[Federal Register Volume 87, Number 163 (Wednesday, August 24, 2022)]
[Proposed Rules]
[Pages 51955-51959]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-18201]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

50 CFR Part 648

[Docket No. 220818-0171]
RIN 0648-BI18


Fisheries of the Northeastern United States; Amendment 20 to the 
Atlantic Surfclam and Ocean Quahog Fishery Management Plan

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

ACTION: Proposed rule; request for comments.

-----------------------------------------------------------------------

SUMMARY: NMFS proposes regulations to implement Amendment 20 to the 
Atlantic Surfclam and Ocean Quahog Fishery Management Plan. The Mid-
Atlantic Fishery Management Council developed this action to limit the 
amount of surfclam or ocean quahog individual transferable quota share 
or annual allocation in the form of cage tags that an individual or 
their family members could hold. These changes are intended to ensure 
the management plan is consistent with requirements of the Magnuson-
Stevens Fishery Conservation and Management Act, and to improve the 
management of these fisheries.

DATES: Comments must be received by September 23, 2022.

ADDRESSES: You may submit comments on this document, identified by 
NOAA-NMFS-2020-0112, by any of the following methods:
     Electronic Submission: Submit all electronic public 
comments via the Federal e-Rulemaking Portal. Go to https://www.regulations.gov and enter NOAA-NMFS-2020-0112 in the Search box. 
Click the ``Comment'' icon, complete the required fields, and enter or 
attach your comments.
     Mail: Submit written comments to Michael Pentony, Regional 
Administrator, NMFS, Greater Atlantic Regional Fisheries Office, 55 
Great Republic Drive, Gloucester, MA 01930. Mark the outside of the 
envelope: ``Comments on Surfclam/Ocean Quahog Excessive Shares 
Amendment.''
    Instructions: Comments sent by any other method, to any other 
address or individual, or received after the end of the comment period, 
may not be considered by NMFS. All comments received are a part of the 
public record and will generally be posted for public viewing on 
www.regulations.gov without change. All personal identifying 
information (e.g., name, address, etc.), confidential business 
information, or otherwise sensitive information submitted voluntarily 
by the sender will be publicly accessible. NMFS will accept anonymous 
comments (enter ``N/A'' in the required fields if you wish to remain 
anonymous). Written comments regarding the burden-hour estimates or 
other aspects of the collection-of-information requirements contained 
in this proposed rule may be submitted to the Greater Atlantic Regional 
Fisheries Office and to www.reginfo.gov/public/do/PRAMain. Find this 
particular information collection by selecting ``Currently under 30-day 
Review--Open for Public Comments'' or by using the search function.
    Copies of Amendment 20, including the draft Environmental 
Assessment (EA), are available on request from the Mid-Atlantic Fishery 
Management Council, 800 North State Street, Suite 201, Dover, DE 19901. 
These documents are also accessible via the internet at https://www.mafmc.org.

FOR FURTHER INFORMATION CONTACT: Douglas Potts, Fishery Policy Analyst, 
978-281-9341.

SUPPLEMENTARY INFORMATION:

