E9-30838. Magnuson-Stevens Fishery Conservation and Management Act Provisions; Fisheries of the Northeastern United States

AGENCY:

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

ACTION:

Final rule.

SUMMARY:

NMFS is modifying the fishing vessel permit regulations to include specific terms and conditions for Federal fishing vessel permits obtained through the purchase of fishing vessels using Federal grant awards. The terms and conditions authorize the NMFS Administrator, Northeast Region (Regional Administrator), to suspend, cancel, fail to renew, modify, or otherwise rescind any Federal fishing vessel permit, or the rights thereto, if the terms and conditions of any Federal grant award used to obtain said permit, or an associated memorandum of understanding or agreement, are violated by the grant recipient.

DATES:

This final rule is effective on January 28, 2010.

ADDRESSES:

Copies of the Regulatory Impact Review (RIR) are available upon request from Patricia A. Kurkul, Regional Administrator, NMFS, Northeast Regional Office, 55 Great Republic Drive, Gloucester, MA 01930.

FOR FURTHER INFORMATION CONTACT:

Michael Pentony, Senior Fishery Policy Analyst, phone [phone].

SUPPLEMENTARY INFORMATION:

Background

This final rule implements changes to the Northeast (NE) fisheries regulations at 50 CFR part 648 to authorize the Regional Administrator to suspend, cancel, fail to renew, modify, or otherwise rescind any Federal fishing vessel permit, including the rights thereto, held by a person, corporation, non-profit organization, or government entity if the terms and conditions of any Federal grant award used to obtain said permit, or an associated memorandum of understanding or agreement, are violated by the grant recipient. The intent of this action is to establish an effective regulatory mechanism through which NOAA will be able to enforce the terms and conditions of any Federal grant award used to obtain Federal fishing vessel permits in the NE Region.

As several fisheries in the NE Region begin to transition to catch-share management strategies, various fishing organizations, conservations groups, and states are exploring alternatives to the traditional vessel-permit ownership model. An alternative model known as “permit banking” is developing in the Northeast, whereby an organization obtains a suite of permits in a particular fishery, with the option to lease out the fishing rights associated with those permits.

Permit banks hold promise for addressing two important issues related to the development and implementation of effective catch-share management programs: First, permit banks could be used to ease the transition to catch-share management by expanding the pool of catch shares available for use; and, second, permit banks could be used to demonstrate that small fishing operations and small communities can be successful participants in catch-share management programs. Depending on the structure of the permit bank, and the criteria used for participation, permit banks could be very effective at protecting the fishing interests of small communities and small-scale fishing operations by mitigating some of the consolidation of fishing rights that often follows implementation of catch-share programs.

Interest in developing permit banking programs is expanding in the NE and, because of NOAA's policy position promoting catch-share management, the NMFS NE Regional Office has proposed a pilot program designed to guide the development and expansion of permit banks in order to facilitate the implementation of effective catch-share programs. In the spending plan for a recent Congressional authorization for New England fisheries assistance, NOAA proposed to award a $1-million grant to develop this pilot permit banking program in Maine. Since then, NMFS has been working in partnership with Maine's Department of Marine Resources on a program that would allow the State to use the grant award to purchase fishing vessels with associated permits. The fishing rights associated with the permits would then serve as the basis for a permit bank to be operated by the State, in partnership with NMFS, to facilitate the transition to catch-share management by leasing additional fishing opportunities to qualified vessel owners in small ports. The State of Maine is very interested in developing such a partnership and establishing a permit bank. If the pilot program proves successful, NOAA may consider expanding the program throughout other parts of the NE Region.

Absent this regulatory change, NOAA would not be able to retain sufficient control and oversight of the resulting permit banking program to ensure its success. Under current grant management rules and fishing vessel permit regulations, once a grant award is made to an organization, and the award is used to obtain fishing vessel permits, NOAA risks losing control over the implementation and operation of the resulting permit bank. Even if the grant includes special award conditions specifying the criteria to be used in operation of the permit bank, NOAA would have limited mechanisms to enforce those criteria once an organization obtains the permits. In order to protect NOAA's and the public's interests in the successful development, implementation, and operation of such a program, this regulatory change is necessary to provide NOAA with an appropriate oversight mechanism.

This action amends the NMFS NE Region regulations regarding fishing vessel permits to include specific terms and conditions that will apply to Federal fishing vessel permits obtained through the purchase of fishing vessels using Federal grant awards. The terms and conditions authorize the Regional Administrator to suspend, cancel, fail to renew, modify, or otherwise rescind any Federal fishing vessel permit, including the rights thereto, held by a person, corporation, non-profit organization, or government entity if the terms and conditions of any Federal grant award used to obtain said permit, or an associated memorandum of understanding or agreement, are violated by the grant recipient.

