[Federal Register Volume 61, Number 169 (Thursday, August 29, 1996)]
[Notices]
[Pages 45408-45412]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-21999]
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DEPARTMENT OF COMMERCE
[Docket No. 960412111-6229-03; I.D. 080596I]
RIN 0648-ZA20
West Coast Salmon Fisheries; Northwest Emergency Assistance Plan
(NEAP)--License Buy Out Program (LBOP)
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA), Commerce.
ACTION: Notice of proposed program; request for comments.
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SUMMARY: This notice requests public comment on new bidding options for
the 1996 Washington State Salmon Vessel License Buy Out Program (LBOP)
to be administered by the Washington Department of Fish and Wildlife
(WDFW) through a cooperative agreement with NMFS. The objectives of the
program are to provide financial assistance to commercial salmon
fishermen adversely impacted by the salmon fishery disaster, and to aid
the long-term viability of the fishery resource. This notice also
responds to comments submitted on the notice of proposed 1996 LBOP,
which was published in the Federal Register on April 23, 1996 (61 FR
17879). In that notice, NMFS announced certain administrative changes
to the NEAP and requested comments on proposed NEAP revisions for the
Habitat Restoration Program and the Data Collection Jobs Program, as
well as the LBOP. On August 1, 1996, NMFS published a Federal Register
notice (61 FR 40197) implementing the final program for the Habitat
Restoration Jobs Program and Data Collection Jobs Program, and also
announced that final decisions on the administration of the 1996 LBOP
will be deferred until the public is provided with notice and an
opportunity to comment on new bidding options developed as a result of
comments received on the initial notice.
DATES: Written comments must be received on or before September 27,
1996.
ADDRESSES: Comments should be sent to Stephen P. Freese, Northwest
Emergency Assistance Plan, Trade and Industry Services Division,
Northwest Regional Office, National Marine Fisheries Service, BIN
C15700, 7600 Sand Point Way NE, Seattle, WA 98115.
FOR FURTHER INFORMATION CONTACT: Stephen Freese, (206) 526-6113.
SUPPLEMENTARY INFORMATION: On August 2, 1995, the Secretary of Commerce
(Secretary) declared that a fishery resource disaster continued in 1995
for the salmon fisheries of the Pacific States of California (north of
San Francisco), Oregon, and Washington, excluding Puget Sound. Under
the authority of the Interjurisdictional Fisheries Act (IFA) of 1986
(16 U.S.C. 4107(d)), as amended, an additional $12.7 million in Federal
financial assistance was made available for affected salmon fishermen.
In the April 23, 1996, Federal Register notice (61 FR 17879), NMFS
announced its decision to continue the basic structure of the Habitat
Restoration Jobs Program and the Data Collection Jobs Program, as first
established on October 11, 1994 (59 FR 51419), with subsequent
amendments published on January 31, 1995 (60 FR 3908), and June 22,
1995 (60 FR 32507). NMFS decided to modify certain limitations, terms,
and conditions of the NEAP programs to enable more fishermen to benefit
from the assistance available from the jobs programs and to further
reduce fishing capacity under the LBOP. The public was asked in the
notice to comment on these new terms, limitations, and conditions prior
to final implementation.
With respect to the 1996 LBOP, four options were presented for
public comment, as follows:
Option 1--Eligible fishermen submit new bids or maintain the bids
that they submitted to the 1995 LBOP. Starting with the lowest offers,
licenses are accepted and retired by WDFW until available funding is
exhausted.
Option 2--Starting with the lowest unsuccessful 1995 LBOP offer,
WDFW would purchase licenses until available funding is exhausted.
Option 3--Unsuccessful bidders in the 1995 LBOP are offered set
fixed prices for each license: Salmon troll and delivery--$24,894,
Salmon gill net--$38,000, and Salmon charter--$21,300. Remaining funds
would be applied to new applications starting with the lowest offer.
Option 4--Applicants submit bids and uninsured loss estimates.
Starting with the lowest ratio of bid to uninsured loss, WDFW would
purchase licenses until available funding is exhausted.
