[Federal Register Volume 71, Number 135 (Friday, July 14, 2006)]
[Rules and Regulations]
[Pages 40030-40033]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-11137]


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DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

50 CFR Part 680

[Docket No. 060330091-6185-02; I.D. 032406D]
RIN 0648-AU37


Fisheries of the Exclusive Economic Zone Off Alaska; Allocating 
Bering Sea and Aleutian Islands King and Tanner Crab Fishery Resources

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

ACTION: Final rule.

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SUMMARY: NMFS issues a final rule to implement Amendment 21 to the 
Fishery Management Plan for Bering Sea/Aleutian Islands King and Tanner 
Crabs (FMP). This action makes changes to the arbitration system in the 
Bering Sea and Aleutian Islands (BSAI) Crab Rationalization Program 
(Program) by modifying the timing for harvesters and processors to 
match harvesting and processing shares and the timing for initiating 
arbitration proceedings to resolve price and other delivery disputes. 
This action is necessary to increase resource conservation and economic 
efficiency in the crab fisheries that are subject to the Program. This 
action is intended to promote the goals and objectives of the Magnuson-
Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), 
the FMP, and other applicable law.

DATES: Effective on August 14, 2006.

ADDRESSES: Copies of the environmental assessment/regulatory impact 
review/initial regulatory flexibility analysis (EA/RIR/IRFA) and the 
Final Regulatory Flexibility Analysis (FRFA) prepared for this action, 
and the Bering Sea and Aleutian Islands Crab Fisheries Final 
Environmental Impact Statement (EIS) prepared for the Crab 
Rationalization Program, may be obtained from the NMFS Alaska Region, 
P.O. Box 21668, Juneau, AK 99802, Attn: Ellen Walsh, Records Officer, 
and from the NMFS Alaska Region website at http://www.fakr.noaa.gov.

FOR FURTHER INFORMATION CONTACT: Glenn Merrill, 907-586-7228 or 
[email protected].

SUPPLEMENTARY INFORMATION: The king and Tanner crab fisheries in the 
exclusive economic zone of the BSAI are managed under the FMP. The FMP 
was prepared by the North Pacific Fishery Management Council (Council) 
under the Magnuson-Stevens Act as amended by the Consolidated 
Appropriations Act of 2004 (Public Law 108-199, section 801). 
Amendments 18 and 19 to the FMP included the Program. A final rule 
implementing these amendments was published on March 2, 2005 (70 FR 
10174). Regulations implementing Amendments 18 and 19 are located at 50 
CFR part 680. On May 25, 2006, the Secretary approved Amendment 20 to 
the FMP, which authorizes the issuance of an East Bering Tanner crab 
quota share (QS) and West Bering Tanner crab QS. The final rule to 
implement Amendment 20 was published in the Federal Register on June 7, 
2006 (71 FR 32862).
    In February 2006, the Council adopted Amendment 21 to the FMP. The 
notice of availability for Amendment 21 was published in the Federal 
Register on March 31, 2006 (71 FR 16278), with a public comment period 
through May 30, 2006. NMFS received one comment on Amendment 21. That 
comment is addressed as Comment 1 in the Response to Comment section. 
NMFS approved Amendment 21 on June 30, 2006.
    NMFS published the proposed rule for Amendment 21 in the Federal 
Register on April 20, 2006 (71 FR 20378), with a public comment period 
through June 5, 2006. NMFS received two comment letters with four 
unique public comments on the proposed rule.
    A more in depth description of this action is provided in the 
preamble to the proposed rule and is briefly summarized here. Under the 
Program, NMFS issued harvester QS that yields annual individual fishing 
quota (IFQ). An IFQ is a permit to harvest a specific portion of the 
total allowable catch (TAC). A portion of the IFQs issued are ``Class 
A'' IFQ. Crab harvested under a Class A IFQ permit must be delivered to 
a specific processor. NMFS issued processor quota share (PQS) to 
processors that yield individual processing quota (IPQ). IPQ is a 
permit to receive and process a portion of the TAC harvested with Class 
A IFQ. A one-to-one relationship exists between Class A IFQ and IPQ.
    The Program includes an arbitration system to resolve price, 
delivery terms, and other disputes if holders of Class A IFQ and IPQ 
are unable to negotiate those terms. The arbitration system provides 
harvesters and processors with the ability to reach price agreements 
through binding arbitration using two methods: (1) the ``share match'' 
approach that results in a binding arbitration decision prior to the 
season; and (2) the ``lengthy season'' approach that allows a binding 
arbitration proceeding to begin under a mutually agreed upon 
negotiation timeline.
    After the annual issuance of IFQ and IPQ, the share match approach, 
at Sec.  680.20(h)(3)(iv)(A), allows harvesters who are not affiliated 
with a processor through ownership or control linkages (unaffiliated 
harvesters) to unilaterally commit delivery of harvests from Class A 
IFQ to a processor with available IPQ. Once committed, the unaffiliated 
harvester is permitted to initiate a binding arbitration proceeding 
under Sec.  680.20(h)(3)(v) if the parties are unable to agree to the 
terms of delivery. Regulations at Sec.  680.20(h)(3)(v) require that an 
IFQ holder initiate binding arbitration at least 15 days prior to a 
season opening.
    Alternatively, regulations at Sec.  680.20(h)(3)(iii) allow 
unaffiliated harvesters to match IFQ with processors with available IPQ 
using a lengthy season approach. The lengthy season approach allows 
harvesters and processors to use the binding arbitration proceeding 
during a specific time during the fishing season rather than prior to 
the start of the season. The lengthy season approach requires a mutual 
agreement of both partes to schedule arbitration proceedings later in 
the season, which can affect negotiating positions.
    The share match approach to resolve price disputes has not met the 
needs of IFQ holders because they are not able to