In addition, this final rule responds to three issues raised in the comments received on the proposed rule for this action. First, NMFS's intent is for this action to apply only to Federal grants issued by NOAA for the express purpose of purchasing fishing vessels, obtaining fishing vessel permits, and/or establishing or expanding a permit bank, and this action would not apply to permits obtained through grants of a more general nature or those awarded by other Federal agencies. Second, the new regulation implemented by this final rule is intended to provide an oversight mechanism for vessel permit-related grants that supplements but does not replace, supersede, or contravene existing enforcement provisions and procedures established under Department of Commerce regulations at 15 CFR parts 14 and 24. Third, it is NMFS's intent that any such controls applied to a permit bank as authorized by this action would be imposed either at the time of an application for a permit lease transaction or at the time of permit renewal, and it is not NMFS's intent for such permit sanctions to affect the intended recipients of the permit lease transactions.

Comments and Responses

Nine individual comment letters were received on the proposed rule.

Comment 1: One commenter objected to the suggestion that a potential pilot permit bank with the State of Maine may be limited to qualified vessels in small ports, and took issue with statements in the preamble to the proposed rule regarding potential benefits of permit banks.

Response: NMFS understands that some stakeholders may object to some of the terms and conditions that may be placed on Federal grant awards used to obtain fishing vessel permits for the purpose of establishing one or more permit banks. However, nothing in this action imposes or constrains any future actions with respect to the specific terms and conditions that may be imposed on a state, or other party, regarding a Federal grant award that may be used to establish a permit bank. This action is wholly constrained to establishing an effective oversight mechanism such that NOAA, should it at some future time provide a Federal grant award to a state, or other party, for the purpose of obtaining one or more fishing vessels and the associated Federal permits, as a means to retain some level of oversight and control over how the fishing rights associated with the permits are used, beyond the duration of the Federal grant award. Regarding the perceived implications of permit banks for the affected public, NMFS considers permit banks as one potential tool to ease the transition to catch-share management programs and as a potential way to preserve fishing opportunities for small fishing operations and/or small fishing communities so that they can participate effectively in catch-share management programs. However, NMFS acknowledges that permit banks are not proven to achieve these goals in all cases. This is why the preamble to the proposed rule referred to a potential permit bank with the State of Maine as a pilot program. NMFS intends to utilize this opportunity, should a grant be awarded to the State of Maine for this purpose, to study the implications of establishing such a permit bank and would utilize the results of the pilot program to inform decisions on potential future expansion of the permit bank concept.

Comment 2: A commenter opposed the authority proposed in the rule because it would deny the permit bank the opportunity to be heard on the issues by an Administrative Law Judge, and because the fishermen who leased the fishing rights associated with the permits in question may suffer economic hardship if the permits are rescinded.

Response: Existing Department of Commerce regulations at 15 CFR parts 14 and 24 establish the overarching procedures and requirements for Federal grants to institutions of higher education, hospitals, other non-profits, commercial organization, and state and local governments, and also stipulate procedures to enforce the terms and conditions of such grants. Regulations at 15 CFR 14.62(a) and 15 CFR 24.43(a) provide as “remedies for noncompliance,” that the awarding agency may take actions that include temporarily withholding cash payments, suspending or terminating the current award, withholding future awards, or taking “other remedies that may be legally available.” By this rule, NMFS is establishing an additional remedy to be available for the enforcement of a Federal grant intended to be used for a permit bank. Regarding the comment that the rule would “deny the permit bank the opportunity to be heard on the issues,” existing regulations at 15 CFR 14.62(b) and 24.43(b) provide such an opportunity for a hearing or appeal, as follows “In taking an enforcement action, the awarding agency will provide the grantee or subgrantee an opportunity for such hearing, appeal, or other administrative proceeding to which the grantee or subgrantee is entitled . . .” Nothing in this rule preempts or replaces these existing regulations. Also, as clarified above, NMFS does not intend for any enforcement action taken pursuant to this rule to adversely affect fishermen who leased the fishing rights associated with the subject permits. NMFS intends that any such enforcement action would be taken either at the time of an application for a permit lease transaction, at the time of permit renewal, or prior to the start of a fishing year.

Comment 3: A number of commenters indicated general support for the intent of the proposed rule and for permit banks in general, but raised several relevant questions regarding how this rule would be implemented. The commenters questioned: (1) The definition of what qualified as a Federal grant for the purposes of this rule; (2) who is responsible for determining when a violation of a grant agreement has occurred and what specific enforcement action the violation would merit; and (3) whether there would be a formal appeals or arbitration process established for cases when the parties disagree as to whether a violation has occurred.

