03-18344. Magnuson-Stevens Act Provisions; Fishing Capacity Reduction Program; Pacific Coast Groundfish Fishery; California, Washington, and Oregon Fisheries for Coastal Dungeness Crab and Pink Shrimp

AGENCY:

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

ACTION:

Final notice of proposed fishing capacity reduction program.

SUMMARY:

NMFS issues this final notice about a voluntary fishing capacity reduction program in the Pacific Coast groundfish fishery. After a successful referendum, harvesters 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 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 coastal Dungeness crab and pink shrimp. Accepted bidders must also surrender their Federal groundfish permits, as well as all other Federal fishing licenses, fishery permits, area and species endorsements, and any other fishery privileges issued to vessels named in their bids (or to persons on the basis of their operation or ownership of those vessels). 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 notice also contains the groundfish program's invitation to bid and bidding document.

DATES:

The final notice is effective July 18, 2003.

ADDRESSES:

Copies of the environmental assessment and regulatory impact review are available from NMFS upon request from Michael L. Grable, Chief, Financial Services Division, National Marine Fisheries Service, 1315 East-West Highway, Silver Spring, MD 20910-3282. Comments involving the reporting burden estimates or any other aspects of the collection of information requirements should be sent both to Michael L. Grable at the above address and to the National Oceanic and Atmospheric Administration Desk Officer, Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, DC 20503. Comments sent by Internet or e-mail will not be accepted.

FOR FURTHER INFORMATION CONTACT:

Michael L. Grable, [phone].

SUPPLEMENTARY INFORMATION:

I. General

Enacted on February 20, 2003, Section 212 of Division B, Title II, of Pub. L. 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 coastal 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, authorized by 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 Pub. L. 107-206, funds the Federal Credit Reform Act cost of authorizing a $36 million reduction loan.

Section 212 supersedes some of the provisions of both the fishing capacity reduction framework regulations (50 CFR 600.1000 et seq.) and the Magnuson-Stevens Act fishing capacity reduction provisions (16 U.S.C. 1861a(b)-(e)).

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. Section 212, however, renders some of the Magnuson-Stevens Act provisions and 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 relinquishing 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. Summary of Comments

NMFS received comments from nine entities. Comments from both individuals and organizations represent the views of many parties. Most of the comments supported fishing capacity reduction in the reduction fishery, although some comments disagreed with some aspects of the proposed notice.

Comment 1: Three comments suggested that NMFS offer flat permit-relinquishment payments to groundfish reduction permit owners who own no reduction vessel.

Response: This was not specifically contemplated in the statute and therefore NMFS does not have the authority to implement such a payment scheme.

Comment 2: Three comments suggested that NMFS allow entities that own reduction vessels to be co-bidders with other entities that own groundfish reduction permits but not reduction vessels.

Response: NMFS agrees and has expanded the definition of bidder to allow co-bidder participation. A bid can include multiple parties owning or holding the different reduction components required for a bid.

Comment 3: One comment requested that NMFS change “Dungeness crab” to “ocean Dungeness crab” to ensure that Dungeness crab inside Puget Sound is excluded from this program.

Response: NMFS agrees that Puget Sound Dungeness crab should be excluded as a fee-share fishery and has added the term “coastal” to clarify the Dungeness crab eligible for this program. This term is intended to encompass California, Oregon, and Washington state's description of Dungeness crab fisheries and permit systems outside of Puget Sound.

Comment 4: Two comments requested that NMFS remove the provisions requiring relinquishment of fee-share reduction permits not registered to reduction vessels.

Response: NMFS agrees and has clarified the language to require that only fee-share permits registered to a reduction vessel be relinquished.

Comment 5: Two comments state that NMFS' request for information regarding catch history as a requirement of the bid is unnecessary because such information on how fishermen got their permits is irrelevant.

Response: NMFS agrees and has made the appropriate revisions.

Comment 6: One comment suggested clarifying that relinquishing Federal permits other than the groundfish reduction permit is restricted to Federal permits registered to the reduction vessel.

Response: NMFS agrees and has made the appropriate revision.

Comment 7: One comment suggests that bid scoring should include the average landings values of only those fee-share fisheries that match the bidder's fee-share reduction permits.

Response: NMFS agrees and has clarified that such values should correspond to the bidder's fee-share reduction permits.

Comment 8: Two comments requested that NMFS allow bidders to document alternative landings values higher than those in the official fish-ticket databases.

Response: In order to provide a fair opportunity for all bidders to document their landings, NMFS determined the best evidence of landings is the official fish-ticket databases.

Comment 9: One comment suggested that in situations involving bids with identical scores, where accepting both would exceed funding levels, NMFS should accept the bid with the lowest value first rather than the bid first received.

