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Proposed Rule

Magnuson-Stevens Act Provisions; Fishing Capacity Reduction Program; Pacific Coast Groundfish Fishery; California, Washington, and Oregon Fisheries for Dungeness Crab and Pink Shrimp

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


Notice of proposed fishing capacity reduction program; request for public comments.


NMFS issues this notice about a voluntary fishing capacity reduction program in the Pacific Coast groundfish fishery. After a successful referendum, harvesters that are accepted to participate would be paid to surrender their fishing permits and restrict their vessels. A loan, which would be repaid by fishermen remaining in the fishery, will finance the majority of the program's cost. The program will invite bids from permit owners of groundfish trawl permits (except those harvesting whiting and processing it at sea) that are willing to surrender their fishing privileges, score the bids in a reverse auction against the value of bidders' harvests, and then conduct a referendum regarding repayment of the loan. If the referendum is successful, accepted bidders must relinquish their California, Oregon, and Washington fishing licenses for Dungeness crab and pink shrimp; accepted bidders must also surrender their Federal groundfish permit, as well as all other Federal fishing licenses associated with the fishing vessel named in their bids. The fishing vessels involved will never again be eligible to fish. If the referendum is not successful, bidders are excused from all such obligations. The groundfish program aims to increase the remaining harvesters' productivity, help financially stabilize the fishery, and help conserve and manage its fish. This Start Printed Page 31654notice also contains the groundfish program's pro forma invitation to bid and bidding document.


NMFS must receive comments by June 27, 2003.


Mail or fax written comments about the proposed groundfish program to Michael L. Grable. In addition to public comments about the program's substance, NMFS also seeks public comment about any ambiguity or unnecessary complexity in this notice. Copies of a draft environmental assessment and regulatory impact review are available from NMFS upon request. The mailing address is: Michael L. Grable, Chief, Financial Services Division, National Marine Fisheries Service, 1315 East-West Highway, Silver Spring, MD 20910-3282. The primary fax number is (301) 713-1306. The secondary fax number is (301) 713-1939. NMFS will not accept e-mail or Internet comments. If a comment involves any aspect of this notice's collection of information requirements, send the comment both to Michael L. Grable and to the National Oceanic and Atmospheric Administration Desk Officer, Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, DC 20503.

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Michael L. Grable, (301) 713-2390.

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I. General

Enacted on February 20, 2003, Section 212 of Division B, Title II, of Public Law 108-7 (section 212) authorizes a fishing capacity reduction program (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, are endorsed for trawl gear operation (reduction fishery). The program's objective is to reduce the number of vessels and permits endorsed for the operation of groundfish trawl gear. Vessels that catch and process whiting at sea are ineligible to participate. The program also involves corollary fishing capacity reduction in the California, Oregon, and Washington fisheries for Dungeness crab and pink shrimp (fee-share fisheries). Sections 1111 and 1112 of the Merchant Marine Act, 1936 (46 App. U.S.C. 1279f and 1279g) (Title XI) authorize loans for financing the cost of fishing capacity reduction programs (reduction loans). The program has two appropriations. A $10 million appropriation, found at section 501(b) of Division N, Title V, of Public Law 108-7, directly funds part of the program's cost. The second, a $0.5 million appropriation, included in Public Law 107-206, funds the Federal Credit Reform Act cost of authorizing a $36 million reduction loan.

Although largely consistent with the framework regulations for fishing capacity reduction (promulgated pursuant to section 312 of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), 16 U.S.C. 1861a(b)-(e) (found at 50 CFR 600.1000 et seq.), section 212 supersedes some of the provisions of both the framework regulations and the Magnuson-Stevens Act.