[[Page 40031]]

initiate arbitration 15 days prior to the start of the season, as 
required by regulation. IFQ holders have noted a desire to use the 
share match approach in the future. Under the current schedule for 
stock assessments and TAC setting, NMFS typically does not issue IFQ 
and IPQ 15 days prior to a season opening. NMFS issued quota 5 days 
prior to the season during the 2005/2006 fishing year for most 
fisheries. This schedule effectively limits the ability of IFQ holders 
to rely on the share match approach to achieve a price resolution.
    Because of existing stock assessment and TAC setting procedures, it 
is not feasible for NMFS to change the timing of issuance of IFQ and 
IPQ. Each year, the State of Alaska Department of Fish and Game (ADF&G) 
establishes a TAC for BSAI crab through a collaborative process with 
NMFS. The FMP outlines this process. ADF&G considers the most recent 
and best available scientific data when determining the TAC for a 
fishery. In most cases, crab stock survey data become available for 
analysis between mid-August and mid-September. Once data is available, 
NMFS and ADF&G analysts perform stock assessments to estimate stock 
abundance as needed for determinating the status of the stocks relative 
to overfishing and determining the TACs. For most BSAI crab fisheries 
which open on October 15, ADF&G announces the TACs on October 1. The 
TAC announcement timing allows ADF&G and NMFS to thoroughly review the 
data prior to the TAC determinations, and for NMFS to issue IFQs and 
IPQs prior to the October 15 season opening. Announcing the TACs before 
October 1 could compromise the integrity of the results, introduce 
additional errors, and limit the ability of ADF&G and NMFS to use the 
most recent and best available data. Once ADF&G announces the TAC, NMFS 
issues IFQ to harvesters based upon their holdings of QS, and IPQ to 
processors based upon their holdings of PQS. The IFQ issuance process 
requires several days after the TAC is announced.
    This final rule provides a mechanism ensuring that a binding 
arbitration proceeding could occur early in the fishing season and in 
accordance with the original Program. The new mechanism fulfills the 
FMP's intent to provide harvesters and processors with effective 
methods of resolving price disputes under the arbitration system. This 
final rule accommodates the existing stock assessment and TAC 
announcement processes by linking the timing for initiating share 
matching and a binding arbitration proceeding to the issuance of IFQ 
and IPQ. This will provide participants with a reasonable and reliable 
opportunity to fully use the arbitration system, consistent with the 
original intent of the Program.
    With this final rule, the timing for share matching and initiation 
of binding arbitration is based on the issuance of IFQ and IPQ, 
including a five-day (120 hour) assessment period for negotiated 
commitments. For a period of five days (120 hours) after the issuance 
of IFQ and IPQ, unaffiliated harvesters holding Class A IFQ and holders 
of IPQ can voluntarily agree to commit their respective shares. After 
the five-day (120-hour) assessment period, holders of uncommitted Class 
A IFQ can unilaterally commit that IFQ to any holder of uncommitted 
IPQ. During the 10-day period beginning five days after the issuance of 
IFQ and IPQ, any holder of committed Class A IFQ can unilaterally 
initiate a binding arbitration proceeding with the IPQ holder to which 
the IFQ were committed. An IFQ holder may not initiate a binding 
arbitration procedure after this 10 day period, which combined with the 
assessment period, is 360 hours after the issuance of IFQ and IPQ for a 
fishery.
    This final rule does not change existing requirements that the 
arbitration parties meet with a contract arbitrator to schedule 
information submission to the arbitrator and the terms and timing for 
submission of last best offers. This final rule does not modify the 
lengthy season approach to binding arbitration proceeding. This final 
rule does not alter the basic structure or management of the Program 
and does not alter reporting, monitoring, fee collection, and other 
requirements to participate in the arbitration system. This final rule 
also does not increase the number of harvesters or processors in the 
Program fisheries or the current amount of crab that may be harvested. 
The final rule does not affect current regional delivery requirements 
or other restrictions on harvesting and processing.

