FR Doc 03-26074

[Federal Register: October 16, 2003 (Volume 68, Number 200)]
[Proposed Rules]
[Page 59564-59577]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16oc03-20]

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

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

50 CFR Part 679

[Docket No. 030922237-3237-01; I.D. 082503D]
RIN 0648-AQ98

Fisheries of the Exclusive Economic Zone Off Alaska; Individual
Fishing Quota Program; Community Purchase

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

ACTION: Proposed rule.

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

SUMMARY: NMFS issues a proposed rule to implement Amendment 66 to the
Fishery Management Plan for Groundfish of the Gulf of Alaska (FMP), and
an amendment to the Pacific halibut commercial fishery regulations for
waters in and off of Alaska. Amendment 66 to the FMP and the regulatory
amendment would modify the Individual Fishing Quota (IFQ) Program by
revising the definition of an eligible quota share holder to allow
eligible communities in the Gulf of Alaska (GOA) to establish non-
profit entities to purchase and hold halibut and sablefish quota share
(QS) for lease to, and use by, community residents as defined by
specific elements of the proposed action. This action is intended to
improve the effectiveness of the IFQ Program and is necessary to
promote the objectives of the Magnuson-Stevens Fishery Conservation and
Management Act (Magnuson-Stevens Act) and the Northern Pacific Halibut
Act of 1982 (Halibut Act) with respect to the IFQ fisheries.

DATES: Comments on the proposed rule must be received on or before
December 1, 2003.

ADDRESSES: Comments may be sent to Sue Salveson, Assistant Regional
Administrator for Sustainable Fisheries, Alaska Region, NMFS, P.O. Box
21668, Juneau, AK 99802, Attn: Lori Durall. Comments also may be
delivered by hand to NMFS, Room 420, 709 West 9th Street, Juneau, AK
99801. Send comments on collection-of-information requirements to the
same address and to the Office of Information and Regulatory Affairs,
Office of Management and Budget (OMB), via facsimile (202-395-7285; Attn: NOAA Desk Officer) or email at David_Rostker@omb.eop.gov.
Comments also may be sent via facsimile (fax) to 907-586-7557. Comments
will not be accepted if submitted by email or the Internet. Copies of
Amendment 66 and the Environmental Assessment/Regulatory Impact Review/
Initial Regulatory Flexibility Analysis (EA/RIR/IRFA) prepared for
Amendment 66 may be obtained from the North Pacific Fishery Management
Council at 605 West 4th, Suite 306, Anchorage, AK 99501-2252, Phone:
(907) 271-2809.

FOR FURTHER INFORMATION CONTACT: Glenn Merrill, 907-586-7228 or email at glenn.merrill@noaa.gov.

SUPPLEMENTARY INFORMATION:

Background

The groundfish fisheries in the Exclusive Economic Zone of the GOA
are managed under the FMP. The FMP was developed by the North Pacific
Fishery Management Council (Council) under the Magnuson-Stevens Act
(Public Law 94-265, 16 U.S.C. 1801). The FMP was approved by the
Secretary of Commerce and became effective in 1978. Fishing for Pacific
halibut (Hippoglossus stenolepis) is managed by the International
Pacific Halibut Commission (IPHC) and the Council under the Halibut
Act. The IFQ Program, a limited access management system for the fixed
gear Pacific halibut and sablefish (Anoplopoma fimbria) fisheries off
Alaska, was recommended by the Council in 1992, approved by NMFS in
January 1993, and initial implementing rules were published on November
9, 1993 (58 FR 59375). Fishing under the IFQ program began on March 15,
1995. The IFQ Program limits access to the halibut and sablefish
fisheries to those persons holding QS in specific management areas. The
IFQ Program for the sablefish fishery is implemented by the FMP and
Federal regulations at 50 CFR part 679 under authority of the Magnuson-
Stevens Act. The IFQ Program for the halibut fishery is implemented by
Federal regulations at 50 CFR part 679 under the authority of the
Halibut Act.
The IFQ Program originally was designed to resolve conservation and
management problems that are endemic to open access fisheries. The
background issues leading to the Council's initial action recommending
the adoption of IFQs are described in the preamble to the proposed rule
establishing the IFQ Program published December 3, 1992 (57 FR 57130).
A central concern of the Council in developing the IFQ Program was
that QS, from which IFQ is derived, would become increasingly held by
corporate entities instead of independent fishermen who typically own
and operate their own vessels. To prevent this outcome, the Council
designed the IFQ Program such that QS could, in most cases, be held
only by individuals or natural persons, and not by corporate entities.
The Council provided limited exemptions to this basic approach to
accommodate existing corporate ownership of vessels at the time of
implementation and to recognize the participation by corporately owned
freezer vessels. However, the overall intent of the IFQ Program was for
catcher vessel QS eventually to be held only by individual fishermen.
The IFQ Program is designed to limit corporate holding of QS and
increase holdings of QS by individual fishermen as corporate owners
divest themselves of QS. The rationale for this owner-operator
structure was that it would maintain a robust QS market and reasonable
entry costs for new fishermen. This provision is implemented through
the QS and IFQ transfer regulations at 50 CFR 679.41.
The purpose of this proposed rule is to revise existing IFQ Program
regulations and policy to explicitly allow a new group of non-profit
entities to hold QS on behalf of residents of specific rural
communities located adjacent to the coast of the GOA. This change would
allow a non-profit corporate entity that meets specific criteria to
receive transferred halibut or sablefish QS on behalf of an eligible
community and to lease the resulting IFQ to fishermen who are residents
of the eligible community. This change is intended to provide
additional opportunities to these fishermen, and may indirectly address
concerns about the economic viability of those communities.
A Notice of Availability (NOA) of the FMP amendment was published
on September 2, 2003 (68 FR 52173), with comments on the FMP amendment
invited through November 3, 2003. Written comments may address the FMP
amendment, the proposed rule, or both, but must be received by November
3, 2003, to be considered in the decision to approve or disapprove the
FMP amendment.
Since initial issuance of QS, and as a result of voluntary
transfers of QS, the amount of QS and the number of resident QS holders
has substantially declined in most of the GOA communities that would be
affected by

[[Page 59565]]

this action. This trend may have had an effect on employment and may
have reduced the diversity of fisheries to which fishermen in rural
communities have access.
The ability of fishermen in small rural communities to purchase QS
or maintain existing QS may be limited by a variety of factors unique
to those communities. In particular, many fishermen in small rural
communities may be limited in their ability to obtain access to
financing due to the remote nature of the communities and their
dependence on a limited range of economic opportunities. Many small
rural communities are isolated from other communities and this
isolation limits access to a wider variety of markets for fishery
product that are available to communities with better transportation
infrastructure. In addition, fishermen in these rural communities tend
to have smaller vessels and fishing operations relative to fishermen in
larger ports. These fishermen may have received less QS during initial
issuance and may have chosen to divest themselves of QS that was not
economically viable. Although the specific causes for decreasing QS
holdings in rural communities may vary, the net effect is overall lower
participation by residents of these communities in the halibut and
sablefish IFQ fisheries.
In June 2000, representatives of several GOA communities presented
the Council with a proposal to allow communities to purchase QS. The
Council approved several alternatives for analysis in June 2001,
reviewed an initial analysis in December 2001, and took final action in
April 2002. The Council formally adopted a problem statement in June
2001 for this proposed action that recognized the fact that a number of
small coastal communities ``are struggling to remain economically
viable.'' The Council stated that ``[a]llowing qualifying communities
to purchase halibut and sablefish quota share for use by community
residents will help minimize adverse economic impacts on these small,
remote, coastal communities in Southeast and Southcentral Alaska, and
help provide for the sustained participation of these communities in
the halibut and sablefish IFQ fisheries.''
The proposed action developed by the Council would address these
concerns by modifying the IFQ Program to allow non-profit entities that
represent small rural communities in the GOA with a historic
participation in the halibut and sablefish fisheries to hold QS. The
Council's recommendations also reflect the most recent amendments to
the Magnuson-Stevens Act, and IFQ policy recommendations by the
National Research Council (NRC).
The 1996 amendments to the Magnuson-Stevens Act established a new
national standard for fishery conservation and management (National
Standard 8) that requires management programs to ``take into the
account the importance of fishery resources to fishing communities in
order to (A) provide for the sustained participation of such
communities, and (B) to the extent practicable, minimize adverse
economic impacts on such communities'' (16 U.S.C. 1851). The Halibut
Act requires consideration of the effect of halibut allocations to
fishing communities by reference to section 303(b)(6) of the Magnuson-
Stevens Act. This reference requires, among other things, that the
effects of halibut allocations be considered as is described under the
directives of National Standard 8 of the Magnuson-Stevens Act.
The 1996 Magnuson-Stevens Act amendments also directed the NRC to
submit a report to Congress on existing IFQ Programs and provide
recommendations on the implementation of existing and future programs.
The NRC published its report ``Sharing the Fish: Toward a National
Policy on Individual Fishing Quotas'' in 1999. In this report, the NRC
recommends that NMFS and the Regional Councils consider including
fishing communities as stakeholders in fishery management programs. The
NRC recommends that Regional Councils should be permitted to authorize
the purchase, holding, management, and sale of QS/IFQs by communities.
This action proposes to implement provisions that would address the NRC
recommendations on the use of QS by communities.
The Council considered the range of comments from the public, NMFS,
and the State of Alaska (State), and incorporated various suggestions
in developing its proposed community QS policy. The basic provisions of
this proposed policy are described as follows.

