[Federal Register Volume 87, Number 173 (Thursday, September 8, 2022)]
[Rules and Regulations]
[Pages 54902-54910]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-19146]
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DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration
50 CFR Parts 600, 648, 660, and 679
[Docket No. 220805-0170]
RIN 0648-BJ33
Establishment of National Minimum Insurance Standard for National
Marine Fisheries Service Programs That Permit or Approve Observer
Providers
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA), Commerce.
ACTION: Final rule.
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SUMMARY: NMFS issues this final rule to establish a uniform, nationally
consistent minimum insurance standard that would apply in regional
regulatory programs that authorize an observer provider to deploy a
person in any mandatory or voluntary observer program and that specify
responsibilities of authorized providers. NMFS has concluded that this
action is
[[Page 54903]]
necessary to clarify the types of insurance that are appropriate to
address the financial risks that observer coverage presents in any
federally managed fishery that is subject to observer coverage. This
rule also revises regional observer program regulations to reference
the national minimum insurance standard. The rule does not modify
existing regional observer program regulatory procedures that specify
how an observer provider demonstrates compliance with insurance
requirements.
DATES:
Effective date: This final rule is effective September 8, 2022.
Compliance date: Compliance is not required until or during the
next insurance certification or February 6, 2023, whichever date is
later, after which time NMFS may request observer providers that are
approved to deploy observers to provide a certificate of insurance that
demonstrates compliance with this final rule.
FOR FURTHER INFORMATION CONTACT: Requests for additional information
should be directed to Dennis Hansford, 301-427-8136 or
[email protected].
SUPPLEMENTARY INFORMATION: The insurance standard established in this
final rule provides a nationally consistent suite of insurance
coverages that an observer provider seeking authorization, or that has
been authorized, must have to mitigate the financial risks associated
with providing observer services; specifically observer deployments to
fishing vessels or shoreside locations such as processing facilities,
and those that arise with training personnel for these deployments.
Through compliance with this minimum standard, observer providers would
be properly insured, thereby mitigating the financial risks that
fishing vessels, first receivers, and shoreside processors have when
complying with observer coverage requirements.
Background
The Magnuson-Stevens Fishery Conservation and Management Act (MSA),
16 U.S.C. 1801 et seq., establishes a national program for conservation
and management of fishery resources within the United States Exclusive
Economic Zone (EEZ). See id. 1801(a)(6), 1811(a). NMFS, acting under
authority delegated from the Secretary of Commerce, is responsible for
managing fisheries under the MSA, in conjunction with eight regional
fishery management councils (Councils) established under the Act. See
id. 1852(a). Each Council has authority to develop fishery management
plans (FMPs) for fisheries in a specific geographical area and to deem
proposed regulations that are necessary for plan implementation. See
id. 1852(a), (c).
Collection of information on fishing and fish processing, such as
type and quantity of fishing gear used, catch in numbers of fish or
weight thereof, fishing locations, and biological information, are
critical to effective fishery management. See id. 1853(a)(5). To obtain
this information, the MSA authorizes, among other things, that an FMP
may ``[r]equire that one or more observers be carried on board a vessel
of the United States engaged in fishing for species that are subject to
the plan, for the purpose of collecting data necessary for the
conservation and management of the fishery . . .''. See id. 1853(b)(8).
The MSA defines the term ``observer'' as ``any person required or
authorized to be carried on a vessel for conservation and management
purposes by regulations or permits under this Act.'' See id. 1802(31).
This definition would thus cover persons referred to in FMPs and
regulations as ``observers'' as well as ``catch-monitors'' or ``at-sea
monitors.'' In this final rule, the term ``observer'' refers to a
person who is deployed as an observer, a catch or at-sea monitor on a
fishing vessel or mothership, or as an observer deployed to a shoreside
first receiver location or processing facility. Also, in the preamble
of this final rule, NMFS refers to a company that provides observer or
catch monitor or at-sea monitor services as an ``observer provider.''
At present, all at-sea and shoreside observer deployments for NMFS
observer programs are staffed by observer providers. These companies
provide observer staffing support under two distinct models: (1) direct
service, where the NMFS observer program contracts with an observer
provider and oversees the provider's services based on the terms of the
contract; and (2) industry-funded service, where the observer provider
provides services directly to a vessel or a fleet of vessels, and a
NMFS regional observer program oversees the provision of those services
based on requirements set forth in NMFS regulations.
In the North Pacific and most West Coast programs, an observer
provider must be permitted under the programs' regulations and satisfy
other responsibilities specified in regulations in order to provide
services in either the direct contract model or industry-funded model.
The North Pacific and West Coast programs have regulatory-based
insurance requirements for observer providers that are permitted to
deploy observers. Permitted observer providers must demonstrate
compliance with these requirements on an annual basis by providing the
relevant program copies of certificates of insurance that name the
applicable program as the certificate holder and that verify that the
company has the insurance specified in the applicable regulation.
In the Northeast/Mid-Atlantic region an observer provider must be
approved to provide services in the at-sea sampler/observer coverage
program or at-sea monitoring services in the Northeast Multispecies
sector program. The Northeast at-sea sampler/observer coverage program
insurance requirements are included as elements of an approved program
provider application. In other words, an observer provider must
demonstrate evidence that it holds the insurance specified in the
regulation as part of its application to become an approved provider.
