[Federal Register: November 16, 2004 (Volume 69, Number 220)]
[Proposed Rules]
[Page 67100-67104]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16no04-23]
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DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration
50 CFR Part 600
[Docket No. 041029298-4298-01; I.D. 052004A]
RIN 0648-AS38
Magnuson-Stevens Act Provisions; Fishing Capacity Reduction
Program; Pacific Coast Groundfish Fishery; California, Washington, and
Oregon Fisheries for Coastal Dungeness Crab and Pink Shrimp; Industry
Fee System for Fishing Capacity Reduction Loan
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA), Commerce.
ACTION: Proposed rule.
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SUMMARY: NMFS proposes regulations to implement an industry fee system
for repaying a $35,662,471 Federal loan partially financing a fishing
capacity reduction program in the Pacific Coast groundfish fishery. The
fee system involves future landings in the trawl portion (excluding
whiting catcher - processors) of the Pacific Coast groundfish fishery
as well as the California, Washington, and Oregon fisheries for coastal
Dungeness crab and pink shrimp. This action's intent is to implement
the fee system.
DATES: Comments on this proposed rule must be received by December 16,
2004.
ADDRESSES: You may submit comments by any of the following methods:
E-mail: 0648-AS38@noaa.gov. Include in the subject line
the following identifier: Pacific Coast Groundfish Buyback RIN 0648-
AS38. E-mail comments, with or without attachments, are limited to 5
megabytes.
Federal e-Rulemaking Portal: http:http://www.regulations.gov.
Mail: Michael L. Grable, Chief, Financial Services
Division, National Marine Fisheries Service, 1315 East-West Highway,
Silver Spring, MD 20910-3282.
Fax: (301) 713-1306.
Comments involving the burden-hour estimates or other aspects of
the collection-of-information requirements contained in this proposed
rule should be submitted in writing to Michael L. Grable, at the above
address, and to David Rostker, Office of Management and Budget (OMB),
by e-mail at David_Rostker@omb.eop.gov or by fax to 202-395-7285.
Copies of the Environmental Assessment, Regulatory Impact Review
[[Page 67101]]
(EA/RIR) and Initial Regulatory Flexibility Analysis (IRFA) for the
program may be obtained from Michael L. Grable, at the above address.
FOR FURTHER INFORMATION CONTACT: Michael L. Grable, (301) 713-2390.
SUPPLEMENTARY INFORMATION:
I. Background
Section 312(b)-(e) of the Magnuson-Stevens Fishery Conservation and
Management Act (16 U.S.C. 1861a(b) through (e)) (the Act) generally
authorized fishing capacity reduction programs (programs). In
particular, section 312(d) of the Act (section 312(d)) authorized
industry fee systems (fee systems) for repaying fishing capacity
reduction loans (reduction loans) which finance program costs.
Subpart L of 50 CFR part 600 contains the framework regulations
(framework regulations) generally implementing section 312(b)-(e) of
the Act.
Sections 1111 and 1112 of the Merchant Marine Act, 1936 (46 App.
U.S.C. 1279f and 1279g) generally authorized reduction loans.
Section 212 of Division B, Title II, of Public Law 108-7 (section
212) specifically authorized a $46 million program (groundfish program)
for that portion of the limited entry trawl fishery under the Pacific
Coast Groundfish Fishery Management Plan whose permits, excluding those
registered to whiting catcher-processors, were endorsed for trawl gear
operation (reduction fishery). Section 212 also authorized a fee system
for repaying the reduction loan partially financing the groundfish
program's cost. The fee system includes both the reduction fishery and
the fisheries for California, Washington, and Oregon coastal Dungeness
crab and pink shrimp (fee share fisheries).
Section 501(c) of Division N, Title V, of Public Law 108-7 (section
501(c)) appropriated $10 million to partially fund the groundfish
program's cost.
Public Law 107-206 authorized a $36 million reduction loan
financing up to $36 million of the groundfish program's cost.
