[Federal Register Volume 76, Number 214 (Friday, November 4, 2011)]
[Rules and Regulations]
[Pages 68358-68365]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-28664]


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DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

50 CFR Part 680

[Docket No. 0812081573-1645-03]
RIN 0648-AX47


Fisheries of the Exclusive Economic Zone Off Alaska; Bering Sea 
and Aleutian Islands Crab Rationalization Program

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

ACTION: Final rule.

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SUMMARY: NMFS issues regulations implementing Amendment 30 to the 
Fishery Management Plan for Bering Sea/Aleutian Islands King and Tanner 
Crabs (FMP). Amendment 30 amends the Bering Sea/Aleutian Islands Crab 
Rationalization Program (CR Program) to modify procedures for producing 
and submitting documents that are required under the arbitration system 
to resolve price, delivery, and other disputes between harvesters and 
processors. This action is necessary to improve the quality and 
timeliness of market information used to conduct arbitration 
proceedings. This action is intended to promote the goals and 
objectives of the Magnuson-Stevens Fishery Conservation and Management 
Act, the FMP, and other applicable law.

DATES: Effective December 5, 2011.

ADDRESSES: Electronic copies of Amendment 30, the Regulatory Impact 
Review/Final Regulatory Flexibility Analysis (RIR/FRFA) and the 
categorical exclusion prepared for this action--as well as the 
Environmental Impact Statement (EIS) prepared for the CR Program--may 
be obtained from the NMFS Alaska Region Web site at http://alaskafisheries.noaa.gov. In addition, copies of Amendment 30 and the 
RIR/FRFA for this action are available from http://www.regulations.gov. 
NMFS determined that this action is categorically excluded from the 
need to prepare an environmental assessment under the National 
Environmental Policy Act.
    Written comments regarding the burden-hour estimates or other 
aspects of the collection-of-information requirements contained in this 
final rule may be submitted by mail to NMFS, Alaska Region, P.O. Box 
21668, Juneau, AK 99802-1668, Attn: Ellen Sebastian, Records Officer; 
in person at NMFS, Alaska Region, 709 West 9th Street, Room 420A, 
Juneau, Alaska; by email to [email protected]; or by fax to 
(202) 395-7285.

FOR FURTHER INFORMATION CONTACT: Forrest R. Bowers, (907) 586-7228.

SUPPLEMENTARY INFORMATION: The king and Tanner crab fisheries in the 
exclusive economic zone of the Bering Sea and Aleutian Islands (BSAI) 
are managed under the FMP. The FMP was prepared by the North Pacific 
Fishery Management Council (Council) under the Magnuson-Stevens Fishery 
Conservation and Management Act. Amendments 18 and 19 to the FMP 
implemented the CR Program. Regulations implementing the FMP, including 
the CR Program, are located at 50 CFR part 680.

Background

    Under the CR Program, NMFS issued quota share (QS) to persons based 
on their qualifying harvest histories in the BSAI crab fisheries during 
a specific time period. Each year, the QS issued to a person yields an 
amount of individual fishing quota (IFQ), which is a permit providing 
an exclusive harvesting privilege for a specific amount of raw crab 
pounds, in a specific crab fishery, in a given season. The size of each 
annual IFQ allocation is based on the amount of QS held by a person in 
relation to the total QS pool in a crab fishery. For example, a person 
holding QS equaling 1 percent of the QS pool in a crab fishery would 
receive IFQ to harvest 1 percent of the annual total allowable catch in 
that crab fishery. Catcher processor license holders were allocated 
catcher processor vessel owner (CPO) QS for their history as catcher 
processors; and catcher vessel license holders were issued catcher 
vessel owner (CVO) QS based on their history as a catcher vessel.
    Under the CR Program, 97 percent of the initial allocation of QS 
was issued to vessel owners as CPO or CVO QS; the remaining 3 percent 
was issued to vessel captains and crew as crew QS based on their 
harvest histories as crew members onboard crab fishing vessels. Ninety 
percent of the annual CVO IFQ is issued as A shares, or Class A IFQ, 
which are subject to landing requirements in specific geographic 
regions, and must be delivered to a processor holding unused individual 
processor quota (IPQ). The remaining 10 percent of the annual CVO IFQ 
is issued as B shares, or Class B IFQ, which may be delivered to any 
processor and are not subject to regionalization. CPO, CPC, and CVC IFQ 
are not subject to regionalization and are not required to be matched 
with a processor holding IPQ.
    NMFS also issued processor quota shares (PQS) to processors based 
on their qualifying processing histories in the BSAI crab fisheries 
during a specific time period. These PQS yield annual IPQ, which 
represent a privilege to receive a certain amount of crab harvested 
with Class A IFQ. IPQ are issued in an amount equivalent to the Class A 
IFQ, creating a one-to-one correspondence between Class A IFQ and IPQ. 
Prior to the start of a crab

[[Page 68359]]

fishing season, Class A IFQ and IPQ holders match their shares with one 
another, thereby determining their markets for the coming year. These 
matches may be modified during the crab season, but both parties must 
consent to any modifications.

