[Federal Register Volume 63, Number 241 (Wednesday, December 16, 1998)]
[Proposed Rules]
[Pages 69256-69259]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-33319]


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DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

50 CFR Part 679

[Docket No. 980923246-8246-01; I.D. 071598A]
RIN 0648-AK20


Fisheries in the Exclusive Economic Zone Off Alaska; Modified 
Hired Skipper Requirements for the Individual Fishing Quota Program

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 proposes a regulatory amendment to the Individual Fishing 
Quota (IFQ) Program for fixed gear Pacific halibut and sablefish 
fisheries in and off of Alaska. This action would require an initial 
recipient of certain categories of quota share (QS) who wishes to hire 
a skipper to fish the IFQ derived from that QS to own a minimum of 20-
percent interest in the harvesting vessel. This 20-percent minimum 
ownership requirement

[[Page 69257]]

would not apply to a QS holder who hired a skipper prior to April 17, 
1997, continues to own that vessel at no less percentage of ownership 
interest than was held on April 17, 1997, and has not acquired 
additional QS through transfer after September 23, 1997. This action is 
necessary to promote the Council's intent to provide for an owner-
operator catcher vessel fleet in the halibut and sablefish fixed gear 
fisheries off Alaska and is intended to further the objectives of the 
IFQ Program.

DATES: Comments on the proposed rule and supporting documents must be 
received by January 15, 1999.

ADDRESSES: Comments must be sent to Sue Salveson, Assistant Regional 
Administrator for Sustainable Fisheries, Alaska Region, NMFS, Room 453, 
709 West 9th Street, Juneau, AK 99801, or P.O. Box 21668, Juneau, AK 
99802, Attention: Lori J. Gravel. Copies of the Regulatory Impact 
Review/Initial Regulatory Flexibility Analysis (RIR/IRFA) prepared for 
this proposed action also may be obtained from the same address.

FOR FURTHER INFORMATION CONTACT: James Hale, 907-586-7228.

SUPPLEMENTARY INFORMATION:

