Fisheries Off West Coast States; Pacific Coast Groundfish Fishery Management Plan; Amendments 20 and 21; Trawl Rationalization Program

Federal RegisterJun 10, 2010

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DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

15 CFR Part 902

50 CFR Part 660

[Docket No. 100212086-0210-01]

RIN 0648-AY68

Fisheries Off West Coast States; Pacific Coast Groundfish Fishery Management Plan; Amendments 20 and 21; Trawl Rationalization Program

AGENCY:

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

ACTION:

Proposed rule; request for comments.

SUMMARY:

NMFS proposes measures to initiate implementation of Amendments 20 and 21 to the Pacific Coast Groundfish Fishery Management Plan (FMP). Amendment 20 would establish a trawl rationalization program for the Pacific Coast groundfish fishery. Amendment 20's trawl rationalization program would consist of: An individual fishing quota (IFQ) program for the shore-based trawl fleet (including whiting and non-whiting sectors); and cooperative (coop) programs for the at-sea (whiting only) mothership (MS) and catcher/processor (C/P) trawl fleets. The trawl rationalization program is intended to increase net economic benefits, create individual economic stability, provide full utilization of the trawl sector allocation, consider environmental impacts, and achieve individual accountability of catch and bycatch. Amendment 21 would establish fixed allocations for limited entry (LE) trawl participants. These allocations are intended to improve management under the rationalization program by streamlining its administration, providing stability to the fishery, and addressing halibut bycatch.

NMFS is reviewing Amendments 20 and 21 in their entirety. However, due to the complexity of the proposed fishery management measures, this rule proposes only certain key components that would be necessary to have permits and endorsements issued in time for use in the 2011 fishery and in order to have the 2011 specifications reflect the new allocation scheme. Specifically, this rule would establish the allocations set forth under Amendment 21 and establish procedures for initial issuance of permits, endorsements, quota shares, and catch history assignments under the IFQ and coop programs. In addition, the proposed rule would restructure the entire Pacific Coast groundfish regulations to more closely track the organization of the proposed management measures and to make the total groundfish regulations more clear. NMFS plans to propose additional program details in a future proposed rule. Such additional details would include: Program components applicable to IFQ gear switching, observer programs, retention requirements, equipment requirements, catch monitors, catch weighing requirements, coop permits/agreements, first receiver site licenses, quota share accounts, vessel quota pound accounts, further tracking and monitoring components, and economic data collection requirements. In order to encourage more informed public comment, this proposed rule includes a general description of these additional program requirements. NMFS is also planning a future “Cost-Recovery” rule based on a recommended methodology yet to be developed by the Pacific Fishery Management Council (the Council).

DATES:

Comments on this proposed rule must be received no later than 5 p.m., local time on July 12, 2010.

ADDRESSES:

You may submit comments, identified by 0648-AY68, by any of the following methods:

•

Electronic Submissions:

Submit all electronic public comments via the Federal e-Rulemaking Portal, at

http://www.regulations.gov.

•

Fax:

206-526-6736; Attn: Jamie Goen.

•

Mail:

Barry Thom, Acting Regional Administrator, Northwest Region, NMFS, 7600 Sand Point Way NE., Seattle, WA 98115-0070;

Attn:

Jamie Goen.

Instructions:

All comments received are a part of the public record and will generally be posted to

http://www.regulations.gov

without change. All Personal Identifying Information (for example, name, address, etc.) voluntarily submitted by the commenter may be publicly accessible. Do not submit Confidential Business Information or otherwise sensitive or protected information. NMFS will accept anonymous comments (if submitting comments via the Federal e-Rulemaking portal, enter “N/A” in the relevant required fields if you wish to remain anonymous). Attachments to electronic comments will be accepted in Microsoft Word or Excel, WordPerfect, or Adobe PDF file formats only. Written comments regarding the burden-hour estimates or other aspects of the collection-of-information requirements contained in this proposed rule may be submitted to NMFS, Northwest Region, e-mailed to

David_Rostker@omb.eop.gov;

or faxed to 202-395-7285.

FOR FURTHER INFORMATION CONTACT:

Jamie Goen, 206-526-4656; (fax) 206-526-6736;

Jamie.Goen@noaa.gov.

SUPPLEMENTARY INFORMATION:

Electronic Access

This proposed rule is accessible via the Internet at the Office of the Federal Register's Web site at

http://www.gpoaccess.gov/fr/index.html.

Background information and documents, including the Draft Environmental Impacts Statements for Amendment 20 and Amendment 21, are available at the Pacific Fishery Management Council's Web site at

http://www.pcouncil.org/.

Although this proposed rule would implement only certain portions of Amendments 20 and 21, NMFS is reviewing both Amendments 20 and 21 in their entirety. On May 12, 2010, NMFS published a notice of availability of Amendments 20 and 21, and—consistent with requirements of the Magnuson-Stevens Fishery Conservation and Management Act (MSA)—must make a decision to approve, disapprove, or partially approve the amendments by September 8, 2010. Comments on the approvability of the amendments must be submitted to NMFS by August 9, 2010. This preamble provides information about the full contents of each amendment for the purposes of promoting informed public comment. Detailed provisions regarding features of the proposed rule are provided where applicable. In addition, section IV of this preamble highlights what the main regulatory changes would be.

I. Background: Current Management Approach and Need for Change

The Pacific Coast Groundfish FMP covers a diverse mixture of species occurring in close association and proximity in the Pacific off the states of Washington, Oregon, and California. The trawl rationalization program would consist of: (1) An individual fishing quota (IFQ) program for the shore-based trawl fleet and (2) cooperative (coop) programs for the at-sea trawl fleet. The shore-based trawl fleet would include IFQ participants who land groundfish to shore-based processors or first receivers. The at-sea trawl fleet would include fishery participants harvesting whiting with

midwater trawl gear (i.e., whiting catcher/processor vessels, whiting motherships, and whiting catcher vessels associated with motherships). The co-op programs for the at-sea trawl fleet are further divided as follows: (1) A single whiting catcher/processor co-op; and (2) one or more whiting mothership co-ops may form, or vessels may choose to fish in a non-coop fishery which would be unaffiliated with a coop. For the coop and non-coop fishery, vessel owners pool their harvest together.

The IFQ program for the shore-based fleet would require NMFS to make an initial allocation of harvest quota share (QS) (expressed as a percentage of the total sector amount) through a new QS permit to current owners of limited entry trawl permits and shore-based whiting first receivers who meet the qualifying criteria. Depending on a person's limited entry trawl permit history in qualifying years, the permit owner will receive an initial allocation for various target species/species groups (~20 species), some with area designations. In addition, NMFS would allocate QS for overfished species based on a proxy of the amount of target species allocated to the quota share holder. Shore-based whiting first receivers will receive an initial allocation of whiting only, based on their history of being the first receiver reported on state fish tickets (with an opportunity to reassign their history). Each year, based on the optimum yield amounts for each species and the amount of QS a holder has for a particular species/area, NMFS would allocate quota pounds to the QS account. The QS owner in turn, must allocate quota pounds to vessel accounts. Vessels are required to have IFQ or quota pounds in an account to cover all IFQ landings and discards incurred while fishing under this program. In order to comply with the MSA, NMFS would track ownership interest in QS to determine if individuals are within set accumulation limits, both at the initial allocation stage and during the operation of the program. In Amendment 20, the Council has adopted limits (by species group and area) on the amount of QS an individual can control (i.e. control limits) and limits on the amount of quota pounds that may be registered to a vessel for use in a given year.

For the at-sea whiting component of the trawl rationalization program, the Council has adopted a program that provides for a C/P coop and MS coops that differ from how the coops have operated in the past. The C/P coop will not require an initial allocation of catch shares to individual vessels, provided that a coop is established. However, whiting catch shares for the MS fleet (called catch history assignments) would initially be allocated to qualifying limited entry trawl permits that were registered to catcher vessels in qualifying years and which were used in the mothership whiting fishery. Holders of qualifying permits that are allocated a whiting catch history assignment may choose to participate in the MS coop or non-coop fishery. Similar to the shore-based IFQ program, NMFS would be required to track permit ownership interests in the MS sector to determine if individuals are in compliance with accumulation limits.

The FMP features different management strategies for different species, locales, vessels and processing arrangements. These different management regimes are often referred to as “sectors.” Current management divisions pertain to tribal vs. non-tribal, trawl vs. non-trawl (fixed gear); limited entry vs. open access; commercial vs. recreational; whiting vs. non-whiting; shore-based whiting vs. at-sea whiting; and at-sea whiting MS operations vs. at-sea whiting C/Ps.

A. Sector Management and Allocations

Currently, the Pacific Coast groundfish fishery consists of several different sectors, defined by fishing gear, species targeted, and regulatory context. Under current management, the annual optimum yield (OY) is first reduced to a commercial harvest guideline (commercial HG) by subtracting from the OY amounts of fish necessary for tribal fisheries, bycatch for exempted fishing permits (EFPs), and estimates of research catch, recreational catch, and bycatch in non-groundfish fisheries. Subtracting these amounts produces the commercial HG, which NMFS then divides between two main sectors: Limited entry (LE) and open access (OA). The LE sector is further subdivided into the fixed gear and trawl subsectors. Within the LE trawl subsector, there is an additional division between whiting and non-whiting trawl fisheries. The non-whiting trawl fishery consists primarily of a shore-based multi-species fishery generally conducted with bottom trawl gear. The whiting trawl fishery consists of three different fleets: Shore-based, MS, and C/P (all of which fish only with midwater trawl gear).

Within the whiting trawl fishery, whiting available to the commercial fisheries is already allocated among the shore-based, MS, and C/P sectors as follows: 42 percent, 24 percent, and 34 percent, respectively. (See existing regulations at 50 CFR 660.323.) This allocation would not change.

Trawl Target Species (Including Pacific Whiting Fisheries)

The list of current trawl target species includes flatfish, roundfish, thornyheads, and a few species of rockfish. Primary flatfish target species include Petrale sole and Dover sole. Roundfish target species include Pacific whiting, Pacific cod, and sablefish. However, seven rockfish species, which co-occur with the target stocks and can be caught with trawl gear, are currently declared overfished pursuant to the MSA. The need to rebuild these stocks to a healthy size has led to a variety of harvest constraints on groundfish fisheries, and rockfish are generally no longer a target of these fisheries.

Limited Entry Trawl, Limited Entry Fixed Gear vs. Open Access

The groundfish trawl fishery is subject to a Federal license limitation program (referred to as limited entry), implemented in 1994; currently there are 178 groundfish LE trawl permits. Groundfish fixed gear fisheries—using longline and pot gear—are also managed under the limited entry program. Some groundfish are caught and landed by vessels without an LE permit; these vessels comprise the “open access” sector, which has directed and incidental components.

Limited Entry Trawl Whiting vs. Non-Whiting

The LE trawl fishery is divided into two broad sectors: A multi-species trawl fishery, which most often uses bottom trawl gear (hereafter called the non-whiting sector), and the whiting fishery, which uses midwater trawl gear. The non-whiting trawl fishery is principally managed through two month cumulative trip limit periods along with closed areas to limit overfished species bycatch. Non-whiting trawlers target the range of species described above with the exception of Pacific whiting.

LE Trawl Whiting Components

In most years, less than 2 percent of the catch in the Pacific whiting fishery are species other than Pacific whiting, although overfished species that co-occur with Pacific whiting are also caught. The whiting fishery is further subdivided into three sectors. The shore-based fishery delivers their catch to processing facilities on land, and the vessels are similar in size and configuration (with the exception of the type of net used) to the non-whiting trawl fishery vessels. In the MS sector, catcher vessels deliver to at-sea

processors called “motherships”. Most of the MS-sector catcher vessels also participate in the shore-based whiting fishery. The C/P sector comprises vessels that catch Pacific whiting and process it on board.

B. Need for Amendment 20

In its June 2004, scoping document, the Council described the problem that, despite the recent Federal buyback program that retired several trawl permits (70 FR 45695, August 8, 2005), management of the groundfish trawl fishery was still facing serious biological, social, and economic concerns. The trawl fishery is currently viewed by the Council as economically unsustainable.

Bycatch, especially bycatch of overfished species, was identified as a major problem. All direct harvest of overfished species had been prohibited and numerous closed areas were implemented; however, due to the multispecies nature of the fishery, it is generally not possible to avoid catching the overfished species. As a result, harvests of healthy species were being constrained in order to protect the overfished species. As noted in the scoping document, management relies on average estimated discard (bycatch) rates to predict bycatch. The harvest is then constrained by these bycatch predictions. The discard rate estimates are fixed for a season and change over time only as new information becomes available from the observer program. This creates a situation where there may be little incentive for fishermen to avoid bycatch on an individual vessel level.

The average estimated bycatch rate has been controversial. Also, different fishing interests have expressed different opinions about the pace of the fishery. Some prefer a year-round groundfish fishery, while others prefer a more seasonal fishery. The current system is not flexible enough to accommodate both interests or to respond to changes in markets, weather, or harvest conditions. The ability to react to changing conditions is important if the goal is an efficient fishery that is safe for participants. Accordingly, the following problems were initially identified with the current management regime:

• The bycatch rate is uncertain.

• There are limited incentives for fishermen to reduce bycatch.

• Opportunities to harvest target species are lost.

• The system cannot accommodate the variety of harvest patterns desired by fishermen.

• The system cannot respond quickly to changes in markets, weather, etc.

• Communities are challenged by uncertainty in the industry.

Through an iterative public process, the Council refined these issues into this goal for Amendment 20:

Create and implement a capacity rationalization plan that increases net economic benefits, creates individual economic stability, provides for full utilization of the trawl sector allocation, considers environmental impacts, and achieves individual accountability of catch and bycatch.