Arbitration System

    The CR Program requires holders of Class A IFQ to deliver their 
catch to processors holding IPQ for a specific crab fishery within a 
specific geographic region. Potential disputes among harvesters and 
processors during price and delivery negotiations can occur, and the 
share matching requirements can exacerbate these disputes. To fairly 
address potential price and delivery disputes that may arise between 
Class A IFQ holders and IPQ holders, the CR Program includes an 
arbitration system. Disputes are most likely to occur in cases where 
the Class A IFQ holder is not affiliated with an IPQ holder through 
common ownership or control and the IPQ holder will not consent to 
modification of the preseason share matching, thereby allowing the IPQ 
holder to dictate prices or other conditions without the ability of the 
Class A IFQ holder to move to an alternative market. Class A IFQ 
holders who are unaffiliated, or independent, of IPQ holders are 
commonly known as unaffiliated Class A IFQ holders. Conversely, Class A 
IFQ holders who are affiliated with IPQ holders through common 
ownership and control are known as affiliated Class A IFQ holders. 
Affiliated Class A IFQ holders are not eligible to use the arbitration 
system to settle price or other disputes. Affiliated Class A IFQ 
holders do not require an arbitration system, because they are 
integrated with IPQ holders and do not have distinct and potentially 
adversarial negotiating positions as may be the case with unaffiliated 
Class A IFQ and IPQ holders.
    In the event of a dispute, the arbitration system allows 
unaffiliated Class A IFQ holders to initiate an arbitration proceeding 
to allow an independent third party to review harvester and processor 
negotiation positions and provide an independent and binding resolution 
to issues under dispute. Regulations describing the arbitration system 
are found at 50 CFR 680.20. An extensive discussion of the components 
of the arbitration system is found in the preamble to the proposed rule 
(October 24, 2004; 69 FR 63200) and final rule (March 2, 2005; 70 FR 
10174) that implemented the CR Program, as well as in the final EIS 
prepared for the CR Program, and is not reiterated here (see 
ADDRESSES).
    To facilitate arbitration proceedings, the arbitration system 
establishes a series of contractual requirements that CVO QS, PQS, 
Class A IFQ, and IPQ holders must meet that dictate how the arbitration 
system will function. Regulations require that all unaffiliated CVO QS 
and Class A IFQ holders join an Arbitration Organization (AO). 
Similarly, affiliated CVO QS and Class A IFQ holders are required to 
join a separate AO. PQS and IPQ holders are required to join a third 
AO. Regulations further require that these three AOs enter into a 
series of contracts that will allow the arbitration system to function. 
Although affiliated Class A IFQ and IPQ holders must join AOs, the 
primary role of the arbitration system is to facilitate negotiations 
among the unaffiliated Class A IFQ and IPQ holders. Therefore, this 
final rule would primarily affect unaffiliated Class A IFQ and IPQ 
holders. For clarity in this final rule, the AO representing 
unaffiliated CVO QS and Class A IFQ holders will be called the 
unaffiliated Class A IFQ arbitration organization, the AO representing 
affiliated CVO QS and Class A IFQ holders will be called the affiliated 
Class A IFQ arbitration organization, and the AO representing PQS and 
IPQ holders will be called the IPQ arbitration organization.
    Under the arbitration system, all AOs must establish contracts to 
hire an independent third-party data provider, who will provide up-to-
date information on matches between Class A IFQ and IPQ holders for 
crab deliveries and contracts to hire independent experts to facilitate 
arbitration proceedings. Only the unaffiliated Class A IFQ AOs and the 
IPQ AOs can enter into contracts to hire: (1) A market analyst, who 
provides a pre-season market report of likely market conditions for 
each crab fishery to aid in price negotiations and arbitrations; (2) a 
formula arbitrator, who prepares a non-binding price formula that 
describes the historic division of first whole-sale values among 
harvesters and processors that can be used in price negotiations and 
arbitrations; and (3) a contract arbitrator, who reviews the positions 
of the parties during an arbitration proceeding and issues a binding 
decision based on a last-best offer form of arbitration.
    Under current regulations, contracts with the market analyst, 
formula arbitrator, and contract arbitrator must be established by June 
1 and can only be established by the mutual agreement of unaffiliated 
Class A IFQ AOs and IPQ AOs. ``Mutual agreement,'' as defined in 50 CFR 
680.2, requires the consent and agreement of unaffiliated Class A IFQ 
AOs that represent an amount of unaffiliated Class A IFQ equal to more 
than 50 percent of all the unaffiliated Class A IFQ in a fishery, and 
IPQ AOs that represent an amount of IPQ equal to more than 50 percent 
of all the IPQ in a fishery based upon the Annual Arbitration 
Organization Reports. This mutual agreement requirement is intended to 
ensure that the majority of the unaffiliated Class A IFQ and IPQ 
holders reach agreement on the contracts that will provide necessary 
services for the functioning of the arbitration system, but avoid the 
potential that the process could be compromised by the inability of all 
unaffiliated Class A IFQ or IPQ holders to reach unanimity on the 
contracts.
    During an arbitration proceeding, the contract arbitrator is 
required to consider the market report and the non-binding price 
formula when considering the offers provided by the parties to the 
arbitration proceeding. Because the market report and the non-binding 
price formula play a central role in the decision-making process of the 
contract arbitrator, the information used in their preparation and the 
timing of their production can affect their utility and importance.
    As the CR Program has progressed, it has become clear to the 
unaffiliated Class A IFQ and IPQ holders--as well as to the market 
analyst, the formula arbitrator, and the contract arbitrator--that 
certain aspects of the existing requirements for the timing and content 
of the market report and non-binding price formula limit the 
effectiveness of the arbitration system. This amendment modifies four 
aspects of the arbitration system to improve its effectiveness by (1) 
Allowing AOs to mutually agree to establish contracts that would forgo 
the preparation of market reports and non-binding price formulas if a 
CR Program crab fishery is unlikely to (and does not) open; (2) 
modifying the timeline for release of the non-binding price formula for 
the western Aleutian Islands golden king crab (WAG) and eastern 
Aleutian Islands golden king crab (EAG) fisheries; (3) modifying the 
information used in the market report and allowing AOs to mutually 
agree to modify the timing for release of the market report in each CR 
Program fishery; and (4) clarifying the authority of the AOs, market 
analyst, formula arbitrator, contract arbitrators, and third-party data 
provider to adopt additional arbitration system procedures that are not 
in conflict with arbitration system regulations. The need for and 
effect of each of these actions are described in greater detail below.