Likewise, as part of an application to be an approved services provider
in the Northeast Multispecies sector at-sea monitoring program, a
company must demonstrate that it holds insurance that NMFS deems
adequate.
The Southeast, Southwest, and Pacific Islands programs use only the
direct contract model, and do not have regulations to authorize a
company to deploy observers in their programs through an approval or
permit process. Nor do these programs have regulations that specify
observer provider responsibilities. Further information about NMFS'
regional observer programs is available at https://www.fisheries.noaa.gov/topic/fishery-observers.
In 2014, NMFS initiated an evaluation of observer provider
insurance requirements in North Pacific observer program regulations.
This effort was prompted by a letter from Alaskan Observers Inc. (AOI)
to the North Pacific Fishery Management Council (NPFMC) which asserted
that some North Pacific insurance requirements are excessive or
inapplicable to observer provider operations. AOI also asserted that
there are inconsistent insurance requirements among regional observer
programs. In a 2015 letter to the NPFMC Executive Director, NMFS agreed
with AOI's views that certain insurance requirements are necessary and
noted that NPFMC could consider revising those North Pacific observer
program regulations to specify different types of insurance. NMFS then
initiated a broader, national evaluation of observer provider insurance
regulation to address concerns with the North Pacific Observer program
requirements that are
[[Page 54904]]
reflected in other program regulations and to address the lack of
consistency between regional requirements. Through this evaluation,
NMFS obtained extensive input from observer providers, insurance
experts, and other interested parties, on the different types of
insurance and associated coverage amounts that are needed to address
the financial risks that observer deployments present in any federally
managed fishery that is subject to observer coverage. Based on this
effort, and internal research and analysis, NMFS published a proposed
rule to establish a uniform, nationally consistent minimum insurance
standard that would apply in regional regulatory programs that
authorize an observer provider to deploy a person in any mandatory or
voluntary observer program and that specify responsibilities of
authorized providers (86 FR 66259; November 22, 2021). NMFS concluded
that establishment of a minimum insurance standard for observer
providers is necessary to clarify the types of insurance that are
appropriate to mitigation the financial risks associated with provided
observers services; specifically observer deployments to fishing
vessels or shoreside locations such as processing facilitates, and
those that arise with training personnel for these deployments. Further
background on NMFS' development of, and rationale for specific elements
of the national minimum insurance standard is available in the proposed
rule.
Responses to Public Comments
NMFS received comments on the proposed rule in three letters
received from the Purse Seine Vessel Owners' Association (PSVOA),
Gallagher Insurance (Gallagher), and LIG Marine Managers. Summaries of
the comments and agency responses are provided below.
Comment 1. Gallagher commented on NMFS' citation to a 2017 Bureau
of Labor Statistics, Census of Fatal Occupational Injuries report that
ranked commercial fishing as one of the most dangerous occupations and
NMFS' suggestion that, because observers are usually deployed to
commercial fishing vessels, observers' risk of occupational injury is
equal to that of commercial fishermen. Gallagher noted that an
occupation with a high Fatal Occupational Injuries ranking does
necessarily mean that it has a high level of Occupation Injury overall.
Certain characteristics of commercial fishing--a relatively low number
of employees compared to other food processing industries and a unique
at-sea work environment--lead it to having a higher level of per-
employee fatalities, but not necessarily a higher level of overall
occupational injuries compared to other industries. Lastly, for
observers, several factors mitigate the risk of occupational injury
that is otherwise faced by commercial fishermen, including: work
stations designated for observers; different proximity to mechanical
equipment, and deployment to processing vessels or motherships or
shoreside facilities which have less or no risk of sinking.
Response. NMFS agrees that a high Fatal Occupational Injuries
ranking does not necessarily mean a high level of Occupation Injury
overall for commercial fishing. NMFS also agrees that the risk of
observer occupational injury may not always be equivalent to such risks
for commercial fishermen. However, NMFS maintains its view that
occupational injury risks faced by commercial fishermen are relevant to
assessing, as a general matter, the risks for observers and the minimum
level of insurance observer providers should have to insure against
those risks.
Comment 2. In response to NMFS' specific request for comments on
the issue, PSVOA expressed strong support for enhancing the proposed
Marine General Liability (MGL) policy requirement with an endorsement
that extends protection to vessel or shoreside processor owners from
legal actions filed by an observer. Such an endorsement should be
added, because vessel owners face significant exposure to liability
from incidents that arise involving compliance with federal observer
coverage requirements. The endorsement should name a vessel owner as a
party that will be indemnified against a lawsuit or other legal action
that seeks redress of an observer injury or death.
Response. NMFS recognizes PSVOA's concern that vessel owners have
some risk of legal actions filed against them by observers, whether
specifically or as part of an action brought against the employer.
However, NMFS has decided not to add an endorsement to the MGL policy
requirement in the rule. The proposed rule noted that the incidence or
risk of observer-initiated legal actions against parties other than
their employer are likely to be low, and NMFS did not receive public
comments that would affect that conclusion. Such risks should be
addressed through the Marine Employer's Liability (MEL) policy element
of the minimum insurance standard. In addition, the minimum insurance
standard is intended to protect vessel and shoreside processor owners
against employer-based claims. Based on available information about
risks and costs, NMFS believes that requiring observer providers to
have an enhanced MGL policy that protects vessel and shoreside
processor owners against any legal action brought by an observer, not
just those that are employer-based, is too broad and overly burdensome.