The Council further identified eight specific objectives to support achievement of the goal:

1. Provide a mechanism for total catch accounting.

2. Provide for a viable, profitable, and efficient groundfish fishery.

3. Promote practices that reduce bycatch and discard mortality, and minimize ecological impacts.

4. Increase operational flexibility.

5. Minimize adverse effects from an IFQ program on fishing communities and other fisheries to the extent practical.

6. Promote measurable economic and employment benefits through the seafood catching, processing, distribution elements, and support sectors of the industry.

7. Provide quality product for the consumer.

8. Increase safety in the fishery.

Because OY on healthy stocks is constrained by rebuilding needs of co-occurring overfished stocks, Amendment 20 is intended to implement an approach that will support attainment of OY while improving bycatch avoidance and supporting rebuilding.

C. Purposes of Amendment 21

The purposes of Amendment 21 are to: Simplify or streamline future decisions by establishing allocations of specified groundfish stocks and stock complexes within the Pacific Coast Groundfish FMP; support rationalization of the LE trawl fishery (Amendment 20) by providing more certainty to the affected sectors and reducing the risk that these sectors would be closed because of other non-trawl sectors exceeding their allocation; facilitate individuals' ability to make long-range planning decisions based on the allocation of harvest privileges; support overall total catch accounting of groundfish species by the group within the trawl sector; and limit the bycatch of Pacific halibut in future LE trawl fisheries.

Under the IFQ and harvest cooperative systems proposed under the Amendment 20 trawl rationalization program, it would be critical to reduce the risk that sectors would be closed because of other sectors exceeding their allocation. Reducing this risk is important in order to prevent a race for fish that could occur if QP holders or coop fishermen thought other sectors would close them down because of overages.

To the extent that Amendment 21 supports implementation of Amendment 20, it would also contribute to the anticipated benefits of individual accountability for catch and bycatch, and improved overall total catch accounting of groundfish species by the group with the largest amounts of groundfish catch, the trawl sector. By limiting the bycatch of Pacific halibut in the LE trawl fisheries, Amendment 21 would control bycatch and could provide increased benefits to Washington, Oregon, and California fishermen targeting Pacific halibut.

Uncertainty existed regarding whether the allocations in Amendment 21 superseded the allocations to the open access fishery established when the limited entry fishery began. The Council has clarified that these allocation are to supersede the earlier open access allocation for the species allocated under Amendment 21.

II. Amendment 20 Program Description

After considering alternatives, including the status quo, the Council recommended Amendment 20, which divides the trawl fishery into three main management sectors: Shore-based (whiting and non-whiting) to be managed by IFQs; and the MS and C/P sectors (at-sea whiting), both to be managed by separate coop programs. The shore-based trawl fleet would consist of IFQ participants who land groundfish to shore-based processors, or other entities that receive but do not process the groundfish. Both are referred to as first receivers. The at-sea trawl fleet would consist of fishery participants harvesting and processing whiting (i.e., whiting C/P vessels, whiting motherships that process whiting at sea, and whiting catcher vessels that deliver to motherships). The at-sea trawl fleet would be further divided as follows: (1) The whiting C/P sector; and (2) the whiting MS sector. The MS sector program may include multiple coops where vessels pool their harvest together to form fishing cooperatives, as well as vessels not associated with a coop (i.e., the “non-coop” segment of the MS fishery).

A key feature of the trawl rationalization program would be a shift from the current catch accounting system (that uses fleetwide estimates of

discards based on an observer sampling system that has 20-percent coverage) to an `individual accountability' system where all catch by shore-based vessels would count against individual participants' shares, including both retained and discarded catch, based on 100 percent observer coverage on vessels and 100 percent monitoring of the vessel's offload in the plants (called “catch monitoring”). Under the current management system, shore-based fishermen fish against bimonthly trip limits and annual fleetwide quotas and have no direct accountability for discards. Under the proposed system, shore-based fishermen would fish against “individual” quotas, against which their discards would count. Thus, fishermen would have a strong incentive to fish in a manner that reduces discards because excessive discards would either lead to shortening their fishing season when their quota is reached, or greater costs to them if they had to buy additional quota from other quota holders.

The management approaches set forth in the trawl rationalization program would consist of different types of limited-access approaches. These limited-access approaches grant permission to the holder of the privilege or permit to participate in the program. Such permission may be revoked, limited, or modified at any time. In other words, it is a conditional privilege.

Amendment 20 would include features such as annual renewal requirements and regular program reviews to ensure program goals are being met, provide NMFS the ability to review, track, and monitor program implementation and needs, and prevent the perception that the program confers “rights” as opposed to privileges.

Amendment 20 establishes programs that are “limited-access privilege programs,” which are consistent with the MSA provisions at section 303A. Limited-access privileges, including the quota shares, quota pounds, and catch history assignments, may be revoked, limited or modified at any time in accordance with the MSA—and do not create any right of compensation to the holder of the limited-access privilege, quota share, quota pound, or catch history assignment if it is revoked, limited or modified. The limited-access privilege program does not create any right, title, or interest in or to any fish before the fish is harvested by the holder and shall be considered a grant of permission to the holder of the limited-access privilege to engage in activities permitted by the limited-access privilege program. For further statutory provisions related to limited-access privileges, see section 303A of the MSA.

Section 303A contains an “antitrust savings clause” that provides that “nothing in this Act shall be construed to modify, impair, or supersede the operation of any of the antitrust laws. For purposes of the preceding sentence, the term `antitrust laws' has the meaning given such term in subsection (a) of the first section of the Clayton Act, except that such term includes section 5 of the Federal Trade Commission Act to the extent that such section 5 applies to unfair methods of competition.”

NOAA advises that any fishery participants who are uncertain about the legality of their activities under the antitrust laws of the United States should consult legal counsel prior to commencing those activities. NOAA intends to restate this advice in the regulations for the program components.

A. IFQ Program Details

IFQs offer a powerful accountability measure for maintaining catch levels within limits (as required by the MSA). The IFQ program would feature complete accounting for all catch, both landings and discards, and would facilitate accountability down to the individual vessel level.

1. Structure Overview

Amendment 20 would establish an IFQ program for the shore-based LE trawl fleet. The IFQ program would apply to a specified list of species, set forth in § 660.140(c) of the proposed rule, which includes both whiting and non-whiting species. The program would apply to shore-based harvesters with LE permits and first receivers, and would apply to all trips with IFQ species delivered shoreside. The IFQ program would provide for total catch accounting and individual vessel responsibility. This means that both landed catch and discards would count against the quota pounds in an individual vessel's vessel account.

Accountability for landings and discards are expected to increase the certainty managers have regarding fishing mortality, which in turn is expected to foster the rebuilding of overfished species and help prevent overfishing. Furthermore, the increased observation necessary to monitor landings and discard is expected to increase the information flow on the status of the fishery as the fishery occurs. Finally, responsibility for landings and discards—and the monitoring necessary for that type of management—is expected to increase accounting ability and result in changes to fishing behavior, which include a reduction in the bycatch rate of constraining stocks and a reduction in regulatory discarding.

To implement the IFQ program, NMFS would divide the trawl allocation for these species between the IFQ and at-sea whiting sectors. NMFS would then divide the IFQ allocation among individual participants as percentages of the total sector allocation. This individual apportionment of catch percentage would be called Quota Share (QS). Each year, the percentage of catch represented by the QS would be converted into poundage based on the total amount of catch available to the sector. This poundage would be known as Quota Pounds (QP). The QP would be issued to the QS permit owner, but in order to be fished, the QP would have to be transferred into a vessel account. In order to land an IFQ species, a vessel's account would be required to contain sufficient QP to cover the catch within 30 days of the landing. Special provisions for addressing overages are discussed below in section II.A.7 of this preamble.

Within the IFQ program, vessels would be allowed to use a variety of directed groundfish commercial gear (including non-trawl gear) to take the shore-based trawl sector allocation, which would thus allow for “gear switching.” To prevent the OA and fixed gear allocations from being reduced due to landings by people with IFQ, catch that is made with non-trawl gear by a person with QP would count against the QP and against the IFQ allocation. In addition, QS and QP would be tied to specific species groups, areas, and sectors.

The assignment of QP would constitute a revocable privilege to harvest a certain portion of the trawl sector's allocation within a given year, which would not constitute a permanent right or privilege. NMFS and the Council would review the program at regular intervals to determine whether the program should be continued. Results of these reviews could lead to dissolution of the program, revocation of QS, or other fundamental changes to the program. The first review would occur no later than 5 years after implementation, with subsequent reviews, if applicable, at 4-year intervals after that. Holders of QS should remain cognizant of this fact when making decisions regarding their QS, including the buying, selling, and leasing of these shares.

2. IFQ species

IFQ requirements would apply for most species of groundfish under the

FMP (although some would still be managed collectively at the stock-complex level, such as remaining minor slope rockfish). Dogfish and some groundfish species rarely caught by trawl gear would be excluded from the IFQ program. T o ensure that OY for species not covered by the IFQ are not exceeded, catch of those species would be monitored.

QS would be assigned for the following species: lingcod, Pacific cod, Pacific whiting, sablefish north of 36° N. lat., sablefish south of 36° N. lat., Pacific ocean perch, widow rockfish, canary rockfish, chilipepper rockfish, bocaccio, splitnose rockfish, yellowtail rockfish, shortspine thornyhead north of 34°27′ N. lat., shortspine thornyhead south of 34°27′ N. lat., longspine thornyhead north of 34°27′ N. lat., cowcod, darkblotched rockfish, yelloweye rockfish, minor rockfish north slope species complex, minor rockfish north shelf species complex, minor rockfish south slope species complex, minor rockfish south shelf species complex, Dover sole, English sole, petrale sole, arrowtooth flounder, starry flounder, and the “Other Flatfish” stock complex.

The purpose of covering species with quota is to provide a catch-control tool to ensure that management targets are adhered to and that other sectors are not affected by higher-than-expected catch levels in the trawl fishery, or both. In determining which species to recommend for coverage, the Council considered cases in which it would not be necessary or appropriate to cover certain species, such as species that are inaccessible to groundfish trawl gear, species that are constrained by the catch of other species, species caught predominantly within state waters, and species encountered in very small volumes. For these types of species, management through IFQ is not necessary for successful management of fishing mortality.

For species not covered by IFQ, trip limits and set-asides may still be used and would be implemented through the biennial specification process.

For Pacific halibut taken as bycatch in the IFQ fishery, Amendment 20 would require halibut individual bycatch quota (IBQ) to cover the mortality of the incidental catch of Pacific halibut in the groundfish trawl shore-based fishery. This would be a change from the current trawl fishery in which there is no cap on the amount of halibut caught, discarded, or killed. Retention of halibut caught under the IBQ would not be allowed, which is consistent with the current regulations. The purpose of establishing an IBQ would be to prevent the trawl fishery from preempting or constraining the directed halibut fishery. The level of halibut mortality would be limited by the total catch limits proposed in Amendment 21, if that amendment is approved.

3. Who can participate?

While initial issuance of QS would be limited to Limited Entry permit owners based on catch history, and whiting shoreside processors based on processing history, after the initial issuance, QP would be immediately transferable in increments of whole pounds. In addition, after the first 2 years, QS would become transferable as well. The eligibility requirements for owning QS and QP would be very broad, allowing anyone who meets the following criteria to own them: A U.S. citizen, permanent resident alien, or corporation, partnership, or other entity established under the laws of the United States or any State that is eligible to own and control a U.S. fishing vessel with a fishery endorsement.

a. Initial Issuance

The Council considered which groups should receive QS by initial issuance (vessel owners, permit owners, processors, communities, skippers and crew, or general public through auctions, etc.). In consideration of many factors—including but not limited to dependence on the fishery, economic and market factors, fairness and equity, community impacts, the ability to promote stewardship, and participation history—the Council recommended dividing the initial issuance as follows: The Council recommended that harvesters (those holding LE permits for trawl vessels) be given an initial allocation of 90 percent of the non-whiting QS and 80 percent of the whiting QS. Ten percent of the QS for non-whiting species would be set aside for an adaptive management program (AMP), and eligible shoreside processors would receive 20 percent of the whiting QS. After the first 2 years, transferability would likely affect these initial distribution ratios.

The AMP is intended to be used after the first 2 years to address the following objectives: Community stability, processor stability, conservation, and unintended or unforeseen consequences of IFQ management. During the first 2 years of the program, the AMP QP would be issued (“passed through”) to all QS holders pro rata. During the first 2 years of the program, the Council intends to develop the procedures and formulas for distributing the AMP quota set aside starting in year 3 of the program; this could require a recommendation to NMFS, as well as a proposed and final rulemaking in order to approve and implement it.

The Council also considered whether the initial issuance of QS in the harvesting sector should be allocated to the vessel owner or the LE permit owner. Because the ownership of the permit better reflects the amount of investment in the fishery than the ownership of the vessel, and the permit is what authorizes the participation in the fishery, the Council recommended attaching the initial issuance to the qualifying permits. Subsequent transfers, as well as potential additional distributions, would allow for additional groups to buy into the fishery.

The Council also considered the highly controversial issue of allocation of harvest shares to processors. Several alternatives concerning the initial issuance of harvest QS to processors were considered, ranging from fifty percent of QS for all whiting and non-whiting IFQ species, to zero percent of QS for all IFQ species, to amounts within this range for whiting only. In its deliberation on this issue, the Council explored the issue of investment in the fishery, the role of ownership of QS in the conservation benefits of a catch share program, and the importance of a strong working relationship between the community, processors, and the harvesters. The Council's final recommendation was to provide to eligible shoreside processors twenty percent of the initial issuance of whiting QS only. The Council's rationale in choosing the preferred alternative focused on the need to carefully consider the balance of market power between harvesters and processors, as well as the importance to communities of maintaining processing capabilities along the coast. The Council believed that an initial allocation of twenty percent of the whiting resource to eligible shoreside processors struck an appropriate compromise among these multiple factors. In addition, the Council believed that the AMP could be used to lessen potential impacts to processors and communities.

i. Eligibility and Qualifying Criteria for Initial Issuance of QS

Both harvesters and shore-based processors could receive QS permits if they meet the initial eligibility and qualifying criteria.