In response to the April 23, 1996, notice of proposed program, NMFS
received 27 comment letters from 10 fishing associations, 14 fishermen,
1 tribe, and 2 government entities. Most of
[[Page 45409]]
these comments concerned the LBOP. The comments specifically relating
to the NEAP Habitat Restoration Program and the Data Collection Jobs
Program were considered and addressed in the Federal Register notice
published on August 1, 1996. However, as a result of significant
intervening factors between the time of publication and proposed
implementation, NMFS and the State of Washington decided to defer the
final decision on the 1996 LBOP. These intervening factors included
consultations with Washington State officials, and comments on the
initial notice indicating a lack of public consensus on any proposed
bidding option. The Governor of Washington, citing this lack of
consensus, also supported a delay of the program for consideration of
new options. These new bidding options were developed in response to
these intervening factors and are presented in this notice for public
comment before a final decision is made. The comments and NMFS response
to the initial notice (61 FR 17879) are presented below for purposes of
addressing issues that were raised by commenters concerning the 1995
program and maintaining participation by the public in the development
of the new options.
Comments and Responses
Because many comments referred to the 1995 LBOP, it is helpful to
know the outcome of this program. Under the 1995 LBOP, 459 of the 1378
possible licenses were submitted and 296 licenses were ultimately
purchased. The maximum amount paid for a gill net license under this
program was $38,000; for a troll license, $24,984; and for a
charterboat license, $21,300. The average compensation for the 83 gill
net licenses purchased was $21,998; for the 190 troll licenses
purchased, $9,136; and for the 23 charterboat licenses purchased,
$13,896. There are potentially 163 repeat participants and 919 new
participants for the 1996 LBOP.
Comment 1: Several commenters wanted to give preference to
fishermen who participated in the 1995 LBOP, because the commenters
felt that these unsuccessful bidders took the first risk and
demonstrated the sincerest intentions of giving up their licenses. The
commenters also felt that fishermen who chose not to participate in the
1995 LBOP clearly understood that they would have no chance to receive
any benefit from the program. Therefore, the commenters argued that
these nonparticipants would be no worse off under Option 2. In
contrast, other members of the public commented that preference should
not be given to unsuccessful bidders in the 1995 program because NMFS
and WDFW never conditioned participation in any subsequent buy out
program on participation in the initial program, and such an exclusion
would unduly penalize a license holder who did not, for whatever
reason, submit an offer under the 1995 program.
Response 1: Participation in the 1995 LBOP was voluntary and
participating fishermen were given an opportunity to withdraw their
offers and retain their licenses. Therefore, participation in the 1995
LBOP does not necessarily reflect ``risk'' or any greater ``sincerity''
to give up a license, particularly as many fishermen offered their
licenses at the maximum price possible. NMFS agrees that neither the
1995 LBOP notice nor any other document ever stated that persons who
did not participate in the 1995 LBOP would be excluded from future
programs.
Comment 2: Many commenters addressed how the different bidding
options would affect fishermen who suffered various levels of uninsured
loss. Some stated that Option 1 favored those with low uninsured
losses, while others believed that Option 4 favored the highly
productive fishing operations that have the largest uninsured losses.
Finally, compared with the other options, some said that Option 2
tended to give preference to those fishermen who had neither low nor
high uninsured losses.
Response 2: The purpose of these options was not to target any
specific sector of the industry, but to present methods by which the
agency and WDFW proposed to achieve the NEAP objectives of providing
financial assistance to commercial fishermen adversely impacted by the
salmon fishery disaster, and to aid the long-term viability of the
fishery resource. NMFS and the State of Washington, after review of the
comments, will choose the option that most effectively achieves the
NEAP objectives.
Comment 3: Several commenters stated that the 1995 LBOP forced
fishermen to accept a fraction of their uninsured loss.
Response 3: NMFS stresses again that the LBOP is a voluntary
program, not an entitlement program. Fishermen are asked to put a
monetary value on their own licenses. Fishermen who do not feel the
program provides enough compensation are not compelled to participate.
Comment 4: Several commenters commented that Option 2 was the most
cost-effective option.
Response 4: Of the options presented, Option 2 does appear to have
the least administrative costs, since it relies on existing bids.
However, the administrative costs associated with the new options, in
relation to the benefits, do not differ significantly. While NMFS and
the State of Washington must obviously consider the impact of
administrative costs on the program, NMFS will choose the option that
best meets the program's objectives.