[[Page 68360]]

Action 1: Allow AOs To Forgo Preparation of Market Reports and Non-
Binding Price Formulas If a Crab Fishery Is Unlikely To and Does Not 
Open

    This action allows AOs representing unaffiliated Class A IFQ 
holders and IPQ holders to mutually agree that when a crab fishery is 
unlikely to open, neither a market report nor a non-binding formula 
would be prepared for the fishery. If mutual agreement is reached, this 
action requires the AOs representing unaffiliated Class A IFQ holders 
and IPQ holders to include provisions in the contracts with the market 
analyst and formula arbitrator that reflect the mutual agreement of the 
AOs to forgo preparation of a market report and non-binding price 
formula for the fishery; requires preparation of the market report and 
non-binding price formula in the event that an opening is later 
announced for the fishery; and specifies a timeline for the production 
of the market report and non-binding price formula, which must occur 
before June 30.
    This action allows the AOs, and, by extension, the unaffiliated 
Class A IFQ and IPQ holders who are members of the AOs and who pay the 
costs for producing these reports, the option to forgo incurring 
expenses associated with the production of those reports when it 
appears unlikely that a fishery will open. The potential cost savings 
to the AOs could range from a few thousand to several tens of thousands 
of dollars.
    Status of stocks for CR Program crab fisheries is assessed annually 
and it is possible that some CR Program crab fisheries will not open in 
a given year. For example, during the first five years of the CR 
Program, the western Aleutian Islands red king crab and Pribilof 
Islands red and blue king crab fisheries have failed to open, and the 
Saint Matthew Island blue king crab fishery has only been open during 
the 2009-2010 and 2010-2011 fishing seasons. Regardless of whether a 
fishery is scheduled to open, regulations at 50 CFR 680.20(e)(4)(ii) 
require that the market report and non-binding price formula must be 
prepared for each crab fishery no later than 50 days before the opening 
date for the first crab fishing season for that crab QS fishery. 
Because most crab fisheries have an October 15 season opening date, 
most of the market reports and non-binding price formulas must be 
produced by August 26 each year. However, in most cases, the State of 
Alaska does not announce whether a CR Program crab fishery will be open 
or closed until October 1.
    This action allows the AOs to mutually agree to forgo the 
production of the market report and non-binding price formula if a 
fishery is unlikely to and does not open. This agreement must be 
included in the contract the AOs establish with the market analyst and 
formula arbitrator. If the AOs mutually agree to include this provision 
in their contract with the market analyst and the formula arbitrator, 
the contract also must require the production of the market report and 
non-binding price formula in the event that a fishery previously not 
anticipated to open does actually open. The revised regulations at 
Sec.  680.20(f) and (g) leave the details about the timeline for 
producing these reports in the event of a fishery opening to the mutual 
agreement of the AOs, only requiring that the market report and non-
binding price formula be produced prior to June 30. The mutual 
agreement to forgo the issuance of a market report must be incorporated 
into the contract with the market analyst.
    Regulations at Sec.  680.20(e)(5) require that the AOs provide NMFS 
with the names of the persons serving as the market analyst and provide 
copies of the contracts with the market analyst and formula arbitrator 
no later than June 1 of each year. Therefore, the contract with the 
market analyst and formula arbitrator, including any terms that would 
allow forgoing the production of a market report and non-binding price 
formula for a fishery, must be incorporated in the contract between the 
AOs and the market analyst no later than June 1. If the AOs do not 
reach mutual agreement on these terms by June 1, then the existing 
regulatory requirements to produce a market report and non-binding 
price formula no later than 50 days before a fishery opening apply.
    As discussed above, most fisheries have an October 15 opening date, 
and under this action, most market reports must be produced no later 
than August 26. The Council recommended this approach so that AOs 
unable to reach mutual agreement on whether to forgo production of 
market reports and non-binding price formulas would have sufficient 
time to comply with the 50-day requirements at Sec.  680.20 for their 
production.
    The Council determined, and NMFS agrees, that production of a 
market report for fisheries unlikely to open is unnecessary and 
presents a financial burden to fishery participants. Elimination of the 
requirement to produce a market report for fisheries unlikely to open 
presents a minor risk that participants in a fishery will have 
inadequate information to inform price negotiations in the event that a 
fishery unexpectedly opens; however, NMFS agrees with the Council that 
this risk is mitigated by the requirement that AOs develop a 
contingency plan for describing how a market report will be produced 
when a fishery unexpectedly opens or when AOs disagree concerning 
whether a fishery will open.

