[Federal Register Volume 60, Number 167 (Tuesday, August 29, 1995)]
[Proposed Rules]
[Pages 44825-44832]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-21327]



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DEPARTMENT OF COMMERCE
50 CFR Part 641

[Docket No. 950810206-5206-01; I.D. 071395A]
RIN 0648-AG29


Reef Fish Fishery of the Gulf of Mexico; Amendment 8

AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and 
Atmospheric Administration (NOAA), Commerce.

ACTION: Proposed rule; request for comments.

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SUMMARY: NMFS issues this proposed rule that would implement certain 
provisions of Amendment 8 to the Fishery Management Plan for the Reef 
Fish Fishery of the Gulf of Mexico (FMP). Amendment 8 proposes a 
limited entry program for the commercial red snapper sector of the reef 
fish fishery in the Gulf of Mexico. Initial participants in the limited 
entry program would receive shares of the commercial quota of red 
snapper based on specified criteria. The percentage shares of the 
commercial quota would equate to individual transferable quotas (ITQs). 
NMFS, based on a preliminary evaluation of Amendment 8, has disapproved 
three of the measures in the amendment because they are inconsistent 
with the Magnuson Fishery Conservation and Management Act (Magnuson 
Act) and other applicable laws. The proposed rule would implement the 
remaining measures in Amendment 8. In addition, NMFS proposes a minor 
clarification to the existing regulations regarding commercial permit 
requirements. The intended effect of this rule is to manage the 
commercial red snapper sector of the reef fish fishery in order to 
preserve its long-term economic viability.

DATES: Written comments must be received on or before October 10, 1995.

ADDRESSES: Comments on the proposed rule must be sent to Robert Sadler, 
Southeast Region, NMFS, 9721 Executive Center Drive N., St. Petersburg, 
FL 33702.
    Requests for copies of Amendment 8, which includes an environmental 
assessment, a regulatory impact review (RIR), and an initial regulatory 
flexibility analysis (IRFA), and for copies of a minority report 
submitted by three members of the Council, should be sent to the Gulf 
of Mexico Fishery Management Council, 5401 W. Kennedy Boulevard, Suite 
331, Tampa, FL 33609.
    Comments regarding the collection-of-information requirements 
contained in this proposed rule should be sent to Edward E. Burgess, 
Southeast Regional Office, NMFS, 9721 Executive Center Drive N., St. 
Petersburg, FL 33702, and to the Office of Information and Regulatory 
Affairs, Office of Management and Budget (OMB), Washington, DC 20503 
(Attention: NOAA Desk Officer).

FOR FURTHER INFORMATION CONTACT: Robert Sadler, 813-570-5305.

SUPPLEMENTARY INFORMATION: The reef fish fishery of the Gulf of Mexico 
is managed under the FMP. The FMP was prepared by the Gulf of Mexico 
Fishery Management Council (Council) and is implemented through 
regulations at 50 CFR part 641 under the authority of the Magnuson Act.

Background and Rationale

    The ITQ system proposed in this rule addresses the excessive effort 
capacity for the commercial red snapper fishery, given current quota 
levels and effort. This excessive capacity is evidenced by the 
increasingly short time in which the commercial sector reaches its 
quota, with a closure of the fishery for the rest of the fishing year.
    Beginning in 1993, NMFS implemented a red snapper endorsement 
system whereby owners or operators of permitted vessels that had 
historical catches of at least 5,000 lb (2,268 kg) in 2 of the 3 years 
1990, 1991, and 1992 were authorized to harvest red snapper under trip 
limits of 2,000 lb (907 kg), and all other permitted vessels were 
authorized to harvest under trip limits of 200 lb (91 kg). 
Nevertheless, the commercial red snapper fishermen continued to reach 
the commercial quota in increasingly shorter times.
    NMFS implemented the existing red snapper endorsement regulations 
under Amendment 6 to the FMP and extended them under Amendment 9 as an 
interim measure, pending development of a long-term, comprehensive 
management system. The endorsement provisions expire on December 31, 
1995, and red snapper management will revert to an open access system 
unless a long-term effort control system is implemented through 
Amendment 8.
    In anticipation of either a license limitation system or ITQs, the 
Council proposed, and NMFS implemented, provisions in Amendment 9 
whereby data were collected on the vessel landings of red snapper 
during the period 1990 through 1992 and on the status of certain 
individuals as ``historical captains.'' These data identify each red 
snapper landing during the period. Each landing is associated with an 
owner. Where appropriate, a landing is also associated with an operator 
whose earned income qualified him or her for the vessel permit at the 
time of the landing. Finally, where appropriate, a landing is 
associated with an historical captain. As defined in the final rule to 
implement Amendment 9 (59 FR 39301, August 2, 1994), historical captain 
means an operator who: (1) From November 6, 1989 through 1993, fished 
solely under verbal or written share agreements with an owner, and such 
agreements provided for the operator to be responsible for hiring the 
crew, who were paid from the share under his or her control; (2) landed 
from that vessel at least 5,000 lb (2,268 kg) of red snapper per year 
in 2 of the 3 years 1990, 1991, and 1992; (3) derived more than 50 
percent of his or her earned income from commercial fishing, that is, 
sale of the catch, in each of the years 1989 through 1993; and (4) 
landed red snapper prior to November 7, 1989.
    The Council explored various alternative management options to 
preserve and enhance the economic and socioeconomic viability of the 
fishery in the face of continued incentives for entry and competition. 
After extensive deliberation and consideration of public comment, the 
Council selected an ITQ system for management of the red snapper 
fishery as the most effective means of achieving optimum yield (OY) and 
addressing the concerns described above.

