[Federal Register Volume 62, Number 152 (Thursday, August 7, 1997)]
[Proposed Rules]
[Pages 42474-42478]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-20851]
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DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration
50 CFR Part 600
[Docket No. 970728182-7182-01; I.D. 071697A]
RIN 0648-AG16
Magnuson-Stevens Act Provisions; Financial Disclosure
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA), Commerce.
[[Page 42475]]
ACTION: Proposed rule.
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SUMMARY: NMFS issues this proposed rule to revise the rules of conduct
and financial disclosure regulations applicable to Regional Fishery
Management Council (Council) nominees, appointees, and voting members.
The proposed revisions would implement a provision of the Magnuson-
Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act)
that was amended by the Sustainable Fisheries Act (SFA) in 1996. The
new provision prohibits Council members from voting on matters that
would have a significant and predictable effect on a financial interest
disclosed in accordance with existing regulations. The recusal
requirement will not become effective until the Secretary of Commerce
(Secretary) promulgates final regulations, which is scheduled to occur
by October 11, 1997.
DATES: Comments must be received by September 8, 1997.
ADDRESSES: Comments should be sent to Dr. Gary C. Matlock, F/SF, NMFS,
1315 East-West Highway, Silver Spring, MD 20910. Comments regarding the
collection-of-information requirement contained in this rule should be
sent to the above address and to the Office of Information and
Regulatory Affairs, Office of Management and Budget (OMB), Washington,
DC 20503 (Attention: NOAA Desk Officer).
FOR FURTHER INFORMATION CONTACT: Margaret Frailey Hayes, Assistant
General Counsel for Fisheries, NOAA Office of General Counsel, 301-713-
2231.
SUPPLEMENTARY INFORMATION:
Background
In the 1986 amendments to the Magnuson Fishery Conservation and
Management Act (Public Law 99-659), Congress created a requirement for
voting members and Executive Directors of each Council to disclose any
financial interest they held in the harvesting, processing, or
marketing of fishery resources under the jurisdiction of their
respective Council. The financial interests of the member included
those held by that member, the spouse, minor child, or partner of the
member, and any organization (other than the Council) in which the
member was serving as an officer, director, trustee, partner, or
employee. If they disclosed their financial interests as required by
the statute, the amendments exempted Council members and Executive
Directors from the provisions of 18 U.S.C. 208, which generally
prohibit persons from making decisions on behalf of the Federal
Government during their employment when a conflict of interest arises.
If a member did not comply with the financial disclosure requirements,
the prohibitions and penalties of 18 U.S.C. 208 would apply.
Congress intended that Council members could have a direct
financial interest in fisheries. Governors are required to nominate
persons who are ``knowledgeable'' or ``experienced'' regarding the
conservation and management or commercial or recreational harvest of
the fishery resources within the jurisdiction of the Council (16 U.S.C.
302(b)(2)(A)). Congress also believed, however, that the public has a
right to know of any voting Council member's financial interests in
fishery matters under the purview of a Council. Council members could,
therefore, participate in matters of general public concern that were
likely to have a direct and predictable effect on their financial
interests in harvesting, processing, or marketing activities in a
fishery if such interests were disclosed on the member's statement of
financial interests. Even if their financial interests were reported,
however, they could not participate in a particular matter primarily of
individual concern, such as a contract, in which they had a financial
interest under rules now codified at 50 CFR 600.225(b)(8)(i).
On October 11, 1996, the President signed into law the SFA, which
made numerous amendments to the Magnuson-Stevens Act (16 U.S.C. 1801 et
seq.). This proposed rule would amend 50 CFR 600.225, Rules of Conduct,
and 50 CFR 600.235, Financial Disclosure, to implement the SFA
amendments to the Magnuson-Stevens Act concerning recusal of Council
members from votes involving matters in which they have a financial
interest.
The proposed regulations would remove 50 CFR 600.225(b)(8)(ii),
which prohibits a Council member from voting on any matter of general
public concern that is likely to have a ``direct and predictable
effect'' on a member's financial interest unless it has been disclosed.