Background

    The IFQ Program is a limited access system for managing the fixed 
gear Pacific halibut (Hippoglossus stenolepis) and sablefish 
(Anoplopoma fimbria) fisheries in waters of the Exclusive Economic Zone 
off of Alaska. The North Pacific Fishery Management Council (Council), 
under authority of the Magnuson-Stevens Fishery Conservation and 
Management Act and the Northern Pacific Halibut Act of 1982, 
recommended the IFQ Program, which NMFS implemented in 1995. The IFQ 
Program is designed to reduce excessive fishing capacity, while 
maintaining the social and economic character of the fixed gear fishery 
and the coastal communities where many of these fishermen are based. To 
this end, various program constraints limit consolidation of QS and 
ensure that those who actually harvest the resource retain harvesting 
privileges. The Fishery Management Plan for Groundfish of the Gulf of 
Alaska and the Fishery Management Plan for the Groundfish Fishery of 
the Bering Sea and Aleutian Islands Area (FMPs) and IFQ implementing 
regulations prohibit all leasing of IFQ derived from QS in categories 
B, C, and D (QS that authorizes the harvest but not the processing of 
IFQ species on board the vessel). Further, they require that holders of 
such QS be aboard the vessel harvesting IFQ species during all fishing 
operations.
    An exception to this owner-aboard provision allows initial 
recipients of B, C, or D category QS to employ a hired skipper to fish 
his or her IFQ provided that the QS holder owns the vessel on which the 
IFQ is being fished. This exception was created to allow fishermen who 
had operated their fishing businesses in this manner before the IFQ 
Program was implemented to have some flexibility to continue operating 
this way under the IFQ Program. While the IFQ Program promotes an 
owner-operator fixed gear fishery for sablefish and halibut, this 
exception allows initial recipients of QS to remain ashore while a 
hired skipper harvests their IFQ. By limiting this exception to initial 
recipients, the Council designed the hired skipper provision to expire 
with the eventual transfer of all QS out of the possession of initial 
recipients.
    The current regulations do not specify any minimum ownership 
interest that must be acquired before the QS holder may hire a skipper 
to harvest the IFQ. An initial recipient of B, C, or D category QS who 
acquires even a nominal ownership of a vessel may hire a skipper to 
fish his or her IFQ on that vessel. In the first 2 years of the IFQ 
Program, the hired skipper provision occasionally has been used by 
initial allocation QS holders who may not have employed hired skippers 
prior to the IFQ Program but who acquire as little as 0.1 percent 
ownership interest in a vessel expressly for the purpose of hiring a 
skipper. This practice, if unchecked, would compromise the Council's 
intent to have an owner-operator fishery in which the QS holders 
actively participate in harvesting operations.
    In November 1995, the IFQ Industry Implementation Team recommended 
that the current regulations be revised to require initial recipients 
of QS to hold a minimum of 51 percent or a controlling interest in a 
vessel in order to take advantage of the hired skipper provisions. In 
April 1997, and again in June 1997, the Council reviewed analyses of 
various options and alternatives including requiring minimum vessel 
interest of 5, 20, 49, or 51 percent. At its meeting in September 1997, 
the Council took final action to recommend this proposed action.
    If NMFS approves this proposed action, initial recipients of B, C, 
or D category QS who wish to hire skippers to fish the IFQ derived from 
their QS would be required to own a minimum of 20 percent interest in 
the vessel on which the IFQ species are being harvested. This minimum 
vessel ownership interest would not be required of QS holders who have 
hired skippers prior to April 17, 1997, the date of the Council's first 
review of the analysis of this issue, provided that the QS holder's 
percentage of vessel ownership does not fall below the percentage held 
April 17, 1997, and the QS holder has not acquired additional QS 
through transfer after September 23, 1997, the date of the Council's 
final action to recommend this regulatory change.
    The rationale for setting the minimum percentage of vessel 
ownership at 20 percent is to allow for most equal-interest 
partnerships, such as those between spouses. Joint ownership by several 
parties each holding a substantial equal interest in the vessel would 
put each owner below the 51 percent controlling interest originally 
proposed by the IFQ Industry Implementation Team. However, the analysis 
for this issue suggests that some instances of vessel ownership below 
20 percent may also represent business arrangements in which the QS 
holder has acquired a substantial ownership interest in the vessel on 
which the IFQ is to be harvested. Therefore, the Council includes the 
grandfather provision in this proposed action that would allow 
percentages of vessel ownership existing prior to April 17, 1997, to 
continue with regard to the hired skipper provisions.
    The grandfather provision itself would carry restrictions. By 
requiring QS holders who held lower percentages of vessel interest 
prior to April 17, 1997, to continue to hold at least the percentage 
held prior to that date, the Council intends to prevent those 
grandfathered under this proposed action from divesting themselves of 
all but nominal interest in a vessel. Moreover, because an initial 
recipient of QS may hire a skipper to fish not only the QS acquired as 
an initial allocation but also any QS acquired through transfer, the 
proposed action would limit the maximum amount of QS that could be used 
under the grandfather provision to levels held prior to September 23, 
1997-the date of the Council's final action on this proposal. This 
restriction would assure that exemption from the 20 percent requirement 
would be granted only to pre-existing arrangements regarding levels of 
both vessel ownership and QS holdings.

Examples

    (1) If an initial allocation QS holder owns 15 percent interest in 
a vessel and hired a skipper to fish his IFQ on that

[[Page 69258]]

