[Federal Register Volume 71, Number 164 (Thursday, August 24, 2006)]
[Proposed Rules]
[Pages 50012-50025]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-7122]


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DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

50 CFR Part 622

[Docket No. 060731206-6206-01; I.D. 072806A]
RIN 0648-AS67


Fisheries of the Caribbean, Gulf of Mexico, and South Atlantic; 
Reef Fish Fishery of the Gulf of Mexico; Amendment 26

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

ACTION: Proposed rule; request for comments.

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[[Page 50013]]

SUMMARY: NMFS issues this proposed rule that would implement Amendment 
26 to the Fishery Management Plan for the Reef Fish Fishery of the Gulf 
of Mexico (FMP). Amendment 26 would establish an individual fishing 
quota (IFQ) program for the commercial red snapper sector of the reef 
fish fishery in the Gulf of Mexico. Initial participants in the IFQ 
program would receive percentage shares of the commercial quota of red 
snapper based on specified historical landings criteria. The percentage 
shares of the commercial quota would equate to annual IFQ allocations. 
Both shares and IFQ allocations would be transferable. The intended 
effect of this rule is to manage the commercial red snapper sector of 
the reef fish fishery to preserve its long-term economic viability and 
to achieve optimum yield from the fishery.

DATES: Written comments must be received on or before September 28, 
2006.

ADDRESSES: You may submit comments on the proposed rule by any of the 
following methods:
     E-mail: [email protected]. Include in the 
subject line the following document identifier: 0648-AS67.
     Federal e-Rulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail: Phil Steele, Southeast Regional Office, NMFS, 263 
13th Avenue South, St. Petersburg, FL 33701.
     Fax: 727-824-5308; Attention: Phil Steele.
    Copies of Amendment 26, which includes a supplemental environmental 
impact statement (SEIS), a regulatory impact review (RIR), and an 
initial regulatory flexibility analysis (IRFA), may be obtained from 
the Gulf of Mexico Fishery Management Council, 2203 N. Lois Avenue, 
Suite 1100, Tampa, FL 33607; telephone: 813-348-1630; fax: 813-348-
1711; e-mail: [email protected]. In addition, copies of the 
final SEIS, a revised RIR, and a revised IRFA, prepared by NMFS are 
also available from the Council at the address above. Copies of all of 
these documents may also be downloaded from the Council's website at 
www.gulfcouncil.org.
    Comments regarding the burden-hour estimates or other aspects of 
the collection-of-information requirements contained in this proposed 
rule may be submitted in writing to Jason Rueter at the Southeast 
Regional Office address (above) and to David Rostker, Office of 
Management and Budget (OMB), by e-mail at [email protected], 
or by fax to 202-395-7285.

FOR FURTHER INFORMATION CONTACT: Phil Steele, telephone 727-824-5305; 
fax 727-824-5308; e-mail [email protected].

SUPPLEMENTARY INFORMATION: The reef fish fishery of the Gulf of Mexico 
is managed under the FMP. The FMP was prepared by the Gulf of Mexico 
Fishery Management Council (Council) and is implemented through 
regulations at 50 CFR part 622 under the authority of the Magnuson-
Stevens Act.

Background

    A red snapper individual transferable quota (ITQ) program, proposed 
in Amendment 8 to the FMP and approved by NMFS in 1995, was never 
implemented because of action taken through the 1996 Sustainable 
Fisheries Act to place a moratorium on the development or 
implementation of new ITQ programs until October 1, 2000. The Council 
and commercial fishermen remained concerned about the continuing 
problems associated with overcapacity in the fishery and the adverse 
impacts associated with the derby fishery, i.e., the competitive race 
for available fish. This proposed rule would implement an IFQ program 
to address these issues.

IFQ Program

Scope

    The provisions of this IFQ program would apply to Gulf red snapper 
in or from the Gulf EEZ and, for a person aboard a vessel with a Gulf 
red snapper IFQ vessel endorsement or for a person with a Gulf red 
snapper IFQ dealer endorsement, these provisions would apply to Gulf 
red snapper regardless of where harvested or possessed.

Duration

    The IFQ program would remain in effect until it is modified or 
terminated; however, the program would be evaluated by the Council 
every 5 years.

Electronic System Requirements, Account Setup, and Information

    The administrative functions associated with this IFQ program, 
e.g., registration and account setup, landing transactions, and 
transfers, are designed to be accomplished online; therefore, a 
participant would have to have access to a computer and Internet access 
and set up an appropriate IFQ online account to participate. Assistance 
with online functions would be available from IFQ Customer Service by 
calling 1-866-425-7627 Monday through Friday between 8 a.m. and 4:30 
p.m. eastern time.
    The IFQ program would provide for use of paper-based components for 
basic required functions as a backup only during catastrophic 
conditions. The Regional Administrator, Southeast Region, NMFS, (RA) 
would determine when catastrophic conditions exist, the duration of the 
catastrophic conditions, and which participants or geographic areas are 
deemed affected by the catastrophic conditions. The RA would provide 
timely notice to affected participants via publication of notification 
in the Federal Register, NOAA weather radio, fishery bulletins, and 
other appropriate means and would authorize the affected participants' 
use of paper-based components for the duration of the catastrophic 
conditions. NMFS would provide each IFQ dealer the necessary paper 
forms. The paper forms would also be available from the RA. The program 
functions available to participants or geographic areas deemed affected 
by catastrophic conditions would be limited under the paper-based 
system. There would be no mechanism for transfers of IFQ shares or 
allocation under the paper-based system in effect during catastrophic 
conditions. Assistance in complying with the requirements of the paper-
based system would be available via IFQ Customer Service 1-866-425-7627 
Monday through Friday between 8 a.m. and 4:30 p.m. eastern time.
    As soon as possible after publication of the final rule that would 
implement Amendment 26, the RA would mail an IFQ information package to 
eligible IFQ participants. The package would include information for 
accessing the online IFQ system at ifq.sero.nmfs.noaa.gov and 
establishing an online account, general instructions related to online 
transaction procedures and requirements, and where appropriate, 
information regarding historical landings and initial IFQ shares and 
allocation.

IFQ Shares and Allocation

    An IFQ share is the percentage of the commercial quota of red 
snapper proportioned to each eligible person based on specified 
landings data. An IFQ allocation is the actual poundage of red snapper, 
measured in gutted weight, each IFQ shareholder is ensured the 
opportunity to land during a given fishing year. The allocation granted 
each IFQ shareholder would be derived by multiplying their IFQ share 
times the annual red snapper commercial quota. A person would be 
required to have an annual allocation or portion thereof, to harvest, 
possess, or sell red snapper. IFQ shares and annual allocations can be 
transferred separately or together to other eligible persons.

[[Page 50014]]

Adjustments in Commercial Quota and Allocation

    The Council periodically reviews and adjusts the commercial quota 
for Gulf red snapper in response to new data and information, which 
generally take the form of new or updated red snapper stock 
assessments. As the quota is adjusted, shareholder's IFQ allocations 
would be proportionately adjusted based on the IFQ share each 
shareholder has at the time of the adjustment.

Special Procedure for Initial Calculation of 2007 IFQ Allocations

    Because of uncertainty regarding the 2007 commercial quota for Gulf 
red snapper and the timing of its implementation and to avoid the 
possibility of having to revoke some proportion of initial allocation 
if the quota was subsequently reduced, the RA may initially calculate 
the 2007 IFQ allocations based on a proxy commercial quota. If a 
commercial quota adjustment for Gulf red snapper has not been submitted 
for review by the Secretary of Commerce in time for calculation of 2007 
IFQ allocations, the RA would initially calculate 2007 allocations 
based on a proxy commercial quota of 2.55 million lb (1.16 million kg). 
Alternatively, if a commercial quota adjustment for Gulf red snapper 
has been submitted for review by the Secretary of Commerce in time to 
allow calculation of 2007 allocations, the RA would base 2007 IFQ 
allocations on the proposed quota. Under either scenario, as soon as 
the actual 2007 commercial quota is final, but no later than July 1, 
2007, the RA would adjust the 2007 IFQ allocations, as necessary, 
consistent with the actual quota.

IFQ Share Eligibility and Share Calculation

    Eligibility for initial issuance of IFQ shares would be restricted 
to persons who own a Class 1 or Class 2 license as of the date of 
publication of the final rule implementing Amendment 26. An owner of a 
license is defined as the person who actually controls transfer of the 
Class 1 or Class 2 license and is listed as the qualifier on the face 
of the license. NMFS would calculate initial IFQ shares based on the 
highest average annual landings of Gulf red snapper associated with 
each shareholder's current Class 1 or Class 2 license(s) during the 
applicable landings history unless the shareholder selects other years 
of landings consistent with the applicable landing history. For a Class 
1 license holder whose license was not issued based on historical 
captain status, the 10 consecutive years between 1990 and 2004 with the 
highest average landings would be used. For a Class 1 license holder 
whose license was issued on the basis of historical captain status, all 
years of landings data from 1998 through 2004 would be used. For a 
Class 2 license holder, the 5 years between 1998 and 2004 with the 
highest average landings would be used.
    All landings associated with a current Class 1 or Class 2 license 
for the applicable landings history, including those reported by a 
person who held the license prior to the current license owner, would 
be attributed to the current license owner. Only legal landings 
reported in compliance with applicable state and Federal regulations 
would be accepted. Each shareholder's initial IFQ share would be 
derived by dividing the shareholder's highest average annual landings 
during the applicable landings history by the sum of the highest 
average annual landings of all shareholders during the respective 
applicable landings histories. Initial IFQ shares would not be issued 
in denominations of less than 0.0001 percent.