Action 2: Modify the Timing for Release of the Aleutian Islands Golden 
King Crab Fishery Non-Binding Price Formula

    Under current State of Alaska regulations, the EAG and WAG 
fisheries open on August 15 of each year. This opening date means that 
the non-binding price formula developed for both fisheries must be 
released no later than June 26, as current regulations require that the 
formula be released at least 50 days prior to the opening date for 
these fisheries. However, the opening date for the EAG and WAG 
fisheries prevents the formula arbitrator from using the most current 
information from the Commercial Operators Annual Report (COAR), which 
is a key source of information on wholesale prices used in the non-
binding price formula. COAR documents are typically not available until 
early July; therefore, data from the preceding season is not 
incorporated in the non-binding price formula.
    This action amends regulations at Sec.  680.20(g) to require 
release of the non-binding price formula at least 30 days prior to the 
start of these fisheries to provide the formula arbitrator time to 
incorporate data from the most recent COAR. NMFS does not anticipate 
that producing the non-binding price formula at least 30 days prior to 
the start of the fisheries, rather than at least 50 days prior to the 
start of the fisheries, will adversely affect price negotiations. 
Participants in the fisheries noted that a more complete and current 
non-binding price formula using COAR data from the most recent EAG and 
WAG fisheries outweighs any potential disadvantage of a slightly 
shorter period of time to review the non-binding price formula before 
fishing begins. The Council determined and NMFS agrees that this action 
will provide the affected fishing industry with the most recent data 
for use in the non-binding price formula while providing as much lead 
time as possible before the start of the fisheries for consideration of 
the non-binding price formula in any potential negotiations.

[[Page 68361]]

Action 3: Modify the Information Used and Timing for Release of the 
Market Report

    Existing regulations at Sec.  680.20(f) require that the market 
report be released no later than 50 days prior to the opening of a 
fishery and that it cannot be supplemented with additional information 
once released. Existing regulations permit the inclusion of publicly 
available information, as well as data from proprietary sources in the 
market report. The CR Program established the 50-day release date and 
prohibition on subsequent supplements to the market report to reduce 
the risk that the market report could contain proprietary data released 
during a fishing season. Any such data could unduly influence the 
results of the market report by creating incentives for processors or 
harvesters to present data that cannot be reviewed publicly and have 
that data incorporated in a manner that would influence the results of 
the market report for the benefit of one party, thereby increasing the 
risk of tainting the market report with information that could be used 
for anticompetitive purposes.
    To address these concerns, regulations at Sec.  680.20(f)(2)(v) 
require that any price information contained in the market report (1) 
include only data that is based on information regarding activities 
occurring more than three months prior to the generation of the market 
report; (2) include only statistics for which there are at least five 
providers reporting data upon which each statistic is based and for 
which no single provider's data represents more than 25 percent of a 
weighted basis of that statistic; and (3) be sufficiently aggregated 
such that any information disseminated in the market report would not 
identify specific price information by an individual provider of 
information. These provisions are intended to prevent the use of 
private information in the report that could skew the conclusions 
reached by the market analyst in a manner that might benefit a specific 
private interest and could therefore be anticompetitive.
    While these requirements limit the potential for a harvester or 
processor to submit data for his or her benefit, these requirements 
also limit the usefulness of the market report because much of the data 
contained in the report are no longer indicative of market conditions 
by the time the market report is released. Furthermore, aggregation of 
data across five or more sources may not always be possible in the 
small market of crab producers, limiting the availability of data from 
private sources for any market report.
    To address these concerns, the AOs recommended that, no later than 
50 days prior to a fishery opening, the AOs representing the 
unaffiliated Class A IFQ and IPQ holders should be permitted to 
mutually agree to the timeline for release of the market report, and 
that these AOs could mutually agree to allow supplements to the market 
report at any time prior to June 30. Additionally, the AOs recommended 
that the market report use only publicly available information and that 
the AOs be provided discretion in recommending contents of the market 
report. The Council agreed that the current requirement for market 
reports to be complete at least 50 days prior to the season prevents 
inclusion of the most current and relevant pricing information and that 
the prohibition on supplements to the report prevents subsequent report 
modification to provide useful market information inseason or after 
completion of the initial report. The Council concurred with the AOs 
that market reports would be more timely and informative if those 
reports can be produced and supplemented at any time and recommended 
that the market report contain only publicly available information to 
reduce the risk that any information provided by a private source could 
taint the market report for anticompetitive purposes. For the purposes 
of this action, publicly available information means data and 
information published in a manner that makes them available, either for 
a fee or at no cost, to the public at large. The Council also 
recommended allowing the AOs to negotiate the timing of release of the 
market report and the inclusion of any supplements to enhance the 
timeliness, accuracy, and usefulness of the market report.
    NMFS agrees with the Council that the flexibility afforded by this 
final rule should allow AOs to provide the most useful, timely 
information to participants in need of market information for price 
negotiations. This final rule presents some risk that majority QS and 
PQS holders could assert their position in the AOs to provide a market 
report that is not particularly beneficial to holders of relatively 
small amounts of QS or PQS, and who may be likely to derive the 
greatest benefit from the market reports. The Council and NMFS find the 
risk to be minor and that the benefits of the action outweigh this 
slight and unlikely risk.
    To be consistent with the Council's recommendations, this final 
rule amends regulations at Sec.  680.20(f) to remove the ability for 
IFQ and IPQ holders to submit proprietary data for inclusion in the 
market report, require that the information that the market analyst 
considers be publicly available, and allow AOs to mutually agree to 
negotiate the content and the timing for release of the market report. 
As with Action 1, while this amendment allows the AOs to mutually agree 
to a date for release of the market report, regulations require release 
of the market report prior to June 30. NMFS also amends regulations at 
Sec.  680.20(f) to clarify that if the AOs cannot mutually agree to the 
contents, timing for release, or a provision addressing whether any 
supplements for the market report will be permitted, the market report 
would have to be released 50 days prior to the start of a crab fishery, 
and supplements to the market report would not be permitted. This 
provision will ensure that a market report will be prepared for each 
fishery if the AOs cannot reach mutual agreement. The Council 
recommended that existing requirements should apply if mutual agreement 
is not possible to ensure that all parties have some market report 
available for consideration during price negotiations even if the data 
in that report may not be as current as that available later in the 
year.