Response: NMFS agrees that the process for accepting bids with identical scores should be revised. However, to be consistent with the purposes of the Program, where there is not sufficient reduction funding to accept all bids, NMFS will accept the bid that removes the greatest amount of capacity without exceeding funding limits. If both bids remove the same amount of capacity, the bid received first will be accepted.

Comment 10: One comment suggested that NMFS delay notifying bidders that bids have been accepted until after a successful referendum.

Response: NMFS agrees and will notify accepted bidders after the referendum.

Comment 11: One comment suggested that NMFS clarify that the loan sub-amount calculation's dividend is derived from the bid-scoring period landing values of the accepted bidders.

Response: NMFS agrees and has changed the notice accordingly.

Comment 12: One comment suggests that NMFS establish a specific time for every accepted bidder to stop fishing, as opposed to the proposed notice and addenda provisions that each accepted bidder must stop fishing upon receipt of NMFS' request for payment instructions. The suggestion is that fishing cease 30 days after the certification of referendum results.

Response: NMFS agrees that this provision should be modified so that all accepted bidders will cease fishing at the same time. The provision has been revised so that the bidder must have stopped fishing and must have retrieved all fishing gear previously deployed from the reduction vessel 30 days after the publication of the reduction payment tender notice.

Comment 13: Two comments suggest that NMFS revise the notice and addenda language which holds accepted bidders accountable for the actions of new owners to whom accepted bidders may, after buyback, transfer reduction vessels.

Response: NMFS agrees that accepted bidders cannot be held responsible for the future actions of unrelated third parties to whom they transfer these vessels. Any violations by the new owners will be addressed under existing statutory authority.

Comment 14: One comment questioned if “inside waters” fishing count for bid scoring purposes.

Response: All landings, including in inside waters, associated with the management of federal groundfish and with state coastal fisheries for pink shrimp and Dungeness crab will be used for bid scoring purposes.

Comment 15: One commenter questioned if accepted bidders may fish a reduction vessel in “inside waters” or sell the vessel to Mexico or Alaska.

Response: A reduction vessel may not be fished anywhere. It may not be sold into any foreign registry or operation but can be sold to an Alaska resident, although it cannot fish there or anywhere else.

Comment 16: One comment asked NMFS to establish the “basic trawl permit price without a past harvest”.

Response: Congress established a bidding formula, which requires past harvest revenues.

Comment 17: One comment asked if NMFS buys back only his permit, if he could fish his reduction vessel in inside waters.

Response: This capacity reduction program compensates fishermen for relinquishing not only the reduction permits but the fishery endorsement of the reduction vessel. Therefore, the reduction vessel cannot fish anywhere. If the reduction vessel is a state registered vessel, it must be scrapped.

Comment 18: One comment asked what to do with a reduction vessel.

Response: The owner of a reduction vessel may do whatever he chooses with a reduction vessel as long as he does not fish with the reduction vessel or move it into a foreign registry or operation, except for non-Federally registered vessels which must be scrapped.

Comment 19: One comment suggested that a reduction vessel be saleable into a foreign fishery because this is most beneficial to the buyback.

Response: The authorizing statute prohibits such a sale.

Comment 20: One comment asked if a reduction vessel can be used for tendering and for the definition of “fishing”.

Response: The definition of “fishing” is contained in the Magnuson-Stevens Act and would preclude a reduction vessel from tendering.

Comment 21: One comment asked if income from NMFS fisheries research charters can be included in landings for bid scoring.

Response: Yes, but only the income from the sale of the groundfish recorded on fish tickets.

Comment 22: One comment asked what happens to fish in deployed gear at the time of tender, when fishing must cease.

Response: Any fish caught within the 30 day time period may be legally retained and sold. After that date, the gear should have been pulled up and no longer fishing.

Comment 23: One comment implies that coastal Dungeness crab and pink shrimp gear should be included in the capacity reduction program.

Response: No statutory authority exists to buy back fishing gear.

Comment 24: One comment implies that accepted bidders should be prevented from using their reduction payments to buy existing coastal Dungeness crab or pink shrimp permits and crab or shrimp gear and leasing them to vessels already in these fisheries.

Response: No statutory authority exists to make this change.

Comment 25: One comment implies that the existence of latent permits in coastal Dungeness crab and pink shrimp fisheries exacerbates problems described in comments (23) and (24).

Response: Latent permits in these fisheries is an issue that should be addressed by state fisheries managers.

Comment 26: One comment implies that accepted bidders should, themselves, be prevented from ever fishing again.

Response: No statutory authority exists to make this change.

Comment 27: One comment suggested that all reduction vessels should be scrapped.

Response: The authorizing statute allows for retention of the reduction vessel as long as the fishery endorsement is cancelled. This affords more capacity removal from the targeted fisheries at less cost.

Comment 28: One comment stated that neither the notice nor its addenda indicate whether a reduction vessel which has a multi-year NMFS trawl-survey charter can continue with the charter after the buyback.