Community QS Provisions

1. Community Quota Entities

Community quota entities (CQEs), incorporated under the laws of the
State to represent eligible communities, would obtain QS by transfer
and hold the QS and lease the resulting annual IFQ to individual
community residents. Unless otherwise specified, the restrictions that
apply to any current QS holder would apply to a CQE. CQEs, however,
would be subject to additional regulatory requirements beyond those
applying to existing QS holders.
A CQE could represent more than one eligible community. However, no
community could be represented by more than one CQE. This provision
would minimize confusion and ensure effective and efficient
administration of the program.
During Council deliberations, a new non-profit entity was selected
as the appropriate QS holder for these communities based on
recommendations from GOA communities. These recommendations indicated
that a non-profit entity could be more flexible and cost-effective than
either a for-profit corporation or an existing governmental body. To be
considered eligible to hold QS on behalf of a community, a CQE would be
required to be incorporated after April 10, 2002, the date of final
Council action.
The Council stated that the purpose of designating a new non-profit
entity to hold QS is that existing administrative structures such as
municipal governments, tribal councils, or other community
organizations may be focused on other priorities. The Council
considered that a new non-profit entity may be better suited to
represent an entire community with the express purpose of purchasing
and managing QS. Additionally, the EA/RIR/IRFA noted that a number of
communities considered as eligible for this program are unincorporated,
do not have local tribal governments, or other community organizations,
and therefore lack an existing governmental body that could manage the
QS.
The Council also recommended that a non-profit organization provide
proof of support from the community that it is seeking to represent.
This support must be demonstrated in the application by a non-profit
organization to become eligible as a CQE. The specific mechanism for
the community to demonstrate its support for a CQE is described in the
Administrative Oversight section of the preamble.
Once an application to become a CQE has been approved, then that
CQE would be eligible to hold and receive QS, and lease IFQ to eligible
community residents under the mechanisms established by this proposed
rule. If a CQE does not remain in compliance, (e.g., by failing to
submit a complete annual report), then NMFS could initiate
administrative proceedings to deny the transfer of QS or IFQ to or from
the CQE. As with other administrative determinations under the IFQ
Program, any such determination could be

[[Page 59566]]

appealed under the procedures set forth in regulations (50 CFR 679.43).
The Council recommended regulatory measures, described below, as a
means to monitor the ability of the non-profit entities to meet the
goals of distributing IFQ among residents in these GOA communities.

2. Eligible Communities

Communities eligible to participate in this program would need to
meet all the following criteria: (a) have a population of less than
1,500 persons based on the 2000 United States Census; (b) have direct
saltwater access; (c) lack direct road access to communities with a
population greater than 1,500 persons; (d) have historic participation
in the halibut and sablefish fisheries; and (e) be specifically
designated on a list adopted by the Council and included in this
proposed rule (see Table 21 to Part 679).
If a community appears to meet the eligibility criteria but is not
specifically designated on the list of communities adopted by the
Council, then that community would have to apply directly to the
Council to be included. In this event, the Council may modify the list
of eligible communities adopted by the Council through a regulatory
amendment. Under the criteria established in this proposed rule, a
total of 42 communities in the GOA would qualify as eligible to
purchase QS. These eligible communities may designate a new non-profit
entity to hold QS on behalf of that community.
The specific criteria for community eligibility were developed
through Council deliberations. Generally, the Council chose criteria
that were intended to define a set of communities that have experienced
a similar decline in their participation in the halibut and sablefish
IFQ fisheries. Analysis in the EA/RIR/IRFA indicates that all but 2 of
the 42 communities designated in Table 21 to part 679 have experienced
a net loss in QS held by residents of those communities since initial
allocation.
(a) Population of Less than 1,500 persons
The Council considered a range of population criteria and chose to
limit eligibility to communities less than 1,500 persons based on an
analysis of QS distribution. This analysis indicated that several
communities larger than 1,500, specifically Wrangell and Cordova, did
not have the same decline in participation in the halibut and sablefish
fisheries as the communities that this action proposes to address. The
2000 United States Census was chosen as the standard for measuring
total population. This standard would be used to determine eligibility
for community participation in this program because it is considered to
be a more accurate measure of population than annual estimates
conducted by the State. Additionally, at the time that final action to
modify the IFQ Program was taken by the Council to accommodate
communities, the 2000 Census was the best available demographic data.
This proposed rule establishes that a community with not less than
20 persons and not more than 1,500 persons that is defined as a Census
Designated Place under the U.S. Census fulfills the requirement for the
definition of a community for the purposes of this program. If
communities seek inclusion as an eligible community in the future, then
NMFS would review those communities using the definitions of a
community as defined by this proposed rule.
The reason for using a minimum of a 20-person standard, is that two
communities specifically designated by the Council for eligibility for
this program have populations slightly higher than 20 persons.
Specifically, Meyers Chuck and Ivanof Bay have populations of 21 and 22
persons, respectively. If a higher minimum population standard were
used, neither of these communities would be eligible to participate in
this program. Excluding these two communities that have experienced a
loss of QS since the implementation of the IFQ program would undermine
the intent of this action, which is to provide an additional
opportunity for residents of those communities to receive access to
halibut and sablefish resources.
The limitation on minimum population size would reduce the
potential for future petitions for inclusion into the program by a
small group of individuals living in a place solely for the purpose of
participating in this program. Additionally, there are a number of
communities that are no longer populated that could be qualified under
the historic participation criteria. The Council did not intend this
program to provide an opportunity for communities which do not exist to
receive the ability to form non-profit entities and purchase QS. The
limitation on population size would prevent this possibility and also
reflects existing definitions of a community as established by the
State of Alaska for purposes of revenue sharing agreements. The State
defines a community as a group of not less than 25 people living in a
geographic location as a social unit. Without a minimum population
standard established in this proposed rule, the goals of the Council
and this action to provide additional opportunities for coastal
residents in established communities is undermined. All of the
communities designated by the Council on the list of eligible
communities meet these requirements based on the analysis of these
eligibility criteria in the EA/RIR/IRFA prepared for this proposed
rule.
(b) Have Direct Saltwater Access
A community would be defined as adjacent to saltwater if it is
located on the GOA coast of the North Pacific Ocean.
(c) Lack of Direct Road Access
The Council recommended limiting eligibility to communities without
direct road access to communities larger than 1,500 persons because
such communities may lack access to markets for fishery products and
could be disadvantaged relative to other communities with better
transportation infrastructure. Communities that do have road access to
larger communities would be expected to have access to larger markets,
better access to capital, and are not likely to face the same economic
conditions that this program is trying to address by providing
additional harvest opportunities for community residents.
(d) Have Historic Participation in the Halibut and Sablefish Fisheries
Historic participation would be defined as communities for which a
resident has recorded a commercial landing of either halibut or
sablefish between 1980-2000 according to Commercial Fisheries Entry
Commission (CFEC) data for permit and fishing activity. This definition
would provide a means for the Council to consider those communities for
which halibut or sablefish has some historic commercial importance. A
broad range of years was chosen to accommodate the shifting patterns of
halibut and sablefish harvests within these communities over the past
twenty years. The year 1980 was chosen because it represents the first
year of widely collected and reliable data from the CFEC , and the year
2000 was chosen because it was the last year of data available prior to
the Council's decision to recommend this program.
(e) Be Specifically Designated on a List Adopted by the Council
The Council adopted a specific list of eligible communities to
limit the entry of new communities into the Community QS Program (see
Table 21 to Part 679). The Council expressed a

[[Page 59567]]

desire to review the addition of any communities not listed. Council
review is ensured by listing eligible communities in the regulations.
Any change to the list of eligible communities would first require
Council action to recommend such a change. The Council desired this
review to ensure that communities that were not originally considered
under this proposed rule provide adequate evidence of their eligibility
to participate in this program. This review would reduce potential
disruption in administration of the Community QS Program due to a
sudden and unanticipated increase in competition for QS among eligible
communities. This Council review also would provide an additional
public review process before modifying the Community QS Program.