For that same reason, NMFS also declines PSVOA's request that the
minimum insurance standard be modified to require that the MGL have an
endorsement that names a vessel or shoreside processor as a party that
that will be indemnified against a lawsuit or other legal action that
seeks redress of an observer injury or death.
Comment 3. Gallagher and LIG Marine Managers commented that the
preamble of the proposed rule incorrectly suggested that there is a
distinction between a MEL policy and a policy for maritime liability to
cover claims under the Jones Act and General Maritime Law (GML). There
is no difference between the two policies because MEL is a policy for
maritime liability that covers claims under the Jones Act and GML.
Response. NMFS agrees that an MEL policy covers claims under the
Jones Act and GML. In the preamble to the proposed rule, NMFS used the
same terminology reflected in existing regional observer program
regulations. North Pacific and West Coast program regulations require
coverage for maritime liability to cover Jones Act and GML claims while
the Northeast program regulations require the same coverage but
describe it as an MEL policy. This rule includes an MEL policy and, as
NMFS explained in the proposed rule, the purpose of that policy is to
provide coverage for Jones Act and GML claims.
Comment 4. Gallagher commented extensively on the applicability of
the U.S. Longshore and Harborworkers Compensation Act (LHWCA), the
Jones Act, and GML to observers and expressed support for requiring
observer providers to have insurance for observer claims for benefits
under these authorities. Gallagher asserted that if LHWCA applies to
observers on land, it must also be applicable to observers while
deployed on a vessel in US navigable waterways. Gallagher referenced
analysis by insurance expert Vincent Gullette, of American Equity
Underwriters, that is documented in NMFS' Fisheries Observers
Insurance, Liability and Labor Workshop Technical Memorandum, dated
June 12-14, 2001, available at Observer Insurance Tech Memo.
According to Mr. Gullette, observers may not be covered under the
LHWCA
[[Page 54905]]
because they do not meet the criteria for longshore status. Observers
may be considered ``aquaculture workers'' for purposes of the LHWCA,
and, as such, would be excluded from coverage under that authority. But
if not considered ``aquaculture workers,'' they would be covered under
the LHWCA whether on land or at-sea. Gallagher expressed support for
the finding of that insurance expert and NMFS' finding that, because
observers are not vessel crew, neither the Jones Act nor GML apply to
them. Notwithstanding, Gallagher expressed support for inclusion of
LHWCA coverage and MEL coverage for Jones Act and GML claims in the
rule. While observers may not have the requisite status needed to
recover benefits under these authorities, observers are nonetheless
free to pursue such benefits and that could result in significant legal
costs for observer providers.
Response. NMFS agrees that the details of whether and how the
LHWCA, Jones Act, and GML apply to observers are unclear in some cases.
Regardless of these uncertainties, NMFS agrees that a minimum suite of
insurance for observer provider operations must include coverage for
claims under those authorities, and thus made no change to the final
rule as a result of this comment. NMFS notes that the minimum insurance
standard is designed to be narrowly tailored to cover the reasonable
risks, but not every possible risk, that may arise with observer
provider operations. As explained in the proposed rule, based on
independent research and extensive outreach efforts to insurance
experts, observer providers, and other government agencies, NMFS
determined that the LHWCA applies only to shoreside incidents. While
deployed on a vessel under the MSA or the Marine Mammal Protection Act,
observers have status as Federal employees for purposes of compensation
under the Federal Employee Compensation Act. See 16 U.S.C. 1881b(c).
Accordingly, because observers can seek FECA benefits for injuries
sustained while deployed on a vessel, NMFS concluded that, for purposes
of the minimum insurance standard, observer providers need only obtain
LHWCA coverage for observers when they perform duties shoreside.
Nonetheless, the minimum insurance standard establishes a floor, not a
ceiling, for the appropriate insurance policy types and levels of
associated insurance policy coverage amounts. Thus, this rule would not
prevent an observer provider from having broader insurance or higher
coverage amounts than what is required under the minimum standard.
NMFS agrees that observers do not have the requisite status for
Jones Act and GML claims, but also agrees that the minimum standard
should include an MEL policy to address legal costs should observers
pursue Jones Act or GML claims. Moreover, as NMFS explained in the
proposed rule, an MEL policy is appropriate to cover certain GML
benefits that do apply to incidents at-sea involving observers,
specifically potential remedies related to claims based on
Unseaworthiness, Wrongful Death, Transportation, Wages, Maintenance and
Cure, and the Death on the High Seas Act.
Comment 5. LIG Marine Managers commented as follows on LHWCA and
State Workers' Compensation policies. LHWCA and State Workers'
Compensation policies are always issued to provide statutory coverage,
thus it is not necessary to specify ``at statutory limits'' in the
rule. The requirement for State Workers' Compensation should be changed
to apply for ``all states of operation'' because some observer programs
involve multiple states. LHWCA and State Workers' Compensation policies
include a sublimit for employers' liability (EL) and that sublimit
should be increased to $1 million. LIG Marine Managers illustrated
these comments, and those in comment 6, in Table 1 below.
