[Federal Register Volume 72, Number 139 (Friday, July 20, 2007)]
[Proposed Rules]
[Pages 39779-39783]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-14118]


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DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

50 CFR Part 600

[Docket No. 070607179-7312-01]
RIN 0648-AV66


Fishing Capacity Reduction Program for the Longline Catcher 
Processor Subsector of the Bering Sea and Aleutian Islands Non-Pollock 
Groundfish Fishery, Industry Fee System

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

ACTION: Proposed rule; request for comments.

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SUMMARY: NMFS proposes regulations to implement an industry fee system 
for repaying a $35 million Federal loan financing a fishing capacity 
reduction program in the longline catcher processor subsector of the 
Bering Sea and Aleutian Islands (BSAI) non-pollock groundfish fishery. 
This action's intent is to implement a fee collection system to ensure 
repayment of the loan.

DATES: Comments on this proposed rule must be received by August 20, 
2007.

ADDRESSES: Comments may be submitted by any of the following methods:
     E-mail: [email protected]. Include in the 
subject line the following identifier: ``Longline catcher processor 
buyback fee system proposed rule.'' E-mail comments, with or without 
attachments, are limited to 5 megabytes;
     Federal e-Rulemaking Portal: http://www.regulations.gov;
     Mail to: Leo Erwin, Chief, Financial Services Division, 
NMFS-MB5, 1315 East-West Highway, Silver Spring, MD 20910; or
     Fax to 301-713-1306.
    Comments involving the burden-hour estimates or other aspects of 
the collection-of-information requirements contained in this proposed 
rule should be submitted in writing to Leo Erwin, at the above address, 
and to David Rostker, Office of Management and Budget (OMB), by email 
at [email protected] or by fax to 202 395 7285.
    Copies of the Environmental Assessment/Regulatory Impact Review/
Final Regulatory Flexibility Analysis (EA/RIR/FRFA) prepared for the 
program may be obtained from Leo Erwin at the above address.

[[Page 39780]]


FOR FURTHER INFORMATION CONTACT: Leo Erwin at 301-713 2390.

SUPPLEMENTARY INFORMATION:

Background

    Sections 312(b)-(e) of the Magnuson-Stevens Fishery Conservation 
and Management Act (16 U.S.C. 1861a(b) through (e)) generally 
authorized fishing capacity reduction programs. In particular, section 
312(d) authorized industry fee systems for repaying the reduction loans 
which finance reduction program costs. Subpart L of 50 CFR part 600 is 
the framework rule generally implementing sections 312(b)-(e). Subpart 
M of 50 CFR part 600 contains specific fishery or program regulations.
    Sections 1111 and 1112 of the Merchant Marine Act, 1936 (46 App. 
U.S.C. 1279f and 1279g) generally authorized reduction loans.
    The FY 2005 Appropriations Act (Public Law 108-447, Section 219) 
authorized a fishing capacity reduction program for the longline 
catcher processor subsector of the BSAI non-pollock groundfish fishery 
(reduction fishery).
    NMFS published the longline catcher processor subsector BSAI non-
pollock reduction program's (reduction program) proposed implementation 
rule on August 11, 2006 (71 FR 46364) and its final rule on September 
29, 2006 (71 FR 57696). Anyone interested in the reduction program's 
full implementation details should refer to these two documents. NMFS 
proposed and adopted the reduction program's implementation rule as 
Sec.  600.1105 of subpart M of 50 CFR part 600.
    The reduction program's objectives include promoting sustainable 
fishery management and maximum sustained reduction of fishing capacity 
from the reduction fishery at the least cost. This is a voluntary 
program in which, in return for reduction payments, selected offerors 
permanently relinquished their fishing licenses, surrendered the 
fishing histories upon which those licenses' issuance were based, and 
permanently withdrew vessels from fishing.
    NMFS financed the reduction program's $35 million cost, which post-
reduction BSAI non-pollock groundfish longline catcher processors repay 
over an anticipated 30-year term but fees will continue indefinitely 
for as long as necessary to fully repay the loan.
    The fee amount, expressed in cents per pound rounded up to the next 
one-tenth of a cent, will be based upon the annual principal and 
interest due on the loan and could be up to 5 percent of longline 
catcher processor subsector BSAI Pacific cod landings. In the event 
that the total principal and interest due exceeds 5 percent of the ex-
vessel Pacific cod revenues, an additional fee of one penny per pound 
will be assessed for pollock, arrowtooth flounder, Greenland turbot, 
skate, yellowfin sole and rock sole.
    The Freezer Longline Conservation Cooperative (FLCC) received 
member offers and subsequently voted to accept four offers. The FLCC 
submitted a fishing capacity reduction plan (reduction plan) 
subsequently approved by NMFS. A referendum concerning the fees 
necessary for repayment of the $35 million loan followed the offer and 
acceptance process. Approval of the industry fee system required at 
least two-thirds of the votes cast in the referendum to be in favor 
before the reduction program could be implemented and payment tendered.
    NMFS mailed ballots to 39 qualified referendum voters on March 21, 
2007, after approving the reduction plan. The voting period opened on 
March 21, 2007, and closed on April 6, 2007. NMFS received 34 timely 
and valid votes. All of the votes approved the fees. This exceeded the 
two-thirds minimum required for industry fee system approval. 
Consequently, this referendum was successful and approved the industry 
fee system.
    On April 26, 2007, NMFS published a Federal Register notice (72 FR 
20836) advising the public that NMFS would, beginning on May 29, 2007, 
tender the reduction program's reduction payments to the four selected 
offerors. On May 29, 2007, NMFS required the selected offerors to 
permanently stop all fishing with the reduction vessels and permits. 
Subsequently, NMFS:
    1. Disbursed $35,000,000 in reduction payments to the four selected 
offerors;
    2. Revoked the relinquished reduction licenses;
    3. Revoked each reduction vessel's fishing history;
    4. Notified the National Vessel Documentation Center to revoke the 
reduction vessels' fishery trade endorsements and appropriately 
annotate the reduction vessel's document; and
    5. Notified the U.S. Maritime Administration to prohibit the 
reduction vessel's transfer to foreign ownership or registry.
    Selected offerors participating in the reduction program have 
received $35 million in exchange for relinquishing valid non-interim 
Federal License Limitation Program BSAI groundfish licenses endorsed 
for catcher processor fishing activity, catcher/processor, Pacific cod, 
and hook and line gear, as well as any present or future claims of 
eligibility for any fishing privilege based on such permit, and 
additionally, any future fishing privilege of the vessel named on the 
permit. Individual fishing quota shares are excluded from 
relinquishment.

II. Proposed Regulations

    NMFS has completed the reduction program except for implementing 
the industry fee system which this action proposes to implement. The 
fee amount will be calculated on an annual basis as: the principal and 
interest payment amount due over the proceeding twelve months, divided 
by the reduction fishery portion of the BSAI Pacific cod initial total 
allowable catch (ITAC) allocation in metric tons multiplied by 2,205 to 
convert into pounds, provided that the fees should not exceed 5 percent 
of the average ex-vessel production value of the reduction fishery.
    The terms defined in Sec.  600.1105 of the reduction program's 
implementation rule and in Sec.  600.1000 of the framework rule apply 
to this action.
    The framework rule's Sec.  600.1013 governs fee payment and 
collection in general, and this action applies the Sec.  600.1013 
provisions to the reduction program.
    Under Sec.  600.1013, the first ex-vessel buyers (fish buyers) of 
post-reduction fish (fee fish) subject to an industry fee system must 
withhold the fee from the trip proceeds which the fish buyers would 
otherwise have paid to the parties (fish sellers) who harvested and 
first sold the fee fish to the fish buyers. For the purpose of the fee 
collection, deposit, disbursement, and accounting requirements of this 
subpart, subsector members are deemed to be both the fish buyer and 
fish seller. In this case, all requirements and penalties of Sec.  
600.1013 of this subpart that are applicable to both a fish seller and 
a fish buyer shall equally apply to parties performing both functions.
    The BSAI Pacific cod ITAC was chosen as the basis for fee 
calculation of the reduction program because Pacific cod is the only 
directed fishery with a total allowable catch set in advance of the 
fishing season. This methodology allows for a straightforward 
calculation of the fee due and simplifies future accounting. The fee 
will be assessed and collected on Pacific cod to the extent possible 
and if the amount is not sufficient to cover annual principal and 
interest due, additional fees will be assessed and collected. Fees will 
be assessed and collected on all harvested Pacific cod, including that 
used for bait or discarded. Although the fee could be up to 5 percent 
of the ex-vessel