vessel prior to April 17, 1997, then the QS holder may continue to hire 
a skipper to fish his IFQ on that vessel provided that the QS holder's 
percentage of ownership in that particular vessel does not fall below 
15 percent. If the QS holder's percentage of ownership in that vessel 
falls, for example, to 14 percent, the QS holder would no longer be 
allowed to hire a skipper to fish his IFQ on that vessel. The QS holder 
would be required either to be on board the vessel harvesting his IFQ 
during all fishing operations or to acquire additional ownership 
interest amounting to a total minimum of 20 percent interest in the 
vessel. By allowing his ownership interest in the vessel to fall below 
the percentage held prior to April 17, 1997, the QS holder would 
relinquish his grandfathered status under this provision.
    (2) If the same QS holder in example (1) acquires an ownership 
interest in an additional vessel after April 17, 1997, then the QS 
holder must own a minimum of 20 percent interest in that particular 
vessel in order to hire a skipper to fish the IFQ on that vessel. The 
QS holder may continue to hire a skipper to fish for IFQ on the vessel 
in example (1) provided the QS holder continues to hold no less 
percentage of ownership in that vessel than he or she held on April 17, 
1997. The grandfathered status is specific both to the vessel and to 
percentage of ownership owned on April 17, 1997.
    (3) If an initial allocation QS holder owned a 15 percent interest 
in a vessel and hired a skipper to fish his IFQ on that vessel prior to 
April 17, 1997, but relinquishes ownership in that particular vessel 
and acquires ownership interest in another vessel after April 17, 1997, 
then the QS holder must own a minimum of 20 percent interest in the 
newly acquired vessel to hire a skipper to fish the IFQ on that vessel.
    (4) If an initial allocation QS holder owned 15 percent interest in 
a vessel and hired a skipper to fish his IFQ on that vessel prior to 
April 17, 1997, but acquired additional QS through transfer after 
September 23, 1997, then that QS holder must acquire an additional 
ownership interest in that same vessel of at least 5 percent, for a 
total ownership interest of at least 20 percent, to hire a skipper to 
fish his IFQ on that vessel.
    A corporation or partnership that received an initial allocation of 
QS assigned to categories B, C, or D may fish the IFQ resulting from 
that QS and any additional QS acquired within the limitations of 
Sec. 679.42 provided the corporation or partnership owns a minimum of 
20 percent interest in the vessel on which its IFQ is being fished, and 
it is represented on the vessel by a master employed by the corporation 
or partnership that received the initial allocation of QS. This 
authorization to fish IFQ is not transferrable. It is noted that the QS 
assigned to categories B, C, and D for halibut in IFQ regulatory area 
2C or for sablefish in the IFQ regulatory area east of 140 deg. W. 
long. must be to an individual pursuant to Sec. 679.41 (c) of this part 
and be used pursuant to Sec. 679.41 (c) and (i).
    The additional restrictions that this proposed action would impose 
on those wishing to hire skippers to fish IFQ do not deny or prevent 
initial recipients of category B, C, or D QS from enjoying the benefits 
of the IFQ derived from their QS. A QS holder who does not want to 
comply with the minimum ownership requirements can simply be on board 
the vessel himself for the harvesting of his IFQ, in which case the QS 
holder would not have to possess any ownership interest in a vessel. An 
``owner-on-board'' IFQ fishery remains the basic intent of the Council 
for category B, C, and D QS.

Classification

    This proposed rule has been determined to be not significant for 
purposes of E.O. 12866.
    NMFS prepared an IRFA that describes the impact this proposed rule, 
if adopted, would have on small entities. The IRFA identifies the small 
entities affected by this action and analyzes the economic impact on 
these small entities.
    This proposed action would potentially affect approximately 5,000 
persons who continue to hold initial allocations of category B, C, or D 
QS, all of which are classified as small entities as well as skippers 
who hire themselves out to operate fishing vessels. For purposes of the 
Regulatory Flexibility Act, NMFS generally considers a ``substantial 
number'' to mean 20 percent of the affected small entities; in this 
instance, initial allocation QS holders and hired skippers. Primarily, 
this rule would affect those who hired skippers after April 17, 1997, 
and who did not possess the minimum 20 percent of ownership interest in 
their vessel. In 1997, out of a total number of 221 applications by QS 
owners claiming vessel ownership for purposes of hiring a skipper, the 
49 vessel owners claiming vessel ownership less than 20 percent 
represent the vessel owners that would be chiefly impacted by this 
action.
    The acquisition of additional QS represents a substantial financial 
investment. No data are available on how many, if any, additional 
holders of initially allocated QS might have planned to hire skippers 
in the future. Nor are data available concerning what percentages of 
vessel ownership such QS holders might have. Fishermen for whom vessel 
ownership is either financially prohibitive or would entail a 
substantial increase in capital costs may, as is intended by the 
Council, harvest their IFQ themselves, rather than hire skippers. 
However, NMFS has no information on whether it would be possible or 
practical for these QS holders to do so. If the QS holders who hired 
skippers in the past and need to acquire more vessel ownership to 
continue to hire skippers do acquire additional vessel ownership 
interest, the number of hired skippers would not change. If some QS 
holders do not acquire more ownership to continue to hire skippers, the 
services of some skippers may not be retained. NMFS has no information 
on the potential number of skippers available for hire or the potential 
number of QS holders who may acquire additional vessel interest and so 
not retain the services of hired skippers.
     For these reasons, it is possible that this action could result in 
a decrease of more than 5 percent in annual gross revenues for skippers 
whose services are not retained; it is also possible that this action 
could result in an increase of more than 5 percent in total costs of 
production or increases in compliance or capital costs for 20 percent 
or more of the affected small entities for any QS holders who decide to 
acquire ownership interest in a vessel rather than fish their IFQ 
themselves.
    The Council considered a range of alternatives for addressing the 
issue of nominal or minimal vessel ownership by QS holders who hire 
skippers. Minimum ownership percentages of 5 percent, 20 percent, 49 
percent, and 51 percent were analyzed and reviewed, before recommending 
the present proposed action. The Council decided to recommend a 20 
percent minimum because a 5 percent minimum would continue to allow 
minimal vessel ownership and not solve the problem, and options for 
requiring minimum ownership of 49 and 51 percent would have solved the 
problem but would have been more burdensome to industry, and 
disallowing the use of hired skippers by all or many QS holders who own 
vessels in equal partnerships.
    This action, if approved, could have a significant economic impact 
on a substantial number of small entities for purposes of the 
Regulatory Flexibility Act, and an Initial Regulatory Flexibility

