checks at least every 2 hours to check for and remove any protected species, and would likely result in short- and long-term direct moderate adverse socioeconomic impacts. Some smoothhound shark gillnet fishermen fish multiple nets at one time or deploy their net(s), leave the vicinity, and return at some later time. Alternative C2 would require these fishermen to check each gillnet at least once every 2 hours, making fishing with multiple nets or leaving nets unattended difficult. This would likely lead to a reduction in effort and landing levels, resulting in lower ex-vessel revenues. Quantifying the loss of income is difficult without information characterizing the fishery, including the number of nets fished. However, limiting the amount of fishing effort in this manner is likely to reduce total landings of smoothhound sharks or, in order to keep landing levels high, extend the length of trips. Landings of incidentally caught fish species could be reduced as well, although under preferred sub-Alternative A2-1c, smoothhound shark fishermen that wish to remove smooth dogfish fins at sea could not retain other species. This alternative would not have a large impact on supporting businesses such as dealers or bait, tackle, and ice suppliers, since these businesses do not solely rely on the smoothhound shark fishery. The smoothhound shark fishery is small relative to other fisheries. Thus, Alternative C2 would likely result in short- and long-term indirect neutral socioeconomic impacts. Alternative C2 would impact the approximately 31 vessel that annually direct on smoothhound sharks with gillnet gear (annual average from 2003-2013).

Alternative C3 would establish a gillnet soak time limit of 24 hours for smoothhound shark permit holders. Under this alternative, fishermen holding both an Atlantic shark limited access permit and a smoothhound shark permit must abide by the 24 hour soak time restriction and conduct net checks at least every 2 hours. This alternative would likely result in short- and long-term direct minor adverse socioeconomic impacts to those smoothhound permitted fishermen that also have an Atlantic shark limited access permit, and therefore would be required to check their nets at least every 2 hours. Currently, smoothhound shark gillnet fishermen sometimes fish multiple nets or leave nets unattended for short periods of time. Rarely are these nets soaked for more than 24 hours, thus, this alternative would not impact smoothhound shark gillnet fishermen that do not have an Atlantic shark limited access permit. Adverse socioeconomic impacts resulting from this alternative would likely occur to the subset of smoothhound shark fishermen that also hold an Atlantic shark limited access permit. These smoothhound shark fishermen would be at a disadvantage to other smoothhound shark fishermen that do not have an Atlantic shark limited access permit, because they would be required to check their gillnets at least every 2 hours, which is a large change in the way the smoothhound shark fishery currently operates. Dropping the Atlantic shark permit to avoid the net check requirement is not likely feasible, since Atlantic shark permits are limited access and cannot be easily obtained. Additionally, pelagic longline fishermen are required to have an incidental or directed shark permit when targeting swordfish or tunas, even if they are not fishing for sharks, due to the likelihood of incidental shark catch. In practical terms, this alternative could result in smoothhound shark gillnet fishermen abiding by the 2 hour net check requirement even if they do not fish for Atlantic sharks and only hold a Atlantic shark limited access permit to fish for swordfish or tunas (note that gillnets cannot be used to target swordfish or tunas, but some vessels may switch gears between trips). For this subset of fishermen, basing gillnet requirements on permit types could introduce fishing inefficiencies when compared to other smoothhound fishermen, likely resulting in adverse socioeconomic impacts to these fishermen. It is unlikely that this alternative would have a large impact on supporting businesses such as dealers or bait, tackle, and ice suppliers since these businesses do not solely rely on the smoothhound shark fishery. As noted above, the smoothhound shark fishery is small relative to other fisheries, and it is difficult to determine the number of fishermen that would be adversely affected since NMFS does not yet know which vessels will obtain a smoothhound shark fishing permit. However, it is likely that this number will be approximately 170, which is the average annual number of vessel that retain smoothhound sharks.

Alternative C4, the preferred alternative, would establish a soak time limit of 24 hours for fishermen using sink gillnet gear and a 2 hour net check requirement for fishermen using drift gillnet gear in the Atlantic shark and smoothhound shark fisheries. Drift gillnets would be defined as those that are unattached to the ocean bottom with a float line at the surface. Sink gillnet gear would be defined as those with a weight line that sinks to the ocean bottom, has a submerged float line, and is designed to be fished on or near the bottom. Alternative C4 would likely result in neutral short- and long-term direct socioeconomic impacts. Smoothhound shark fishermen, who typically use sink gillnets, would be required to limit soak times to 24 hours and as discussed above, this requirement is unlikely to significantly alter smoothhound shark fishing practices. Drift gillnet fishermen, who are more likely to target Atlantic sharks other than smoothhound sharks, would be required to check their nets at least every 2 hours, as is currently required. Thus, this alternative is unlikely to have any socioeconomic impacts to Atlantic shark and smoothhound shark fishermen since it would not change current fishing practices. Similarly, this alternative would likely result in neutral short- and long-term indirect socioeconomic impacts since supporting businesses including dealers and bait, tackle, and ice suppliers should not be impacted. Alternative C4 would impact the approximately 31 vessels that annually direct on smoothhound sharks with gillnet gear. Since Alternative C4 would have minimal economic impact but is still consistent with the 2012 Shark BiOp, NMFS prefers this alternative at this time.

NMFS also considered two alternatives to streamline the current VMS requirements for Atlantic shark fishermen with gillnet gear on board. NMFS considered two alternatives, the No Action alternative that would maintain the current requirement to have VMS on board when fishing for Atlantic sharks with gillnet regardless of where the vessel is fishing, and alternative D2 that would only require VMS on board for Atlantic shark fishermen using gillnet gear in an area specified by the ALWTRP requirements at 50 CFR 229.32.

Alternative D1 would maintain the current requirement that Atlantic shark permit holders fishing with gillnet gear must have VMS on board from November 15-April 15, regardless of where the vessel is fishing. These VMS requirements were put in place as an enforcement tool for complying with the ALWTRP requirements set forth in 50 CFR 229.32. Per 50 CFR 229.32 (h)(2)(i) Atlantic shark gillnet fishermen are only required to have VMS if they are fishing in the Southeast U.S. Monitoring Area. Purchasing and installing a VMS unit costs fishermen around $3,500 and monthly data transmission charges cost, on average, approximately $44.00. Because these monthly costs are currently incurred whenever a shark gillnet fishermen is fishing from November 15-April 15, these costs can affect the fishermen's annual revenues. Although the affected fishermen already have VMS installed, they continue to pay for transmission and maintenance costs, and could need to buy a new unit if theirs fails. NMFS notes that there may be a reimbursement program that would defray part of the purchase cost, but whether that program will exist is not certain at this time. Thus, it is likely that this alternative could have short and long-term direct minor adverse socioeconomic impacts to fishermen due to the cost of purchasing and maintaining a VMS unit. While the retention of sharks in federal waters requires one of two limited access commercial shark permits, these permits do not specify gear type, including gillnets. For this reason, NMFS does not know the exact number of affected shark gillnet fishermen. As of July 11, 2013, there are 216 directed shark and 261 incidental shark permit holders. Logbook records indicate that there are usually about 10 Atlantic shark directed permit holders that use gillnet gear in any year. However, the universe of directed permit holders using gillnet gear can change from year to year and could include anyone who holds an Atlantic shark directed permit.