[[Page 39781]]

production value of all post-reduction longline catcher processor 
subsector non-pollock groundfish landings, the fee will be less than 5 
percent if NMFS projects that a lesser rate can amortize the fishery's 
reduction loan over the reduction loan's 30-year term.
    If the total principal and interest due exceeds five percent of the 
ex-vessel Pacific cod revenues, a penny per pound round weight fee will 
be calculated based on the latest available revenue records and NMFS 
conversion factors for pollock, arrowtooth flounder, Greenland turbot, 
skate, yellowfin sole and rock sole. Any additional fees will be 
limited to the amount necessary to amortize the remaining twelve months 
principal and interest in addition to the five percent fee assessed 
against Pacific cod. If collections exceed the total principal and 
interest needed to amortize the payment due, the principal balance of 
the loan will be reduced.
    To verify that the fees collected do not exceed five percent of the 
reduction fishery revenues, the annual total of principal and interest 
due will be compared with the latest available annual reduction fishery 
revenues to ensure it is equal to or less than five percent of the 
total ex-vessel production revenues. In all likelihood this will be 
based on State of Alaska's Commercial Operator Annual Report produced 
annually in the March following the close of the previous season. If 
any of the components necessary to calculate the next year's fee are 
not available, or for any other reason NMFS believes the calculation 
must be postponed, the fee will remain at the previous year's amount 
until such time that new calculations are made and communicated to the 
post reduction fishery participants.
    The framework rule's Sec.  600.1014 governs how fish buyers must 
deposit, and later disburse to NMFS, the fees which they have collected 
as well as how they must keep records of, and report about, collected 
fees. Under the framework rule's Sec.  600.1014, fish buyers must, no 
less frequently than at the end of each business week, deposit 
collected fees through a date not more than two calendar days before 
the date of deposit in segregated and federally insured accounts. Fees 
shall be submitted to NMFS monthly and shall be due no later than 
fifteen (15) calendar days following the end of each calendar month. 
Fee collection reports must accompany these disbursements. Fish buyers 
must maintain specified fee collection records for at least 3 years and 
submit to NMFS annual reports of fee collection and disbursement 
activities by February 1 of each calendar year.
    Under Sec.  600.1015, the late charge to fish buyers for fee 
payment, collection, deposit, and/or disbursement shall be one and one-
half (1.5) percent per month. The full late charge shall apply to the 
fee for each month or portion of a month that the fee remains unpaid.
    To provide more accessible services, streamline collections, and 
save taxpayer dollars, fish buyers may disburse collected fee deposits 
to NMFS by using a secure Federal system on the Internet known as 
Pay.gov. Pay.gov enables subsector members to use their checking 
accounts to electronically disburse their collected fee deposits to 
NMFS. Subsector members who have access to the Internet should consider 
using this quick and easy collected fee disbursement method. Subsector 
members may access Pay.gov by going directly to Pay.gov's Federal 
website at: https://www.pay.gov/paygov/.
    Subsector members who do not have access to the Internet or who 
simply do not wish to use the Pay.gov electronic system, must disburse 
collected fee deposits to NMFS by sending a check to our lockbox at:
NOAA Fisheries Longline Catcher Processor Non-pollock Buyback
P O Box 979060
St. Louis, MO 63197-9000
    Subsector members must not forget to include with their 
disbursements the fee collection report applicable to each 
disbursement. Subsector members using Pay.gov will find an electronic 
fee collection report form to accompany electronic disbursements. 
Subsector members who do not use Pay.gov must include a hard copy fee 
collection report with each of their disbursements. Subsector members 
not using Pay.gov may also access the NMFS website for a PDF version of 
the fee collection report at: http://www.nmfs.noaa.gov/mb/financial_services/buyback.htm.
    NMFS will, before the fee's effective date, separately mail a copy 
of this rule, along with detailed fee payment, collection, deposit, 
disbursement, recording, and reporting information and guidance, to 
each fish seller and fish buyer of whom NMFS has notice. The fact that 
any fish seller or fish buyer might not, however, receive from NMFS a 
copy of the notice or of the information and guidance does not relieve 
the fish seller or fish buyer from his fee obligations under the 
applicable regulations.
    All parties interested in this action should carefully read the 
following framework rule sections, whose detailed provisions apply to 
the fee system for repaying the reduction program's loan:
    1. Sec.  600.1012;
    2. Sec.  600.1013;
    3. Sec.  600.1014;
    4. Sec.  600.1015;
    5. Sec.  600.1016; and
    6. Sec.  600.1017.
    NMFS, in accordance with the framework rule's Sec.  600.1013(d), 
establishes the initial fee for the program's reduction fishery as 2.0 
cents per pound. NMFS will then separately mail notification to each 
affected fish seller and fish buyer of whom NMFS has notice. Until this 
notification, fish sellers and fish buyers do not have to either pay or 
collect the fee.
    Please see the framework rule's Sec.  600.1000 for the definition 
of ''delivery value'' and of the other terms relevant to this proposed 
rule. Each disbursement of the reduction loan's $35,000,000 principal 
amount began accruing interest as of the date of each such 
disbursement. The loan's interest rate is the applicable rate, plus 2 
percent, which the U.S. Treasury determines at the end of fiscal year 
2007.

