[Federal Register Volume 61, Number 108 (Tuesday, June 4, 1996)]
[Notices]
[Pages 28177-28181]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-13953]



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DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration
[Docket No. 950616159-6146-03; I.D. 052496C]
RIN 0648-ZA16


Fishing Capacity Reduction Program (FCRP)

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

ACTION: Notice of proposed program and request for comments.

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SUMMARY: NMFS issues this notice to describe the proposed FCRP 
requirements and to solicit comments on the proposal. The proposed FCRP 
is a $25 million program designed to provide grants to the owners of 
fishing vessels participating in the Northeast multispecies limited 
access groundfish fishery who are willing to scrap or make their 
vessels permanently ineligible to participate in any of the fisheries 
of the United States and to surrender all associated Federal fish 
harvesting permits.

DATES: Comments must be submitted on or before July 1, 1996.

ADDRESSES: Comments should be sent to the Financial Services Division, 
National Marine Fisheries Service, 1315 East West Hwy., Silver Spring, 
MD 20910.

FOR FURTHER INFORMATION CONTACT: Michael Grable, (301) 713-2390, fax 
(301) 589-2686.

SUPPLEMENTARY INFORMATION:

I. Background

    Under the provisions of Public Law 103-211, the Emergency 
Supplemental Appropriations Act of 1994, $2 million was made available 
as part of the Northeast Fisheries Assistance Program for a pilot FCRP, 
which was called the Fishing Capacity Reduction Demonstration Program 
(pilot program). The purpose of this program was to test an approach 
for permanently reducing the fishing capacity in the Northeast 
multispecies groundfish fishery. On October 11, 1995, NOAA announced

[[Page 28178]]

that 114 vessel owners, with vessels worth over $52 million and 
representing 31 percent of the active groundfish capacity, applied to 
participate in the pilot program. Under the pilot program, NOAA has 
made grant awards to 11 vessel owners totaling $1.89 million. In 
addition to the 11 Federal multispecies limited access fishing permits 
surrendered under the pilot program, an additional 15 limited access 
fishing permits for the summer flounder, ocean quahog, squid, mackerel, 
and butterfish fisheries were retired as well. Overall, the pilot 
program has proven that a vessel removal program can be successfully 
designed and implemented, and that there is substantial interest within 
the fishing industry to participate in such a program.
    As a result of the August 2, 1995, declaration of a fishery 
resource disaster by the Secretary of Commerce (Secretary), $25 million 
in emergency disaster assistance has been made available to NOAA for an 
expanded fishing capacity reduction program. The authority for this 
program is contained in section 308(d) of the Interjurisdictional 
Fisheries Act (IFA) of 1986 (16 U.S.C. 4107(d)), as amended.
    Recent amendments to the IFA require that as a condition of 
awarding assistance under this program, the Secretary shall prohibit 
the vessel from being used for fishing and require that the vessel be 
(a) scrapped or otherwise disposed of in a manner approved by the 
Secretary; or (b) donated to a nonprofit organization and thereafter 
used only for purposes of research, education, or training; or (c) used 
for another non-fishing purpose, provided the Secretary determines that 
adequate measures are in place to ensure that the vessel cannot reenter 
any fishery. The amendments to the IFA also state that any vessel 
prohibited from fishing under this program will be permanently 
ineligible to hold a fishery endorsement.
    NMFS has preliminarily determined that the only effective way to 
ensure that a vessel cannot reenter any state or Federal fishery is to 
require that a vessel's Coast Guard document has a permanent 
restriction prohibiting that vessel from holding a fishery endorsement. 
Consequently, successful applicants with undocumented vessels would be 
required to scrap their vessels. Like the pilot program, voluntary 
sinking will be allowed as long as it is conducted in compliance with 
all applicable Federal, state and local environmental laws and 
regulations.
    For documented vessels that obtain the necessary fishery 
endorsement restriction, NMFS is considering allowing the transfer of a 
vessel to a public entity or nonprofit organization for research 
(including fisheries research), education, training, humanitarian, 
safety, or law enforcement purposes, but will entertain comments on 
other appropriate reuses. If a vessel is transferred, NMFS is proposing 
that the entity to which the vessel is transferred will be required to 
scrap it once the vessel has served the purpose for which it was 
transferred to that entity. NMFS also specifically requests comment on 
the possibilities of vessel reuse and the transfer of vessels to 
private and public foreign entities, as well as domestic entities, for 
the limited purposes set forth in the amended IFA.

