00-6714. Fisheries of the Caribbean, Gulf of Mexico, and South Atlantic; Reef Fish Fishery of the Gulf of Mexico; Amendment 17

AGENCY:

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

ACTION:

Proposed rule; request for comments.

SUMMARY:

NMFS issues this proposed rule to implement Amendment 17 to the Fishery Management Plan for the Reef Fish Resources of the Gulf of Mexico (FMP). This rule proposes to extend the current commercial reef fish vessel permit moratorium, which expires on December 31, 2000, for 5 years to December 31, 2005. The purpose of the moratorium is to provide a stable environment in the fishery necessary for evaluation and development of a more comprehensive controlled access system for the entire commercial reef fish fishery.

DATES:

Comments must be received no later than 5:00 p.m., eastern standard time, on May 1, 2000, at the appropriate address or fax number (see ADDRESSES).

ADDRESSES:

Written comments must be mailed to the Southeast Regional Office, NMFS, 9721 Executive Center Drive N., St. Petersburg, FL 33702; they may also be sent via facsimile (fax) to 727-570-5583, but they may not be sent via e-mail or the Internet.

Requests for copies of Amendment 17, which includes an environmental assessment and a regulatory impact review, should be sent to the Gulf of Mexico Fishery Management Council, 3018 U.S. Highway 301 North, Suite 1000, Tampa, Florida 33619-2266; phone: [phone]; fax: [phone]; e-mail: [e-mail].

FOR FURTHER INFORMATION CONTACT:

Michael Barnette, 727-570-5305; fax: [phone]; e-mail: [e-mail].

SUPPLEMENTARY INFORMATION:

The reef fish fishery is managed under the FMP as prepared by the Gulf of Mexico Fishery Management Council (Council) and approved and implemented by NMFS under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) by regulations at 50 CFR part 622.

This proposed rule would implement FMP Amendment 17 and extend the moratorium on the issuance of new commercial reef fish vessel permits that was initiated by Amendment 4 in 1992. Amendment 4 was intended to last for 3 years but was extended twice. The second extension in 1995 was for 5 years ending on December 31, 2000. The permit moratorium was deemed necessary to moderate short-term future increases in fishing effort and to stabilize fishing mortality while the Council was considering a more comprehensive effort limitation program. During the moratorium, the Council developed an individual transferable quota system for red snapper. However, before it was implemented, Congress prohibited individual fishing quotas (IFQs) under sections 303(d) and 407 of the Magnuson-Stevens Act. The current Congressional prohibition of IFQs will lapse on October 1, 2000.

The Council intends to evaluate a broad range of controlled access systems, including IFQs, for the commercial reef fish fishery. Development and implementation of a comprehensive controlled access system are expected to extend past the period of the current moratorium. Without a moratorium, fishing effort in the resulting open access reef fish fishery is likely to increase and complicate allocation of fishing privileges, creating an unstable fishery environment.

Additional background and rationale for the measures discussed above are contained in Amendment 17, the availability of which was announced in the Federal Register on December 17, 1999 (64 FR 70678). Written comments on Amendment 17 were solicited and must have been received by February 15, 2000, to be considered in the approval/disapproval decision on Amendment 17. All comments received on Amendment 17 or on this proposed rule during their respective comment periods will be addressed in the preamble to the final rule.

Classification

At this time, NMFS has not determined that the amendment that this rule would implement is consistent with the national standards of the Magnuson-Stevens Act and other applicable laws. NMFS, in making that determination, will take into account the data, views, and comments received during the comment period on Amendment 17.

This proposed rule has been determined to be not significant for purposes of E.O. 12866.

The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration that this proposed rule, if adopted, would not have a significant economic impact on a substantial number of small entities as follows:

The proposed rule contains a single provision to extend the commercial reef fish permit moratorium for 5 years, from its current expiration date of December 31, 2000, to December 31, 2005, unless replaced sooner by a comprehensive controlled access system. The moratorium on new permits was first instituted in May 1992 and was extended on two previous occasions by FMP Amendments 9 and 11. The current expiration date of December 31, 2000, was set by FMP Amendment 11 in January 1996 with the stated purpose of allowing time for the Gulf of Mexico Fishery Management Council (Council) to consider limited access for the reef fish fishery. However, several intervening events since January 1996, including a Congressional moratorium on new individual transferable quota management systems in effect until October 2000, have hindered the Council's taking its intended action to develop a limited access system for this fishery. Comprehensive controlled access systems are difficult to develop and implement; there is an insufficient amount of time to implement such a system by December 31, 2000. Hence, the Council is proposing the current action to provide additional time to develop a new limited access system and to ensure that the current management system will not revert to open access before the new system is developed, approved, and implemented.

The entities that could be affected by Amendment 17 are those firms holding commercial reef fish harvest permits. There are currently about 1,204 such permit holders and they all meet the Small Business Administration definition of small business entities.

