[Federal Register Volume 69, Number 220 (Tuesday, November 16, 2004)]
[Proposed Rules]
[Pages 67100-67104]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-25428]


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DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

50 CFR Part 600

[Docket No. 041029298-4298-01; I.D. 052004A]
RIN 0648-AS38


Magnuson-Stevens Act Provisions; Fishing Capacity Reduction 
Program; Pacific Coast Groundfish Fishery; California, Washington, and 
Oregon Fisheries for Coastal Dungeness Crab and Pink Shrimp; Industry 
Fee System for Fishing Capacity Reduction Loan

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

ACTION: Proposed rule.

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SUMMARY: NMFS proposes regulations to implement an industry fee system 
for repaying a $35,662,471 Federal loan partially financing a fishing 
capacity reduction program in the Pacific Coast groundfish fishery. The 
fee system involves future landings in the trawl portion (excluding 
whiting catcher - processors) of the Pacific Coast groundfish fishery 
as well as the California, Washington, and Oregon fisheries for coastal 
Dungeness crab and pink shrimp. This action's intent is to implement 
the fee system.

DATES: Comments on this proposed rule must be received by December 16, 
2004.

ADDRESSES: You may submit comments by any of the following methods:
     E-mail: [email protected]. Include in the subject line 
the following identifier: Pacific Coast Groundfish Buyback RIN 0648-
AS38. E-mail comments, with or without attachments, are limited to 5 
megabytes.
     Federal e-Rulemaking Portal: http:www.regulations.gov.
     Mail: Michael L. Grable, Chief, Financial Services 
Division, National Marine Fisheries Service, 1315 East-West Highway, 
Silver Spring, MD 20910-3282.
     Fax: (301) 713-1306.
    Comments involving the burden-hour estimates or other aspects of 
the collection-of-information requirements contained in this proposed 
rule should be submitted in writing to Michael L. Grable, at the above 
address, and to David Rostker, Office of Management and Budget (OMB), 
by e-mail at [email protected] or by fax to 202-395-7285.
    Copies of the Environmental Assessment, Regulatory Impact Review

[[Page 67101]]

(EA/RIR) and Initial Regulatory Flexibility Analysis (IRFA) for the 
program may be obtained from Michael L. Grable, at the above address.