Response. NMFS agrees that LHWCA and State Workers' Compensation
policies issued by insurance carriers provide statutory coverage. No
change is needed in the rule, as reference to ``at statutory limits''
was not in the proposed regulatory text, only in the preamble. NMFS
does not agree that the requirement for State Workers' Compensation
should be revised to require coverage in ``all states of operation''.
As explained in the proposed rule, the minimum insurance standard
applies only when NMFS regulations require observer provider companies
to obtain approval or a permit to deploy a person in any mandatory or
voluntary observer program. The North Pacific, West Coast, and
Northeast observer programs have such regulatory requirements, whereas
the Southeast, Southwest and Pacific Islands programs do not, as they
currently operate only under a direct contract model. Requiring that
State Workers' Compensation (or other policies) cover ``all states of
operation'' would be overly broad for the former programs, which are
subject to approval or permitting under regulations for particular
fisheries and not for all states where they might operate. While direct
contract programs are not subject to this rule, as explained in the
proposed rule, NMFS will apply the minimum insurance standard in this
rule as a condition of direct contracts for observer provider services
by adding that standard to the National Oceanic and Atmospheric
Administration's Acquisitions and Grants Office Policy Manual. NMFS
contracts with observer providers for services in specific fisheries,
and thus, as with the regulations-based programs, believes requiring
coverage in ``all states of operation'' would be overly broad.
Comment 6. LIG Marine Managers commented that commercial general
liability coverage, which generally does not apply to any vessel-based
operations, should be a component of MGL with a minimum of $1 million.
Policy coverage amounts for MEL, EL, and MGL can be identified at
common market limits, e.g., $1 million for each respective policy, but
some insurance carriers prefer to write them differently. It does not
matter how these coverage amounts are set out in any combination of
primary and excess layers as long the total coverage is equal to or
greater than the total of the coverage amounts required for each
policy. LIG Marine Managers submitted Table 1 with its comments, which
illustrates its recommendations summarized under Comments 5 and 6.
[[Page 54906]]
Table 1--LIG Marine Managers' Recommendations
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Marine employer's
liability (MEL) Excess or umbrella
State worker's compensation LHWCA (longshore) Employers liability covering Jones Act/ Marine general coverage over MGL,
coverage (WC) (EL) GML, seamen's claims liability (MGL) EL and MEL
coverage
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Must meet requirements within all Monoline or endorsed As part of the WC $1 million per $1 million per $2 million minimum.
state(s) of operation: Statutory to the WC policy. coverage. occurrence. occurrence.
Limit. Statutory Limit....... $1 million............
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Any combination of primary and excess policies can be provided for the EL, MEL and MGL in order to achieve the total limits required above.
Response. NMFS agrees that some insurance carriers may craft policy
coverage amounts differently than the market standard. Those variations
do not weaken coverage so long as the total coverage of each policy is
equal to or greater than the sum of what is required for each policy.
Accordingly, this final rule amends the regulatory text of the proposed
rule at 50 CFR 600.748 by adding a new paragraph (d) to include
flexibility in satisfying the coverage amounts required for MGL and MEL
policies.
With regard to the comment on an EL policy sublimit for LHWCA and
State Workers' Compensation policies, NMFS believes that the standard
limit for EL coverage is sufficient. Moreover, the purpose of this rule
is to address the risks that observer provider operations present for
fishing vessels and shoreside processors. An EL policy would do little
to advance that purpose because it is intended to address the risks
associated with lawsuits in which employees allege that their employers
negligently created an unsafe work environment. Coverage that only
addresses negligence claims by observers against observer providers--
which to our knowledge are rare--would not mitigate the financial risks
that observer deployments present for fishing vessels subject to
observer coverage. NMFS reiterates that, as with all elements of the
minimum standard in this rule, observer providers can choose to
increase EL coverage as they deem necessary to address their
operational needs.
Changes From the Proposed Rule
As described above in the Responses to Public Comments section, in
response to public comments and after further agency consideration, in
this final rule NMFS has added a new paragraph (d) to section 600.748
to allow policy coverage amounts for Marine General Liability and
Marine Employers' Liability under paragraph (b)(1) and (2) respectively
to be higher or lower than the specified amounts so long as the total
is equal to or greater than the combined specified amounts (i.e., so
long as the combined coverage for these policies is $2 million).
Paragraphs (b)(1) and (2) were revised to include cross-references to
paragraph (d).
Table 2--Final Minimum Insurance Standard
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State workers'
LHWCA compensation Marine general Marine employer's Excess or
coverage (WC) liability (MGL) liability (MEL) umbrella coverage
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Required $1 million coverage.... Must meet Required $ 1 Required $ 1 Required $ 2
requirements million per million per million per
within state of occurrence. occurrence. occurrence.
operation.
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Coverage amounts specified for MGL and MEL may be higher or lower for each respective policy so long as the
combined coverage for these policies is $2 million.
In addition, NMFS has clarified the preface of paragraph 600.748(c)
by replacing the phrase ``policy coverages'' with the phrase ``scope of
coverages,'' which is a more accurate description of that paragraph.
Classification
NMFS issues this final rule pursuant to Magnuson-Stevens Act (MSA)
section 305(d), which provides the Secretary of Commerce with general
responsibility to carry out any FMP or FMP amendment, and to promulgate
regulations as may be necessary to discharge such responsibility (16
U.S.C. 1855(d)). The NMFS Assistant Administrator has determined that
this final rule is consistent with the MSA and other applicable laws.