Duration of ITQ System

    Under Amendment 8, the proposed ITQ system would remain in effect 
for 4 years from the date that the system is implemented, during which 
time NMFS and the Council would evaluate the system. Based on the 
evaluation, NMFS and the Council would modify, extend, or terminate the 
system. The Council selected the 4-year period after consideration of 
alternative time periods. The Council, before its vote for the proposed 
4-year duration, was aware 

[[Page 44826]]
of the potential for reduced economic benefits with a 4-year time 
period, as compared to a system of indefinite duration. However, public 
testimony to the Council supported the 4-year period to allow 
termination of the system if it does not produce the expected benefits, 
and to keep windfall profit and speculation to a minimum.
    Amendment 8 includes an option for a time limit, and alternative 
time periods were discussed at public hearings. To provide additional 
public review, NMFS specifically requests comments on the proposed 4-
year duration of the ITQ system.

Initial Eligibility

    An initial shareholder under the ITQ system would be either the 
owner or operator of a vessel with a valid permit on August 29, 1995, 
provided such owner or operator had the required landing of red snapper 
during the period 1990 through 1992. If the earned income of an 
operator was used to qualify for the permit valid on August 29, 1995, 
such operator would be the initial shareholder rather than the owner. 
The term ``owner'' includes a corporation or other legal entity. 
Additionally, a historical captain could be an initial ITQ shareholder. 
The Council believes that these criteria for initial ITQ shareholder 
status encompass both current participation and historical dependence 
on the fishery and would be consistent with previous measures for red 
snapper endorsements.

Initial ITQ Shares

    Initial shares would be apportioned based on each shareholder's 
average of the top 2 years' landings in 1990, 1991, and 1992. However, 
no initial shareholder would receive an initial percentage share that 
would equate to less than 100 lb (45.36 kg), whole weight, of red 
snapper. If the commercial quota remains at the present level of 3.06 
million lb (1.39 million kg), each such minimum share would be 0.0033 
percent. This minimum share amount would provide a bycatch allowance 
for those initial shareholders who had minimal historical landings of 
red snapper during the period 1990 through 1992.
    After the minimum shares have been calculated, the remaining 
percentage shares would be apportioned based on each remaining 
shareholder's average of the top 2 years' landings in 1990, 1991, and 
1992. Landings associated with a historical captain would be 
apportioned between the owner and historical captain in accordance with 
the share agreement in effect between the owner and historical captain 
at the time of the landings.

Landings Records

    Determinations of landings during the period 1990 through 1992 and 
historical captain status would be based on the data collected under 
Amendment 9. However, a red snapper landings record associated solely 
with an owner during these years may be transferred under the following 
circumstances. An owner of a vessel with a valid reef fish permit on 
August 29, 1995, who transferred a vessel permit to another vessel 
owned by him or her, would retain the red snapper landings record for 
the previous vessel. Thus, an owner who replaced a vessel that sank or 
was otherwise removed from the fishery would retain credit for his or 
her landings.
    An owner of a vessel with a valid reef fish permit on August 29, 
1995 also would retain the landings record of a permitted vessel if the 
vessel had a change of ownership without a substantive change in 
control of the vessel. It would be presumed that there was no 
substantive change in control of a vessel if a successor in interest 
received at least a 50 percent interest in the vessel as a result of 
the change of ownership, whether the change of ownership was: (1) From 
a closely held corporation to its majority shareholder; (2) from an 
individual who became the majority shareholder of a closely held 
corporation receiving the vessel; (3) between closely held corporations 
with a common majority shareholder; or (4) from one to another of the 
following: Husband, wife, son, daughter, brother, sister, mother, or 
father. This provision would recognize, for example, a change of 
ownership between closely held corporations or from individual to 
corporate, or vice versa, all with the same person retaining actual 
control of the vessel.
    In another case of permit transfers through change of vessel 
ownership, an owner of a vessel with a valid reef fish permit on August 
29, 1995 would receive credit for the landings record of the vessel 
before his or her ownership only if there were a legally binding 
agreement for transfer of the landings record. This provision would 
account for all other changes of ownership where there is no logical 
basis for transfer of a landings record but where there may have been 
an agreement for such transfer between the seller and buyer.
    An owner of a permitted vessel who potentially is eligible to be 
credited with transferred landings records under the criteria described 
above would be given an opportunity to request transfer of specific 
landings records. Documentation supporting the request may be required 
by the Director, Southeast Region, NMFS (Regional Director). After 
considering requests for transfers of landings records, the Regional 
Director would advise each initial shareholder or applicant of his or 
her tentative allocation of shares.

Appeals

    The Council will convene a special advisory panel to function as an 
appeals board, which would consider written requests from persons who 
contest their tentative allocations of shares or determinations of 
historical captain status. In addition to considering written requests, 
the board could allow personal appearances by such persons before the 
board or a subboard.
    The board would be empowered to consider disputed calculations or 
determinations, based on documentation submitted under Amendment 9 to 
the FMP, regarding landings of red snapper during the period 1990 
through 1992, or transfers of such landings records, or regarding 
historical captain status. Applicants would be required to submit their 
appeals in writing to the Regional Director within a time frame 
specified by the Regional Director and would be required to include 
documentation that supports allegations of improper calculations or 
determinations, or other such matters that form the bases for the 
appeals.
    The advisory board would meet as necessary to consider each timely 
request. Members of the board would provide their individual 
recommendations in each case to the Council, which would forward its 
recommendation to the Regional Director. The board and the Council will 
recommend whether the eligibility criteria, specified in Amendment 8 of 
the FMP and paragraphs (c)(1) and (c)(2) of 50 CFR Sec. 641.10, were 
correctly applied in each case, based solely on the available record, 
including documentation submitted by the applicant. The Council will 
also base its recommendation on the recommendations of the board 
members. The Regional Director will decide the appeal based on above 
criteria and the available record, including documentation submitted by 
the applicant and the recommendation of the Council. The Regional 
Director will notify the appellant of his decision and the reason 
therefor, in writing, normally within 45 days of receiving the 
Council's recommendation. The Regional Director's decision would 

[[Page 44827]]
constitute the final administrative action by NMFS on an appeal.

