[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