3. Use Caps for Individual Communities

Each eligible community as represented by a CQE would be subject to
the same use limitations on QS and IFQ currently established for QS
holders as described under 50 CFR 679.42(e) for sablefish and 50 CFR
679.42(f) for halibut. Therefore, for each community it represents, a
CQE would be limited to using:

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

------------------------------------------------------------------------
No more than: 599,799 units in IFQ regulatory area 2C
of halibut QS..............
No more than: 1,502,823 in IFQ regulatory areas 2C, 3A, and 3B
units of halibut QS
combined...................
No more than: 688,485 in the IFQ regulatory Area East of
sablefish QS units......... 140[deg] W. long. (Southeast Outside
District)
No more than 3,229,721 in the Southeast Outside District West
sablefish QS units combined Yakutat, Central Gulf Regulatory Area, and
Western Gulf Regulatory Area
------------------------------------------------------------------------

A CQE representing an eligible community located within Areas 3A or
3B would be prohibited from purchasing QS in Area 2C (Southeast Alaska)
on behalf of that community. The Council recommended this provision
because 21 of the 42 eligible communities are located in Area 2C.
Allowing additional CQEs representing communities located in Areas 3A
and 3B to purchase QS in Area 2C would increase competition, and
possibly result in higher QS prices, for 2C communities. This increased
competition could affect both prospective community QS buyers and new
individual entrants to the fishery.
Likewise, a CQE representing an eligible community within Area 2C
would be prohibited from purchasing and using QS in Area 3B (Western
GOA) on behalf of that community. The Council recommended this
limitation because residents from communities located in Area 2C
traditionally did not fish in Area 3B, and one of the principal goals
of the community QS program is to improve the access of residents of
the eligible communities to local resources.
Although the Council recommended limiting the use of halibut QS to
those areas that are adjacent to the eligible communities, a similar
provision was not recommended for sablefish. The sablefish fishery
occurs in deeper waters than much of the halibut fishery and typically
requires larger vessels that can travel longer distances for harvesting
fish.
As noted above, the Council recommended limiting QS holdings by
CQEs on behalf of communities to the levels established in the current
IFQ program. The Council noted that this limit would provide an
adequate opportunity for communities to purchase and hold sufficient QS
for leasing the resulting IFQ among community residents. This level was
considered not to be so restrictive as to discourage communities from
purchasing and holding quota. The Council also considered the potential
effects on existing QS holders in recommending use caps for individual
communities. The use caps accommodate existing QS holders who are
concerned that shifting potential QS holdings to communities could
disadvantage individual fishermen by reducing the amount of QS
available to them in the QS market.

4. Cumulative Use Caps for All Communities

Communities represented by CQEs cumulatively would be limited to
holding a maximum of 3 percent of the total halibut and sablefish QS in
each area in the first year after implementation of this program. In
each subsequent year, the percentage would be increased by an
additional 3 percent until, after 7 years, a maximum of 21 percent of
the total halibut and sablefish QS could be held in each area in which
CQEs are eligible to hold QS.
The Council recommended limiting cumulative community ownership of
QS in each area as an additional measure to reduce the potential
increase in QS price that could result if CQEs sought to purchase QS up
to their respective communities' use cap(s) in each area. The Council
recommended this step-up cumulative use cap to balance potential QS
market competition between communities and individuals, and to
accommodate the desire of GOA community representatives to have
adequate access to QS as CQEs enter the program on behalf of eligible
communities.

5. Transfer and Use Restrictions

(a) Block Limits
The purchase of blocked QS by CQEs would be restricted. During
Council deliberations, numerous industry representatives and fishermen
indicated that allowing unrestricted purchasing of QS could
disadvantage new entrants, particularly those individuals in the market
for ``blocked QS.'' Blocked QS are aggregates of small units of QS that
were designated as blocks when they were initially issued and that
cannot be subdivided upon transfer. The number of blocks that may be
held by a person is limited under the IFQ Program. These limits were
established to limit the consolidation of blocked QS and to ensure that
smaller aggregate units would be available on the market. Blocked QS
typically is less expensive and more attractive to new-entrants.
This proposed rule would modify the consolidation limits for
blocked QS for communities represented by CQEs. The Council is
recommending this change to provide additional opportunities for CQEs
(on behalf of the communities they represent) to access the typically
less expensive blocked QS. The Council also considered the potential
effects on new entrants by allowing each community represented by a CQE
to hold more QS blocks than can other types of QS holders. Each
community represented by a CQEs would be limited to holding, at any
point in time, a maximum of 10 blocks of halibut QS and 5 blocks of
sablefish QS in each IFQ regulatory area for halibut and sablefish. The
CQE could not subdivide blocked QS.
Existing regulations at 50 CFR 679.42(g) limit QS holders to a
maximum of two blocks for either species in any area if a person holds
only blocked QS, and no more than one

[[Page 59568]]

block for a species in an area if a person holds any unblocked QS for
that species-area combination. Allowing CQEs to hold more blocks than
existing QS holders on behalf of their constituent communities would
expand the potential QS market available to these communities. The
Council recommended this provision because in most areas of the GOA
large portions of the QS are available only in blocked shares. Limiting
communities to existing unblocked QS would effectively limit the QS
available to communities to a small portion of the total QS that is
typically higher priced than the more available blocked QS. The
proposed limits would provide additional opportunities for eligible
communities represented by CQEs to purchase QS beyond those that
constrain current QS holders. In recommending this modification to the
existing regulations, the Council balanced the objectives of this new
program with concerns about protecting the interests of individual new
entrants to the fishery.
To accommodate the interests of prospective new entrants, the
Council recommended prohibiting CQEs from purchasing:

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

------------------------------------------------------------------------
Halibut QS blocks less than in Area 2C
or equal to 19,992 units...
(e.g., 2,850 lb (1,292.8 kg)
of IFQ in 2003)............
Halibut QS blocks 27,912 in Area 3A
units......................
(e.g., 3,416 lb (1,549.5 kg)
of IFQ in 2003)............
Sablefish QS blocks less in the Southeast Outside District
than or equal to 33,270
units......................
(e.g., 4,003 lb (1,815.8 kg)
of IFQ in 2003)............
Sablefish QS blocks less in the West Yakutat District
than or equal to 43,390
units......................
(e.g., 3,638 lb (1,650.2 kg)
of IFQ in 2003)............
Sablefish QS blocks less in the Central GOA regulatory area
than or equal to 46,055
units......................
(e.g., 4,684 lb (2,124.7 kg)
of IFQ in 2003)............
Sablefish QS blocks less in the Western GOA regulatory area
than or equal to 48,410
units......................
(e.g., 6,090 lb (2,762.4 kg)
of IFQ in 2003.............
------------------------------------------------------------------------

These QS limits are specified in 50 CFR 679.41(e) as the ``sweep
up'' limit, or the number of QS units initially issued as blocks that
could be combined to form a single block.
The Council recommended that communities not be eligible to
purchase or hold these smaller ``sweep-up'' blocks because these
smaller QS blocks typically are purchased by individuals entering the
IFQ fisheries. The Council recommended this measure to minimize
potentially unfair competition in the QS market between CQEs and
individuals for these small QS blocks. The Council did not recommend
similar restrictions on QS in the halibut fishery for Area 3B because
fewer ``sweep-up'' blocks exist in Area 3B and few new entrants in Area
3B have sought these ``sweep-up'' blocks.
(b) Transfer and IFQ Leasing
CQEs could only receive and use halibut QS assigned to vessel
category B (greater than 60 feet length overall) and vessel category C
(greater than 35 feet and less than or equal to 60 feet length overall)
in Areas 2C and 3A.
This provision would prohibit CQEs from holding QS assigned to
vessel category D (less than or equal to 35 feet (10.7 m) length
overall) in Areas 2C and 3A. Category D QS typically is purchased by
individuals seeking entry to the halibut IFQ fisheries. The Council
recommended this provision to reduce potential competition in the
halibut QS market between individuals and CQEs.
The Council did not recommend prohibiting CQEs from holding D
category halibut QS in Area 3B. A relatively small amount of D category
QS exists in Area 3B, and traditionally few prospective buyers exist
for this category of QS. Existing D category QS holders in Area 3B
indicated that allowing CQEs to purchase D category QS in Area 3B would
increase the marketability of their QS.
The Council did not recommend catcher vessel category restrictions
for CQEs holding sablefish QS. Only B and C vessel categories exist for
sablefish QS and sablefish are typically harvested from larger vessels.
So that the annual IFQ derived from the QS held on behalf of a
community could be fished, a CQE would lease (i.e., transfer the annual
IFQ) to one or more residents of the community, or communities, it
represents. Each IFQ lease would be made on annual basis, as is
currently the requirement in existing regulations. IFQ so transferred
could be fished from a vessel of any size regardless of the QS vessel
category from which the IFQ was derived. This provision would apply
only while the QS is held by the CQE. The vessel category requirements
for use of the QS would apply once again after the QS is transferred
from a CQE to a qualified recipient that was not a CQE.
The Council recommended this provision to facilitate the use of the
IFQ on the wide range of vessel types that is present in many rural
communities. Limiting CQEs to purchase only certain vessel category QS
could increase demand and price competition among CQEs and other QS
holders, particularly for category C QS because many vessels in the
eligible communities tend to be within this size range. Broadening the
use of IFQ from community-held QS could reduce this potential
competition.
The amount of IFQ that may be leased annually to an eligible
community resident would be limited so that no such lessee could hold
IFQ permits authorizing the harvest of more than 50,000 lb (22.7 mt) of
halibut and 50,000 lb (22.7 mt) of sablefish IFQ, inclusive of any IFQ
derived from any source.
This limitation is intended to ensure a broad distribution of IFQ
among community residents and to limit the amount of IFQ that may be
leased to those residents who already hold QS or lease IFQ from another
source. The Council noted that one of the principal goals of this
program was to provide access to halibut and sablefish resources to
community residents that do not currently have access to these
resources.
Similarly, during any fishing year, no vessel participating in the
community QS program could be used to harvest an amount of IFQ greater
than 50,000 lb (22.7 mt) of halibut and 50,000 lb (22.7 mt) of
sablefish, inclusive of all IFQ fished aboard that vessel. Currently,
vessels are limited to 1 percent of the Area 2C IFQ TAC for halibut
(e.g., 85,000 net pounds (38 mt) in 2003), or, outside of Area 2C, 0.5
percent of the entire IFQ TAC (e.g., 295,050 net pounds (134 mt) in
2003), and 1 percent of the Southeast IFQ TAC for sablefish (e.g.
78,484 round pounds (36 mt) in 2003), or, outside of Southeast, 1
percent of the entire sablefish TAC (e.g. 348,635 round pounds (158 mt)
in 2003).
This limitation on the amount of IFQ that could be fished on any
one vessel using community-held QS is intended