II. Definitions

    Regulated groundfish species--those species that are regulated 
under the Northeast Multispecies Fishery Management Plan and are 
limited to cod, haddock, pollock, yellowtail flounder, winter flounder, 
gray sole, American plaice, windowpane flounder, white hake and 
redfish.
    Valid multispecies limited access permit--those limited access 
permits defined in the regulations implementing the Northeast 
Multispecies Fishery Management Plan, as amended by Amendment 7, 50 CFR 
part 651.4(b). To be valid, a permit must be free of all permit 
sanctions, pending or otherwise, at the time that the application is 
submitted, and at the time of closing.

III. Proposed Program

    The purpose of the FCRP is to reduce permanently the maximum 
effective fishing capacity within the groundfish fishery through the 
removal of fishing vessels and limited access fishing permits. Like the 
pilot program, the FCRP is a voluntary market based program intended to 
remove the greatest amount of effective capacity at the lowest cost and 
targeted at full-time groundfish vessels. It will also allow the 
applicant to establish a price for offered vessels and permits that 
will be scored in a competitive manner. Unlike the pilot program, NMFS 
is proposing that all fishing vessels with a valid multispecies limited 
access permit be eligible.
    Based on comments received during the pilot program, NMFS is 
considering changes to the scoring method used in determining a vessel 
owner's score. Outlined below are the three alternatives currently 
under consideration:
    Alternative I. This alternative would use the same eligibility 
requirements and formula as the pilot program. Only vessels that 
derived 65 percent or more of their gross revenues from the sale of 
regulated groundfish species during any 3 of the 4 years between 1991 
and 1994 would be eligible. The performance of a vessel would continue 
to be measured by the average gross revenues from the sale of regulated 
groundfish species during the 3 years selected.
    Alternative II. Under this alternative, the 65 percent regulated 
species threshold would be dropped, allowing any vessel with a valid 
multispecies limited access permit to be eligible, regardless of the 
percentage of their income generated from the sale of regulated 
groundfish species. The performance of a vessel would continue to be 
measured by the average annual gross revenues from the sale of 
regulated groundfish species.
    Alternative III. This alternative would retain the 65 percent 
regulated species threshold, but allow vessel owners to use all gross 
revenues, as opposed to gross revenues from the sale of regulated 
groundfish species, when calculating vessel performance.
    NMFS is particularly interested in receiving comments on the 
alternatives discussed above.
    The following sections describe the proposed requirements and the 
application, scoring, ranking, and selection processes NMFS intends to 
follow under the FCRP.

IV. How To Apply

A. Eligible Applicants

    Applications for FCRP financial assistance will only be considered 
from owners of eligible fishing vessels, in accordance with the 
procedures set forth in this notice. An owner may be an individual who 
is a citizen or national of the United States, or a citizen of the 
Northern Mariana Islands, or a corporation, partnership, association 
(non profit or otherwise), trust, or other nongovernmental entity, if 
such an entity is a citizen within the meaning of section 802 of the 
Shipping Act, 1916, as amended (46 U.S.C. App. 802). Federal Government 
agencies or employees, including full-time, part-time, and intermittent 
personnel, and Fisheries Management Council members and employees are 
not eligible to submit an application. Vessel owners may not have 
earned more than $2,000,000 in net revenues from commercial fishing in 
any of the 3 years between 1991-1994 chosen by the applicant to 
determine eligibility.
    For a vessel to be eligible for the FCRP, it must meet the 
following conditions:
    1. Have a valid multispecies limited access fishing permit free of 
any permit

[[Page 28179]]

sanctions, pending or otherwise, both at time of application and at 
closing. Vessel owners will be required to surrender such permits along 
with all other Federal fishing permits issued to that vessel if awarded 
financial assistance under the FCRP.
    2. Be active and functioning at the time the vessel owner submits 
an application, which means that a vessel must have made at least two 
fishing trips (of any duration for any species) during the 2-month 
period prior to the final date for the submission of applications for 
FCRP assistance, and be capable of fishing for groundfish in Federal 
waters under its own power at the time of application.
    3. Depending on which alternative is chosen, one of the following 
would apply:
    Alternative I. Have derived 65 percent or more of its gross annual 
revenues from the sale of regulated groundfish species in any 3 of the 
4 years between 1991 and 1994. This means that successful applicants 
must be able to prove that 65 percent or more of the gross revenues 
(for the vessel involved) in any 3 years between 1991, 1992, 1993, and 
1994, was from the sale of regulated groundfish species.
    Alternative II. There would be no 65 percent regulated species 
threshold. Vessel owners would not be required to show that they 
generated a certain level of revenues from the sale of regulated 
groundfish species.
    Alternative III. Vessel owners must satisfy the 65 percent 
threshold requirement, as in Alternative I.