Appeals Process

    The only items subject to appeal under this IFQ system would be 
initial eligibility for IFQ shares based on ownership of a Class 1 or 
Class 2 license, the accuracy of the amount of landings, and correct 
assignment of landings to the license owner. The RA would review, 
evaluate, and render final decisions on appeals. Appeals would have to 
be submitted to the RA postmarked no later than 90 days after the 
effective date of the final regulations implementing the IFQ program 
and would have to contain documentation supporting the basis for 
appeal. Hardship arguments would not be considered. Landings data from 
1990 through 1992 would not be subject to appeal. Landings records 
appeals for 1993-2004 would be based on NMFS logbook data. If NMFS 
logbooks are not available; state landings records or data submitted on 
or before June 30, 2005, could be used. During the first year of the 
IFQ program only, the RA initially would reserve a 3-percent IFQ share, 
prior to initial distribution of shares, to be used to resolve appeals. 
Any portion of the 3-percent share reserve remaining after the appeals 
process has been completed would be proportionately distributed back to 
the initial recipients as soon as possible that year. If resolution of 
appeals requires more than a 3-percent share, the shares of all initial 
shareholders would be reduced proportionately to accommodate the 
required shares in excess of the 3-percent reserve.

IFQ Share Cap--NMFS Solicits Public Comment

    To prevent any entity from obtaining excessive shares under this 
IFQ program, as mandated by National Standard 4 of the Magnuson-Stevens 
Act, a share cap would be established. No person would be allowed to 
own at any time IFQ shares exceeding the maximum share initially issued 
to any person for the 2007 fishing year, as of the date appeals are 
resolved and shares are adjusted accordingly. NMFS estimates this would 
cap ownership of shares at approximately 8 percent of total shares. If 
an ownership cap is too high, market power may become too consolidated 
and produce an unduly anti-competitive market. However, setting the 
limit too low can also have adverse effects on the price of fish. This 
can happen in cases where it is less costly overall for fewer entities 
to each catch more fish than it is for lots of entities to each catch 
smaller amounts of fish.
    Aside from considerations of controlling the undue consolidation of 
market power and maintaining a fair level of competition, Section 
303(b)(6) of the Magnuson-Stevens Act requires consideration of several 
factors in establishing a limited access program such as the red 
snapper IFQ program. Those factors include, but are not limited to: 
present participation in the fishery, historical fishing practices in, 
and dependence on, the fishery; the economics of the fishery; and the 
cultural and social framework relevant to the fishery and any affected 
fishing communities. Although the approximately 8 percent cap may not 
result in consolidation that rises to the level of presenting an undue 
concentration of market power or chilled competition, a higher cap 
could result in levels of consolidation producing effects that are 
problematic under the Magnuson-Stevens Act. Examples would include 
potentially eliminating numerous small-scale historical participants, 
adversely affecting the social and cultural framework of the fishery by 
adversely affecting working conditions and wages for crew, and 
potentially adversely affecting prices.
    NMFS is seeking comments on whether the proposed cap of 
approximately 8 percent is appropriate. According to the``Horizontal 
Merger Guidelines'' (Guidelines) issued jointly by the Department of 
Justice and the Federal Trade Commission (http://www.usdoj.gov/atr/
public/guidelines/

[[Page 50015]]

hmg.pdf, see especially pp 15-17), even under conservative assumptions 
a limit of 10 percent (or possibly higher under less restrictive 
assumptions) would be unlikely to have adverse competitive effects. 
Accordingly, NMFS seeks specific comments on the appropriateness and 
magnitude of the proposed ownership cap.

Permit and IFQ Endorsement Requirements

    For a person aboard a vessel, for which a commercial vessel permit 
for Gulf reef fish has been issued, to fish for, possess, or land Gulf 
red snapper, regardless of where harvested or possessed, a Gulf red 
snapper IFQ vessel endorsement would have to be issued to the vessel 
and be on board, and such person would have to hold or be assigned 
sufficient IFQ allocation to account for all red snapper on board or 
landed. As a condition of the IFQ vessel endorsement, a person aboard 
such vessel would have to comply with the requirements of the IFQ 
program regardless of where red snapper are harvested or possessed.
    All dealers who purchase red snapper from an IFQ share/allocation 
holder would be required to possess a valid Federal dealer permit for 
Gulf reef fish and a red snapper IFQ dealer endorsement without which 
possessing, transporting, selling, purchasing, or processing red 
snapper would be prohibited.
    The red snapper IFQ vessel endorsement and red snapper IFQ dealer 
endorsement would be available for download from the IFQ website, 
ifq.sero.nmfs.noaa.gov, at no cost to those individuals who possess a 
valid Gulf reef fish permit or a valid Gulf reef fish dealer permit, 
respectively, and request the endorsements. If such individuals do not 
have an IFQ online account, they would have to first contact IFQ 
Customer Service at 1-866-425-7627 to obtain information necessary to 
access the IFQ website and establish an IFQ online account. The red 
snapper IFQ vessel endorsement and dealer endorsement would remain 
valid as long as the individual possesses a valid Gulf reef fish permit 
or reef fish dealer permit, respectively, abides by all reporting and 
cost recovery requirements of the IFQ program, and is not subject to 
sanctions under 15 CFR part 904. The IFQ vessel endorsement and the 
dealer endorsement are not transferable.

Fleet Management and Assignment of Allocation

    An IFQ shareholder or IFQ allocation holder who owns more than one 
vessel with a valid Gulf reef fish vessel permit and a valid Gulf red 
snapper IFQ vessel endorsement may assign IFQ allocation to a person 
aboard such vessel and provide that person the IFQ account information 
necessary to conduct landing transactions. This assignment of 
allocation, which does not constitute a transfer or sale of allocation, 
can be accomplished by the shareholder or allocation holder online via 
the IFQ website.

Electronic Reporting of IFQ Transactions

    IFQ share and allocation transactions would be tracked using an 
online accounting system developed by NMFS, in which the IFQ share/
allocation holder, IFQ dealer, and appropriate NOAA personnel would 
participate. The IFQ share/allocation holder and IFQ dealer accounts 
would record IFQ share/allocation transactions into the online system 
using unique user ID numbers and personal identification numbers (PIN) 
issued to them by NMFS. Transaction approval codes obtained from NMFS 
via the online accounting system would be required for the following 
transactions: (1) share transfers; (2) allocation transfers; and (3) 
landings/sales transactions. The transaction approval code would verify 
the IFQ share/allocation holders involved in the transaction are 
eligible participants and, in the case of landings/sale, have 
sufficient allocation to conduct the sales transaction.
    Data managed through the online accounting system would include, 
but not be limited to:
    1. The identities and certificate numbers of IFQ share holders and 
their associated vessel ID numbers;
    2. The identities of persons and corporations holding and fishing 
IFQ allocations and their associated vessel ID numbers;
    3. The dates, times, and types of IFQ share and allocation 
transactions;
    4. The identities and locations of IFQ dealerships;
    5. The dates, times, and places of landing/sales transactions;
    6. The identities of the dealers and fishermen conducting landing/
sales transactions;
    7. The price of red snapper recorded during each landing/sales 
transaction; and
    8. The biological data recorded during each landing/sales 
transaction.

Landings/Sale Transactions

    At the time of landing/sale of IFQ red snapper, the dealer would be 
responsible for initiating transactions in the online accounting 
system. The fisherman would validate the transaction online by entering 
his unique PIN number at the point of transaction submittal. The 
information required to be recorded in the online accounting system for 
each landing/sale transaction at the point of sale would include, but 
not be limited to:
    1. The date and time of landing/sale;
    2. The weight of red snapper purchased;
    3. The share/allocation holder account number from which the catch 
should be debited;
    4. The ID number of the vessel used to harvest the fish;
    5. The IFQ endorsement number of the authorized dealer;
    6. The PIN numbers of both the dealer and fishermen; and
    7. The actual ex-vessel unit price of the red snapper.

Limited Landings Overage Allowance

    On the last fishing trip of the fishing year permitted by the 
shareholder's annual allocation, a shareholder would be permitted to 
land up to 10 percent more than the remaining allocation, without 
purchasing additional allocation. Any such overages would be deducted 
from the next year's allocation associated with the shareholder's IFQ 
share.
    This carryover provision would not apply to a person who only 
possesses IFQ allocation and no IFQ shares because there would be no 
reliable mechanism for compensating for the overage in the following 
fishing year. Such a person would not be permitted to land any red 
snapper in excess of his/her current allocation.

Cost Recovery

    Section 304(d)(2)(A) of the Magnuson-Stevens Act requires the 
Secretary of Commerce to establish a fee to assist in recovering the 
actual costs directly related to the management and enforcement of any 
IFQ program. Currently, such a fee may not exceed 3 percent of the ex-
vessel value of fish harvested under any such program, and must be 
collected at either the time of landing, filing of a landing report, or 
sale of such fish during a fishing season or in the last quarter of the 
calendar year in which the fish is harvested. Fees collected must be in 
addition to any other fees charged under the Magnuson-Stevens Act and 
must be deposited in the Limited Access System Administration Fund 
(LASAF) established under Section 305(h)(5)(B) of the Magnuson-Stevens 
Act. Initially, the fee would be 3 percent of the actual ex-vessel 
value of Gulf red snapper landed under the IFQ program, as

[[Page 50016]]

documented at the time of sale in each landings transaction report. The 
RA would review the cost recovery fee annually to determine if a 
downward adjustment is warranted. Factors considered in the review 
would include the catch subject to the IFQ cost recovery, projected ex-
vessel value of the catch, costs directly related to the management and 
enforcement of the IFQ program, the projected IFQ balance in the LASAF, 
and expected non-payment of fee liabilities. If the RA determines that 
a fee adjustment is warranted, the RA would publish a notification of 
the fee adjustment in the Federal Register.
    The IFQ shareholder or allocation holder whose IFQ allocation is 
debited for a Gulf red snapper landing would be responsible for paying 
the associated IFQ cost recovery fees. The IFQ dealer who receives such 
landing would be responsible for collecting the applicable fee from the 
shareholder/allocation holder and submitting the applicable fee to NMFS 
using pay.gov via the IFQ system no later than 30 days after the end of 
each calendar-year quarter; however, fees may be submitted at any time 
before that deadline. Authorized payment methods would be credit card, 
debit card, or automated clearing house (ACH). Payment by check would 
be authorized only if the RA has determined that the geographical area 
or an individual(s) is affected by catastrophic conditions. Fees not 
received by the deadline would be considered delinquent and would be 
resolved through the fee reconciliation process as specified in Sec.  
622.16(c)(2)(iv) of this proposed rule. Failure to resolve payment of 
delinquent fees may result in annulment of the applicable IFQ permit 
and/or IFQ endorsement and submission of the matter to appropriate 
authorities for resolution.