Hardships

    Amendment 8 proposes that (1) the appeals board consider hardship 
cases and (2) NMFS should set aside up to 3 percent of the initial 
commercial allocation for resolving hardship cases. NMFS has determined 
that the hardship appeals criterion in Amendment 8 is too vague and 
subjective to identify circumstances constituting hardships. This 
subjectivity, in turn, would invite arbitrary decision-making. In 
addition, Amendment 8 contains no criteria for allocating the 3 percent 
set-aside for hardship cases. Moreover, a set-aside is unnecessary, if 
the board is precluded from considering hardship cases.
    Accordingly, the Regional Director has disapproved these 
provisions, based on his determination that they are inconsistent with 
the Magnuson Act and Administrative Procedure Act. Accordingly, the 
hardships appeals section and 3 percent set-aside are not included in 
this proposed rule. The Regional Director's disapproval of these 
provisions means the appeals board would not be empowered to consider 
an application from a person who believes he or she should be eligible 
because of hardship or other factors.

Issue and Transfer of Shares

    Upon completion of the appeal process, the Regional Director would 
issue share certificates to initial shareholders. If additional shares 
become available to NMFS, e.g., through forfeiture pursuant to a rule 
violation, such shares would be reissued proportionately to 
shareholders based on their shares as of November 1, after such 
additional shares become available. If additional shares are required 
to be issued by NMFS, such as may be required in the resolution of 
disputes, shares would be proportionately reduced, based on shares as 
of November 1 after the share reduction took place.
    The transfer of shares would be prohibited for the first 6 months 
after the date that ITQ coupons are required to be carried on board. 
From 6 months after the date that ITQ coupons are required to be 
carried on board, to 18 months after such date, shares could be 
transferred only to persons who are initial shareholders and are U.S. 
citizens or permanent resident aliens. Thereafter, ITQ participants may 
transfer all or a portion of their percentage shares to any person who 
is a U.S. citizen or permanent resident alien. The restrictions on 
initial transfers of shares are intended to provide time for NMFS to 
prepare for that activity and to prevent speculative entry during the 
beginning phase of the ITQ program while participants adjust to the 
system.
    Amendment 8 proposes to limit share transfers to natural persons 
who are U.S. citizens or permanent resident aliens. A person includes a 
corporation, partnership, or other legal entity. However, ``natural 
person,'' as used in Amendment 8, would preclude transfers of shares to 
a corporation, partnership, etc. NOAA General Counsel has determined 
that the rationale for this exclusion is inadequate. Accordingly, the 
restriction regarding transfers only to ``natural persons'' is 
considered to be arbitrary, has been disapproved by the Regional 
Director, and is not included in this proposed rule.
    All transfers of shares would have to be registered with and 
confirmed by the Regional Director. An administrative fee would be 
charged for each transaction of shares. Share transactions would not be 
recorded or confirmed during November and December, each year. During 
those months, the Regional Director would calculate each shareholder's 
allocation of the commercial quota for the ensuing fishing year and 
issue ITQ coupons for that year. The fishing year for reef fish begins 
on January 1 and ends on December 31.

ITQ Coupons

    Amendment 8 proposes to assign 100 percent of the commercial red 
snapper quota to the ITQ system. The commercial quota is in terms of 
whole weight. Since red snapper are typically landed eviscerated, 
landings in eviscerated weight are converted to whole weight for quota 
monitoring. Accordingly, each shareholder's ITQ would be the product of 
the red snapper commercial quota, in whole weight, for the ensuing 
fishing year, the factor for converting whole weight to eviscerated 
weight, and each shareholder's percentage share as of November 1 of the 
preceding year. The factor for converting whole weight to eviscerated 
weight is .9009. If the commercial quota for red snapper remains 3.06 
million lb (1.39 million kg), a shareholder with a 1 percent share 
would be entitled to ITQ coupons totaling 27,570 lb (12,506 kg) 
(3,060,000 X .9009 X .01 = 27,567.54, rounded to the nearest 10 lb = 
27,570). A shareholder with a minimum share of .0033 percent would be 
entitled to ITQ coupons totaling 90 lb (41 kg) (3,060,000 X .9009 X 
.000033 = 91.0, rounded to the nearest 10 lb = 90). Thus, ITQ coupons 
would be in terms of eviscerated weight of red snapper.
    The Regional Director would issue ITQ coupons in various 
denominations that equal the shareholder's calculated total based on 
shares owned on November 1. Each coupon would be coded to indicate the 
initial recipient. Coupons would be transferrable by completing the 
sale endorsement thereon, including the name of the recipient and the 
signature of the seller.