Response: In response to the first question raised by the commenters, NMFS clarifies in this final rule that the intent is for this action to apply only to Federal grants issued by NOAA for the express purpose of purchasing fishing vessels, obtaining fishing vessel permits, and/or establishing or expanding a permit bank, and this action would not apply to permits obtained through grants of a more general nature or those awarded by other Federal agencies. Regarding who is responsible for determining whether a violation of a grant agreement has occurred, Department of Commerce regulations at 15 CFR 14.61, 14.62, 24.43, and 24.44 establish that the Grants Officer may terminate grant awards, or take appropriate enforcement actions. Upon closeout of the grant award, if the operation of a permit bank program continues under the terms of a memorandum of understanding or agreement between NMFS and the grant recipient, this authority shall transition to the Regional Administrator for the remaining effective period of the subject memorandum of understanding or agreement. Regarding the determination of the specific enforcement action would be taken if a violation is determined to have occurred, NMFS intends that this would depend on the scope and severity of the violation in question. NMFS intends first to attempt to resolve any concerns with the operation of a NOAA-funded permit bank informally between the program contact representatives for the respective parties. Failing this, concerns may be raised to the level of the respective signatories of the memorandum of understanding or agreement for resolution. If resolution cannot be achieved at this level, the Grants Officer or Regional Administrator will reserve the right to take appropriate enforcement action, as authorized by 15 CFR 14.62 and 24.43, and this action. Regarding the potential for an appeals or arbitration process in the event the parties disagree as to whether a violation has occurred, the Department of Commerce regulations at 15 CFR 14.62(b) and 14.43(b) provide for the grantee to have an opportunity for a hearing, appeal, or other administrative proceeding. Nothing in this action is intended to replace, supersede, or contravene existing Department of Commerce regulations on administration of Federal grants.

Comment 4: A comment letter on behalf of the State of Maine indicated general support for the proposed rule, but also raised a concern about the potential terms of the proposed grant to the State of Maine to establish a permit bank.

Response: The details of any terms and conditions applicable to a proposed grant to the State of Maine will be developed and finalized in a separate and future action, and are not relevant to this rule.

Comment 5: A comment letter on behalf of the New England Fishery Management Council requested that the final rule make clear that all vessel permits obtained using Federal grant awards be used in a manner consistent with all fishery management plan provisions governing those permits, and that the permits should not be subject to additional constraints without Council consideration.

Response: NMFS intends for any fishing operations conducted by a vessel using access rights (e.g., DAS, ACE) associated with a Federal permit obtained using a Federal grant award to be consistent with applicable fishery management plan provisions and to fully comply with all applicable fishing regulations. However, NMFS reserves the right to establish more restrictive criteria for the operations of any permit banks established using Federal grant awards.

Comment 6: A commenter opposed the use of Federal funds to establish permit banks.

Response: While NMFS acknowledges that some stakeholders may have concerns regarding the use of Federal funds to establish permit banks, this action does not, in itself, create or authorize the use of Federal funds in this manner. This action is wholly constrained to establishing an effective enforcement mechanism such that NOAA, should it at some future time provide a Federal grant award to a state, or other party, for the purpose of obtaining one or more fishing vessels, and the associated Federal permits, retains some level of oversight and control over how the fishing rights associated with the permits are used, beyond the duration of the Federal grant award.

Classification

Pursuant to section 305(d) of the Magnuson-Stevens Act, the NMFS Assistant Administrator determined that this final rule is consistent with the Fishery Management Plans (FMPs) of the NE Region, other provisions of the Magnuson-Stevens Act, and other applicable law, and is necessary to discharge the general responsibility to carry out said FMPs.

This final rule has been determined to be not significant for purposes of Executive Order 12866.

The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration during the proposed rule stage that this action would not have a significant economic impact on a substantial number of small entities. The factual basis for the certification was published in the proposed rule and is not repeated here. No comments were received regarding this certification. As a result, a regulatory flexibility analysis was not required and none was prepared.

List of Subjects in 50 CFR part 648

Fisheries, Fishing, Reporting and recordkeeping requirements.

Dated: December 22, 2009.

Samuel D. Rauch III,

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

For the reasons set out in the preamble, 50 CFR part 648 is amended as follows:

PART 648—FISHERIES OF THE NORTHEASTERN UNITED STATES

1. The authority citation for part 648 continues to read as follows:

Authority: 16 U.S.C. 1801 et seq.

2. In § 648.4, add paragraph (n) to read as follows:

§ 648.4

Vessel permits.

(n) Federal grant awards. The Regional Administrator may suspend, cancel, fail to renew, modify, or otherwise rescind any Federal fishing vessel permit, issued pursuant to this section, including the rights thereto, held by a person, corporation, non-profit organization, or government entity if the terms and conditions of any Federal grant award used to obtain said permit, or an associated memorandum of understanding or agreement, are violated by the grant recipient.