IFQ Share/Allocation Transferability

    During the first 5 years of the IFQ program, IFQ shares or 
allocations could only be transferred to a person with a valid 
commercial vessel permit for Gulf reef fish; thereafter, shares and 
allocations could be transferred to U.S. citizens and permanent 
resident aliens.

Share Transfer Transactions

    IFQ share transfers would require NMFS' approval of a share 
transfer application. The person transferring the share would be 
responsible for initiating the transfer request by using the online red 
snapper IFQ website at ifq.sero.nmfs.noaa.gov. Following the 
instructions provided on the website, the transferor would be required 
to enter pertinent information regarding the transfer request 
including, but not limited to:
    1. The name, address, and certificate number of the individual or 
corporation transferring the IFQ share;
    2. The identity of the purchaser or transferee;
    3. The amount of the IFQ share being transferred; and
    4. The monetary value of the transfer.
    If the information is accepted, the online system would send the 
transferor an initial transaction approval code and make an application 
for share transfer available for downloading and printing. The 
transferor and transferee would be required to complete the 
application, have their signatures notarized, and mail the signed 
application to the RA at least 30 days prior to the date on which the 
applicant desires to have the transfer effective. Share transfers would 
be prohibited during December of each year to allow NMFS the time 
necessary for end-of-year program management; therefore, any signed 
application would have to be received by the RA prior to December 1. If 
the RA approves the application for transfer, the online system would 
send the transferor and transferee an electronic message acknowledging 
the approval; a transfer would be effective upon receipt of the 
message. The adjusted shares resulting from a transfer could be viewed 
online by each shareholder. If the RA does not approve the transfer 
application, the RA would return the application to the transferor with 
an explanation and instructions for correcting any deficiencies.

Allocation Transfer Transactions

    Unlike share transfers which require a notarized application for 
transfer, allocation transfers could be accomplished online via the red 
snapper IFQ website. An allocation holder could initiate an allocation 
transfer by logging on to the red snapper IFQ website at 
ifq.sero.nmfs.noaa.gov, and entering the required information 
including, but not be limited to:
    1. The name, address, and share certificate number (if applicable) 
of the individual or corporation transferring the IFQ allocation;
    2. The identity of the eligible purchaser or transferee;
    3. The amount of the IFQ allocation being transferred; and
    4. The monetary value of the transfer.
    An allocation transfer would be valid only for the remainder of the 
fishing year in which it occurs; it would not carry over to the 
subsequent fishing year. Transfer of allocation is not prohibited 
during December. Any allocation that is unused at the end of the 
fishing year would be void.

Redistribution of Shares Resulting from Permanent Permit or Endorsement 
Revocation

    If a shareholder's commercial vessel permit for Gulf reef fish or 
Gulf red snapper IFQ vessel endorsement has been permanently revoked 
under provisions of 15 CFR part 904, the RA would redistribute the IFQ 
shares held by that shareholder proportionately among remaining 
shareholders based upon the amount of shares each held just prior to 
the redistribution. During December of each year, the RA would 
determine the amount of revoked shares, if any, to be redistributed, 
and the shares would be distributed at the beginning of the subsequent 
fishing year.

Annual Recalculation and Notification of IFQ Shares and Allocation

    On or about January 1 each year, IFQ shareholders would be 
notified, via the IFQ website, of their IFQ share and allocation for 
the upcoming fishing year. These updated share values would reflect the 
results of applicable share transfers and any redistribution of shares 
resulting from permanent revocation of applicable permits or 
endorsements under 15 CFR part 904. Allocation is calculated by 
multiplying IFQ share times the annual red snapper commercial quota. 
Updated allocation values would reflect any change in IFQ share, any 
change in the annual commercial quota for Gulf red snapper, and any 
debits required as a result of prior fishing year overages. IFQ 
participants would be able to monitor the status of their shares and 
allocation throughout the year via the IFQ website.

Measures to Enhance Enforceability

    The following measures are proposed to enhance enforceability of 
the IFQ program. Fishermen participating in the IFQ program would be 
required to offload their red snapper landings to permitted IFQ dealers 
and only between 6 a.m. and 6 p.m. daily. Any person landing IFQ red 
snapper would be required to notify NMFS' Office of Law Enforcement by 
calling 1-866-425-7627, at least 3 hours in advance of landing and 
specify the time and location of landing and the name and address of 
the dealer where the fish would be received. Possession of IFQ red 
snapper from the time of transfer from a vessel through possession by a 
dealer would be prohibited unless the IFQ red snapper are accompanied 
by a transaction approval code verifying a legal transaction of the 
amount of IFQ

[[Page 50017]]

red snapper in possession. For red snapper offloaded to a truck for 
transportation to a dealer, this would require on-site capability to 
accurately weigh the fish and to connect electronically to the online 
IFQ system to complete the transaction and obtain the transaction 
approval code. At-sea or dockside vessel-to-vessel transfers of fish on 
board IFQ vessels would be prohibited.

Changes Proposed by NMFS

    In this proposed rule, NMFS has clarified the distinction between 
IFQ shareholders and IFQ allocation holders, and more clearly 
distinguished the roles and responsibilities of these two IFQ 
participant types. This clarification was necessary for proper 
implementation of the IFQ program.
    NMFS has also determined that it is not necessary to prohibit 
transfer of allocation during December as Amendment 26 proposed. 
Allocation is only valid for a given fishing year; does not carry over 
to the subsequent year; and, thus, does not affect agency calculations 
and implementation for the following year. Therefore, consistent with 
the Council's intent to maximize flexibility among eligible 
participants, NMFS has modified the proposed rule to only prohibit 
transfer of IFQ shares during December of each year.
    In addition, NMFS has structured the proposed rule to require an 
IFQ vessel endorsement rather than an IFQ endorsement issued to an 
individual as discussed by the Council. The primary purpose of the 
endorsement requirement is to enhance enforceability. NMFS has 
determined that a vessel endorsement would provide the necessary 
enforceability; be less restrictive for participants; and be consistent 
with endorsement provisions in current regulations for other fisheries 
in the Southeast Region.
    NMFS also has clarified in this proposed rule that the IFQ 
allocation holder specified in the landing transaction report is 
responsible for payment of the applicable cost recovery fee, not 
necessarily the shareholder. In some cases, the shareholder may also be 
the allocation holder, but in other cases, the shareholder may have 
transferred allocation to a non-shareholder. In all cases, the 
allocation holder is ultimately responsible for payment of the fee.
    Finally, this proposed rule does not include the vessel monitoring 
system (VMS) requirement for vessels with a Gulf reef fish vessel 
permit that was proposed in Amendment 26. Amendment 26 acknowledged 
that a comparable VMS requirement was proposed in Amendment 18A to the 
FMP. Amendment 26 stated that the VMS requirement in Amendment 26 would 
be unnecessary if Amendment 18A was approved by NMFS. NMFS has approved 
Amendment 18A and the associated VMS requirement; therefore, this 
proposed rule would not implement any additional VMS requirement.

Classification

    At this time, NMFS has not determined that Amendment 26 is 
consistent with the Magnuson-Stevens Act and other applicable laws. 
NMFS, in making that determination, will take into account the data, 
views, and comments received during the comment periods on Amendment 26 
and this proposed rule.
    This proposed rule has been determined to be not significant for 
purposes of Executive Order 12866.
    NMFS prepared a final supplemental environmental impact statement 
(FSEIS) for this amendment; a notice of availability was published on 
August 2, 2006 (71 FR 43706).
    NMFS prepared an IRFA, as required by section 603 of the Regulatory 
Flexibility Act, for this proposed rule. The IRFA describes the 
economic impact this proposed rule, if adopted, would have on small 
entities. A description of the action, why it is being considered, and 
the legal basis for this action are contained at the beginning of this 
section in the preamble and in the SUMMARY section of the preamble. A 
copy of the full analysis is available from the Council (see 
ADDRESSES). A summary of the IRFA follows.
    The Magnuson-Stevens Act provides the statutory basis for the 
proposed rule. The proposed rule will establish an IFQ program for the 
commercial red snapper fishery in the Gulf. Specifics for this IFQ 
program include the following: (1) no limit on the duration of the 
program, but a program evaluation is required every 5 years; (2) 
maximum IFQ share ownership equal to the maximum percentage issued to 
any initial recipient of IFQ shares; (3) restriction on initial 
eligibility only to owners of Class 1 or Class 2 license holders; (4) 
proportionate allocation of initial IFQ shares based on average annual 
landings for 10 consecutive years during 1990-2004 for Class 1, all 
years of landings during 1998-2004 for Class 1 historical captains, and 
any 5 years during 1998-2004 for Class 2; (5) establishment of an 
appeals process and a set-aside of a 3-percent IFQ share to resolve 
appeals; (6) restriction on transfers of IFQ shares/allocations only to 
those with a valid commercial reef fish permit during the first 5 years 
and to U.S. citizens and permanent resident aliens thereafter; (7) 
proportionate allocation of commercial quota adjustments based on 
percentage of IFQ share holdings at the time of the adjustment and 
phased-in issuance of IFQ allocations for the 2007 season; and, (8) 
provision for IFQ cost recovery fees to be paid by IFQ allocation 
holders who land IFQ red snapper but collected and submitted to NMFS by 
registered IFQ dealers.
    The main objectives of the proposed rule are to address the excess 
capacity and derby problems in the commercial red snapper fishery. The 
proposed rule would generally impact two types of businesses in the 
Gulf reef fish fishery, namely, commercial fishing vessels (including 
recreational for-hire vessels with commercial reef fish permits) and 
fish dealers.
    At present, the Gulf of Mexico (GOM) commercial reef fish permits 
are under a limited access program. Commercial reef fish permits are 
renewable every year subject to the condition the applicant meets the 
income requirement. Also, the commercial red snapper fishery is 
presently under a two-tier license limitation program. A Class 1 
license entitles the holder a trip limit of 2,000 lb (907.2 kg) of red 
snapper while a Class 2 license entitles the holder a lower trip limit 
of 200 lb (90.7 kg). Each type of license is allowed only one trip per 
day. The proposed IFQ program would replace this two-tier license 
limitation system in the commercial red snapper fishery, but the 
limited access program for commercial reef fish permits remains 
unchanged.
    No duplicative, overlapping, or conflicting Federal rules have been 
identified.
    There are 1,118 active commercial reef fish permits and 91 others 
that are currently expired but may be renewed within a year. Thus, a 
total of 1,209 vessels may be considered to comprise the universe of 
commercial harvest operations in the GOM reef fish fishery. Of the 
1,209 commercial permittees, 136 entities hold red snapper Class 1 
licenses and 628 entities hold red snapper Class 2 licenses. Of the 136 
Class 1 licenses, seven have been issued on the basis of the historical 
captain criterion. All original owners of Class 1 historical captain 
licenses have sold their licenses. Reported average annual gross 
receipts (in 2004 dollars) of commercial reef fish vessels in the GOM 
range from $24,095 for low-volume vertical line vessels to $116,989 for 
high-volume longline vessels which primarily target grouper. The 
corresponding annual net incomes range from $4,479 for low-volume 
vertical line vessels to $28,466 for high-volume vertical line vessels. 
Permit records