Use of ITQ Coupons

    Under the ITQ system, red snapper in or from the exclusive economic 
zone (EEZ) or on board a vessel with a Federal reef fish permit may not 
be possessed in an amount, in eviscerated weight, that exceeds the 
total of ITQ coupons on board.
    Each coupon would have separable parts, i.e., a ``Fisherman'' part 
and a ``Fish House'' part. Prior to termination of a trip, the 
operator's signature in ink and the date signed would be required on 
the ``Fisherman'' part of ITQ coupons, which must be in denominations 
at least equal to the eviscerated weight of the red snapper on board. 
(The factor for converting whole weight to eviscerated weight is 
0.9009.) The ``Fisherman'' part of each ITQ coupon would be separated 
from the coupon and submitted with the logbook forms for that fishing 
trip. An owner or operator of a vessel would be required to make 
available to an authorized officer all ITQ coupons in his or her 
possession upon request.
    Red snapper harvested in the EEZ or by a permitted vessel would be 
transferrable only to a dealer who holds a Federal reef fish dealer 
permit. The permitted vessel operator would give the ``Fish House'' 
part of each ITQ coupon to each dealer to whom the red snapper are 
transferred, which again must be in denominations equal to the 
eviscerated weight of the red snapper transferred to that dealer.
    A Federally permitted dealer would be allowed to receive red 
snapper only from a vessel that has its reef fish vessel permit and ITQ 
coupons on board. This restriction on dealers is necessary for 
effective monitoring and enforcement of the ITQ system. However, this 
requirement may impose an unreasonable restraint on trade for fishermen 
on board unpermitted vessels who harvest red snapper solely from state 
waters. (See below for a related concern regarding the effect of 
commercial harvests from state waters of red snapper outside the ITQ 
system.) Public comments on this aspect of Amendment 8 and the proposed 
rule are specifically solicited.
    A Federally permitted dealer would be required to receive the 
``Fish House'' 

[[Page 44828]]
part of ITQ coupons in denominations at least equal to the eviscerated 
weight of the red snapper received. The dealer would be required to: 
(1) Indicate the date received; (2) enter the vessel's and dealer's 
permit numbers; (3) sign each ``Fish House'' part; and (4) submit all 
such parts to the Science and Research Director, Southeast Fisheries 
Science Center, at monthly intervals, or more frequently if requested 
by the Science and Research Director. A dealer would be required to 
make available to an authorized officer all ITQ coupons in his or her 
possession upon request. A dealer would be required to have signed and 
dated coupons in amounts at least equalling the pounds of red snapper 
in his or her possession until such coupons are submitted to the 
Science and Research Director.

Entire Commercial Quota Under ITQ System

    As discussed above, ITQ coupons would be issued for the entire 
commercial quota for red snapper. The commercial quota includes red 
snapper harvested from both the EEZ and adjoining state waters of the 
Gulf of Mexico. Federal jurisdiction, however, does not extend to 
vessels that do not have Federal reef fish vessel permits and fish only 
in state waters, or to dealers who do not have Federal dealer permits 
and purchase reef fish harvested only in state waters. Accordingly, the 
management measure of Amendment 8 that proposes that 100 percent of the 
commercial quota of red snapper be under the ITQ system relies on 
compatible state regulations. Specifically, state regulations should 
ensure that red snapper harvested from state waters by vessels that do 
not have Federal permits are not sold or purchased without Federal ITQ 
coupons.
    To the extent that non-compatible state regulations allow red 
snapper to be harvested outside the ITQ system, the system would be 
compromised because monitoring and enforcement would be hindered. In 
addition, the FMP requires that a commercial fishery be closed when its 
quota is reached. Thus, commercial harvests of red snapper outside the 
ITQ system would directly impact holders of ITQ coupons. NMFS is 
concerned with this potential obstacle to an effective ITQ system and 
is requesting the Gulf of Mexico states to enact compatible 
regulations. Public comments on this aspect of Amendment 8 and the 
proposed rule are specifically solicited.

Magnuson Act Considerations

    Section 303 of the Magnuson Act provides that a Council may 
establish a system for limiting access to the fishery in order to 
achieve OY if, in developing such system, the Council takes into 
account the following factors: (1) Present participation in the 
fishery; (2) historical fishing practices in, and dependence on, the 
fishery; (3) the economics of the fishery; (4) the capability of 
fishing vessels used in the fishery to engage in other fisheries; (5) 
the cultural and social framework relevant to the fishery; and (6) any 
other relevant considerations. The Council's consideration of these 
factors, as well as additional background and rationale for the 
management measures comprising the ITQ system, are contained in 
Amendment 8, the availability of which was announced in the Federal 
Register on July 21, 1995, (60 FR 37624).

Partial Disapproval of Amendment 8

    As discussed above, the Regional Director has partially disapproved 
Amendment 8. The disapproved measures specify that: (1) ITQ share 
transfers be limited to natural persons; (2) the appeals board consider 
hardship cases; and (3) up to 3 percent of the initial allocation be 
set aside for ITQ hardship cases.

Minority Report

    A minority report signed by three Council members raised various 
objections to Amendment 8. Copies of the minority report are available 
(see ADDRESSES). The final rule will respond to the minority report and 
to comments on the proposed rule received by NMFS during the 45-day 
comment period.

Additional Measure Proposed by NMFS

    The current regulations specify that, as a prerequisite to selling 
reef fish, an owner or operator of a vessel that fishes in the EEZ must 
obtain an annual vessel permit (50 CFR 641.4(a)(1)(i)). For clarity, 
NMFS would reference this requirement in the proposed paragraph that 
discusses sale of reef fish possessed under the bag limits (50 CFR 
641.24(g)) and include a corresponding prohibition in the prohibitions 
section (50 CFR 641.7).