Section 212 required NMFS to implement the groundfish program by a
public notice in the Federal Register. NMFS published the groundfish
program's initial public notice on May 28, 2003 (68 FR 31653) and final
notice on July 18, 2003 (68 FR 42613). Anyone interested in the
groundfish program's full implementation details should refer to these
two notifications.
The groundfish program's maximum cost was $46 million, consisting
of a $10 million appropriation and a $36 million reduction loan.
Voluntary participants in the groundfish program relinquished, among
other things, their fishing permits and licenses in the reduction
fishery and the fee share fisheries, their fish catch histories in
these fisheries, and their vessels' worldwide fishing privileges in
return for a reduction payment whose amount the participant's bid
determined.
On July 18, 2003, NMFS invited groundfish program bids from the
reduction fishery's permit holders. The bidding period opened on August
4, 2003, and closed on August 29, 2003. NMFS scored each bid's amount
against the bidder's past ex-vessel revenues and, in a reverse auction,
accepted the bids whose amounts were the lowest percentages of the
revenues. This created reduction contracts whose performance was
subject only to a successful referendum about the fee system required
to repay the reduction loan.
Bid offers totaled $59,786,471. NMFS accepted bids totaling
$45,662,471. The next lowest scoring bid would have exceeded the
groundfish program's maximum cost. The accepted bids involved 91
fishing vessels as well as 239 fishing permits (91 in the reduction
fishery, 121 in the fee-share fisheries, and 27 other Federal permits).
In accordance with the section 212 formula, NMFS allocated portions
of the prospective $35,662,471 reduction loan to the reduction fishery
and each of the six fee share fisheries, as follows:
(1) Reduction fishery, $28,428,719; and
(2) Fee share fisheries:
(a) California Dungeness crab, $2,334,334,
(b) California pink shrimp, $674,202,
(c) Oregon Dungeness crab, $1,367,545,
(d) Oregon pink shrimp, $2,228,845,
(e) Washington Dungeness crab, $369,426, and
(f) Washington pink shrimp, $259,400.
NMFS next held a referendum about the fee system. The reduction
contracts would have become void unless the majority of votes cast in
the referendum approved the fee system. On September 30, 2003, NMFS
mailed ballots to referendum voters in the reduction fishery and the
six fee share fisheries. The voting period opened on October 15, 2003,
and closed on October 29, 2003. NMFS received 1,105 responsive votes.
In accordance with the section 212 formula, NMFS weighted the votes
from each of the seven fisheries. Over 85% of the weighted votes
approved the fee system. This successful referendum result removed the
only condition precedent to reduction contract performance.
On November 4, 2003, NMFS published another Federal Register
document (68 FR 62435) advising the public that NMFS would, beginning
on December 4, 2003, tender the groundfish program's reduction payments
to the 91 accepted bidders. On December 4, 2003, NMFS required all
accepted bidders to permanently stop all further fishing with the
reduction vessels and permits. Subsequently, NMFS:
(1) Disbursed $45,662,471 in reduction payments to 91 accepted
bidders;
(2) Revoked the relinquished Federal permits;
(3) Advised California, Oregon, and Washington about the
relinquished state permits;
(4) Arranged with the National Vessel Documentation Center for
revocation of the reduction vessels' fishery trade endorsements; and
(5) Notified the U.S. Maritime Administration to restrict placement
of the reduction vessels under foreign registry or their operation
under the authority of foreign countries.
Section 501(c) also requires the groundfish program, among other
things, to ensure ``that the owners of * * * [groundfish program
reduction vessels] will operate only under the United States flag or be
scrapped as a reduction vessel pursuant to section 600.1011(c) of title
50, Code of Federal Regulations.''
II. Present Status
NMFS has completed the groundfish program except for implementing
the fee system and providing for certain aspects of the reduction
vessels' post-reduction operation. This action proposes to implement
the groundfish program's fee system. A later action will separately
propose regulations providing for certain aspects of the reduction
vessel's post-reduction operation and such other groundfish program
matters as may require regulation.