[[Page 50018]]

indicate there are 17 Class 1 fleet operations owning a total of 58 
licenses. In 2004, the top three fleet operations landed a total of 
987,532 lb (447,937 kg) of red snapper, or an average of 329,177 lb 
(149,312 kg) per fleet operation. At the 2004 average red snapper ex-
vessel price of $2.83 per pound, the average pounds landed convert to 
ex-vessel revenues of $931,571. No fleet information is available for 
Class 2 licenses, but it is reasonable under the circumstances to 
assume that if ever a Class 2 fleet operation exists, it would generate 
much less revenues than its Class 1 counterparts.
    There currently exists a permitting requirement for dealers to buy 
or sell reef fish, including red snapper, caught in the GOM. This 
permitting requirement remains under the proposed IFQ program, but in 
addition a red snapper endorsement would be required of dealers to buy 
or sell red snapper. Based on the permits file, there are 227 dealers 
possessing permits to buy and sell reef fish species. However, based on 
logbook records, there are 154 reef fish dealers actively buying and 
selling red snapper. It is possible, though, that some of the 227 
dealers may be handling red snapper in one year but not in another. 
Dealers in Florida purchased about $1.8 million of red snapper, 
followed by dealers in Louisiana with purchases of $1.4 million and 
dealers in Texas with purchases of $1.3 million. Dealers in Mississippi 
purchased $174,000 worth of red snappers and those in Alabama, $88,000. 
These dealers may hold multiple types of permits, and because we do not 
know 100 percent of the business revenues, it is not possible to 
determine what percentage of their business comes from buying and 
selling red snapper.
    Average employment information per reef fish dealer in the GOM is 
unknown. Although dealers and processors are not synonymous entities, a 
recent study reported total employment for reef fish processors in the 
Southeast at approximately 700 individuals, both part and full time. 
NMFS assumes all processors must be dealers, yet a dealer need not be a 
processor. Further, processing is a much more labor intensive operation 
than dealing. Therefore, given the employment estimate for the 
processing sector, it is likely the average dealer employment would be 
low.
    The Small Business Administration (SBA) defines a business as a 
small business if it is independently owned and operated and not 
dominant in its field of operation, and if it has annual receipts not 
in excess of $4.0 million in the case of commercial harvesting entities 
or $6.5 million in the case of for-hire entities, or if it has fewer 
than 500 employees in the case of fish processors, or fewer than 100 
employees in the case of fish dealers. Based on the gross revenue and 
employment profiles presented above, all permitted commercial reef fish 
vessels (including fleet operations) and reef fish dealers affected by 
the proposed regulations may be classified as small entities.
    The proposed rule would introduce additional reporting and record-
keeping requirements involving the tracking of IFQ shares and the 
corresponding red snapper landings. An electronic reporting system is 
the planned approach to track IFQ shares and corresponding red snapper 
landings. The reporting burden would mainly fall on the dealers. An IFQ 
dealer endorsement would be required of any dealer purchasing red 
snapper. The IFQ dealer endorsement would be issued at no cost to those 
individuals who possess a valid GOM reef fish dealer permit and request 
the endorsement. Although the current GOM reef fish dealer permit must 
be renewed annually at a cost of $50 for the initial permit ($12.50 for 
each additional permit), the IFQ dealer endorsement would remain valid 
as long as the individual possesses a valid GOM reef fish dealer 
permit, abides by all reporting and cost recovery requirements of the 
IFQ program, and is not subject to sanctions under 15 CFR part 904. As 
an integral part of the electronic monitoring system, an IFQ dealer 
would be required to have access to computers and the Internet for 
inputting, among other data, pounds and value of red snapper purchased 
by the dealer from an IFQ shareholder. If a dealer does not have 
current access to computers and the Internet, he or she may have to 
expend approximately $1,500 for computer equipment and accessories 
(one-time cost) and $300 annual cost for Internet access. Dealers would 
need some basic computer and Internet skills to input information for 
all red snapper purchases into the IFQ electronic reporting system. 
Dealers also have to remit to NMFS on a quarterly basis, the cost 
recovery fees equivalent to 3 percent of the actual ex-vessel value of 
red snapper purchased from IFQ shareholders/allocation holders. 
Although IFQ allocation holders pay this fee, it is the responsibility 
of dealers to collect and remit these fees to NMFS. In addition to this 
quarterly remittance, dealers would be required to submit to NMFS a 
year-end report summarizing all transactions involving the purchase of 
red snapper. There is currently no available information to determine 
how many of the 227 reef fish dealers or of the current 154 red snapper 
dealers have the necessary electronic capability to participate in the 
IFQ program. However, demonstration of this capability would be 
necessary for IFQ program participation by any dealer.
    IFQ shareholders/allocation holders also have to use the electronic 
reporting system to report transfer/assignment of shares and allocation 
as well as to monitor their outstanding IFQ shares and allocations. 
Similar skills and equipment needs for dealers also apply to IFQ 
shareholders/allocation holders. There would be 95 IFQ shareholders 
based on Class 1 license qualification and as many as 482 IFQ 
shareholders based on Class 2 license qualification. Over time under 
the IFQ program, the number of IFQ shareholders is expected to decline.
    The 764 vessels (136 Class 1 licenses plus 628 Class 2 licenses) 
that have Class 1 or Class 2 licenses comprise 64 percent of all 
vessels with GOM commercial reef fish permits. Also, at least 154, or 
68 percent, of the 227 permitted reef fish dealers would be affected. 
Therefore, the proposed rule would affect a substantial number of small 
entities.
    Because all affected vessel and dealer operations are small 
entities, the proposed rule would not result in disproportionate 
impacts where small entities are placed at a significant competitive 
disadvantage to large entities. Some vessel operations are relatively 
larger than others. In particular, 17 fleet operations account for as 
much as 40 percent of the entire commercial quota for red snapper. 
These 17 fleet operations and another 78 single vessel operations would 
initially receive about 90 percent of IFQ shares. The other 482 smaller 
operations would receive the rest of the IFQ shares. And 146 Class 2 
vessel operations would likely not receive any initial IFQ shares, 
because they have no landings history during the qualifying period of 
1998-2004 for these licenses.
    The proposed rule has varying effects on the profitability of the 
affected vessel operations. Most likely, it has minimal effects on the 
profits of the 146 Class 2 vessel operations that have no red snapper 
landings. These vessels would mainly lose their relatively low-cost 
entry into the red snapper fishery should the need arise. Under the 
proposed rule, they would have to buy shares/allocations even if they 
intend to fish only on a limited basis. Some of the 482 Class 2 vessel 
operations that may have increasingly relied on red snapper to 
supplement their overall harvests

[[Page 50019]]