Action 4: Clarify the Authority of the AOs, Market Analyst, Formula 
Arbitrator, Contract Arbitrators and Third-Party Data Provider

    The arbitration program established by the CR Program requires AOs 
to enter into a series of contracts with harvesters, processors, market 
analysts, arbitrators, and, if desirable, a third-party data provider. 
Regulations require each of these contracts to contain several specific 
provisions. However, the regulations do not specify all aspects of the 
arbitration system. For example, regulations at Sec.  680.20(f) and (g) 
do not provide specific details about how the market reports and non-
binding price formula documents should be released, how specific data-
quality issues within these documents should be considered and 
addressed, or how new information should be incorporated. Because the 
regulations are specific on certain requirements and silent as to other 
aspects, arbitration administrators (i.e., the AO representatives, 
contract arbitrators, formula arbitrators, market analysts, and third 
party data providers) have questioned their authority to agree to 
provisions or develop procedures that could improve the arbitration 
program but that are not explicitly contained in regulation. Absent a 
regulation that

[[Page 68362]]

clearly specifies this authority, it could be argued that these actions 
are beyond the scope of an arbitration administrator's powers.
    As a result, arbitration administrators have expressed some concern 
that potential liability could influence decision making. For example, 
if an arbitrator is concerned that a participant may litigate if the 
arbitrator makes a certain finding, the arbitrator's independence could 
be compromised. Likewise, arbitration organizations might choose not to 
make changes in the arbitration structure that are agreed to by 
participants in both harvesting and processing sectors, but are not 
addressed by the regulations, if they fear potential lawsuits related 
to those changes. At the extreme, the threat of liability could make it 
difficult to find persons willing to perform arbitration services.
    Although not specifically stated in the regulations originally 
developed to implement the CR Program, a review of the EIS prepared for 
the CR Program supports the conclusion that the Council intended for 
arbitration administrators to have the discretion to adapt the 
arbitration system to address perceived problems in program 
administration. Specifically, the EIS notes that administration of the 
arbitration system ``would be undertaken primarily by industry, 
avoiding government involvement in the price setting process and 
providing greater flexibility to adopt agreed to modifications without 
government action.''
    This flexibility was viewed by the Council and NMFS as necessary to 
avoid time consuming and costly processes of the Council and NMFS to 
amend the program through the standard regulatory process. The Council 
believed that broader administrative authority by the arbitration 
administrators would improve the efficiency of administration of the 
arbitration system. Although many industry participants have argued 
that the arbitration administrators have broad authority to adopt 
provisions to improve the operations of the arbitration system, absent 
a regulation clearly specifying this authority, it could be argued that 
these actions are beyond the scope of their powers.
    For these reasons, the Council recommended that the regulations be 
modified to specifically state that arbitration administrators have the 
authority to establish procedures and make administrative decisions 
concerning the arbitration program that are in addition to those 
requirements specified in regulation, provided those actions are not in 
conflict with any of the regulatory requirements. NMFS agrees with the 
Council's recommendations and adds this additional clarification in a 
new paragraph at Sec.  680.20(i). This clarification of authority is 
intended to remove any inhibitions of arbitration administrators to 
adopt procedures and make decisions that would improve the operation of 
the arbitration system.

Public Comment

    NMFS received three unique letters during the public comment period 
for Amendment 30 and the proposed rule. One comment letter (Comment 1) 
submitted by an industry group representing participants in the BSAI 
crab fisheries was supportive of Amendment 30 and recommended 
implementation without any modification. The other two comments were 
submitted by AOs formed and authorized under the arbitration system 
regulations. These comments were substantive and are summarized below 
along with NMFS's responses. Public comment letters received by NMFS 
for this action may be obtained from http://www.regulations.gov.
    Comment 2: The title of Sec.  680.20(i) is broader than the 
substance of the regulation. The title states ``Other Procedures, 
Policies, and Decisions'' whereas the text of the regulation refers to 
``procedures.'' The title and text should conform to prevent ambiguity.
    Proposed regulations at Sec.  680.20(i) state ``The arbitration 
organizations, market analysts, arbitrators, or third party data 
providers are authorized * * *'' The term ``arbitrators'' is assumed to 
refer to both ``Contract Arbitrator(s)'' and ``Formula Arbitrator.'' 
Referencing both functions rather than using the single term provides 
clarity and prevents ambiguity.
    The proposed regulation refers to the plural ``market analysts'' 
whereas the existing regulations refer to one Market Analyst for each 
fishery. Use of the singular term avoids ambiguity.
    The existing regulations capitalized the terms ``Market Analyst, 
Formula Arbitrator, Contract Arbitrator(s) and Third-Party Data 
Provider'' whereas the proposed regulation uses the lower case. Use of 
the capitalized terms provides consistency with the rest of the 
regulations.
    Response: NMFS agrees that the title and text of Sec.  680.20(i) 
published in the proposed rule were not in agreement. As explained in 
the response to Comment 3, the title and text of Sec.  680.20(i) have 
been revised, so that the title and text of the paragraph are in 
agreement. NMFS agrees with the other grammatical and technical 
concerns mentioned in this comment and has modified the regulatory text 
based on those comments.
    Comment 3: The third comment also relates to Sec.  680.20(i) and 
suggests that the proposed authority granted to Arbitration 
Organizations, Market Analysts, Contract Arbitrators, Formula 
Arbitrators, and the Third Party Data Provider in the regulatory text 
is not broad enough and that the regulatory text should include not 
only the authority to adopt procedures, but also the authority to adopt 
policies and make administrative decisions.
    Response: NMFS explained in the preamble to the proposed rule that 
the Council and agency intended to provide arbitration administrators 
with the authority to establish procedures and make administrative 
decisions concerning the arbitration program. NMFS agrees with the 
commenter that additional clarity in the regulatory text concerning the 
scope of authority would be beneficial and has modified the title and 
text of Sec.  680.20(i) to clearly reference authority to make 
administrative decisions.