Sections 600.1013 of the framework regulations govern the payment
and collection of fees under a fee system.
Basically, the first ex-vessel buyers (fish buyers) of post-
reduction fish subject to a fee system (fee fish) must withhold the fee
from the trip proceeds which the fish buyers would otherwise have paid
to the parties who harvested and first sold (fish sellers) the fee fish
to the fish buyers. Fish buyers calculate the fee to be collected by
multiplying the applicable fee rate times the fee fish's full delivery
value. Delivery value is the fee fish's full fair market value,
[[Page 67102]]
including all in-kind compensation or other goods or services exchanged
in lieu of cash.
Fish buyers collect the fee when they withhold it from trip
proceeds, and fish sellers pay the fee when the fish buyers withhold
it. Fee payment and fee collection is mandatory, and there are
substantial penalties for failing to pay and collect fees in accordance
with the applicable regulations.
Section 600.1014 governs fish buyers' depositing and disbursing
collected fees as well as their keeping records of, and reporting
about, collected fees.
Basically, fish buyers must, no less frequently than at the end of
each business week, deposit collected fees in segregated and Federally
insured accounts until, no less frequently than on the last business
day of each month, they disburse all collected fees in the accounts to
a lockbox which NMFS specifies for this purpose. Settlement sheets must
accompany these disbursements. Fish buyers must maintain specified fee
collection records for at least three years and submit to NMFS annual
reports of fee collection and disbursement activities.
All parties interested in this proposed action should carefully
read the following sections of the framework regulations, whose
detailed provisions this action proposes to apply to the groundfish
program's reduction loan and the fee system for repaying the reduction
loan:
(1) Section 600.1012;
(2) Section 600.1013;
(3) Section 600.1014;
(4) Section 600.1015;
(3) Section 600.1016; and
(4) Applicable portions of Section 600.1017.
Section 212 provided an option for NMFS to enter into agreements
with California, Washington, and Oregon regarding groundfish program
fees in the fee share fisheries. While this would not have involved
actual fee collection (because both section 312(d) and the framework
regulations require fish buyers to collect the fee), it would have
allowed fish buyers to use existing state systems for post-collection
fee administration.
After all three states enacted legislation which would allow them
to function in this capacity, NMFS evaluated the feasibility of
exercising the section 212 option. NMFS concluded, however, that the
option was not feasible because, among other reasons:
(1) The state systems sometimes:
(a) Assess and collect fees based on pounds rather than on dollars,
(b) Neither assess nor collect fees at the point of fish sale, and/
or
(c) Involve quarterly fee disbursements;
(2) One state's legislation regarding this option authorizes
participation of a state agency different from the one administering
the existing state system (and might require amendment);
(3) One state's legislation regarding the section 212 option
expires in less than two years;
(4) All states indicated that funding and staffing, under the
section 212 option, for the reduction loan's 30-year term would be
problematic; and
(5) The states' collection systems are dissimilar and, without
significant modification, might not promote efficient and uniform
groundfish program fee collection.
Accordingly, NMFS decided that the section 212 option was not
feasible at this time.
NMFS intends to enter into landing and permit data sharing
agreements with the states in order for NMFS to receive landing and
permit information that will allow it to ensure full groundfish program
fee payment, collection, and disbursement under the framework rule
provisions.
NMFS proposes, in accordance with section 600.1013(d) of the
framework regulations, to establish the initial fee applicable to the
reduction fishery and to each fee share fishery by Federal Register
notification and by separate mailed notification to each fish seller
and fish buyer affected of whom NMFS then has notice. This notification
will not occur until after NMFS has adopted a final rule following its
review of public comment about this proposed rule. Until such
notification actually occurs, fish sellers and fish buyers should
neither pay nor collect the groundfish program fee. Prospectively,
however, the initial fee rates would be:
(1) Reduction fishery, 5%; and
(2) Fee share fisheries:
(a) California Dungeness crab, 1.24%,
(b) California pink shrimp, 4.24%,
(c) Oregon Dungeness crab, 0.55%,
(d) Oregon pink shrimp, 2.33%,
(e) Washington Dungeness crab, 0.16%, and
(f) Washington pink shrimp, 1.50%.