That language would be replaced with new Sec. 600.235(c), described
below under ``Financial Disclosure.''
The proposed rules would retain the first sentence in 50 CFR
600.225(b)(8), which prohibits any Council member from participating in
a ``particular matter primarily of individual concern'' in which he or
she has a financial interest. Examples of such matters are contracts
with the member's employer, grants to the member's academic
institution, and management measures that affect only the member's
business and a few other fishery participants.
Section 302(j) of the Magnuson-Stevens Act requires the disclosure
by ``affected individuals'' of financial interests in any harvesting,
processing, or marketing activity that is being, or will be undertaken,
within any fishery under the jurisdiction of the individual's Council.
The financial interests include those of the affected individual's
spouse, minor child, or partner, or any organization other than the
Council in which the individual is serving as an officer, director,
trustee, partner, or employee.
The SFA defines ``affected individuals'' as persons nominated by a
Governor, and voting members appointed by the Secretary of Commerce
from among those nominees, under section 302(b)(2) of the Magnuson-
Stevens Act. The term also includes the Indian representative on the
Pacific Council, if he or she is not subject to disclosure or recusal
requirements under Indian tribal government laws.
Voting members of Councils who are excluded from the definition are
Regional Administrators of NMFS, and the principal state officials and
designees named by Governors under section 302(b)(1) of the Magnuson-
Stevens Act. Council Executive Directors, who previously had been
subject to the financial disclosure reporting requirements, are no
longer ``affected individuals.''
Financial Disclosure
The SFA's most significant revision to section 302(j) of the
Magnuson-Stevens Act is the addition of a provision that prohibits an
affected individual from voting on a Council decision that would have a
significant and predictable effect on the affected individual's
financial interests in harvesting, processing, or marketing activities.
That effect exists if there is a close causal link between the Council
decision and an ``expected and substantially disproportionate benefit''
to the financial interest of the affected individual relative to the
financial interests of other participants in the same gear type or
sector of the fishery.
This rule would define ``expected and substantially
disproportionate benefit'' as a quantifiable positive or negative
impact with regard to a matter likely to affect a fishery or sector of
the fishery in which the affected individual has a significant
interest, as indicated by (1) a greater than 10 percent interest in the
total harvest of the fishery or sector of the fishery in question, (2)
a greater than 10 percent interest in the marketing or
[[Page 42476]]
processing of the total harvest of the fishery or sector of the fishery
in question, or (3) full or partial ownership of more than 10 percent
of the vessels using the same gear type within the fishery or sector of
the fishery in question.
We interpret the statutory term ``benefit'' to include both
positive and negative impacts on the member's financial interest. The
purpose of the 1996 amendments was to address real or perceived
conflicts of interest, i.e., situations where Council members might
have a greater incentive to protect their own financial interests than
to consider the welfare of all fishery participants and the national
interest. In this context, actual or perceived conflicts of interest
occur when a member's income or investment is threatened, just as much
as when they may be augmented. Avoiding a negative is as advantageous
as gaining a positive.
To limit ``benefit'' to positive impacts would unfairly bias the
Council system toward preservation of the status quo. If members who
stood to gain from a proposed Council action could not vote, but
members who might suffer a loss from the same action could do so,
proposals for change would be handicapped.
The choice of a particular percentage as indicative of a
``significant'' interest is a difficult one. The Councils manage
fisheries as small as seven vessels and as large as thousands of
vessels. The agency is considering a tiered approach, with different
percentage indicators for different-sized sectors of the fishing
industry, but has been unable to construct a workable model. We invite
comments and specific suggestions on dealing with this issue.
Affected individuals who have financial interests in businesses or
not-for-profit organizations closely related to harvesting, processing,
or marketing activities are covered by section 302(j) of the Magnuson-
Stevens Act and must disclose those interests. Examples are suppliers
of bait, manufacturers of fishing gear, business or economic
consultants to the fishing industry, and representatives of
environmental organizations that address fisheries issues. Because the
effects of Council decisions on this type of financial interest are
unlikely to be ``significant or predictable,'' we do not foresee
recusals by such individuals under proposed Sec. 600.235(c); however,
such individuals could not participate in a ``particular matter
primarily of individual concern'' under Sec. 600.225(b)(8).