Alternative D2, the preferred alternative, would change the gillnet VMS requirements to require federal directed shark permit holders with gillnet gear on board to use VMS only in the vicinity of the Southeast U.S. Monitoring Area, pursuant to ALWTRP requirements. This alternative would have short- and long-term direct minor beneficial socioeconomic impacts. Atlantic shark gillnet fishermen fishing in the vicinity of the Southeast U.S. Monitoring Area would still incur the installation costs of the VMS, but data transmission would be limited to those times when the vessel is in this area. Furthermore, shark gillnet fishermen outside of this area that do not fish in the vicinity of the Southeast U.S Monitoring Area would not need to install a VMS unit or, if they already have one, maintain the VMS unit or replace a malfunctioning one. Thus, the socioeconomic impacts from this alternative, while still adverse, are of a lesser degree than those under Alternative D1, the No Action alternative. This alternative would likely result in neutral short- and long-term indirect socioeconomic impacts, since supporting businesses including dealers and bait, tackle, and ice suppliers would not be impacted. As noted in the other alternatives discussions, NMFS does not know the exact number of shark gillnet fishermen that would be affected by this alternative. As of July 11, 2013, there are 216 directed shark and 261 incidental shark permit holders. Logbook records indicate that there are usually about 10 Atlantic shark directed permit holders that use gillnet gear in any year. However, the universe of directed permit holders using gillnet gear can change from year to year and could include anyone who holds an Atlantic shark directed permit. Since this alternative is more in line with the requirements of the ALWTRP, and because it would reduce socioeconomic impacts while still maintaining beneficial ecological impacts for protected whale species, NMFS prefers this alternative at this time.

For reasons set out in the preamble, 50 CFR part 635 is proposed to be amended as follows:

Section 402(a)(1) for the Magnuson-Stevens Fishery Conservation and Management Act authorizes the Secretary of Commerce to implement an information collection program if a fishery management council determines that additional information would be beneficial for developing, implementing, or revising a fishery management plan (FMP). The Mid-Atlantic Fishery Management Council requests that NMFS implement an information collection program in the Atlantic surfclam and ocean quahog individual transferable quota (ITQ) fisheries. The specific components of the requested information collection are detailed in a white paper titled, “Data Collection Recommendations for the Surfclam and Ocean Quahog Fisheries” that was prepared by the Surfclam and Ocean Quahog Data Collection Fishery Management Action Team, at the direction of the Council. The purpose of this information collection is to better identify the specific individuals who hold or control ITQ allocation in these fisheries. The Council will use the information collected to inform the development of a future management action intended to establish an excessive share cap as part of the Council's Surfclam/Ocean Quahog FMP.

The Atlantic surfclam and ocean quahog fisheries have been managed under an ITQ system since 1990. Vessel owners received an initial allocation of quota share based on a formula of historical catch and vessel size. Each year, the total commercial quotas for the surfclam and ocean quahog ITQ fisheries are divided among the individuals who hold quota share. Annual allocations take the form of cage tags for the standard 32-bushel (1,700L) cages, which must be used to land the product. The quota share or cage tags are both considered types of ITQ allocation, and may be leased or sold to anyone, except foreign owners.

While managed jointly, the surfclam and ocean quahog ITQ fisheries are operationally distinct. The commercial quotas, quota shareholders, and cage tags are different for the two species. In addition, vessels may not land both surfclams and ocean quahogs on the same trip. Because these fisheries are managed in the same way, this information collection program applies equally to both fisheries.

Currently, NMFS collects only basic information about the individuals or businesses that hold surfclam and ocean quahog ITQ allocations. This information is collected at the time that an entity first acquires ITQ allocation and is not routinely verified or updated. The information collection program proposed by this action is intended to identify the specific individuals who have an ownership interest in surfclam or ocean quahog ITQ allocation through a corporation, partnership, or other entity, or control the use of ITQ allocation through the use of long-term contracts or other agreements. This action would also ensure that the ownership information on file remains current by modifying the procedures for receiving and maintaining an ITQ allocation permit.

With this action, we are proposing to change the current surfclam and ocean quahog ITQ allocation permit, which currently never expires, into an annual ITQ permit. A surfclam or ocean quahog ITQ permit would need to be renewed each year before the ITQ permit holder could receive cage tags. In addition, if the permit holder has quota share, the permit would need to be renewed before the end of the fishing year or that quota could be considered voluntarily relinquished, and no longer eligible to receive an annual allocation of cage tags.

To receive a surfclam or ocean quahog ITQ permit, an applicant would need to complete both an ITQ permit application form and an ITQ ownership form. In subsequent years, the permit renewal process would require the applicant to review a pre-filled copy of these forms, make any necessary changes, then sign and submit the forms to NMFS in order to verify that the information on file remains current. Any transfer of ITQ quota share or cage tags would require an ITQ transfer application form.

The ITQ permit application form would collect the applicant's name, business address, telephone number, and date of birth (for individuals) or taxpayer identification number (TIN) (for businesses) to positively identify people or businesses with similar names. The applicant would also need to verify that the permit holder meets the requirement to be eligible to own a documented vessel under the terms of 46 U.S.C. 12103(b). This requirement ensures that the applicant is a U.S. citizen or a U.S. controlled corporation.

The ITQ ownership form would collect detailed information about the entities that hold ITQ allocation. The form would collect the ITQ permit holder's name, business address, telephone number, date of birth (for individuals) or TIN (for businesses), state registered in (for businesses), and identify the organization type (e.g., individual/sole proprietorship, joint ownership, partnership, corporation, etc.).

As requested by the Council, the form would allow state or federal chartered banks that hold ITQ allocation as collateral on a loan, but do not exert control over the use of the allocation, to attest to this fact. Such banks would need to identify the borrower, but would not need to complete the more detailed ownership information described below. To ensure that the borrower is the controlling factor in the use of the ITQ allocation, the borrower would need to maintain a separate ITQ permit, and any transfer of quota share or cage tags from the bank would be restricted to the borrower. Allocation could then be transferred to a third party, at the discretion of the borrower. A borrower would therefore need to complete the more detailed ownership information in order to maintain a valid ITQ permit.

ITQ holders that are not eligible banks would need to provide more detailed ownership information. An ITQ permit holder that is a business entity would need to identify corporate officers. All ITQ permit holders would need to identify any shareholders with a 10 percent or greater ownership interest in the permit holder down to the individual level. This means that if an ITQ permit is held by a business entity, and that business is owned in part by another business entity, ownership of that second business would also need to be identified to the level of individual persons that make up that business. If that second business was part owned by another business entity, then ownership of that third business would need to be identified to the level of individual persons, and so on. In addition, the applicant would need to identify any immediate family members of the ITQ permit holder, or the individuals who have an ownership interest in the ITQ permit holder, that also have an ownership interest in any other surfclam or ocean quahog ITQ permit. For purposes of this collection, we are using the definition of “immediate family member” used by the Small Business Administration: Father, mother, husband, wife, son, daughter, brother, sister, grandfather, grandmother, grandson, granddaughter, father-in-law, and mother-in-law.