The $35,662,471 principal amount of the reduction loan began
accruing interest on March 1, 2004 at a fixed interest rate of 6.97%.
Classification
The Assistant Administrator for Fisheries, NMFS, determined that
this proposed rule is consistent with the Magnuson-Stevens Fishery
Conservation and Management Act and other applicable laws.
In compliance with the National Environmental Policy Act, NMFS
prepared an EA for the final notice implementing the groundfish
program. The EA discusses the impact of the groundfish program on the
natural and human environment and resulted in a finding of no
significant impact. The EA considered the implementation of this fee
collection system, among other alternatives. Therefore this proposed
action has earned a categorical exclusion from additional analysis.
NMFS will send the EA to anyone who requests it (see ADDRESSES).
This proposed rule has been determined to be not significant for
purposes of Executive Order 12866. NMFS prepared an RIR for the final
notice implementing the groundfish program. NMFS will send the RIR to
anyone who requests it (see ADDRESSES).
NMFS prepared an IRFA as required by Section 603 of the Regulatory
Flexibility Act. The IRFA, describes the impact this proposed rule, if
adopted, would have on small entities. A summary of the IRFA follows.
NMFS will send a complete copy to anyone who requests it (see
ADDRESSES).
Description of Reasons for Action and Statement of Objective and
Legal Basis: Section 212 of division B, Title II, of Public Law 108-7
(section 212) specifically authorized a $46 million fishing capacity
reduction program for that portion of the limited entry trawl fishery
under the Pacific coast Groundfish Fishery Management Plan whose
permits, excluding those registered to whiting catcher-processors, were
endorsed for trawl gear operation (reduction fishery). Section 212 also
authorized a fee system for repaying the reduction loan partially
financing the groundfish program's cost. The fee system includes both
the reduction fishery and the fisheries for California, Washington, and
Oregon coastal Dungeness crab and pink shrimp (fee share fisheries).
Section 501(b) of Division N, Title V, of Public Law 108-7 (section
501(b)) appropriated $10 million to partially fund the groundfish
program's cost. Public Law 107-206 authorized a $36 million reduction
loan financing up to $36 million of the groundfish program's cost.
Pursuant to section 212, NMFS implemented the groundfish program by
initial public notice on May 28, 2003 (68 FR 31653) and final notice on
July 18, 2003 (68 FR 42613).
NMFS has completed the groundfish program except for implementing
the fee system and providing for certain aspects of the reduction
vessels' post-reduction operation. This action
[[Page 67103]]
proposes to implement the groundfish program's fee system.
Description of Small Entities to Which the Rule Applies: The Small
Business Administration (SBA) has defined all fish harvesting
businesses that are independently owned and operated, not dominant in
its field of operation, and with annual receipts of $3.5 million or
less as small entities. In addition, processors with 500 or fewer
employees, involved in related industries such as canned and cured fish
and seafood, or preparing fresh fish and seafood, are also considered
small entities. According to the SBA's definition of a small entity,
virtually all of the approximate 1,800 catcher vessels are considered
small entities. This includes the remaining 172 groundfish trawl
permits and over 1,600 fee share permits.
Description of Recordkeeping and Compliance Costs: Please see
collection-of-information requirements listed below.
Duplication or Conflict with Other Federal Rules: This rule does
not duplicate or conflict with any Federal rules.
Description of Significant Alternatives Considered: Three
alternatives have been considered: (1) Status Quo (no fee system); (2)
Statutorily Mandated Reduction Program with Fee Collection; and (3)
Statutorily Mandated Reduction Program with Fee Collection Cooperation
by States.