Response to Comments

    Comment 1: The commenter recommends that quotas need to be reduced 
by 50 percent this year, and that a marine sanctuary should be 
established.
    Response: This rule is not intended to impose quotas or otherwise 
limit harvesting or processing activities. This rule is intended to 
modify procedures for initiating binding arbitration proceedings for 
price negotiations. Any changes in quota allocations or to establish a 
marine sanctuary under the Program would need to be addressed in a 
separate amendment to the FMP and are not part of this action. The rule 
is not modified based on this comment.
    Comment 2: Although the proposed rule tracks Amendment 21, it 
provides no guidance to industry or the arbitration organization and 
fails to address inconsistencies created with other portions of the 
regulations that remain unchanged.
    Response: Amendment 21 was not intended to address issues in the 
arbitration system other than those specifically identified in the 
analysis that supported this rule. While additional clarifications in 
the arbitration system may be desired in the future, the rule is 
intended only to address the timing of share matching shares and the 
timing of initiating a binding arbitration proceeding under this share 
matching process. Additional changes in the arbitration system would 
need to be addressed through a separate FMP amendment and regulatory 
process. The rule has not been modified based on this comment.
    Comment 3: NMFS should revise the proposed rule to provide the 
details necessary to implement Amendment 21. Specifically, the rule 
should note that the voluntary sharematching period starts on the day 
and hour NOAA Fisheries posts the issuance of IFQ and IPQ for a crab QS 
fishery on the NOAA Fishery website, and continues for the next 120 
hours. Additionally, the rule should state that a binding arbitration 
proceeding must be initiated 240 hours after the end of the voluntary 
sharematching period. (Equivalent to 360 hours after the issuance of 
IFQ and IPQ for a crab QS fishery).
    Response: NMFS agrees that it is appropriate for the rule to 
provide some additional clarity in the definition of the specific time 
periods for initiating share matching and a binding arbitration 
proceeding in a crab QS fishery. The proposed rule indicated that 
Arbitration IFQ holders could begin matching shares with IPQ holders 
five days after NMFS issues IFQ and IPQ for that crab QS fishery, and 
that a Binding Arbitration proceeding must begin no later than 15 days 
after the issuance of IFQ and IPQ in a fishery. The clarifications 
below do not differ substantively from the time periods specified in 
the proposed rule, and will reduce potential conflicts when 
interpreting the intent of these provisions. NMFS modifies the rule 
with three clarifications:
    1. The issuance of IFQ and IPQ for a crab QS fishery occurs on the 
time and date that IFQ and IPQ amounts for that crab QS fishery are 
posted on the NMFS, Alaska Region website at http://www.fakr.noaa.gov.

[[Page 40032]]

    2. An uncommitted Arbitration IFQ holder may begin matching shares 
with an uncommitted IPQ holder no earlier than 120 hours after the 
issuance of IFQ and IPQ for that crab QS fishery. A 120-hour period is 
equivalent to five days.
    3. An uncommitted Arbitration IFQ holder must initiate a Binding 
Arbitration proceeding for a crab QS fishery not later than 360 hours 
after NMFS issuance that crab QS fishery. A 360-hour period is 
equivalent to 15 days.
    Comment 4: NMFS should advise the arbitration organizations that 
the details associated with implementation of Amendment 21 and the 
proposed rule are consistent with the third-party data provider 
mechanism established by arbitration organizations to share information 
on uncommitted IPQ.
    Response: Amendment 21 and the accompanying final rule are intended 
to narrowly address the specific timing for initiating share matching 
and a binding arbitration proceeding in a crab QS fishery. Amendment 21 
and the final rule were not intended to provide a mechanism to review 
the adequacy of the interpretation of specific contract terms or the 
operation of a third-party data provider for purposes of sharing 
information among Arbitration IFQ and IPQ holders. Nothing in the rule 
is intended to address the contract terms for a third-party data 
provider, and the rule is not inconsistent with the required 
contractual terms. NMFS notes that the interpretation and enforcement 
of those terms is specifically intended to be addressed through civil 
measures. Please see regulations at Sec.  680.20(a) for additional 
details. Although the use of a third-party data provider as described 
by the commenter does not appear to be inconsistent with this rule, any 
interpretation, implementation, or enforcement of specific third-party 
data provider contract terms remains a civil matter. The rule has not 
been modified based on this comment.