FOR FURTHER INFORMATION CONTACT: Michael L. Grable, (301) 713-2390.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 312(b)-(e) of the Magnuson-Stevens Fishery Conservation and 
Management Act (16 U.S.C. 1861a(b) through (e)) (the Act) generally 
authorized fishing capacity reduction programs (programs). In 
particular, section 312(d) of the Act (section 312(d)) authorized 
industry fee systems (fee systems) for repaying fishing capacity 
reduction loans (reduction loans) which finance program costs.
    Subpart L of 50 CFR part 600 contains the framework regulations 
(framework regulations) generally implementing section 312(b)-(e) of 
the Act.
    Sections 1111 and 1112 of the Merchant Marine Act, 1936 (46 App. 
U.S.C. 1279f and 1279g) generally authorized reduction loans.
    Section 212 of Division B, Title II, of Public Law 108-7 (section 
212) specifically authorized a $46 million program (groundfish program) 
for that portion of the limited entry trawl fishery under the Pacific 
Coast Groundfish Fishery Management Plan whose permits, excluding those 
registered to whiting catcher-processors, were endorsed for trawl gear 
operation (reduction fishery). Section 212 also authorized a fee system 
for repaying the reduction loan partially financing the groundfish 
program's cost. The fee system includes both the reduction fishery and 
the fisheries for California, Washington, and Oregon coastal Dungeness 
crab and pink shrimp (fee share fisheries).
    Section 501(c) of Division N, Title V, of Public Law 108-7 (section 
501(c)) appropriated $10 million to partially fund the groundfish 
program's cost.
    Public Law 107-206 authorized a $36 million reduction loan 
financing up to $36 million of the groundfish program's cost.
    Section 212 required NMFS to implement the groundfish program by a 
public notice in the Federal Register. NMFS published the groundfish 
program's initial public notice on May 28, 2003 (68 FR 31653) and final 
notice on July 18, 2003 (68 FR 42613). Anyone interested in the 
groundfish program's full implementation details should refer to these 
two notifications.
    The groundfish program's maximum cost was $46 million, consisting 
of a $10 million appropriation and a $36 million reduction loan. 
Voluntary participants in the groundfish program relinquished, among 
other things, their fishing permits and licenses in the reduction 
fishery and the fee share fisheries, their fish catch histories in 
these fisheries, and their vessels' worldwide fishing privileges in 
return for a reduction payment whose amount the participant's bid 
determined.
    On July 18, 2003, NMFS invited groundfish program bids from the 
reduction fishery's permit holders. The bidding period opened on August 
4, 2003, and closed on August 29, 2003. NMFS scored each bid's amount 
against the bidder's past ex-vessel revenues and, in a reverse auction, 
accepted the bids whose amounts were the lowest percentages of the 
revenues. This created reduction contracts whose performance was 
subject only to a successful referendum about the fee system required 
to repay the reduction loan.
    Bid offers totaled $59,786,471. NMFS accepted bids totaling 
$45,662,471. The next lowest scoring bid would have exceeded the 
groundfish program's maximum cost. The accepted bids involved 91 
fishing vessels as well as 239 fishing permits (91 in the reduction 
fishery, 121 in the fee-share fisheries, and 27 other Federal permits).
    In accordance with the section 212 formula, NMFS allocated portions 
of the prospective $35,662,471 reduction loan to the reduction fishery 
and each of the six fee share fisheries, as follows:
    (1) Reduction fishery, $28,428,719; and
    (2) Fee share fisheries:
    (a) California Dungeness crab, $2,334,334,
    (b) California pink shrimp, $674,202,
    (c) Oregon Dungeness crab, $1,367,545,
    (d) Oregon pink shrimp, $2,228,845,
    (e) Washington Dungeness crab, $369,426, and
    (f) Washington pink shrimp, $259,400.
    NMFS next held a referendum about the fee system. The reduction 
contracts would have become void unless the majority of votes cast in 
the referendum approved the fee system. On September 30, 2003, NMFS 
mailed ballots to referendum voters in the reduction fishery and the 
six fee share fisheries. The voting period opened on October 15, 2003, 
and closed on October 29, 2003. NMFS received 1,105 responsive votes. 
In accordance with the section 212 formula, NMFS weighted the votes 
from each of the seven fisheries. Over 85% of the weighted votes 
approved the fee system. This successful referendum result removed the 
only condition precedent to reduction contract performance.
    On November 4, 2003, NMFS published another Federal Register 
document (68 FR 62435) advising the public that NMFS would, beginning 
on December 4, 2003, tender the groundfish program's reduction payments 
to the 91 accepted bidders. On December 4, 2003, NMFS required all 
accepted bidders to permanently stop all further fishing with the 
reduction vessels and permits. Subsequently, NMFS:
    (1) Disbursed $45,662,471 in reduction payments to 91 accepted 
bidders;
    (2) Revoked the relinquished Federal permits;
    (3) Advised California, Oregon, and Washington about the 
relinquished state permits;
    (4) Arranged with the National Vessel Documentation Center for 
revocation of the reduction vessels' fishery trade endorsements; and
    (5) Notified the U.S. Maritime Administration to restrict placement 
of the reduction vessels under foreign registry or their operation 
under the authority of foreign countries.
    Section 501(c) also requires the groundfish program, among other 
things, to ensure ``that the owners of * * * [groundfish program 
reduction vessels] will operate only under the United States flag or be 
scrapped as a reduction vessel pursuant to section 600.1011(c) of title 
50, Code of Federal Regulations.''