Comment 5: Several commenters said that the proposed program was
not like the NMFS Fishing Capacity Reduction Demonstration Program for
Northeast groundfish vessels (FCRDP), while another commenter
complained that the procedure proposed in Option 4 negates the
competitive process and unnecessarily complicates the program.
Response 5: The reference in the proposed program notice to the
FCRDP was to suggest that Option 4 adjusts bids via a vessel
performance procedure in a way that is similar to the FCRDP bidding
process. NMFS does not believe that the procedure complicates the
program, because it relies on the same information that would have to
be submitted for the other options. Furthermore, NMFS received no
negative comments from the FCRDP participants that indicated any
miscomprehension of the bidding system.
Comment 6: Several fishermen commented that the new bidders would
have an advantage because information has been published on the 1995
individual bids and associated losses.
Response 6: The names of the unsuccessful troll fishermen have
been released but not with their associated losses and bids. Such a
release of the names is permissible under State law. Any information
released on past bids and uninsured losses is historical information
and would not give any new or previous bidder an advantage under a new
competition. Previous bidders may change their bid strategies because
of changes in their business environment, in response to revised
bidding rules, or because of competition from new bidders.
Comment 7: One fisherman argued that Option 2 should be adopted,
because the additional funds were meant to continue the same programs,
which should, in effect, ``pick up where they left off.'' Another
commented that the notice of proposed program referred to a continued
disaster. Therefore, they argued, it would be prejudicial to former,
unsuccessful, applicants to deny them the opportunity to ``continue''
to accept or reject their original bids. On the other hand, another
fisherman commented that the WDFW and NOAA documents show that the 1996
LBOP is
[[Page 45410]]
a separate and distinct program from the 1995 LBOP.
Response 7: The Secretary established the NEAP as an overarching
financial assistance plan to assist the Pacific Northwest in coping
with the fisheries disasters that occurred before and up until 1995.
Under the plan, NMFS created the individual NEAP grant programs, such
as the Habitat Restoration Jobs Program, the Data Collection Jobs
Program, and the LBOP. These programs each have unique award terms,
limitations, and conditions. The new funding provided for the programs
described in the proposed notice does not obligate NMFS to continue the
programs with the same program parameters; NMFS has the discretion to
create new programs with the same or different terms, limitations, and
conditions. Based on the comments and consultations with State of
Washington officials, NMFS has determined that a new LBOP with new
parameters should be considered.
Comment 8: Several commenters stated that fishermen should be
allowed to sell more than one license.
Response 8: The initial proposed options and the options being
proposed below do not restrict the number of licenses that may be sold
by one applicant. However, NMFS is specifically requesting comment on
this issue as part of the new options presented below in this notice.
Comment 9: One respondent requested that fleet reduction targets
be determined and that reentry into the fishery be precluded until each
fleet meets its reduction target.
Response 9: Funds were allocated between the industry sectors (see
Response 15) consistent with recommendations from the NMFS Proposed
Recovery Plan for Snake River Salmon, which calls for reduction of the
Oregon and Washington troll fleet by 50 percent and elimination of all
gill net fishing on the mainstem of the Columbia River. In addition,
the new Option 2 proposed below includes restrictions on reentry into
the fleet.
Comment 10: One commenter stated that a fisherman who sells a
permit under the 1996 LBOP should be ineligible to purchase another
permit.
Response 10: The new Option 2, which is described below, addresses
this comment by prohibiting a person who sells a license in the 1996
program from purchasing a commercial license for 10 years, beginning
January 1, 1997.
Comment 11: Many commenters voiced concerns about timing and
communication with the industry. Some thought additional meetings
between Federal and State officials and the industry would be useful,
while others supported a delay in the program to aid communication with
the industry and to improve the design of the program.
Response 11: NMFS and the State of Washington are postponing final
decisions on the 1996 LBOP in order to receive comments on the new
options presented below. This delay should provide a greater
opportunity for public participation through the established Federal
and Washington State public comment processes.
Comment 12: Several commenters complained that not all affected
parties had an equal opportunity to meet with State and Federal
officials.