(A) Eligibility and Qualifying Criteria for Harvesters

A harvester may apply for initial issuance of both whiting and non-whiting QS. To be eligible, the harvester

would need to own a LE trawl-endorsed permit. The Council considered that the significant investment in vessels and permits provide a good indicator of who should be eligible to apply among the fleet.

After considering several possible time periods to serve as the qualifying period, the Council recommended the years 1994-2003 for non-overfished species. These years represent the period of time from the beginning of the license limitation period through the announcement of the trawl rationalization control date. Dates prior to 1994 would not have permit histories because the LE system under which the permits were issued was not implemented until 1994. Other potential start dates between 1994 and 2003 were considered, including 1997 (the first year of fixed allocations among the three whiting sectors), 1998 (to exclude older histories), 1999 (the year of the first major reductions in response to overfished determinations), and 2000 (the year disaster was declared and fishing opportunities were significantly constrained and modified). The Council also considered 2004 as a later end date to the qualifying period, but determined that using 2004 would reward speculative entrants who chose to ignore the control date, create perceptions of inequity, and undermine the ability of the Council to use control dates in the future.

The recommended range of years from 1994-2003 would include fishing patterns from under a variety of circumstances, would recognize long-time users of the fishery, and is intended to mitigate disruptive effects experienced by communities as a result of geographic effort shifts. In addition, the dropping of the two worst years for whiting, or the three worst years for non-whiting, as well as the calculation of “relative history” (described below), is intended to mitigate against hardship cases and could reduce the requests regarding special circumstances and appeals.

Determination of overfished species QS would be based upon bycatch rates for different target species and areas and vessel logbook area distribution data from the years 2003-2006. This time period is used because the Council intended to accommodate more recent fishing patterns and spatial trends—and to provide the allocations of bycatch to those most in need of such allocations for the purpose of targeting healthy stocks. The Council declined to use catch history of these species as a basis for allocation because it would reward those who targeted these species in recent years.

(B) Eligibility and Qualifying Criteria for Processors

A shoreside processor may apply for initial issuance of whiting QS only. To be eligible, the processor would need to have received at least 1 metric ton of whiting from whiting trips (defined as a fishing trip where greater than or equal to 50 percent of all fish reported on the state landing receipt is whiting) in each year of at least two of the years from 1998-2004. The Council considered the greater likelihood of transient participation among processors, and therefore included the additional criteria of the minimum receipt requirement to demonstrate substantial participation.

For eligibility for initial issuance, “shoreside processor” would be defined as an operation on U.S. soil that takes delivery of trawl-caught groundfish that has not been processed and that thereafter engages that fish in shoreside processing activities, which include cutting groundfish into smaller portions; freezing, cooking, smoking, or drying groundfish; packaging that groundfish for resale into 100 pound units or smaller for sale or distribution into a wholesale or retail market; and the purchase of live groundfish from a harvesting vessel and redistribution in to a wholesale or retail market. Entities that received fish that have not undergone at-sea processing or shoreside processing and sell that fish directly to consumers would not be considered a processor for purposes of QS allocations.

The best official data that can be used to identify a processor that processed whiting on shore are the state landing receipts signed by the first receiver of the whiting. In a few cases, the first receiver that signed the landing receipts is not in fact the first processor of the whiting. Because of this, the process established to issue whiting QS to processors will allow the first receiver to apply for the QS. If the first receiver is not in fact the first processor, these regulations establish a process whereby the initial issuance of the QS could be issued to the first processor through agreement by the first processor and first receiver, or by a separate request for correction submitted by the first processor.

The Council developed formulas to determine initial issuance allocations of QS. The allocation formulas are based on vessel landings or processor receipt histories within the shoreside sector. Under the proposed rule, NMFS would use data from the Pacific Fisheries Information Network (PacFIN) of the Pacific States Marine Fisheries Commission to derive these histories.

In developing the allocation formulas, the Council considered whether to calculate QS based on a harvester's landings or processor's receipt history as expressed in absolute pounds or by the applicant's relative history. Relative history computes an applicant's history as a percentage of effort within the sector, rather than in absolute pounds, in order to take into account changes in fishing and processing opportunity between years. An example to illustrate the concept of relative history can be shown using a hypothetical fishery with one species, three permits, and four years. The permits' absolute catch history for each year, expressed as species weight, follows:

Year 1

Year 2

Year 3

Year 4

Permit 1

300

100

200

Permit 2

500

600

300

200

Permit 3

400

1200

400

100

Sector Total

1200

1900

900

500

The relative history for each permit would express each permit's catch in terms of a percentage of the total catch. Thus, in this hypothetical example, the permit's catch history would be divided by the total catch history of all permits in the sector. The relative history of this hypothetical fishery would look like this:

Year 1

(percent)

Year 2

(percent)

Year 3

(percent)

Year 4

(percent)

Permit 1

Permit 2

Permit 3

Sector Total

100

For calculating QS, some calculations drop years with the lowest relative history before summing all relative histories, with the QS determined by dividing the permit's total relative histories by the aggregate total for the sector. This can be shown in this hypothetical example by demonstrating one dropped year as follows (each permit's lowest relative history is crossed out and not counted in the total relative history for the permit or year in which it occurs):

Year 1

(percent)

Year 2

(percent)

Year 3

(percent)

Year 4

(percent)

Total

(sum of relative histories, less worst year)

(percent)

QS Allocation

(permit total relative history/total of sector relative histories)

(percent)

Permit 1

25.36

Permit 2

115

33.53

Permit 3

140

40.82

Sector Total (less worst years)

100

343

100.00

The calculation of relative history uses all catch history associated with the sector, regardless of whether all of that catch qualifies for QS, in order to demonstrate the permit or processor's actual performance relative to other participants.

The Council recommended specific allocation formulas for determining the initial amount of QS each eligible entity would receive. For harvesters, calculation of QS under this program would differ based on the eligibility of the underlying permits. The QS associated with the history of permits retired in the buyback program for all species (except incidentally-caught overfished species other than canary) would be distributed equally among the remaining qualified permits. The QS pool associated with the buyback permits would be the buyback permit history as a percent of the total fleet history for the allocation period, based on absolute pounds with no dropped years or other adjustments (about 44 percent of the QS would be allocated in this fashion).

The remaining harvester QS after computing the equal distribution would be calculated based on the history associated with each harvester's own current limited entry trawl permit. Different allocation formulas are used for whiting trips and non-whiting trips, as well as different formulas for target species and incidentally-caught overfished species in non-whiting trips. For initial issuance, a whiting trip would be defined as a fishing trip where greater than or equal to 50 percent of all fish reported on the state landing receipt are whiting (a non-whiting trip for purposes of initial issuance would be a fishing trip where less than 50 percent of all fish reported on the state landing receipt are whiting). For calculating QS based on a permit's landing history, NMFS would combine the landings histories of permits that have been combined. If two or more permits are registered to a single vessel, then NMFS would divide the landings history evenly among the permits. Landings history associated with provisional “A” permits that did not result in an “A” permit and landings associated with “B” permits would not be used; these permits no longer exist.

Within the regulations deemed by the Council as necessary or appropriate under the Magnuson Act, there were regulations where the Council expected NMFS to undertake the following when allocating catch history: “After applying standard PacFIN species composition algorithms and where the resulting species categorizations do not match IFQ species categories, NMFS will assign species to an IFQ species category based on other information from state landings receipts or logbook information in PacFIN.” As discussed in Appendix A to the Draft Environmental Impact Statement (DEIS) for Amendment 20 (

see

Tables A-57 and A-58), most of this issue concerns unspecified rockfish within the minor rockfish north and south IFQ categories. NMFS is unsure that such an analysis can be reasonably undertaken given the Council's staff estimate that about 25,000 fish tickets would have to be reviewed. As noted in Appendix A, this could be a source of appeal: “Another area in which some discretion will be exercised is the classification of fish ticket records for which species remains unspecified, even after the application of species composition information (unspecified flatfish and unspecified rockfish). Unspecified flatfish can be reasonably assigned to the “Other Flatfish” category. Unspecified rockfish is most likely remaining shelf rockfish but might also be remaining nearshore rockfish (outside the scope of the IFQ program) or remaining slope rockfish. A more accurate determination may be made by considering other species listed on the fish ticket as well as any logbook data that can be correlated with a particular trip. Judgments made in the application of this ancillary data to determine the correct attribution for unspecified rockfish may be a source of appeal. Data on the extent of this issue is provided in Section A-2.1.3. The precautionary note regarding changing fish tickets is included in response to rumors that during the license limitation program implementation state agency personnel were changing fish tickets at fishermen's requests without realizing the implications with respect to the license limitation permit issuance process.”

NMFS highlights this issue to request comments specifically on whether the agency should use information other than PacFIN data to assign species to an IFQ species category when such action would be impracticable in that it would be extremely time consuming and result in information that would not necessarily be accurate.

The Council also adopted language that stated: “History for illegal landings will not count for allocation of QS. Landings made under non-whiting Experimental Fishing Permits (EFPs) that are in excess of the cumulative limits in place for the nonEFP fishery will not count toward an allocation of QS.” However, the draft regulations deemed as necessary or appropriate under the Magnuson Act, by the Council stated that “Landings identified as being in excess of the cumulative landings limits in place (e.g., illegal landings, non-whiting EFP landings, etc.) will not count toward the allocation of QS.” The proposed regulation at § 660.140(d)(8)(iii)(A)(

) differs from what the Council initially deemed in order to match the language adopted by the Council. NMFS would rely upon information reported into the state fish ticket system (as documented in the PacFIN database) to identify such landings.

Allocations of QS based on a LE trawl-endorsed permit's catch history from whiting trips would be calculated from the permit's relative history from 1994-2003, dropping the two years with the worst relative history. Allocations for incidental catch in the whiting fishery would be made pro rata based on the qualifying permit's whiting history, meaning QS of bycatch species from whiting trips would be allocated at the same percent as whiting QS. Allocations of QS based on a LE trawl-endorsed permit's catch history for certain target species from non-whiting trips (called “Group 1” species in the proposed rule) would be calculated from the permit's relative history from 1994-2003, dropping the three years with the worst relative history.

Allocations of QS based on a LE trawl-endorsed permit's catch history for incidentally-caught overfished species from non-whiting trips (“Group 2” and “Group 3” species in the proposed rule) would be calculated by a formula that takes into account average bycatch rates based on 2003-2006 data from the West Coast Groundfish Observer Program (WCGOP), specific depth and latitude distributions determined from vessel logbook data, and the permit's QS allocations of certain target species. Bycatch rates specified in the proposed rule have been calculated by the NMFS' Northwest Fishery Science Center, and may be modified in the final rule for greater precision. To determine the weighting of various target species against which bycatch rates would be applied, NMFS would calculate a permit's estimated QP based on short-term non-whiting allocations applied to 2011 harvest specifications (initial calculations would be based on projections, subject to revision pending final specifications). The goal would be to address the QS recipient's need to cover incidental catch on non-whiting trips under current fishing practices. In order to make sure each qualifying permit receives an initial allocation of canary rockfish QS (“Group 3” species in the proposed rule), as described above, the landings history of vessels bought out through the buyback program for canary rockfish would be distributed evenly among qualifying QS permits.

Allocation of QS from whiting trips and from non-whiting trips would be calculated separately and weighted according to short-term allocations between whiting and non-whiting as set forth in 660.140(d)(8). The resulting amounts would be combined into a single QS for each species. Although not specifically addressed in the Council motion, for the first year of implementation only, NMFS would round overfished species QP up to the nearest pound for qualifying QS permits that would receive greater than zero, but less than one pound of an overfished species. This is intended to help mitigate the effects of initial issuance of overfished species QS.

Halibut IBQ for harvesters would be calculated using a formula based on QS for arrowtooth flounder and petrale sole, two target species that correlate to halibut bycatch. The formula would include additional factors such as area distribution of fishing effort and bycatch rates from WCGOP data applied to projected 2011 specifications, as set forth in full at § 660.140(d)(8). As with the QS calculation for overfished species, bycatch rates specified in the proposed rule may be modified in the final rule for greater precision.

For shoreside processors, calculation of whiting QS would be based on the relative history of the eligible processing company's receipts of whiting from whiting trips. NMFS would calculate whiting QS based on the processor's relative history from 1998-2004, dropping the 2 years with the worst relative history. NMFS would rely on PacFIN records to determine the first receiver/processor. A key consideration for this formula was to minimize disruption in the processing sector. An appeals process would allow NMFS to subsequently reassign landings history to another shoreside processor, if applicable.

ii. How To Obtain an Initial QS Permit

(A) Application and Correction

The proposed rule, at § 660.140(d)(8), sets forth two ways for qualified applicants to apply for a QS permit, either by responding to NMFS' prequalification materials, or by requesting a blank application and completing and submitting it to NMFS with evidence of qualification.

NMFS would mail “prequalified applications” to the eligible LE trawl permit holders and first receivers that appear to qualify for QS. The prequalification materials would show the basis for NMFS' calculations. If an eligible applicant does not receive a prequalified application from NMFS, the applicant may request a blank application from NMFS. The applicant would be required to complete the application and submit it to NMFS, along with additional information, by the application deadline. Failure to submit a complete application package to NMFS by the application deadline date would result in forgoing the ability to qualify for initial issuance of QS.