Changes From the Proposed Rule

    Proposed regulatory text at Sec.  680.20(i) was clarified by 
removing authority to establish policies granted to Arbitration 
Organizations, Market Analysts, Contract Arbitrators, Formula 
Arbitrators, and the Third Party Data Provider and adding authority to 
make administrative decisions, consistent with the description of the 
action in the proposed rule preamble and with the Council's 
recommendations for this action. In addition, minor grammatical and 
technical changes were made to this paragraph to improve clarity.

Notice of Availability and Proposed Rule

    NMFS published the notice of availability for Amendment 30 on July 
25, 2011 (76 FR 44297), with a public comment period that closed on 
September 23, 2011. NMFS published the proposed rule to implement 
Amendment 30 on August 10, 2011 (76 FR 49423), and the public comment 
period closed on September 9, 2011. NMFS received three public comments 
during the public comment periods. As explained above, based on the 
three comments received, NMFS made minor, technical changes were made 
to one subsection of the final rule to improve clarity and consistency 
within the arbitration system regulations.

[[Page 68363]]

Classification

    The Administrator, Alaska Region, NMFS, determined that Amendment 
30 is necessary for the conservation and management of the fisheries 
managed under the CR Program and that it is consistent with the 
Magnuson-Stevens Fishery Conservation and Management Act and other 
applicable laws. This final rule has been determined to be not 
significant for purposes of Executive Order 12866.
    A final regulatory flexibility analysis (FRFA) was prepared for 
this rule. The FRFA incorporates the initial regulatory flexibility 
analysis (IRFA), notes that no public comments on the IRFA were 
submitted, and summarizes the analyses completed to support the action. 
Copies of the FRFA prepared for this final rule are available from NMFS 
(see ADDRESSES). The FRFA prepared for this final rule incorporates by 
reference an extensive RIR and FRFA prepared for the CR Program that 
detailed its impacts on small entities.
    NMFS published the proposed rule to implement Amendment 30 on 
August 10, 2011 (76 FR 49423), and the public comment period closed on 
September 9, 2011. An IRFA was prepared and summarized in the 
``Classification'' section of the preamble to the proposed rule. NMFS 
received three letters of public comment on Amendment 30 and the 
proposed rule. None of these comments addressed the IRFA or the 
economic impacts of this rule more generally.
    The description of this action, its purpose, and its legal basis 
are described in the preamble to the final rule and are not repeated 
here.
    The primary objective of this rule is to modify several specific 
areas of the arbitration system that have been identified as preventing 
the arbitration system from functioning as intended. The Council 
considered two alternatives for this action: the action alternative and 
the status quo. The action alternative recommends changes to four 
separate areas of the arbitration program. Specifically the action 
alternative provides the AOs with the discretion not to produce a 
market report and non-binding price formula if a fishery does not open, 
thereby reducing costs to the quota holders directly regulated; 
requires that a non-binding price formula be prepared at least 30 days 
prior to the fishery opening, thereby ensuring that relevant price 
information can be incorporated in the non-binding price formula; 
provides the AOs with the discretion to mutually agree to negotiate the 
timing for release of a market report and to include any supplements to 
help provide a timely, accurate, and more useful product; and clarifies 
that AOs can establish procedures and make administrative decisions 
concerning the arbitration program that are not explicitly specified in 
the regulations provided those actions are not in conflict with any 
requirement contained in the arbitration system regulations.
    The Council determined and NMFS agrees that these actions are 
consistent with the Council's original intent in developing the 
arbitration program and that they will reduce costs to the industry by 
eliminating the requirement that a market report be produced for 
fisheries not anticipated to open and will allow for use of more 
timely, publicly available market information, thereby adding to the 
utility of the market reports. Under the status quo, some of these 
market reports are perceived as having limited utility and they are 
expensive to produce for fisheries that are not expected to open. In 
addition, modifications to timing of when arbitration products must be 
made available for the Aleutian Islands golden king crab fishery, which 
has a different fishery start date than other CR Program fisheries, 
will make the market reports more relevant for that particular fishery 
relative to the status quo. Clarifying the role of participants in the 
arbitration process will reduce ambiguity for participants in the CR 
Program fisheries relative to the status quo.
    With regard to Action 1, alternatives that would rely on 
preliminary notice of intent to close a fishery from State or Federal 
managers, after which the arbitration organizations would not be 
required to contract for a market report or non-binding formula for the 
fishery were considered and not advanced for analysis. The need for a 
formal notice from managers could be misinterpreted by participants and 
disruptive to planning for fishing in the upcoming season. 
Additionally, alternatives that would create a strict time frame for 
applying the exemption, as well as for producing the market report and 
non-binding formula were considered and not advanced for analysis. 
These alternatives were believed to be overly restrictive and 
administratively burdensome, limiting the ability of the arbitration 
organizations to appropriately respond to changes in circumstances in 
providing the reports and formulas.
    In evaluating Action 3, the Council alternatives that would 
establish strict timelines and fully defined contents for market 
reports were considered, but not advanced for analysis. These 
alternatives were believed to be overly prescriptive, limiting the 
ability of arbitration organizations (and participants) to agree to 
terms for the production of market reports that would be most useful 
and informative to participants. In addition, an alternative to remove 
the requirement for any market report was also considered, but not 
advanced for analysis. The market report is thought to provide 
beneficial baseline market information for negotiations. In addition, 
small, independent participants in the program are thought to derive 
benefit from the information in the report, which might otherwise be 
costly for them to gather. As a consequence, the alternative to remove 
the market report requirement was determined to be inconsistent with 
the basic program objectives for price arbitration in the crab 
fisheries.
    An alternative that would grant immunity to arbitration 
administrators for their actions taken in the administration of the 
arbitration system was considered, but not advanced for analysis for 
Action 4. NMFS regulations that grant arbitral immunity would 
effectively restrict the ability of courts to adjudicate certain 
actions against specific persons. While there are clear benefits to 
arbitration systems from arbitral immunity, and courts have applied 
arbitral immunity for arbitrators and arbitration organizations, it was 
questioned whether the Council and NMFS are authorized to promulgate 
regulations that grant such immunity. The Council stated its belief 
that the preferred alternative (by clarifying the scope of authority of 
arbitration administrators) would strengthen any argument that common 
law or other immunity should be extended to any acts taken to 
administer the arbitration program (including the development of 
arbitration procedures).
    Under each of the actions described in this amendment, holders of 
CVO QS and holders of PQS would be regulated in the contracts that they 
must establish as a condition of receiving Class A IFQ and IPQ, 
respectively. The holders of these shares are the entities that are 
directly regulated by this action. Of the estimated 221 QS holders in 
the fisheries, 210 are estimated to be small entities. Of the estimated 
25 PQS holders, 17 are estimated to be small entities. All of the 
directly regulated persons would be expected to benefit from this 
action relative to the status quo alternative because the action is 
expected to reduce the costs of compliance with the arbitration system, 
provide more timely and useful market reports and non-binding price 
formulas for use in negotiations, and provide