III. Classification

    The Assistant Administrator for Fisheries, NMFS, determined that 
this proposed rule is consistent with the Magnuson-Stevens Fishery 
Conservation and Management Act, Consolidated Appropriations Act of 
2005, and other applicable laws.
    In compliance with the National Environmental Policy Act, NMFS 
prepared an EA for the reduction program's final implementing rule 
(September 29, 2006; 71 FR 57696). The EA discusses the impact of this 
proposed rule on the natural and human environment and integrates an 
RIR and a FRFA. The EA resulted in a finding of no significant impact. 
The EA considered, among other alternatives, the implementation of the 
fee payment and collection in this action. NMFS will send the EA, RIR, 
and FRFA to anyone who requests a copy (see ADDRESSES).
    NMFS prepared an Initial Regulatory Flexibility Analysis (IRFA), as 
required by section 603 of the Regulatory Flexibility Act (RFA), to 
describe the economic impacts this proposed rule would have on small 
entities. This proposed rule does not duplicate or conflict with other 
Federal regulations.

IRFA Analysis

    The Small Business Administration has defined small entities as all 
fish harvesting businesses that are independently owned and operated, 
not dominant in its field of operation, and with annual receipts of $4 
million or less. In addition, processors with 500 or

[[Page 39782]]

fewer employees for related industries involved in canned or cured fish 
and seafood, or preparing fresh fish and seafood, are also considered 
small entities. Small entities within the scope of this proposed rule 
include individual U.S. vessels and dealers. There are no 
disproportionate impacts between large and small entities.