II. Present Status

    NMFS has completed the groundfish program except for implementing 
the fee system and providing for certain aspects of the reduction 
vessels' post-reduction operation. This action proposes to implement 
the groundfish program's fee system. A later action will separately 
propose regulations providing for certain aspects of the reduction 
vessel's post-reduction operation and such other groundfish program 
matters as may require regulation.
    Sections 600.1013 of the framework regulations govern the payment 
and collection of fees under a fee system.
    Basically, the first ex-vessel buyers (fish buyers) of post-
reduction fish subject to a fee system (fee fish) must withhold the fee 
from the trip proceeds which the fish buyers would otherwise have paid 
to the parties who harvested and first sold (fish sellers) the fee fish 
to the fish buyers. Fish buyers calculate the fee to be collected by 
multiplying the applicable fee rate times the fee fish's full delivery 
value. Delivery value is the fee fish's full fair market value,

[[Page 67102]]

including all in-kind compensation or other goods or services exchanged 
in lieu of cash.
    Fish buyers collect the fee when they withhold it from trip 
proceeds, and fish sellers pay the fee when the fish buyers withhold 
it. Fee payment and fee collection is mandatory, and there are 
substantial penalties for failing to pay and collect fees in accordance 
with the applicable regulations.
    Section 600.1014 governs fish buyers' depositing and disbursing 
collected fees as well as their keeping records of, and reporting 
about, collected fees.
    Basically, fish buyers must, no less frequently than at the end of 
each business week, deposit collected fees in segregated and Federally 
insured accounts until, no less frequently than on the last business 
day of each month, they disburse all collected fees in the accounts to 
a lockbox which NMFS specifies for this purpose. Settlement sheets must 
accompany these disbursements. Fish buyers must maintain specified fee 
collection records for at least three years and submit to NMFS annual 
reports of fee collection and disbursement activities.
    All parties interested in this proposed action should carefully 
read the following sections of the framework regulations, whose 
detailed provisions this action proposes to apply to the groundfish 
program's reduction loan and the fee system for repaying the reduction 
loan:
    (1) Section 600.1012;
    (2) Section 600.1013;
    (3) Section 600.1014;
    (4) Section 600.1015;
    (3) Section 600.1016; and
    (4) Applicable portions of Section 600.1017.
    Section 212 provided an option for NMFS to enter into agreements 
with California, Washington, and Oregon regarding groundfish program 
fees in the fee share fisheries. While this would not have involved 
actual fee collection (because both section 312(d) and the framework 
regulations require fish buyers to collect the fee), it would have 
allowed fish buyers to use existing state systems for post-collection 
fee administration.
    After all three states enacted legislation which would allow them 
to function in this capacity, NMFS evaluated the feasibility of 
exercising the section 212 option. NMFS concluded, however, that the 
option was not feasible because, among other reasons:
    (1) The state systems sometimes:
    (a) Assess and collect fees based on pounds rather than on dollars,
    (b) Neither assess nor collect fees at the point of fish sale, and/
or
    (c) Involve quarterly fee disbursements;
    (2) One state's legislation regarding this option authorizes 
participation of a state agency different from the one administering 
the existing state system (and might require amendment);
    (3) One state's legislation regarding the section 212 option 
expires in less than two years;
    (4) All states indicated that funding and staffing, under the 
section 212 option, for the reduction loan's 30-year term would be 
problematic; and
    (5) The states' collection systems are dissimilar and, without 
significant modification, might not promote efficient and uniform 
groundfish program fee collection.
    Accordingly, NMFS decided that the section 212 option was not 
feasible at this time.
    NMFS intends to enter into landing and permit data sharing 
agreements with the states in order for NMFS to receive landing and 
permit information that will allow it to ensure full groundfish program 
fee payment, collection, and disbursement under the framework rule 
provisions.
    NMFS proposes, in accordance with section 600.1013(d) of the 
framework regulations, to establish the initial fee applicable to the 
reduction fishery and to each fee share fishery by Federal Register 
notification and by separate mailed notification to each fish seller 
and fish buyer affected of whom NMFS then has notice. This notification 
will not occur until after NMFS has adopted a final rule following its 
review of public comment about this proposed rule. Until such 
notification actually occurs, fish sellers and fish buyers should 
neither pay nor collect the groundfish program fee. Prospectively, 
however, the initial fee rates would be:
    (1) Reduction fishery, 5%; and
    (2) Fee share fisheries:
    (a) California Dungeness crab, 1.24%,
    (b) California pink shrimp, 4.24%,
    (c) Oregon Dungeness crab, 0.55%,
    (d) Oregon pink shrimp, 2.33%,
    (e) Washington Dungeness crab, 0.16%, and
    (f) Washington pink shrimp, 1.50%.
    The $35,662,471 principal amount of the reduction loan began 
accruing interest on March 1, 2004 at a fixed interest rate of 6.97%.