[[Page 68364]]

clarity concerning the administration of the arbitration system.
    The analysis revealed no Federal rules that would conflict with, 
overlap, or be duplicated by this amendment.
    The actions in this rule modify existing recordkeeping and 
reporting requirements, but do not impose any additional recordkeeping 
and reporting requirements. Specifically, the actions modify the 
timing, preparation, and release of information used in the market 
reports and non-binding price formulas and are not expected to increase 
the recordkeeping and reporting burden for affected participants.
    This final rule contains collection-of-information requirements 
subject to the Paperwork Reduction Act (PRA), and which has been 
approved by the Office of Management and Budget (OMB) under OMB Control 
No. 0648-0516. Public reporting burden for the market report is 
estimated to average four hours per response, including the time for 
reviewing instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information. Send comments regarding burden estimates or 
any other aspect of this data collection, including suggestions for 
reducing the burden, to NMFS (see ADDRESSES); email to [email protected], or fax to (202) 395-7285.
    Notwithstanding any other provision of the law, no person is 
required to respond to, and no person shall be subject to 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.

Small Entity Compliance Guide

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

List of Subjects in 50 CFR Part 680

    Alaska, Fisheries.

    Dated: November 1, 2011.
John Oliver,
Deputy Assistant Administrator for Operations, National Marine 
Fisheries Service.
    For the reasons set out in the preamble, NMFS amends 50 CFR part 
680 as follows:

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

0
1. The authority citation for 50 CFR part 680 continues to read as 
follows:

    Authority: 16 U.S.C. 1862; Pub. L. 109-241; Pub. L. 109-479.


0
2. In Sec.  680.20,
0
a. Revise paragraphs (e)(4)(i), (e)(4)(ii), and (f)(1);
0
b. Revise paragraphs (f)(2)(i) and (f)(2)(ii), and remove paragraphs 
(f)(2)(iii) through (v);
0
c. Redesignate paragraphs (f)(2)(vi) through (f)(2)(viii) as paragraphs 
(f)(2)(iii) through (f)(2)(v) respectively, and revise newly 
redesignated paragraph (f)(2)(v);
0
d. Revise paragraphs (f)(4)(i), (f)(4)(ii) introductory text, and 
(g)(1);
0
e. Revise paragraph (g)(2)(viii)(B); and
0
f. Add new paragraph (i) to read as follows:


Sec.  680.20  Arbitration system.