The current ITQ transfer form would be modified by this action. Information about the allocation holder would be removed, as that would now be collected through the ITQ permit application and the ITQ ownership form. The transfer form would clarify whether or not a permanent transfer of ITQ quota share includes all of the cage tags for the current fishing year. The current transfer process does not allow a permanent transfer of quota share without also transferring all of the associated cage tags for the current fishing year. This can be restrictive on quota shareholders who might wish to transfer quota share separate from transfer of the current allocation of cage tags. This action would add questions to the transfer form to better understand the nature of the transfer. These questions include: Total price paid for the transfer, including any fees; broker fees paid, if applicable; whether the transfer is part of a long-term (more than 1 year) contract; if so, the duration of the contract and whether the price is fixed or flexible; and any other conditions on the transfer. As on the current transfer form, both parties would need to sign the form.

In addition, this action would make minor corrections and clarifications to the surfclam and ocean quahog regulations. The current regulations contain an outdated cross reference to the portion of the U.S.C. that defines which persons or entities are eligible to own a documented vessel. Several paragraphs in the Prohibitions section at § 648.14(j) that pertain to the surfclam and ocean quahog fisheries have incorrect cross references to other sections of the part 648 regulations. The regulations specifying when the Regional Administrator may deny a transfer are currently unclear. This action would revise the regulations to provide additional detail and clarity.

Pursuant to section 304(b)(1)(A) of the Magnuson-Stevens Act, the Assistant Administrator for Fisheries, NOAA, has determined that this proposed rule is consistent with the Atlantic Surfclam and Ocean Quahog FMP, other provisions of the Magnuson-Stevens Act, and other applicable law, subject to further consideration after public comment.

This proposed rule has been determined to be not significant for purposes of Executive Order 12866.

The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration (SBA) that this proposed rule, if adopted, would not have a significant economic impact on a substantial number of small entities.

The factual basis for this certification is as follows:

The proposed measures would only affect allocation permit holders that would need to apply for the new annual ITQ permit. This includes entities that hold surfclam or ocean quahog quota share, or that lease the cage tags that are used to land product in these fisheries. In 2013, there were 189 allocation permit holders that either held quota share and/or participated in a lease of cage tags for surfclams or ocean quahog.

Note that individual allocations are often registered in the name of a corporation, rather than an individual. It is common for owners of multiple fishing vessels to list each one as being owned by a separate corporation for the purpose of limiting liability. Similarly, a single individual might hold multiple allocations that are listed in NMFS's records as being registered to distinct corporations for the same reason. Banks that have loaned money to allocation holders will often require that the allocation be placed in the bank's name as collateral for the loan. A single individual may have several such loans. As such, it is important to understand that the number of allocations is not equal to the number of allocation owners. The number of owners will be smaller due to the ownership of multiple allocations, which may be listed under a corporate name or in the name of a bank.

However, NMFS currently does not have information to characterize small entities at the ITQ allocation level. Instead, information on fishing activities is used to characterize and enumerate small entities. One of the benefits of this action would be a better understanding of ownership of allocation holders, which could lead to better identification of small entities and help analyze the impacts of future management actions.

The Small Business Administration defines a small business in the commercial shellfish harvesting sector, as a firm with total annual receipts (gross revenues) not in excess of $5.5 mil. In 2012, there were 498 fishing firms that held at least one surfclam or ocean quahog vessel permit. Vessel permits are open access, available to anyone who applies. Many of the permitted vessels do not actively participate in the fishery. These potential participants likely do not own quota, likely do not have established marketing relationships with surfclam and ocean quahog processors, and likely do not own gear needed to harvest surfclam and ocean quahog. Therefore, while there are 498 regulated entities, many of these entities are only potential participants and unlikely to experience any direct effects of any changes in regulations. In order to provide a more accurate count and description of the directly regulated entities, landings data are used to select only firms that were active in either the surfclam and ocean quahog fishery. There are 38 active fishing firms, of which 36 are small entities and 2 are large entities.

Some of the detailed ownership information has not been previously collected, we have estimated just over one hour of additional time and effort will be necessary on the part of the ITQ permit holder to complete the forms in the first year. However, in subsequent years, renewal forms would be sent to ITQ permit holders completed with the information on file. An ITQ permit holder would just need to review and sign the forms to ensure that the information on file is still correct. This review process is estimated to take 5 minutes per form if the ownership information does not need to be changed.

Therefore, because this action is administrative and because no significant change in fishing effort, participation in the fishery, or fishery expenses is expected, this action will not have a significant economic impact on a substantial number of small entities. As a result, an initial regulatory flexibility analysis is not required and none has been prepared.

This proposed rule contains collection-of-information requirements subject to review and approval by the Office of Management and Budget (OMB) under the Paperwork Reduction Act (PRA). These requirements have been submitted to OMB for approval. Public reporting burden is estimated to average 5 minutes per response for the application for surfclam/ocean quahog ITQ permit; 60 minutes per response for new entrants completing the surfclam/ocean quahog ITQ ownership form and to average 5 minutes per response when the form is pre-filled for renewing entities; and the application to transfer surfclam/ocean quahog ITQ are estimated to average 5 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.

Public comment is sought regarding: Whether this proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; the accuracy of the burden estimate; ways to enhance the quality, utility, and clarity of the information to be collected; and ways to minimize the burden of the collection of information, including through the use of automated collection techniques or other forms of information technology. Send comments on these or any other aspects of the collection of information to the Greater Atlantic Regional Fisheries Office at the ADDRESSES above, and email to OIRA_Submission@omb.eop.gov, or fax to (202) 395-5806.

Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB Control Number. All currently approved NOAA collections of information may be viewed at: www.cio.noaa.gov/services_programs/prasubs.html.

For the reasons set out in the preamble, 50 CFR part 648 is proposed to be amended as follows:

Regulatory Authority

NMFS proposes regulations to implement Amendment 96 to the FMP and a regulatory amendment to revise the CQE Program. The Council recommended and NMFS approved the FMP in 1978 under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) (16 U.S.C. 1801 et seq. ). Regulations implementing the FMP and general regulations governing groundfish appear at 50 CFR part 679. Fishing for Pacific halibut ( Hippoglossus stenolepis ) is managed by the International Pacific Halibut Commission (IPHC) and the Council under the Northern Pacific Halibut Act of 1982 (Halibut Act). Section 773(c) of the Halibut Act authorizes the Council to develop regulations that are in addition to, and not in conflict with, approved IPHC regulations. Such Council-recommended regulations may be implemented by NMFS only after approval by the Secretary of Commerce.

The Council submitted Amendment 96 for review by the Secretary of Commerce, and a Notice of Availability of this amendment was published in the Federal Register on July 25, 2014 (79 FR 43377) with comments invited through September 23, 2014. All relevant written comments received by the end of the applicable comment period, whether specifically directed to the FMP amendment, this proposed rule, or both, will be considered in the decision to approve or disapprove Amendment 96 and addressed in the response to comments in the final decision.

The IFQ Program is a limited access privilege program for the commercial fixed-gear halibut and sablefish ( Anoplopoma fimbria ) fisheries in and off Alaska. The IFQ Program limits access to the halibut and sablefish fisheries to those persons holding QS in specific regulatory areas. Quota shares equate to individual harvesting privileges that are given effect on an annual basis through the issuance of IFQ permits. An annual IFQ permit authorizes the permit holder to harvest a specified amount of IFQ halibut or sablefish in a regulatory area. A comprehensive explanation of the IFQ Program can be found in the final rule implementing the IFQ Program (58 FR 59375, November 9, 1993).