Classification

    The Assistant Administrator for Fisheries, NMFS, determined that 
this proposed rule is consistent with the Magnuson-Stevens Fishery 
Conservation and Management Act and other applicable laws.
    In compliance with the National Environmental Policy Act, NMFS 
prepared an EA for the final notice implementing the groundfish 
program. The EA discusses the impact of the groundfish program on the 
natural and human environment and resulted in a finding of no 
significant impact. The EA considered the implementation of this fee 
collection system, among other alternatives. Therefore this proposed 
action has earned a categorical exclusion from additional analysis. 
NMFS will send the EA to anyone who requests it (see ADDRESSES).
    This proposed rule has been determined to be not significant for 
purposes of Executive Order 12866. NMFS prepared an RIR for the final 
notice implementing the groundfish program. NMFS will send the RIR to 
anyone who requests it (see ADDRESSES).
    NMFS prepared an IRFA as required by Section 603 of the Regulatory 
Flexibility Act. The IRFA, describes the impact this proposed rule, if 
adopted, would have on small entities. A summary of the IRFA follows. 
NMFS will send a complete copy to anyone who requests it (see 
ADDRESSES).
    Description of Reasons for Action and Statement of Objective and 
Legal Basis: Section 212 of division B, Title II, of Public Law 108-7 
(section 212) specifically authorized a $46 million fishing capacity 
reduction program for that portion of the limited entry trawl fishery 
under the Pacific coast Groundfish Fishery Management Plan whose 
permits, excluding those registered to whiting catcher-processors, were 
endorsed for trawl gear operation (reduction fishery). Section 212 also 
authorized a fee system for repaying the reduction loan partially 
financing the groundfish program's cost. The fee system includes both 
the reduction fishery and the fisheries for California, Washington, and 
Oregon coastal Dungeness crab and pink shrimp (fee share fisheries).
    Section 501(b) of Division N, Title V, of Public Law 108-7 (section 
501(b)) appropriated $10 million to partially fund the groundfish 
program's cost. Public Law 107-206 authorized a $36 million reduction 
loan financing up to $36 million of the groundfish program's cost. 
Pursuant to section 212, NMFS implemented the groundfish program by 
initial public notice on May 28, 2003 (68 FR 31653) and final notice on 
July 18, 2003 (68 FR 42613).
    NMFS has completed the groundfish program except for implementing 
the fee system and providing for certain aspects of the reduction 
vessels' post-reduction operation. This action

[[Page 67103]]