In preparation for this process, NMFS published, on January 29, 2010 (75 FR 4684), a final rule on data collection that included providing notice to participants in the industry to review their catch data for purposes of ensuring that the QS and other calculations undertaken by NMFS would be based on the best available data. In the February 19, 2010, “Small Entity Compliance Guide” associated with this rule, NMFS provided the following instructions: “For those individuals wanting to participate in the IFQ fishery, the data source is the Pacific States Marine Fisheries Commission's PacFIN database and includes the following: 1. Landings data during 1994-2003 from state fish tickets, as provided by the states to the PacFIN database, would be used to determine initial allocation of IFQ QS for the shore-based whiting and non-whiting harvesters and for the shore-based whiting processors. 2. The first receiver listed on the state fish ticket, as recorded in PacFIN, would be used to determine to whom whiting processing history should be attributed for whiting QS. Through NMFS' initial issuance process for QS, there would be an opportunity to reassign the whiting processing history. 3. State logbook information from 2003 through 2006, as

recorded in PacFIN, would be used to determine the area fished for individual permits (depth and latitudinal strata associated with permits). This information would be used in a formula to determine a permit's initial allocation of overfished species. For those seeking to participate in the MS or C/P fisheries, the data sources are from the NMFS' Northwest Fisheries Science Center's Pacific whiting observer data in NORPAC (NORPAC data). Observer data from the NORPAC database would be used to determine initial issuance of MS permits, mothership catcher vessel (MS/CV) endorsed permits, and C/P endorsed permits and allocation of whiting catch history assignments on MS/CV endorsed permits. Information on trawl-endorsed groundfish limited entry permits or permit combinations would come from limited entry permit records at NMFS, Northwest Region, Sustainable Fisheries Division, Fisheries Permits Office.”

All potential participants in the trawl rationalization program were requested to check the data that NMFS would use for initial issuance of permits and allocations of harvest privileges. This includes potential QS permit owners in the IFQ fishery, including harvesters and shore-based whiting processors. It also includes potential coop participants that may be issued a MS permit, a MS/CV endorsement with an associated whiting catch history assignment, or a C/P endorsement.

Participants were instructed that this would be the only opportunity for potential participants in the trawl rationalization program to review and, if necessary, correct their fishery data prior to initial issuance of permits and allocations. At that time, NMFS stated that it was very important that this information be reviewed prior to the publication of the proposed rule for the trawl rationalization program, so that when NMFS extracts a copy of the databases for the initial issuance of permits and allocations, the data is correct. Participants were further instructed that NMFS would not allow this data to be corrected during the initial issuance and appeals process. Only NMFS' extraction, expansion, or aggregation of the data would be subject to appeal, not whether the raw data NMFS used was correct.

Because none of the data is publicly available at the individual level, for confidentiality reasons, NMFS provided instructions and Federal and state contact information for participants to use in requesting data and correcting data. (In support of this process, the PSMFC developed scripts for the States to use in providing fishermen and processors their data.) NMFS also indicated that if existing data contains a mistake, such as a transcription error, then the participant may request a correction. However, requests to add new data to PacFIN or NORPAC would not be considered. For logbooks, only existing logbook information in PacFIN may be corrected (i.e., only transcription errors); no new logbooks dating back to 2003 through 2006 would be accepted. Any revisions to an entity's fish tickets or logbooks would have to be approved by the state in order to be accepted by NMFS.

NMFS previously announced that the agency intended to extract a copy of the databases for the purposes of initial issuance on the date of publication of the proposed rule for initial issuance (i.e., the date of publication of this proposed rule). However, upon further consideration, NMFS has chosen to specify the date of extraction as July 1, 2010, in order to give the public more time to verify their data. Potential participants have had notice of the significance of verifying their data, and this extension to July 1, 2010, gives them additional time.

NMFS is proposing in this rule that the only basis for appeal would be the same as the basis for corrections which are errors in NMFS' extraction, aggregation, or expansion of data, including: Errors in NMFS extraction of landings data from PacFIN; errors in NMFS extraction of state logbook data from PacFIN; errors in NMFS application of the QS allocation formula; errors in the identification of the permit owner, permit combinations, or vessel registration as listed in NMFS' permit database; and errors in ownership information for first receivers and shoreside processors. The proposed rule, at § 660.140(d)(8), sets forth requirements for requesting these corrections. If an applicant does not accept NMFS' calculation in the pre-qualified application, the applicant would be required to identify in writing to NMFS which parts of the application the applicant contends to be inaccurate, and provide specific, credible information to substantiate any request for correction by the application deadline date. The proposed rule also sets forth requirements for reassignment of whiting landings history for shoreside processors, which require a written request signed by both parties providing specific information. An additional basis for requesting a correction or appeal for whiting QS based on shoreside processing would also be an allegation that the first receiver to which a QS permit and QS have been assigned was not in fact the first processor of the fish included in the qualifying history.

In support of this process, the Council provided the industry a series of tables with its preliminary estimates of QS. (

See http://www.pcouncil.org/groundfish/fishery-management-plan/fmp-amendment-20/trawl-rationalization-schedule-and-quota-share-allocation-tables/#qs

). The Council provided a QS allocation table for permits that shows the estimated initial allocations of QS on a permit-by-permit basis, as developed for purposes of analysis. The last line of the tables provides the whiting allocations for the MS/CV-endorsed permit catch history assignments that would be part of the MS coop program. The permit identifiers were masked for confidentiality reasons; the unmasked number for any particular permit is available only to the owner of that permit. The Council office mailed those numbers to permit owner. (A list of the owners of LE permits is available from the NMFS Limited Entry Permit Office Web site at

https://nwr2.nmfs.noaa.gov/nwp_public_ss/HOME/index_pub_permits_ss.cfm.

)

The Council described how its QS estimates were calculated. The QS estimates are based on 1994-2003 state fish ticket information acquired in the fall of 2006 from the PacFIN database, port sampler information which records the average species mixes for species reported on fish tickets as a group (

e.g.,

“Other Rockfish”); WCGOP data from 2003 to 2006; and individual permit logbook information for 2003 through 2006. With respect to the logbook information, if a permit was not active from 2003-2006, fleet-wide averages were used in place of the permit-specific logbook information. The allocation formulas that were applied are those from Section A-2.1.3 of the Council recommended program.

A similar table was provided for initial estimates of whiting QS that may be allocated to whiting processors. Twenty percent of the total whiting QS would be allocated to processors, as determined for the purpose of analysis. For processors to qualify they would be required to first meet a recent participation criteria, which requires that—in each of at least 2 years from 1998 through 2004—a processor would be required to have processed at least one metric ton (mt) from a vessel making a whiting trip. Available data indicates there are 11 companies that meet this criterion. Two tables were provided for processors; one provided a list of the companies meeting the recent participation criteria and the other showed an estimate of the amount of QS

projected for each company. For the QS estimates, the identity of the processor expected to receive the QS was masked, as was done for the permit owners.

The Council indicated that the actual QS allocations would be determined by NMFS and may vary from these estimates for a variety of reasons, including (but not limited to):

• A change in the allocation of harvest between shore-based whiting and non-whiting sectors or a change in the QS initial allocation formula arising through a partial disapproval of the program by NMFS;

• A change in the rebuilding status for overfished species or a new finding that a particular species is overfished, since the shoreside whiting/non-whiting sector split and QS allocation formulas for overfished species differ from that of non-overfished species; and

• The correction of an error in the fish tickets or logbooks on record for a particular permit (such a change may cause adjustments to the initial allocations for all other permits).

The Council also provided a hypothetical conversion of the initial QS allocations to QP based on OYs for the 2010 fishery and the trawl sector allocations recommended by the Council in April 2009. This is hypothetical because (1) actual QP available to the fishery, if and when this program begins after 2010, would differ from the 2010 example used here, and (2) the estimated QS for a permit may vary from the final actual QS issued to that permit, for the reasons cited above.

The November 11, 2009, update of these tables included modification of the canary QS allocations pursuant to actions taken by the Council at its November 2009 meeting and modification of the catch area assignments. Modification of the catch area assignments primarily affected the allocation of southern sablefish and southern shortspine thornyheads. The Council also noted that for some species, such as bocaccio, the trawl sector allocations may be greater than those assumed in the example. On December 18, 2009, the Pacific halibut and MS whiting estimates were added. On January 25, 2010, the Processor Whiting QS Allocation Table was added. This table was revised on April 9, 2010.

Applicants would be required to submit completed, signed, notarized applications by the deadline date (60 days after date of publication of the final rule in the

Federal Register

). The proposed rule sets forth the requirements for complete applications at § 660.140(d)(8). To be complete, the application would be required to include: Certification that the applicant qualifies to own QS; indication as to whether the applicant accepts NMFS' calculation of initial issuance of QS provided in the prequalified application, or credible information that demonstrates their qualification for QS; and a complete Trawl Identification of Ownership Interest Form identifying all individuals with 2 percent or greater interest in the permit. Business entities may be required to submit a corporate resolution or other credible documentation as proof that the representative of the entity is authorized to act on behalf of the entity. NMFS may request additional information of the applicant as necessary to make an initial administrative determination (IAD) on initial QS issuance.

(B) IAD and Appeals

NMFS would issue an IAD for all complete, certified applications received by the application deadline date. If NMFS approves an application for initial issuance of QS, the applicant would receive a QS Permit specifying the amounts of QS for which the applicant has qualified and the applicant would be registered to a QS Account. If NMFS disapproves an application or a portion of the QS applied for, the IAD would provide the reasons NMFS did not approve or only partially approved the application. If the applicant does not appeal the IAD within 30 calendar days of the date on the IAD, the IAD would become the final decision of the Regional Administrator acting on behalf of the Secretary of Commerce.

An applicant who disagrees with NMFS' determination on the application would be required to appeal within 30 days or the IAD would become final. The proposed rule sets forth procedures and timelines for making appeals at § 660.25(g). Only the applicant may appeal the IAD. In this proposed rule, NMFS is proposing that there is no option to appeal a decision based on incomplete or inadequate data; the only basis for appeal would be the same as the basis for corrections which are errors in NMFS' extraction, aggregation, or expansion of data, including: Errors in NMFS extraction of landings data from PacFIN; errors in NMFS extraction of state logbook data from PacFIN; errors in NMFS application of the QS allocation formula; errors in identification of the permit owner, permit combinations, or vessel registration as listed in NMFS permit database; and errors in ownership information for first receivers and shoreside processors. An additional basis for appeal for whiting QS based on shoreside processing would also be an allegation that the first receiver to which a QS permit and QS have been assigned is not in fact the first processor for those fish. The appeal would be required to be in writing and allege credible facts to show why the criteria have been met. In addition, § 660.140(d)(8) of the proposed rule specifies that certain issues may not be appealed, including but not limited to: The accuracy of the permit landings data or shoreside first receiver landings data in the dataset extracted from PacFIN by NMFS on July 1, 2010.

The proposed rule would address the status of permits pending appeal as follows. For permits and endorsement qualifications and eligibility appeals (i.e., QS permit (permit eligibility, not amounts), MS permit, MS/CV endorsement, C/P endorsement), any permit or endorsement under appeal may not fish in the Pacific Coast groundfish fishery until a final decision on the appeal has been made. If the permit or endorsement is issued, the permit or endorsement would be effective upon approval, except for QS permits, which would be effective at the start of the next fishing year.

For a QS amount for specific IFQ management unit species under appeal, the QS amount for the IFQ species under appeal would remain as that previously assigned to the associated QS in the IAD. The QS permit could be used to fish in the Pacific Coast groundfish fishery with the QS amounts assigned to the QS permit in the IAD. Once a final decision on the appeal has been made—and if a revised QS amount for a specific IFQ species would be assigned to the QS permit—the QS amount associated with the QS permit would be effective at the start of the next calendar year.

b. Transfers

After the first 2 years of program implementation, transfers of QS would be allowed. While criteria for initial issuance limit recipients to owners of LE trawl permits, after the first 2 years, transfers could be made to a broader group. Generally, anyone eligible to own a U.S.-documented fishing vessel could acquire QS and QP in increments as small as one pound. These provisions would allow for new entrants into the fishery; for example, a crew member could slowly purchase amounts of quota. They would also allow for ownership of QS by communities, non-governmental organizations, or other entities.

This transferability would be expected to facilitate bycatch reduction and efficiency. Through the transfer of QS/QP (bought and sold or “leased” through private contract), it is anticipated that those best able to avoid catching overfished species, and those who are most efficient, would increase the amount of QS/QP registered to them, while those who consistently have high bycatch rates or operate less efficiently might choose to sell their QS and leave the fishery.

c. Requirement to Transfer QP Into Vessel Account

Each year, all QP would be required to be transferred into a vessel account by September 1. This requirement is intended to encourage its availability for use by the fleet.

d. Distribution of Additional Quota Shares

In Amendment 20, the Council indicates that it would consider the use of an auction or other non-history-based method when distributing QS that may become available after initial allocation. This may include quota created when a stock transitions from overfished to non-overfished status, quota not used by the AMP, quota forfeited to “use it or lose it” provisions, and any quota that becomes available as a result of the initial or subsequent reviews of the program. The method of distribution would be designed to achieve the goals of Amendment 20, including minimizing the adverse effects from an IFQ program on fishing communities to the extent practical.

4. Ownership Limitations and Accumulation Limits

While transferability is an important component of the Amendment 20 program, there would also be accumulation limits on the amount of QS or QP that could be controlled by a person. The intent of these limits is to prevent excessive control of quota by a participant. The MSA specifically requires the establishment of a maximum share that each limited access privilege holder is permitted to hold, acquire, or use.

a. Limits

In developing limits, the Council noted the tension between allowing sufficient accumulation to improve the efficiencies of harvesting activities and preventing levels of accumulation that could result in adverse economic and social effects. In determining the appropriate levels, the Council considered a wide range of factors such as social benefits, impact on labor, impacts on processors, impacts on harvesters, impacts on the public, the number and sizes of firms, within-sector competition, market power, efficiency, geographic distribution, communities, and fairness and equity.

Amendment 20 would establish limits (by species group and area) on the amount of QS an individual can control (control limits). Control limits would apply to individual species, species groups (and area, for some species), expressed as a percentage of the shore-based IFQ program's allocation. The proposed control limits are set forth in the proposed rule in the table at § 660.140(d)(4). In addition, the proposed rule would establish a control limit for the amount of non-whiting QS a person may control in aggregate.