When fishing capacity reduction is undertaken pursuant to the Magnuson-Stevens Act provisions, NMFS implements each reduction program by adding an implementing section to the framework regulations. However section 212 renders some of the Magnuson-Stevens Act provisions and much of the framework regulations inapplicable. Among other things, the groundfish program applies to more than one fishery. Section 212 also requires NMFS to implement the groundfish program by publishing a notification and an invitation to bid in the Federal Register rather than by promulgating additional regulations. In addition, section 212 supersedes one provision of Title XI, by extending the reduction loan's term to 30 years.

II. Reduction Cost

The amount paid to harvesters in exchange for surrender of their fishery privileges (reduction cost) may equal, but may not exceed, $46 million. A $10 million appropriation will fund part of the reduction, and future harvesters will finance any remainder.

III. Program Summary

NMFS will mail to each “permit owner” (as 50 CFR 660.302 defines the term “permit owner”) of a groundfish permit endorsed for trawl gear operation (other than those issued to whiting catcher-processors) an advance notice that NMFS will formally invite bids for capacity reduction by mailing them a bidding package. Such notice and the bidding package will be mailed to the permit owner at the owner's address of record.

The bidding package will contain, among other things, an invitation to bid and a bidding document. The invitation to bid will specify the terms and conditions under which bids are made and accepted. If the Secretary formally accepts a bid, the bidding document, in conjunction with the invitation to bid, will constitute a reduction contract between the bidder and the United States.

No bidder may bid before receiving the bidding package. Bidders must submit bids on provided forms and in strict conformance with the requirements of the invitation to bid. NMFS will reject any nonconforming bids.

The invitation to bid and bidding document will be similar to the pro forma invitation to bid and bidding document (see addenda to this notification). What follows is a general summary of the relevant provisions.

To submit a bid, bidders must mail or otherwise deliver their bids to NMFS at the address specified in the invitation to bid. Each bidder is responsible for ensuring that NMFS receives his or her bid before the specified bid receipt deadline. NMFS will reject any bid that arrives after the bid receipt deadline; such a bid will be deemed unresponsive to the invitation to bid. All terms and conditions of the invitation to bid or the bidding document are final at the time NMFS mails the bidding package. Thereafter, NMFS will not alter or negotiate any term or condition.

Each bid must specify:

(a) The exact bid amount,

(b) The reduction vessel the bidder proposes to remove from fishing (reduction vessel),

(c) The groundfish reduction permit,

(d) Any other Federal permits registered to or used on the reduction vessel,

(e) All California, Oregon, or Washington issued permits for Dungeness crab or pink shrimp registered to or used on the reduction vessel (fee-share reduction permits), and

(f) Any catch history used as the basis of permit issuance that was accrued on the reduction vessel.

The bidder must both own the reduction vessel and be the permit owner, as well as be the registered holder of all other reduction permits. The groundfish reduction permit must be registered for use on the reduction vessel. However, the bidder need not include any non-Federal permit that neither is registered to nor used on the reduction vessel.

By completing and submitting a bidding document to NMFS, each bidder makes an irrevocable offer to the United States. No bidder, once having submitted a bid to NMFS, is entitled to withdraw or in any way amend the bid.

Each bidder must offer to relinquish all of his or her Federal permits and any state permits for pink shrimp or Dungeness crab. Additionally, each person submitting a bid must offer to relinquish the reduction vessel's legal Start Printed Page 31655authority to participate in any fishery, by offering to permanently:

(a) Allow imposition of title restrictions that remove the reduction vessel's fisheries endorsement,

(b) Relinquish eligibility for any present or future U.S. Government approval under section (9)(c)(2) of the Shipping Act, 1916 (46 U.S.C. App. 808(c)(2)) for placement of the reduction vessel under foreign registry or operation under the authority of a foreign country, and

(c) Relinquish any other present or future reduction vessel fishing privilege or fishery eligibility claim of any kind, including any based on the reduction vessel's catch.

If a reduction vessel is registered only under state jurisdiction (i.e., it is not Federally documented) it must be scrapped.