proposes to implement the groundfish program's fee system.
    Description of Small Entities to Which the Rule Applies: The Small 
Business Administration (SBA) has defined all fish harvesting 
businesses that are independently owned and operated, not dominant in 
its field of operation, and with annual receipts of $3.5 million or 
less as small entities. In addition, processors with 500 or fewer 
employees, involved in related industries such as canned and cured fish 
and seafood, or preparing fresh fish and seafood, are also considered 
small entities. According to the SBA's definition of a small entity, 
virtually all of the approximate 1,800 catcher vessels are considered 
small entities. This includes the remaining 172 groundfish trawl 
permits and over 1,600 fee share permits.
    Description of Recordkeeping and Compliance Costs: Please see 
collection-of-information requirements listed below.
    Duplication or Conflict with Other Federal Rules: This rule does 
not duplicate or conflict with any Federal rules.
    Description of Significant Alternatives Considered: Three 
alternatives have been considered: (1) Status Quo (no fee system); (2) 
Statutorily Mandated Reduction Program with Fee Collection; and (3) 
Statutorily Mandated Reduction Program with Fee Collection Cooperation 
by States.
    Status Quo (Alternative 1): Under the status quo, vessel 
profitability would not be affected. The status quo represents a 
significant alternative compared to the proposed action because it 
minimizes impacts on post reduction fishermen because they do not pay 
fees on landings, however, this alternative was not chosen because it 
is contrary to Pub. Law 107-206.
    Statutorily Mandated Reduction Program with Fee Collection 
(Alternative 2): Under Alternative 2, the preferred alternative, the 
first ex-vessel buyers (fish buyers) of post-reduction fish subject to 
a fee system (fee fish) would withhold the fee from the trip proceeds 
which the fish buyers would otherwise have paid to the parties who 
harvested and first sold (fish sellers) the fee fish to the fish 
buyers. Fish buyers calculate the fee to be collected by multiplying 
the applicable fee rate times the fee fish's full delivery value. 
Delivery value is the fee fish's full fair market value, including all 
in-kind compensation or other goods or services exchanged in lieu of 
cash. This is the preferred alternative because it is mandated by Pub. 
Law 107-206.
    Statutorily Mandated Reduction Program with Fee Collection 
Cooperation by States (Alternative 3): Like Alternative 2, Alternative 
3 would have an adverse effect on vessel profitability; though the 
extent of that adverse effect it is not yet clear. Alternative 3 would 
leave the design of the fee collection system to the individual states. 
This alternative was not chosen because such state systems would:
    (a) Assess and collect fees based on pounds rather than on dollars,
    (b) Neither assess nor collect fees at the point of fish sale, and
    (c) Involve quarterly fee disbursements.
    In addition, one state's legislation regarding fee collection 
authorizes participation of a state agency different from the one 
administering the existing state system. Another state's fee collection 
legislation expires in less than two years. Furthermore, all states 
indicated that funding and staffing for the reduction loan's 30-year 
term would be problematic. Finally, the states' collection systems are 
dissimilar and, without significant modification, might not promote 
efficient and uniform groundfish program fee collection.
    Steps the Agency Has Taken to Mitigate Negative Effects of the 
Action: With the lack of available cost data, increases in revenues may 
serve as a proxy for increased profitability. Further, in light of 
available revenue data, and assuming that each individual vessel shares 
in the increased revenues resulting from the groundfish program, the 
comparison of the relative effects of the program versus the effects of 
the fees show that overall economic benefits of the program would still 
be greater than the relative fees charged under this rule. NMFS is not 
aware of any other measures that could reduce the impact on small 
entities and still meet statutory requirements. However, NMFS welcomes 
comments that relay such ideas.
    This proposed rule contains collection-of-information requirements 
subject to the Paperwork Reduction Act (PRA). OMB has approved these 
information collections under OMB control number 0648-0376. NMFS 
estimates that the public reporting burden for these requirements will 
average:
    (1) 2 hours for submitting a monthly fish buyer settlement sheet;
    (2) 4 hours for submitting an annual fish buyer report; and
    (3) 2 hours for making a fish buyer/fish seller report when one 
party fails to either pay or collect the fee.
    These response estimates include the time for reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
information collection. Send comments regarding this burden estimate, 
or any other aspect of this data collection, including suggestions for 
reducing the burden, to both NMFS and OMB (see ADDRESSES).
    Notwithstanding any other provision of law, no person is required 
to respond to, and no person is subject to a penalty for failure to 
comply with, an information collection subject to the requirements of 
the PRA unless that information collection displays a currently valid 
OMB control number.
    NMFS has determined that this proposed rule will not significantly 
affect the coastal zone of any state with an approved coastal zone 
management program. This determination has been submitted for review by 
the States of Washington, Oregon, and California.

List of Subjects in 50 CFR Part 600

    Fisheries, Fishing capacity reduction, Fishing permits, Fishing 
vessels, Intergovernmental relations, Loan programs business, Reporting 
and recordkeeping requirements.