Background

    This action proposes regulations to implement Amendment 20, also 
known as the Excessive Shares Amendment, to the Atlantic Surfclam and 
Ocean Quahog Fishery Management Plan (FMP). The Mid-Atlantic Fishery 
Management Council developed this amendment to establish limits to the 
amount of individual transferable quota (ITQ) quota share or cage tags 
such that any particular individual, corporation, or other entity can 
not acquire an excessive share of such privileges, as required by the 
Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-
Stevens Act), and to make administrative changes to improve the 
efficiency of the FMP.
    The Magnuson-Stevens Act requires that any FMP or implementing 
regulation be consistent with ten national standards for fishery 
conservation and management. National Standard 4 stipulates that, ``If 
it becomes necessary to allocate or assign fishing privileges among 
various United States fishermen, such allocation shall be . . . carried 
out in such manner that no particular individual, corporation, or other 
entity acquires an excessive share of such privileges.'' When the 
Council adopted Amendment 8 to the Atlantic Surfclam and Ocean Quahog 
FMP, which created the individual transferable quota (ITQ) system for 
managing the fishery, it relied on Federal antitrust laws to prevent 
entities from acquiring excessive shares. In 2002, the Government 
Accountability Office (GAO) released a report titled, Better 
Information Could Improve Program Management (GAO-03-159, December 11, 
2002). One of the recommendations from that report was for the Council 
to define what constitutes an excessive share for this fishery. By 
2007, the Council had begun development of an FMP amendment to address 
this recommendation as well as implement a cost recovery program and 
accountability measure requirements that were introduced by the 
Magnuson-Stevens Fishery Conservation and Management Reauthorization 
Act (Pub. L. 109-479). The accountability measure provisions were 
subsequently removed and were implemented as part of the Council's 
Annual Catch Limit and Accountability Measure Omnibus Amendment (76 FR 
60605, September 29, 2011).
    As part of the development of this action, an economic consulting 
company, Compass Lexecon, was contracted to evaluate the fishery and to 
provide advice on how to set an excessive share limit on ITQ systems 
that could protect against market power without constraining the 
workings of competition. The 2011 Compass Lexecon report and associated 
Center for Independent Experts review indicated that, in order to 
implement an excessive shares definition, managers would need more 
reliable information regarding quota share ownership, and would need to 
better monitor control of the quota by tracking transfers and long-term 
leases of cage tags in the surfclam and ocean quahog fisheries.
    In 2012, the Council voted to split the FMP amendment that was 
under development. The cost recovery provisions became Amendment 17 (81 
FR 38969, June 15, 2016). The Council requested that NMFS create a data 
collection program as authorized under Section 402A of the Magnuson-
Stevens Act, and the Council subsequently established a new fishery 
management action team (FMAT) to develop recommendations for the 
program. The new program became effective on January 1, 2016 (80 FR 
42747, July 20, 2015), and collected more detailed

[[Page 51956]]

information about the individual owners of companies holding quota 
share and annual cage tags than was previously available.
    In 2017, the Council reformed the FMAT to continue development of 
the Excessive Shares Amendment. The FMAT developed a wide range of 
options for defining an excessive share in this fishery and for 
potential management measures to prevent anyone from acquiring an 
excessive share. The full range of alternatives considered by the 
Council is described in the amendment document and not repeated here.
    In December 2019, the Council selected preferred alternatives, and 
approved the Excessive Shares Amendment for submission to NMFS. 
However, additional work was needed to prepare the environmental 
analysis of the action and for NMFS to develop the systems and 
protocols that would be needed to effectively monitor and enforce the 
excessive share caps approved by the Council.