[[Page 59569]]

to encourage use of a broad distribution of community-held IFQ on
vessels that may otherwise have limited or no participation in the IFQ
Program.
Eligibility to lease IFQ derived from community-held QS would be
limited to permanent residents of the community represented by the CQE.
The Council recommended this provision to explicitly tie the potential
benefits of QS held by a CQE on behalf of a community to the residents
of that community. Such a resident who wishes to lease IFQ would be
required to state that he or she maintains a permanent domicile in that
specific community and is qualified to receive QS and IFQ by transfer
under the existing regulations (i.e., that he or she holds a Transfer
Eligibility Certificate issued by NMFS).
Existing regulations at 50 CFR 679.41 require that, for an
individual to be eligible to receive QS/IFQ by transfer, such an
individual must be a U.S. citizen and must either have received QS upon
initial issuance or have 150 days of experience onboard a vessel
working as part of the harvesting crew in a U.S. commercial fishery.
Upon having demonstrated that he or she has satisfied those
requirements, such an individual is issued a Transfer Eligibility
Certificate (TEC). These requirements would remain in place for
individuals seeking to lease IFQ derived from community QS. Individuals
receiving IFQ must meet these qualifications and attest that they are
permanently domiciled within that community when receiving IFQ by
transfer from a CQE. For purposes of this program, an individual would
need to affirm that he or she maintained a domicile in the community
from which the IFQ is leased for 12 consecutive months immediately
preceding the time when the assertion of residence is made, and had not
claimed residency in another community, state, territory, or country.
An individual who receives IFQ derived from QS held by a CQE may
not designate a skipper to fish the community IFQ, instead that
individual must be onboard the vessel when the IFQ is being fished. The
Council recommended this requirement to help ensure that the potential
benefits of QS held by communities would be realized by resident
fishermen of those communities and not leased outside the communities.
Individuals who hold leases of IFQ from communities would be
considered to be IFQ permit holders and would be subject to the
regulations that govern other permit holders, including the payment of
annual fees as required under 50 CFR 679.45, unless noted otherwise in
this proposed rule.
(c) Sale Restrictions
Certain restrictions would apply to the transfer of QS held by a
CQE on behalf of a community. A CQE is restricted to sell its QS to
generate revenues to improve, sustain, or expand the opportunities for
community residents to participate in the IFQ halibut and sablefish
fisheries. These restrictions are designed to ensure that the goals of
the program are met. NMFS would approve the transfer of QS held by a
CQE on behalf of a community only if the community for which the CQE
holds the QS authorizes that transfer. This authorization may be in the
form of a signature from a authorized representative of the governing
body of the eligible community for QS transfers on the Approval of
Transfer form. The purpose of this authorization is to ensure that the
community is fully aware of the transfer because certain restrictions
apply to future transfers if the transfer of QS is for a reason other
than to sustain, improve, or expand the program (i.e., the CQE would be
prohibited from holding QS on behalf of that community for a period of
three years and the CQE must divest itself of all QS held on behalf of
that community).
This proposed action would also provide an opportunity for a CQE to
transfer QS to dissolve the CQE; or as a result of a court order,
operation of law, or as part of a security agreement. These provisions
are allowed to account for those cases in which a CQE is no longer
capable of representing an eligible community and seeks to divest
itself of QS holdings in order to provide an opportunity for another
non-profit to form and seek approval as a CQE for a community.
Transfers that are required as a result of a court order, operation of
law, or as part of a security requirement would be authorized under
this proposed action. These forms of transfers are authorized under the
existing IFQ program.
During Council deliberations, NMFS indicated that the enforcement
and monitoring mechanism for these transfer provisions would be
limited. The EA/RIR/IRFA prepared by the Council (see ADDRESSES) notes
these concerns. Rather than requiring an extensive monitoring and
auditing program for each transfer of QS, NMFS would rely on the
declaration by the CQE about the purpose of the transfer of any QS held
on behalf of a community and the authorization by the governing body of
that community to transfer that QS. If subsequent information is made
available to NMFS that confirms that the transfer of QS is made for
reasons other than to sustain, improve, or expand the opportunities for
community residents, then NMFS would withhold annual IFQ permits on any
remaining QS held by the CQE on behalf of that community and would
disqualify that CQE from holding QS on behalf of that community for 3
calendar years following the year in which final agency action adopting
that determination is made.
NMFS would not impose this restriction until the CQE had received
full administrative due process, including notice of the potential
action and the opportunity to be heard. An initial administrative
determination (IAD) proposing an adverse action would only become final
agency action if the CQE failed to appeal the IAD within 60 days, or
upon the effective date of the decision issued by the Office of
Administrative Appeals. The procedures for appeal are provided at 50
CFR 679.43.
The 3-year restriction was recommended by the Council because the
Council did not intend for this program to provide a mechanism for
speculating in the QS market or using potential assets to fund other
unrelated projects but intended to encourage the long-term
participation of fishery dependent communities in the IFQ Program. The
public is encouraged to comment specifically on these transfer
restrictions, the administrative process that would be established to
monitor these requirements, and the enforcement of these restrictions.

6. Joint and Several Liability for Violations

Both the CQE and the individual fisherman to whom the CQE leases
its IFQ will be considered jointly and severally liable for any IFQ
fishery violation committed while the individual fisherman is in the
process of fishing the leased IFQ. This joint and several liability is
analogous to the joint and several liability currently imposed on IFQ
permit holders and any hired skippers fishing the permit holders' IFQ.

7. Administrative Oversight

Implementing this proposal would require that NMFS: (1) review
applications of eligibility for non-profit entities seeking to be
qualified as a CQE for a particular community and certify eligible
CQEs; and (2) review an annual report detailing the use of QS and IFQ
by the CQE and community residents. These reviews ensure that the CQEs
are adequately representing the communities and that the program is
meeting the goals established by the

[[Page 59570]]

Council. If a CQE fails to provide a completed annual report to NMFS
for each community that it represents, then that CQE would be deemed
ineligible to use the IFQ resulting from that QS on behalf of that
community until a complete annual report is received. Before becoming a
Final Agency Action, any such determination by NMFS may be appealed
through the administrative appeals process described under the IFQ
Program (50 CFR 679.43).
Each non-profit entity applying to become a CQE would have to
provide NMFS with the following:
(1) Its articles of incorporation as a non-profit entity under the
laws of the State;
(2) A statement designating the community, or communities,
represented by that CQE;
(3) Management organization;
(4) A detailed statement describing the procedures that will be
used to determine the distribution of IFQ to residents of each
community represented by that CQE; and
(5) A statement of support and accountability of the non-profit
entity to that community from a governing body representing each
community represented by the CQE.
During Council deliberations, the State noted that it would like to
have an opportunity to provide NMFS with comments on applications by
non-profit entities seeking to become CQEs. NMFS will provide the State
with a copy of the applications. The State will have a period of 30
days to provide comments to NMFS after they are received. NMFS will
consider these comments before certifying a non-profit entity as a CQE.
This opportunity for comment does not diminish the authority of NMFS to
administer these regulations and certify CQEs, but does provide an
opportunity for the State to provide comments on the applications. NMFS
will review all applications for completeness. Those applications that
are not complete would be returned to the applicant for revision. This
proposed action does not establish a limit on the amount of time that a
non-profit would have to correct deficiencies in an application.
To minimize potential conflicts that may exist among non-profit
entities seeking qualification as a CQE, NMFS would not consider a
recommendation from a community governing body supporting more than one
non-profit entity to hold QS on behalf of that community. The specific
community governing body that would be relied on to make a
recommendation would recommend a non-profit entity would vary depending
on the governance structure of the particular community.
The Council intended that any CQE establish that it is accountable
to the community that it would seek to represent. By establishing a
requirement that a specific governing body within a community provide a
recommendation supporting a CQE, this proposed rule would establish a
clear link between the governing body that represents that community
and the CQE. Allowing multiple non-profits to apply as CQEs for a
singly community would require additional review by NMFS to ensure
accountability. Additionally, it would be difficult to establish
specific criteria that would establish a clear accountability or lack
of accountability. The Council did not intend that this proposed action
would serve the interests of a small number of individuals within a
given community who may choose to form a corporate entity to narrowly
represent their interests. The specific linkage to specific recognized
governing bodies within a community minimized the need for additional
administrative oversight to ensure accountability to a community and
provides a clear nexus between the CQE and the community members it is
intended to represent by holding QS on behalf of that community.
Communities incorporated as municipalities. For a community that is
incorporated as a municipality under State statutes, the City Council
would recommend the non-profit entity to serve as the CQE.
Communities represented by tribal governments. For those
communities that are not incorporated as municipalities but that are
represented by a tribal government recognized by the Secretary of the
Interior, the tribal governing body would recommend the non-profit
entity to serve as the CQE.
Communities represented by a non-profit association. For those
communities that are not incorporated as a municipality, and that are
not represented by a tribal government, the community non-profit
association that has an established relationship as the governmental
body recognized by the State for purposes of governmental functions
would recommend the non-profit entity to serve as the CQE for that
community.
Communities without governing bodies. Those communities that are
not incorporated as a municipality, or represented by a tribal
government recognized by the Bureau of Indian Affairs, and that do not
have a community non-profit association recognized by the State for
purposes of governmental functions, would not be eligible to recommend
a non-profit entity to hold QS on its behalf until a representative
governing entity was formed (e.g., the community incorporated as a
municipality, was represented by a tribal government recognized by the
Bureau of Indian Affairs, or a community non-profit association was
formed and recognized by the Alaska Department of Community and
Economic Development). NMFS would consult with the State to determine
if a community non-profit association is formed, and that it adequately
represents the interests of the community before that community non-
profit association could recommend a CQE to hold QS on behalf of that
community.
This requirement would ensure that any communities that do not have
a governmental structure form such a structure prior to being allowed
to recommend a specific non-profit entity as a CQE. This requirement is
expected to affect only two of the 42 eligible communities recommended
by the Council: Halibut Cove and Meyers Chuck. Neither of these
communities possess any of the governmental bodies described above.
These communities could establish community non-profit associations and
have those entities reviewed by the State prior to recommending a CQE.
This requirement is determined to be adequate to ensure that any non-
profit designated as a CQE for these communities represents the
interests of the residents of those communities. The public is
encouraged to comment on this particular aspect of this proposed rule.
Establishing that only one CQE to represent the interests in a
given community would reduce potential conflicts and reduce
administrative burdens. This requirement would not undermine a
community's ability to access QS and would ensure that an entity
seeking authorization to hold QS on behalf of a community is reviewed
by the appropriate governing body within that community before it is
certified by NMFS. The definition for ``eligible community'' is revised
by redesignating the existing paragraph as paragraph (1) for purposes
of the CDQ Program and by adding a new paragraph (2) for purposes of
the IFQ Program.
(a) Annual Report.
NMFS would require each CQE to submit an annual report by January
31 to NMFS and to the governing body for each community represented by
the CQE, detailing the use of QS and IFQ by the CQE and community
residents during the previous year's fishing season. That annual report
would