Under the proposed rule, an affected individual who is a
representative of an association of fishermen, processors, or dealers
would be required to disclose, in addition to his/her own interests,
the financial interests of the association in harvesting, processing,
or marketing activities that are or will be undertaken within any
fishery under the jurisdiction of his or her Council. The financial
interests of the association would be considered as separate from the
financial interests of its individual members. A vote on a Council
decision that might have a significant and predictable effect on the
members of the association would not be considered to have a
significant and predictable effect on the financial interests of the
representative.
Procedures
An affected individual would be able to recuse him or herself by
simply announcing an intent not to vote on a Council decision that is
likely to have a direct and predictable effect on that individual's
financial interest.
The proposed regulations would provide that, if an affected
individual has a significant interest that prohibits him or her from
voting, he or she may still participate in Council deliberations on
that matter.
The proposed regulations would set out the process for raising the
issue of whether a Council decision would have a significant and
predictable effect on an individual's financial interest, the
information that would be considered in making that determination, and
procedures for review of a determination. The proposed regulations
would specify the NOAA General Counsel attorney advising the Council as
the designated official who would determine whether the affected
individual must recuse him or herself. The determination by the NOAA
attorney would be based upon the information contained in the member's
financial disclosure report and any other reliable and probative
information provided in writing. All information provided would be made
part of the public record for the decision.
If the NOAA attorney determines that the member may not vote, the
member may state for the record how he or she would have voted.
Any Council member would be able to file a request for review of
the determination to the NOAA General Counsel within 10 days of the
determination. The member whose vote is at issue would have an
opportunity to respond to such request for review by another Council
member. The NOAA General Counsel would issue a decision within 30 days
from the date of receipt of the request for review. As specified in
section 302(j)(7)(E) of the Magnuson-Stevens Act, if the General
Counsel's decision reverses a recusal determination, that decision may
not be treated as cause to invalidate or reconsider the Council's
action.
The proposed regulations would implement the part of section 307(1)
of the Magnuson-Stevens Act that makes it unlawful for an affected
individual to knowingly and willfully fail to disclose or to falsely
disclose any financial interest required to be disclosed or to
knowingly vote on a Council decision in violation of section 302(j).
The penalties for violation include removal of the affected individual
from the Council and/or a civil penalty of up to $100,000 per
violation.
Classification
This rule 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 proposed rule, if adopted,
would not have a significant economic impact on a substantial number of
small entities. This proposed rule would implement statutory provisions
of the SFA relative to the disclosure of financial interests of Council
nominees, appointees, and members in harvesting, processing, or
marketing activities that are or will be undertaken in fisheries under
the jurisdiction of the individual's Council. Certain Council members
may be required to recuse themselves from voting on a Council decision
that would have a significant and predictable effect on a financial
interest disclosed in accordance with these regulations. This proposed
rule would have no effect on the conduct of business of any small
entities. As such, no Initial Regulatory Flexibility Analysis has been
prepared.
This rule contains a collection-of-information requirement subject
to the PRA. The financial disclosure form that must be completed by
affected individuals has been approved by OMB under control number
0648-0192.
Public reporting burden for this collection of information is
estimated to average 0.58 hours per response, including the time for
reviewing instructions, searching existing data sources, gathering and
maintaining the data needed, and completining and reviewing the
collection of information. Send comments regarding this burden estimate
or any other aspect of this collection of information, including
suggestions for reducing this burden, to OMB and NMFS (see ADDRESSES).
[[Page 42477]]
Notwithstanding any other provision of the law, no person is
required to respond to, nor shall any person be subject to a penalty
for failure to comply with, a collection of information subject to the
requirements of the Paperwork Reduction Act (PRA), unless that
collection of information displays a currently valid OMB control
number.
List of Subjects in 50 CFR Part 600
Administrative practice and procedure, Confidential business
information, Fisheries, Fishing, Fishing vessels, Foreign relations,
Intergovernmental relations, National Oceanic and Atmospheric
Administration, Penalties, Reporting and recordkeeping requirements,
Statistics.