Excessive Share Caps

    Under the Council's preferred alternative, separate caps would be 
established for quota share and for annual cage tags for both the 
surfclam and ocean quahog ITQ programs. The amount of quota share that 
an individual or entity could have ownership in would be capped at 35 
percent of the surfclam quota and 40 percent of the ocean quahog quota. 
A higher cap would be established for cage tags in recognition that 
additional temporary consolidation through leasing or other 
transactions may be warranted within a fishing year to meet market 
demand because of the limited number of processors available. There is 
a limited market for fresh surfclams or ocean quahogs. The fisheries 
largely rely on a small number of processing plants to convert these 
species into final products or ingredients for other food companies. 
These plants operate by leasing cage tags from multiple quota 
shareholders and then providing those tags to harvesting vessels that 
deliver clams, as needed by the plants. The amount of annual cage tags 
that an individual or entity could have in a given year would be capped 
at 65 percent for surfclam and 70 percent for ocean quahog.
    No person or entity currently exceeds the proposed quota share cap, 
nor has any entity exceeded the proposed cap on annual cage tags in 
recent years. The analysis conducted by Compass Lexecon did not support 
a conclusion that market power was being exercised through withholding 
of quota in this fishery. The Council's preferred cap limits were 
chosen to ensure that potential future consolidation does not reach the 
level of an excessive share of this fishery, and were not intended to 
restrict current quota share holdings.
    Once implemented, NMFS would determine where each individual or 
entity that holds quota share is relative to the cap. This 
determination is based on the allocation held in whole or in part by 
that individual and the allocation held in whole or in part by their 
immediate family members. When an ITQ permit holder submits an 
application to transfer quota share and/or cage tags, NMFS would review 
the total allocation held by the ITQ permit holder and their immediate 
family members to determine whether the transfer would exceed the quota 
share cap or cage tag cap. If the ITQ permit is held by a business or 
partnership, the allocation held by the owners of that business (and 
their family members, if applicable) would be used in that 
determination.
    An individual's immediate family members, for the purposes of 
monitoring these caps would consist of the individual's: Spouse and the 
spouse's parents; children and their spouses; parents and their 
spouses; siblings and their spouses; and grandparents and grandchildren 
and their spouses.
    The excessive share caps would be monitored using a calculation of 
potential control. A person or entity would be considered to have 
potential control of any allocation held by themselves, their family 
members, or any business they have an ownership interest in. Here is a 
set of example calculations of potential control.
    Example 1, Potential control of allocation by an individual or a 
company: Sue holds 2 percent of the Atlantic surfclam quota in her own 
name. She is also a part owner, along with Mary, of ABC Clams, a 
business that holds 5 percent of the quota. Mary's brother has 4 
percent of the quota in his own name. For the purpose of monitoring the 
quota share cap:
     Sue has potential control of 7 percent (the 2 percent of 
the quota in her name plus the 5 percent of the quota held by the 
company she part owns);
     Mary has potential control of 9 percent (the 5 percent of 
the quota held by the company she part owns plus the 4 percent of the 
quota held by her brother); and
     ABC Clams, Inc., has potential control of 11 percent of 
the quota (the 5 percent of the quota it holds directly plus the quota 
controlled by its owners, which in this case is the 2 percent of the 
quota Sue holds separately and the 4 percent of the quota Mary's 
brother holds).
    Example 2, Potential control of allocation by an individual or a 
company and transfers of quota allocation: Sue's son, John, wishes to 
get into the business. He submits an application to transfer 3 percent 
of the quota from another quota shareholder. When we process his 
transfer application, we see that, as a result of the transfer, John 
would have potential control of 10 percent (his new 3 percent plus his 
mother's 7 percent of the quota allocation, which includes her own 
quota and her ownership in ABC Clams); Sue would also have potential 
control of 10 percent; ABC Clams, Inc., would have potential control of 
14 percent, and Mary would still be connected to the same 9 percent. 
The transfer would be approved because no entity would be over the 
proposed 35-percent cap.
    Example 3, Potential control of allocation by an individual or a 
company and the total, cumulative cap on transfers of quota allocation: 
Before the start of each fishing year, the total quota is converted 
from bushels into tags for the industry-standard 32-bushel (1,700 L) 
cages. Each quota shareholder is allocated cage tags based on the 
amount of quota share they hold. For simplicity, this example will 
assume the total quota equates to 1,000 tags, so shareholders receive 
10 tags for each 1 percent of the quota they hold. As a result, and 
continuing with the examples described above, Sue receives 20 tags, 
John gets 30 tags, and ABC Clams gets 50 tags. In addition, based on 
the proposed surfclam cage tag cap of 65 percent, no entity could hold 
or potentially control more than 650 tags over the course of the 
fishing year. The rules of potential control are the same for tags as 
they are for quota share. Therefore, while Sue received 20 tags to her 
personal allocation, she is still considered to have potential control 
of the 30 tags that John received and the 50 tags that ABC Clams 
received, for a total of 100 tags toward the 650-tag cap. Likewise, 
John will start off the year at 100 tags, ABC Clams at 140 tags, and 
Mary at 90 tags. If John and Sue both transfer their tags to ABC Clams, 
the transfer would make no change to the cap total for John, Sue, or 
ABC Clams (each of those entities were considered to have potential 
control of those tags through ownership and family connections). 
However, the additional tags would now count toward Mary's potential 
control, bringing her total to 140 (50 tags initially held by ABC 
Clams, 50 tags transferred in from Sue