To determine a person's aggregate amount of non-whiting QS, the Council adopted a formula that would convert QS to poundage to reflect the weighting between individual stocks. Because individual non-whiting species' stock fluctuations would affect a QS owner's aggregate QS holdings, the Council motion states that “This conversion will always be conducted using the trawl allocations applied to the 2010 OYs, until such time as the Council recommends otherwise” and that “QS for each species will be multiplied by the shoreside trawl allocation for that species.” However, because no shoreside trawl allocation existed in 2010 that could be applied to the 2010 OYs, it is not clear how NMFS would calculate the aggregate non-whiting control limit. If the Council intended to use the OYs from the initial implementation year (i.e., if it were under the mistaken impression that 2010 was to be the implementation year) and the 2011 OYs were used, there would be no problem determining the aggregate non-whiting amount, as the sector allocation could be calculated by deducting the at-sea sector set asides for each species from the limited entry trawl sector allocation for that species. In 2010, however, non-whiting target species did not have at-sea set asides that could be deducted from the limited entry trawl sector allocation to calculate a shoreside trawl allocation. NMFS specifically requests comment on this issue to address in the final rule.

NMFS would determine and track ownership interest in QS to determine if individuals are within set limits, both at the initial allocation stage and during the operation of the program. As part of the IAD on the initial application, NMFS would indicate if the QS Permit owner has QS in amounts that exceed the accumulation limits and are subject to divestiture provisions set forth in § 660.140(d)(4). NMFS would determine ownership interest based on the “Individual and Collective Rule,” which means that the QS that counts toward a person's accumulation limit would include both the QS owned by that person, and a portion of the QS owned by an entity in which that person has an interest.

The proposed rule contains additional interpretation of the word “control,” which is intended to address the Council's concern that a person could control QS by controlling QP. The proposed rule is intended to set the boundaries around QS control limits, including QP but excluding QP in a vessel account if subject to separate accumulation limits. If control of QP is not subject to the QS control limits, a person could use control over QP to control a percentage of the harvest from the fishery in excess of that intended under the QS control-limit percentage. In other words, if the QS control limits are not extended to QP, there is no assurance that QS control limits would perform their intended function. At some point, QP control amounts to the functional equivalent of QS control. The following examples illustrate undesirable forms of control:

Example 1.

A QS holder enters into a multi-year agreement under which another person has the right to direct how the QS holder's QP is used. The person controlling the QP has essentially gained control of the QS even beyond the duration of the QP issued during the first year of the agreement.

Example 2.

Vessel financing arrangements under which a lender who is engaged in the seafood business exercises control over the catch delivered by a fisherman-borrower are not uncommon. These arrangements sometimes require that the fisherman deliver his catch as the lender directs, and provide for a method of calculating “market value” of the catch. In other cases, the lender may hold a right of first refusal (“ROFR”) over the catch. While the ROFR does not in and of itself require that the fisherman deliver to the lender, it provides the lender with the authority to decide on a delivery-by-delivery basis whether the catch would be delivered to a third party or the lender, and thereby effectively gives the lender control over catch. If a single lender entered into arrangements of this type with a number of fishermen, the lender could potentially control a percentage of QP for the fishery in excess of the QS control limit percentage through those arrangements, without having asserted direct control over the fishermen's QS.

Example 3.

Crew assign QP to a vessel, or fishermen transfer QP to a vessel but do not grant control over QS. This would not count toward QS control limits; however, it would indicate control if long term control of disposition of the QP derived from the QS were granted.

Similar regulatory language would apply a control limit to Pacific halibut IBQ.

b. Divestiture

Amendment 20 would establish different rules for complying with the accumulation limits depending on when the permits were transferred. For permits transferred prior to November 8, 2008, and which exceed the accumulation limits, the permit owner would initially receive the entire amount of QS for which the permit qualifies. However, the permit owner would be required to divest of the amount in excess of the limit sometime during years 3 and 4 of the IFQ program, and, at the end of year 4 of the IFQ program, any QS owned or controlled by a person in excess of the accumulation limits would be revoked and redistributed to the remainder of the QS owners in proportion to the QS holdings in year 5. No compensation would be due for any revoked shares.

For permits transferred after November 8, 2008, the permit owner would only be able to receive QS amounts that are within the appropriate limits. The initial issuance of QS would be reduced in order to comply with the applicable control limits. For non-whiting species, whether NMFS applies the aggregate non-whiting control limit first or applies individual non-whiting species control limits first may affect the initial QS allocation for each species. Generally, application of the aggregate non-whiting control limit first would result in an allocation that more closely reflects the weighting of non-whiting species in the permit's history. NMFS highlights this issue to seek specific comment on which approach to use.

5. QS Account/Annual Renewal

Once a person is found eligible for a QS permit, NMFS would issue QS and register it to a QS account. At the beginning of each year and after QS permit renewal, NMFS would assign a specific amount of QP representing the QS percentage to the account. QS owners would be required to transfer their QP from their QS account to a vessel account in order for those QP to be fished.

6. Overages and Carryovers

Amendment 20 would provide flexibility by allowing a 30-day grace period after which an overage occurred to acquire QP into the vessel account to cover the overage. However, during this 30-day period, no more fishing could occur and no QS transfers could take place until the account is settled. If an overage shows on the fish ticket at the time of landing or in the vessel account at any time after the landing, the clock would start when any data/documentation from the trip which caused the overage is available or the vessel account shows there is an overage.

To the extent allowed by the conservation requirements of the MSA, Amendment 20 would include a “carryover allowance” that would allow surplus QP in a vessel account to be carried over from one year to the next or allow a deficit in a vessel account for one year to be carried over and covered with QP from a subsequent year. Surplus QP could not be carried over for more than 1 year and could not exceed in 1 year the carryover allowance as described below.

A vessel with a QP surplus at the end of the current year would be able to use that QP in the immediately following year, up to the limit of the carryover allowance (see below). However, if there is a decline in the OY, the amount of QP carried over as a surplus would be reduced in proportion to the reduction in the OY.

A vessel with a QP deficit in the current year would be able to cover that deficit with QP from the following year without incurring a violation if the amount of QP it needs from the following year is within the carryover allowance and the QP are acquired within the specified time limits.

The carryover amount for a deficit is based on the amount of QP in the vessel account at the end of the 30-day period during which a vessel would be required to cover its overage. The carryover amount for a surplus is based on the amount of QP in the vessel account at the end of the year.

The carryover allowance would be limited to up to 10 percent carryover for each species. This would apply to both non-overfished species and overfished species. The percentage would be calculated based on the total pounds (used and unused) in a vessel account for the current year. The percentage used for the carryover provision could be changed during the biennial specifications process.

7. Catch Monitoring and Tracking (or Tracking, Monitoring and Enforcement)

Amendment 20 would include a tracking and monitoring program to assure that all catch (including discards) would be documented and matched against QP. The Council specified that observers would be required on all vessels and shoreside monitoring (catch monitors) would be required during all offloading (100 percent coverage). Compared to status quo monitoring, this would be a monitoring and observer coverage level increase for a large portion of the trawl fleet, particularly non-whiting shore-based vessels. As a result, more accurate estimates of total mortality would be expected to benefit stock conservation goals, as well as other goals discussed herein.

The Council recommended providing NMFS flexibility to develop a monitoring program that would achieve the objectives of the trawl rationalization program. NMFS is working closely with the States and the Council to develop the details of the tracking and monitoring program, as reported by PSMFC at the April 2010 Council meeting. The details of the program would be proposed in the upcoming program components rule. As reported by PSMFC, the following tracking and monitoring components would be addressed.

Amendment 20 would require NMFS-certified at-sea observers on each vessel. These include shore-based catcher vessels, catcher vessels in the mothership sector, motherships, and C/Ps. Because this is a new program, ensuring adequate observer coverage would be particularly important for monitoring the complex suite of allocations. Observers aboard vessels would be required to adequately account for catch and bycatch in the fishery. Among his or her duties, the observer would record fishing effort and estimate total, retained and discarded catch weight by species; determine species composition of retained and discarded catch (non-whiting vessels) and document the reasons for discard; record interactions and sightings of protected species; and take biological samples from tagged fish and discards, and estimate the viability of Pacific halibut. Observers would be essential for monitoring the use of IBQ in the fishery, including the weighing and discarding of halibut bycatch.

An increase in observer and catch-monitoring coverage requirements would result in increased costs over the status quo observer program costs. There would be a combined status quo, pay-as-you-go industry funding and agency-funded observer and catch monitor system as required for each sector. The agency has announced its intent, subject to available Federal funding, that participants would initially be responsible for 10 percent of the cost of hiring observers and catch monitors. The industry proportion of the costs of hiring observers and catch monitors would be increased every year so that by 2014, once the fishery has transitioned to the rationalization program, the industry would be

responsible for 100 percent of the cost of hiring the observers and catch monitors. NMFS believes that an incrementally reduced subsidy to industry-funding would enhance the observer and catch monitor program's stability, ensure 100 percent observer and catch monitor coverage, and facilitate the industry's successful transition to the new rationalized trawl fishery.

Amendment 20 would require that first receivers—the shoreside processors—sort, weigh and report all landings of IFQ species under a catch monitoring plan. First receivers would be required to hire NMFS-certified catch monitors to verify all shoreside deliveries of IFQ species, ensure that species are sorted to Federal species of species group, ensure that the fish are weighed on state-certified scales that are periodically tested, and record and submit catch data daily.

To ensure that the IFQ program goals are met and landings are tracked, first receivers would be required to submit electronic fish tickets using software provided by the PSMFC. Further, vessels would be required to use vessel monitoring systems (VMS) for purposes of indicating location of the vessels and to make declarations. In addition, there are plans to develop and require an electronic vessel logbook, but this component would not be immediately implemented.

To ensure that program goals are met to track transferrable QS and QP, NMFS is also developing an online accounting system for the tracking and trading of QS by owner and for the tracking, trading, and use of the QP that results from these QS by vessels.

8. Fees

The agency would collect fees to cover the administrative costs of issuing the QS, permit endorsements (one-time fee and annual renewal), and first receiver site licenses (annual). Amendment 20 would allow for assessing cost recovery fees of up to 3 percent of ex-vessel value, consistent with section 303A(e) of the MSA. The costs to be recovered would be the agency's costs of management, data collection, analysis, and enforcement activities. The Council would develop the methodology required by section 303(A)(e) in a trailing action.

9. Management (Accountability Measures)

If individual vessel overages (catch not covered by QP) make it necessary, area restrictions, season closures, or other measures could be used to prevent the trawl sector (in aggregate or the individual trawl sectors listed here) from going over allocations. The IFQ fishery may also be restricted or closed as a result of overages in other sectors.

10. Retention and Discard Provisions

For non-whiting vessels and whiting vessels sorting at-sea, Amendment 20 would allow discarding of IFQ species, but such discards would have to be covered by QP. Discarding of Pacific halibut would be required and would have to be covered by IBQ. Discarding of non-IFQ species and non-groundfish species would be allowed.

For whiting maximized retention vessels, discarding of fish covered by IFQ or IBQ, and discarding of nongroundfish species, would be prohibited.

11. First Receiver/Processor Permit

Amendment 20 would require processors that are the first receivers of IFQ species to obtain a site license in order to accept shoreside deliveries. A license could be issued to any site that meets the monitoring requirements.

12. Adaptive Management Program

Amendment 20 contains an AMP for the shore-based non-whiting sector that is intended to address: Community stability; processor stability; conservation; unintended and unforeseen consequences of IFQ management; and facilitating new entrants. Ten percent of the shore-based non-whiting QS would be reserved, or set aside, for the AMP. During the first 2 years of the IFQ program, the method to be used in distributing QP in years 3-5 would be determined, including the decision-making and organization structure to be used in distributing the QP set aside.

The set aside of QP for the identified objectives would be reviewed as part of the year 5 comprehensive review and a range of sunset dates would be considered, including 10-, 15-, 20-year and no sunset date options.

13. Data Collection

Amendment 20 would require expansion of the data collection program. Submission of economic data by harvesters and processors would be mandatory. Random and targeted audits could be used to validate mandatory data submissions. Information on QS transaction prices would be included in a central QS ownership registry.

14. Program Review

Amendment 20 provides for a review of the IFQ program to begin no later than 5 years after implementation of the program. The review would evaluate the progress the IFQ program has made in achieving the goal and objectives of Amendment 20. The result of this evaluation could include dissolution of the program, revocation of all or part of QS, or other fundamental changes to the program. Owners of QS should remain cognizant of this fact when making decisions regarding their QS, including buying selling, and leasing of these shares.

Amendment 20 requires the Council to consider the use of an auction or other non-history based methods when distributing QS that may become available after initial allocation. This may include quota created when a stock transitions from overfished to non-overfished status, quota not used by the adaptive management program, quota forfeited to “use it or lose it” provisions, and any quota that becomes available as a result of the initial or subsequent reviews of the program. The specific form of the auction or other method of distribution would be designed to achieve the goals of Amendment 20, specifically including minimizing the adverse effects from an IFQ program on fishing communities to the extent practical.

After the initial review, there would be a review process every four years. A community advisory committee would take part in the review of IFQ program performance.

B. Mothership Coop Program

The term “cooperative” refers to a collective arrangement among a like-minded group of individuals. Cooperatives, also called coops, are entities that are controlled by the people who use them. They differ from other business entities because they are member owned and operate for the benefit of members. The cooperatives designed under Amendment 20 are designed to coordinate harvest among members, thus they can be described as “harvest cooperatives.” Under Amendment 20, each MS cooperative would annually be allocated an amount of catch based on the combined catch histories of its members for that year. As designed under Amendment 20, the harvest cooperatives for both the MS and C/P sectors would constitute a form of allocation that facilitates catch accounting down to individual vessel levels by allowing private contracts and intra-coop self-monitoring.