Although the IFQ Program resulted in significant safety and economic benefits for many fishermen, since the inception of the IFQ Program, many residents of Alaska's smaller remote coastal communities in the GOA who held QS have transferred their QS to non-community residents or moved out of the smaller coastal communities. As a result, the number of resident QS holders has declined substantially in most of the GOA communities with IFQ Program participants. This transfer of halibut and sablefish QS and the associated fishing effort from the GOA's smaller remote coastal communities has limited the ability of residents to locally purchase or lease QS and reduced the diversity of fisheries to which fishermen in remote coastal communities have access. The Council recognized that a number of remote coastal communities were struggling to remain economically viable and developed the CQE Program to provide these communities with long-term opportunities to access the halibut and sablefish resources that have been historically available to resident fishermen.

The Council recommended the CQE Program as an amendment to the IFQ Program in 2002 (Amendment 66 to the FMP), and NMFS implemented the program in 2004 (69 FR 23681, April 30, 2004). The CQE Program adopted by the Council, and implemented by NMFS, was specifically intended to provide fishing opportunities to communities in the GOA that had a historic dependence on the halibut and sablefish fisheries. The Council recommended and NMFS implemented a CQE Program that would provide similar opportunities to coastal communities in the Aleutian Islands in 2013, known as the Aleutian Islands CQE Program (79 FR 8870, February 14, 2014). The Aleutian Islands CQE Program would not be affected by this proposed action and is not addressed further. Where the terms “CQE” or “CQE Program” are used in this preamble, they are specifically referring to the regulations and management measures applicable to the GOA CQE Program, and not to the Aleutian Islands CQE Program.

The CQE Program allows 45 small, remote, coastal communities in the GOA that met historic participation criteria in the halibut and sablefish fisheries to transfer (purchase) and hold catcher vessel halibut and sablefish QS in specific regulatory areas (see Table 21 to 50 CFR Part 679). The communities are eligible to participate in the CQE Program once they are represented by a NMFS-approved non-profit entity called a CQE. After NMFS approval, a CQE may receive catcher vessel QS for the represented community or communities through NMFS-approved transfers. The CQE is the holder of the QS and is issued the IFQ annually by NMFS. Once a CQE holds QS in the GOA, the CQE can lease the annual IFQ derived from its QS to individual GOA community residents. With certain exceptions, the QS must be held by the CQE. This program structure creates a permanent asset for the community to use. The structure promotes community access to QS to generate participation in, and fishery revenues from, the commercial halibut and sablefish fisheries. The CQE Program also promotes QS ownership by individual community residents. Individuals who lease annual IFQ from the CQE could use resulting IFQ revenue to transfer their own QS. The Council believed, and NMFS agrees, that both CQE- and non-CQE-held QS are important in terms of providing community residents fishing access that promotes the economic health of communities.

Current CQE Program regulations include a number of management provisions that originated from the IFQ Program structure and affect the use of CQE-held QS and the annual IFQ derived from the QS. Under some provisions, a CQE has the same privileges and is held to the same limitations as individual QS holders in the IFQ fishery. For example, CQE-held QS is subject to the same IFQ regulatory area use cap that applies to non-CQE held QS. In other instances, the CQE is subject to less restrictive provisions than individual, non-CQE QS holders. For example, a community resident leasing IFQ from a CQE may fish the IFQ assigned to a larger vessel size category on a smaller size category of catcher vessel. In other instances, the CQE must operate under more restrictive provisions than individual, non-CQE QS holders, in part to protect existing QS holders and preserve “entry-level” opportunities for new entrants. A comprehensive explanation of the CQE Program provisions can be found in the final rule implementing the CQE Program (69 FR 23681, April 30, 2004). Recent modifications to the CQE Program can be found in a rule that amended several components of the CQE Program (78 FR 33243, June 4, 2013).

A number of IFQ Program provisions that apply to CQE Program participants are important to understanding the proposed action and are summarized in this preamble. These provisions include regulatory area and vessel size categories; QS use caps; and QS blocks. Additional detail on the IFQ Program is available in the final rule implementing the IFQ Program (58 FR 59375, November 9, 1993). Since implementation of the IFQ Program, there have been changes to halibut and sablefish QS use caps (62 FR 7947, February 21, 1997; 67 FR 20916, April 29, 2002) and to the halibut block use cap (72 FR 44795, August 9, 2007).

The IFQ Program annually issues fixed-gear halibut and sablefish QS specific to IFQ regulatory area and vessel category. In the GOA there are three IPHC halibut regulatory areas: Areas 2C (Southeast Alaska), 3A (Central Gulf of Alaska), and 3B (Western Gulf of Alaska), and four sablefish regulatory areas: Southeast (SE), West Yakutat (WY), Central GOA (CG), and Western GOA (WG). The boundaries for the halibut and sablefish IFQ regulatory areas are defined in regulation (see definition of “IFQ Regulatory Area” at § 679.2). Each QS is assigned to a vessel based upon the size of the vessel from which IFQ halibut and sablefish may be harvested and/or processed (see regulations at § 679.40(a)(5)). Halibut QS and its associated IFQ are assigned to one of four vessel categories in each regulatory area: Freezer (catcher/processor) category (category A); catcher vessel greater than 60 ft. length overall (LOA) (category B); catcher vessel 36 ft. to 60 ft. LOA (category C); and catcher vessel 35 ft. LOA or less (category D). Sablefish QS and its associated IFQ are assigned to one of three vessel categories in each regulatory area: Freezer (catcher/processor) category (category A); catcher vessel greater than 60 ft. LOA (category B); and catcher vessel 60 ft. LOA or less (category C). The vessel categories were designed to ensure that the IFQ Program did not substantially change the structure of the fleet that existed at the time the IFQ Program was implemented. These vessel size restrictions prevent the fishery from being dominated by large vessels or by any particular vessel category.

CQEs may obtain by transfer and hold QS only in specified areas in order to facilitate local support of community fishing operations (see § 679.40 and Table 21 to part 679). However, CQEs are restricted in terms of the IFQ regulatory area(s) in which they may transfer and hold halibut. Table 1 below illustrates the IFQ regulatory area and vessel category of halibut QS a CQE can transfer and hold based on the location of the community represented by the CQE. As shown in Table 1 (below) and in Table 21 to part 679, a CQE representing an eligible community may transfer and hold halibut QS in the regulatory area in which the community is located (their regulatory area). CQEs are restricted, however, to transferring and holding certain halibut QS inside and outside their regulatory area. For example, CQEs in Area 2C may not transfer and hold halibut category D QS in Area 2C. Generally, CQEs can transfer and hold halibut QS in adjacent regulatory areas. However, CQEs located in Area 3A may not transfer and hold halibut QS in Area 2C, although CQEs located in Area 2C may transfer and hold halibut category A, B and C QS in Area 3A. CQEs located in Areas 3A or 3B may transfer and hold halibut QS in Areas 3A and 3B, but CQEs in Area 3B cannot transfer and hold category D QS in Area 3A. Table 1 (below) illustrates the limitations on CQEs' transferring and holding halibut QS by regulatory area and vessel category. For further explanation and the rationale for the restrictions, see the final rule implementing the CQE Program (69 FR 23681, April 30, 2004) and subsequent amendment (78 FR 33243, June 4, 2013).

The CQE Program authorizes CQEs to obtain by transfer and hold catcher vessel QS: Category B, C, and D halibut QS, with area-specific limitations for category D halibut QS; and category B and C sablefish QS. However, the vessel size categories do not apply to IFQ derived from QS held by a CQE, with an exception for category D halibut QS in Area 3A.

The Council recommended specific limitations for CQEs to transfer and hold category D halibut QS in Areas 2C and 3A. These limitations were intended to balance the Council's objective for providing CQEs with increased opportunities to acquire halibut QS with its objective to limit potential competition for category D halibut QS between non-CQE and CQE QS holders. Vessel category D halibut QS is generally the least expensive category of halibut QS because non-CQE IFQ derived from category D QS must be used on the smallest category of catcher vessel. It is often transferred and held by smaller operations or by new entrants to the IFQ fisheries. CQE Program regulations at § 679.41(g)(5) prohibit a CQE from transferring and holding category D halibut QS in Area 2C. The Council recommended this prohibition because a greater portion of the total Area 2C halibut QS is issued as category D QS relative to Areas 3A and 3B, and category D halibut QS is more commonly transferred by new entrants in Area 2C than in Areas 3A and 3B.

A CQE representing one or more communities in Area 3A is allowed to transfer and hold a limited amount of Area 3A category D halibut QS, but the IFQ derived from that QS must (among other restrictions) be fished on a category D vessel, which are vessels less than or equal to 35 ft. LOA (see regulations at § 679.42(a)(2)(iii)). Category D vessels are typically held by new entrants and by most fishery participants residing in Area 3A communities. An Area 3A CQE is limited to transferring and holding no more than the total number of category D halibut QS units initially issued to individual residents of Area 3A CQE communities. The Council recommended this provision to provide opportunities for CQEs to transfer and hold an amount of category D halibut QS up to the amount historically held by CQE residents without increasing potential competition for category D halibut QS between non-CQE and CQE QS holders (78 FR 14490, March 6, 2013).

A CQE representing one or more communities in Areas 3A and 3B is allowed to transfer and hold Area 3B category D halibut QS. As noted in the final rule implementing the CQE Program (69 FR 23681, April 30, 2004), a relatively small amount of category D halibut QS exists in Area 3B, and traditionally few prospective buyers exist for this category of QS.

Individual community use caps limit the amount of halibut QS and sablefish QS that each CQE may transfer and hold on behalf of a community. The use caps accommodate existing QS holders who are concerned that shifting QS holdings to CQEs could disadvantage individual fishermen in the IFQ fishery by reducing the amount of QS available to them in the QS market. In the CQE Program, the CQE individual community use cap is limited to an amount of QS equal to the individual IFQ Program use cap. GOA CQEs are limited to transferring and holding a maximum of 1 percent of the Area 2C halibut QS (see regulations at § 679.42(f)(2)(ii)) and a maximum of 0.5 percent of the combined Area 2C, 3A, and 3B halibut QS (see regulations at § 679.42(f)(2)(i)). GOA CQEs also are limited to transferring and holding a maximum of 1 percent of the Southeast sablefish QS (see regulations at § 679.42(e)(5)) and a maximum of 1 percent of all combined sablefish areas QS (see regulations at § 679.42(e)(4)(i)).

In addition to individual community use caps, cumulative community use caps limit the amount of halibut QS and sablefish QS that all CQE eligible communities within an IFQ regulatory area can transfer and hold. CQEs are limited to a maximum of 21 percent of the total halibut QS pool (see regulations at § 679.42(f)(5)) and a maximum of 21 percent of the total sablefish QS pool (see regulations at § 679.42(e)(6)) in each IFQ regulatory area in the GOA. Therefore, all CQEs in the GOA are subject to the maximum cumulative community use cap of 21 percent of each species' total QS pool in each IFQ regulatory area.

The IFQ Program initially issued QS in blocks. A block is a consolidation of QS units that cannot be subdivided upon transfer (see regulations at § 679.41(e)(1)). One of the primary purposes of QS blocks and the subsequent amendments to the block provisions was to conserve small blocks of QS that could be transferred at a relatively low cost by crew members and new entrants to the IFQ fisheries. Blocked QS typically is less expensive and more affordable for new entrants. The IFQ Program incorporates a “sweep-up” provision to allow very small blocks of QS to be permanently consolidated, up to specified limits, so as to be practical to fish (see regulations at §§ 679.41(e)(2) and (e)(3)).

A block use cap restricts how many blocks of QS an individual can transfer and hold. In the IFQ Program, an individual may transfer and hold no more than three blocks of halibut QS and two blocks of sablefish QS (see regulations at § 679.42(g)(1)). The purpose of this cap is to limit the consolidation of blocked QS and to ensure that smaller aggregate units would be available on the market. These provisions were established to prevent unrestricted transfer of QS by fishermen with greater capital or operating efficiency. These fishermen could also disadvantage new entrants, particularly fishermen with smaller operations in remote communities who have typically sought to transfer “blocked QS.” The block use cap was intended to preserve the character of the fishing fleet in remote Alaska fishing communities by ensuring that QS would be available to the fleet of smaller operators, thereby maintaining the diversity in operation types that exist in more remote coastal communities.

The IFQ Program also limits the number of blocks a CQE may transfer and hold. The limitation prevents CQEs from consolidating the type of QS that is most attractive to and feasible for new entrant, non-CQE fishermen to transfer. CQEs may transfer and hold up to a maximum of 10 blocks of halibut QS and 5 blocks of sablefish QS in each GOA regulatory area (see regulations at § 679.42(g)(ii)). These limits on CQE block holdings and the limit on where CQEs can hold QS restrict CQEs to 20 halibut QS blocks (10 blocks in each of two areas) and 20 sablefish QS blocks (5 blocks in each of four areas).

During development of the CQE Program, the Council and NMFS were concerned that CQEs would seek to acquire as much of the most affordable QS as they were allowed to hold. The Council and NMFS determined that if no limit on the acquisition of blocked QS was established, then gains in CQE holdings could reflect losses of QS holdings among residents of the same CQE communities. The Council and NMFS were also concerned that CQEs might have greater access to capital than individuals, so they could buy up blocks of QS that are most in demand by non-CQE fishermen with small operations. Fishermen entering the IFQ fishery tend to seek relatively smaller blocks of QS. Smaller blocks of QS are typically designated for vessels of a smaller size category: Category C and D in the halibut fishery and category C in the sablefish fishery. New entrants tend to own or use smaller category C and D vessels. Therefore, smaller blocks are more in demand by new entrants, and less in demand by fishermen using larger vessels. Smaller blocks of QS are typically more affordable due to their low total cost compared to the cost of larger blocks (see Section 2.7.2.2 of the Analysis). Given these factors, the Council and NMFS determined it was appropriate to restrict CQEs from purchasing or holding blocked QS of less than a minimum size to preserve fishing opportunities for new entrants in certain regulatory areas.