[[Page 59571]]

contain the following information for the preceding fishing season:
(1) Identification of the eligible community, or communities,
represented by the CQE ;
(2) Total amount of halibut QS and sablefish QS held by the CQE at
the start of the calendar year and at the end of the calendar year;
(3) Total amount of halibut and sablefish IFQ leased from the CQE;
(4) Names, business addresses, and amount of halibut and sablefish
IFQ received by each individual to whom the CQE leased IFQ;
(5) The name, ADF&G vessel registration number, USCG documentation
number, length overall, and home port of each vessel from which the IFQ
leased from community owned QS was fished;
(6) The names, and business addresses of those individuals employed
as crew members when fishing the IFQ derived from the QS held by the
CQE.
(7) A detailed description of the criteria used by the CQE to
distribute IFQ leases among eligible community residents;
(8) A description of efforts made to employ crew members who are
eligible community residents of the eligible community aboard vessels
on which IFQ derived from QS held by a CQE is being fished;
(9) A description of the process used to solicit lease applications
from eligible community residents of the eligible community on whose
behalf the CQE is holding QS;
(10) The names and business addresses and amount of IFQ requested
by each individual applying to receive IFQ from the CQE;
(11) Any changes in the bylaws of the CQE, board of directors, or
other key management personnel;
(12) Copies of minutes and other relevant decision making documents
from CQE board meetings; and
(13) The number of vessels that fished for IFQ derived from QS held
by a CQE.
The purpose of the annual report is to assist NMFS and the Council
to assess the performance of the CQEs in meeting the objectives of
providing for community-held QS. The Council expressed its intent that
the use of community QS would be reviewed 5 years after the effective
date of implementing the regulations. The Council may use the annual
reports in this review. In particular, the Council wished to evaluate
the distribution of IFQ leases within a community, the use of IFQ by
local crew members, and the percentage of IFQ resulting from community-
held QS that is fished on an annual basis. This annual report would
also be provided to the governing body of each community represented by
the CQE. This would assist the governing body and residents of that
community in reviewing the activities of the CQE relative to that
community.
Submitting the annual report by January 31 would provide NMFS
adequate time to review the annual report before issuing annual IFQ to
the CQE at the beginning of the IFQ fishing season and would provide an
opportunity for NMFS to indicate to the CQE any deficiencies that may
exist in the annual report and allow that CQE time to make corrections.
The Council also requested that the communities provide information
on the location of landings and other biological data to assess the
distribution of landings that occur. These data are routinely reported
on the State Fish Ticket and IFQ landing reports and can be summarized
by NMFS. CQEs would not be expected to have access to these records.
NMFS routinely collects specific information on the transfer of QS as
part of transfer applications. Therefore, NMFS can collect several
components of the annual report and provide them to the Council and the
communities as requested. Specifically, NMFS can provide directly to
the Council or any of the CQEs items 1 through 4 and item 13, as
described above. The CQEs may wish to incorporate this information in
the annual report provided to the Council and the community governing
body. This proposed rule does not require that the CQEs collect this
information separately.
If a CQE fails to submit a timely and complete annual report, or if
other information indicates that the CQE is not adhering to the
procedures for distributing or managing QS and IFQ on behalf of a
community as established under its application and these regulations,
then NMFS would initiate an administrative action to suspend the
ability of that CQE to transfer QS and IFQ, and to receive additional
QS by transfer. This action would be implemented consistent with the
administrative review procedures provided at 50 CFR 679.43. Also, a CQE
would be subject to enforcement actions for violating regulations.
Because of the significant impacts these restrictions can impose on a
community for which the CQE holds QS, communities are encouraged to
carefully monitor the actions of a CQE and to provide a mechanism to
ensure that the CQE acts in the best interest of that community and
fulfills all the requirements established in its application for
eligibility and the regulations for this program.

Effect of this Action

Assuming that CQEs are formed and enter the QS market, this action
could affect the distribution of halibut and sablefish QS and the
associated IFQ throughout the GOA. Specifically, by enabling non-profit
entities to hold QS, some QS may shift from existing QS holders to
these new eligible non-profit entities. No data exist to predict the
source of the QS that would be purchased by CQEs, the amount that would
be purchased by CQEs, or the specific fishing activities of those
individuals that lease IFQ from the CQEs. Because the potential effects
of this proposed rule are unknown, the Council proposed limits on the
amount of QS that each community may hold individually and in the
aggregate.
This action would not increase the overall harvests of either the
halibut or sablefish resource. The amount of halibut and sablefish
available for harvest would not be affected by this proposed rule and
would remain limited by the annual catch limit established for halibut
by the IPHC and the annual TAC for sablefish established by the
Council.
Although this action may affect the distribution of harvests within
the sablefish and halibut management areas, the potential effect of
this redistribution of effort is unknown.
Some effect on the price of QS could be expected. Authorizing new
entities to enter the QS market could increase the competition for QS
and could result in elevated prices. However, the effect of this
potential competition on the market value of QS is unknown.
Nothing in this proposed rule is expected to undermine existing
management measures designed to prevent overfishing or increase the
bycatch of non-target species. The intent of this proposal is to expand
the opportunity for fishermen in remote fishing communities to harvest
commercial halibut and sablefish. Any possible effect on local stock
abundance would depend on the amount of QS purchased and the actual
fishing locations of the IFQ lessees, as compared to the current
distribution of fishing effort. No effect on the overall stock
abundance would be expected.

Classification

This proposed rule has been determined to be not significant for
the purposes of Executive Order 12866.
The Council and NMFS prepared an Initial Regulatory Flexibility
Analysis (IRFA) that describes the impact this