may receive small IFQ shares. They would either have to buy more 
shares/allocations to continue fishing for red snapper or sell their 
shares. Either way, their overall profits may decline, at least 
initially, although in selling their IFQ shares they would receive some 
remuneration. The 136 Class 1 vessel operations and some Class 2 vessel 
operations that have relatively large red snapper landings are expected 
to benefit most from the IFQ program. As discussed in the RIR, an IFQ 
system is expected to improve the profitability of these vessels. This 
improvement would generally take time, since fishermen would have to 
adjust their operations in order to achieve the most profitable 
position. Such adjustment may involve consolidation of multiple vessel 
operations to lower costs, scheduling of harvests to take advantage of 
market and weather conditions, negotiation with purchasers to strike a 
long-term deal at relatively stable prices, or some other arrangements 
that take advantage of a relatively certain share of a season's quota 
at the start of the season. Some entities may be successful in making 
adjustments while others may not. For those that cannot, there is 
always the option to sell their shares. They may leave the red snapper 
fishery, but would receive some remuneration for doing so.
    The extent to which the IFQ monitoring system, including the 
collection and remittance of the cost recovery fees, would affect 
dealers' profitability cannot be determined at this time. For the 
relatively established dealers, the monetary cost requirement under an 
electronic monitoring system is probably small, especially if they 
already have computer systems in place. Smaller operations, however, 
may totally stay out of the red snapper fishery. On top of the cost the 
dealer defrays to collect and remit cost recovery fees, participating 
dealers are also exposed to possibilities of temporarily or permanently 
losing their red snapper business in the event there are problems with 
their collection and/or remittance of the full amount of cost recovery 
fees. To mitigate this potential adverse impact, dealers are granted a 
30-day grace period from the end of the quarter to reconcile their cost 
recovery fee accounts. Arrears in cost recovery fees not settled within 
the 30-day grace period would lead to suspension of the dealer red 
snapper endorsement. In this eventuality, dealers are granted another 
30 days to settle their accounts before their dealer endorsement is 
annulled. Note, however, that payment of arrears is sufficient to 
reinstate the dealer endorsement within a certain period of time.
    This amendment considered several alternatives to the proposed 
rule. An alternative to the IFQ program is the current limited access 
and license limitation system. Under this system, overcapacity and 
derby effects have substantially constrained the profitability of the 
commercial harvest industry. The proposed IFQ program is expected to 
effectively address these major issues/problems in the fishery. To 
partly cushion the impacts of unintended IFQ allocation overruns that 
may result in penalties, IFQ shareholders are allowed to land up to 10 
percent more than their remaining allocations for the fishing year's 
last fishing trip without having to purchase additional allocation. 
However, any overages would be deducted from the next year's allocation 
associated with their IFQ shares.
    There are two other alternatives with respect to the duration of 
the IFQ program. One specifies no duration while the other imposes a 
term limit on the program. The former has similar effects as the 
proposed rule, but it does not contain a mandatory evaluation of the 
program every 5 years. A sunset provision, as in the latter 
alternative, offers a lower likelihood for the IFQ program to achieve 
its intended objectives. Also, it would introduce uncertainties into 
the program due to potential changes in the ``rules of the game.''
    With respect to an ownership cap, two other alternatives have been 
considered. One places no cap on ownership of IFQ shares while the 
other places a cap ranging from 2 to 15 percent of the commercial 
quota. The first alternative provides a fertile ground for 
consolidation of IFQ shares, but it can also lead to concentration of 
ownership to a select few at the expense of eliminating historically 
small-scale operations in the fishery. The second alternative may be 
too liberal (e.g., 15 percent) as to lead to over-consolidation or too 
restrictive (e.g., 2 percent) as to penalize the more efficient 
operations.
    Two other alternatives have been considered on the issue of 
initially eligible persons. The first one does not specify persons 
eligible to receive initial IFQ shares, and, thus, does not provide 
guidance for initially allocating IFQ shares. The second restricts 
initial eligibility to Class 1 license holders. This is too restrictive 
as to disallow at least 482 Class 2 license holders from continued 
participation in the fishery at the start of the IFQ program.
    Regarding allocating initial IFQ shares, two other alternatives 
have been considered. The first does not specify a methodology for 
allocating initial IFQ shares, and, thus, does not provide guidance for 
allocating IFQ shares to eligible participants. The second allocates 
initial IFQ shares equally among all eligible participants. This 
alternative would penalize the highliners and reward the small-scale 
operations in the fishery. There are more participants who would 
benefit from this alternative, but the magnitude of adverse impacts on 
at least 136 operations would be relatively large.
    Regarding the appeals process, three other alternatives have been 
considered. The first does not establish an appeals process, and, thus, 
would not provide fishermen an avenue to contest landings information 
used by NMFS to determine their IFQ shares. The second establishes an 
appeals board composed of state directors/designees who would advise 
the RA on appeals. The third establishes an advisory panel composed of 
IFQ shareholders. The proposed rule is simple and more straightforward 
than any of the alternatives that establish an appeals board.
    There are five other alternatives regarding the transfer of IFQ 
shares/allocations. The first provides no limit on transfer; the second 
limits transfers only to those with valid commercial reef fish permits; 
the third limits transfers only to IFQ shareholders; the fourth allows 
transfers to U.S. citizens and permanent resident aliens; and, the 
fifth limits transfers only to IFQ shareholders during the first five 
years of the IFQ program and those with valid commercial reef fish 
permits thereafter. With the exception of the first alternative, all 
others would tend to limit the price an IFQ seller gets, so the 
resulting IFQ prices would not capture the true value of the resource. 
In addition, such limitations would constrain the entry of potentially 
more efficient producers. The proposed rule would be less restrictive 
than these alternatives but still would be more restrictive than the 
first alternative that does not impose limits on transfer. However, the 
proposed rule addresses concerns relative to the preservation of the 
historical and current participation in the fishery.
    On the issue of allocating adjustments in the commercial quota, 
three other alternatives have been considered. The first does not 
specify a method for allocating adjustments, so it does not provide 
adequate guidance for allocating quota changes. The second would 
allocate quota changes equally among IFQ share holders, and the third 
would allocate quota changes equally for 50 percent of the change and

[[Page 50020]]

proportionately for the other 50 percent. The second alternative would 
provide smaller operations larger benefits with quota increases and 
also larger losses with quota decreases. The third alternative would 
favor smaller operations at the expense of larger operations. One 
should note, however, that both large and small vessel operations have 
been considered small entities for SBA purposes.
    The proposed rule regarding a cost recovery fee is intended to 
abide by the Sec.  304(d)(2)(A) provision of the Magnuson-Stevens Act. 
One other alternative considered in this respect is not to impose a 
fee, which would not be in compliance with the noted provision. Another 
alternative considered is similar to the proposed rule, except that 
collection and submission of fees reside on the IFQ holders and not on 
the dealers. Under this alternative and the proposed rule, a small 
entity bears the cost of collecting and remitting the fees. The 
proposed rule, however, affords a better accounting control for the 
government. Copies of the RIR and IRFA are available (see ADDRESSES).
    This proposed rule contains collection-of-information requirements 
subject to the Paperwork Reduction Act (PRA). The collection-of-
information requirements and associated public reporting burdens, in 
minutes, are as follows: (1) Dealer account activation--5; (2) Dealer 
transaction report--7; (3) Shareholder account activation--5; (4) 
Allocation holder account activation--10; (5) Advance notification of 
landing--3; (6) Transfer of share--15; and (7) Transfer of allocation--
5. These requirements have been submitted to OMB for approval. These 
estimates of the public reporting burdens include the time for 
reviewing instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collections of information. Public comment is sought regarding: Whether 
these proposed collections of information are necessary for the proper 
performance of the functions of the agency, including whether the 
information will have practical utility; the accuracy of the burden 
estimates; ways to enhance the quality, utility, and clarity of the 
information to be collected; and ways to minimize the burden of the 
collections of information, including through the use of automated 
collection techniques or other forms of information technology. Send 
comments regarding the burden estimates or any other aspect of the 
collection-of-information requirements, including suggestions for 
reducing the burden, to NMFS and to OMB (see ADDRESSES).
    Notwithstanding any other provision of law, no person is required 
to respond to, nor shall a person be subject to a penalty for failure 
to comply with, a collection of information subject to the requirements 
of the PRA, unless that collection of information displays a currently 
valid OMB control number.

List of Subjects in 50 CFR Part 622

    Fisheries, Fishing, Puerto Rico, Reporting and recordkeeping 
requirements, Virgin Islands.

    Dated: August 18, 2006.
Samuel D. Rauch III,
Deputy Assistant Administrator for Regulatory Programs, National Marine 
Fisheries Service.
    For the reasons set out in the preamble, 50 CFR part 622 is 
proposed to be amended as follows:

PART 622--FISHERIES OF THE CARIBBEAN, GULF, AND SOUTH ATLANTIC

    1. The authority citation for part 622 continues to read as 
follows:

    Authority: 16 U.S.C. 1801 et seq.
    2. In Sec.  622.1, revise paragraph (a) and the first sentence in 
paragraph (b), and Table 1 entry ``FMP for the Reef Fish Resources of 
the Gulf of Mexico'', and add footnote 5 to read as follows:


Sec.  622.1  Purpose and scope.

    (a) The purpose of this part is to implement the FMPs prepared 
under the Magnuson-Stevens Act by the CFMC, GMFMC, and/or SAFMC listed 
in Table 1 of this section.
    (b) This part governs conservation and management of species 
included in the FMPs in or from the Caribbean, Gulf, Mid-Atlantic, 
South Atlantic, or Atlantic EEZ, unless otherwise specified, as 
indicated in Table 1 of this section. * * *

                Table 1--FMPs Implemented Under Part 622
------------------------------------------------------------------------
                                       Responsible fishery
              FMP title                     management      Geographical
                                            council(s)          area
------------------------------------------------------------------------
                                * * * * *
                                       ...................
FMP for the Reef Fish Resources of     GMFMC                 Gulf.\1,5\
 the Gulf of Mexico
                                * * * * *
                                       ...................
------------------------------------------------------------------------
\5\ Regulated area includes adjoining state waters for Gulf red snapper
  harvested or possessed by a person aboard a vessel with a Gulf red
  snapper IFQ vessel endorsement or possessed by a dealer with a Gulf
  red snapper IFQ dealer endorsement.

    3. In Sec.  622.2, definitions of ``Actual ex-vessel value'' and 
``IFQ'' are added in alphabetical order to read as follows:


Sec.  622.2  Definitions and acronyms.

* * * * *
    Actual ex-vessel value means the total monetary sale amount a 
fisherman receives for IFQ landings from a registered IFQ dealer.
* * * * *
    IFQ means individual fishing quota.
* * * * *
    4. Section 622.4 is amended by:
    A. Adding introductory text to the section.
    B. Adding a new sentence after the first sentence of paragraph 
(a)(2)(v).
    C. Revising paragraphs (a)(2)(ix), (a)(4), the first sentence of 
paragraph (d), paragraph (g)(1), and the first sentence of paragraph 
(h)(1).
    D. Removing and reserving paragraph (p).
    The additions and revisions read as follows:


Sec.  622.4  Permits and fees.