Response 12: The Administrative Procedure Act does not prohibit
contact with the public during the informal rulemaking process as long
as the content of the meetings, and any supplementary information
provided at the meetings, are made part of the public record. NMFS
recognizes the benefit of public participation in the decision making
process, and therefore, representatives of NOAA, NMFS, and the Governor
of Washington met with various sectors of the affected public during
the option development stage and comment period. NMFS is willing to
meet with anyone who is interested in discussing the program, time and
resources permitting.
Comment 13: One commenter alleged that WDFW officials provided
misinformation about the limits to bidders, causing some to ``sell
out'' at too low a price and others not to bid. The commenter also
suggested that the application package should state explicitly the
importance of choosing a bid amount since high bids may make the
application less competitive.
Response 13: NMFS has forwarded these comments to WDFW.
Comment 14: Some commenters opposed any potential application to
the 1996 LBOP of the $25,000/$50,000 maximum income limitation used in
the Habitat Restoration Jobs Program and Data Collection Jobs Program.
Response 14: The $25,000/$50,000 maximum income limitation was not
proposed and is not being considered for this program.
Comment 15: One commenter suggested that because gill net vessels
have fewer options compared to most troll and charter vessels,
compensation for gill net licenses should be treated differently than
for other commercial permits.
Response 15: The 1996 LBOP allocates $2.3 million for the purchase
of salmon troll and delivery licenses, $2.3 million for the purchase of
Columbia River gill net licenses, and $0.4 million for salmon charter
licenses. These allocations reflect an appreciation for the different
circumstances facing the major industry sectors. However, further
specialization of the program to accommodate each industry sector would
be too administratively burdensome and would undermine the goal of
equitable and efficient distribution of the disaster funds.
Comment 16: One fisherman who moved his operation to Alaska
because of the Boldt Decision requested that the income from Alaska be
used to determine uninsured loss. He further requested inclusion of
income from years before 1988.
Response 16: The Secretary's disaster declaration limits
assistance to the salmon fisheries of California, Oregon, and
Washington, excluding Puget Sound, and NMFS has defined the disaster
period as extending only to the years 1991 through 1995.
Comment 17: One tribal organization made three related comments.
First, buy out programs for non-tribal fishermen should be continued.
Second, each tribe should receive its own allocation of NEAP funds.
Third, NEAP should include programs that help tribes develop new non-
salmon fisheries.
Response 17: As currently structured, the proposed 1996 LBOP
allows participation by both tribal and non-tribal fishermen. Available
funding is insufficient to provide individual allocations and programs
for each particular user group.
Proposed Revisions to the 1996 LBOP
Based on above comments and discussions with Washington State
officials concerning the four initial options proposed, NMFS and the
State of Washington agreed to work together in developing new options.
These options share similar characteristics with Options 1 and 4
presented in the proposed notice of April 23, 1996, but with certain
important differences. One difference is that the calculation of
uninsured loss is no longer necessary under the amended IFA. However,
NMFS will retain the concept and require fishermen to calculate their
``salmon disaster impact'' (SDI), which is a value analogous to the
calculation of uninsured loss under the initial buy out program. A
fisherman's SDI is equal to 2.5 times the difference between the
highest gross salmon fishery income derived from fishing during any
calendar year 1986 through 1991 (base year), less the sum of the least
amount of salmon fishery income derived from commercial salmon fishing
during any calendar year from 1991 through 1995 (comparison year).
Fishermen can use
[[Page 45411]]
the same information they supplied to the 1995 LBOP to determine their
SDI. The use of SDI in place of an uninsured loss determination puts
similar restrictions on new participants as were placed on the original
participants. Therefore, no large penalty or reward accrues to those
who participated in the initial program.
The options in this notice also differ from those published on
April 23, 1996, in that bids would also be constrained by an absolute
maximum offer limit. Under Option 1, fishermen may offer their licenses
for any amount up to $40,000 or their SDI, whichever is less.
Similarly, under Option 2, fishermen may offer their licenses for any
amount up to $50,000 or their SDI, whichever is less. The higher
maximum offer limit under Option 2 ($50,000) reflects the additional
requirement that successful participants cannot purchase or operate
another commercial salmon license for 10 years beginning January 1,
1997, unless the license was owned or operated by that person in 1995.