Response: The vessel's fishery endorsement will have been withdrawn and therefore the vessel can no longer fish. However, NMFS will work internally to ensure that any fishermen who is bought out will not be subject to a Governmental action for breach of contract based on inability to fish due to the buyback.

Comment 29: One comment stated that NMFS lacks legal authority regarding the coastal Dungeness crab and pink shrimp fisheries noting that they are managed by the respective states.

Response: NMFS acknowledges that these are state-managed fisheries and will work with the states to implement this voluntary program as directed by the authorizing legislation to revoke the fee-share fishery reduction permits. Nevertheless, this does not affect fee payment and collection.

Comment 30: One comment questioned NMFS' legal authority regarding processors of trawl groundfish noting that there are no Federal requirements for permits or reporting groundfish landings.

Response: The Fishery Management Plan for Pacific Coast Groundfish incorporates by reference state requirements to record landings on state fish tickets.

Comment 31: One comment stated that Congress intended for NMFS to follow existing practices for fee collection.

Response: The authorizing legislation provides an option for the U.S. 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 the fees in accordance with the framework regulations.

Comment 32: One comment states that the volume and size of fish buyers dictates special circumstances to avoid an administrative nightmare for NMFS.

Response: NMFS believes that the fee collection system currently in place should be adequate.

Comment 33: One comment strongly suggests that NMFS enter into fee collection arrangements with the States.

Response: Because of specific statutory time constraints, NMFS must defer this matter's resolution until after the buyback, at which time we will explore optional state fee collection.

Comment 34: One comment states that the program's Environmental Assessment and Regulatory Impact Review (EA/RIR) does not estimate how many small businesses may be required to participate in the fee collection process.

Response: Section 3.6 or the EA/RIR discusses the processing sector by reviewing data on the 1,780 purchasers of fish from West coast harvesters during 2000. Fish buyers are categorized according to “large” and “small” buyers based on the amount of fish purchased. However, available analyses on the diversity and size of the processing sector as well as state participation in the fee collection process precludes NMFS from developing definitive estimates of processor involvement. According to SBA (See Section 6.6), a “large” processor is a processor with more than 500 employees. NMFS does not have complete data on processing employment by processing site or by company. (Some companies control several sites). However, based on available descriptions of companies and ownership, NMFS believes that almost all of the processors on the West Coast would be considered “small” under the SBA definition. Sections 3.6 and 6.6 of the EA/RIR will be revised accordingly.

Comment 35: One comment questioned the analysis undertaken in Section 4.2 of the EA/RIR to show the remaining fishermen the benefit of the program will outweigh the program costs passed on to them.

Response: The program is statutorily mandated but participation is voluntary. It is difficult to quantify the effects of a capacity reduction program before it occurs due to many unknown variables. However, the success of a fishing capacity reduction program depends upon certain assumptions such as the number of fish after a reduction remaining constant, preventing new capacity from replacing retired capacity, and fish prices remaining constant. If these assumptions are true then revenue for the remaining participants after fee payment would likely increase. A majority of those voting in the referendum would need to support it in order for the industry fee system to be approved.

Comment 36: One comment asserted that the analysis in Section 4.8 of the EA/RIR repeats an untrue assumption that removing permits from the coastal Dungeness crab and pink shrimp fisheries will benefit fishermen by increasing access to a greater portion of management quotas and trip limits.

Response: The appropriate sections of the EA/RIR will be clarified to reflect that trip limits and quotas are not used in the management of coastal Dungeness Crab and Pink Shrimp. However, NMFS maintains that in general terms, these fisheries would benefit because fewer fishermen would remain fishing for the same amount of fish. In addition, if the Buyback Program provides conservation benefits to the groundfish fish stocks, current groundfish bycatch restrictions on the non-groundfish fisheries, particularly the Pink Shrimp fisheries may be relaxed. However, the commenter raises valid issues in noting that benefits to non-groundfish fee share fisheries may be limited by the extent that latent capacity is activated, purchased capacity is replace through the issuance of new state permits, or effort is increased as the result of buyback program. The Commenter estimates that at least 100 of the the Oregon Dungeness Crab fishery permits are latent permits. As described in the EA/RIR, the Oregon Pink shrimp fishery has a requirement that if the number of active permits falls below 150, a lottery is to be held to return the number of issued permits to 150. Currently, there are 186 Oregon permits issued. Therefore, depending on the state fishery, the benefits will be hard to assess until it is known what permits are to be purchased and how the States are to respond to the statutory language that states: “It is the sense of Congress that the States of Washington, Oregon, and California should revoke all relinquishment permits in each of the fee-share fisheries immediately after the reduction payment, and otherwise to implement appropriate State fisheries management and conservation provisions in each of the fee-share fisheries that establishes a program that meets the requirements of 16 U.S.C. 141861a(b)(1)(B) as if it were applicable to fee-share fisheries.”