    Paragraphs (p)(1) through (3) and (p)(5) through (6) of this 
section will no longer be in effect as of January 1, 2007, and 
paragraph (p)(4) of this section will no longer be in effect as of 
[DATE OF PUBLICATION OF THE FINAL RULE].
    (a) * * *
    (2) * * *
    (v) * * * See paragraph (a)(2)(ix) of this section regarding an 
additional IFQ vessel endorsement required to fish for, possess, or 
land Gulf red snapper. * * *
* * * * *
    (ix) Gulf red snapper IFQ vessel endorsement. For a person aboard a 
vessel, for which a commercial vessel permit for Gulf reef fish has 
been issued, to fish for, possess, or land Gulf red snapper, regardless 
of where harvested or possessed, a Gulf red snapper IFQ vessel 
endorsement must have been issued to the vessel and must be on board. 
As a condition of the IFQ vessel endorsement issued under this

[[Page 50021]]

paragraph (a)(2)(ix), a person aboard such vessel must comply with the 
requirements of Sec.  622.16 regardless of where red snapper are 
harvested or possessed. An owner of a vessel with a commercial vessel 
permit for Gulf reef fish can download an IFQ vessel endorsement from 
the NMFS IFQ website at ifq.sero.nmfs.noaa.gov. If such owner does not 
have an IFQ online account, the owner must first contact IFQ Customer 
Service at 1-866-425-7627 to obtain information necessary to access the 
IFQ website and establish an IFQ online account. There is no fee for 
obtaining this endorsement. The vessel endorsement remains valid as 
long as the vessel permit remains valid and the vessel owner is in 
compliance with all Gulf reef fish and Gulf red snapper IFQ reporting 
requirements, has paid all IFQ fees required under paragraph (c)(2) of 
this section, and is not subject to sanctions under 15 CFR part 904. 
The endorsement is not transferable. See Sec.  622.16 regarding other 
provisions pertinent to the Gulf red snapper IFQ system.
* * * * *
    (4) Dealer permits, endorsements, and conditions --(i) Permits. For 
a dealer to receive Gulf reef fish, golden crab harvested from the 
South Atlantic EEZ, South Atlantic snapper-grouper, rock shrimp 
harvested from the South Atlantic EEZ, dolphin or wahoo harvested from 
the Atlantic EEZ, or wreckfish, a dealer permit for Gulf reef fish, 
golden crab, South Atlantic snapper-grouper, rock shrimp, Atlantic 
dolphin and wahoo, or wreckfish, respectively, must be issued to the 
dealer.
    (ii) Gulf red snapper IFQ dealer endorsement. In addition to the 
requirement for a dealer permit for Gulf reef fish as specified in 
paragraph (a)(4)(i) of this section, for a dealer to receive Gulf red 
snapper subject to the Gulf red snapper IFQ program, as specified in 
Sec.  622.16(a)(1), or for a person aboard a vessel with a Gulf red 
snapper IFQ vessel endorsement to sell such red snapper directly to an 
entity other than a dealer, such persons must also have a Gulf red 
snapper IFQ dealer endorsement. A dealer with a Gulf reef fish dealer 
permit can download a Gulf red snapper IFQ dealer endorsement from the 
NMFS IFQ website at ifq.sero.nmfs.noaa.gov. If such persons do not have 
an IFQ online account, they must first contact IFQ Customer Service at 
1-866-425-7627 to obtain information necessary to access the IFQ 
website and establish an IFQ online account. There is no fee for 
obtaining this endorsement. The endorsement remains valid as long as 
the Gulf reef fish dealer permit remains valid and the dealer is in 
compliance with all Gulf reef fish and Gulf red snapper IFQ reporting 
requirements, has paid all IFQ fees required under paragraph (c)(2) of 
this section, and is not subject to sanctions under 15 CFR part 904. 
The endorsement is not transferable. See Sec.  622.16 regarding other 
provisions pertinent to the Gulf red snapper IFQ system.
    (iii) State license and facility requirements. To obtain a dealer 
permit or endorsement, the applicant must have a valid state 
wholesaler's license in the state(s) where the dealer operates, if 
required by such state(s), and must have a physical facility at a fixed 
location in such state(s).
* * * * *
    (d) * * * Unless specified otherwise, a fee is charged for each 
application for a permit, license, or endorsement submitted under this 
section, for each request for transfer or replacement of such permit, 
license, or endorsement, and for each fish trap or sea bass pot 
identification tag required under Sec.  622.6(b)(1)(i)(B). * * *
* * * * *
    (g) * * *
    (1) Vessel permits, licenses, and endorsements and dealer permits. 
A vessel permit, license, or endorsement or a dealer permit or 
endorsement issued under this section is not transferable or 
assignable, except as provided in paragraph (m) of this section for a 
commercial vessel permit for Gulf reef fish, in paragraph (n) of this 
section for a fish trap endorsement, in paragraph (o) of this section 
for a king mackerel gillnet permit, in paragraph (q) of this section 
for a commercial vessel permit for king mackerel, in paragraph (r) of 
this section for a charter vessel/headboat permit for Gulf coastal 
migratory pelagic fish or Gulf reef fish, in paragraph (s) of this 
section for a commercial vessel moratorium permit for Gulf shrimp, in 
Sec.  622.17(c) for a commercial vessel permit for golden crab, in 
Sec.  622.18(e) for a commercial vessel permit for South Atlantic 
snapper-grouper, or in Sec.  622.19(e) for a commercial vessel permit 
for South Atlantic rock shrimp. A person who acquires a vessel or 
dealership who desires to conduct activities for which a permit, 
license, or endorsement is required must apply for a permit, license, 
or endorsement in accordance with the provisions of this section and 
other applicable sections of this part. If the acquired vessel or 
dealership is currently permitted, the application must be accompanied 
by the original permit and a copy of a signed bill of sale or 
equivalent acquisition papers. In those cases where a permit, license, 
or endorsement is transferable, the seller must sign the back of the 
permit, license, or endorsement and have the signed transfer document 
notarized.
* * * * *
    (h) * * *
    (1) * * * Unless specified otherwise, a vessel owner or dealer who 
has been issued a permit, license, or endorsement under this section 
must renew such permit, license, or endorsement on an annual basis.
* * * * *
    5. In Sec.  622.7, paragraphs (gg) and (hh) are added to read as 
follows:


Sec.  622.7  Prohibitions.

* * * * *
    (gg) Fail to comply with any provision related to the Gulf red 
snapper IFQ program as specified in Sec.  622.16.
    (hh) Falsify any information required to be submitted regarding the 
Gulf red snapper IFQ program as specified in Sec.  622.16.
    6. The stay of Sec.  622.16 is lifted and the section is revised to 
read as follows:


Sec.  622.16  Gulf red snapper individual fishing quota (IFQ) program.

    (a) General. This section establishes an IFQ program for the 
commercial fishery for Gulf red snapper. Under the IFQ program, the RA 
initially will assign eligible participants IFQ shares equivalent to a 
percentage of the annual commercial red snapper quota, based on their 
applicable historical landings. Shares determine the amount of Gulf red 
snapper IFQ allocation, in pounds gutted weight, a shareholder is 
initially authorized to possess, land, or sell in a given calendar 
year. Shares and annual IFQ allocation are transferable. See Sec.  
622.4(a)(2)(ix) regarding a requirement for a vessel landing red 
snapper subject to this IFQ program to have a Gulf red snapper IFQ 
vessel endorsement. See Sec.  622.4(a)(4)(ii) regarding a requirement 
for a Gulf red snapper IFQ dealer endorsement. Details regarding 
eligibility, applicable landings history, account setup and transaction 
requirements, constraints on transferability, and other provisions of 
this IFQ system are provided in the following paragraphs of this 
section.
    (1) Scope. The provisions of this section apply to Gulf red snapper 
in or from the Gulf EEZ and, for a person aboard a vessel with a Gulf 
red snapper IFQ vessel endorsement as required by Sec.  622.4(a)(2)(ix) 
or for a person with a Gulf red snapper IFQ dealer endorsement as 
required by Sec.  622.4(a)(4)(ii), these provisions apply

[[Page 50022]]