[[Page 51957]]

and John, plus the 40 tags initially allocated to her brother).
    Using tags to land surfclams does not reduce the calculation of 
potential control of cage tags, nor does transferring tags to another 
allocation holder. Continuing this example, ABC Clams uses all 100 tags 
it physically holds to land surfclams for a processor. The company 
agrees to acquire, through a temporary transfer, an additional 200 tags 
from another source in order to continue fishing. Because the potential 
control of allocation is considered cumulative in any given fishing 
year, this results in ABC Clams having potential control of 340 tags, 
even though it only has 200 tags physically in its possession. The tag 
transfer would also result in a corresponding increase to the potential 
control calculations for Sue (300 tags), John (300 tags), and Mary (340 
tags). If ABC Clams decides to transfer 50 tags to another company, the 
transfer would not reduce ABC Clams calculation of potential control 
because ABC Clams controlled those tags at some point during the 
fishing year. If, later in the year, ABC Clams acquires another 50 tags 
to replace those it transferred earlier, its potential control would 
increase to 390 tags. In this way, acquiring tags during the fishing 
year would increase the calculated potential control, but using tags to 
land clams or transferring tags to others would not reduce the level of 
potential control.
    If an entity inadvertently exceeds a cap, they would be required to 
take action to correct the situation. Such an overage could occur 
because of a change in company ownership that does not require a 
transfer application, for example. There may be a number of ways an 
entity could address such an overage and NMFS would not specify how the 
overage is to be corrected.
    The Magnuson-Stevens Act specifies that any information submitted 
to the Secretary by any person in compliance with the requirements of 
the Act is confidential unless it falls under one of the listed 
exceptions. One of these exceptions is for information that is required 
to be submitted to the Secretary for any determination under a limited 
access program. If these regulations are finalized as proposed, the 
ownership information used by NMFS to monitor and enforce these caps 
would likely meet this exception and would no longer be subject to the 
Act's confidentiality requirements. This would include the identities 
of individuals who own businesses that hold quota share and annual cage 
tags as well as the family relationships that are used to link those 
individuals.
    The information collection program implemented in 2016 included a 
wide range of information to ensure the Council had the data it needed 
to design and analyze a range of alternative management measures. The 
monitoring and enforcement of the caps being proposed do not require 
continued collection of some data elements, which would no longer be 
collected. The ITQ Ownership form would be modified to remove the 
collection of the names of corporate officers. The ITQ transfer form 
would be modified to remove most of the questions under ``additional 
transaction details'' except for total price. The questions being 
removed include broker fees and whether the transfer is part of a long-
term contract.

Multi-Year Specifications

    The FMP currently limits multi-year specifications to a maximum 
duration of three years. The proposed change would allow the Council to 
develop specifications for the number of years needed to align with the 
stock assessment schedule approved by the Northeast Region Coordinating 
Council (NRCC). The NRCC is comprised of representatives from the Mid-
Atlantic Fishery Management Council, the New England Fishery Management 
Council, the Atlantic States Marine Fisheries Commission, the NMFS 
Greater Atlantic Regional Fisheries Office, and the Northeast Fishery 
Science Center. One of its roles is to develop a schedule for fishery 
stock assessments that balances the needs of the numerous fisheries in 
the region with the available resources. The current schedule calls for 
an updated stock assessment every four years for surfclam and every six 
years for ocean quahog. These assessment intervals are the result of 
recent improvements to the methods used to survey these wild 
populations. Changing the duration of specifications to match the 
assessments will allow the Council, Council staff, and NMFS staff to 
avoid spending time developing new specifications packages when no new 
information on the health of the stocks are available. The Council and 
its Scientific and Statistical Committee will continue the current 
practice of reviewing the specifications each year, and making mid-
cycle adjustments if conditions warrant.
    Pursuant to section 303(c) of the Magnuson-Stevens Act, the Council 
has deemed that this proposed rule is necessary and appropriate for the 
purpose of implementing Amendment 20.