[[Page 59572]]

proposed rule, if adopted, would have on small entities. The IRFA
considered two alternatives. The first alternative is the status quo
alternative in which only qualified persons, as defined under current
Federal regulations, would be eligible to hold QS. The second
alternative would allow eligible communities in the GOA, as defined in
this proposed action, to hold halibut and sablefish QS for use by
residents of those eligible communities. The second alternative would
address concerns noted in the IRFA regarding the lack of initially
issued QS and the loss of QS in remote, fishery-dependent GOA
communities and thus, address negative impacts sustained by these
communities through loss of participation in the IFQ fisheries that
would continue under the status quo. This action proposes to implement
the second alternative considered in the IRFA.
As of December 31, 2001, the most recent year for which data are
available for analysis, NMFS records show 1,534 halibut QS holders in
Area 2C, 2,047 QS holders in 3A, and 585 QS holders in Area 3B.
Similarly, as of December 31, 2001, NMFS data indicate 486 sablefish QS
holders in the Southeast Area, 300 QS holders in the West Yakutat Area,
442 QS holders in the Central Gulf Area, and 177 QS holders in the
Western Gulf Area. All of these QS holders could be considered small
entities for purposes of the Regulatory Flexibility Act (RFA). The
proposed rule could impact the estimated 860 registered commercial
halibut buyers participating in the commercial halibut and sablefish
IFQ program, many of which are small entities. Also classified as small
entities under the RFA are the 42 communities that would qualify as
eligible to participate in the IFQ Program as small government
jurisdictions with fewer than 50,000 residents.
Analysis of the proposed action indicates no adverse impact on
small entities from this action. This action does not reallocate QS
away from existing QS holders. The potential adverse effects of this
proposed action would be limited to the potential increase in
competition which may exist between CQEs, existing QS holders, and new
entrants in the QS market. This competition could increase the market
price of QS for all persons seeking to purchase QS. No data exist to
determine if this potential increase in QS price would occur, or if it
would disadvantage existing QS holders or new entrants relative to
CQEs.
The ability of CQEs to compete in the QS market is limited by 3
factors: Their access to capital, the amount of QS available on the
market, and the cumulative use cap. The cap limits CQEs to holding a
maximum of 3 percent of the total halibut and sablefish QS in each IFQ
regulatory area per year, for a total of 21 percent of the total
halibut and sablefish QS in each IFQ regulatory area in the GOA.
Limiting the amount of QS that communities can purchase each year would
mitigate the effects of expanding the universe of potential new
participants in the QS market.
This action may have an economic benefit for small entities, to the
extent that this action provides additional fishing opportunities to
rural fishermen. The benefit is largely due to the redistribution of
fishing opportunities, and is primarily a social benefit, not a
strictly economic benefit. However, the potential economic benefits of
this possibility can not now be measured or estimated.
Net benefits cannot be quantified because of the importance of non-
market social costs and benefits in the proposed action. The sale of QS
to the CQEs will increase the revenues of some community members who
may wish to exit the fishery, or redirect capital into other industries
within the larger communities incurring a net loss of QS. To the extent
that residents within larger communities currently hold proportionally
more quota shares, these residents, and presumably the communities
where they live, will benefit from the compensation received by the
sale of quota, otherwise they would not voluntarily choose to sell.
Although the Council and NMFS do not anticipate that this rule would
have a significant impact on a substantial number of small entities,
they are unable to state this with certainty and therefore prepared an
IRFA.
This proposed rule contains collection-of-information requirements
subject to the Paperwork Reduction Act (PRA). The following requirement
and estimated response time has been approved by OMB under control
number 0648-0272: 2 hours for Application for Transfer Eligibility
Certificate (TEC).
The following requirements have been submitted to OMB for approval:
200 hours for the Application to Become a CQE; and 40 hours for the CQE
annual report; 2 hours for an Application for Transfer of QS or IFQ; 30
minutes for Approval of Transfer of QS from Governing Body; and 10
hours for a community petition for, and State comments on, forming a
governing body.
These estimates include the time for reviewing instructions,
searching existing data sources, gathering and maintaining the data
needed, completing and reviewing the collection of information, and
sending the initial application to NMFS to become a CQE, and sending
the annual report to NMFS and the community governing body of the
community that the CQE represents.
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. Send comments on
these or any other aspects of the collection of information to Sue
Salveson, Assistant Regional Administrator for Sustainable Fisheries,
at the ADDRESSES above, and to the Office of Information and Regulatory
Affairs, OMB facsimile or email at the ADDRESSES above.
Notwithstanding any other provision of the law, no person is
required to respond to, nor shall any person be 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.
There are no duplicative, overlapping, or conflicting Federal rules
associated with this proposed rule.

List of Subjects in 50 CFR Part 679

Alaska, Fisheries, Recordkeeping and reporting requirements.

Dated: October 8, 2003.
Rebecca Lent,
Deputy Assistant Administrator for Regulatory Programs, National Marine
Fisheries Service.
For the reasons discussed in the preamble, 50 CFR part 679 is
proposed to be amended as follows:

PART 679--FISHERIES OF THE EXCLUSIVE ECONOMIC ZONE OFF ALASKA

1. 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.,
Title II of Division C, Pub. L. 105-277; Sec. 3027, Pub. L. 106-31,
113 Stat. 57; 16 U.S.C. 1540(f).
2. In Sec. 679.2, the definition for ``Eligible community'' is
revised and new definitions for ``Community quota entity (CQE)'' and
``Eligible community resident'' are added in alphabetical order to read
as follows:

[[Page 59573]]

Sec. 679.2 Definitions.

* * * * *
Community quota entity (CQE): (for purposes of the IFQ Program)
means a non-profit organization that:
(1) Did not exist prior to April 10, 2002;
(2) Represents at least one eligible community that is listed in
Table 21 of this part; and,
(3) Has been approved by the Regional Administrator to obtain by
transfer and hold QS, and to lease IFQ resulting from the QS on behalf
of an eligible community.
* * * * *
Eligible community means:
(1) For purposes of the CDQ program, a community that is listed in
Table 7 to this part or that meets all of the following requirements:
(i) The community is located within 50 nm from the baseline from
which the breadth of the territorial sea is measured along the Bering
Sea coast from the Bering Strait to the most western of the Aleutian
Islands, or on an island within the Bering Sea. A community is not
eligible if it is located on the GOA coast of the North Pacific Ocean,
even if it is within 50 nm of the baseline of the Bering Sea.
(ii) That is certified by the Secretary of the Interior pursuant to
the Native Claims Settlement Act (Public Law 92-203) to be a native
village.
(iii) Whose residents conduct more than half of their current
commercial or subsistence fishing effort in the waters of the BSAI.
(iv) That has not previously deployed harvesting or processing
capability sufficient to support substantial groundfish fisheries
participation in the BSAI, unless the community can show that benefits
form an approved CDP would be the only way to realize a return from
previous investment. The community of Unalaska is excluded under this
provision.
(2) For purposes of the IFQ program, a community that is listed in
Table 21 to this part, and that:
(i) Is a municipality or census designated place as defined in the
2000 United States Census located on the GOA coast of the North Pacific
Ocean;
(ii) Has a population of not less than 20 and not more than 1,500
persons based on the 2000 United States Census;
(iii) Has had a resident of that community with at least one
commercial landing of halibut or sablefish made during the period from
1980 through 2000, as documented by the State of Alaska Commercial
Fisheries Entry Commission; and
(iv) Is not accessible by road to a community larger than 1,500
persons based on the 2000 United States Census.
* * * * *
Eligible community resident means, for purposes of the IFQ Program,
any individual who:
(1) Is a citizen of the United States;
(2) Has maintained a domicile in a rural community listed in Table
21 to this part for the 12 consecutive months immediately preceding the
time when the assertion of residence is made, and who is not claiming
residency in another community, state, territory, or country; and
(3) is an IFQ crew member.
* * * * *
3. In Sec. 679.5, paragraph (l)(8) is added to read as follows:

Sec. 679.5 Recordkeeping and reporting (R&R).

* * * * *
(l) * * *
(8) CQE Annual Report for an Eligible Community. By January 31, the
CQE shall submit a complete annual report on halibut and sablefish IFQ
activity for the prior fishing year, for each community represented by
the CQE to the Regional Administrator, National Marine Fisheries
Service, Post Office Box 21668, Juneau, AK 99802, and to the governing
body of those communities identified in Table 21 to this part.
(i) A complete annual report contains the following information:
(A) Name, ADF&G vessel registration number, USCG documentation
number, length overall, and home port of each vessel from which the IFQ
leased from QS held by a CQE was fished;
(B) Name and business addresses of individuals employed as crew
members when fishing the IFQ derived from the QS held by the CQE;
(C) Detailed description of the criteria used by the CQE to
distribute IFQ leases among eligible community residents;
(D) Description of efforts made to employ crew members who are
eligible community residents of the eligible community aboard vessels
on which IFQ derived from QS held by a CQE is being fished;
(E) Description of the process used to solicit lease applications
from eligible community residents of the eligible community on whose
behalf the CQE is holding QS;
(F) Names and business addresses and amount of IFQ requested by
each individual applying to receive IFQ from the CQE;
(G) Any changes in the bylaws of the CQE, board of directors, or
other key management personnel;
(H) Copies of minutes and other relevant decision making documents
from CQE board meetings.
(ii) Additional information may be submitted as part of the annual
report based on data available through NMFS. This includes:
(A) Identification of the eligible community, or communities,
represented by the CQE;
(B) Total amount of halibut QS and sablefish QS held by the CQE at
the start of the calendar year and at the end of the calendar year;
(C) Total amount of halibut and sablefish IFQ leased from the CQE;
(D) Names, business addresses, and amount of halibut and sablefish
IFQ received by each individual to whom the CQE leased IFQ;
(E) Number of vessels that fished for IFQ derived from QS held by a
CQE.
* * * * *
4. In Sec. 679.7, paragraphs (f)(16) and (f)(17) are added to read
as follows:

Sec. 679.7 Prohibitions.

* * * * *
(f) * * *
(16) Hire a master to fish for IFQ halibut or IFQ sablefish that is
derived from QS held by a CQE.
(17) Process IFQ halibut or IFQ sablefish onboard a vessel on which
a person is using IFQ derived from QS held by a CQE.
* * * * *
5. In Sec. 679.41, paragraphs (d)(1) and (g)(1) are revised, and
paragraphs (c)(10), (e)(4), (e)(5), (g)(5) through (g)(8), and (l) are
added to read as follows:

Sec. 679.41 Transfer of quota shares and IFQ.

