[Federal Register Volume 63, Number 101 (Wednesday, May 27, 1998)] [Notices] [Pages 28986-28989] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 98-13979] ----------------------------------------------------------------------- DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration [Docket No. 980324076-8076-01; I.D. 031798B] RIN 0648-ZA38 Halibut and Sablefish Fisheries Quota-Share Loan Program; Final Program Notice and Announcement of Availability of Federal Assistance AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration, Commerce. ACTION: Announcement of availability of Federal assistance. ----------------------------------------------------------------------- SUMMARY: NMFS announces the availability of long-term loans for financing or refinancing the purchase cost of quota share (QS) in the halibut and sablefish fisheries off Alaska. Only entry-level fishermen or fishermen who fish from small vessels are eligible for these loans. DATES: NMFS will accept applications only during an application open season. The application open season will begin on June 10, 1998 and will end on June 24, 1998. All loan funds available for FY 1998 must be committed before September 30, 1998. ADDRESSES: Applicants should send loan applications to the Northwest Financial Services Branch, National Marine Fisheries Service, National Oceanic and Atmospheric Administration, U.S. Department of Commerce, 7600 Sand Point Way, NE (BIN C15700), Building No. 1, Seattle, WA 98115. FOR FURTHER INFORMATION CONTACT: Kimberly Berryhill at (206) 526-6122 (voice) or (206) 526-6306 (facsimile). SUPPLEMENTARY INFORMATION: I. Introduction A. Background The Sustainable Fisheries Act (SFA) (P.L. 104-297) amended section 1104A(a)(7) of Title XI of the Merchant Marine Act (46 U.S.C. App. 1274) and section 303(d)(4) of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) (16 U.S.C. 1801 et seq.) to authorize financing and refinancing the cost of entry-level fishermen and fishermen who fish from small boats purchasing individual fishing quota (IFQ). Although the SFA indicates that loans are available for purchasing IFQ, the basic fishing permit for the halibut and sablefish fisheries is termed ``QS'' rather than ``IFQ.'' In these fisheries, IFQ is an annual allocation of the pounds of fish that each QS holder may harvest. Consequently, NMFS interprets the SFA to allow loans for the cost of purchasing basic fishing permits rather than annual harvest allocations under those permits. These loans will finance the purchase of halibut and sablefish QS rather than IFQ. Title XI of the Merchant Marine Act, 1936, is the credit authority under which NMFS will make these loans. This authority is subject to the Federal Credit Reform Act of 1990 (FRCA) (2 U.S.C. 661). This Act requires estimated net loan losses (FCRA cost) to be appropriated in cash at the time Congress authorizes annual loan ceilings. FY 1998 appropriations for the U.S. Department of Commerce included a $100,000 advance to fund the FCRA cost of this loan program during its first year (from October 1, 1997, through September 30, 1998). The amount of annual FCRA credit authority available is a ratio of the FCRA cost rate and the FCRA cost appropriated. NMFS preliminarily estimates the FCRA cost rate of these loans to be 2 percent. Consequently, the $100,000 appropriated for this loan program's FY 1998 FCRA cost will preliminarily support a $5,000,000 credit authority ($5,000,000 times 0.2 equals $100,000). The FY 1998 credit authority may not support more than 20 to 35 loans. FY 1998 loan demand will most likely exceed supply. NMFS will, to the maximum extent possible, process loan applications (up to the maximum FY 1998 credit authority available) in the order in which applicants submit them during an application open season. For the specific dates upon which the application open season begins and ends, see the DATES heading at the beginning of this document. All applications must be submitted by first-class U.S. mail. No other form of application submission is acceptable. To reduce the open-season paperwork burden, applicants need complete only a small portion (Section A) of the [[Page 28987]] application form at the time of open season application. These loans will, until further notice, continue to be available in any year for which adequate FCRA credit authority exists. SFA amendments to section 303(d)(4) and section 304(d)(2) of the Magnuson-Stevens Act authorize the FCRA cost of IFQ lending to be funded by up to 25 percent of the IFQ and Community Development Quota (CDQ) fee revenue from the IFQ fishery involved. Presumably, a portion of halibut and sablefish fees from this revenue source will, in the future, fund the annual FCRA cost of these loans for purchasing halibut