The CQE program prohibits CQEs from transferring and holding a QS block that is less than the “sweep up” limit, or the number of QS units initially issued as blocks that could be combined to form a single block (see regulations at §§ 679.41(e)(4) and (e)(5)). Quota share blocks that are less than or equal to the “sweep up” limit are known as “small blocks.” The amount of QS units that comprise a small block in each IFQ regulatory area in the GOA is specified for the halibut fishery (see regulations at § 679.41(e)(3)) and for the sablefish fishery (see regulations at § 679.41(e)(2)) (see Table 2 below). Currently, CQEs are prohibited from purchasing or using small blocks of halibut QS in Areas 2C and 3A (see regulations at § 679.41(e)(5)), and sablefish QS in the SE., WY, CG, and WG (see regulations at § 679.41(e)(4)) regulatory areas. The Council did not recommend a small block restriction for Area 3B halibut QS. Fewer small blocks exist in Area 3B and few new entrants in Area 3B have sought these small blocks of halibut QS (69 FR 23681, April 30, 2004). Therefore, CQEs transferring Area 3B QS are not subject to a small block restriction.

The total amount of QS units issued in small blocks differs by IFQ regulatory area. Sections 2.6.3.2 and 2.7.1 of the Analysis report that 11.3 percent of the total Area 2C and Area 3A halibut QS is small block halibut QS, and 3.7 percent of the total sablefish QS (i.e., SE., WY, CG, and WG) is small block sablefish QS. Even though a relatively small proportion of QS is issued as small blocks and not available for transfer by CQEs, existing regulations may constrain small block holders from selling their small blocks and CQEs from transferring QS.

This proposed action would amend the FMP and halibut and sablefish CQE regulations to remove the restriction on CQEs' ability to purchase and use small blocks of halibut and sablefish QS less than or equal to the sweep-up limit currently specified in regulations at §§ 679.41(e)(5) and 679.41(e)(4), respectively. Under this proposed action, all CQEs in the GOA could receive by transfer any size block of halibut and sablefish QS to hold for use by eligible community members. CQEs would be able to transfer the similar size of QS blocks in the market place as individual non-CQE QS holders. The objectives of this action are to provide CQE communities in the GOA with increased opportunity to transfer and hold QS and sustain participation of CQE community residents in the IFQ halibut and sablefish fisheries.

Although the proposed action would allow CQEs to transfer any size block of QS from any QS holder, provisions of the IFQ Program described above would still apply. These include regulatory area restrictions, community QS use caps (individual and cumulative), the prohibition on CQEs' transfer and holding of category D halibut QS in Area 2C, the limitation on the amount of category D halibut QS that an Area 3A CQE may transfer and hold, and the prohibition on transfer and holding of category D halibut QS in Area 3A by CQEs located outside Area 3A.

The proposed rule would update Table 21 to part 679 to clarify the category of halibut QS (A, B, C and D) and IFQ regulatory area of the QS that a CQE can transfer by area. This revision to Table 21 to part 679 would provide a clearer and more comprehensive summary of CQE harvesting privileges.

This proposed action would provide additional opportunities for CQEs to transfer and hold QS, and NMFS expects it will not adversely affect the ability of non-CQE fishery participants to transfer and hold small blocks of QS. In proposing this action, the Council and NMFS considered the current participation of CQE and non-CQE QS holders in the IFQ fishery, and the potential impact on QS access and markets. The Council and NMFS determined that removing the small block restriction from the CQE Program could improve the ability of CQEs to obtain the most affordable blocks of QS without negatively impacting the ability of non-CQE fishery participants to obtain the similar size blocks of QS.

CQEs participating in the CQE Program have made little progress towards reaching the regulatory limits on the maximum amount of QS that may be transferred or IFQ that may be harvested. Since implementation of the CQE program in 2004, only two of the 45 communities eligible for the CQE program have formed CQEs, transferred QS, and harvested the resulting IFQ. These two CQEs hold less than 0.5 percent of the combined Area 2C, 3A, and 3B halibut QS pool. These two CQEs do not hold sablefish QS. The Council's analysis of the CQE Program indicated that lack of participation in the CQE Program can be attributed to 1) financial barriers to transferring QS, and 2) CQE Program-related restrictions. Key financial barriers to the transfer of QS by CQEs include limited availability of QS for transfer, increased market prices for halibut and sablefish QS, and limited viable options for financing QS transfer. Each of these barriers is a function of market forces and cannot be addressed through regulatory amendment (see the Review of the CQE Program under the Halibut and Sablefish IFQ Program and Section 2.6.3.1 of the Analysis for additional detail (see ADDRESSES )).

Analysis of the percent of blocked and unblocked QS in 2013 (the year of the most recent available data) indicates that the percentage of small block QS relative to the total amount of QS in the GOA IFQ regulatory areas is greater for halibut (11.3 percent of the total Area 2C and Area 3A halibut QS) than for sablefish (3.7 percent of the total SE., WY, CG, WG sablefish QS). Therefore, while this proposed action would impact sablefish QS holders, it likely would have a greater impact on halibut QS holders. Section 2.7.2.1 of the Analysis (see ADDRESSES ) examines the amount of small block QS in the 2013 QS pool by regulatory area and vessel size category and serves as an example of the amount of small block QS that could be made available to CQEs as a result of this action. The Analysis considers the maximum potential impacts of the proposed action, which assumes that all eligible communities form CQEs and secure funding to transfer all the newly available small blocks of QS, up to CQE Program limits described above and in regulations at §§ 679.41 and 679.42. For reasons described above, the Analysis indicates this outcome is unlikely given reasonably foreseeable trends in QS holdings by CQEs.

Within Areas 2C and 3A, less than 1 percent of the total amount of category A halibut QS could be made available for transfer by CQEs if they could hold small blocks of category A halibut QS; less than 5 percent of the total amount of category B halibut QS could be made available for transfer by CQEs if they could hold small blocks of category B halibut QS; about 50 percent of the total amount of category C halibut QS in these areas could be available for transfer by CQEs if they could hold small blocks of category C halibut QS; and 43 percent of Area 3A category D halibut QS could be available for transfer by CQEs if they could hold small blocks of Area 3A category D halibut QS. This proposed action would not remove the regulation at § 679.41(g)(5) prohibiting a CQE from transferring and holding category D halibut QS in Area 2C. Therefore, no small blocks of category D halibut QS could be transferred and held by a CQE in Area 2C (see Table 1 in the section titled “IFQ Regulatory Area and Vessel Size Categories” of this proposed rule). Because there is no restriction on CQEs transferring and holding small blocks of Area 3B category D halibut QS, this proposed action would not affect the ability of CQEs in Areas 3A and 3B to transfer and hold small blocks of Area 3B category D halibut QS.

In Southeast, West Yakutat, Central GOA and Western GOA regulatory areas, 2 percent, 7 percent, 3 percent, and 15 percent of the total amount of A share sablefish QS could be available, respectively, for purchase by CQEs if they could hold small blocks of A share sablefish QS; 9 percent, 19 percent, 26 percent, and 37 percent of the B share sablefish QS could be available, respectively, for purchase by CQEs if they could hold small blocks of B share sablefish QS; and 89 percent, 75 percent, 71 percent, and 47 percent of the C share sablefish QS could be available, respectively, for purchase by CQEs if they could hold small blocks of C share sablefish QS.