If the individual owned a license in 1995, this is indicative of the
fact that the person owned multiple licenses and did not purchase a new
license in 1996 in order to speculate on any future government buy out
program. Therefore, any license owned in 1995 and retained after
participation in the 1996 LBOP is excluded from the ten-year
prohibition.
These maximum offer limits are designed to increase the number of
potential successful bidders and ensure awards consistent with amounts
paid under the initial program. These limits are reasonable given the
limited funds available, the amounts paid for licenses under the
initial program, and the number of fishermen affected by the disaster
and still eligible for the program. Comments are specifically requested
on these maximum offer amounts.
Eligibility Criteria
To be eligible under either option, the person making the offer
must fulfill the following requirements:
1. The person making the offer must have possessed or was eligible
to possess one of the following Washington State salmon fishery
licenses in 1994 and possessed the same license in 1995:
a. Salmon troll license;
b. Salmon delivery license;
c. Salmon gill net--Grays Harbor-Columbia River;
d. Salmon gill net--Willapa Bay-Columbia River; or
e. Salmon charter.
2. A participant must demonstrate an SDI greater than $0.
3. Applicants must not have earned more than $2,000,000 in net
revenues annually from commercial fishing for the period between 1991
and 1994.
Options
Option 1--License holders may offer their licenses for any amount
up to $40,000 or their SDI, whichever is less. Licenses will be
purchased starting with the lowest bid. In the event of a tie,
preference will be given to the fisherman with the highest SDI.
Option 2--License holders may offer their licenses for any amount
up to $50,000 or their SDI, whichever is less. Bids will be ranked
according to the offer ratio. The offer ratio is the division of the
offer amount by the SDI. Licenses will be ranked and purchased starting
with those bids that have the lowest offer ratios. In the event of a
tie, where offer ratios are identical, the lowest offer will be given
preference. Successful participants cannot purchase or operate another
commercial salmon license for 10 years beginning January 1, 1997,
unless the license was owned or operated by that person in 1995.
Option 1 Example
Step 1: Determine SDI
Step 1A: Base Year Selection:
Select the highest year of gross income during the base period 1986
though 1991. For Fisherman A, this is $38,000. For Fisherman B, this is
$8,000.
Step 1B: Comparison Year Selection:
Select the lowest year of gross income during the comparison year
of 1991 through 1995. For Fisherman A, this is $3,000. For Fisherman B,
this is $0.
Step 1C: Subtraction
Subtract the selected comparison year gross income from the
selected base year income. For Fisherman A, this is $38,000 minus
$3,000, or $35,000. For Fisherman B, this is $8,000 minus $0, or
$8,000.
Step 1D: Multiplication
Multiply the difference between the comparison year and base year
gross income by 2.5. For Fisherman A, this is $35,000 multiplied by
2.5, or $87,500. For Fisherman B, this is $8,000 multiplied by 2.5, or
$20,000.
Step 1E: SDI Determination
SDI is the result of steps 1A through 1D. Fisherman A's SDI is
$87,500 (($38,000-$3,000) X 2.5 = $87,500). Fisherman B's SDI is
$20,000 (($8,000-$0) x 2.5 = $20,000).
Step 2: Determine Maximum Offer Amount
The maximum offer amount under Option 1 is $40,000 or the
fisherman's SDI, whichever is less. Fisherman A's SDI is $87,500, which
is greater than $40,000. Therefore, Fisherman A's maximum bid is
$40,000 because $40,000 is the maximum any fisherman can receive under
this option. Fisherman B's maximum bid is $20,000 because his SDI is
less than $40,000.
Step 3: Determine Bid
Fishermen can choose to submit an offer that ranges from $1 up to
their maximum offer limit. Fisherman A's range is from $1 to $40,000.
Fisherman B's range is from $1 to $20,000.
Ranking of Bids under Option 1
If both Fisherman A and Fisherman B submit their respective maximum
offers, Fisherman B's offer would be accepted first because it is less
than Fisherman A's offer. If Fisherman A elected to submit an offer of
$19,000 and Fisherman B elected to submit a maximum offer of $20,000,
then Fisherman A's offer would be accepted first because it is less
than Fisherman B's offer. In the event of a tie between fishermen,
preference will be given to the fishermen with the highest SDI.