and sablefish QS. B. Catalog of Federal Domestic Assistance The program of which halibut and sablefish QS loans are a part is listed in the ``Catalog of Federal Domestic Assistance'' under number 11.415, Fisheries Obligation Guarantee Program. II. Definitions Applicant means either an entry-level fisherman who applies for a loan or a fisherman who fishes from a small vessel who applies for a loan. Application means an application for a loan from an applicant. Application form means NOAA Form 88-1 (bearing OMB approval No. 0648-0082 and expiring on September 30, 1998). Base year means the year in which an applicant applies for a loan. Entry-level fisherman means a fisherman who: (1) Does not own any QS; (2) Applies for a loan to purchase QS that involves an IFQ total not greater than 8,000 lb (3,628.7 kg) during the base year; and (3) Will be a crew member aboard the vessel that harvests the IFQ for the loan QS. Fisherman who fishes from a small vessel means a fisherman: (1) Who applies for a loan to purchase halibut or sablefish QS previously assigned under Sec. 676.20(c)(2), sablefish QS previously assigned under Sec. 676.20(c)(3), halibut QS previously assigned under Sec. 676.20(c)(4), and/or halibut QS previously assigned under Sec. 676.20(c)(5); (2) Whose aggregate ownership of QS (including the loan QS) will involve an IFQ not greater than 50,000 lb (22,679.6 kg) during the base year; (3) Who will be a crew member aboard the vessel that harvests the IFQ for the aggregate QS such fisherman owns (including the loan QS) at the time the loan QS transfers to such fisherman; (4) Who has, for at least a total of 150 days at any point in the past, been a crewman aboard any vessel in any U.S. commercial fishery; and (5) Who does not own, in whole or in part, any vessel of the type involved in the previous assignment of halibut or sablefish QS under Sec. 676.20(c)(1) or (c)(2). Halibut/sablefish means halibut, sablefish, or halibut and sablefish from the QS fishery off Alaska for halibut and/or the QS fishery off Alaska for sablefish. IFQ means the annual catch limit of halibut/sablefish that may be harvested by a person who is lawfully allocated a harvest privilege for a specific portion of the total allowable catch of halibut/sablefish. Loan means a program loan for financing or refinancing the cost of purchasing halibut/sablefish QS. Loan QS means the QS purchased with the proceeds of a loan. NMFS means the National Marine Fisheries Service, National Oceanic and Atmospheric Administration, United States Department of Commerce. Notice date means the date this document is published in the Federal Register. NWFSB means the Northwest Financial Services Branch (F/SF23), National Marine Fisheries Service, National Oceanic and Atmospheric Administration, U.S. Department of Commerce, 7600 Sand Point Way, NE (BIN C15700), Building No. 1, Seattle, WA 98115. Open season means the period beginning and ending on the dates specified under the DATES heading at the beginning of this document. Program means the halibut/sablefish loan program described in this document. QS means a halibut/sablefish permit, the face amount of which is used as a basis for the annual calculation of a person's IFQ. RAM Program means the Restricted Access Management activities in the Alaska Regional Office of the National Marine Fisheries Service. Sec. 676.20(c) means Sec. 676.20(c) of Title 50, Code of Federal Regulations (as revised as of October 1, 1995). Title XI means Title XI of the Merchant Marine Act, 1936 (the statutory credit authority under which lending the purchase cost of IFQ is but one of the eligible fisheries loan purposes). III. Eligible Applicants Any entry-level fisherman or fisherman who fishes from a small vessel and is a U.S. citizen is eligible to apply for a loan. IV. Loan Purpose (1) General. The loan purpose is financing or refinancing the cost of purchasing QS. (2) Fishermen who fish from small vessels. The loan QS must be: halibut or sablefish QS previously assigned under Sec. 676.20(c)(2), sablefish QS previously assigned under Sec. 676.20(c)(3), halibut QS previously assigned under Sec. 676.20(c)(4), and/or halibut QS previously assigned under Sec. 676.20(c)(5). Applicants must be eligible to receive (hold) the loan QS. The amount of QS any applicant will own at the time the loan QS transfers to the applicant may not have involved an aggregate IFQ greater than 50,000 lb (22,679.6 kg) during the base year. The IFQ for such QS during any year other than the base year is irrelevant. If, for example, an applicant who owns QS that involved a 20,000-lb (9,071.8-kg) IFQ during the base year wants a loan to finance the purchase of additional QS, the loan QS may not have involved more than an additional 30,000-lb (13,607.8-kg) IFQ during the base year. Applicants may not own, in whole or in part, any vessel of the type involved in the previous assignment of halibut or sablefish QS under Sec. 676.20(c)(1) or (c)(2). Although CFR part 676 is not the CFR part that presently regulates halibut/sablefish, Sec. 676.20(c) is the section that the Sustainable Fisheries Act requires NMFS to use for the matters involved in this notice. NWFSB can provide applicants copies of Sec. 676.20(c) and explain how this section controls the loan QS. Each applicant must be a crewman aboard the vessel that will harvest the total IFQ for all QS that the applicant owns at the time the loan QS transfers to applicant. (3) Entry-level fishermen. The loan QS may be of any type for which the RAM Program will issue a Quota Share Certificate in the purchaser's name. The loan QS may not have involved an IFQ greater than 8,000 lb (3,628.7 kg) during the base year. The IFQ for such QS during any year other than the base year is irrelevant. (4) Applicants' indirect QS or vessel ownership interests. NMFS will count against the poundage ceilings in paragraphs IV(2) and (3) of this notice whatever portion of QS interests (and the base-year IFQ for them) applicants indirectly own by virtue of owning corporations, partnerships, or other forms of business organizations that directly own QS. For example, if an [[Page 28988]] applicant owns one-third of the stock in a corporation that owns QS with a base-year IFQ of 30,000-lb (13,607.8-kg), NMFS will, for the purposes of the ceilings, regard the applicant as also owning QS with a base-year IFQ of 10,000 lb (4,535.9 kg). NMFS will also, for the purpose of the vessel ownership restriction in paragraph IV(2) of this notice, consider that applicants indirectly have an ownership interest in vessels which are owned by corporations, partnerships, or other forms of business organization in which applicants own any corporate shares, partnership interests, or other interests. For example, if an applicant owns one share of stock in a corporation that owns a vessel of the type involved in the previous assignment of halibut or sablefish QS under Sec. 676.20(c)(1) or (c)(2), NMFS will consider the applicant to partly own such a vessel. Such an applicant will not be eligible for a loan. (5) Refinancing. Applicants may refinance with the proceeds of loans any existing debts which previously financed the purchase cost of QS, provided that the QS purchases would themselves have been eligible for program financing if the program had been available at the time of QS purchase. In the instance of refinancing only, NMFS will consider loans in amounts up to 80 percent of QS' current market value (rather than original purchase cost), provided that loans will, in no event, be for an amount greater than the amount required to fully repay the QS debt being refinanced. V. Loan Terms and Conditions (1) Down payment. Applicants financing (rather than refinancing) QS purchase cost must fund 20 percent of the purchase cost from funds other than loan proceeds. If the current market value of QS whose purchase cost is being refinanced (rather than financed) is higher than its original purchase price, applicants may need less, or no, down payment. (2) Loan amount. The amount of a loan that finances (rather than refinances) QS purchase cost may not exceed 80 percent of QS purchase cost. Loan amounts may, however, exceed 80 percent if the current market value of QS whose purchase cost is being refinanced (rather than financed) is higher than its original purchase price. (3) Interest rate. Each loan's annual interest rate will be 2 percent higher than the U.S. Treasury's cost of borrowing public funds of an equivalent maturity. For example, the annual loan interest rate would, on February 20, 1998, have been approximately 7.9 percent for a 20-year maturity. Interest is simple interest. (4) Maturity. Loan maturity may not exceed 25 years, but may be shorter depending on credit and other considerations. (5) Repayment. Repayment will generally be by equal quarterly installments of principal and interest. (6) Security. The loan QS will, in every case, secure the loan. NMFS will require all parties with significant ownership interests in corporate or partnership applicants to personally guarantee loan repayment. Some credit risks may require additional security. VI. Application (1) Open Season. NMFS will accept for processing only those applications submitted during the open season. NMFS will not accept applications submitted before or after the open season. (2) Method of submission. NMFS will accept only those applications submitted by first-class U.S. mail. NMFS will not accept applications submitted by any other method (including, but not limited to: any form of