The status quo (taking no action) means that the permit moratorium would expire, the fishery would revert to open access, and the number of permits issued to fishermen would likely increase. Conversely, the proposed action to extend the existing moratorium means that nothing would change and the permit moratorium, would continue. Under the status quo alternative, then there would be a number of economic effect changes related to the fishery's reversion to open access. For example, given that there were 2,200 permits issued to fishermen at the start of the moratorium in 1992 and that there are now only about 1,204 permits. it is likely that additional vessel owners would obtain permits. While some of them would probably obtain a permit with the intention only of establishing harvesting rights in the reef fish fishery and would not actively participate in the fishery, other new entrants would ostensibly be active. Some of the active new entrants might land a minimum quantity of reef fish with the expectation that having a permit in combination with at least some level of landings history would enhance their claim to future fishery access rights.

Another reason to expect additional entrants into the fishery under open access conditions is that the moratorium has created an economic situation in which about 120 permit transfers occur each year. A market has developed for reef fish permits, and recent single permit prices have been in the range of $8,000 to $10,000. This market probably exceeds the expected net present value of profits (net revenues) derived from the small catches made by marginal participants. The market value is also indicative of the value that some entrants have put on participation in the fishery. With the moratorium lifted, new entry would be possible by paying only the administrative permit fee, currently $50 for a new permit or $20 for a reef fish endorsement to an existing permit for another species. If some fishermen are willing to buy a permit for several thousand dollars, others must be ready to pay the $20 or $50 for an endorsement or for a new permit.

Further, at the present time, the fisherman giving up a permit by transfer must exit the fishery, and current exit behavior is probably influenced by the value of a permit. Logbook data indicate that some participants do not land a large amount of reef fish on an annual basis and these are the participants who are most likely to sell their existing permit to a new entrant under the continuing condition of a moratorium on new permits. the reasoning is that the expected net present value of profits (net revenues) derived from small catches would be exceeded by the current market value of the reef fish permit. This exit behavior probably accounts for the bulk of the annual transfer of about 120 permits.

In summary, maintaining the status quo and thereby allowing the current permit moratorium to expire could result in an increase in the number of permits; an increase in the catch of those reef fish species not currently subject to a commercial catch quota; an unknown, but likely small, decrease in exvessel prices; and a loss of the estimated $8,000 to $10,000 market value of a permit. The result would be a negative economic impact on all current permit holders, including those who might otherwise be expected to sell their permits and exit the fishery under the current system.

At the same time, there would also be positive impacts for at least some new entrants because they could obtain a permit for $20 to $50 instead of paying $8,000 to $10,000 for an existing permit. Some new entrants probably would be able to participate in the fishery at a significant and profitable level. In addition to these rather straightforward impacts on current participants and new entrants, the increase in the number of permitted fishermen could create derby fisheries for species subject to commercial quotas with the attendant loss in economic benefits typically associated with such fisheries.

By allowing the fishery to revert to open access, the Council would once again have to undertake the preliminary steps necessary to establish a comprehensive controlled access system. It is likely that these steps would have negative economic impacts on at least some participants who may have to reestablish a fishing history or take other steps to remain in the new system.

The overall conclusion is that if the status quo was chosen and the permit moratorium allowed to expire on December 31, 2000, there would be negative impacts on existing participants in the Gulf of Mexico reef fish fishery. While there would likely be some positive economic impacts for a portion of the new entrants, the negative impacts would be expected to exceed the positive impacts. Taking action to extend the moratorium means that the expected negative economic outcome of the status quo (letting the permit moratorium expire) will not occur. In other words, the proposed action of extending the moratorium for an additional 5 years will forestall economic changes and impacts associated with the status quo scenario. The effect of taking action in this case is to maintain the present permits system; hence, there should be no economic impacts. It follows, therefore, that there will not be a significant economic impact on a substantial number of small business entities.

As a result, a regulatory flexibility analysis was not prepared.

List of Subjects in 50 CFR Part 622

• Fisheries
• Fishing
• Puerto Rico
• Reporting and recordkeeping requirements
• Virgin Islands

Dated: March 13, 2000.

Andrew A. Rosenberg,

Deputy Assistant Administrator for Fisheries, National Marine Fisheries Service.

For the reasons set out in the preamble, 50 CFR part 622 is proposed to be amended as follows:

PART 622—FISHERIES OF THE CARIBBEAN, GULF, AND SOUTH ATLANTIC

1. The authority citation for part 622 continues to read as follows:

Authority: 16 U.S.C. 1801 et seq. 2. In § 622.4, paragraph (m) introductory text is revised to read as follows:

§ 622.4

Permits and fees.

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(m) Moratorium on commercial vessel permits for Gulf reef fish. The provisions of this paragraph (m) are applicable through December 31, 2005.

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