Classification

    Section 304(a)(1)(D) of the Magnuson Act requires NMFS to publish 
regulations proposed by a Council within 15 days of receipt of an 
amendment and regulations. At this time, NMFS has not determined that 
provisions of Amendment 8 not already specifically disapproved as 
discussed above are consistent with the national standards, other 
provisions of the Magnuson Act, and other applicable laws. NMFS, in 
making that determination with respect to the remaining parts of 
Amendment 8, will take into account the data, views, and comments 
received during the comment period.
    This proposed rule has been determined to be not significant for 
purposes of E.O. 12866.
    The Council prepared an IRFA as part of the RIR. The IRFA describes 
the impacts that this proposed rule would have on small entities, if 
adopted. The impacts are summarized as follows. All participants in the 
fishery are small entities and an ITQ system will affect a substantial 
number of them. Significant positive economic benefits will accrue to 
participants who are initial shareholders in the ITQ system. There will 
be negative economic effects for those not included as initial 
shareholders. The negative economic effects may exceed 5 percent of 
gross revenues depending on the management regime used for comparison, 
that is, open access or the current red snapper endorsement system. In 
either case, the overall positive economic benefits significantly 
exceed the negative economic effects. No small businesses are expected 
to cease operations as a result of this action, because the system 
recognizes historical participation in the red snapper fishery. Thus, 
any fisherman who has fished red snapper so continuously as to be 
economically dependant upon the fishery, likely will qualify as an 
initial ITQ shareholder. Furthermore, fishermen who do not have a 
recent history of catches will be able to enter the fishery through the 
purchase of red snapper ITQ shares or coupons. A copy of the IRFA is 
available from the Council (see ADDRESSES).
    This rule proposes a new, one-time collection of information and 
three new, continuing collections, namely: (1) The one-time submission 
of a request for appeal of tentative share allocations and of 
determinations of historical captain status; (2) the submission by 
fishermen and dealers of ITQ coupons; (3) requests for transfer of ITQ 
shares; and (4) monthly dealer reports when red snapper are received. 
Requests to collect this information have been submitted to OMB for 
approval. The public reporting burdens for these collections of 
information are estimated to average 90, 1, 15, and 15 minutes per 
response, respectively.
    This proposed rule would revise the submission of applications for 
dealer permits by requiring permits for dealers who receive red snapper 
harvested by 

[[Page 44829]]
Federally permitted vessels from state waters adjoining the EEZ in the 
Gulf of Mexico. The collection of information on such applications 
currently is approved under OMB Control No. 0648-0205. The public 
reporting burden for this collection was estimated at 5 minutes per 
response and is unchanged by the proposed revision.
    This rule involves the collection of information under Amendment 9 
of landings records during the period 1990 through 1992. That 
collection is currently approved under OMB Control No. 0648-0281 and 
its public reporting burden is estimated at 2 hours per response.
    Each of the above reporting burden estimates includes the time for 
reviewing instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collections of information. Send comments regarding any of these 
reporting burden estimates or any other aspects of the collections of 
information, including suggestions for reducing the burdens, to NMFS 
and OMB (see ADDRESSES).

List of Subjects in 50 CFR Part 641

    Fisheries, Fishing, Reporting and recordkeeping requirements.

    Dated: August 22, 1995.
Gary Matlock,
Program Management Officer, National Marine Fisheries Service.
    For the reasons set out in the preamble, 50 CFR part 641 is 
proposed to be amended as follows:

PART 641--REEF FISH FISHERY OF THE GULF OF MEXICO

    1. The authority citation for part 641 continues to read as 
follows:

    Authority: 16 U.S.C. 1801 et seq.

    2. In Sec. 641.1, paragraph (b) is revised to read as follows:


Sec. 641.1  Purpose and scope.

* * * * *
    (b) This part governs conservation and management of reef fish in 
the Gulf of Mexico EEZ, except that Secs. 641.5 and 641.25 also apply 
to reef fish from adjoining state waters and Sec. 641.4(a)(2) and (q) 
also apply in the manner stated therein to red snapper from adjoining 
state waters. The Gulf of Mexico EEZ extends from the U.S./Mexico 
border to the intercouncil boundary between the South Atlantic and Gulf 
of Mexico Fishery Management Councils, as specified at 50 CFR 
601.11(c). ``EEZ'' in this part refers to the EEZ in the Gulf of 
Mexico, unless the context clearly indicates otherwise.
    3. In Sec. 641.2, the definition of ``Science and Research 
Director'' is revised to read as follows:


Sec. 641.2  Definitions.

* * * * *
    Science and Research Director means the Science and Research 
Director, Southeast Fisheries Science Center, NMFS, 75 Virginia Beach 
Drive, Miami, FL 33149, telephone: 305-361-5761; or a designee.
* * * * *
    4. In Sec. 641.4, the first sentence of paragraph (a)(2) and the 
third sentence of paragraph (i) are revised, and paragraph (q) is added 
to read as follows:


Sec. 641.4  Permits and fees.

    (a) * * *
    (2) * * * A dealer who receives from a fishing vessel reef fish 
harvested from the EEZ, or red snapper from adjoining state waters that 
are harvested by or possessed on board a vessel with a Federal permit 
issued under this section, must obtain an annual dealer permit. * * *
* * * * *
    (i) * * * In addition, a copy of the dealer's permit must accompany 
each vehicle that is used to pick up from a fishing vessel reef fish 
harvested from the EEZ or red snapper from adjoining state waters that 
are harvested by or possessed on board a vessel with a permit issued 
under this section. * * *
* * * * *
    (q) Permit conditions. (1) As a condition of a vessel permit issued 
under this section, without regard to where red snapper are harvested 
or possessed, a permitted vessel--
    (i) Must comply with the red snapper individual transferrable quota 
requirements of Sec. 641.10(b).
    (ii) May not transfer red snapper at sea or receive red snapper at 
sea.
    (iii) Must maintain red snapper with head and fins intact through 
landing, and the exceptions to that requirement contained in 
Sec. 641.21(b)(3) and (b)(4) do not apply to red snapper. Such red 
snapper may be eviscerated, gilled, and scaled but must otherwise be 
maintained in a whole condition.
    (2) As a condition of a dealer permit issued under this section, 
without regard to where red snapper are harvested or possessed, a 
permitted dealer must comply with the red snapper individual 
transferrable quota requirements of Sec. 641.10(b).
    5. In Sec. 641.5, paragraph (d)(3) is redesignated as paragraph 
(d)(4), paragraph (d)(2) is revised, and paragraph (d)(3) is added to 
read as follows:


Sec. 641.5  Recordkeeping and reporting.