Classification

    Pursuant to section 304(b)(1)(A) of the Magnuson-Stevens Act, the 
Assistant Administrator for Fisheries, NOAA, has determined that this 
proposed rule is consistent with Amendment 20, other provisions of the 
Magnuson-Stevens Act, and other applicable law, subject to further 
consideration after public comment.
    This proposed rule has been determined to be not significant for 
purposes of Executive Order 12866.
    The Chief Counsel for Regulation of the Department of Commerce 
certified to the Chief Counsel for Advocacy of the Small Business 
Administration (SBA) that this proposed rule, if adopted, would not 
have a significant economic impact on a substantial number of small 
entities. The factual basis for this certification is as follows.
    A complete description of the measures, why they are being 
considered, and the legal basis for proposing and implementing these 
measures for the surfclam and ocean quahog fisheries are contained 
above in the preamble to this proposed rule.
    The measures proposed by this action apply to surfclam and ocean 
quahog allocation owners. These are the individuals or entities that 
received initial individual transferable quota (ITQ) allocations (i.e., 
owners of record) at the beginning of each fishing year. There were 64 
allocation owners of record for surfclam and 33 for ocean quahog in 
2019.
    For Regulatory Flexibility Act purposes, NMFS has established a 
size standard for small businesses, including their affiliated 
operations, whose primary industry is commercial fishing (see 50 CFR 
200.2). A business primarily engaged in commercial fishing (North 
American Industry Classification System (NAICS) code 11411) is 
classified as small if it is independently owned and operated, is not 
dominant in its field of operation (including its affiliates), and has 
combined annual receipts not in excess of $11.0 million for all its 
affiliated operations worldwide. For other types of businesses, the SBA 
size standards for the relevant NAICS codes were used to categorize 
businesses by industry description. Of the 64 initial surfclam 
allocation owners of record for 2019, 19 were categorized as 
``Commercial Fishing,'' with 100 percent of them classified as small 
entities (under $11 million in revenues). Of the nine allocation owners 
that were categorized as ``Fish and Seafood Merchant Wholesalers,'' one 
was classified as a small entity (under 100 employees) (11

[[Page 51958]]

percent) and eight were classified as large entities (89 percent). 
Eight allocation owners were categorized as ``Commercial Banking,'' one 
of which was classified as a small entity (under $550 million in 
assets) (12 percent), and seven of which were classified as large 
entities (88 percent). Six allocations were categorized as ``Credit 
Unions,'' with 100 percent of them classified as large entities (over 
$550 million in assets). There were also five allocations categorized 
as ``Sector 92'' (Public Administration sector); therefore, small 
business size standards are not applicable for these five allocation 
owners. Lastly, the SBA classification for the remaining 17 surfclam 
allocation owners was unknown due to lack of information.
    Of the 33 initial ocean quahog allocation owners of record for 
2019, 14 were categorized as ``Commercial Fishing,'' with 100 percent 
of them classified as small entities. Of the six allocation owners that 
were categorized as ``Fish and Seafood Merchant Wholesalers,'' two were 
classified as small entities (33 percent) and four were classified as 
large entities (67 percent). One allocation owner was categorized as 
``Commercial Banking'' and one was categorized as ``Credit Unions'' 
with 100 percent of them classified as large entities. The SBA 
classification for the remaining allocations owners is unknown.
    The proposed measures are administrative in nature and are not 
expected to have impacts on the prosecution of the surfclam and ocean 
quahog fisheries, including landings levels (no changes in surfclam or 
ocean quahog ex-vessel revenues are expected), fishery distribution, or 
fishing methods and practices. The proposed action is not expected to 
result in changes to the manner in which the surfclam and ocean quahog 
fisheries are prosecuted, or the manner in which the industry operates. 
An analysis of the operation of the fishery in 2017 shows that if the 
proposed caps had been in place, all entities would have fallen below 
the proposed cap levels. As such, no entity would have been constrained 
by those cap levels, and the caps would help prevent future excessive 
consolidation of the fishery. The proposed change to the maximum 
duration of multi-year specifications is administrative and would not 
affect how the fishery currently operates.
    The proposed actions would have no impact on the way the fishery 
operates, and, therefore, is not expected to disproportionately affect 
small entities. Nor are the proposed actions expected to have a 
significant economic impact on a substantial number of small entities. 
As a result, an initial regulatory flexibility analysis is not required 
and none has been prepared.
    This proposed rule contains a collection-of-information requirement 
subject to review and approval by OMB under the Paperwork Reduction Act 
(PRA). This rule revises the existing requirements for the collection 
of information 0648-0240 by removing the section of the ITQ Ownership 
form that requires identification of corporate officers and removing 
some of the ``additional transaction details'' questions from the ITQ 
transfer form. The Council chose not to use this information to define 
or monitor the excessive share caps and collecting the information 
would no longer be necessary. Removing these questions is not 
anticipated to change to the number of respondents or responses and 
would not have a measurable reduction in burden hours or costs. An 
extension of the collection is also requested through this action. 
Public reporting burden for the ITQ ownership form is estimated to be 
one hour to complete for new entrants and five minutes to review a pre-
filled form for renewing entities. The ITQ transfer form is estimated 
to take five minutes to complete. These estimates include the time for 
reviewing instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information.
    Public comment is sought regarding: Whether this proposed 
collection of information is necessary for the proper performance of 
the functions of the agency, including whether the information shall 
have practical utility; the accuracy of the burden estimate; ways to 
enhance the quality, utility, and clarity of the information to be 
collected; and ways to minimize the burden of the collection of 
information, including through the use of automated collection 
techniques or other forms of information technology. Submit comments on 
these or any other aspects of the collection of information at 
www.reginfo.gov/public/do/PRAMain.
    Notwithstanding any other provisions of the law, no person is 
required to respond to, nor shall any person by 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 648