Status Quo (Alternative 1): Under the status quo, vessel
profitability would not be affected. The status quo represents a
significant alternative compared to the proposed action because it
minimizes impacts on post reduction fishermen because they do not pay
fees on landings, however, this alternative was not chosen because it
is contrary to Pub. Law 107-206.
Statutorily Mandated Reduction Program with Fee Collection
(Alternative 2): Under Alternative 2, the preferred alternative, the
first ex-vessel buyers (fish buyers) of post-reduction fish subject to
a fee system (fee fish) would withhold the fee from the trip proceeds
which the fish buyers would otherwise have paid to the parties who
harvested and first sold (fish sellers) the fee fish to the fish
buyers. Fish buyers calculate the fee to be collected by multiplying
the applicable fee rate times the fee fish's full delivery value.
Delivery value is the fee fish's full fair market value, including all
in-kind compensation or other goods or services exchanged in lieu of
cash. This is the preferred alternative because it is mandated by Pub.
Law 107-206.
Statutorily Mandated Reduction Program with Fee Collection
Cooperation by States (Alternative 3): Like Alternative 2, Alternative
3 would have an adverse effect on vessel profitability; though the
extent of that adverse effect it is not yet clear. Alternative 3 would
leave the design of the fee collection system to the individual states.
This alternative was not chosen because such state systems would:
(a) Assess and collect fees based on pounds rather than on dollars,
(b) Neither assess nor collect fees at the point of fish sale, and
(c) Involve quarterly fee disbursements.
In addition, one state's legislation regarding fee collection
authorizes participation of a state agency different from the one
administering the existing state system. Another state's fee collection
legislation expires in less than two years. Furthermore, all states
indicated that funding and staffing for the reduction loan's 30-year
term would be problematic. Finally, the states' collection systems are
dissimilar and, without significant modification, might not promote
efficient and uniform groundfish program fee collection.
Steps the Agency Has Taken to Mitigate Negative Effects of the
Action: With the lack of available cost data, increases in revenues may
serve as a proxy for increased profitability. Further, in light of
available revenue data, and assuming that each individual vessel shares
in the increased revenues resulting from the groundfish program, the
comparison of the relative effects of the program versus the effects of
the fees show that overall economic benefits of the program would still
be greater than the relative fees charged under this rule. NMFS is not
aware of any other measures that could reduce the impact on small
entities and still meet statutory requirements. However, NMFS welcomes
comments that relay such ideas.
This proposed rule contains collection-of-information requirements
subject to the Paperwork Reduction Act (PRA). OMB has approved these
information collections under OMB control number 0648-0376. NMFS
estimates that the public reporting burden for these requirements will
average:
(1) 2 hours for submitting a monthly fish buyer settlement sheet;
(2) 4 hours for submitting an annual fish buyer report; and
(3) 2 hours for making a fish buyer/fish seller report when one
party fails to either pay or collect the fee.
These response estimates include the time for reviewing
instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
information collection. Send comments regarding this burden estimate,
or any other aspect of this data collection, including suggestions for
reducing the burden, to both NMFS and OMB (see ADDRESSES).
Notwithstanding any other provision of law, no person is required
to respond to, and no person is subject to a penalty for failure to
comply with, an information collection subject to the requirements of
the PRA unless that information collection displays a currently valid
OMB control number.
NMFS has determined that this proposed rule will not significantly
affect the coastal zone of any state with an approved coastal zone
management program. This determination has been submitted for review by
the States of Washington, Oregon, and California.
List of Subjects in 50 CFR Part 600
Fisheries, Fishing capacity reduction, Fishing permits, Fishing
vessels, Intergovernmental relations, Loan programs business, Reporting
and recordkeeping requirements.
Dated: November 9, 2004.
John Oliver,
Deputy Assistant Administrator for Operations, National Marine
Fisheries Service.
For the reasons in the preamble, the National Marine Fisheries
Service proposes to amend 50 CFR part 600 as follows:
PART 600--MAGNUSON-STEVENS ACT PROVISIONS
1. The authority citation for part 600 is revised to read as
follows:
Authority: 5 U.S.C. 561, 16 U.S.C. 1801 et seq., 16 U.S.C.