to Gulf red snapper regardless of where harvested or possessed.
    (2) Duration. The IFQ program established by this section will 
remain in effect until it is modified or terminated; however, the 
program will be evaluated by the Gulf of Mexico Fishery Management 
Council every 5 years.
    (3) Electronic system requirements. (i) The administrative 
functions associated with this IFQ program, e.g., registration and 
account setup, landing transactions, and transfers, are designed to be 
accomplished online; therefore, a participant must have access to a 
computer and Internet access and must set up an appropriate IFQ online 
account to participate. Assistance with online functions is available 
from IFQ Customer Service by calling 1-866-425-7627 Monday through 
Friday between 8 a.m. and 4:30 p.m. eastern time.
    (ii) The RA will mail initial shareholders and dealers with Gulf 
reef fish dealer permits information and instructions pertinent to 
setting up an IFQ online account. Other eligible persons who desire to 
become IFQ participants by purchasing IFQ shares or allocation or by 
obtaining a Gulf red snapper IFQ dealer endorsement must first contact 
IFQ Customer Service at 1-866-425-7627 to obtain information necessary 
to set up the required IFQ online account. Each IFQ participant must 
monitor his/her online account and all associated messages and comply 
with all IFQ online reporting requirements.
    (iii) During catastrophic conditions only, the IFQ program provides 
for use of paper-based components for basic required functions as a 
backup. The RA will determine when catastrophic conditions exist, the 
duration of the catastrophic conditions, and which participants or 
geographic areas are deemed affected by the catastrophic conditions. 
The RA will provide timely notice to affected participants via 
publication of notification in the Federal Register, NOAA weather 
radio, fishery bulletins, and other appropriate means and will 
authorize the affected participants' use of paper-based components for 
the duration of the catastrophic conditions. NMFS will provide each IFQ 
dealer the necessary paper forms, sequentially coded, and instructions 
for submission of the forms to the RA. The paper forms will also be 
available from the RA. The program functions available to participants 
or geographic areas deemed affected by catastrophic conditions will be 
limited under the paper-based system. There will be no mechanism for 
transfers of IFQ shares or allocation under the paper-based system in 
effect during catastrophic conditions. Assistance in complying with the 
requirements of the paper-based system will be available via IFQ 
Customer Service 1-866-425-7627 Monday through Friday between 8 a.m. 
and 4:30 p.m. eastern time.
    (b) Procedures for initial implementation--(1) Determination of 
eligibility for initial IFQ shares. To be eligible as an initial IFQ 
shareholder a person must own a Class 1 or Class 2 Gulf red snapper 
license as of the date of publication of the final rule implementing 
this IFQ system. For the purposes of this paragraph, an owner of a 
license is defined as the person who controls transfer of the license 
and is listed as the qualifier on the face of the license. NMFS' permit 
records are the sole basis for determining eligibility based on Class 1 
or Class 2 license history. No more than one initial eligibility will 
be granted based upon a given Class 1 or Class 2 license.
    (2) Calculation of initial IFQ shares and allocation--(i) IFQ 
shares. The RA will calculate initial IFQ shares based on the highest 
average annual landings of Gulf red snapper associated with each 
shareholder's current Class 1 or Class 2 license during the applicable 
landings history. The applicable landings history for a Class 1 license 
owner whose license was not issued based on historical captain status 
includes any 10 consecutive years of landings data from 1990 through 
2004; for a Class 1 license owner whose license was issued on the basis 
of historical captain status, all years of landings data from 1998 
through 2004; and for a Class 2 license holder, any 5 years of landings 
data from 1998 through 2004. All landings associated with a current 
Class 1 or Class 2 license for the applicable landings history, 
including those reported by a person who held the license prior to the 
current license owner, will be attributed to the current license owner. 
Only legal landings reported in compliance with applicable state and 
Federal regulations will be accepted. Each shareholder's initial share 
is derived by dividing the shareholder's highest average annual 
landings during the applicable landings history by the sum of the 
highest average annual landings of all shareholders during the 
respective applicable landings histories. Initial IFQ shares will not 
be issued in denominations of less than 0.0001 percent.
    (ii) Initial share set-aside to accommodate resolution of appeals. 
During the first year of implementation of this IFQ program only, the 
RA will reserve a 3-percent IFQ share, prior to the initial 
distribution of shares, to accommodate resolution of appeals, if 
necessary. Any portion of the 3-percent share remaining after the 
appeals process is completed will be distributed as soon as possible 
among initial shareholders in direct proportion to the percentage share 
each was initially allocated. If resolution of appeals requires more 
than a 3-percent share, the shares of all initial shareholders would be 
reduced accordingly in direct proportion to the percentage share each 
was initially allocated.
    (iii) IFQ allocation. IFQ allocation is the amount of Gulf red 
snapper, in pounds gutted weight, an IFQ shareholder or allocation 
holder is authorized to possess, land, or sell during a given fishing 
year. IFQ allocation is derived at the beginning of each year by 
multiplying a shareholder's IFQ share times the annual commercial quota 
for Gulf red snapper.
    (iv) Special procedure for initial calculation of 2007 IFQ 
allocations. Because of uncertainty regarding the 2007 commercial quota 
for Gulf red snapper and the timing of its implementation and to avoid 
the possibility of having to revoke some proportion of initial 
allocation if the quota was subsequently reduced, the RA may initially 
calculate the 2007 IFQ allocations based on a proxy commercial quota. 
If a commercial quota adjustment for Gulf red snapper has not been 
submitted for review by the Secretary of Commerce in time for 
calculation of 2007 IFQ allocations, the RA will initially calculate 
2007 allocations based on a proxy commercial quota of 2.55 million lb 
(1.16 million kg). Alternatively, if a commercial quota adjustment for 
Gulf red snapper has been submitted for review by the Secretary of 
Commerce in time to allow calculation of 2007 allocations, the RA will 
base 2007 IFQ allocations on the proposed quota. Under either scenario, 
as soon as the actual 2007 commercial quota is final, but no later than 
July 1, 2007, the RA will adjust the 2007 IFQ allocations, as 
necessary, consistent with the actual quota.
    (3) Shareholder notification regarding landings history, initial 
determination of IFQ shares and allocations, and IFQ account setup 
information. (i) As soon as possible after the date of publication of 
the final rule implementing this IFQ program, the RA will mail each 
Class 1 or Class 2 red snapper license owner information pertinent to 
the IFQ program. This information will include--
    (A) Gulf red snapper landings associated with the owner's license

[[Page 50023]]

during each year of the applicable landings history;
    (B) The highest average annual red snapper landings based on the 
owner's applicable landings history;
    (C) The owner's initial IFQ share based on the highest average 
annual landings associated with the owner's applicable landings 
history;
    (D) The initial IFQ allocation;
    (E) Instructions for appeals;
    (F) General instructions regarding procedures related to the IFQ 
online system, including how to set up an online account; and
    (G) A user identification number--the personal identification 
number (PIN) will be provided in a subsequent letter.
    (ii) The RA will provide this information, via certified mail 
return receipt requested, to the license owner's address of record as 
listed in NMFS' permit files. A license owner who does not receive such 
notification from the RA within 30 days after the date of publication 
of the final rule implementing this IFQ system must contact the RA to 
clarify eligibility status and landings and initial share information.
    (iii) The initial share information provided by the RA is based on 
the highest average landings associated with the owner's applicable 
landings history; however, a license owner may select a different set 
of years of landings, consistent with the owner's applicable landings 
history, for the calculation of the initial IFQ share. The license 
owner must submit that information to the RA postmarked no later than 
30 days after the date of publication of the final rule implementing 
this IFQ system. If alternative years, consistent with the applicable 
landings history, are selected, revised information regarding shares 
and allocations will be posted on the online IFQ accounts no later than 
January 1, 2007. A license owner who disagrees with the landings or 
eligibility information provided by the RA may appeal the RA's initial 
determinations.
    (4) Procedure for appealing IFQ eligibility and/or landings 
information. The only items subject to appeal under this IFQ system are 
initial eligibility for IFQ shares based on ownership of a Class 1 or 
Class 2 license, the accuracy of the amount of landings, and correct 
assignment of landings to the license owner. Appeals based on hardship 
factors will not be considered. Appeals must be submitted to the RA 
postmarked no later than 90 days after the effective date of the final 
rule implementing this IFQ system and must contain documentation 
supporting the basis for the appeal. The RA will review all appeals, 
render final decisions on the appeals, and advise the appellant of the 
final decision.
    (i) Eligibility appeals. NMFS' records of Class 1 and Class 2 
licenses are the sole basis for determining ownership of such licenses. 
A person who believes he/she meets the permit eligibility criteria 
based on ownership of a vessel under a different name, as may have 
occurred when ownership has changed from individual to corporate or 
vice versa, must document his/her continuity of ownership.
    (ii) Landings appeals. Landings data for 1990 through 1992 are not 
subject to appeal. Appeals regarding landings data for 1993 through 
2004 will be based solely on NMFS' logbook records. If NMFS' logbooks 
are not available, state landings records or data that were submitted 
in compliance with applicable Federal and state regulations, on or 
before June 30, 2005, can be used.
    (5) Dealer notification and IFQ account setup information. As soon 
as possible after the date of publication of the final rule 
implementing this IFQ program, the RA will mail each dealer with a 
valid Gulf reef fish dealer permit information pertinent to the IFQ 
program. Any such dealer is eligible to receive a red snapper IFQ 
dealer endorsement which can be downloaded from the IFQ website 
atifq.sero.nmfs.noaa.gov once an IFQ account has been established. The 
information package will include general information about the IFQ 
program and instructions for accessing the IFQ website and establishing 
an IFQ dealer account.
    (c) IFQ operations and requirements--(1) IFQ Landing and 
transaction requirements. (i) Gulf red snapper subject to this IFQ 
program can only be possessed or landed by a vessel with a Gulf red 
snapper IFQ vessel endorsement. Such red snapper can only be received 
by a dealer with a Gulf red snapper IFQ dealer endorsement. The person 
landing the red snapper must hold or be assigned IFQ allocation at 
least equal to the pounds of red snapper landed, except as provided in 
paragraph (c)(1)(ii) of this section.
    (ii) An IFQ shareholder or his agent or employee assigned to land 
the shareholder's allocation can legally exceed, by up to 10 percent, 
the shareholder's allocation remaining on the last fishing trip of the 
fishing year. Any such overage will be deducted from the shareholder's 
allocation for the subsequent fishing year.
    (iii) The dealer is responsible for completing a landing 
transaction report for each landing and sale of Gulf red snapper via 
the IFQ website at ifq.sero.nmfs.noaa.gov at the time of the 
transaction in accordance with reporting form and instructions provided 
on the website. This report includes, but is not limited to, date, 
time, and location of transaction; weight and actual ex-vessel value of 
red snapper landed and sold; and information necessary to identify the 
fisherman, vessel, and dealer involved in the transaction. The 
fisherman must validate the dealer transaction report by entering his 
unique PIN number when the transaction report is submitted. After the 
dealer submits the report and the information has been verified, the 
website will send a transaction approval code to the dealer and the 
allocation holder.
    (2) IFQ cost recovery fees. As required by section 304(d)(2)(A)(i) 
of the Magnuson-Stevens Act, the RA will collect a fee to recover the 
actual costs directly related to the management and enforcement of the 
Gulf red snapper IFQ program. The fee cannot exceed 3 percent of the 
ex-vessel value of Gulf red snapper landed under the IFQ program. Such 
fees will be deposited in the Limited Access System Administration Fund 
(LASAF). Initially, the fee will be 3 percent of the actual ex-vessel 
value of Gulf red snapper landed under the IFQ program, as documented 
in each landings transaction report. The RA will review the cost 
recovery fee annually to determine if adjustment is warranted. Factors 
considered in the review include the catch subject to the IFQ cost 
recovery, projected ex-vessel value of the catch, costs directly 
related to the management and enforcement of the IFQ program, the 
projected IFQ balance in the LASAF, and expected non-payment of fee 
liabilities. If the RA determines that a fee adjustment is warranted, 
the RA will publish a notification of the fee adjustment in the Federal 
Register.
    (i) Payment responsibility. The IFQ allocation holder specified in 
the documented red snapper IFQ landing transaction report is 
responsible for payment of the applicable cost recovery fees.
    (ii) Collection and submission responsibility. A dealer who 
receives Gulf red snapper subject to the IFQ program is responsible for 
collecting the applicable cost recovery fee for each IFQ landing from 
the IFQ allocation holder specified in the IFQ landing transaction 
report. Such dealer is responsible for submitting all applicable cost 
recovery fees to NMFS on a quarterly basis. The fees are due and must 
be submitted, using pay.gov via the IFQ system, no later than 30 days 
after the end of each calendar-year quarter; however, fees