    Fisheries, Fishing, Reporting and recordkeeping requirements.

    Dated: August 18, 2022.
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 648 is 
proposed to be amended as follows:

PART 648--FISHERIES OF THE NORTHEASTERN UNITED STATES

0
1. The authority citation for part 648 continues to read as follows:

    Authority: 16 U.S.C. 1801 et seq.
0
2. In Sec.  648.14, add paragraph (j)(3)(viii) to read as follows:


Sec.  648.14  Prohibitions.

* * * * *
    (j) * * *
    (3) * * *
    (viii) Take action to circumvent an ITQ quota share cap or cage tag 
cap specified in 648.74(a)(2) or fail to take corrective action if such 
cap is exceeded inadvertently.
* * * * *
0
3. In Sec.  648.72;
0
a. Revise paragraph (a) introductory text,
0
b. Revise paragraph (a)(1) introductory text, and;
0
c. Revise paragraph (b).
    The revisions to read as follows:


Sec.  648.72  Surfclam and ocean quahog specifications.

    (a) Establishing catch quotas. The amount of surfclams or ocean 
quahogs that may be caught annually by fishing vessels subject to these 
regulations will be specified by the Regional Administrator for a 
period up to the maximum number of years needed to align with the 
Northeast Region Coordinating Council-approved stock assessment 
schedule. Specifications of the annual quotas will be accomplished in 
the final year of the quota period, unless the quotas are modified in 
the interim pursuant to paragraph (b) of this section.
    (1) Quota reports. On an annual basis, MAFMC staff will produce and 
provide to the MAFMC an Atlantic surfclam and ocean quahog annual quota 
recommendation paper based on the ABC recommendation of the SSC, the 
latest available stock assessment report prepared by NMFS, data 
reported by harvesters and processors, and other relevant data, as well 
as the information contained in paragraphs (a)(1)(i) through (vi) of 
this section. Based on that report, and at least once prior to August 
15 of the year in which a multi-year annual quota specification 
expires, the MAFMC, following an opportunity for

[[Page 51959]]

public comment, will recommend to the Regional Administrator annual 
quotas and estimates of DAH and DAP for a period up to the maximum 
number of years needed to align with the Northeast Region Coordinating 
Council-approved stock assessment schedule. In selecting the annual 
quotas, the MAFMC shall consider the current stock assessments, catch 
reports, and other relevant information concerning:
* * * * *
    (b) Interim quota modifications. Based upon information presented 
in the quota reports described in paragraph (a)(1) of this section, the 
MAFMC may recommend to the Regional Administrator a modification to the 
annual quotas that have been specified for a multi-year period and any 
estimate of DAH or DAP made in conjunction with such specifications 
within the ranges specified in paragraph (a)(1) of this section. Based 
upon the MAFMC's recommendation, the Regional Administrator may propose 
surfclam and or ocean quahog quotas that differ from the annual quotas 
specified for the current multi-year period. Such modification shall be 
in effect for a period up to the maximum number of years needed to 
align with the Northeast Region Coordinating Council-approved stock 
assessment schedule, unless further modified. Any interim modification 
shall follow the same procedures for establishing the annual quotas 
that are specified for a multi-year period.
* * * * *
0
4. In Sec.  648.74, revise paragraphs (a)(2) and (b)(3) to read as 
follows:


Sec.  648.74  Individual Transferable Quota (ITQ) Program.