U.S. mail other than first class mail, any other delivery service, personal delivery, delivery by facsimile, etc.). (3) Submission address. NMFS will accept only those applications addressed directly to NWFSB at the mailing address listed both under the ADDRESSES heading of this document and in this document's definition of the term ``NWFSB''. (4) Date of submission. The date of each application's submission will be the date on which the U.S. Postal Service postmarks the envelope containing the application. The sole exception will be applications that NWFSB first receives later than five business days after the last day of the open season (even though applicants might have submitted such applications before the end of the open season). Applications subject to this exception will have the same submission date as the last day of the open season. (5) Processing Priority. All applications submitted on each day of the open season will have a processing priority higher than all applications submitted on every later day in the open season. Relative processing priority among applications submitted on the same date will be decided by random selection from among all applications submitted on that date. The sole exception will be applications that NWFSB first receives later than five business days after the last day of the open season (even though applicants might have submitted such applications before the end of the open season). Applications subject to this exception will have the lowest priority of all applications received on the last day of the open season, and the date and time at which NWFSB actually first receives them will determine their relative priority. Processing priority does not mean that applications will be approved. It merely means that NWFSB will process applications in the order of their assigned processing priority. (6) Application form. All applicants must use the application form. NMFS will not accept any other form of application. Open-season applicants need complete only Section A of the application form. After the open season, NWFSB will contact each applicant whose processing priority makes the applicant's application eligible for processing as a FY 1998 loan and begin a standard due-diligence credit investigation. The application form is available from NWFSB. NWFSB will send only Section A of the application form to parties requesting the application form for the purpose of submitting an open-season application. NWFSB can, upon request, do this by facsimile. On the notice date, NWFSB will immediately do so for all parties who have previously expressed an interest in applying for a loan. (7) Notification of processing priority. NWFSB will, within 7 working days after the last day of the open season, enumerate the processing priority of all open-season applications that NWFSB received. NWFSB will immediately thereafter notify each open-season applicant of its processing priority and the relative likelihood of its application being processed as a FY 1998 loan. NWFSB will then accomplish a due-diligence credit investigation for each application whose processing priority (and other factors) makes it eligible for processing as a FY 1998 loan. (8) Application fee. The application fee is 0.5 percent of the loan amount for which a successful open-season applicant applies. Application fees will be due only for those open-season applications that NWFSB actually accepts for processing as FY 1998 loans. No application fee is due for any open-season application that NWFSB does not accept for processing as a FY 1998 loan. Although the application fee is due at the time of application, it is not payable until NMFS requests its payment. NMFS will not request application fee payment until after it has accepted an application for processing as a FY 1998 loan and an application review and/or interview with the applicant and other necessary [[Page 28989]] parties prospectively indicates the applicant's compliance with basic loan eligibility and credit criteria. Half the application fee is fully earned at the time NMFS requests its payment. NMFS will not return this half regardless of subsequent application disposition. The other half is fully earned only when NMFS issues an approval in principal letter approving an application. Once it has issued an approval in principle letter, NMFS will not return the second half of the application fee. (9) Transfer eligibility certificate. Transfer eligibility certificates certify that parties are eligible to receive (hold) QS. The RAM Program issues these certificates to prospective QS purchasers. If, at the time of application, an applicant does not already have a transfer eligibility certificate, NWFSB will advise the applicant how to apply for one. If applicants cannot