After bidding, the bidder must continue to hold all reduction permits and own the reduction vessel until: NMFS notifies the bidder that NMFS rejects the bid, the bid expires without NMFS having accepted or rejected it, NMFS notifies the bidder that a reduction contract between the bidder and the United States no longer exists, or NMFS tenders reduction payment to the bidder and the bidder relinquishes all reduction permits and the reduction vessel's fishing privileges.

NMFS will determine which bids it accepts by using a reverse auction. Upon receipt of each bid, NMFS will determine a bid score by dividing each bid amount by the average annual total ex-vessel dollar value of the Pacific groundfish, Dungeness crab, and pink shrimp landed by the bidder's reduction vessel. NMFS will average the three highest total annual revenues from groundfish, Dungeness crab, and pink shrimp during 1998, 1999, 2000, or 2001.

NMFS will accept the responsive bid with the lowest bid score and then successively accept each additional responsive bid with the next lowest bid score until either there are no more bids to accept or acceptance of the bid with the next lowest bid score would cause the reduction cost to exceed the maximum reduction cost. If any two or more bid scores are exactly the same, NMFS will first accept the bid it received first.

NMFS will mail each bidder either a bid acceptance notice or a bid rejection notice. NMFS” acceptance of a bid offer will form a fully binding reduction contract between the bidder and the United States. Each party's obligation to perform in accordance with the terms and conditions of any reduction contract will, however, be subject to the results of the fee referendum.

After bids are formally accepted, NMFS will establish up to seven reduction loan sub-amounts, one for the reduction fishery and one for each of the fee share fisheries. A reduction sub-amount is a fishery's share of the reduction loan and is in proportion to the fishery's share of the total ex-vessel dollar value of the groundfish, Dungeness crab, and pink shrimp which all reduction vessels landed during the four-year period from 1998 through 2001. Post-reduction fees from each of these fisheries will repay its respective reduction loan sub-amount.

Specifically, NMFS will calculate each reduction loan sub-amount as follows. NMFS will separately add up the total ex-vessel values of landings, for the four-year period 1998 through 2001, for the reduction fishery (i.e., groundfish trawl fishery) and the fee-share fisheries (the three Dungeness crab fisheries and the three pink shrimp fisheries). Then NMFS will divide each of the seven totals by the aggregate value of all of the landings from all seven fisheries to derive seven quotients. NMFS will then multiply the reduction loan amount by each of the quotients to determine the loan sub-amount that each of these fisheries must repay.

NMFS will conduct the referendum as soon as practicable after bid acceptance. The referendum's sole purpose will be to determine whether the voters who cast referendum ballots authorize the fee required to repay the reduction loan.

NMFS will mail referendum information, voting instructions, and a referendum ballot(s) to the permit owner of each groundfish permit in the reduction fishery and to the person who is the holder of record of each state-issued pink shrimp or Dungeness crab permit (collectively, eligible voters). NMFS will include information about the following bid acceptance results:

(a) The program's reduction cost,

(b) The seven reduction loan sub-amounts,

(c) The number of permits that will be relinquished,

(e) The number of reduction vessels, and

(f) The total ex-vessel dollar values of reduction vessel landings, in the reduction fishery and in each of the six fee-share fisheries, during each year from 1998 through 2001.

NMFS will mail eligible voters a separate referendum ballot for each groundfish permit they own and every pink shrimp or Dungeness crab permit they hold. In other words, eligible voters will have one ballot for every such permit they hold.

Immediately after the deadline for NMFS’ receipt of ballots, NMFS will tally votes, fishery by fishery, and multiply each tally by the quotients used in calculating the reduction loan sub-amounts. The products of this multiplication will be the vote tallies for the respective fisheries weighted in proportion to each fishery's reduction loan sub-amount.

If the weighted total of approving votes is greater than the weighted total of disapproving votes, the referendum is successful. The referendum is unsuccessful if the weighted total of disapproving votes is the same as or exceeds the weighted total of approving votes. NMFS will mail each eligible voter a notice about the referendum's outcome.

If the referendum is unsuccessful, the fee will not be approved; and NMFS will mail a notice to each accepted bidder that neither the accepted bidder nor the United States has any further obligation under any reduction contract.

If the referendum is successful, NMFS will request, from each accepted bidder, specific and written payment instructions for disbursing the reduction payment. Upon a bidder's receipt of such a request for payment instructions, the bidder must stop fishing and must retrieve all fishing gear previously deployed from the reduction vessel. Bidders must relinquish their permits and return their groundfish permit and any other Federal permit associated with the reduction vessel to NMFS. The bidder must also certify that they have complied with the requirements of the reduction contract.

NMFS will:

(a) Revoke all groundfish permits and all other reduction permits,

(b) Notify California, Oregon, and Washington that accepted bidders have relinquished their fee-share reduction permits,

(c) Request the Secretary under whom the U.S. Coast Guard operates to revoke the fisheries endorsements of all Federally-documented reduction vessels, and

(d) Request the Secretary under whom the U.S. Maritime Administration operates to make all Federally-documented reduction vessels permanently ineligible for any present or future U.S. Government approval under section (9)(c)(2) of the Shipping Act, 1916 (46 U.S.C. App. 808(c)(2)) for placement of a reduction vessel under foreign registry or operation under the authority of a foreign country.

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The bidder must immediately scrap the state-registered reduction vessel and allow NMFS to observe and certify the scrapping.

After receiving a bidder's payment instructions and certification of compliance, NMFS will disburse the reduction payment, unless NMFS has reason to believe that the bidder has not performed in accordance with his or her duties and obligations. NMFS will disburse reduction payments only to accepted bidders, unless they explicitly instruct NMFS to do otherwise. If a reduction vessel needs to be scrapped, NMFS will withhold funds sufficient to cover the cost of such scrapping until its completion.

IV. Program Process

The following table outlines, in chronological order, the program's process:

OneNMFS publishes this notice in the Federal Register, together with a pro forma invitation to bid and bidding document.
TwoNMFS receives and analyzes public comments.
ThreeNMFS publishes a final notice in the Federal Register, together with the final draft of the invitation to bid and bidding document.
FourNMFS mails each permit owner of a groundfish trawl permit (other than those issued to whiting catcher-processors) a notice that indicates that NMFS will subsequently mail him or her a bidding package.
FiveNMFS formally invites each qualified bidder to bid by mailing to him or her a bidding package that also informs him or her that a referendum will occur after NMFS has accepted bids.
SixNMFS mails a notice to persons holding any fee-share fishery permit (other than those to whom NMFS sent the mailing in step five) indicating that NMFS has invited bids. The notice will also state that NMFS will, without further notice, mail him or her a referendum ballot(s) and voting instructions after NMFS has accepted bids.
SevenBidders submit bids.
EightNMFS receives bids until the bid receipt deadline.
NineNMFS scores, tallies, and accepts or rejects each bid and mails to each bidder an acceptance or rejection notice.
TenNMFS mails to each person eligible to vote in the referendum a ballot(s) and voting instructions.
ElevenThe referendum occurs.
TwelveNMFS receives votes until the vote receipt deadline and afterwards tallies the votes.
Thirteen (A)If the referendum fails: (a) NMFS mails to each eligible voter a notice that the referendum is unsuccessful, and (b) NMFS mails to each accepted bidder a notice that the reduction contracts are without force and/or effect.
Thirteen (B)If the referendum is successful: (a) NMFS mails to each accepted bidder a notice that the referendum is successful and reminds him or her that he or she must perform the reduction contract duties and obligations, (b) NMFS mails to each person who voted a notice indicating that the referendum was successful, (c) NMFS publishes a reduction payment tender notification in the Federal Register,
(d) NMFS tenders reduction payments to each accepted bidder by requesting the bidder's payment instructions, (e) Accepted bidders relinquish their reduction permits and reduction vessel fishing privileges, and (f) Accepted bidders certify their compliance with their contractual obligations.
FourteenNMFS disburses reduction payments upon its receipt of payment instructions and certification of compliance.
FifteenNMFS undertakes a separate rulemaking about fee payment and collection.
SixteenNMFS establishes fee amounts.
Seventeen(a) NMFS mails fish sellers and fish buyers a reduction loan fee payment and collection notice, (b) Fish sellers begin paying the fees, and fish buyers begin collecting and disbursing the fees to NMFS, and (c) NMFS receives collected-fee disbursements from fish buyers.