B. Submission of Applications

    Vessel owners will be given 60 days from the date of publication in 
the Federal Register of the final FCRP Notice to submit an FCRP 
application form. The form may request the following information: Owner 
and vessel name, vessel number, gross revenues from all landings, and 
gross revenues from groundfish landings only. Proof of eligibility need 
not be submitted with the application. Applicants will be required to 
submit one signed original application. No facsimile applications will 
be accepted. Proof of receipt may be obtained by sending an application 
by certified mail, return receipt requested. The anticipated time 
required to process applications is 120 days from the closing date of 
the solicitation.
    All multispecies limited access fishing permit holders will be 
mailed a copy of the application form along with a copy of the Federal 
Register notice announcing the availability of funds under the FCRP. 
Applications will also be made available at the NMFS Regional Office at 
One Blackburn Drive, Gloucester, MA 01930-2298.

V. Application Review and Scoring

    All timely submitted and completed applications will be assigned a 
score calculated by the following method:

Step A--Identify Bid

    The bid is the dollar amount submitted by the applicant in the 
application.

Step B--Calculate Vessel Performance

    Depending on which alternative is chosen, vessel performance would 
be calculated by one of the following methods:
    Alternative I. Vessel performance would be determined by averaging 
the annual revenues from the sale of regulated groundfish species 
harvested by that vessel for any 3 of the 4 years during the qualifying 
period (1991, 1992, 1993, 1994). Applicants could only use revenues 
from those years in which 65 percent or more of gross revenues was 
derived from the sale of regulated groundfish species.
    Alternative II. Vessel performance would be determined by averaging 
the annual revenues from the sale of regulated groundfish species 
harvested by that vessel for any 3 of the 4 years during the qualifying 
period, regardless of the percentage this represented of a vessel's 
gross revenues.
    Alternative III. Vessel performance would be determined by 
averaging the annual gross revenues from the sale of all fish harvested 
by that vessel for any 3 of the 4 years during the qualifying period. 
Applicants could only use gross revenues from those years in which 65 
percent or more of the gross revenues were derived from the sale of 
regulated groundfish species.

Step C--Determine Vessel Score

    Depending on which alternative is chosen, a vessel score would be 
calculated using one of the following formulas:
Alternative I
[GRAPHIC] [TIFF OMITTED] TN04JN96.009

    Gross revenues may only be used from those years in which an 
applicant can prove that 65 percent or more of the revenues were 
derived from the sale of regulated groundfish species.
Alternative II
[GRAPHIC] [TIFF OMITTED] TN04JN96.010

    No 65 percent regulated species threshold requirement.
Alternative III
[GRAPHIC] [TIFF OMITTED] TN04JN96.011

    Gross revenues may only be used from those years in which an 
applicant can prove that 65 percent or more of the revenues were 
derived from the sale of regulated groundfish species.
    Determining a bid amount is extremely important, since this will be 
a key factor in the success of an

[[Page 28180]]

applicant. If the bid is too high in relation to the vessel's overall 
performance, the bid may not be competitive. In the pilot program, 
successful applicants submitted bids that resulted in scores between 
0.494 and 0.725. Applicants will need to carefully consider all costs 
involved with receiving financial assistance under the FCRP, including 
satisfying vessel liens, vessel scrapping, vessel transfer costs, and 
tax consequences. Applicants may wish to consider selling vessel gear 
and equipment separately as a way of reducing the amount of a bid. 
Vessel owners may retain removable gear and equipment for private 
disposition.

VI. Ranking of Applications

    Applications will be ranked, starting with the lowest score. The 
Assistant Administrator for Fisheries, NOAA, will determine which 
applications are eligible with competitive bids based on the ranking of 
the applications. NMFS may initially find eligible more applications 
than it can fund but will investigate all such applications in order of 
their ranking. NMFS will reserve the right to reject any or all 
applications and may solicit additional applications. If additional 
applications are solicited, all applications submitted previously and 
not determined to be eligible with competitive bids will be considered 
rejected. NMFS will notify eligible applicants with competitive bids in 
writing. However, eligible applicants are not guaranteed funding by 
simply having a competitive bid; they will be subject to a thorough 
investigation described in section VII.