* * * * *
    (d) * * *
    (2) In any month that a red snapper is received, a dealer must 
report total poundage of red snapper received during the month, in 
whole or eviscerated weight, the average monthly price paid for red 
snapper by market size, and the proportion of total poundage landed by 
each gear type. The ``Fish House'' parts of red snapper individual 
transferrable coupons, received during the month in accordance with 
Sec. 641.10(b), must be submitted with the report to the Science and 
Research Director postmarked not later than 5 days after the end of the 
month.
    (3) For reef fish other than red snapper, when requested by the 
Science and Research Director, a dealer must provide the following 
information from his/her record of reef fish received: total poundage 
of each species received during the requested period, average monthly 
price paid for each species by market size, and proportion of total 
poundage landed by each gear type.
* * * * *
    6. In Sec. 641.7, paragraphs (g), (r), (s), and (bb) are revised 
and paragraphs (ee) through (kk) are added to read as follows:


Sec. 641.7  Prohibitions.

* * * * *
    (g) Possess a finfish without its head and fins intact, as 
specified in Sec. 641.21(b); or a red snapper without its head and fins 
intact, as specified in Sec. 641.4(q)(1)(iii).
* * * * *
    (r) Transfer reef fish at sea, as specified in Sec. 641.24(f); or 
transfer or receive red snapper at sea, as specified in 
Sec. 641.4(q)(1)(ii).
    (s) Purchase, barter, trade, or sell, or attempt to purchase, 
barter, trade, or sell, a reef fish--
    (1) Harvested from the EEZ by a vessel that does not have a valid 
Federal permit, or
    (2) Possessed under the bag limits--as specified in Sec. 641.24(g).
* * * * *
    (bb) Receive from a fishing vessel, by purchase, trade, or barter, 
reef fish harvested from the EEZ or red snapper from adjoining state 
waters harvested by or possessed on board a vessel with a Federal 
permit, without a dealer permit, as specified in Sec. 641.4(a)(2).
* * * * *
    (ee) Falsify information required for administration of the 
individual transferable quota (ITQ) system specified in Sec. 641.10.

[[Page 44830]]

    (ff) Possess an ITQ coupon not issued to him or her or, if acquired 
by transfer, without all required sale endorsements properly completed 
thereon, as specified in Sec. 641.10(b)(3).
    (gg) Possess red snapper in or from the EEZ, or on board a 
federally permitted vessel, in an amount exceeding the total of the ITQ 
coupons on board, or without the vessel permit on board, as specified 
in Sec. 641.10(b)(4).
    (hh) Fail to sign and date the ``Fisherman'' part of ITQ coupons or 
fail to submit such coupon parts with the logbook forms for that 
fishing trip, as specified in Sec. 641.10(b)(5).
    (ii) Transfer red snapper harvested from the EEZ, or possessed by a 
permitted vessel, to a dealer who does not have a Federal permit, or 
fail to give a dealer the ``Fish House'' part of ITQ coupons, as 
specified in Sec. 641.10(b)(6).
    (jj) As a permitted dealer--
    (1) Receive red snapper from a vessel that does not have a reef 
fish permit;
    (2) Fail to receive the ``Fish House'' part of ITQ coupons in 
denominations at least equal to the eviscerated weight of red snapper 
received; or
    (3)--Fail to properly complete the ``Fish House'' parts of ITQ 
coupons as specified in Sec. 641.10(b)(7).
    (kk) Fail to make ITQ coupons available to an authorized officer, 
as specified in Sec. 641.10(b)(5) and (b)(7).
    7. Section 641.10 is added to subpart A to read as follows:


Sec. 641.10  Red snapper individual transferable quota (ITQ) system.