* * * * *
(c) * * *
(10) If the person applying to transfer or receive QS or IFQ is a
CQE, the following determinations are required for each eligible
community represented by that CQE:
(i) An individual applying to receive IFQ from QS held by a CQE is
an eligible community resident of the eligible community in whose name
the CQE is holding QS;
(ii) The CQE applying to receive or transfer QS, has submitted a
complete annual report(s) required by 679.5 (l)(8) of this section;
(iii) The CQE applying to transfer QS has provided information on
the reasons for the transfer as described in paragraph (g)(7) of this
section;
(iv) The CQE applying to receive QS is eligible to hold QS on
behalf of the eligible community in the halibut or sablefish regulatory
area designated for that eligible community in Table 21 to this part;
and

[[Page 59574]]

(v) The CQE applying to receive QS has received notification of
approval of eligibility to receive QS/IFQ for that community as
described in paragraph (d)(1) of this section.
(d) Eligibility to receive QS or IFQ by transfer--(1) Application
for Eligibility.
All persons applying to receive QS or IFQ must submit an
Application for Eligibility to Receive QS/IFQ (Application for
Eligibility), containing accurate information, to the Regional
Administrator, except that an Application for Eligibility to Receive
QS/IFQ (Application for Eligibility) is not required if a complete
application to become a CQE, as described in paragraph (l)(3) of this
section, has been approved by the Regional Administrator on behalf of
an eligible community. The Regional Administrator will not approve a
transfer of IFQ or QS to a person until the Application for Eligibility
for that person is approved by the Regional Administrator. The Regional
Administrator shall provide an Application for Eligibility form to any
person on request.
* * * * *
(e) * * *
(4) A CQE may not purchase or use sablefish QS blocks less than or
equal to the number of QS units specified in (e)(2)(i) through
(e)(2)(iv) of this section.
(5) A CQE may not purchase or use halibut QS blocks less than or
equal to the number of QS units specified in (e)(3)(i) and (e)(3)(ii)
of this section.
* * * * *
(g) * * *
(1) Except as provided in paragraph (f), paragraph (g)(2), or
paragraph (l) of this section, only persons who are IFQ crew members,
or who were initially issued QS assigned to vessel categories B, C, or
D, and meet the eligibility requirements in this section, may receive
by transfer QS assigned to vessel categories B, C, or D, or the IFQ
resulting from it.
* * * * *
(5) a CQE may not hold QS in halibut IFQ regulatory areas 2C or 3A
that is assigned to vessel category D.
(6) Except as provided by paragraph (f) of this section, QS held by
a CQE on behalf of an eligible community may be used only by an
eligible community resident of that eligible community.
(7) A CQE may transfer QS:
(i) To generate revenues to provide funds to meet administrative
costs for managing the community QS holdings:
(ii) To generate revenue to improve the ability of residents within
the community to participate in the halibut and sablefish IFQ
fisheries;
(iii) To generate revenue to purchase QS for use by community
residents;
(iv) To dissolve the CQE; or
(v) As a result of a court order, operation of law, or as part of a
security agreement.
(8) If the Regional Administrator determines that a CQE transferred
QS for purposes other than those specified in paragraph (g)(7) of this
section, then:
(i) The CQE must divest itself of any remaining QS holdings and
will not be eligible to receive QS by transfer for a period of three
years after the date of the Regional Administrator's determination; and
(ii) The Regional Administrator will not approve a CQE to represent
the eligible community in whose name the CQE transferred quota for a
period of three years after the date of the Regional Administrator's
determination.
* * * * *
(l) Transfer of QS to CQEs.--(1) Each eligible community must
designate a CQE to transfer and hold QS on behalf of that community.
(2) Each eligible community may designate only one CQE to hold QS
on behalf of that community at any one time.
(3) Prior to initially receiving QS by transfer on behalf of a
specific eligible community, a non-profit entity that intends to
represent that eligible community as a CQE must submit a complete
application to become a CQE to the Regional Administrator, National
Marine Fisheries Service, Post Office Box 21668, Juneau, AK 99802. The
Regional Administrator, will provide a copy to the Alaska Department of
Community and Economic Development, Commissioner, P.O. Box 110809,
Juneau, AK 99811-0809. Comments by the State of Alaska on an
application to become a CQE must be submitted to the NMFS, P.O. Box
21668, Juneau, AK 99802 within 30 days of the application being
received by the State. NMFS will consider comments received by the
Alaska Department of Community and Economic Development, when reviewing
applications for a non-profit entity to become a CQE. A complete
application to become a CQE consists of:
(i) The articles of incorporation for that non-profit entity in the
State of Alaska;
(ii) A statement designating the eligible community, or
communities, represented by that non-profit entity for purposes of
holding QS;
(iii) Management organization information, including:
(A) The bylaws of the non-profit entity;
(B) A list of key personnel of the managing organization including
but not limited to: the board of directors, officers, representatives,
and any managers;
(C) A description of the organizational management structure of the
non-profit including resumes of management personnel, including the
name, address, fax number, telephone, email, and any other contact
information for the non-profit entity;
(D) A description of how the non-profit entity is qualified to
manage QS on behalf of the eligible community, or communities, it is
designated to represent, and a demonstration that the non-profit entity
has the management, technical expertise, and ability to manage QS and
IFQ; and
(E) The name of the non-profit organization, taxpayer ID number,
NMFS person number, permanent business mailing addresses, name of
contact persons and additional contact information of the managing
personnel for the non-profit entity, name of community represented by
the CQE, name of contact for the governing body of the community
represented, date, name and notarized signature of applicant, Notary
Public signature and date when commission expires.
(iv) A statement describing the procedures that will be used to
determine the distribution of IFQ to residents of the community
represented by that CQE, including:
(A) Procedures used to solicit requests from residents to lease
IFQ; and
(B) Criteria used to determine the distribution of IFQ leases among
qualified community residents and the relative weighting of those
criteria;
(v) A statement of support from the governing body of the eligible
community as that governing body is identified in Table 21 to this
part. That statement of support is:
(A) A resolution from the City Council or other official governing
body for those eligible communities incorporated as first or second
class cities in the State of Alaska;
(B) A resolution from the tribal government authority recognized by
the Bureau of Indian Affairs for those eligible communities that are
not incorporated as first or second class cities in the State of
Alaska; but are represented by a tribal government authority recognized
by the Secretary of the Interior;
(C) A resolution from a non-profit community association, homeowner
association, community council, or other non-profit entity for those
eligible communities that are not incorporated as first or second class
cities in the State of Alaska, and is not represented by a tribal
government authority recognized

[[Page 59575]]

by the Bureau of Indian Affairs. The non-profit entity that provides a
statement of support must:
(1) Have articles of incorporation as a non-profit community
association, homeowner association, community council, or other non-
profit entity;
(2) Have an established relationship with the State of Alaska
Department of Community and Economic Development for purposes of
representing that community for governmental functions.
(D) If an eligible community is not incorporated as a first or
second class city in the State of Alaska, is not represented by a
tribal government authority recognized by the Secretary of the
Interior, and does not have a non-profit community association,
homeowner association, community council, or other non-profit entity
within that community with an established relationship with the Alaska
Department of Community and Economic Development for purposes of
representing that community for purposes of governmental functions,
then NMFS will not consider any statement from a non-profit entity
representing that community until that community:
(1) Is incorporated as a first or second class city in the State of
Alaska;
(2) Establishes a tribal government authority recognized by the
Secretary of the Interior; or
(3) Establishes a non-profit community association, homeowner
association, community council, or other non-profit entity within that
community that meets the requirements established in paragraph
(l)(3)(v)(E) of this section.
(E) If a community described under paragraph (l)(3)(v)(D) of this
section establishes a non-profit community association, homeowner
association, community council, or other non-profit entity within that
community, then NMFS will consider any recommendations from this entity
to support a particular applicant after reviewing:
(1) Petitions from residents affirming that the non-profit
community association, homeowner association, community council, or
other non-profit entity within that community represents the residents
within that community; and
(2) Comments from the State of Alaska Department of Community and
Economic Development on the articles of incorporation for that non-
profit entity and the ability of that non-profit entity to adequately
represent the interests of that community for purposes of governmental
functions.
(3) The governing body of an eligible community as that governing
body is identified in Table 21 to this part, must provide authorization
for any transfer of QS by the CQE that holds QS on behalf of that
eligible community prior to that transfer of QS being approved by NMFS.
This authorization must be submitted as part of the Application for
Transfer. That authorization consists of a signature on the Application
for Transfer by a representative of the governing body that has been
designated by that governing body to provide such authorization to
approve the transfer of QS.
6. In Sec. 679.42, paragraphs (a), (f), (g)(1), and (h) are
revised, and paragraphs (e)(3) through (e)(8), and (i)(4) are added to
read as follows:

Sec. 679.42 Limitations on use of QS and IFQ.