NEPA Determination
NOAA's Policy and Procedures for Compliance with the National
Environmental Policy Act (NEPA) and Related Authorities (NOAA
Administrative Order (NAO) 216-6A and Companion Manual for NAO 216-6A)
provide that all NOAA major Federal actions be reviewed with respect to
environmental consequences on the human environment. Based on the NAO
and Companion Manual, NMFS examined the proposed rule for its potential
to impact the quality of the human environment and concluded that it
would not have a significant adverse effect, individually or
cumulatively, on the human environment and would not involve any
extraordinary circumstances listed in the Companion Manual. NMFS has
made the same conclusion for the final rule, and received no public
comments related to effects on the human environment. Furthermore, NMFS
determined that this final rule may appropriately be categorically
excluded from the requirement to prepare either an environmental
assessment or environmental impact statement in accordance with the
categorical exclusion described at G7 in the Companion Manual for NAO
216-6A, Appendix, page E-14, which applies to preparation of policy
directives, rules, regulations, and guidelines of an administrative,
financial, legal, technical, or procedural nature, or for which the
environmental effects are too broad, speculative or conjectural to lend
themselves to meaningful analysis and
[[Page 54907]]
will be subject later to the NEPA process, either collectively or on a
case-by-case basis.
Executive Order 12866
This final rule has been determined to be not significant for
purposes of Executive Order 12866.
Regional regulatory programs that authorize an observer provider to
deploy a person in any mandatory or voluntary observer program and that
specify responsibilities of authorized providers already include
insurance requirements. Thus, to operate in these programs, observer
providers already must demonstrate that they have the insurance
specified in the applicable regulations.
Due to the nuances of maritime law and the unique nature of
observer deployments, regions have adopted differing insurance
requirements that are in some cases overly burdensome and inefficient.
This action would provide a national standard that clarifies the types
and amounts of insurance and associated coverage amounts that best
address the financial risks of observer provider operations regardless
of the fishery or region in which an observer provider operates. In
some cases, compliance with the final national insurance standard would
require observer providers to have insurance that is different from
what they are required to have under current regulations. While this
final action could change the suite of insurance that observer
providers are required to have, it does not make substantive increases
to the insurance that is required in current regional programs.
For these reasons, we do not expect this action to result in a
significant increase in the premiums that observer providers currently
pay. In fact, the action could result in lower premiums due to the
increased efficiency of having a national standard and the fact that
the standard does not include certain coverages that are required under
current regulations. Additionally, section 600.748(d) of the final rule
has modified how the coverage amounts for MGL and MEL may be met, which
provides greater flexibility to observer providers.
Paperwork Reduction Act
This action does not contain a change to a collection-of-
information requirement for purposes of the Paperwork Reduction Act.
NMFS' regional observer program regulations that authorize observer
providers or that specify authorized provider responsibilities already
include procedures for demonstrating compliance with program insurance
requirements, and this proposed rule would not change those procedures.
The following existing collection of information requirements would
continue to apply, under the following control numbers: (1) 0648-0318,
Alaska Observer Program (applies to the North Pacific Observer
Program); (2) 0648-0500, An Observer Program for At-Sea Processing
Vessels in the Pacific Coast Groundfish Fishery; and (3) 0648-0546,
Northeast Region Observer Providers Requirements. Note that, while this
action would make clear that the existing regulations for the West
Coast Catcher Processor Program (50 CFR 660.160) include insurance
requirements for permitted observer providers (by adding a reference to
the minimum insurance standard to the program's regulations), the
collection of an insurance certificate from observer providers that are
permitted to operate in this program is already covered under the
existing control number 0648-0500, An Observer Program for At-Sea
Processing Vessels in the Pacific Coast Groundfish Fishery.
Final Regulatory Flexibility Analysis
In compliance with section 604 of the Regulatory Flexibility Act,
NMFS prepared a final regulatory flexibility analysis (FRFA), which is
included below.
In the Response to Comments section above, NMFS clarified that
insurance policies for State Workers' Compensation and LHWCA are
routinely issued ``at statutory limits'' and, therefore, that the level
of coverage need not be specified in this final rule as it had been in
the preamble to the proposed rule. NMFS also revised the regulatory
text of the proposed rule at 50 CFR 600.748 by adding a new paragraph
(d) to provide an observer provider with flexibility in satisfying
required policy coverage amounts for Marine General Liability (MGL) and
Marine Employers' Liability (MEL). Specifically, new paragraph (d)
allows coverage amounts for those policies to be higher or lower than
the specified amounts so long as the combined total coverage is equal
to or greater than the required amounts for each respective policy.
Neither the clarification to the coverage amount required for State
Workers' Compensation and LHWCA, nor the addition of new paragraph (d)
adding flexibility for satisfying the coverage amounts for MGL and MEL,
have any cost implications.
No economic issues were raised by public comment, and, therefore,
no changes to this final rule were made in response to public comments
of an economic nature. NMFS received no comments on the initial
regulatory flexibility analysis (IRFA), nor any comments from the
Office of Advocacy for the Small Business Administration. NMFS does not
have any new information to take into account for purposes of that
analysis. For these reasons, the FRFA provided below, with the
exception of non-substantive technical updates, reflects the initial
regulatory flexibility analysis that NMFS prepared for the proposed
rule.