    The ITQ system established by this section will remain in effect 
for 4 years after the date that ITQ coupons must be carried on board, 
during which time NMFS and the Gulf of Mexico Fishery Management 
Council (Council) will evaluate the effectiveness of the system. Based 
on the evaluation, the system may be modified, extended, or terminated.
    (a) Percentage shares. (1) Initial percentage shares of the annual 
commercial quota of red snapper will be assigned to persons in 
accordance with the procedure specified in Amendment 8 to the Fishery 
Management Plan for the Reef Fish Fishery of the Gulf of Mexico (FMP) 
and in paragraphs (c)(1) through (c)(4) of this section. Each person 
will be notified by the Regional Director of his or her initial 
percentage shares. If additional shares become available to NMFS, such 
as by forfeiture pursuant to subpart F of 15 CFR part 904 for rule 
violations, such shares will be proportionately issued to shareholders 
based on their shares as of November 1 after the additional shares 
become available. If additional shares are required to be issued by 
NMFS, such as may be required in the resolution of disputes, existing 
shares will be proportionately reduced. This reduction of shares will 
be based on shares as of November 1 after the required addition of 
shares.
    (2) All or a portion of a person's percentage shares may be 
transferred to another person who is a U.S. citizen or permanent 
resident alien. (See paragraph (c)(5) of this section for restrictions 
on the transfer of shares in the initial months under the ITQ system). 
Transfer of shares must be reported on a form available from the 
Regional Director. The Regional Director will confirm, in writing, each 
transfer. The effective date of each transfer is the confirmation date 
provided by the Regional Director. The confirmation date will normally 
be not later than 3 working days after receipt of a properly completed 
transfer form. However, reports of share transfers received by the 
Regional Director from November 1 through December 31 will not be 
recorded or confirmed until after January 1. A fee will be charged for 
each transfer of percentage shares. The amount of the fee is calculated 
in accordance with the procedures of the NOAA Finance Handbook for 
determining the administrative costs of each special product or service 
provided by NOAA to non-Federal recipients. The fee may not exceed such 
costs and will be specified with each transaction form. The appropriate 
fee must accompany each submitted transaction form.
    (3) On or about January 1 each year, the Regional Director will 
provide each red snapper shareholder with a list of all red snapper 
shareholders and their percentage shares, reflecting share transactions 
as indicated on properly completed transaction forms received through 
October 31. Updated lists may be obtained at other times by written 
request to the Regional Director.
    (b) ITQs. (1) Annually, as soon after November 15 as the following 
year's red snapper commercial quota is established, the Regional 
Director will calculate each red snapper shareholder's ITQ in terms of 
eviscerated weight. Each ITQ is the product of the red snapper 
commercial quota, in whole weight, for the ensuing fishing year, the 
factor for converting whole weight to eviscerated weight, and each red 
snapper shareholder's percentage share, reflecting share transactions 
reported on forms received by the Regional Director through October 31.
    (2) The Regional Director will provide each red snapper shareholder 
with ITQ coupons in various denominations, the total of which equals 
his or her ITQ, and a copy of the calculations used in determining his 
or her ITQ. Each coupon will be coded to indicate the initial 
recipient.
    (3) An ITQ coupon may be transferred by completing the sale 
endorsement thereon, including the name of the recipient and the 
signature of the seller.
    (4) Except when the red snapper bag limit applies, red snapper in 
or from the EEZ or on board a vessel that has been issued a reef fish 
permit under Sec. 641.4 may not be possessed in an amount, in 
eviscerated weight, exceeding the total of ITQ coupons on board. (See 
Sec. 641.24(a) for applicability of the bag limit.)
    (5) Prior to termination of a trip, the operator's signature and 
the date signed must be written in ink on the ``Fisherman'' part of ITQ 
coupons totalling at least the eviscerated weight of the red snapper on 
board. The ``Fisherman'' part of each such coupon must be separated 
from the coupon and submitted with the logbook forms for that fishing 
trip. An owner or operator of a vessel must make available to an 
authorized officer all ITQ coupons in his or her possession upon 
request.
    (6) Red snapper harvested from the EEZ or possessed by a vessel 
with a permit issued under Sec. 641.4 may be transferred only to a 
dealer with a permit issued under Sec. 641.4. The ``Fish House'' part 
of each ITQ coupon must be given to such dealer in amounts totalling at 
least the eviscerated weight of the red snapper transferred to that 
dealer.
    (7) A dealer with a permit issued under Sec. 641.4 may receive red 
snapper only from a vessel that has on board a reef fish permit issued 
under Sec. 641.4. A dealer must receive the ``Fish House'' part of ITQ 
coupons totalling at least the eviscerated weight of the red snapper 
received. The dealer must enter the permit number of the vessel 
received from, enter the dealer's permit number, date and sign each 
such ``Fish House'' part, and submit all such parts as required by 
Sec. 641.5(d)(2). A dealer must make available to an authorized officer 
all ITQ coupons in his or her possession upon request.
    (c) Procedures for Implementation--(1) Initial shareholders. The 
following persons are initial shareholders in the red snapper ITQ 
system:
    (i) Either the owner or operator of a vessel with a valid permit on 
August 29, 1995, provided such owner or operator have landing of red 
snapper during the period 1990 through 1992. If the earned income of an 
operator was used to qualify for the permit that is valid on August 29, 
1995, such operator is the initial shareholder rather than the owner. 
In the case of an owner, a person 