[[Page 50024]]

may be submitted at any time before that deadline. Fees not received by 
the deadline are delinquent.
    (iii) Fee payment procedure. For each IFQ dealer, the IFQ system 
will post, on individual message boards, an end-of-quarter statement of 
cost recovery fees that are due. The dealer is responsible for 
submitting the cost recovery fee payments using pay.gov via the IFQ 
system. Authorized payments methods are credit card, debit card, or 
automated clearing house (ACH). Payment by check will be authorized 
only if the RA has determined that the geographical area or an 
individual(s) is affected by catastrophic conditions.
    (iv) Fee reconciliation process--delinquent fees. The following 
procedures apply to an IFQ dealer whose cost recovery fees are 
delinquent.
    (A) On or about the 31st day after the end of each calendar-year 
quarter, the RA will send the dealer an electronic message via the IFQ 
website and official notice via mail indicating the applicable fees are 
delinquent; the dealer's IFQ account has been suspended pending payment 
of the applicable fees; and notice of intent to annul the dealer's IFQ 
endorsement.
    (B) On or about the 61st day after the end of each calendar-year 
quarter, the RA will mail to a dealer whose cost recovery fee payment 
remains delinquent, official notice documenting the dealer's IFQ 
endorsement has been annulled.
    (C) On or about the 91st day after the end of each calendar-year 
quarter, the RA will refer any delinquent IFQ dealer cost recovery fees 
to the appropriate authorities for collection of payment.
    (v) Annual IFQ dealer ex-vessel value report. The IFQ online system 
will generate an annual IFQ Dealer Ex-Vessel Value Report for each IFQ 
dealer. The report will include quarterly and annual information 
regarding the amount and value of IFQ red snapper received by the 
dealer, the associated cost recovery fees, and the status of those 
fees. The dealer's acceptance of this report constitutes compliance 
with the annual dealer IFQ reporting requirement.
    (3) Measures to enhance IFQ program enforceability--(i) Advance 
notice of landing. The owner or operator of a vessel landing IFQ red 
snapper is responsible for calling NMFS Office of Law Enforcement at 1-
866-425-7627 at least 3 hours in advance of landing to report the time 
and location of landing and the name and address of the IFQ dealer 
where the red snapper are to be received.
    (ii) Time restriction on landing and offloading. IFQ red snapper 
may be landed and offloaded only between 6 a.m. and 6 p.m., local time.
    (iii) Restrictions on transfer of IFQ red snapper. At-sea or 
dockside transfer of IFQ red snapper from one vessel to another vessel 
is prohibited.
    (iv) Requirement for transaction approval code. Possession of IFQ 
red snapper from the time of transfer from a vessel through possession 
by a dealer is prohibited unless the IFQ red snapper are accompanied by 
a transaction approval code verifying a legal transaction of the amount 
of IFQ red snapper in possession.
    (4) Transfer of IFQ shares and allocation. Through the date 5 years 
after the effective date of the final rule implementing this IFQ 
program, IFQ shares and allocations can be transferred only to a person 
who holds a valid commercial vessel permit for Gulf reef fish; 
thereafter, IFQ shares and allocations can be transferred to any U.S. 
citizen or permanent resident alien. However, a valid commercial permit 
for Gulf reef fish, a Gulf red snapper IFQ vessel endorsement, and Gulf 
red snapper IFQ allocation are required to possess, land or sell Gulf 
red snapper subject to this IFQ program.
    (i) Share transfers. Share transfers are permanent, i.e., they 
remain in effect until subsequently transferred. Transfer of shares 
will result in the corresponding allocation being automatically 
transferred to the person receiving the transferred share beginning 
with the fishing year following the year the transfer occurred. 
However, within the fishing year the share transfer occurs, transfer of 
shares and associated allocation are independent--unless the associated 
allocation is transferred separately, it remains with the transferor 
for the duration of that fishing year. A share transfer transaction 
that remains in pending status, i.e., has not been completed and 
verified with a transaction approval code, after 30 days from the date 
the shareholder initiated the transfer will be cancelled, and the 
pending shares will be re-credited to the shareholder who initiated the 
transfer.
    (ii) Share transfer procedures. A shareholder must initiate the 
request for the RA to transfer IFQ shares by using the online Gulf red 
snapper IFQ website at ifq.sero.nmfs.noaa.gov. Following the 
instructions provided on the website, the shareholder must enter 
pertinent information regarding the transfer request including, but not 
limited to, amount of shares to be transferred, which must be a minimum 
of 0.0001 percent; name of the eligible transferee; and the value of 
the transferred shares. For the first 5 years this IFQ program is in 
effect, an eligible transferee is a person who has a valid commercial 
vessel permit for Gulf reef fish; is in compliance with all reporting 
requirements for the Gulf reef fish fishery and the red snapper IFQ 
program; is not subject to sanctions under 15 CFR part 904; and who 
would not be in violation of the share cap as specified in paragraph 
(c)(6) of this section. Thereafter, share transferee eligibility will 
be extended to include U.S. citizens and permanent resident aliens who 
are otherwise in compliance with the provisions of this section. NMFS 
will evaluate and verify the information entered. If the information is 
not accepted, NMFS will send the shareholder an electronic message 
explaining the reason(s). If the information is accepted, NMFS will 
send the shareholder an initial transaction approval code and make an 
application for share transfer available for downloading and printing. 
The shareholder and eligible transferee must complete the application, 
have their signatures notarized, and mail the signed application to the 
RA at least 30 days prior to the date on which the applicant desires to 
have the transfer effective. The signed application must be received by 
the RA prior to December 1. See paragraph (c)(4)(v) of this section 
regarding a prohibition on transfer during December of each year. If 
the RA approves the application for transfer, the online system will 
send the shareholder and the transferee an electronic message 
acknowledging the approval; a transfer is effective upon receipt of the 
message. The adjusted shares resulting from a transfer may be viewed 
online by each shareholder. If the RA does not approve the transfer 
application, the RA will return the application to the shareholder with 
an explanation and instructions for correcting any deficiencies.
    (iii) Allocation transfers. An allocation transfer is valid only 
for the remainder of the fishing year in which it occurs; it does not 
carry over to the subsequent fishing year. Any allocation that is 
unused at the end of the fishing year is void.
    (iv) Allocation transfer procedures. Unlike share transfers which 
require a notarized application for transfer, allocation transfers can 
be accomplished online via the red snapper IFQ website. An IFQ 
allocation holder can initiate an allocation transfer by logging on to 
the red snapper IFQ website at ifq.sero.nmfs.noaa.gov, entering the 
required information, including but not limited to, name of an eligible 
transferee and amount of IFQ allocation to be transferred and price, 
and submitting

[[Page 50025]]

the transfer electronically. If the transfer is approved, the website 
will provide a transaction approval code to the transferor and 
transferee confirming the transaction.
    (v) Prohibition of transfer of shares during December each year. No 
IFQ shares may be transferred during December of each year. This period 
is necessary to provide the RA sufficient time to reconcile IFQ 
accounts, adjust allocations for the upcoming year if the commercial 
quota for Gulf red snapper has changed, and update shares and 
allocations for the upcoming fishing year.
    (5) Fleet management and assignment of IFQ allocation. An IFQ 
shareholder or IFQ allocation holder who owns more than one vessel with 
a valid Gulf reef fish vessel permit and a valid Gulf red snapper IFQ 
vessel endorsement may assign IFQ allocation to a person aboard such 
vessel and provide that person the IFQ account information necessary to 
conduct landing transactions.
    (6) IFQ share cap. No person, including a corporation or other 
entity, may individually or collectively hold IFQ shares in excess of 
the maximum share initially issued to a person for the 2007 fishing 
year, as of the date appeals are resolved and shares are adjusted 
accordingly. For the purposes of considering the share cap, a 
corporation's total IFQ share is defined as the sum of the IFQ shares 
held by the corporation and the IFQ shares held by individual 
shareholders of the corporation. A corporation must identify the 
shareholders of the corporation and their percent of shares in the 
corporation.
    (7) Redistribution of shares resulting from permanent permit or 
endorsement revocation. If a shareholder's commercial vessel permit for 
Gulf reef fish or Gulf red snapper IFQ vessel endorsement has been 
permanently revoked under provisions of 15 CFR part 904, the RA will 
redistribute the IFQ shares held by that shareholder proportionately 
among remaining shareholders based upon the amount of shares each held 
just prior to the redistribution. During December of each year, the RA 
will determine the amount of revoked shares, if any, to be 
redistributed, and the shares will be distributed at the beginning of 
the subsequent fishing year.
    (8) Annual recalculation and notification of IFQ shares and 
allocation. On or about January 1 each year, IFQ shareholders will be 
notified, via the IFQ website at ifq.sero.nmfs.noaa.gov, of their IFQ 
share and allocation for the upcoming fishing year. These updated share 
values will reflect the results of applicable share transfers and any 
redistribution of shares resulting from permanent revocation of 
applicable permits or endorsements under 15 CFR part 904. Allocation is 
calculated by multiplying IFQ share times the annual red snapper 
commercial quota. Updated allocation values will reflect any change in 
IFQ share, any change in the annual commercial quota for Gulf red 
snapper, and any debits required as a result of prior fishing year 
overages as specified in paragraph (c)(1)(ii) of this section. IFQ 
participants can monitor the status of their shares and allocation 
throughout the year via the IFQ website.

Sec.  622.34 [Amended]
    7. In Sec.  622.34, paragraph (l) is removed and reserved.
    8. In Sec.  622.42, paragraph (a)(1)(i) is revised to read as 
follows.


Sec.  622.42  Quotas.

* * * * *
    (a) * * *
    (1) * * *
    (i) Red snapper--4.65 million lb (2.11 million kg), round weight.
* * * * *

Sec.  622.44 [Amended]
    9. In Sec.  622.44, paragraph (d) is removed and reserved.
[FR Doc. 06-7122 Filed 8-23-06; 8:45 am]
BILLING CODE 3510-22-S