Description of the Reasons Why Action Is Being Considered
The policy reasons for issuing this final rule are discussed in the
preamble above and in the proposed rule and are not repeated here.
Statement of the Objectives of, and Legal Basis for, the Proposed Rule;
Identification of All Relevant Federal Rules Which May Duplicate,
Overlap, or Conflict With the Final Rule
The objective of this final rule is to promote effective operation
of regional observer programs by ensuring that observer providers have
a nationally consistent suite of insurance coverages that properly
addresses the financial risks of their operations, regardless of the
fishery observed or the region in which the provider operates. The
legal basis for this rule is 16 U.S.C. 1855(d). No other Federal rules
duplicate, overlap, or conflict with this proposed rule.
Number and Description of Small Entities Regulated by the Final Action
Currently, there are six companies that provide observer services
in a NMFS mandatory or voluntary observer program. These entities,
which would be directly regulated by this rule include: A.I.S. Inc.;
Alaskan Observers, Inc.; Saltwater, Inc.; TechSea International; Fathom
Resources LLC; and East West Technical Services, LLC. Four of these
entities operate in the North Pacific Observer Program. Three operate
in the West Coast Observer Program, and two operate in the Northeast
Observer Program. The specific NMFS regional observer programs in which
these companies may be permitted or approved to deploy observers are as
follows: the North Pacific Observer Program, 50 CFR 679.52; the West
Coast Groundfish Observer Program, 50 CFR 660.16; the West Coast Catch
Monitor Program, 50 CFR 660.17; the West Coast Groundfish Observer and
Catch Monitor Provider Permits Program, 50 CFR 660.18; the West Coast
Shoreside IFQ Program, 50 CFR 660.140; the West Coast
[[Page 54908]]
Mothership Cooperative Program, 50 CFR 660.150; the West Coast Catcher
Processor Cooperative Program, 50 CFR 660.160; the program for
Northeast at-sea sampler/observer coverage, 50 CFR 648.11(h); and the
Northeast Multispecies at-sea sector monitoring program, 50 CFR
648.87(b)(4). The information available to NMFS indicates that the
principal activity of most of these companies is providing observers.
All of the current observer provider companies are considered small
entities under the RFA.
Additionally, firms interested in obtaining approval or a permit to
provide observer services under a NMFS regional observer program in the
future would be regulated under this rule. Observer provider services
are specialized services, and NMFS does not know how many other firms
might want to become providers in the future. In any event, NMFS
anticipates that any new providers would be considered small entities.
For purposes of the RFA, NMFS established a small business size
standard (NAICS 11411) for all businesses in the commercial fishing
industry including their affiliates, whose primary industry is
commercial fishing. (See 80 FR 81194; 50 CFR 200.2). A business
primarily engaged in commercial fishing (NAICS code 11411) is
classified as a small business 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
million for all of its affiliated operations worldwide. Based on
available information, NMFS has determined that all six of these
companies are small entities, i.e., they are engaged in the business of
fish harvesting (NAICS 114111), are independently owned or operated,
are not dominant in their field of operation, and have annual gross
receipts not in excess of $11 million.
Even though this rule would apply to a substantial number of the
relevant businesses, the implementation of this action would not result
in a significant adverse economic impact on individual companies. As
described below, this rule could result in possible changes in
insurance costs for these companies, ranging from an increase of
approximately $10,000 to an approximate decrease of a similar amount.
This range includes potential benefits to the companies stemming from
clarifying requirements and allowing them to drop certain insurance
policies that NMFS has determined to be no longer necessary.
Description of Projected Reporting, Recordkeeping, and Other Compliance
Requirements of the Final Rule
This final rule does not include new reporting, recordkeeping, or
other compliance requirements. As noted under the Paperwork Reduction
Act header above, NMFS' regional observer program regulations that
authorize observer providers or that specify authorized provider
responsibilities, already include procedures for demonstrating
compliance with program insurance requirements, and this proposed rule
would not change those procedures.
Description of Any Significant Alternatives to the Final Rule That
Accomplish the Stated Objectives of Applicable Statutes and That
Minimize Any Significant Economic Impact of the Final Rule on Small
Entities
As required by 5 U.S.C. 604(a), NMFS' analysis considered whether
there are any significant alternatives to the proposed rule that would
accomplish its stated objectives while minimizing any significant
economic impact on small entities. To identify alternatives, NMFS took
several information gathering actions. In 2016, NMFS held an Observer
Provider Insurance Workshop (2016 Workshop), which was attended by
marine insurance experts, observer providers, observer representatives,
and officials from relevant federal and state agencies. Additionally,
in 2018, NMFS issued a Request for Information (2018 RFI) in which it
asked for input on an appropriate suite of insurance and associated
coverage amounts for observer providers (83 FR 32829, July 16, 2018).
Through this engagement, NMFS identified no alternatives to the
proposed rule that would reasonably address the unique risks that
observer coverage presents for observer providers, observers, and the
industry that is subject to observer coverage requirements. After
considering public comment on the proposed rule, NMFS determined that
there were no significant alternatives to the final rule. Therefore, in
the proposed rule and this final rule, NMFS analyzed only whether this
action would have a significant economic impact on observer providers,
all of which are small entities.