Description of the Number of Small Entities

    The IRFA uses the most recent year of data available to conduct the 
analysis (2003). Most firms operating in the reduction fishery have 
annual gross revenues of less than $4 million. The IRFA analysis 
estimates that 24 of the remaining 36 active longline catcher processor 
vessels (i.e., 36 vessels constitute the post-reduction longline 
subsector) that participated in 2003 are considered small entities. The 
remaining 10 vessels are not considered small entities for purposes of 
the RFA. There is 1 additional fisherman with a permit but no vessel 
remaining in the longline subsector. The vessels that might be 
considered large entities were either affiliated under owners of 
multiple vessels or were catcher processors. However, little is known 
about the ownership structure of the vessels in the fleet, so it is 
possible that the IRFA overestimates the number of small entities. 
Because the final reduction program rule has not resulted in changes to 
allocation percentages and participation is voluntary, net effects are 
expected to be minimal relative to the status quo.
    The economic impact to communities where non-pollock groundfish are 
landed and processed would be minimal because the harvest quotas and 
allocations would not be altered. Fewer vessels in the catcher 
processor fleet may mean that fewer on-shore fleet support services 
would be required in Seattle and in Dutch Harbor. The communities would 
see little change because total landings of non-pollock groundfish 
would remain at current levels. Some beneficial impacts may occur 
because this program has provided $35 million to successful offerors. 
Much of this could be reinvested in the various communities which serve 
as home ports to the vessels and a portion would be recovered through 
income taxes. Crew employment opportunities will be reduced when 
vessels were removed from the fishery. However, those vessels remaining 
in the fishery will likely experience increased fishing opportunities 
and higher per capita incomes.
    The proposed rule's impact will be positive for both those whose 
offers NMFS has accepted, the selected offerors who received payments 
to stop fishing, and for post-reduction catcher processors whose 
landing fees repay the reduction loan. The owners whose offers NMFS 
accepted have relinquished their fishing licenses, reduction privilege 
vessels where appropriate, and fishing histories in exchange for 
payment. These payments ranged from $1.5 million for an inactive 
license that was not attached to a vessel, up to $11.8 million for the 
removal of both an active license and vessel from the fishery.
    Those participants remaining in the fishery after the reduction 
program will incur additional fees of up to 5 percent of the ex-vessel 
production value of post-reduction landings. However, the additional 
costs could be mitigated by increased harvest opportunities by post-
reduction fishermen. This is because removal of the vessels from the 
fishery creates immediate benefits to the longline catcher processor 
subsector by reducing competition pressure for each of the remaining 
vessels to catch fish. In theory, each of the vessels retaining their 
fishing licenses will be able to harvest more fish. This will likely 
result in net benefits to the subsector members who have voluntarily 
assumed the additional fees necessary to repay the reduction loan.
    For example, even though each vessel could, on average, pay 
approximately $77,440 in fees, the net increase per vessel, on average 
could be approximately $302,560 more than they would have been able to 
make before the reduction program's implementation due to the increased 
opportunity to harvest the TAC. The referendum voters also cast votes 
unanimously in favor of the fee collection system, which demonstrated 
to NMFS the involved members of the fishing community have high 
confidence in the cost-effectiveness of this buyback program.
    This rule, when implemented, would affect neither authorized BSAI 
Pacific cod ITAC and other non-pollock groundfish harvest levels or 
harvesting practices.
    NMFS rejected the no action alternative considered in the EA for 
the final rule implementing the reduction program because NMFS would 
not be in compliance with the mandate of Section 219 of the Act to 
establish a reduction program. In addition, the longline catcher 
processor subsector of the non-pollock groundfish fishery would remain 
overcapitalized. Although too many vessels compete to catch the current 
subsector ITAC allocation, fishermen remain in the fishery because they 
have no other means to recover their significant capital investment. 
Overcapitalization reduces the potential net value that could be 
derived from the non-pollock groundfish resource, by dissipating rents, 
driving variable operating costs up, and imposing economic 
externalities. At the same time, excess capacity and effort diminish 
the effectiveness of current management measures (e.g. landing limits 
and seasons, bycatch reduction measures). Overcapitalization has 
diminished the economic viability of members of the fleet and increased 
the economic and social burden on fishery dependent communities.
    It has been determined that this proposed rule is not significant 
for purposes of Executive Order 12866.
    This proposed rule contains collection-of-information requirements 
subject to the Paperwork Reduction Act. OMB has approved these 
information collections under OMB control number 0648 AU42. NMFS 
estimates that the public reporting burden for these requirements will 
average two hours for submitting a monthly fee collection report and 
four hours for submitting an annual fish buyer report.
    These response estimates include the time for reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
information collection. Send comments regarding this burden estimate, 
or any other aspect of this data collection, including suggestions for 
reducing the burden, to both NMFS and OMB (see ADDRESSES).
    Notwithstanding any other provision of the law, no person is 
required to respond to, and no person is subject to a penalty for 
failure to comply with, any information collection subject to the 
Paperwork Reduction Act unless that information collection displays a 
currently valid OMB control number.