Analysis of the amount of small block QS by regulatory area in 2013 indicates that cumulative use caps on CQE QS ownership would not constrain the maximum potential transfer of QS by CQEs. The more likely constraint on CQE transfer and holding of QS would be the limit on the number of blocks that a CQE can own in any one area (10 halibut blocks and 5 sablefish blocks). Based on 2013 data, CQEs in Area 2C would gain access to 507 small blocks of Area 2C halibut QS plus 635 small blocks of Area 3A halibut QS in categories A, B and C. At maximum participation, even if all 23 eligible communities in Area 2C formed CQEs, those CQEs could not transfer and hold more than 230 small blocks of the 507 small blocks of halibut QS available in Area 2C due to the block limit of 10 blocks per CQE eligible to purchase in Area 2C. At maximum participation, even if all 23 eligible communities in Area 2C, all 14 eligible communities in Area 3A, and all 8 eligible communities in Area 3B formed CQEs, those CQEs could not transfer and hold more than 450 of the 635 small blocks of halibut QS available in Area 3A due to the block limit of 10 blocks per CQE eligible to transfer in Area 3A. In addition, the 8 eligible communities in Area 3B would gain access to the same 635 blocks of category A, B and C QS in Area 3A, but none of the category D QS in Area 3A. Even at maximum CQE participation, QS block limits and the reservation of a limited amount of Area 3A category D QS for transfer by CQEs representing communities in Area 3A would prevent CQEs from collectively acquiring all small block halibut QS made available under the proposed action. Thus, the Council and NMFS determined that small block halibut QS would continue to be available to non-CQE participants in the IFQ halibut fishery. See section 2.7.2.1 of the Analysis for additional detail.

For sablefish, a CQE can own up to 5 blocks of QS in its area plus 5 blocks from each of the other 3 sablefish regulatory areas. Based on 2013 data, CQEs would gain access to 156 small blocks of SE sablefish QS, 122 small blocks of WY sablefish QS, 179 small blocks of CG sablefish QS, and 59 small blocks of WG sablefish QS. At maximum participation, if all 45 eligible communities formed CQEs, those CQEs could transfer and hold 225 small blocks of sablefish QS in each IFQ regulatory area. Under these allowable block limits, CQEs would be able collectively to transfer and hold all the available sablefish small block QS in each IFQ regulatory area. Given the financial barriers to CQE transfers of QS, such as limited availability of QS for transfer, increased market prices for halibut and sablefish QS, and limited viable options for financing QS transfer, described above and in the Analysis, the Council and NMFS determined it is unlikely that CQEs would transfer the maximum amount of small block sablefish QS made available by the proposed action. Thus, small block halibut QS would continue to be available to non-CQE participants in the IFQ sablefish fishery. See sections 2.6.3.1 and 2.7.2.1 of the Analysis for additional detail.

Although this proposed action would allow CQEs to transfer and hold small blocks of category A halibut and sablefish QS, the Council and NMFS anticipate that CQE transfers of category A QS would be extremely limited. Because IFQ derived from category A halibut and sablefish QS may be caught and processed at sea, category A QS is typically priced much higher than all other QS categories. In addition, the total amount of category A QS issued is small relative to all other categories of QS. Therefore, the potential impact of allowing CQEs to transfer and hold small blocks of category A QS on new entrants, small-boat operations and CQE fishery participants would be minimal. See sections 2.6.3.1 and 2.7.2.1 of the Analysis for additional detail.

To date, CQEs have transferred and held a limited amount of QS that likely has not negatively impacted non-CQE fishery participants' ability to acquire QS in the open market. Transferring and holding small block QS will benefit CQEs, their community members, and future community members, who tend to rely on these restricted blocks of mainly small vessel category QS. Allowing CQEs to transfer and hold small block QS could also enhance a CQE's ability to keep QS in remote communities and create some operational efficiencies that could provide a net benefit to both the CQEs and their community residents. The impacts of the proposed action can be categorized into (1) changes in access to QS, (2) effects on the QS market, and (3) social and economic tradeoffs. These impacts are described in section 2.7.2.2 of the Analysis and are summarized here.

Under this proposed action, CQE fishery participants gain access to more lower-cost QS, though the extent to which this occurs will be shaped by a CQE's progress in securing the necessary financing for CQE transfers. In turn, CQEs provide fishery access by leasing QS to community residents. Leasing QS from a CQE at favorable financial terms, compared to lease fees on the QS market, can aid new entrants in building up the financial base necessary to transfer and hold QS in the future. While this may facilitate CQE community resident ownership of QS, it may not benefit persons who do not reside in a CQE-eligible community. Transfer of small block QS by CQEs under the proposed action could result in a reduction in the amount of QS that would be available to individual CQE community residents and could constitute an economic loss for these individuals. Conversely, CQE acquisition of QS could also be considered a benefit to community residents because it is a public investment in the community's future. The proposed action would also enable CQE residents retiring from the IFQ fishery to transfer small block QS to a CQE by selling or gifting the QS.

The Council and NMFS considered whether entry of CQEs into the small block QS market could bid up the price of QS. This price effect could occur through price competition and reduced supply of small blocks on the market. If CQEs can afford to pay as much or more for small block QS than existing buyers, then competition could increase the price for small block QS. This type of demand-driven price effect would impact both CQE and non-CQE community residents who are in the market for small block QS. However, based on the 10-year review of the CQE Program (see ADDRESSES ), CQEs have not and are not likely to accrue the financial assets to transfer a quantity of QS that would have a large impact on QS price.

Allowing CQEs to transfer and hold small blocks of QS could reduce the supply of small block QS available for transfer. This could occur when CQE community residents, who are reducing their fishery participation, transfer their QS to benefit other small operators or new entrants in the CQE community. However, allowing CQEs access to small block QS is not expected to reduce QS supply to non-CQE fishery participants or result in a corresponding near-term increase in QS price.

An increase in CQE QS holdings would likely result in both social and economic trade-offs. Social benefits could include increased fishery participation for communities eligible to form CQEs and transfer QS, as well as increased harvest opportunities for new entrants and fishery participants who live in these communities. These social benefits could have varying distributional impacts since CQEs by nature are localized. From an economic view point, facilitating community QS transfer comes at a cost but also offers some operational efficiency that may not be realized when QS is held by individuals living in remote communities. For example, when CQEs transfer QS they gain an asset that can be leased out to new entrants and small-boat operators who then could build up their own financial base to transfer QS. Benefits from QS holdings that provide future value to the community support the original goals of the CQE Program. Any future value that does not accrue to individual CQE or non-CQE community residents could be viewed as an indirect impact that the Council and NMFS acknowledged as consistent with the goals of the CQE Program.

The Council and NMFS considered two alternatives for the proposed action, one of which is the status quo. The action alternative (Alternative 2) would revise regulations to allow a CQE to transfer and hold any size block of halibut and sablefish QS from any QS holder (Option 1), or from a subset of QS holders determined by the location of the QS holder's residence (Options 2 and 3). The Council selected the least restrictive option, Option 1 under Alternative 2.

Option 2 would allow CQE communities to transfer and hold any size block of halibut and sablefish QS from residents of any CQE community. Option 2 was not selected because a relatively small number of small blocks are held by residents of CQE communities, and many of those small blocks are designated as category C and D QS. This would greatly limit the potential number of small blocks available to CQEs, and would increase potential competition among CQEs and residents of CQE communities seeking to transfer these small blocks (see Section 2.7.2 of the Analysis for additional detail).