Whether this final rule would have a significant economic impact
depends upon whether carrying the required policies under the minimum
national standard would result in increased premiums compared to the
premiums that observer providers currently pay to comply with existing
regional requirements. However, for both the proposed and final rules,
NMFS lacked the precise baseline information on existing premium costs
that is necessary to determine, with any specificity, the economic
impact that may result from the rule. During development of the
proposed rule, NMFS attempted to obtain baseline information on current
observer provider insurance premium costs through outreach to the six
companies that provide observer services in a NMFS mandatory or
voluntary observer program. However, these companies viewed insurance
cost information as proprietary, and, therefore, declined to provide
details of their insurance costs or estimates of what premium costs
would be to comply with the proposed national minimum standard.
Nonetheless, based on the limited information that these companies did
provide, NMFS estimated that current observer provider insurance
premiums cost less than $5,000 per employee. It is possible that this
action could result in a decrease of premiums from the estimated $5,000
per employee baseline, due to cost savings from lower premiums, from
the consolidation of policies, or from the cancellation of policies
that are no longer necessary. It is also possible for a premium
increase to an outer bound of $10,000 per employee if a company
previously had no policy coverage at all. Using these general
assumptions, NMFS developed ranges in observer provider premium changes
that could result from the proposed rule, if finalized and implemented
(see table 3 below).
To form an accurate assessment of the economic impact that may
result from the rule, in the proposed rule, NMFS specifically requested
public comment on whether the magnitude of the ranges described below
accurately captures the likely premium changes that may result from the
rule and which of these ranges is most likely to apply upon
implementation of this final rule.
Table 3--Estimated Ranges of Observer Provider Premium Changes
------------------------------------------------------------------------
Insurance premium increases Insurance premium decreases
------------------------------------------------------------------------
$0 to $2,500 per employee $0 to $2,500 per employee.
$2,500 to $5,000 per employee $2,500 to $5,000 per employee.
$5,000 to $7,500 per employee $5,000 to $7,500 per employee.
$7,500 to $10,000 per employee $7,500 to $10,000 per employee.
------------------------------------------------------------------------
NMFS received no comments on the premium ranges in the table, the
table in general, or other aspects of the Initial
[[Page 54909]]
Regulatory Flexibility Act analysis. NMFS also did not receive comments
on or related to baseline information on observer provider insurance
premium costs, and thus the agency's estimates of such costs remains
unchanged from the IRFA.
Small Business Compliance Guide
Section 212 of the Small Business Regulatory Enforcement Fairness
Act of 1996 states that, for each rule or group of related rules for
which an agency is required to prepare a FRFA, the agency shall publish
one or more guides to assist small entities in complying with the rule,
and shall designate such publications as small entity compliance
guides. As part of the rulemaking process, NMFS prepared a small entity
compliance guide, which will be sent to all interested parties.
List of Subjects
50 CFR Part 600
Administrative practice and procedure, Confidential business
information, Fish, Fisheries, Fishing, Fishing vessels, Foreign
relations, Intergovernmental relations, Penalties, Reporting and
recordkeeping requirements, Statistics.
50 CFR Part 648
Fisheries, Fishing, Reporting and recordkeeping requirements.
50 CFR Part 660
Fisheries, Fishing, Indians, Recreation and recreation areas,
Reporting and recordkeeping requirements, Treaties.
50 CFR Part 679
Alaska, Fisheries, Reporting and recordkeeping requirements.
Dated: August 31, 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 parts 600, 648,
660, and 679, are amended as follows:
PART 600--MAGNUSON-STEVENS ACT PROVISIONS
0
1. The authority citation for 50 CFR part 600 continues to read as
follows:
Authority: 5 U.S.C. 561 and 16 U.S.C. 1801 et seq.
0
2. Add Sec. 600.748 to subpart H to read as follows:
Sec. 600.748 National Minimum Observer Provider Insurance Standard.
(a) Applicability. As part of regulations for observer provider
companies to obtain approval or a permit to deploy a person in any
mandatory or voluntary observer program, or regulations that specify
approved or permitted observer provider responsibilities, NMFS must
reference and ensure compliance with the following national minimum
insurance standard.
(b) Policies and Coverage Amounts. (1) Marine General Liability ($1
million any one occurrence or as provided under paragraph (d) of this
section).
(2) Marine Employers Liability ($1 million any one occurrence or as
provided under paragraph (d) of this section) for an observer provider
that is authorized, or has applied to be authorized, to deploy
observers or monitors at-sea.
(3) State workers' compensation as required by each state in which
the observer provider is authorized, or has applied to be authorized,
to deploy observers or monitors at-sea or shoreside.
(4) U.S. Longshore and Harbor Workers' Act coverage, either as a
stand-alone policy or as a state workers' compensation policy
endorsement, if that policy or a policy endorsement is required by the
respective state(s) in which the observer provider is authorized, or
has applied to be authorized, to deploy observers or monitors at-sea or
shoreside.
(5) Excess or umbrella coverage ($2 million any one occurrence).
(c) Scope of coverages. Coverage must extend to injury, liability,
and accidental death during the period of employment, including
training, of observers or monitors at-sea or shoreside.
(d) Combined coverage amounts. Coverage amounts specified for
Marine General Liability and Marine Employers Liability may be higher
or lower for each respective policy so long as the combined coverage
for these policies is $2 million.