1. Structure Overview

The Mothership Coop Program (MS Coop Program) would apply to harvesters and processors in the MS sector of the at-sea whiting trawl fishery. The MS Coop Program would

also apply both to vessels participating in a coop as well those not participating in a coop. For those participating in coops, the program would assign to each MS coop a designated amount of harvest privilege representing a “sub-allocation” of the total MS sector allocation. MS coop membership would consist of MS/CV-endorsed permit owners who enter into a coop agreement that is accepted by NMFS. Participants in the MS coop include the catcher vessels registered to the member MS/CV-endorsed permits, LE permitted trawl vessels without an MS/CV-endorsed permit that are working with the coop, and the motherships to which the MS/CVs-endorsed permits are obligated. Once a coop agreement is accepted, NMFS would issue the coop a permit, and would assign to the coop a “sub-allocation” of catch that is derived from the catch histories of the individual MS/CV-endorsed permits in the coop.

The MS Coop Program would establish new requirements for MS permits and MS/CV permit endorsements. Similar to the shore-based IFQ program, NMFS would be required to track ownership interest in both MS permits and MS/CV-endorsed permits to determine if individual vessels are within set accumulation and usage limits, as described further below.

The vessels registered to MS/CV endorsed permits in the MS sector that do not participate in a coop would be able to fish in the non-coop fishery. The non-coop whiting fishery would be authorized to harvest the Pacific whiting remaining in the MS sector annual allocation after the deduction of all coop allocations. For non-whiting, the sub-allocation to the non-coop fishery would be in proportion to the MS/CV Pacific whiting catch history assignments for the non-coop fishery.

Participants in the MS sector would be required to declare annually in what capacity they would operate: Coop or non-coop. Additionally, MS/CV-endorsed permits operating in a coop would be required to indicate to which MS permit they would be obligated.

2. Coop Species

Pursuant to Amendment 20, hard caps would be established for the following species: Pacific whiting, Pacific ocean perch, widow rockfish, canary rockfish, and darkblotched rockfish. In addition, annual MS sector set-asides would be established for lingcod, Pacific cod, sablefish S. of 36° N. lat., chilipepper S. of 40°10′ N. lat., splitnose S. of 40°10′ N. lat., yellowtail N. of 40°10′ N. lat., shortspine N. of 34°27′ N. lat., shortspine S. of 34°27′ N. lat., longspine N. of 34°27′ N. lat., minor slope rockfish N. of 40°10′ N. lat., minor slope rockfish S. of 40°10′ N. lat., Dover sole, English sole, petrale sole, arrowtooth flounder, starry flounder, and Other Flatfish. Groundfish species with MS sector set-asides would be managed on an annual basis unless there is a risk of a harvest specification being exceeded, unforeseen impact on another fisheries, or conservation concerns in which case inseason action may be taken. Set-asides may be adjusted through the biennial specifications and management measures process as necessary.

The MS Coop Program would not establish allocations or set-asides for infrequently occurring species, such as shortbelly rockfish, longspine thornyhead S. of 34°27′ N. lat., black rockfish (WOC), minor rockfish north nearshore species complex, minor rockfish south nearshore species complex, CA scorpionfish, cabezon (CA only), kelp greenling, and Other Fish. Many of these occur primarily in nearshore areas where trawl gear does not operate and are mostly managed by the states. There is no market for shortbelly, and its OY is large compared to the amount of incidental catch. Other rockfish and other fish are not caught in large volumes and catch of these species would be constrained by limits on other species. Like set-asides, these species would be managed on an annual basis unless there is a risk of a harvest specification being exceeded, unforeseen impact on another fisheries, or conservation concerns (in which case inseason action may be taken). Annually, a specified amount of the Pacific halibut would be held in reserve as a set-aside for the Pacific whiting MS sector.

3. Who/How To Participate

The MS Coop Program would issue MS permits and MS/CV endorsements for LE permits to qualified applicants and would establish new requirements for participation.

a. Permit and Endorsement Requirements

Under the MS coop program, vessels participating as motherships would be required to be registered to MS permits. Catcher vessels fishing for a MS coop would need to be registered to a MS/CV-endorsed permit, or be registered to a LE trawl endorsed permit without an MS/CV endorsement with permission of the coop, as described below. Catcher vessels in the non-coop fishery would be required to be registered to a MS/CV-endorsed permit.

i. MS Permit Initial Issuance

The proposed program would close the MS sector by creating a LE program and requiring registration of the vessel to a new type of LE permit, an MS permit. The restriction preventing mothership vessels from operating as catcher vessels or C/Ps during a year in which they operate as motherships would be maintained. The owners of qualifying motherships would be issued MS permits. The following requirements govern the process for obtaining an MS permit.

(A) Eligibility

Generally, an owner of a vessel that processed whiting in the MS sector in the qualifying years would be eligible to apply for a MS permit. However, there would be an exception to address a vessel that was a bareboat charter during the qualifying period.

(B) Qualifying Criteria

In order for an owner of a mothership to qualify for a MS permit, the mothership would be required to have processed at least 1,000 mt of whiting in each of 2 years during the qualifying years of 1997-2003. The Council intended these criteria to recognize those participants that have substantially participated as a mothership in the Pacific whiting fishery. Using the years 1997 to 2003 is intended to reflect the time period between the date the C/P sector and the MS sector were separated from a general at-sea sector in regulation (1997) and to be consistent with the control date (2003).

NMFS would make a preliminary determination of whether a mothership meets the qualifying criteria using Pacific Whiting Observer data as extracted from the NORPAC database on July 1, 2010. If a mothership meets the qualifying criteria for an MS permit, NMFS would mail to the owner of the vessel an application pre-filled with qualifying information at the address of record as currently given in NMFS permit database. Pre-filled applications would be required to be completed and returned to NMFS by the application deadline date.

Owners of vessels that do not receive a prequalified application from NMFS, and believe they are qualified for a MS Permit, would be required to complete an application package (available from NMFS) and submit the completed application to NMFS by the deadline date. If an applicant fails to complete and return an application by the deadline date, the person forgoes the

opportunity to receive consideration for initial issuance of a MS permit.

If an applicant does not agree with the basis for NMFS' determination, the applicant would be required to submit, by the application deadline, a written statement identifying the incorrect information and providing credible documentation to support a correction, as set forth in the proposed rule at § 660.150(f)(6). Corrections may only be submitted for errors in NMFS' extraction, aggregation, or expansion of the dataset that was extracted from NORPAC by NMFS on July 1, 2010. Corrections may be submitted for errors in NMFS extraction of data from NORPAC, errors in NMFS calculation, and errors in the vessel registration as listed in NMFS permit database or in the identification of the mothership owner or bareboat charterer.

The current vessel owner would be required to then submit a completed application by the deadline date (60 days after date of publication of the final rule in the

Federal Register

). A complete application would be required to be signed and notarized, and must include all of the information required by NMFS which includes, but is not limited to, the factors specified at § 660.150(f)(6), including: Certification that the applicant qualifies to own a MS permit and indication of whether they agree or disagree with NMFS' determination on initial issuance of the MS permit provided in the application; a complete Trawl Identification of Ownership Interest Form; business entities may be required to submit a corporate resolution or any other credible documentation as proof that the representative of the entity is authorized to act on behalf of the entity; a bareboat charterer would be required to provide credible evidence that demonstrates it was chartering the MS vessel under a private contract during the qualifying years. NMFS may request additional information of the applicant as necessary to make an IAD.

(D) IAD and Appeals

NMFS would issue an IAD for all complete, certified applications received by the application deadline date. If NMFS approves an application, the applicant would receive a MS permit. If NMFS disapproves an applicant's request to correct the application, the IAD would provide the reasons NMFS did not accept the corrections. If the applicant does not appeal the IAD within 30 calendar days of the date on the IAD, the IAD becomes the final decision of the Regional Administrator acting on behalf of the Secretary of Commerce.

An applicant who disagrees with NMFS' determination on the application would be required to appeal within 30 days or the IAD would become final. The proposed rule's appeals procedures at § 660.25(g) would apply to this section as well as additional specific requirements at § 660.25(f)(6), which limit the scope of appeals to the issues that can be corrected and further specify that some issues are not subject to appeal, including but not limited to: The accuracy of data in the dataset extracted from NORPAC by NMFS on July 1, 2010.

ii. MS/CV Endorsement, Initial Issuance, Catch History Assignment (CHA), and Appeals

In order to fish in the MS sector, a catcher vessel would be required to be either registered to a MS/CV-endorsed LE permit or registered to a trawl-endorsed LE permit without a MS/CV or C/P endorsement. Vessels registered to a MS/CV-endorsed LE permit would be able to elect to fish in either the coop or non-coop sector. Vessels registered to a trawl-endorsed LE permit without MS/CV-endorsed LE permits would only be able to fish in the coop sector under a specific coop agreement with permission of the coop. Vessels registered to a C/P-endorsed LE permit could not fish in the MS sector. Vessels fishing as catcher vessels in the MS sector could not function as motherships or C/Ps during the same calendar year.

(A) Eligible Applicant

Only an owner of a current trawl endorsed LE permit with a history of whiting deliveries in the MS whiting sector is eligible to receive a MS/CV endorsement. Any past catch history associated with a current trawl permit would accrue to the current permit owner. If a trawl limited entry permit is eligible to receive both a C/P endorsement and a MS/CV endorsement, the permit owner would be required to choose which endorsement to apply for (i.e., the owner of such a permit may not receive both a C/P and MS/CV endorsement).

(B) Endorsement Qualifying Criteria

In order to qualify for a MS/CV endorsement, vessels registered to a trawl-endorsed LE permit would be required to have caught and delivered more than 500 mt of whiting to motherships from 1994 through 2003. Deliveries of whiting by vessels registered to permits that were subsequently combined to generate the current permit would count toward qualifying tonnage unless the permit owner also applies for a C/P permit. These criteria were selected to demonstrate substantial participation and to include the years between the establishment of the LE period and the control date. While the at-sea sectors were separated in 1997, this would not necessarily have affected catcher vessels.

The catch history assignment (CHA) calculation for the MS/CV-endorsed permit would be based on the whiting relative history of vessels registered to the permit in each year from 1994 through 2003, dropping the two worst years (lowest relative history) unless otherwise indicated by the applicant.

The proposed rule sets forth the specific approach NMFS would use to calculate the CHA at § 660.150(g)(6). Based on Pacific whiting observer data that reside in NORPAC on July 1, 2010, NMFS would calculate the CHA as a percentage of Pacific whiting of the total MS sector allocation for each year. The catch history would be used to assign both whiting and bycatch species allocations to a coop and the non-coop fishery. The catch history would include any deliveries of whiting by vessels registered to a permit that were combined to generate the current permit. Illegal landings would not count towards catch history; nor would landings history from Federal LE groundfish permits that were revoked or retired either through the Federal buyback program. Landings history associated with provisional “A” permits that did not result in an “A” permit and that associated with “B” permits would also not count towards catch history; these permits no longer exist.

(D) Application and Correction

The proposed rule sets forth the process for applications and corrections at § 660.150(g)(6). NMFS would mail a prequalified application form to current trawl permit owners where NMFS finds their LE permits to have a catch history that meets the qualifying criteria. This application would be mailed to current permit owner's address of record in the NMFS permit data base. Prequalified applications would be partially pre-filled by NMFS and would be required to be completed by the applicant and returned to NMFS by the application deadline date.

If a current trawl LE permit owner does not receive a prequalified application from NMFS and the permit owner believes the permit's catch history qualifies for a MS/CV endorsement and associated CHA, the

permit owner would be required to complete an application package (available from NMFS) and submit the application package to NMFS by the application deadline. If the permit owner fails to submit an application to NMFS by the deadline date, the person forgoes the opportunity to receive consideration for initial issuance of a MS/CV endorsement and associated CHA.

If an applicant does not accept NMFS' calculation in the prequalified application, the applicant would be required to identify in writing to NMFS which parts of the application the applicant contends to be inaccurate, and provide credible information to substantiate any request for correction by the application deadline date. Requests for corrections, as specified in § 660.150(g)(6), may only be granted for changes to the selection of eight years with the highest relative history of whiting and errors in NMFS' extraction, aggregation, or expansion of data, including errors in NMFS extraction of data from NORPAC; errors in NMFS calculation; and errors in the identification of the permit owner, permit combinations, or vessel registration as listed in NMFS permit database. Requests for corrections would be required to be submitted no later than the application deadline date. NMFS would review a correction provided by the applicant and either accept or not accept the correction. If a correction is accepted by NMFS, the CHA would be revised. If the applicant fails to provide the request for correction or documentation supporting the correction by the deadline date, NMFS would make its IAD based on the catch history data provided in the prequalified application.

An applicant would be required to sign and notarize the completed application and return it to NMFS by the application deadline date (60 days after date of publication of the final rule in the

Federal Register

). A completed application would be required to contain the items listed in § 660.150(g)(6), which include, but are not limited to: Certification that the applicant qualifies to own a MS/CV-endorsed permit and indication as to whether they agree or disagree with NMFS' determination on initial issuance of the MS/CV-endorsed permit and CHA provided in the application; and a complete Trawl Identification of Ownership Interest Form. Business entities may be required to submit a corporate resolution or any other credible documentation as proof that the representative of the entity is authorized to act on behalf of the entity. NMFS could request additional information of the applicant as necessary to make an IAD.

(E) IAD

NMFS would issue an IAD for all complete, certified applications received by the application deadline date. If NMFS approves the application, the applicant would receive a MS/CV endorsement and associated Pacific whiting CHA on their LE trawl-endorsed permit. If NMFS disapproves an applicant's request to correct the application, the IAD would provide the reasons NMFS did not accept the corrections. If known at the time of the IAD, NMFS would indicate if the MS/CV-endorsed permit owner has ownership interest in CHAs that exceed the accumulation limits and are subject to divestiture provisions given at § 660.150(g)(3). If the applicant does not appeal the IAD within 30 calendar days of the date on the IAD, the IAD becomes the final decision of the Regional Administrator acting on behalf of the Secretary of Commerce.