Option 3 would allow CQE communities to transfer and hold any size block of halibut and sablefish QS from residents of their CQE community, but not from any non-resident. Option 3 was not selected because an even smaller number of small blocks are held by residents of CQE communities, and in some CQE communities, no CQE resident may hold small blocks, effectively excluding some CQE communities and not others from holding small blocks. Section 2.7.2 of the Analysis notes that no CQE residents hold small blocks of halibut QS in 17 of the 45 eligible CQE communities, and no CQE residents hold small blocks of sablefish QS in 31 of the 45 communities. Overall, option 3 would limit the number of CQEs that could transfer and hold small block QS more than Options 1 or 2 (see Section 2.7.2 of the Analysis for additional detail).

Pursuant to sections 304(b)(1)(A) and 305(d) of the Magnuson-Stevens Act, the NMFS Assistant Administrator has determined that Amendment 96 and this proposed rule are consistent with the FMP, provisions of the Magnuson-Stevens Act, the Halibut Act, and other applicable laws, subject to further consideration after public comment.

This proposed rule has been determined to be not significant for purposes of Executive Order 12866.

An Initial Regulatory Flexibility Analysis (IRFA) was prepared for this action, as required by section 603 of the Regulatory Flexibility Act (RFA). The IRFA describes the economic impact this proposed rule, if adopted, would have on small entities. The IRFA describes the reasons why this action is being proposed; the objectives and legal basis for the proposed rule; the number of small entities to which the proposed rule would apply; any projected reporting, recordkeeping, or other compliance requirements of the proposed rule; any overlapping, duplicative, or conflicting Federal rules; impacts of the action on small entities; and any significant alternatives to the proposed rule that would accomplish the stated objectives of the Magnuson-Stevens Act, and any other applicable statutes, and would minimize any significant adverse impacts of the proposed rule on small entities. The description of the proposed action, its purpose, and the legal basis are contained earlier in this preamble and in the SUMMARY and are not repeated here. A summary of the IRFA follows. A copy of the Analysis is available from NMFS (see ADDRESSES ).

On June 12, 2014, the Small Business Administration (SBA) issued a final rule revising the small business size standards for several industries effective July 14, 2014 (79 FR 33647, June 12, 2014). The rule increased the size standard for Finfish Fishing from $19.0 to 20.5 million. The new size standards were used to prepare the IRFA for this action.

The proposed action would directly regulate 45 CQEs that would be considered small entities under the RFA (Section 601(3)). The CQEs qualify as small not-for-profit organizations that are not dominant in their field. CQEs represent small communities that would directly benefit from the proposed action. Each of the communities qualifies as a small entity under the RFA since they are governments of towns or villages with populations less than 50,000 people. The CQE acquires QS and makes the resulting IFQ available by lease to eligible harvesters who are community residents. Those harvesters are required to make a series of reports and declarations to NMFS in order to be found eligible to participate. Therefore, those commercial fishing operations would be directly regulated small entities, although their number is unknown at this time. No adverse economic impact on community residents is expected under the proposed action. Further, NMFS anticipates that any economic impacts accruing from the proposed action to these small entities would be beneficial because their access to the IFQ fisheries will be improved.

Existing individual halibut and sablefish QS holders and new entrants to the IFQ fishery have potential to be impacted by this proposed action but are not directly regulated by this proposed rule. Currently, there are 2,565 unique halibut QS holders and 845 unique sablefish QS holders across all regulatory areas. These entities and future fishery entrants, of which the number is unknown, could potentially be impacted by this proposed action. Under the IRFA, NMFS considers only those entities that are directly regulated by the proposed action. An impact on existing halibut and sablefish QS holders and new entrants to the IFQ fishery could be realized if CQE transfer of QS results in a significant increase in the price for QS. The Analysis indicates this impact has not been observed in the past and is not likely to occur in the future, given the present constraints on CQE access to investment capital and the range of other factors that also influence QS prices (see Section 2.6.3.1 of the Analysis). Therefore, existing and potential future non-CQE QS holders are not considered to be directly regulated by this action and are not further analyzed in this IRFA.

This proposed rule would remove the regulations prohibiting Gulf of Alaska CQE from transferring and holding small blocks of halibut and sablefish quota share. The proposed rule is intended to allow CQEs to acquire small block QS and make the resulting IFQ available by lease to eligible harvesters who are community residents. Allowing CQEs to transfer and hold small block QS should benefit their community members or future community members. Unrestricted transfer of small block QS should enhance the CQEs' ability to keep QS in remote communities and as a result provide for active participation of CQE and community residents in the halibut and sablefish fisheries in the future. By increasing their QS transfers and holdings under the proposed action, CQEs would provide fishery access through leasing to community residents who are new entrants to the fishery or who currently fish small quota holdings and wish to increase their participation. Leasing quota from a CQE at favorable terms, compared to market lease fees, could aid new entrants in building up the financial base necessary to transfer and hold individual QS in the future. However, Section 2.7.2.1 of the Analysis notes that the amount of QS that would become available is likely greater than what CQEs could expect to finance in the present capital market. Increased QS availability to CQEs under the proposed action could provide some operational efficiency that results in a net benefit to both the CQEs and their community residents. One such efficiency that could result from allowing CQEs to transfer and hold small block QS is that community residents would be able to transfer small block QS to a CQE as they retire or otherwise reduce their active participation in the fishery, keeping the QS holdings within the community.

The IRFA also requires a description of any significant alternatives to the preferred alternative that accomplish the stated objectives, are consistent with applicable statutes, and would minimize any significant economic impact of the proposed rule on small entities. The suite of potential actions includes two alternatives and associated options. A detailed description of these alternatives and options is provided in section 2.7 of the Analysis.

The significant alternative to the proposed action is the status quo alternative (Alternative 1). Under Alternative 1, NMFs would make no changes to the current regulations. Alternative 1 would not have adverse economic impacts on CQEs or the resident QS holders in the CQE qualifying communities, which would be the small entities directly regulated by this action. Alternative 1 does not meet the objectives of the action to promote more CQE access to QS and facilitate the sustained participation by CQE community residents in the IFQ Program. Under Alternative 2, NMFS would implement the proposed action, which is less restrictive on CQEs than Alternative 1, and is the least burdensome of the available alternatives for directly regulated small entities. Alternative 2 specified three options (Options 1, 2 and 3) that allow CQEs to transfer any size block of QS from any QS holder or a subset of QS holders depending on the option and determined by the location of the QS holder's residence.

Option 1 would allow CQEs to transfer and hold any size block of halibut or sablefish QS. This option is the least burdensome on directly regulated small entities of all the options considered, and would minimize any significant adverse economic impact. Option 2 would allow CQE communities to transfer and hold any size block of halibut and sablefish QS from residents of any CQE community. Option 2 was not selected because it would have greatly limited the potential number of small blocks available to CQEs. This would be more burdensome on directly regulated CQEs than Option 1. Option 3 would allow CQE communities to transfer and hold any size block of halibut and sablefish QS from residents of their CQE community, but not from any non-resident. Option 3 was not selected because it would have limited the potential number of small blocks available to CQEs and the number of CQEs that could transfer and hold small block QS. Option 3 would be more burdensome on directly regulated CQEs than either Option 1 or 2. The Analysis did not identify any other alternatives that would more effectively meet the RFA criteria to minimize adverse economic impacts on directly regulated small entities.

This action does not modify reporting, recordkeeping or other compliance requirements.

No Federal rules that might duplicate, overlap, or conflict with these proposed actions have been identified.

For the reasons set out in the preamble, NMFS proposes to amend 50 CFR part 679 as follows: