[Federal Register Volume 63, Number 241 (Wednesday, December 16, 1998)]
[Proposed Rules]
[Pages 69256-69259]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-33319]
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DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration
50 CFR Part 679
[Docket No. 980923246-8246-01; I.D. 071598A]
RIN 0648-AK20
Fisheries in the Exclusive Economic Zone Off Alaska; Modified
Hired Skipper Requirements for the Individual Fishing Quota Program
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA), Commerce.
ACTION: Proposed rule; request for comments.
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SUMMARY: NMFS proposes a regulatory amendment to the Individual Fishing
Quota (IFQ) Program for fixed gear Pacific halibut and sablefish
fisheries in and off of Alaska. This action would require an initial
recipient of certain categories of quota share (QS) who wishes to hire
a skipper to fish the IFQ derived from that QS to own a minimum of 20-
percent interest in the harvesting vessel. This 20-percent minimum
ownership requirement
[[Page 69257]]
would not apply to a QS holder who hired a skipper prior to April 17,
1997, continues to own that vessel at no less percentage of ownership
interest than was held on April 17, 1997, and has not acquired
additional QS through transfer after September 23, 1997. This action is
necessary to promote the Council's intent to provide for an owner-
operator catcher vessel fleet in the halibut and sablefish fixed gear
fisheries off Alaska and is intended to further the objectives of the
IFQ Program.
DATES: Comments on the proposed rule and supporting documents must be
received by January 15, 1999.
ADDRESSES: Comments must be sent to Sue Salveson, Assistant Regional
Administrator for Sustainable Fisheries, Alaska Region, NMFS, Room 453,
709 West 9th Street, Juneau, AK 99801, or P.O. Box 21668, Juneau, AK
99802, Attention: Lori J. Gravel. Copies of the Regulatory Impact
Review/Initial Regulatory Flexibility Analysis (RIR/IRFA) prepared for
this proposed action also may be obtained from the same address.
FOR FURTHER INFORMATION CONTACT: James Hale, 907-586-7228.
SUPPLEMENTARY INFORMATION:
Background
The IFQ Program is a limited access system for managing the fixed
gear Pacific halibut (Hippoglossus stenolepis) and sablefish
(Anoplopoma fimbria) fisheries in waters of the Exclusive Economic Zone
off of Alaska. The North Pacific Fishery Management Council (Council),
under authority of the Magnuson-Stevens Fishery Conservation and
Management Act and the Northern Pacific Halibut Act of 1982,
recommended the IFQ Program, which NMFS implemented in 1995. The IFQ
Program is designed to reduce excessive fishing capacity, while
maintaining the social and economic character of the fixed gear fishery
and the coastal communities where many of these fishermen are based. To
this end, various program constraints limit consolidation of QS and
ensure that those who actually harvest the resource retain harvesting
privileges. The Fishery Management Plan for Groundfish of the Gulf of
Alaska and the Fishery Management Plan for the Groundfish Fishery of
the Bering Sea and Aleutian Islands Area (FMPs) and IFQ implementing
regulations prohibit all leasing of IFQ derived from QS in categories
B, C, and D (QS that authorizes the harvest but not the processing of
IFQ species on board the vessel). Further, they require that holders of
such QS be aboard the vessel harvesting IFQ species during all fishing
operations.
An exception to this owner-aboard provision allows initial
recipients of B, C, or D category QS to employ a hired skipper to fish
his or her IFQ provided that the QS holder owns the vessel on which the
IFQ is being fished. This exception was created to allow fishermen who
had operated their fishing businesses in this manner before the IFQ
Program was implemented to have some flexibility to continue operating
this way under the IFQ Program. While the IFQ Program promotes an
owner-operator fixed gear fishery for sablefish and halibut, this
exception allows initial recipients of QS to remain ashore while a
hired skipper harvests their IFQ. By limiting this exception to initial
recipients, the Council designed the hired skipper provision to expire
with the eventual transfer of all QS out of the possession of initial
recipients.
The current regulations do not specify any minimum ownership
interest that must be acquired before the QS holder may hire a skipper
to harvest the IFQ. An initial recipient of B, C, or D category QS who
acquires even a nominal ownership of a vessel may hire a skipper to
fish his or her IFQ on that vessel. In the first 2 years of the IFQ
Program, the hired skipper provision occasionally has been used by
initial allocation QS holders who may not have employed hired skippers
prior to the IFQ Program but who acquire as little as 0.1 percent
ownership interest in a vessel expressly for the purpose of hiring a
skipper. This practice, if unchecked, would compromise the Council's
intent to have an owner-operator fishery in which the QS holders
actively participate in harvesting operations.
In November 1995, the IFQ Industry Implementation Team recommended
that the current regulations be revised to require initial recipients
of QS to hold a minimum of 51 percent or a controlling interest in a
vessel in order to take advantage of the hired skipper provisions. In
April 1997, and again in June 1997, the Council reviewed analyses of
various options and alternatives including requiring minimum vessel
interest of 5, 20, 49, or 51 percent. At its meeting in September 1997,
the Council took final action to recommend this proposed action.
If NMFS approves this proposed action, initial recipients of B, C,
or D category QS who wish to hire skippers to fish the IFQ derived from
their QS would be required to own a minimum of 20 percent interest in
the vessel on which the IFQ species are being harvested. This minimum
vessel ownership interest would not be required of QS holders who have
hired skippers prior to April 17, 1997, the date of the Council's first
review of the analysis of this issue, provided that the QS holder's
percentage of vessel ownership does not fall below the percentage held
April 17, 1997, and the QS holder has not acquired additional QS
through transfer after September 23, 1997, the date of the Council's
final action to recommend this regulatory change.
The rationale for setting the minimum percentage of vessel
ownership at 20 percent is to allow for most equal-interest
partnerships, such as those between spouses. Joint ownership by several
parties each holding a substantial equal interest in the vessel would
put each owner below the 51 percent controlling interest originally
proposed by the IFQ Industry Implementation Team. However, the analysis
for this issue suggests that some instances of vessel ownership below
20 percent may also represent business arrangements in which the QS
holder has acquired a substantial ownership interest in the vessel on
which the IFQ is to be harvested. Therefore, the Council includes the
grandfather provision in this proposed action that would allow
percentages of vessel ownership existing prior to April 17, 1997, to
continue with regard to the hired skipper provisions.
The grandfather provision itself would carry restrictions. By
requiring QS holders who held lower percentages of vessel interest
prior to April 17, 1997, to continue to hold at least the percentage
held prior to that date, the Council intends to prevent those
grandfathered under this proposed action from divesting themselves of
all but nominal interest in a vessel. Moreover, because an initial
recipient of QS may hire a skipper to fish not only the QS acquired as
an initial allocation but also any QS acquired through transfer, the
proposed action would limit the maximum amount of QS that could be used
under the grandfather provision to levels held prior to September 23,
1997-the date of the Council's final action on this proposal. This
restriction would assure that exemption from the 20 percent requirement
would be granted only to pre-existing arrangements regarding levels of
both vessel ownership and QS holdings.
Examples
(1) If an initial allocation QS holder owns 15 percent interest in
a vessel and hired a skipper to fish his IFQ on that
[[Page 69258]]
vessel prior to April 17, 1997, then the QS holder may continue to hire
a skipper to fish his IFQ on that vessel provided that the QS holder's
percentage of ownership in that particular vessel does not fall below
15 percent. If the QS holder's percentage of ownership in that vessel
falls, for example, to 14 percent, the QS holder would no longer be
allowed to hire a skipper to fish his IFQ on that vessel. The QS holder
would be required either to be on board the vessel harvesting his IFQ
during all fishing operations or to acquire additional ownership
interest amounting to a total minimum of 20 percent interest in the
vessel. By allowing his ownership interest in the vessel to fall below
the percentage held prior to April 17, 1997, the QS holder would
relinquish his grandfathered status under this provision.
(2) If the same QS holder in example (1) acquires an ownership
interest in an additional vessel after April 17, 1997, then the QS
holder must own a minimum of 20 percent interest in that particular
vessel in order to hire a skipper to fish the IFQ on that vessel. The
QS holder may continue to hire a skipper to fish for IFQ on the vessel
in example (1) provided the QS holder continues to hold no less
percentage of ownership in that vessel than he or she held on April 17,
1997. The grandfathered status is specific both to the vessel and to
percentage of ownership owned on April 17, 1997.
(3) If an initial allocation QS holder owned a 15 percent interest
in a vessel and hired a skipper to fish his IFQ on that vessel prior to
April 17, 1997, but relinquishes ownership in that particular vessel
and acquires ownership interest in another vessel after April 17, 1997,
then the QS holder must own a minimum of 20 percent interest in the
newly acquired vessel to hire a skipper to fish the IFQ on that vessel.
(4) If an initial allocation QS holder owned 15 percent interest in
a vessel and hired a skipper to fish his IFQ on that vessel prior to
April 17, 1997, but acquired additional QS through transfer after
September 23, 1997, then that QS holder must acquire an additional
ownership interest in that same vessel of at least 5 percent, for a
total ownership interest of at least 20 percent, to hire a skipper to
fish his IFQ on that vessel.
A corporation or partnership that received an initial allocation of
QS assigned to categories B, C, or D may fish the IFQ resulting from
that QS and any additional QS acquired within the limitations of
Sec. 679.42 provided the corporation or partnership owns a minimum of
20 percent interest in the vessel on which its IFQ is being fished, and
it is represented on the vessel by a master employed by the corporation
or partnership that received the initial allocation of QS. This
authorization to fish IFQ is not transferrable. It is noted that the QS
assigned to categories B, C, and D for halibut in IFQ regulatory area
2C or for sablefish in the IFQ regulatory area east of 140 deg. W.
long. must be to an individual pursuant to Sec. 679.41 (c) of this part
and be used pursuant to Sec. 679.41 (c) and (i).
The additional restrictions that this proposed action would impose
on those wishing to hire skippers to fish IFQ do not deny or prevent
initial recipients of category B, C, or D QS from enjoying the benefits
of the IFQ derived from their QS. A QS holder who does not want to
comply with the minimum ownership requirements can simply be on board
the vessel himself for the harvesting of his IFQ, in which case the QS
holder would not have to possess any ownership interest in a vessel. An
``owner-on-board'' IFQ fishery remains the basic intent of the Council
for category B, C, and D QS.
Classification
This proposed rule has been determined to be not significant for
purposes of E.O. 12866.
NMFS prepared an IRFA that describes the impact this proposed rule,
if adopted, would have on small entities. The IRFA identifies the small
entities affected by this action and analyzes the economic impact on
these small entities.
This proposed action would potentially affect approximately 5,000
persons who continue to hold initial allocations of category B, C, or D
QS, all of which are classified as small entities as well as skippers
who hire themselves out to operate fishing vessels. For purposes of the
Regulatory Flexibility Act, NMFS generally considers a ``substantial
number'' to mean 20 percent of the affected small entities; in this
instance, initial allocation QS holders and hired skippers. Primarily,
this rule would affect those who hired skippers after April 17, 1997,
and who did not possess the minimum 20 percent of ownership interest in
their vessel. In 1997, out of a total number of 221 applications by QS
owners claiming vessel ownership for purposes of hiring a skipper, the
49 vessel owners claiming vessel ownership less than 20 percent
represent the vessel owners that would be chiefly impacted by this
action.
The acquisition of additional QS represents a substantial financial
investment. No data are available on how many, if any, additional
holders of initially allocated QS might have planned to hire skippers
in the future. Nor are data available concerning what percentages of
vessel ownership such QS holders might have. Fishermen for whom vessel
ownership is either financially prohibitive or would entail a
substantial increase in capital costs may, as is intended by the
Council, harvest their IFQ themselves, rather than hire skippers.
However, NMFS has no information on whether it would be possible or
practical for these QS holders to do so. If the QS holders who hired
skippers in the past and need to acquire more vessel ownership to
continue to hire skippers do acquire additional vessel ownership
interest, the number of hired skippers would not change. If some QS
holders do not acquire more ownership to continue to hire skippers, the
services of some skippers may not be retained. NMFS has no information
on the potential number of skippers available for hire or the potential
number of QS holders who may acquire additional vessel interest and so
not retain the services of hired skippers.
For these reasons, it is possible that this action could result in
a decrease of more than 5 percent in annual gross revenues for skippers
whose services are not retained; it is also possible that this action
could result in an increase of more than 5 percent in total costs of
production or increases in compliance or capital costs for 20 percent
or more of the affected small entities for any QS holders who decide to
acquire ownership interest in a vessel rather than fish their IFQ
themselves.
The Council considered a range of alternatives for addressing the
issue of nominal or minimal vessel ownership by QS holders who hire
skippers. Minimum ownership percentages of 5 percent, 20 percent, 49
percent, and 51 percent were analyzed and reviewed, before recommending
the present proposed action. The Council decided to recommend a 20
percent minimum because a 5 percent minimum would continue to allow
minimal vessel ownership and not solve the problem, and options for
requiring minimum ownership of 49 and 51 percent would have solved the
problem but would have been more burdensome to industry, and
disallowing the use of hired skippers by all or many QS holders who own
vessels in equal partnerships.
This action, if approved, could have a significant economic impact
on a substantial number of small entities for purposes of the
Regulatory Flexibility Act, and an Initial Regulatory Flexibility
[[Page 69259]]
Analysis has been prepared. A copy of this analysis is available from
NMFS (see ADDRESSES).
List of Subjects in 50 CFR Part 679
Alaska, Fisheries, Reporting and recordkeeping requirements.
Dated: December 10, 1998.
Andrew Rosenberg,
Deputy Assistant Administrator for Fisheries, National Marine Fisheries
Service.
For the reasons set out in the preamble, 50 CFR part 679 is
proposed to be amended as follows:
PART 679--FISHERIES IN THE EXCLUSIVE ECONOMIC ZONE OFF ALASKA
1. The authority citation for part 679 continues to read as
follows:
Authority: 16 U.S.C. 773 et seq., 1801 et seq., and 3631 et seq.
2. In Sec. 679.42, paragraph (i)(1) and the heading and the first
sentence of the introductory text of paragraph (j) are revised and
paragraph (j)(5) is added to read as follows:
Sec. 679.42 Limitations on use of QS and IFQ.
* * * * *
(i) * * *
(1) An individual who received an initial allocation of QS assigned
to categories B, C, or D does not have to be on board the vessel on
which his or her IFQ is being fished or sign IFQ landing reports if
that individual owns at least a 20 percent interest in the vessel, and
is represented on the vessel by a master employed by that individual.
This minimum 20 percent ownership requirement does not apply to any
individual who received an initial allocation of QS assigned to
categories B, C, or D and who, prior to April 17, 1997, employed a
master to fish any of the IFQ issued to that individual, provided the
individual continues to own the vessel from which the IFQ is being
fished at no lesser percentage of ownership interest than was held on
April 17, 1997, and provided that individual has not acquired
additional QS through transfer after September 23, 1997.
* * * * *
(j) Use of IFQ resulting from QS assigned to vessel categories B,
C, or D by corporations and partnerships. Except as provided in
paragraph (j)(5) of this section, a corporation or partnership that
received an initial allocation of QS assigned to categories B, C, or D
may fish the IFQ resulting from that QS and any additional QS acquired
within the limitations of this section provided the corporation or
partnership owns at least a 20 percent interest in the vessel on which
its IFQ is being fished, and it is represented on the vessel by a
master employed by the corporation or partnership that received the
initial allocation of QS. * * *
* * * * *
(5) A corporation or partnership that received an initial
allocation of QS assigned to categories B, C, or D and that, prior to
April 17, 1997, employed a master to fish any of the IFQ issued to that
corporation or partnership may continue to employ a master to fish its
IFQ on a vessel owned by the corporation or partnership provided that
the corporation or partnership continues to own the vessel from which
the IFQ is being fished at no lesser percentage of ownership interest
than was held on April 17, 1997, and provided that corporation or
partnership did not acquire additional QS through transfer after
September 23, 1997.
* * * * *
[FR Doc. 98-33319 Filed 12-15-98; 8:45 am]
BILLING CODE 3510-22-F