(a) IFQ regulatory area and vessel category. (1) The QS or IFQ
specified for one IFQ regulatory area must not be used in a different
IFQ regulatory area.
(2) The QS or IFQ assigned to one vessel category must not be used
to harvest IFQ species on a vessel of a different vessel category,
except:
(i) As provided in paragraph (k) of this section (processing fish
other than IFQ halibut and IFQ sablefish);
(ii) As provided in Sec. 679.41(i)(1) of this part (CDQ
compensation QS exemption);
(iii) IFQ derived from QS held by a CQE may be used to harvest IFQ
species from a vessel of any length.
(3) Notwithstanding Sec. 679.40(a)(5)(ii) of this part, IFQ
assigned to vessel Category B must not be used on any vessel less than
or equal to 60 ft (18.3 m) LOA to harvest IFQ halibut in IFQ regulatory
area 2C or IFQ sablefish in the regulatory area east of 140 degrees W.
long. unless such IFQ derives from blocked QS units that result in IFQ
of less than 5,000 lb (2.3 mt), based on the 1996 TAC for fixed gear
specified for the IFQ halibut fishery and the IFQ sablefish fishery in
each of these two regulatory areas.
* * * * *
(e) * * *
* * * * *
(3) No CQE may hold sablefish QS in the IFQ regulatory areas of the
Bering Sea subarea and the Aleutian Islands subareas.
(4) No CQE may hold more than 3,229,721 units of sablefish QS on
behalf of any single eligible community.
(5) In the IFQ regulatory area east of 140 degrees W. long., no CQE
may hold more than 688,485 units of sablefish QS for this area on
behalf of any single eligible community.
(6) In the aggregate, all CQEs are limited to holding a maximum of
3 percent of the total QS in those IFQ regulatory areas specified in
Sec. 679.41(e)(2)(i) through (e)(2)(iv) of this part for sablefish in
the first calendar year implementing the regulation in this section. In
each subsequent calendar year, this aggregate limit on all CQEs shall
increase by an additional 3 percent in each IFQ regulatory area
specified in Sec. 679.41(e)(2)(i) through (e)(2)(iv) of this part up
to a maximum limit of 21 percent of the total QS in each regulatory
area specified in Section 679.41(e)(2)(i) through (e)(2)(iv) of this
part for sablefish.
(7) No individual that receives IFQ derived from sablefish QS held
by a CQE may hold, individually or collectively, more than 50,000
pounds (22.7 mt) of IFQ sablefish derived from any sablefish QS source.
(8) A CQE receiving category B, or C sablefish QS through transfer
may lease the IFQ resulting from that QS only to an eligible community
resident of the eligible community on whose behalf the QS is held.
(f) Halibut QS use. (1) Unless the amount in excess of the
following limits was received in the initial allocation of halibut QS,
no person, individually or collectively, may use more than:
(i) IFQ Regulatory area 2C. 599,799 units of halibut QS.
(ii) IFQ regulatory area 2C, 3A, and 3B. 1,502,823 units of halibut
QS.
(iii) IFQ regulatory area 4A, 4B, 4C, 4D, and 4E. 495,044 units of
halibut QS.
(2) No CQE may receive an amount of halibut QS on behalf of any
single eligible community which is more than:
(i) IFQ Regulatory area 2C. 599,799 units of halibut QS.
(ii) IFQ regulatory area 2C, 3A, and 3B. 1,502,823 units of halibut
QS.
(3) No CQE may hold halibut QS in the IFQ regulatory areas 4A, 4B,
4C, 4D, and 4E.
(4) A CQE representing an eligible community may receive by
transfer or use QS only in the IFQ regulatory areas designated for that
species and for that eligible community as described in Table 21 to
this part.
(5) In the aggregate, all CQEs are limited to holding a maximum of
3 percent of the total QS in those IFQ regulatory areas specified in
Sec. 679.41(e)(3)(i) through (e)(3)(iii) of this part for halibut in
the first calendar year implementing the regulation in this section. In
each subsequent calendar year, this aggregate limit on all community
quota entities shall increase by an additional 3 percent in each IFQ
regulatory area specified in Sec. 679.41(e)(3)(i) through (e)(3)(iii)
of this

[[Page 59576]]

part. This limit shall increase up to a maximum limit of 21 percent of
the total QS in each regulatory area specified in Sec. 679.41(e)(3)(i)
through (e)(3)(iii) to this part for halibut.
(6) No individual that receives IFQ derived from halibut QS held by
a CQE may hold, individually or collectively, more than 50,000 pounds
(22.7 mt) of IFQ halibut derived from any halibut QS source.
(7) A CQE receiving category B, or C halibut QS through transfer
may lease the IFQ resulting from that QS only to an eligible community
resident of the eligible community represented by the CQE.
(g) * * *
(1) Number of blocks per species. Except as provided in paragraphs
(g)(1)(i) and (g)(1)(ii) of this section, no person, individually or
collectively, may hold more than two blocks of each species in any IFQ
regulatory area.
(i) A person, individually or collectively, who holds unblocked QS
for a species in an IFQ regulatory area, may hold only one QS block for
that species in that regulatory area; and
(ii) A CQE may hold no more than ten blocks of halibut QS in any
IFQ regulatory area and no more than five blocks of sablefish QS in any
IFQ regulatory area on behalf of any eligible community.
* * * * *
(h) Vessel limitations. (1) Halibut. No vessel may be used, during
any fishing year, to harvest more than one-half percent of the combined
total catch limits of halibut for IFQ regulatory areas 2C, 3A, 3B, 4A,
4B, 4C, 4D, and 4E, except that:
(i) In IFQ regulatory area 2C, no vessel may be used to harvest
more than 1 percent of the halibut catch limit for this area.
(ii) No vessel may be used, during any fishing year, to harvest
more than 50,000 pounds (22.7 mt) of IFQ halibut from any halibut QS
source if that vessel is used to harvest IFQ halibut derived from
halibut QS held by a CQE.
(2) Sablefish. No vessel may be used, during any fishing year, to
harvest more than one percent of the combined fixed gear TAC of
sablefish for the GOA and BSAI IFQ regulatory areas, except that:
(i) In the IFQ regulatory area east of 140 degrees W. long., no
vessel may be used to harvest more than 1 percent of the fixed gear TAC
of sablefish for this area.
(ii) No vessel may be used, during any fishing year, to harvest
more than 50,000 pounds (22.7 mt) of IFQ sablefish from any sablefish
QS source if that vessel is used to harvest IFQ sablefish derived from
sablefish QS held by a CQE.
(3) A person who receives an approved IFQ allocation of halibut or
sablefish in excess of these limitations may nevertheless catch and
retain all of that IFQ with a single vessel, except that this provision
does not apply if that IFQ allocation includes IFQ derived from QS held
by a CQE. However, two or more persons may not catch and retain their
IFQ in excess of these limitations.
* * * * *
(i) * * *

* * * * *
(4) IFQ derived from QS held by a CQE must be used only by the
individual whose IFQ permit account contains the resulting IFQ.
7. In 50 CFR part 679, Table 21 is added to read as follows:

Table 21 to Part 679--Eligible GOA Communities, Halibut IFQ Regulatory Use Areas, and Community Governing Body
that Recommends the Community Quota Entity
----------------------------------------------------------------------------------------------------------------
Eligible GOA Community Community Governing Body that recommends the CQE
----------------------------------------------------------------------------------------------------------------
May use halibut QS only in halibut IFQ regulatory areas 2C, 3A
Angoon............................................... City of Angoon
Coffman Cove......................................... City of Coffman Cove
Craig................................................ City of Craig
Edna Bay............................................. Edna Bay Community Association
Elfin Cove........................................... Community of Elfin Cove
Gustavus............................................. Gustavus Community Association
Hollis............................................... Hollis Community Council
Hoonah............................................... City of Hoonah
Hydaburg............................................. City of Hydaburg
Kake................................................. City of Kake
Kasaan............................................... City of Kasaan
Klawock.............................................. City of Klawock
Metlakatla........................................... Metlakatla Indian Village
Meyers Chuck......................................... N/A
Pelican.............................................. City of Pelican
Point Baker.......................................... Point Baker Community
Port Alexander....................................... City of Port Alexander
Port Protection...................................... Port Protection Community Association
Tenakee Springs...................................... City of Tenakee Springs
Thorne Bay........................................... City of Thorne Bay
Whale Pass........................................... Whale Pass Community Association
May use halibut QS only in halibut IFQ regulatory areas 3A, 3B
Akhiok............................................... City of Akhiok
Chenega Bay.......................................... Chenega IRA Village
Chignik.............................................. City of Chignik
Chignik Lagoon....................................... Chignik Lagoon Village Council
Chignik Lake......................................... Chignik Lake Traditional Council
Halibut Cove......................................... N/A
Ivanof Bay........................................... Ivanof Bay Village Council
Karluk............................................... Native Village of Karluk
King Cove............................................ City of King Cove
Larsen Bay........................................... City of Larsen Bay

[[Page 59577]]

Nanwalek............................................. Nanwalek IRA Council
Old Harbor........................................... City of Old Harbor
Ouzinkie............................................. City of Ouzinkie
Perryville........................................... Native Village of Perryville
Port Graham.......................................... Port Graham Village Council
Port Lyons........................................... City of Port Lyons
Sand Point........................................... City of Sand Point
Seldovia............................................. City of Seldovia
Tatitlek............................................. Native Village of Tatitlek
Tyonek............................................... Native Village of Tyonek
Yakutat.............................................. City of Yakutat
----------------------------------------------------------------------------------------------------------------

[FR Doc. 03-26074 Filed 10-15-03; 8:45 am]

BILLING CODE 3510-22-S