1861a(b) through (e), 46 App. U.S.C. 1279f and 1279g, section 144(d)
of Division B of Pub. L. 106-554, section 2201 of Pub. L. 107-20,
section 205 of Pub. L. 107-117, Pub. L. 107-206, and Pub. L. 108-7.
2. Section 600.1102 is added to subpart M to read as follows:
Sec. 600.1102 Pacific groundfish fishing capacity reduction fee
collection system.
(a) Purpose. This section's purpose is to implement an industry fee
system to repay the reduction loan partially financing the Pacific
Coast groundfish fishery fishing capacity reduction program authorized
by section 212 of Division B, Title II, of Pub. L. 108-7 and
implemented by a final notification on July 18, 2003, in the Federal
Register (68 FR 42613).
[[Page 67104]]
(b) Definitions. Unless otherwise defined in this section, the
terms defined in Sec. 600.1000 of Subpart L of this Part expressly
apply to this section. The following terms have the following meanings
for the purpose of this section:
Borrower means, individually and collectively, each post-reduction
fishing permit holder and/or fishing vessel owner fishing in the
reduction fishery, in any or all of the fee share fisheries, or in both
the reduction fishery and any or all of the fee share fisheries.
Fee fish means all fish harvested from the reduction fishery during
the period in which any portion of the reduction fishery's subamount is
outstanding and all fish harvested from each of the fee share fisheries
during the period in which any portion of each fee share fishery's
subamount is outstanding.
Fee share fisheries means the California, Washington, and Oregon
fisheries for coastal Dungeness crab and pink shrimp.
Reduction fishery means all species in, and that portion of, the
limited entry trawl fishery under the Federal Pacific Coast Groundfish
Fishery Management Plan that is conducted under permits, excluding
those registered to whiting catcher-processors, which are endorsed for
trawl gear operation.
Subamount means each portion of the reduction loan's original
principal amount which is allocated to the reduction fishery and to
each of the fee share fisheries.
(c) Reduction loan amount. The reduction loan's original principal
amount is $35,662,471.
(d) Subamounts. The subamounts are:
(1) Reduction fishery, $28,428,719; and
(2) Fee share fisheries:
(i) California Dungeness crab, $2,334,334,
(ii) California pink shrimp, $674,202,
(iii) Oregon Dungeness crab, $1,367,545,
(iv) Oregon pink shrimp, $2,228,845,
(v) Washington Dungeness crab, $369,426, and
(vi) Washington pink shrimp, $259,400.
(e) Interest accrual inception. Reduction loan interest began
accruing on March 1, 2004.
(f) Interest rate. The reduction loan's interest rate shall be
6.97%.
(g) Repayment term. For the purpose of determining fee rates, the
reduction loan's repayment term shall be 30 years from March 1, 2004,
but each fee shall continue for as long as necessary to fully repay
each subamount.
(h) Reduction loan repayment.
(1) The borrower shall repay the reduction loan in accordance with
Sec. 600.1012 of Subpart L of this Part;
(2) Fish sellers in the reduction fishery and in each of the fee
share fisheries shall pay the fee applicable to each such fishery's
subamount in accordance with Sec. 600.1013 of Subpart L of this Part;
(3) Fish buyers in the reduction fishery and in each of the fee
share fisheries shall collect the fee applicable to each such fishery
in accordance with Sec. 600.1013 of Subpart L of this Part;
(4) Fish buyers in the reduction fishery and in each of the fee
share fisheries shall deposit and disburse, as well as keep records for
and submit reports about, the fees applicable to each such fishery in
accordance with Sec. 600.1004 of Subpart L of this Part; and
(5) The reduction loan is, in all other respects, subject to the
provisions of Sec. 600.1012 through Sec. 600.1017 of subpart L of
this part.
[FR Doc. 04-25428 Filed 11-15-04; 8:45 am]
BILLING CODE 3510-22-S