[[Page 69259]]

Analysis has been prepared. A copy of this analysis is available from 
NMFS (see ADDRESSES).

List of Subjects in 50 CFR Part 679

    Alaska, Fisheries, Reporting and recordkeeping requirements.

    Dated: December 10, 1998.
Andrew Rosenberg,
Deputy Assistant Administrator for Fisheries, National Marine Fisheries 
Service.
    For the reasons set out in the preamble, 50 CFR part 679 is 
proposed to be amended as follows:

PART 679--FISHERIES IN THE EXCLUSIVE ECONOMIC ZONE OFF ALASKA

    1. The authority citation for part 679 continues to read as 
follows:

    Authority: 16 U.S.C. 773 et seq., 1801 et seq., and 3631 et seq.

    2. In Sec. 679.42, paragraph (i)(1) and the heading and the first 
sentence of the introductory text of paragraph (j) are revised and 
paragraph (j)(5) is added to read as follows:


Sec. 679.42  Limitations on use of QS and IFQ.

* * * * *
    (i) * * *
    (1) An individual who received an initial allocation of QS assigned 
to categories B, C, or D does not have to be on board the vessel on 
which his or her IFQ is being fished or sign IFQ landing reports if 
that individual owns at least a 20 percent interest in the vessel, and 
is represented on the vessel by a master employed by that individual. 
This minimum 20 percent ownership requirement does not apply to any 
individual who received an initial allocation of QS assigned to 
categories B, C, or D and who, prior to April 17, 1997, employed a 
master to fish any of the IFQ issued to that individual, provided the 
individual continues to own the vessel from which the IFQ is being 
fished at no lesser percentage of ownership interest than was held on 
April 17, 1997, and provided that individual has not acquired 
additional QS through transfer after September 23, 1997.
* * * * *
    (j) Use of IFQ resulting from QS assigned to vessel categories B, 
C, or D by corporations and partnerships. Except as provided in 
paragraph (j)(5) of this section, a corporation or partnership that 
received an initial allocation of QS assigned to categories B, C, or D 
may fish the IFQ resulting from that QS and any additional QS acquired 
within the limitations of this section provided the corporation or 
partnership owns at least a 20 percent interest in the vessel on which 
its IFQ is being fished, and it is represented on the vessel by a 
master employed by the corporation or partnership that received the 
initial allocation of QS. * * *
* * * * *
    (5) A corporation or partnership that received an initial 
allocation of QS assigned to categories B, C, or D and that, prior to 
April 17, 1997, employed a master to fish any of the IFQ issued to that 
corporation or partnership may continue to employ a master to fish its 
IFQ on a vessel owned by the corporation or partnership provided that 
the corporation or partnership continues to own the vessel from which 
the IFQ is being fished at no lesser percentage of ownership interest 
than was held on April 17, 1997, and provided that corporation or 
partnership did not acquire additional QS through transfer after 
September 23, 1997.
* * * * *
[FR Doc. 98-33319 Filed 12-15-98; 8:45 am]
BILLING CODE 3510-22-F