VII. Investigation of Applications

    A representative from the NMFS Financial Services Division will 
contact eligible applicants with competitive bids regarding the 
following:
    1. Ensuring that applicants meet all eligibility requirements and 
can document all claims made in their applications.
    2. Determining what debts exist against the vessel offered in the 
application, including any outstanding civil penalties or fines.
    3. Determining how applicants will satisfy all vessel liens before 
scrapping or transferring the vessels. Eligible applicants will have to 
provide written evidence of vessel lienors' willingness to satisfy 
vessel liens for specific amounts.
    4. Ensuring availability of documentation required to support 
eligible applications, including the following:
    a. Multispecies limited access fishing permit. The applicant may 
provide a copy of the permit to NMFS, but the actual permit must be 
surrendered at the time of grant award closing.
    b. Proof of landings. Depending on which alternative is chosen, 
NMFS may require proof that 65 percent or more of a vessel's gross 
revenues came from the sale of regulated groundfish species in 3 of the 
4 years during the qualifying period. Landing slips or sales tickets 
may be used to verify claimed revenues.
    c. Proof of gross revenues. Depending on which alternative is 
chosen, vessel owners may be required to prove the annual gross 
revenues from the sale of all species for the 3 years selected from the 
qualifying period of 1991 through 1994. Documentation to support income 
may include, but is not limited to, individual or corporate tax 
returns, or fish sale receipts accompanied by vessel settlement 
reports. NMFS may require sworn affidavits from the reporting party 
regarding the accuracy of the information contained in supporting 
documentation. Sales that cannot be substantiated will not be included 
in the calculation of either gross revenues or revenues from regulated 
groundfish species.
    d. Documentation of fishing capability. Documentation that vessel 
made at least two fishing trips (of any duration for any species) 
during the 2-month period prior to the final date of the submission of 
application for FCRP assistance.
    NMFS will provide legal notice of the names of vessels and their 
owners for which an investigation has been successfully completed. 
Proprietary information submitted by applicants will only be disclosed 
to Federal officials who are responsible for the FCRP or otherwise when 
required by court order or other applicable law. This information is 
subject to the Freedom of Information Act.

VIII. Establishment of Award Terms

    Representatives from the NMFS Financial Services Division will 
establish the programmatic terms of each financial assistance award for 
eligible applications validated during the investigation process. These 
terms will be binding on the applicants and will control the 
applicant's post award rights and obligations. Terms of the award will 
address such matters as how the outstanding liens on the vessels will 
be satisfied and how the vessel covered in the application will be 
scrapped or transferred to an eligible entity for an eligible use. 
Award terms will also include provisions to ensure that applicants do 
not violate fisheries laws and regulations prior to closing. At their 
own expense, applicants may choose to retain closing attorneys to 
represent their interests. To the extent necessary, closing attorneys 
will be required to pay grant funds to vessel lienors in return for 
lien releases. Should vessel liens exceed the amount of the FCRP award, 
attorneys must obtain funds from applicants and exchange them for lien 
releases.

IX. Award Closing Procedures

    After the NMFS Financial Services Division has established the 
award terms for each eligible and validated application, and the NOAA 
Grants Management Division has reviewed and approved these applications 
for compliance with the administrative requirements in section X, 
applicants will be notified in writing of the award by the grants 
officer and a closing date will be set. Applicants may be required to 
have an attorney present at the closing. If a vessel is going to be 
scrapped, 75 percent of the award will be available at the closing. The 
remaining 25 percent will be available only when applicants provide 
proof of vessel scrapping. If these arrangements have been made by the 
time of closing, 100 percent of the award may be available at that 
time. Vessel scrapping must occur promptly. If a vessel is going to be 
transferred to an eligible entity, the transfer must also occur at the 
closing and 75 percent of the award will be available at that time. The 
remaining 25 percent will be available when the applicant shows proof 
that the transferred vessel has a permanent restriction on its 
certificate of documentation prohibiting that vessel from participating 
in the fisheries of the United States. If these arrangements have been 
made by closing, 100 percent of the award may be available at that 
time. NMFS reserves the right to terminate financial assistance 
negotiations with an applicant if, in the opinion of NMFS, there are 
material adverse changes in an applicant's ability to meet the terms 
and conditions of a FCRP award agreement.

X. Administrative Requirements

A. Primary Applicant Certification

    Applicants whose applications are selected for funding will be 
required to submit a completed Standard Form 424B, ``Assurances--Non-
Construction Programs'' and Form CD-511, ``Certification Regarding 
Debarment, Suspension and Other Responsibility Matters; Drug-Free 
Workplace Requirements and Lobbying,'' and the