get transfer eligibility certificates for the QS they prospectively intend to purchase, pursuing the loan application process further is pointless. Applicants who do not obtain appropriate transfer eligibility certificates promptly enough may lose their processing priority to applicants who do. VII. Loan Processing NMFS will, to the maximum extent possible, process loan applications in the order of their submission during the open season. If, however, applicants cannot, in NWFSB's discretion, reasonably promptly comply with application processing requirements, they may lose their processing priority to applicants who can. NWFSB will, from time to time, specify compliance time requirements that are responsive to the administrative need to have all credit authority fully obligated before the end of FY 1998. Applicants must comply or lose their application priority to other applicants who will. NWFSB will conduct a standard due-diligence credit investigation. This should be a relatively simple and quick process. Once NMFS has made a due-diligence credit decision, loan approval requires certain internal clearances that will add some time to processing, but NMFS will try to accelerate processing as much as possible. Upon formal loan approval, NMFS will issue an approval in principle letter for the applicant's acceptance. VIII. Loan Closing NMFS will establish all loan terms and conditions, prepare all closing documents, close all loans, and record all security interests. NMFS should generally have no need for applicants to hire attorneys for any loan purpose, but applicants may do so if they wish. Generally, the only closing costs to applicants will be the cost of doing title/lien searches on, or recording security interests in, loan QS. NWFSB may need to do title/lien searches, and record security interests, in several different jurisdictions. IX. Title XI and 50 CFR Part 253 The general rules implementing Title XI are 50 CFR part 253, subpart B. Loans will be subject to so much of the other provisions of Title XI and of its implementing rules as can reasonably be applied to loans involving the purchase under this notice of QS (rather than the purchase of fishing vessels, fisheries shoreside facilities, or aquacultural facilities). X. Administrative Requirements (1) In accordance with the provisions of the Debt Collection Improvement Act of 1996, a person may not obtain any Federal financial assistance in the form of a loan (other than a disaster loan) or loan guarantee if the person has an outstanding debt (other than a debt under the Internal Revenue Code of 1986) with any Federal agency which is in a delinquent status, as determined under standards prescribed by the Secretary of the Treasury. (2) Applicants are subject to a name check review process. Name checks are intended to reveal if any key individuals associated with the applicant have been convicted of or are presently facing criminal charges such as fraud, theft, perjury, or other matters which significantly reflect on the applicant's management honesty or financial integrity. (3) A false statement on an application is grounds for denial or termination of funds and grounds for possible punishment by a fine or imprisonment as provided in 18 U.S.C. 1001. (4) Applicants must submit a completed Form CD-511, ``Certifications Regarding Debarment, Suspension and Other Responsibility Matters; Drug-Free Workplace Requirements and Lobbying,'' and the following explanations are hereby provided: i. Nonprocurement Debarment and Suspension. Prospective participants (as defined at 15 CFR Part 26, Section 105) are subject to 15 CFR Part 26, ``Nonprocurement Debarment and Suspension'' and the related section of the certification form prescribed above applies; ii. Anti-Lobbying. Persons (as defined at 15 CFR Part 28, Section 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. Classification Neither the Administrative Procedure Act nor any other law requires prior notice and opportunity for public comment about this notice (which concerns loans). Consequently, the Regulatory Flexibility Act does not require a regulatory flexibility analysis. This notice is not significant for purposes of E.O. 12866. This document contains a collection-of-information requirement subject to the Paperwork Reduction Act. OMB has, under control number 0648-0012, approved the collection of this information. Notwithstanding any other provision of 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 Paperwork Reduction Act unless that collection of information displays a currently valid OMB control number. Dated: May 20, 1998. David L. Evans, Deputy Assistant Administrator for Fisheries, National Marine Fisheries Service. [FR Doc. 98-13979 Filed 5-26-98; 8:45 am] BILLING CODE 3510-22-F