PART 648--FISHERIES OF THE NORTHEASTERN UNITED STATES
0
3. The authority citation for 50 CFR part 648 continues to read as
follows:
Authority: 16 U.S.C. 1801 et seq.
0
4. In Sec. 648.11, revise paragraph (h)(3)(vii) to read as follows:
Sec. 648.11 Monitoring coverage.
* * * * *
(h) * * *
(3) * * *
(vii) Evidence of holding insurance specified at Sec. 600.748(b)
and (c) of this chapter.
* * * * *
0
5. In Sec. 648.87, revise paragraph (b)(4)(i)(G) to read as follows:
Sec. 648.87 Sector allocation.
* * * * *
(b) * * *
(4) * * *
(i) * * *
(G) Evidence of holding insurance specified at Sec. 600.748(b) and
(c) of this chapter.
* * * * *
PART 660--FISHERIES OFF WEST COAST STATES
0
6. The authority citation for 50 CFR part 660 continues to read as
follows:
Authority: 16 U.S.C. 1801 et seq., 16 U.S.C. 773 et seq., and
16 U.S.C. 7001 et seq.
0
7. In Sec. 660.17, revise paragraph (f)(1)(vii)(B) to read as follows:
Sec. 660.17 Catch monitor program.
* * * * *
(f) * * *
(1) * * *
(vii) * * *
(B) The observer provider must submit copies of ``certificates of
insurance,'' that names the Catch Monitor Program Coordinator as the
``certificate holder'' to the Catch Monitor Program Office by February
1 of each year. The certificates of insurance shall verify all coverage
provisions specified at Sec. 600.748(b) and (c) of this chapter and
state that the insurance company will notify the certificate holder if
insurance coverage is changed or canceled.
* * * * *
0
8. In Sec. 660.140, revise paragraph (h)(5)(xi)(C) to read as follows:
Sec. 660.140 Shorebased IFQ Program.
* * * * *
(h) * * *
(5) * * *
(xi) * * *
(C) Certificates of insurance. The observer provider must submit
copies of ``certificates of insurance'' that name the Northwest
Fisheries Science Center Observer Program manager as the ``certificate
holder'' to the Observer Program Office by February 1 of each year. The
certificates of insurance shall verify all coverage provisions
specified at Sec. 600.748(b) and (c) of this chapter and state that
the insurance company will notify the certificate holder if insurance
coverage is changed or canceled.
* * * * *
0
9. In Sec. 660.150, add paragraph (j)(4)(xi)(A)(6), and revise
paragraph (j)(4)(xi)(B)(3) to read as follows:
[[Page 54910]]
Sec. 660.150 Mothership (MS) Coop Program.
* * * * *
(j) * * *
(4) * * *
(xi) * * *
(A) * * *
(6) Certificates of insurance. The observer service provider must
submit copies of ``certificates of insurance'' that name the Northwest
Fisheries Science Center Observer Program manager as the ``certificate
holder'' to the Observer Program Office by February 1 of each year. The
certificates of insurance shall verify all coverage provisions
specified at Sec. 600.748(b) and (c) of this chapter and state that
the insurance company will notify the certificate holder if insurance
coverage is changed or canceled.
(B) * * *
(3) Certificates of insurance. The observer provider must submit
copies of ``certificates of insurance'' that name the Northwest
Fisheries Science Center Observer Program manager as the ``certificate
holder'' to the Observer Program Office by February 1 of each year. The
certificates of insurance shall verify all coverage provisions
specified at Sec. 600.748(b) and (c) of this chapter and state that
the insurance company will notify the certificate holder if insurance
coverage is changed or canceled.
* * * * *
0
10. In Sec. 660.160, add paragraph (g)(1)(v) to read as follows:
Sec. 660.160 Catcher/processor (C/P) Coop Program.
* * * * *
(g) * * *
(1) * * *
(v) Certificates of insurance. The observer provider must submit
copies of ``certificates of insurance'' that name the Northwest
Fisheries Science Center Observer Program manager as the ``certificate
holder'' to the Observer Program Office by February 1 of each year. The
certificates of insurance shall verify all coverage provisions
specified at Sec. 600.748(b) and (c) of this chapter and state that
the insurance company will notify the certificate holder if insurance
coverage is changed or canceled.
* * * * *
PART 679--FISHERIES OF THE EXCLUSIVE ECONOMIC ZONE OFF ALASKA
0
11. The authority citation for 50 CFR part 679 continues to read as
follows:
Authority: 16 U.S.C. 773 et seq.; 1801 et seq.; 3631 et seq.;
Pub. L. 108-447; Pub. L. 111-281.
0
12. In Sec. 679.52, revise paragraph (b)(11)(vi) to read as follows:
Sec. 679.52 Observer provider permitting and responsibilities.
* * * * *
(b) * * *
(11) * * *
(vi) Certificates of insurance. Copies of ``certificates of
insurance'' that name the NMFS Observer Program leader as the
``certificate holder'' must be submitted to the Observer Program by
February 1 of each year. The certificates of insurance shall verify all
coverage provisions specified at Sec. 600.748(b) and (c) of this
chapter and state that the insurance company will notify the
certificate holder if insurance coverage is changed or canceled.
* * * * *
[FR Doc. 2022-19146 Filed 9-7-22; 8:45 am]
BILLING CODE 3510-22-P