    (a) * * *
    (2) ITQ ownership caps. (i) Quota share. A business or individual 
is not eligible to be issued an ITQ permit and is not eligible to 
acquire additional quota share, if, as a result of the issuance of the 
permit or quota share transfer, the business or individual, or any 
other person who is a shareholder or partner, or their immediate family 
member, would individually or collectively have an ownership interest 
in more than 35 percent of the total surfclam quota or 40 percent of 
the total ocean quahog quota.
    (ii) Cage tags. A business or individual is not eligible to be 
issued an ITQ permit and is not eligible to acquire additional cage 
tags, if, as a result of the issuance of the permit or cage tag 
transfer, the business or individual, or any other person who is a 
shareholder or partner, or their immediate family member, would 
individually or collectively have an ownership interest in more than 65 
percent of the total surfclam cage tags issued that year or 70 percent 
of the total ocean quahog cage tags issued that year.
    (iii) Enforcement. The following conditions apply for the purposes 
of monitoring and enforcing these caps.
    (A) Any partial or shared ownership is counted as full ownership by 
each party for the purpose of monitoring these caps. For example, if 
two people share ownership of a business with quota share, the full 
amount of quota share held by the business counts toward the cap for 
both owners.
    (B) Having an ownership interest includes, but is not limited to, 
persons who are shareholders in a corporation that holds an ITQ permit, 
who are partners (general or limited) to an ITQ permit holder, who are 
immediate family members of an ITQ permit holder, or who, in any way, 
partly own an entity that holds an ITQ permit.
    (C) Immediate family members include individuals connected by the 
following relationships:
    (1) Spouse, and parents thereof;
    (2) Children, and spouses thereof;
    (3) Parents, and spouses thereof;
    (4) Siblings, and spouses thereof; and
    (5) Grandparents and grandchildren, and spouses thereof.
    (D) The quota share and cage tag caps do not apply to a bank or 
other lender that holds ITQ quota share as collateral on a loan as 
described in paragraph (a)(1)(i)(C) of this section. The quota share 
held as collateral and the associated cage tags will be treated as if 
it is held by the borrower.
    (E) Compliance with these ownership caps is based on the total 
amount of quota share or cage tags controlled throughout a fishing 
year. In this instance, control means the cumulative total amount of 
quota share or cage tags, including the amount held by the ITQ permit 
at the start of the fishing year plus any quota share or cage tags 
acquired by the ITQ permit throughout the fishing year. This measure of 
control during the fishing year is increased by acquiring quota share 
or cage tags from other ITQ permits, but is not reduced by any quota 
share or cage tags that are transferred to another ITQ permit.
    (iv) Review. The MAFMC shall review these ITQ ownership cap 
measures at least every 10 years, or sooner as needed. Such a review 
should include an evaluation of the effects and effectiveness of the 
caps in the fishery and whether the cap levels remain appropriate or 
should be adjusted.
    (b) * * *
    (3) Denial of ITQ transfer application. The Regional Administrator 
may reject an application to transfer surfclam or ocean quahog ITQ 
quota share or cage tags for the following reasons: The application is 
incomplete; the transferor or transferee does not possess a valid 
surfclam or ocean quahog ITQ permit for the appropriate species; the 
transfer is not allowed under paragraph (a)(1)(ii)(C)(3) of this 
section; the transferor's or transferee's surfclam or ocean quahog ITQ 
permit has been sanctioned pursuant to an enforcement proceeding under 
15 CFR part 904; the transfer would result in exceeding an ownership 
cap under paragraph (a)(2) of this section; or any other failure to 
meet the requirements of this subpart. Upon denial of an application to 
transfer ITQ allocation, the Regional Administrator shall send a letter 
to the applicant describing the reason(s) for the denial. The decision 
by the Regional Administrator is the final decision of the Department 
of Commerce; there is no opportunity for an administrative appeal.
* * * * *
[FR Doc. 2022-18201 Filed 8-23-22; 8:45 am]
BILLING CODE 3510-22-P