Dated: August 1, 1997.
David L. Evans,
Deputy Assistant Administrator for Fisheries, National Marine Fisheries
Service.
For the reasons set out in the preamble, 50 CFR part 600 is
proposed to be amended as follows:
PART 600--MAGNUSON-STEVENS ACT PROVISIONS
1. The authority citation for part 600 continues to read as
follows:
Authority: 5 U.S.C. 561 and 16 U.S.C. 1801 et seq.
2. In Sec. 600.225, the last sentence in paragraph (b)(4) is
removed, and paragraph (b)(8) is revised to read as follows:
Sec. 600.225 Rules of conduct.
* * * * *
(b) * * *
(8) No Council member may participate personally and substantially
as a member through decision, approval, disapproval, recommendation,
the rendering of advice, investigation, or otherwise in a particular
matter primarily of individual concern, such as a contract, in which he
or she has a financial interest.
3. Section 600.235 is revised to read as follows:
Sec. 600.235 Financial disclosure.
(a) Definitions. For purposes of this section:
(1) ``Affected individual'' means an individual who is--
(i) Nominated by the Governor of a state or appointed by the
Secretary to serve as a voting member of a Council in accordance with
section 302(b)(2) of the Magnuson-Stevens Act; or
(ii) A representative of an Indian tribe appointed to the Pacific
Council by the Secretary under section 302(b)(5) of the Magnuson-
Stevens Act who is not subject to disclosure and recusal requirements
under the laws of an Indian tribal government.
(2) ``Designated official'' means an attorney designated by the
NOAA General Counsel.
(b) Reporting. (1) The Magnuson-Stevens Act requires the disclosure
by each affected individual of any financial interest of the affected
individual in any harvesting, processing, or marketing activity, or
related industry, that is being, or will be, undertaken within any
fishery under the jurisdiction of the individual's Council, and of any
such financial interest of the affected individual's spouse, minor
child, partner, or any organization (other than the Council) in which
that individual is serving as an officer, director, trustee, partner,
or employee. The information required to be reported must be disclosed
on NOAA Form 88-195, ``Statement of Financial Interests for Use by
Voting Members and Nominees of Regional Fishery Management Councils''
(Financial Interest Form), or such other form as the Secretary may
prescribe.
(2) The report must be filed by each nominee for Secretarial
appointment with the Assistant Administrator by April 15 or, if
nominated after March 15, 1 month after nomination by the Governor. A
seated voting member appointed by the Secretary must file a Financial
Interest Form with the Executive Director of the appropriate Council
within 45 days of taking office; must file an update of his or her
statement with the Executive Director of the appropriate Council within
30 days of the time any such financial interest is acquired or
substantially changed by the affected individual or the affected
individual's spouse, minor child, partner, or any organization (other
than the Council) in which that individual is serving as an officer,
director, trustee, partner, or employee; and must update his or her
form annually and file that update with the Executive Director of the
appropriate Council by February 1 of each year.
(3) The Executive Director must, in a timely manner, provide copies
of the financial disclosure forms and all updates to the NMFS Regional
Administrator for the geographic area concerned, the Regional Attorney
who advises the Council, the Department of Commerce Assistant General
Counsel for Administration, and the NMFS Office of Sustainable
Fisheries. The completed financial interest forms will be kept on file
in the office of the NMFS Regional Administrator for the geographic
area concerned and at the Council offices, and will be made available
for public inspection at such offices during normal office hours.
(4) Councils must retain the disclosure form for each affected
individual for at least 5 years after the expiration of that
individual's last term.
(c) Restrictions on voting. (1) No affected individual may vote on
any Council decision that would have a significant and predictable
effect on a financial interest disclosed in his/her report filed under
paragraph (b) of this section.
(2) As used in this section, a Council decision will be considered
to have a ``significant and predictable effect on a financial
interest'' if there is a close causal link between the decision and an
expected and substantially disproportionate benefit to the financial
interest of any affected individual or the affected individual's
spouse, minor child, partner, or any organization (other than the
Council) in which that individual is serving as an officer, director,
trustee, partner, or employee, relative to the financial interests of
other participants in the same gear type or sector of the fishery.