IV. Summary of Revisions

The following sections of this final notice revise the proposed notice.

(1) The term co-bidder has been added to include third parties who own and/or hold reduction components and will participate in the bidding with the qualifying bidder.

(2) Bid-scoring includes the average landings values of only those fee-share fisheries that match the bidder's fee-share reduction permits included in the bid.

(3) For identical bid scores where there is not sufficient reduction funding to accept both, NMFS will accept the bid that removes the greatest amount of capacity without exceeding funding limits or if both bids remove identical amounts of capacity, the first received.

(4) Notification of accepted bidders will occur after the referendum.

(5) Accepted bidders must have stopped fishing and must have retrieved all fishing gear previously deployed from the reduction vessel 30 days after NMFS publishes the reduction payment tender notice in the Federal Register.

V. 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 permit 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 closing date. NMFS will reject any bid that arrives after the bid closing date; 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 price (also referenced as Reduction Payment),

(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 coastal Dungeness crab or pink shrimp registered to or used on the reduction vessel (fee-share reduction permits).

Parties other than the qualifying groundfish permit owner who hold or own the other different components required for a bid may be co-bidders. Between them, bidders or co-bidders must own or hold all required bid components. The groundfish reduction permit must be registered for use on the reduction vessel. The bidder must also include in the bid all Federal fishery licenses, fishery permits, area and species endorsements, and any other fishing privileges issued to a reduction vessel or to the bidder co-bidder on the basis of its operation or ownership of 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 coastal Dungeness crab. Additionally, each person submitting a bid must offer to relinquish the reduction vessel's legal authority 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 history.

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, coastal Dungeness crab, and pink shrimp landed by the bidder's reduction vessel that corresponds to the bidder's fee-share reduction permits. NMFS will average the three highest total annual revenues from groundfish, coastal 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 and there is not sufficient reduction funding to accept both, NMFS will accept the bid that removes the greatest amount of capacity, or in the event more that one such bid removes the same amount of capacity, the bid it received first.

NMFS will accept or reject each bid but will notify bidders accordingly only after a successful referendum occurs. NMFS' acceptance of a bid offer will form a fully binding reduction contract between the bidder (and any co-bidders) 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 a successful 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, coastal 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 the total ex-vessel values of the accepted bidders landings, for the four-year period from 1998 through 2001, for the reduction fishery (i.e., groundfish trawl fishery) and the fee-share fisheries (the three coastal 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. 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 coastal 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 coastal 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 successful, NMFS will mail to each bidder a bid acceptance or rejection notice.

If the referendum is unsuccessful, the fee will not be approved; and NMFS will mail a notice to each bidder that neither the 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. Within thirty days after the publication in the Federal Register of the reduction payment tender notice (which notifies the bidder that NMFS intends to pay the bidder and needs payment instructions), the bidder must have stopped fishing and must retrieve all fishing gear previously deployed from the reduction vessel. 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 federal 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.

These reduction vessel revocations and restrictions run with the vessels' titles and apply to all subsequent owners.

The bidder must immediately scrap any 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 reduction contract 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.

VI. Program Process

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

STEP	ACTION
One	NMFS publishes a final notice in the Federal Register, together with the final draft of the invitation to bid and bidding document.
Two	NMFS mails each permit owner of a groundfish trawl permit (other than those issued to whiting catcher-processors) a notice that NMFS will subsequently mail him or her a bidding package.
Three	NMFS 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.
Four	NMFS mails a notice to persons holding any fee-share fishery permit(other than those to whom NMFS sent the mailing in step three) 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.
Five	Bidders submit bids.
Six	NMFS receives bids until the bid closing date.
Seven	NMFS scores and tallies the bids.
Eight	NMFS mails to each person eligible to vote in the referendum a ballot(s) and voting instructions.
Nine	The referendum occurs.
Ten	NMFS receives votes until the vote receipt deadline and afterwards tallies the votes.
Eleven (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 bidder a notice that the reduction bids are without force and/or effect.
Eleven (B)	If the referendum is successful: (a) NMFS mails to each bidder a notice that the referendum is successful, the bid is either accepted or rejected, and reminds accepted bidders 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 written 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
Twelve	NMFS disburses reduction payments upon its receipt of payment instructions and certification of compliance.
Thirteen	NMFS undertakes a separate rulemaking about fee payment and collection.
Fourteen	NMFS establishes fee amounts.
Fifteen	(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.

VII. 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.

VIII. 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 and the Magnuson-Stevens Act.

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.

IX. Invitation To Bid and Bidding Document

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

Classification

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 an environmental assessment for this action. The assessment discusses the program's impact on the natural and human environment. NMFS will send the 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.

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

Dated: July 15, 2003.

Rebecca Lent,

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