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following explanations are hereby provided:
    1. Nonprocurement debarment and suspension. Prospective 
participants (as defined at 15 CFR 26.105) are subject to 15 CFR part 
26, ``Nonprocurement Debarment and Suspension,'' and the related 
section of the certification form prescribed above applies;
    2. Drug-free workplace. Grantees (as defined at 15 CFR 26.605) are 
subject to 15 CFR part 26, subpart F, ``Governmentwide Requirements for 
Drug-Free Workplace (Grants),'' and the related section of the 
certification form prescribed above applies;
    3. Anti-lobbying. Persons (as defined at 15 CFR 28.105) are subject 
to the lobbying provisions of 31 U.S.C. 1352, ``Limitation on use of 
appropriated funds to influence certain Federal contracting and 
financial transactions,'' and the lobbying section of the certification 
form prescribed above applies to applications/bids for grants, 
cooperative agreements, and contracts for more than $100,000, and loans 
and loan guarantees for more than $150,000, or the single family 
maximum mortgage limit for affected programs, whichever is greater; and
    4. Anti-lobbying disclosure. Any applicant who has paid or will pay 
for lobbying using any funds must submit an SF-LLL, ``Disclosure of 
Lobbying Activities,'' as required under 15 CFR part 28, Appendix B.
    5. Lower tier certifications. Applicants shall require applicants/
bidders for subgrants, contracts, subcontracts, or other lower tier 
covered transactions at any tier under the award to submit, if 
applicable, a completed Form CD-512, ``Certifications Regarding 
Debarment, Suspension, Ineligibility and Voluntary Exclusion-Lower Tier 
Covered Transactions and Lobbying'' and disclosure form SF-LLL, 
``Disclosure of Lobbying Activities.'' Form CD-512 is intended for the 
use of recipients and should not be transmitted to the Department of 
Commerce (Department). SF-LLL submitted by any tier recipient or 
subrecipient should be submitted to the Department in accordance with 
the instructions contained in the award document.

B. Other Requirements

    1. Federal policies and procedures. FCRP grant recipients and 
subrecipients are subject to all Federal laws and Federal and 
Department policies, regulations, and procedures applicable to Federal 
financial assistance awards. Federal assistance funds cannot be used to 
pay for a Federal debt.
    2. Name check review. Applicants are subject to a name check review 
process. Name checks are intended to reveal if any key individuals 
associated with the recipient have been convicted of, or are presently 
facing, criminal charges such as fraud, theft, perjury, or other 
matters that significantly reflect on the recipient's management, 
honesty, or financial integrity. A false statement on the application 
is grounds for denial or termination of funds and grounds for possible 
punishment by a fine or imprisonment (18 U.S.C. 1001).
    3. Financial management certification/preaward accounting survey. 
At the discretion of the NOAA Grants Officer, applicants may be 
required to have their financial management systems certified by an 
independent public accountant as being in compliance with Federal 
standards specified in the applicable Office of Management and Budget 
(OMB) Circulars prior to execution of the award. Any first-time 
applicant for Federal grant funds may be subject to a pre-award 
accounting survey by the Department prior to execution of the award.
    4. Past performance. Unsatisfactory performance under prior Federal 
awards may result in an application not being considered for funding.
    5. Delinquent Federal debts. No award of Federal funds shall be 
made to an applicant or to its subrecipients who have an outstanding 
delinquent Federal debt or fine until either:
    a. The delinquent account is paid in full,
    b. A negotiated repayment schedule is established and at least one 
payment is received, or
    c. Other arrangements satisfactory to the Department are made.
    6. Buy American-made equipment or products. Applicants are hereby 
notified that they are encouraged, to the extent feasible, to purchase 
American-made equipment and products with funding under this program.
    7. Pre-award activities. If applicants incur any costs prior to an 
award being made, they do so solely at their own risk of not being 
reimbursed by the Government. Notwithstanding any verbal or written 
assurance that may have been received, there is no obligation on the 
part of the Department to cover pre-award costs.

Classification

    This action has been determined to be not significant for purposes 
of E.O. 12866.
    Applications under this program are subject to E.O. 12372, 
``Intergovernmental Review of Federal Programs.''
    This notice contains a collection-of-information requirement 
subject to the Paperwork Reduction Act. The collection of this 
information has been approved by the OMB (OMB control number 0648-
0289). Public reporting burden for preparation of the grant application 
is estimated to be 1 hour per response including the time for reviewing 
instructions, gathering and maintaining the data needed, and completing 
and reviewing the collection of information. An additional 15 hour 
reporting burden is estimated for those applicants who are accepted by 
NMFS, including time needed to document the income claims on their 
applications, how outstanding liens on their vessels will be satisfied, 
and how the vessels will be scrapped. Send comments regarding this 
burden estimate or any other aspect of this collection of information, 
including suggestions for reducing this burden, to Michael Grable, 
Financial Services Division (see addresses). 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.

    Dated: May 29, 1996.
Gary Matlock,
Program Management Officer, National Marine Fisheries Service.
[FR Doc. 96-13953 Filed 5-30-96; 4:21 pm]
BILLING CODE 3510-22-W