Changes from the Proposed Rule

    The final rule has been changed from the proposed rule at Sec.  
680.20(h)(3)(iv)(A) and (h)(3)(v) to clarify the time periods for 
initiating share matching and a binding arbitration proceeding as 
explained in the response to Comment 3.

Classification

    NMFS has determined that the final rule is consistent with the FMP, 
the Magnuson-Stevens Act, and other applicable laws.
    This final rule has been determined to be not significant for 
purposes of Executive Order 12866.
    NMFS prepared a final regulatory flexibility analysis (FRFA) as 
required by section 604(a) of the Regulatory Flexibility Act (RFA). The 
FRFA describes the economic impact this rule will have on small 
entities. A description of the action, why it is being considered, and 
the legal basis for it are included in this preamble. A summary of the 
FRFA follows. A copy of the FRFA is available from NMFS (see 
ADDRESSES).

Issues Raised by Public Comments on the IRFA

    NMFS received no public comments on the IRFA.

Need for and Objectives of this Action

    This action is necessary to provide a mechanism to ensure that a 
binding arbitration proceeding can occur early in the fishing season in 
accordance with the original design of the Program.

Number and Description of Small Entities Directly Regulated by the Rule

    Estimates of the number of small harvesting entities under the 
Program are complicated by several factors. First, each eligible 
captain will receive an allocation of QS under the program. A total of 
186 captains received allocations of QS for the 2005-2006 fishery. In 
addition, 269 allocations of QS to license limitation permit (LLP) 
license holders were made under the Program, for a total of 454 QS 
allocations. Because some persons participated as both LLP license 
holders and captains and others received allocations from the 
activities of multiple vessels, only 294 unique persons received QS. Of 
those entities receiving QS, 287 are small entities because they either 
generated $4.0 million or less in gross revenue, or they are 
independent entities not affiliated with a processor. Estimates of 
gross revenues for purposes of determining the number of small 
entities, relied on the low estimates of prices from the arbitration 
reports based on the 2005/2006 fishing season.
    Allocations of PQS under the Program were made to 29 processors. Of 
these PQS recipients, nine are estimated to be large entities, and 20 
are estimated to be small entities. Estimates of large entities were 
made based on available records of employment and the analysts' 
knowledge of foreign ownership of processing companies. These totals 
exclude catcher/processors, which are included in the LLP license 
holder discussion.
    Other supporting businesses also may be indirectly affected by this 
action if it leads to fewer vessels participating in the fishery. These 
impacts are treated in the RIR/IRFA prepared for this action (see 
ADDRESSES).

Recordkeeping and Reporting Requirements

    Implementation of this rule will not change the overall reporting 
structure and recordkeeping requirements of the participants in the 
BSAI crab fisheries or arbitration system.

Description of Significant Alternatives and Description of Steps Taken 
to Minimize the Significant Economic Impacts on Small Entities

    The Council considered three alternatives as it designed and 
evaluated the potential methods for accommodating current fishery 
management timing and the need to provide an opportunity for a binding 
arbitration proceeding early during a crab fishing season. The 
alternatives differ only in the timing of when unaffiliated harvesters 
with IFQ could match their shares with processors with uncommitted IPQ. 
The alternatives have no effect on fishing practices or patterns.
    Alternative 1 is the status quo and would maintain the existing 
timing requirements for initiating a binding arbitration proceeding. 
This would maintain the inconsistency between the timing of the 
issuance of IFQ and IPQ in a crab QS fishery and the requirement to 
initiate a binding arbitration prior to the start of the season. 
Alternative 1 would not provide an opportunity for harvesters to 
initiate a binding arbitration proceeding early in the season. 
Alternative 1 does not effectively implement a portion of the Program 
as recommended by the Council. In effect, the reliability of the 
arbitration system to resolve price disputes earlier in the season is 
limited. Although participants have relied on the lengthy season 
approach to effectively extend the deadline for initiating an 
arbitration proceeding to resolve a dispute concerning terms of 
delivery, the greater degree of cooperation required by the approach 
limits its reliability. In addition, the lengthy season approach could 
delay resolution of disputes, if the process for initiating arbitration 
could be applied as expected. The result could be either a loss of 
operational certainty arising from unsettled terms of delivery and 
potentially a shift in negotiating leverage if one party were 
disproportionately affected by the uncertainty.
    Alternative 2, the preferred alternative, provides harvesters and 
processors with the opportunity to