V. Reduction Loan

The reduction loan's repayment maturity will be 30 years. Its principal amount will be the total of all reduction payments made under this program, less $10 million. NMFS will determine the reduction loan's interest rate in accordance with the framework regulations at 50 CFR 600.1012.

VI. Fee Payment and Collection

Section 212 provides that the United States may enter into agreements with California, Oregon, and Washington to collect the fees that repay the reduction loan. Unless and until NMFS arranges to do so, however, fish sellers will pay the fees and fish buyers will collect, deposit, disburse, record, and report on the fees in accordance with the applicable portions of the framework regulations.

NMFS will establish any fee rates necessary for fish sellers to repay the reduction loan sub-amount applicable to the reduction fishery and to each of the six fee-share fisheries. NMFS will undertake a separate rulemaking to do this. The fee rates may not exceed five percent of the delivery value of fee fish from each of these fisheries, but will be less if NMFS determines that smaller percentages are sufficient to amortize the respective reduction loan sub-amounts over the 30-year reduction loan's term.Start Printed Page 31657

VII. Sample Invitation To Bid and Bidding Document

The addenda to this notification are the pro forma invitation to bid and bidding document.


The Assistant Administrator for Fisheries, NMFS, determined that this action is consistent with Public Law 107-206, Public Law 108-7, the Magnuson-Stevens Fishery Conservation and Management Act, and other applicable laws.

In compliance with the National Environmental Policy Act, NMFS prepared a draft environmental assessment for this action. The assessment discusses the program's impact on the natural and human environment. NMFS will send the draft assessment to anyone who requests NMFS to do so (see ADDRESSES).

The Office of Management and Budget has determined that this notice is significant under Executive Order 12866. NMFS has prepared a Regulatory Impact Review (RIR) for this action (see ADDRESSES).

NMFS believes any Federalism implications arising from this notice are highly unlikely, however, consultations with the States of Washington, Oregon, and California are ongoing.

This notice contains collection-of-information requirements subject to the Paperwork Reduction Act (PRA). The Office of Management and Budget (OMB) has approved these information collections under OMB control number 0648-0376. NMFS estimates that the public reporting burden for these requirements will average 4 hours for submitting a bid, 4 hours for voting in a referendum, and 1 hour for advice (if any) about a conflict on a vessel ownership or permit claim. Persons affected by this action would also be subject to other collection-of-information requirements referred to in this action and also approved under 0648-0376. These requirements and their associated response times are 10 minutes for completing and filing a fish ticket, 2 hours for submitting a monthly fish buyer report, 4 hours for submitting an annual fish buyer report, and 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 notice 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.

In addition to public comment about the substance of this action, NMFS also seeks public comment on any ambiguity or unnecessary complexity arising from the action's language.

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Authority : Pub. L. 107-206, Pub. L. 108-7, 16 U.S.C. 1861a(b-e), and 50 CFR 600.1000 et seq.

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Dated: May 21, 2003.

William T. Hogarth,

Assistant Administrator for Fisheries, National Marine Fisheries Service.

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[These addenda will not be codified in the Code of Federal Regulations.]

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[FR Doc. 03-13274 Filed 5-27-03; 8:45 am]