* * * * *
    (e) * * *
    (4) * * *
    (i) For each crab fishing year, QS holders who are members of 
Arbitration QS/IFQ Arbitration Organization(s) and PQS holders who are 
members of PQS/IPQ Arbitration Organization(s), by mutual agreement, 
will select one Market Analyst, one Formula Arbitrator, and Contract 
Arbitrator(s) for each crab QS fishery. The number of Contract 
Arbitrators selected for each fishery will be subject to the mutual 
agreement of those Arbitration Organizations. The selection of the 
Market Analyst and the Formula Arbitrator must occur in time to ensure 
the Market Report and non-binding price formula are produced within the 
time line established in paragraphs (f)(4)(i) and (g)(2)(viii)(B) of 
this section.
    (ii) The Arbitration Organizations representing Arbitration QS 
holders and PQS holders in a crab fishery shall establish by mutual 
agreement the contractual obligations of the Market Analyst, Formula 
Arbitrator, and Contract Arbitrator(s) for each fishery. The 
contractual obligations of the Market Analyst, the Formula Arbitrator, 
and Contract Arbitrators will be enforced by the parties to the 
contract.
* * * * *
    (f) * * *
    (1) Except as provided in paragraph (f)(1)(ii) of this section:
    (i) The Arbitration QS/IFQ Arbitration Organizations and the PQS/
IPQ Arbitration Organizations shall establish a contract with the 
Market Analyst to produce a Market Report for each crab QS fishery. The 
terms of this contract must specify that the Market Analyst must 
produce a Market Report that shall provide an analysis of the market 
for products of that fishery.
    (ii) The Arbitration QS/IFQ Arbitration Organizations and the PQS/
IPQ Arbitration Organizations may, by mutual agreement, include a 
provision in the contract with the Market Analyst to forgo production 
of a Market Report for a crab QS fishery if the Arbitration QS/IFQ 
Arbitration Organizations and the PQS/IPQ Arbitration Organizations 
anticipate that the crab QS fishery will not open for fishing during a 
crab fishing year. If such a provision is included in the contract with 
the Market Analyst, the Arbitration QS/IFQ Arbitration Organizations 
and the PQS/IPQ Arbitration Organizations must include a provision in 
the contract with the Market Analyst to produce a Market Report not 
later than the June 30 for the crab QS fishery that was expected to 
remain closed but subsequently opens for fishing during the crab 
fishing year.
    (2) * * *
    (i) The Market Analyst will base the Market Report on a survey of 
the market for crab products produced by the fishery.
    (ii) The Market Analyst will note generally the sources from which 
he or she gathered information. The Market Report must include only 
publicly available data and information. Data and information will be 
considered publicly available if they are published in a manner that 
makes them available, either for a fee or at no cost, to the public at 
large.
* * * * *
    (v) The Market Analyst must not issue interim or supplemental 
reports for any crab QS fishery unless the Arbitration QS/IFQ 
Arbitration Organizations and the PQS/IPQ Arbitration Organizations, by 
mutual agreement, include a provision in the contract with the Market 
Analyst for the production of interim or supplemental reports for a 
crab QS fishery. If the Arbitration QS/IFQ Arbitration Organizations 
and the PQS/IPQ Arbitration Organizations have a mutual agreement to 
produce interim or supplemental reports, the contract with the Market 
Analyst must specify the terms and conditions under which those interim 
or supplemental reports will be produced.
* * * * *
    (4) * * *
    (i) In all subsequent years and except as provided in paragraph 
(f)(1)(ii) of this section, the Market Report for each crab QS fishery 
must be produced not later than 50 days prior to the first crab

[[Page 68365]]

fishing season for that crab QS fishery, unless the Arbitration QS/IFQ 
Arbitration Organizations and the PQS/IPQ Arbitration Organizations, by 
mutual agreement, include a provision in the contract with the Market 
Analyst to establish a different date for production of the Market 
Report for that crab QS fishery.
    (ii) The contract with the Market Analyst must specify that the 
Market Analyst will provide the Market Report in that crab fishing year 
to:
* * * * *
    (g) * * *
    (1) Except as provided in paragraph (g)(1)(ii) of this section:
    (i) The Arbitration QS/IFQ Arbitration Organizations and the PQS/
IPQ Arbitration Organizations shall establish a contract with the 
Formula Arbitrator to produce a Non-Binding Price Formula for each crab 
QS fishery.
    (ii) The Arbitration QS/IFQ Arbitration Organizations and the PQS/
IPQ Arbitration Organizations may, by mutual agreement, include a 
provision in the contract with the Formula Arbitrator to forgo 
production of a Non-Binding Price Formula for a crab QS fishery if the 
Arbitration QS/IFQ Arbitration Organizations and the PQS/IPQ 
Arbitration Organizations anticipate that the crab QS fishery will not 
open for fishing during a crab fishing year. If such a provision is 
included in the contract with the Formula Arbitrator, the Arbitration 
QS/IFQ Arbitration Organizations and the PQS/IPQ Arbitration 
Organizations must include a provision in the contract with the Formula 
Arbitrator to produce a Non-Binding Price Formula not later than June 
30 for the crab QS fishery that was expected to remain closed but 
subsequently opens for fishing during the crab fishing year.
* * * * *
    (2) * * *
    (viii) * * *
    (B) In all subsequent years and except as provided in paragraph 
(g)(1)(ii) of this section, the Non-Binding Price Formula must be 
produced not later than 50 days prior to the first crab fishing season 
for that crab QS fishery, except that the Non-Binding Price Formulas 
for the western Aleutian Islands golden king crab fishery and the 
eastern Aleutian Islands golden king crab fishery must be produced not 
later than 30 days prior to the first crab fishing season for those 
crab QS fisheries.
* * * * *
    (i) Other procedures and administrative decisions. The Arbitration 
Organizations, Market Analyst, Contract Arbitrator, Formula Arbitrator, 
and the Third Party Data Provider are authorized to adopt arbitration 
system procedures and make administrative decisions, including 
additional provisions in the various contracts, provided those actions 
are not inconsistent with any other provision in the regulations.

[FR Doc. 2011-28664 Filed 11-3-11; 8:45 am]
BILLING CODE 3510-22-P