(3) ``Expected and substantially disproportionate benefit'' means a
quantifiable positive or negative impact with regard to a matter likely
to affect a fishery or sector of the fishery in which the affected
individual has a significant interest, as indicated by:
(i) A greater than 10 percent interest in the total harvest of the
fishery or sector of the fishery in question;
(ii) A greater than 10 percent interest in the marketing or
processing of the total harvest of the fishery or sector of the fishery
in question; or
(iii) Full or partial ownership of more than 10 percent of the
vessels using the same gear type within the fishery or sector of the
fishery in question.
(d) Voluntary recusal. An affected individual who believes that a
Council decision would have a significant and predictable effect on
that individual's financial interest disclosed under paragraph (b) of
this section may, at any time before a vote is taken, announce to the
Council an intent not to vote on the decision.
(e) Participation in deliberations. Notwithstanding paragraph (c)
of this section, an affected individual may participate in Council
deliberations relating to the decision after notifying the Council of
the voting recusal and identifying the financial interest that would be
affected.
(f) Requests for determination. (1) At the request of an affected
individual, the designated official shall determine for the record
whether a Council decision would have a significant and
[[Page 42478]]
predictable effect on that individual's financial interest. The
determination will be based upon a review of the information contained
in the individual's financial disclosure form and any other reliable
and probative information provided in writing. All information
considered will be made part of the public record for the decision. The
affected individual may request a determination by notifying the
designated official--
(i) Within a reasonable time before the Council meeting at which
the Council decision will be made; or
(ii) During a Council meeting before a Council vote on the
decision.
(2) The designated official may initiate a determination on the
basis of--
(i) His or her knowledge of the fishery and the financial interests
disclosed by an affected individual; or
(ii) Written and signed information received within a reasonable
time before a Council meeting or, if the issue could not have been
anticipated before the meeting, during a Council meeting before a
Council vote on the decision.
(3) At the beginning of each Council meeting, or during a Council
meeting at any time reliable and probative information is received, the
designated official shall announce the receipt of information relevant
to a determination concerning recusal, the nature of that information,
and the identity of the submitter of such information.
(4) If the designated official determines that the affected
individual may not vote, the individual may state for the record how he
or she would have voted. However, a reversal of that determination
under paragraph (g) of this section may not be treated as cause for
invalidation or reconsideration of the Council's decision.
(g) Review of determinations. (1) Any Council member may file a
written request to the NOAA General Counsel for review of the
designated official's determination. A request for review must be
received within 10 days of the determination.
(2) A request must include a full statement in support of the
review, including a concise statement as to why the Council's decision
did or did not have a significantly disproportionate benefit to the
financial interest of the affected individual relative to the financial
interests of other participants in the same gear type or sector of the
fishery, and why the designated official's determination should be
reversed.
(3) If the request for review is from a Council member other than
the affected individual whose vote is at issue, the requester must
provide a copy of the request to the affected individual at the same
time it is submitted to the NOAA General Counsel. The affected
individual may submit a response to the NOAA General Counsel within 10
days from the date of his/her receipt of the request for review.
(4) The NOAA General Counsel must complete the review and issue a
decision within 30 days from the date of receipt of the request for
review. The NOAA General Counsel will limit the review to the record
before the designated official at the time of the determination, the
request, and any response.
(h) Exemption from other statutes. The provisions of 18 U.S.C. 208,
regarding conflicts of interest, do not apply to an affected individual
who is in compliance with the requirements of this section for filing a
financial disclosure report.
(i) Violations and penalties. It is unlawful for an affected
individual to knowingly and willfully fail to disclose, or to falsely
disclose, any financial interest as required by this section, or to
knowingly vote on a Council decision in violation of this section. In
addition to the penalties applicable under Sec. 600.735, a violation of
this provision may result in removal of the affected individual from
Council membership.
[FR Doc. 97-20851 Filed 8-6-97; 8:45 am]
BILLING CODE 3510-22-F