(F) Appeals

The proposed rule would address the status of permits pending appeal as follows. For the MS/CV endorsement qualifications and eligibility appeals, any endorsement under appeal after December 31, 2010, may not fish in the Pacific Coast groundfish fishery until a final decision on the appeal has been made. If the MS/CV endorsement would be issued, the endorsement would be effective upon approval. For a Pacific whiting CHA associated with a MS/CV endorsement under appeal, the CHA would remain as that previously assigned to the associated MS/CV-endorsed LE permit before the appeals process (i.e. at the time of the IAD). The MS/CV-endorsed LE permit may be used to fish in the Pacific Coast groundfish fishery with the catch history assigned to the MS/CV-endorsed permit before the appeal. Once a final decision on the appeal has been made and if a revised CHA would be issued, the Pacific whiting CHA associated with the MS/CV endorsement would be effective at the start of the second year after the trawl rationalization program is implemented.

(G) Permit Transfer During Application Period

There would be a prohibition on transferring ownership of LE trawl permits during the application process until the final decision for that application has been made.

iii. MS Coop Permit

In order for NMFS to assign a sub-allocation to an MS coop, the coop would be required to obtain a coop permit each year. A coop permit would not be renewable and would need to be reissued annually. The application would be required to be submitted between February 1 and March 31 each year, which is before the start of the whiting season. While formation of a coop would be voluntary, certain rules would apply: The coop would be required to be a legal entity with a designated manager, it would be required to include at least 20 percent of the MS/CV-endorsed LE permit owners as members, and it would be required to represent all of its members. Coops would have to be responsible for monitoring and enforcing the terms of the coop agreement on their members. The MS Coop Program would allow for inter-coop agreements as well. Additional requirements pertaining to contents of coop agreements, inter-coop agreements, and the application process for a coop permit would be set forth in the program components rule.

b. CHAs Allocation to the MS Coop

CHAs would initially be allocated to the LE permits associated with individual whiting catcher vessels in the MS fishery that also qualify for an MS/CV endorsement, and would be non-severable from the LE permit. The CHA allocated to the LE permit would reflect that permit's contribution to the total amount of fish its MS coop can harvest.

Under the proposed program, NMFS would calculate the CHA for each individual MS/CV-endorsed LE permit as follows. First, NMFS would determine the total catch of whiting associated with each such permit for the years 1994-2003. Next, NMFS would calculate the permit's “relative” pounds for each year by dividing the total catch of whiting by vessels registered to that permit by the total catch of whiting by all qualified permits. Unless otherwise

specified by the permit owner, the 8 years with the highest relative history would be used. NMFS would then calculate the permit's CHA as a percentage of the total relative histories of all eligible permits combined. NMFS would permanently assign a CHA to the MS/CV-endorsed LE permit, and the CHA would not be severable from its underlying permit.

c. Transfer Provisions

An MS permit would be transferable, and could be transferred to a vessel of any size (there would be no size endorsements associated with the permit). MS permits could not be transferred to a vessel engaged in the harvest of whiting in the year of the transfer. MS permits could be transferred two times during the fishing year provided that the second transfer is back to the original mothership (i.e., only one transfer per year to a different mothership). However, in order to acquire an MS permit, a person would have to be a U.S. citizen, permanent resident alien, or a corporation, partnership or other entity established under the laws of the United States or any State.

MS/CV endorsements would not be severable from the LE permit. The CHA associated with the MS/CV endorsement could not be subdivided. MS/CV endorsed LE permits could be transferred two times during the fishing year, provided that the second transfer would be back to the original catcher vessel (i.e., only one transfer per year to a different catcher vessel).

The annual allocations received by a coop based on catch history of the whiting endorsements held by its members could be transferred among coop members and, through the inter-coop agreement, from one coop to another so long as obligations to processors are met. Whiting allocations may not be transferred from the MS sector to another sector. However, non-whiting groundfish species with MS allocations may be reapportioned between the MS and C/P sectors subject to the provisions at § 660.150(d).

4. Accumulation and Use Limits

a. MS/CV-Endorsed Permit Ownership Limits

An MS/CV-endorsed permit owner would not be allowed to accumulate more than 20 percent of the sector's whiting allocation. NMFS would require submission of an ownership information form to track this requirement. In addition to the ownership limit, the program would restrict catcher vessel usage to no more than 30 percent of the MS sector whiting allocation. Ownership interest would be tracked pursuant to the “individual and collective” rule, which means that the whiting CHA that counts toward a person's accumulation limit would include both the CHA owned by the person, and a portion of the CHA owned by an entity in which that person has an interest.

NMFS would notify entities found to exceed these limits so that they could come into compliance prior to issuance of the permit.

b. MS Usage Limits

Owners of MS permits would be prohibited from processing more than 45 percent of the MS sector whiting allocation. To monitor this requirement, NMFS would require annual renewal of the MS permit along with annual submission of an ownership interest form. Details regarding the MS permit usage limits would be set forth in the program components rule.

5. Annual Renewal and MS Obligations

Participants in the MS sector would be required to declare annually (between September 1 and December 31 of the year before the whiting season) through the LE permit renewal process in what capacity they would operate: Coop or non-coop. Additionally, catcher vessels operating in a coop would be required to indicate which mothership they would be associated with, and which mothership it intends to obligate its catch to for the following year.

If a mothership transfers its MS permit to a different mothership or different owner, the MS/CV-endorsed permit obligation for that year would remain in place and transfer with the MS permit to the replacement mothership unless the obligation is changed by mutual agreement. The obligation would not extend beyond the fishing year.

If a MS/CV-endorsed permit owner transfers coop allocations to another coop member within the coop, or if a coop transfers allocations to another coop within an inter-coop agreement, such allocations would have to be delivered to the mothership to which the allocation is obligated through the preseason declaration, unless released by mutual agreement. By mutual agreement of the MS/CV-endorsed permit owner and mothership to which the permit is obligated, a permit would be allowed to deliver to a licensed mothership other than that to which it is obligated.

If a mothership withdraws subsequent to quota assignment, then the MS/CV-endorsed permit that it is obligated to would be free to participate in the coop or non-coop fishery. The MS permit owner would be required to notify NMFS as well as linked MS/CV-endorsed permit owners of its withdrawal, and MS/CV-endorsed permit owners would be required to notify NMFS of their intent to participate in the coop or non-coop fishery thereafter. If continuing in a coop fishery, then the MS/CV-endorsed permit owner would be required to provide NMFS with the name of the new mothership to which it would be obligated for that season.

6. Closures and Reapportionment

Coops would provide for more direct accountability from coop participants. NMFS would be able to close the coop fishery (all MS coops combined), non-coop fishery, or entire MS sector upon the attainment, or projection of attainment, of its sub-allocation of any groundfish species with a formal allocation to the MS sector. The program would allow NMFS to close or restrict the MS Coop Program fisheries through management measures such as the inseason implementation of bycatch reduction areas. The MS Coop Program may be restricted or closed as a result of projected overages within the MS Coop Program, the C/P Coop Program, or the Shorebased IFQ Program. As determined necessary by the Regional Administrator, area restrictions, season closures, or other measures would be used to prevent the trawl sectors in aggregate or the individual sector (Shorebased IFQ, MS Coop, or C/P Coop) from exceeding an OY, or allocation. The program would also allow for the reallocation of non-whiting between MS and C/P sectors, as well as redistribution of a sub-allocation within a sector.

7. Monitoring and Observer Requirements

Amendment 20 would continue the current observer coverage aboard motherships. Catcher vessels would be required to carry a single observer whenever they are participating in the fishery. To ensure accurate catch weights, motherships would be required to make sure that all catch is weighed in its round form on a NMFS-approved scale. Scales meeting the NMFS-approval and the use of such scales, including testing and maintenance, would be specified. NMFS is working with the PSMFC to develop additional details regarding this provision. It is anticipated that observers would record fishing effort and estimate total, retained and discard catch weight by species; determine species composition of

retained and discarded catch (non-whiting vessels) and document the reasons for discard; record interactions and sightings of protected species; and take biological samples from tagged fish and discards, and estimate viability of Pacific halibut.

The agency has announced its intent, subject to available Federal funding, that participants would initially be responsible for 10 percent of the cost of hiring observers. The industry proportion of the costs of hiring observers would be increased every year so that by 2014, once the fishery has transitioned to the rationalization program, the industry would be responsible for 100 percent of the cost of hiring the observers.

8. Fees

The agency would collect fees to cover the administrative costs of issuing permits (one-time fee and annual renewal). In addition, Amendment 20 would allow for assessing cost recovery fees of up to 3 percent of ex-vessel value, consistent with section 303A(e) of the MSA. The costs to be recovered would be the agency's costs of management, data collection, analysis, and enforcement activities. The Council would develop the methodology required by section 303(A)(e) in a trailing action.

9. Retention Requirements

Catcher vessels would be prohibited from sorting or discarding any portion of the catch taken before the observer on the catcher vessel completes sampling of the catch, with the exception of minor amounts of catch that are lost when the codend is separated from the net and prepared for transfer. This is different from current regulations where catcher vessels are prohibited from discarding catch other than minor operational amounts.

10. Data Collection

Amendment 20 includes a comprehensive plan for collection of economic data as part of the coop program. While the upcoming program components rule would provide details on these provisions, the following are the central elements:

• Mandatory submission of economic data for LE trawl industry (harvesters and processors).

• Voluntary submission of economic data for other sectors of the fishing industry.

• Include transaction value information in a centralized registry of ownership.

• Formal monitoring of government costs.

The mandatory data collection would focus on cost, revenue, ownership, and employment data. Data would be collected on a periodic basis (based on scientific requirements) to provide the information necessary to study the impacts of the program, including achievement of goals and objectives associated with the rationalization program. These data may also be used to analyze the economic and social impacts of future FMP amendments on industry, regions, and localities.

The program would address the type of enforcement actions that could be taken if inaccuracies are found in mandatory data submissions. The intent of this provision is to ensure that accurate data are collected without being overly burdensome to the industry in the event of unintended errors. Annual reports would be provided to NMFS and the Council.

A voluntary data collection program would collect information to assess spillover impacts on non-trawl fisheries. There would be a central registry for maintaining information on transaction prices. Data would also be collected and maintained on the costs to the government of monitoring, administration, and enforcement related to governance of the rationalization program.

11. Reporting

Each permitted MS coop would be required to submit a complete annual coop report to NMFS before the issuance of a new coop permit in a subsequent year. The contents of a complete annual report would be specified in regulation by NMFS through the program components rule.

12. Bycatch Allocation and Management

Amendment 20 provides for management of bycatch species with hard caps in both at-sea whiting fisheries (MS and C/P) as follows. Allocations of bycatch species with hard caps would be subdivided between the MS and C/P sectors. The MS subdivision would then be further subdivided between the coop and non-coop sectors. The MS coop sector subdivision would then be distributed among the individual coops.

Unused bycatch could be rolled over (

i.e.,

reapportioned) from one sector to another if the sector's full allocation of whiting has been harvested or participants in the sector do not intend to harvest the remaining sector allocation, as indicated by the submission of a cease fishing report.

NMFS could choose to close the whole MS sector, the non-coop fishery, and permitted coops based on the projected attainment of the at-sea whiting fishery bycatch cap for any one species. Each permitted MS coop would be responsible for monitoring its catch and to cease fishing when its bycatch allocation is reached.

C. Catcher/Processor (C/P) Coop Program

1. Structure Overview

The C/P Coop Program would be a limited-access program that applies to participants in the C/P sector of the Pacific whiting at-sea trawl fishery. It would allow for the establishment of a single voluntary coop consisting of owners of C/P-endorsed LE permits and vessels registered to those permits. NMFS would annually permit the coop. The entire C/P sector allocations of whiting and non-whiting groundfish with formal allocations would be allocated to the permitted C/P sector coop. For the issuance of a C/P coop permit, a coop agreement would need to be accepted by NMFS. The coop would be expected to help achieve benefits that result from a slower-paced, more controlled harvest. If the coop fails, NMFS would implement an IFQ system that would equally divide the whiting QS for the C/P sector among all C/P-endorsed permits.

2. Coop Species

Pursuant to Amendment 20, hard caps would be established for the following species: Pacific whiting, canary rockfish, darkblotched rockfish, Pacific ocean perch, and widow rockfish.

3. How To Participate

a. The C/P-Endorsed Permit Requirement

All vessels participating in the C/P coop fishery would be required to be registered to a LE permit with a C/P endorsement. The C/P endorsement would not be severable from the LE permit and would have to be renewed each year with a declaration of the participant's intent to participate in the C/P coop fishery. Only parties who are eligible to own a U.S.-documented vessel may own a C/P-endorsed LE permit.

A C/P permit that is combined with a LE trawl permit that is not C/P endorsed would result in a single C/P permit with a larger size endorsement. An MS/CV endorsement on one of the permits being combined would not be reissued on the resulting permit. The resulting size endorsement would be determined based on the existing permit combination formula.

Length endorsement restrictions on LE permits endorsed for groundfish gear

would be retained; however, the provision that requires that the size endorsements on trawl permits transferred to smaller vessels be reduced to the size of that smaller vessel would be eliminated (i.e., length endorsements would not change when a trawl-endorsed permit is transferred to a smaller vessel).

i. Eligible To Apply

Only an owner of a current trawl-endorsed LE permit that has been registered to a vessel that has participated in the C/P fishery during the qualifying period would be eligible to receive a C/P endorsement. Any past catch history associated with the current limited entry trawl permit accrues to the current permit owner. NMFS would not recognize any other person as the limited entry permit owner other than the person listed as the limited entry permit owner in the NMFS permit database.

ii. Qualifying Criteria

In order to qualify for the endorsement, vessels registered to the permit would be required to have caught and/or processed any amount of whiting during a primary C/P season during the period January 1, 1997, through December 31, 2003. This criterion recognizes participants who purchased LE permits and have historically participated as a C/P sector of the Pacific whiting fishery. Using the years 1997 to 2003 reflects the time period after the separation of the at-sea sector into the C/P and MS sectors and is consistent with the control date for this action (2003).