Therefore, if both Fisherman A and Fisherman B submit offers of
$19,000, then Fisherman A would be given preference because Fisherman
A's SDI is higher than Fisherman B's.
Option 2 Example
Step 1: Determine SDI (Same as Steps 1 through 1E in Option 1 Example)
Step 2: Determine Maximum Offer Amount
The maximum offer amount under this option is $50,000 or the
fisherman's SDI, whichever is less. Fisherman A's SDI is $87,500, which
is greater than $50,000. Therefore, Fisherman A's maximum bid is
$50,000 because $50,000 is the maximum any fisherman can receive under
this option. Fisherman B's maximum bid is $20,000 because his SDI is
less than $50,000.
Step 3: Determine Offer
Fishermen can choose to submit an offer that ranges from $1 up to
their maximum offer limit. Fisherman A's range is from $1 to $50,000.
Fisherman B's range is from $1 to $20,000.
Step 4: Determine Offer Ratio
Divide the amount offered by the fisherman's SDI. If Fisherman A
chose to offer the maximum of $50,000, then Fisherman A's ratio would
be $50,000
[[Page 45412]]
divided by $87,500, which is equal to 0.57. If Fisherman B chose to
offer his SDI ($20,000), then Fisherman B's offer ratio would be
$20,000/20,000 = 1.0.
Ranking of Bids under Option 2
If both Fisherman A and Fisherman B elected to submit their
respective maximum offers, Fisherman A's offer would be the first
accepted because the 0.57 offer ratio is less than 1.0. If Fisherman B
elected to submit an offer of $11,000, then Fisherman B's offer ratio
would be 0.55 ($11,000/$20,000). Because Fisherman B's offer ratio is
lower than Fisherman A's offer ratio, Fisherman B's offer would be
accepted first. In the event of a tie with identical offer ratios,
preference will be given to the fishermen with the lowest offer amount.
Additional Terms, Limitations, and Conditions
A license holder may offer more than one license, but income used
in the calculation of an offer that is accepted may not be used in the
calculation of any other offer. Licenses will be purchased in order of
ranking until funds are exhausted. The State of Washington, in
consultation with NMFS, will reserve the right to reject any and all
offers if it is determined by NMFS that such action is in the best
interests of the program or if revisions to the program are warranted
in the future.
Proprietary information submitted by applicants will only be
disclosed to State and Federal officials who are responsible for the
License Buy Out Program, or otherwise when required by court order or
other applicable law. This information is subject to the Freedom of
Information Act.
Catalogue of Federal Domestic Assistance
The Program is listed in the ``Catalogue of Federal Domestic
Assistance'' under No. 11.452, Unallied Industry Projects.
Classification
This action has been determined to be not significant for purposes
of E.O. 12866.
The Assistant General Counsel for Legislation and Regulation of the
Department of Commerce certified to the Chief Counsel for Advocacy of
the Small Business Administration that this notice would not have a
significant economic impact on a substantial number of small entities
because only a small portion of West Coast salmon fishermen will be
directly affected. NMFS estimates that only approximately 3.6 percent
of the industry will receive financial assistance through the LBOP.
Therefore, the impacts of the notice are not significant within the
meaning of the Regulatory Flexibility Act. They are not likely to lead
to a reduction in the annual gross revenues by more than 5 percent or
an increase in total costs of production by more than 5 percent, nor
would this action result in any greater compliance costs.
This program involves a collection-of-information requirement
subject to the Paperwork Reduction Act (PRA). The collection of this
information has been approved by the Office of Management and Budget
(OMB), under OMB control number 0648-0288. Notwithstanding any other
provision of law, no person is required to respond to nor shall a
person be subject to a penalty for failure to comply with a collection
of information subject to the requirements of the PRA unless that
collection of information displays a currently valid OMB control
number.
Authority: Public Law 99-659 (16 U.S.C. 4107 et seq.); Public
Law 102-396.
Dated: August 22, 1996.
C. Karnella,
Acting Assistant Administrator for Fisheries, National Marine Fisheries
Service.
[FR Doc. 96-21999 Filed 8-28-96; 8:45 am]
BILLING CODE 3510-22-F
