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Magnuson-Stevens Act Provisions; Fishing Capacity Reduction Program for the Crab Species Covered by the Fishery Management Plan for the Bering Sea/Aleutian Islands King and Tanner Crabs

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


Notice of fishing capacity reduction program payment tender.


NMFS issues this notice to inform the public about tendering reduction payments to accepted bidders under the Bering Sea/Aleutian Islands King and Tanner Crab fishing capacity reduction program. NMFS has accepted reduction bids, and a successful referendum has approved an industry fee system for repaying the $97.4 million reduction loan financing 100 percent of the program's cost. Accordingly, NMFS is preparing to tender reduction payments to accepted bidders.


Send questions about this notice to Michael L. Grable, Chief, Financial Services Division, National Marine Fisheries Service, 1315 East-West Highway, Silver Spring, MD 20910-3282.

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

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I. Background

Section 144 of Public Law 106-554 (as amended by section 2201 of Pub. L. 107-20 and section 205 of Public Law 107-117) directed the Secretary of Commerce to establish a $100 million fishing capacity reduction program (program) in the Bering Sea/Aleutian Islands king and Tanner crab fishery (crab fishery). The program's objective is reducing the crab fishery's harvesting capacity. This will help financially stabilize this limited-entry fishery and fosters its future management.

NMFS implemented the program by publishing a proposed rule on December 12, 2002 (67 FR 76329) and a final rule on December 12, 2003 (68 FR 69331). Persons wanting further program details should refer to these rules.

This is a voluntary program in which, in return for reduction payments, bidders whose bids NMFS accepts permanently relinquish their fishing licenses, the fishing histories upon which those licenses' issuance was based, and their vessels' worldwide fishing privileges. Their vessels may never fish again and may never be transferred out of U.S. registry.

The total cost of reduction payments to all accepted bidders (and, thus, the program's total cost) cannot exceed $100 million. This cost is 100 percent financed by a fishing capacity reduction loan from NMFS' Fisheries Finance Program. Future crab landing fees will repay the reduction loan over the next 30 years. Each of six area/species endorsement crab fisheries has a different reduction loan subamount to repay and does so at a fee rate appropriate for each subamount.

Under the program, the holders of non-interim crab fishery licenses make bid offers to NMFS for reduction payments. NMFS scores each bid's reduction payment amount against the amount of the bidder's past ex-vessel crab revenues and, in a reverse auction, accepts those bids whose reduction payments are the lowest percentages of the bidders' revenues during a certain period. NMFS quits accepting bids before acceptance of the bid with the next lowest bid score causes reduction payments to exceed the maximum $100 million program cost. Bid acceptances create reduction contracts whose performance are subject only to a successful referendum about the industry fee system necessary to repay the reduction loan.

The referendum follows the bidding process. Approval of the industry fee system requires at least two-thirds of the qualified voters casting ballots to vote in favor of the industry fee system. Qualified voters are all interim and non-interim holders of crab licenses, except those endorsed only for the Norton Sound area/species crab fishery.

II. Present Status

NMFS has twice invited program bids and administered separate referendums on each of the two accepted bidder results.

NMFS administered and, because of a mistake which overstated the bidding results, readministered a referendum about bids accepted under the first invitation to bid. The readministered referendum was unsuccessful. Because of the circumstances involved, however, NMFS issued a second invitation to bid for which the referendum was successful. This notice involves the program's second invitation to bid and the accepted bids, referendum, and reduction contracts consequent to such second invitation to bid.

NMFS issued the second invitation to bid, and the bidding period opened, on August 6, 2004. This bidding period closed on September 24, 2004. Fifty five, non-interim, crab license holders submitted bids totaling $225,954,284. NMFS accepted 25 bids. These totaled $97,399,357. The next lowest scoring bid would have exceeded the program's $100 million maximum cost. The accepted bids involved 25 fishing vessels and 62 fishing licenses or permits. Twenty five of the permits were non-interim crab fishery licenses. The remaining included 15 groundfish fishing licenses, 20 Federal fishery vessel permits, 1 high seas permit, and 1 halibut individual fishing quota allocation.

On October 1, 2004, NMFS mailed referendum ballots to 313 qualified referendum voters. This referendum involved the fees necessary to repay the $97,399,357 reduction loan resulting from the 25 bids NMFS accepted under the program's second invitation to bid. The second referendum voting period opened on October 1, 2004, and closed on November 15, 2004. Two hundred seventy three (or 87.22 percent) of the referendum's qualified voters cast timely ballots. Two hundred seventeen (or 79.49 percent) of the those ballots approved the fees. This exceeded the two-thirds minimum required for industry fee system approval. This referendum was, consequently, successful and approved the industry fee system. Accordingly, the reduction contracts are now in full force and effect and NMFS is now preparing to tender and disburse reduction payments to accepted bidders.

III. Purpose

NMFS publishes this notification to inform the public before tendering reduction payments to the 25 accepted bidders. NMFS will tender reduction payments on December 27, 2004. When NMFS tenders a reduction payment to an accepted bidder, the bidder must then permanently stop all further fishing with each reduction permit the bidder has relinquished and with the reduction vessel whose worldwide fishing privileges the bidder has relinquished. NMFS will then:

(a) Revoke each reduction permit each accepted bidder relinquished,

(b) Revoke each reduction vessel's fishing history,

(c) Notify the National Vessel Documentation Center to revoke the fishery trade endorsement of each accepted bidder's reduction vessel and otherwise appropriately annotate the reduction vessel's document, and

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(d) Notify the U.S. Maritime Administration to prohibit the reduction vessel's transfer to foreign ownership or registry.

Among other things, the reduction contract with each accepted bidder requires the bidder to notify each creditor or other party with an interest in the bidder's reduction vessel or reduction permit that the bidder has entered into a reduction contract which relinquishes the reduction permit and the reduction vessel's fishing privileges in return for NMFS payment to the bidder of a reduction payment. Upon NMFS reduction payment tender, each accepted bidder must, among other things and as a condition of NMFS disbursing the bidder's reduction payment in accordance with the bidder's written payment instruction, also certify to NMFS that the bidder has given such notice to each such creditor or other party.

This notification begins the 30-day period and puts the public (including creditors or other parties) on notice. Section IV of this notification identifies the accepted bidders and the reduction vessels and reduction permits involved in their bids.

IV. Accepted Bidders, Reduction Vessels, and Reduction Permits.

The table below establishes:

(a) The names of the accepted bidders,

(b) The names and official numbers of the reduction vessels whose worldwide fishing privileges the accepted bidders relinquished, and

(c) The license numbers and natures of the reduction permits the accepted bidders relinquished.

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Start Printed Page 68327 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: November 18, 2004.

Rebecca Lent,

Deputy Assistant Administrator for Regulatory Programs, National Marine Fisheries Service.

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[FR Doc. 04-26059 Filed 11-23-04; 8:45 am]