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utilize the arbitration system to resolve disputes in a manner 
consistent with the original intent of Program. Although Alternative 2 
does not provide a price resolution through arbitration prior to the 
start of the season as originally envisioned, it does provide an 
opportunity to resolve price disputes shortly after the start of the 
season. Alternative 2 does not have economic effects on harvesters or 
processors different from those already considered under the EIS 
prepared for the Program (see ADDRESSES). The five-day assessment 
period contributes to stability in relationships among IFQ holders and 
IPQ holders, by permitting persons to resolve negotiated commitments 
prior to allowing unilateral commitments. In addition, this five-day 
period may result in more negotiated commitments by prioritizing 
negotiated relationships over unilateral commitments.
    Alternative 3 is similar to Alternative 2, but does not provide a 
five-day assessment period to match shares after the issuance of IFQ 
and IPQ. The absence of such a period could provide an advantage to 
persons who are unable, or unwilling, to develop voluntary commitments. 
The absence of this period to allow IFQ and IPQ holders to finalize 
negotiated commitments also could disrupt markets by flooding IPQ 
holders with unilateral commitments from IFQ holders who fear being 
displaced by others. An orderly settlement of commitments is more 
likely to take place if a period of negotiated commitments were 
permitted prior to allowing unilateral commitments, as in Alternative 
2.
    Alternative 2 minimizes the potential negative impacts that could 
arise under the status quo or Alternative 3. Therefore, neither of the 
significant alternatives to the preferred alternative have the 
potential to achieve the objectives of this action, while minimizing 
the adverse economic impacts on directly regulated small entities. 
Furthermore, there is no evidence or basis for concluding that the 
impacts for the proposed action will have a disproportionate adverse 
effect on small entities, as compared to other entities operating under 
these rules in the BSAI crab fisheries.

Small Entity Compliance Guide

    NMFS has posted a small entity compliance guide on the Internet at 
http://www.fakr.noaa.gov/sustainablefisheries/crab/rat/progfaq.htm to 
satisfy the Small Business Regulatory Enforcement Fairness Act of 1996, 
which requires a plain language guide to assist small entities in 
complying with this rule. Contact NMFS to request a hard copy of the 
guide (see ADDRESSES).

List of Subjects in 50 CFR Part 680

    Alaska, Fisheries, Reporting and recordkeeping requirements.

    Dated: July 11, 2006.
Samuel D. Rauch III,
Deputy Assistant Administrator for Regulatory Programs, National Marine 
Fisheries Service.

0
For the reasons set out in the preamble, NMFS amends 50 CFR part 680 as 
follows:

PART 680--SHELLFISH FISHERIES OF THE EXCLUSIVE ECONOMIC ZONE OFF 
ALASKA

0
1. The authority citation for part 680 continues to read as follows:

    Authority: 16 U.S.C. 1862.

0
2. In Sec.  680.20, paragraphs (h)(3)(iv)(A) and (h)(3)(v) introductory 
text are revised to read as follows:


Sec.  680.20  Arbitration System.

* * * * *
    (h) * * *
    (3) * * *
    (iv) * * *
    (A) At any time 120 hours (five days) after NMFS issues IFQ and IPQ 
for that crab QS fishery in that crab fishing year, holders of 
uncommitted Arbitration IFQ may choose to commit the delivery of 
harvests of crab to be made with that uncommitted Arbitration IFQ to an 
uncommitted IPQ holder. The issuance of IFQ and IPQ for a crab QS 
fishery occurs on the time and date that IFQ and IPQ amounts for that 
crab QS fishery are posted on the NMFS, Alaska Region website at http://www.fakr.noaa.gov.
* * * * *
    (v) Initiation of Binding Arbitration. If an Arbitration IFQ holder 
intends to initiate Binding Arbitration, the Arbitration IFQ holder 
must initiate the Binding Arbitration procedure not later than 360 
hours (15 days) after NMFS issues IFQ and IPQ for that crab QS fishery 
in that crab fishing year. Binding Arbitration is initiated after the 
committed Arbitration IFQ holder notifies a committed IPQ holder and 
selects a Contract Arbitrator. Binding Arbitration may be initiated to 
resolve price, terms of delivery, and other disputes. There will be 
only one Binding Arbitration Proceeding for an IPQ holder but multiple 
Arbitration IFQ holders may participate in this proceeding. This 
limitation on the timing of Binding Arbitration proceedings does not 
include proceedings that arise due to:
* * * * *
[FR Doc. E6-11137 Filed 7-13-06; 8:45 am]
BILLING CODE 3510-22-S