List of Subjects in 50 CFR Part 600

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

    Dated: July 17, 2007.
Samuel D. Rauch III,
Deputy Assistant Administrator for Regulatory Programs, National Marine 
Fisheries Service.
    For the reasons in the preamble, the National Marine Fisheries 
Service proposes to amend 50 CFR part 600 as follows:

[[Page 39783]]

PART 600 MAGNUSON-STEVENS ACT PROVISIONS

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

    Authority: 5 U.S.C. 561 and 16 U.S.C. 1801 et seq.
    2. Section 600.1106 is added to read as follows:


Sec.  600.1106  Longline catcher processor subsector Bering Sea and 
Aleutian Islands (BSAI) non-pollock groundfish species fee payment and 
collection system.

    (a) Purpose. As authorized by Public Law 108 447, this section's 
purpose is to:
    (1) In accordance with Sec.  600.1012 of subpart L, establish:
    (i) The borrower's obligation to repay a reduction loan, and
    (ii) The loan's principal amount, interest rate, and repayment 
term; and
    (2) In accordance with Sec. Sec.  600.1013 through 600.1016 of 
subpart L, implement an industry fee system for the reduction fishery.
    (b) Definitions. Unless otherwise defined in this section, the 
terms defined in Sec.  600.1000 of subpart L and Sec.  600.1105 of this 
subpart expressly apply to this section.
    Reduction fishery means the longline catcher processor subsector of 
the BSAI non-pollock groundfish fishery that Sec.  679.2 of this 
chapter defined as groundfish area/species endorsements.
    (c) Reduction loan amount. The reduction loan's original principal 
amount is $35,000,000.
    (d) Interest accrual from inception. Interest began accruing on the 
reduction loan from May 29, 2007, the date on which NMFS disbursed such 
loan.
    (e) Interest rate. The reduction loan's interest rate shall be the 
applicable rate which the U.S. Treasury determines at the end of fiscal 
year 2007 plus 2 percent.
    (f) Repayment term. For the purpose of determining fee rates, the 
reduction loan's repayment term is 30 years from May 29, 2007, but fees 
shall continue indefinitely for as long as necessary to fully repay the 
loan.
    (g) Reduction loan repayment. (1) The borrower shall, in accordance 
with Sec.  600.1012, repay the reduction loan;
    (2) For the purpose of the fee collection, deposit, disbursement, 
and accounting requirements of this subpart, subsector members are 
deemed to be both the fish buyer and fish seller. In this case, all 
requirements and penalties of Sec.  600.1013 of this subpart that are 
applicable to both a fish seller and a fish buyer shall equally apply 
to parties performing both functions;
    (3) Subsector members in the reduction fishery shall pay and 
collect the fee amount in accordance with Sec.  600.1105;
    (4) Subsector members in the reduction fishery shall, in accordance 
with Sec.  600.1014, deposit and disburse, as well as keep records for 
and submit reports about, the fees applicable to such fishery; except 
the requirements specified under paragraph (c) of this section 
concerning the deposit principal disbursement shall be made to NMFS no 
later than fifteen (15) calendar days following the end of each 
calendar month; and the requirements specified under paragraph (e) of 
this section concerning annual reports which shall be submitted to NMFS 
by February 1 of each calendar year; and
    (5) The reduction loan is, in all other respects, subject to the 
provisions of Sec. Sec.  600.1012 through 600.1017.
[FR Doc. E7-14118 Filed 7-19-07; 8:45 am]
BILLING CODE 3510-22-S