    Dated: November 9, 2004.
John Oliver,
Deputy Assistant Administrator for Operations, National Marine 
Fisheries Service.
    For the reasons in the preamble, the National Marine Fisheries 
Service proposes to amend 50 CFR part 600 as follows:

PART 600--MAGNUSON-STEVENS ACT PROVISIONS

    1. The authority citation for part 600 is revised to read as 
follows:

    Authority: 5 U.S.C. 561, 16 U.S.C. 1801 et seq., 16 U.S.C. 
1861a(b) through (e), 46 App. U.S.C. 1279f and 1279g, section 144(d) 
of Division B of Pub. L. 106-554, section 2201 of Pub. L. 107-20, 
section 205 of Pub. L. 107-117, Pub. L. 107-206, and Pub. L. 108-7.
    2. Section 600.1102 is added to subpart M to read as follows:


Sec.  600.1102  Pacific groundfish fishing capacity reduction fee 
collection system.

    (a) Purpose. This section's purpose is to implement an industry fee 
system to repay the reduction loan partially financing the Pacific 
Coast groundfish fishery fishing capacity reduction program authorized 
by section 212 of Division B, Title II, of Pub. L. 108-7 and 
implemented by a final notification on July 18, 2003, in the Federal 
Register (68 FR 42613).

[[Page 67104]]

    (b) Definitions. Unless otherwise defined in this section, the 
terms defined in Sec.  600.1000 of Subpart L of this Part expressly 
apply to this section. The following terms have the following meanings 
for the purpose of this section:
    Borrower means, individually and collectively, each post-reduction 
fishing permit holder and/or fishing vessel owner fishing in the 
reduction fishery, in any or all of the fee share fisheries, or in both 
the reduction fishery and any or all of the fee share fisheries.
    Fee fish means all fish harvested from the reduction fishery during 
the period in which any portion of the reduction fishery's subamount is 
outstanding and all fish harvested from each of the fee share fisheries 
during the period in which any portion of each fee share fishery's 
subamount is outstanding.
    Fee share fisheries means the California, Washington, and Oregon 
fisheries for coastal Dungeness crab and pink shrimp.
    Reduction fishery means all species in, and that portion of, the 
limited entry trawl fishery under the Federal Pacific Coast Groundfish 
Fishery Management Plan that is conducted under permits, excluding 
those registered to whiting catcher-processors, which are endorsed for 
trawl gear operation.
    Subamount means each portion of the reduction loan's original 
principal amount which is allocated to the reduction fishery and to 
each of the fee share fisheries.
    (c) Reduction loan amount. The reduction loan's original principal 
amount is $35,662,471.
    (d) Subamounts. The subamounts are:
    (1) Reduction fishery, $28,428,719; and
    (2) Fee share fisheries:
    (i) California Dungeness crab, $2,334,334,
    (ii) California pink shrimp, $674,202,
    (iii) Oregon Dungeness crab, $1,367,545,
    (iv) Oregon pink shrimp, $2,228,845,
    (v) Washington Dungeness crab, $369,426, and
    (vi) Washington pink shrimp, $259,400.
    (e) Interest accrual inception. Reduction loan interest began 
accruing on March 1, 2004.
    (f) Interest rate. The reduction loan's interest rate shall be 
6.97%.
    (g) Repayment term. For the purpose of determining fee rates, the 
reduction loan's repayment term shall be 30 years from March 1, 2004, 
but each fee shall continue for as long as necessary to fully repay 
each subamount.
    (h) Reduction loan repayment.
    (1) The borrower shall repay the reduction loan in accordance with 
Sec.  600.1012 of Subpart L of this Part;
    (2) Fish sellers in the reduction fishery and in each of the fee 
share fisheries shall pay the fee applicable to each such fishery's 
subamount in accordance with Sec.  600.1013 of Subpart L of this Part;
    (3) Fish buyers in the reduction fishery and in each of the fee 
share fisheries shall collect the fee applicable to each such fishery 
in accordance with Sec.  600.1013 of Subpart L of this Part;
    (4) Fish buyers in the reduction fishery and in each of the fee 
share fisheries shall deposit and disburse, as well as keep records for 
and submit reports about, the fees applicable to each such fishery in 
accordance with Sec.  600.1004 of Subpart L of this Part; and
    (5) The reduction loan is, in all other respects, subject to the 
provisions of Sec.  600.1012 through Sec.  600.1017 of subpart L of 
this part.
[FR Doc. 04-25428 Filed 11-15-04; 8:45 am]
BILLING CODE 3510-22-S