[[Page 44831]]
includes a corporation or other legal entity; and
    (ii) A historical captain. A historical captain means an operator 
who--
    (A) From November 6, 1989, through 1993, fished solely under verbal 
or written share agreements with an owner, and such agreements provided 
for the operator to be responsible for hiring the crew, who was paid 
from the share under his or her control;
    (B) Landed from that vessel at least 5,000 lb (2,268 kg) of red 
snapper per year in 2 of the 3 years 1990, 1991, and 1992;
    (C) Derived more than 50 percent of his or her earned income from 
commercial fishing, that is, sale of the catch, in each of the years 
1989 through 1993; and
    (D) Landed red snapper prior to November 7, 1989.
    (2) Initial shares. (i) Initial shares will be apportioned to 
initial shareholders based on each shareholder's average of the top 2 
years' landings in 1990, 1991, and 1992. However, no person who is an 
initial shareholder under paragraph (c)(1) of this section will receive 
an initial percentage share that will amount to less than 100 lb (45.36 
kg), whole weight, of red snapper (90 lb (41 kg), eviscerated weight).
    (ii) The percentage shares remaining after the minimum shares have 
been calculated under paragraph (c)(2)(i) of this sections will be 
apportioned based on each remaining shareholder's average of the top 2 
years' landings in 1990, 1991, and 1992. In a case where a landing is 
associated with an owner and a historical captain, such landing will be 
apportioned between the owner and historical captain in accordance with 
the share agreement in effect at the time of the landing.
    (iii) The determinations of landings of red snapper during the 
period 1990 through 1992 and historical captain status will be made in 
accordance with the data collected under Amendment 9 to the FMP. Those 
data identify each red snapper landing during the period 1990 through 
1992. Each landing is associated with an owner and, when an operator's 
earned income qualified him or her for the vessel permit at the time of 
the landing, with such operator. Where appropriate, a landing is also 
associated with a historical captain. However, a red snapper landings 
record during that period, that is associated solely with an owner may 
be retained by that owner or transferred as follows:
    (A) An owner of a vessel with a valid reef fish permit on August 
29, 1995, who transferred a vessel permit to another vessel owned by 
him or her will retain the red snapper landings record for the previous 
vessel.
    (B) An owner of a vessel with a valid reef fish permit on August 
29, 1995, will retain the landings record of a permitted vessel if the 
vessel had a change of ownership to another entity without a 
substantive change in control of the vessel. It will be presumed that 
there was no substantive change in control of a vessel if a successor 
in interest received at least a 50 percent interest in the vessel as a 
result of the change of ownership whether the change of ownership was--
    (1) From a closely held corporation to its majority shareholder;
    (2) From an individual who became the majority shareholder of a 
closely held corporation receiving the vessel;
    (3) Between closely held corporations with a common majority 
shareholder; or
    (4) From one to another of the following: Husband, wife, son, 
daughter, brother, sister, mother, or father.
    (C) In other cases of transfer of a permit through change of 
ownership of a vessel, an owner of a vessel with a valid reef fish 
permit on August 29, 1995, will receive credit for the landings record 
of the vessel before his or her ownership only if there is a legally 
binding agreement for transfer of the landings record.
    (iv) Requests for transfers of landings records must be submitted 
to the Regional Director within 15 days after the date of publication 
of the final rule to implement the ITQ system. The Regional Director 
may require documentation supporting such request. After considering 
requests for transfers of landings records, the Regional Director will 
advise each initial shareholder or applicant of his or her tentative 
allocation of shares.
    (3) Notification of status. The Regional Director will advise each 
owner, operator, and historical captain for whom NMFS has a record of a 
red snapper landing during the period 1990 through 1992, including 
those who submitted such record under Amendment 9 to the FMP, of his or 
her tentative status as an initial shareholder and the tentative 
landings record that will be used to calculate his or her initial 
share.
    (4) Appeals. (i) A special advisory panel, appointed by the Gulf of 
Mexico Fishery Management Council to function as an appeals board, will 
consider written requests from persons who contest their tentative 
status as an initial shareholder, including historical captain status, 
or tentative landings record. In addition to considering written 
requests, the board may allow personal appearances by such persons 
before the board.
    (ii) The board is only empowered to consider disputed calculations 
or determinations based on documentation submitted under Amendment 9 to 
the FMP regarding landings of red snapper during the period 1990 
through 1992, including transfers of such landings records, or 
regarding historical captain status. In addition, the board may 
consider applications and documentation of landings not submitted under 
Amendment 9 if, in the board's opinion, there is justification for the 
late application and documentation. The board is not empowered to 
consider an application from a person who believes he or she should be 
eligible because of hardship or other factors.
    (iii) A written request for consideration by the board must be 
submitted to the Regional Director not later than 30 days after the 
date of publication of the final rule to implement the ITQ system and 
must contain documentation supporting the allegations that form the 
basis for the request.
    (iv) The board will meet as necessary to consider each request that 
is submitted in a timely manner. Members of the appeals board will 
provide their individual recommendations for each appeal to the 
Council, which will in turn submit its recommendation to the Regional 
Director. The board and the Council will recommend whether the 
eligibility criteria, specified in Amendment 8 of the FMP and 
paragraphs (c)(1) and (c)(2) of this section, were correctly applied in 
each case, based solely on the available record including documentation 
submitted by the applicant. The Council will also base its 
recommendation on the recommendations of the board. The Regional 
Director will decide the appeal based on the above criteria and the 
available record, including documentation submitted by the applicant 
and the recommendation of the Council. The Regional Director will 
notify the appellant of his decision and the reason therefor, in 
writing, normally within 45 days of receiving the Council's 
recommendation. The Regional Director's decision will constitute the 
final administrative action by NMFS on an appeal.
    (v) Upon completion of the appeal process, the Regional Director 
will issue share certificates to initial shareholders.
    (5) Transfers of shares. The following restrictions apply to the 
transfer of shares:
    (i) The transfer of shares is prohibited for the first 6 months 
after the date that 

[[Page 44832]]
ITQ coupons are required to be carried on board.
    (ii) From 6 months after the date that ITQ coupons are required to 
be carried on board to 18 months after such date, shares may be 
transferred only to persons who are initial shareholders and are U.S. 
citizens or permanent resident aliens.
    8. In Sec. 641.24, paragraphs (a)(2) and (a)(3) are redesignated as 
paragraphs (a)(3) and (a)(4), respectively; in newly redesignated 
paragraph (a)(4), the reference to ``paragraph (a)(2)(ii)(C)'' is 
revised to read ``paragraph (a)(1)(ii)(C)''; paragraph (a)(2) is added; 
and paragraph (g) is revised to read as follows:


Sec. 641.24  Bag and possession limits.

    (a) * * *
    (2) In addition, the bag limit for red snapper applies to a person 
on board a vessel with a permit specified in Sec. 641.4 when that 
vessel does not have ITQ coupons on board.
* * * * *
    (g) Sale. A reef fish harvested in the EEZ by a vessel that does 
not have a valid permit, as required by Sec. 641.4(a)(1), or possessed 
under the bag limits specified in paragraph (b) of this section, may 
not be purchased, bartered, traded, or sold, or attempted to be 
purchased, bartered, traded, or sold.
[FR Doc. 95-21327 Filed 8-23-95; 5:01 pm]
BILLING CODE 3510-22-F