NMFS would rely on Pacific whiting observer data residing in the NORPAC database and NMFS trawl LE permit data as extracted by NMFS on July 1, 2010, to determine whether a permit meets the qualifying criteria. A permit's catch and/or processing history would include only the C/P history of whiting for those vessels registered to that particular permit during the qualifying years. Only whiting regulated by this subpart that was taken with midwater (or pelagic) trawl gear would count for the C/P endorsement. History of illegal landings would not count; nor would landings history from Federal LE groundfish permits that were revoked, retired through the Federal buyback program or otherwise discontinued, including B permits. NMFS recognizes that some permits combined to meet the size endorsements for C/Ps may have catch history as catcher vessels in the MS sector. Because a current permit may not qualify for both catch history under a MS/CV and a C/P endorsement, the proposed rule provides that the current permit owner may only apply for one and not both.

iii. Application and Correction

NMFS would mail a prequalified application to the owner of a vessel that NMFS preliminarily determines qualifies for a C/P endorsement. NMFS would mail the application to the current address of record in the NMFS permit database. The application would contain the basis of NMFS' determination based on Pacific whiting observer data recorded in the data set that was extracted from NORPAC by NMFS on July 1, 2010. Prequalified applications would be partially pre-filled by NMFS and would be required to be completed by the applicant and returned to NMFS by the application deadline date.

If a current owner of a LE trawl-endorsed permit does not receive a prequalified application and the permit owner believes the permit's catch history qualifies for a C/P endorsement, the permit owner would be required to complete an application package (available from NMFS) and submit the application package to NMFS by the application deadline date. The applicant would be required to provide credible documentation to substantiate their claim as described in the proposed rule at § 660.160(d)(7). If the permit owner fails to contact NMFS in writing by the application deadline date, the person forgoes the opportunity to receive consideration for a C/P endorsement.

If the applicant does not accept NMFS' calculation in the prequalified application, the applicant would be required to identify in writing to NMFS which parts of the application the applicant contends to be in accurate, and provide credible information to substantiate any request for correction by the application deadline date, as described in the proposed rule at § 660.160(d)(7). Requests for corrections may only be granted for errors in NMFS' extraction, aggregation, or expansion of data, including errors in NMFS extraction of data from NORPAC, errors in NMFS' calculation, and errors in identification of the permit owner, permit combinations, or vessel registration as listed in NMFS permit database.

The applicant would be required to submit a completed application, which has been signed and notarized by the application deadline date (60 days after date of publication of the final rule in the

Federal Register

). To be complete, an application would be required to include certification that the applicant qualifies to own a C/P-endorsed permit and indication as to whether the applicant agrees or disagrees with NMFS' determination on initial issuance of the C/P endorsed permit provided in the application. Business entities may be required to submit a corporate resolution or any other credible documentation as proof that the representative of the entity is authorized to act on behalf of the entity. NMFS may request additional information of the applicant as necessary to make an IAD.

iv. IAD and Appeal

NMFS would issue an IAD for all complete, certified applications received by the application deadline date. If NMFS approves the application, the applicant would receive a C/P-endorsed LE permit. If NMFS disapproves an applicant's request to correct the application, the IAD would provide the reasons NMFS did not accept the corrections. If the applicant does not appeal the IAD within 30 calendar days of the date on the IAD, the IAD becomes the final decision of the Regional Administrator acting on behalf of the Secretary of Commerce.

For a C/P-endorsed permit issued under this section, the appeals process and timelines are specified at § 660.25(g). For the initial issuance of a C/P-endorsed permit, the basis for appeal is described in § 660.160(d)(7). Items not subject to appeal include, but are not limited to, the accuracy of data in the dataset extracted from NORPAC by NMFS on July 1, 2010.

v. Permit Transfer During Application Period

During the application process for initial issuance of a C/P endorsement, a LE trawl permit owner would not be able to transfer ownership of the LE trawl permit until the final decision for that application has been made.

vi. Renewals and Declarations

A C/P endorsed LE permit would be required to be renewed annually during the existing LE permit renewal process. A C/P vessel would be prohibited from acting as a mothership or catcher vessel in the MS sector during the same year in which it operates as a C/P. A vessel would have to declare, at the beginning of each year, in which capacity it would operate.

b. C/P Coop Permit

In order for the C/P coop to receive the C/P sector allocation, the coop would be required to apply for and obtain a permit each year. A C/P coop permit would not be renewable and would need to be reissued annually. Between February 1 and March 31,

before the whiting season, the coop would be required to apply for a coop permit, which would include submitting a coop agreement to NMFS. While formation of a coop would be voluntary, coops would have to be responsible for monitoring and enforcing the terms of the coop agreement on their members. Additional requirements pertaining to the contents of coop agreements and the application process for a coop permit would be set forth in the program components rule.

c. Transfers

C/P permits may be transferred two times during the fishing year, provided that the second transfer would be back to the original vessel (

i.e.,

only one transfer per year to a different vessel).

4. Coop Failure/IFQ

If the coop system fails, it would be replaced by an IFQ program and the initial issuance of IFQ would be allocated equally among the permits (equally divided among all C/P-endorsed permits).

5. Accumulation Limits

There would be no accumulation limits for the C/P coop since there would be only one coop. Within the coop, accumulation limits could be addressed through private arrangements if desired.

6. Annual Report

The C/P coop would be required to submit an annual report to NMFS and to the Council at its November meeting. The report would contain information about the current year's C/P fishery, including the C/P sector's annual allocation of Pacific whiting; the C/P coop's actual retained and discarded catch of Pacific whiting, salmon, rockfish, groundfish, and other species on a vessel-by-vessel basis; a description of the method used by the C/P coop to monitor performance of coop vessels that participated in the C/P sector of the fishery; and a description of any actions taken by the C/P coop in response to any vessels that exceed their allowed catch and bycatch. The report would also identify plans for the next year's C/P fishery, including the companies participating in the coop, the harvest agreement, and catch monitoring and reporting requirements.

7. Catch Management

Under Amendment 20, unused catch of non-whiting groundfish species with formal allocations could be rolled over (

i.e.

reapportioned) from one sector to another if the sector's full allocation of whiting has been harvested or if participants in the sector do not intend to harvest the remaining sector allocation of whiting, as indicated by the submission of a cease fishing report. The C/P coop would be responsible for monitoring its catch of all species with formal allocations and to cease fishing when any formal allocation is reached.

The C/P Coop Program may be restricted or closed as a result of projected overages within the C/P Coop Program, the MS Coop Program, or the Shore-based IFQ Program. As determined necessary by the Regional Administrator, area restrictions, season closures, or other measures would be used to prevent the trawl sectors in aggregate or the individual sector (Shore-based IFQ, MS Coop, or C/P Coop) from exceeding an OY, or formal allocation. To prevent the attainment of an overfished species allocation, NMFS could implement bycatch reduction areas inseason. These provisions would be implemented through the program components rule.

8. Monitoring and Observer Requirements

Amendment 20 would require 100 percent observer coverage. Additional details regarding monitoring provisions would be set forth in the upcoming program components rule.

9. Data Collection

Amendment 20 includes a mandatory provision for collection of economic data as part of the coop program, consistent with the MSA. While the upcoming program components rule would provide details on these provisions, the following are the central elements:

• Mandatory submission of economic data for LE trawl industry (harvesters and processors).

• Voluntary submission of economic data for other sectors of the fishing industry.

A voluntary data collection program would collect information to assess spillover impacts on non-trawl fisheries.

10. Reporting

The permitted C/P coop would be required to submit a complete annual coop report before the issuance of a new coop permit in a subsequent year. Amendment 20 outlines the requirement for an annual report. The contents of a complete annual report would be specified in regulation through the program components rule.

The Council gave NMFS the flexibility to further develop the tracking and monitoring components of the trawl rationalization program.

III. Amendment 21 Allocations Description

A. Overview

For species subject to trawl rationalization, Amendment 21 would modify the manner in which the annual OYs are distributed. Under the current allocation strategy established in Amendment 6, a commercial HG is divided between LE and OA, as necessary. For groundfish species covered under Amendment 21, the LE fixed gear fishery would no longer share an allocation with the LE trawl fishery. The recreational, directed OA, and the limited entry fixed gear fisheries would share an allocation. The OY would be reduced by the tribal fishery, incidental catch in the non-groundfish fishery, research catch, and the bycatch limits in exempted fishing permits, which would result in the fishery harvest guideline. The fishery harvest guideline would be divided between the trawl fishery and non-trawl fisheries (recreational, limited entry fixed gear, and directed open access) based on the percentages in Amendment 21. The distribution of harvest among the non-trawl fisheries would be established during the biennial specifications process. This proposed rule sets forth the specific percentages of the fishery HG for Amendment 21 species that would be allocated to the trawl and non-trawl fisheries.

In order to implement the recommended IFQ and coop programs, it would be necessary for each of these trawl sectors to have a specific allocation of catch that could be divided among participants. While this could be accomplished through the specification process under the status quo, the Council determined that a fixed

allocation within the FMP would be preferable because it would promote predictability and the type of stability that facilitates successful relationships that make individual-based programs work. Thus, the Council recommended the allocations contained in Amendment 21. In addition, Amendment 21 would establish total catch limits (TCLs) for Pacific halibut, as well as set-asides to accommodate the rationalized trawl fleet. The TCLs would protect the directed fishery for halibut.

Species not covered by Amendment 21 would continue to be allocated through the biennial specifications process. The allocations in Amendment 21 would constrain trawl harvests to a slightly lower level than status quo.

Amendment 21 addresses six separate issues pertaining to allocation decisions:

1. How to allocate species between the trawl and non-trawl categories;

2. How to allocate between shore-based whiting and shore-based non-whiting, for species other than darkblotched, Pacific ocean perch, widow, and sablefish North of 36° N. lat.;

3. How to apportion among the 4 trawl sectors (shore-based whiting, shore-based non-whiting, MS, and CP) the LE trawl allocation of darkblotched, Pacific ocean perch, widow, and sablefish North of 36° N.;

4. Providing yield set-asides to accommodate non-overfished species bycatch in the at-sea (whiting) sectors;

5. Limiting bycatch of halibut (a prohibited species); and

6. Determining the process for future modification of allocations.

B. Covered Species

Species subject to Amendment 21's trawl/non-trawl allocations would be: Lingcod, Pacific cod, sablefish south of 36° N. lat., Pacific ocean perch, widow rockfish, chilipepper rockfish, splitnose rockfish, yellowtail rockfish north of 40° 10′ N. lat., shortspine thornyhead (north and south of 34°27′ N. lat.), longspine thornyhead north of 34°27′ N. lat., darkblotched rockfish, minor slope rockfish (north and south of 40°10′ N. lat.), Dover sole, English sole, petrale sole, arrowtooth flounder, starry flounder, and the Other Flatfish complex.

C. Proposed Actions

1. Trawl vs. Non-Trawl

Amendment 21 would formally allocate a subset of the HG to the 4 trawl sectors: Shore-based (whiting and non-whiting), MS, and C/P. With respect to covered species, this would leave the LE fixed gear, OA, and recreational fisheries in a pool that would divide the remaining HG (via the biennial specification process). These allocations are set forth in the proposed rule at § 660.55(m).

In general, the allocations are based on catch history from 2003-2005 and the recommendations of the Groundfish Allocation Committee. The reason for this period is that the Council believed that a relatively recent catch period should form the basis for deciding sector allocations since discards during this period were better informed, and current management strategies, such as specification of Rockfish Conservation Areas, are more likely in the near future. However, for several species, the Council made modifications. For chilipepper rockfish south of 40°10′ N. lat., Amendment 21 contains a higher non-trawl allocation. This is intended to provide greater non-trawl access to this healthy stock off California.

Amendment 21 would not allocate longspine thornyhead south of 34°27′ N. lat. to the trawl fishery. Longspine thornyhead are an incidentally caught species south of 34°27′ N. lat. and the available yields are not projected to constrain any of the groundfish fisheries there that incidentally catch these fish.

Amendment 21 would allocate a much higher percentage of the available yield of starry flounder to non-trawl sectors (50 percent) than recommended by the Groundfish Allocation Committee. The catch history of starry flounder is highly uncertain, but they are significantly caught in nearshore trawl fisheries and recreational fisheries. The Council thought a 50:50 trawl and non-trawl sharing of the available harvest of starry flounder was the fairest allocation.

Amendment 21 includes a higher non-trawl allocation of species in the Other Flatfish complex than recommended by the Groundfish Allocation Committee (10 percent vs. 5 percent). While most of these species are dominant to the trawl fishery, there are some species, such as Pacific sanddabs, that are significantly caught in non-trawl fisheries. The Council believed a higher non-trawl share of the available harvest of Other Flatfish species would better preserve non-trawl fishing opportunities.

2. Allocations Between Shore-Based Whiting and Non-Whiting Sectors

For the shore-based trawl fishery, Amendment 21 would establish a weighting scheme for distributing IFQ for covered species other than darkblotched rockfish, Pacific ocean perch, widow rockfish, and sab lefish N. of 36° N. lat. between the shore-based whiting and shore-based non-whiting sectors. For species other than yellowtail rockfish and the trawl-dominant overfished species, Amendment 21 uses a weighting scheme based on the shore-based sector catch percentages during the 1995-2005 period.

Amendment 21 would allocate 300 mt of yellowtail rockfish to the shore-based whiting sector, and the shore-based non-whiting sector would receive the remaining yield of yellowtail rockfish available to the LE trawl sectors minus any set-aside amount of yellowtail rockfish for the at-sea whiting sectors decided in the future. The initial set-aside of yellowtail rockfish to accommodate bycatch by the at-sea whiting sectors is 300 mt.

3. Apportionment of Three Overfished Species Among the Four Trawl Sectors

For darkblotched, Pacific ocean perch, and widow, Amendment 21 would apportion the LE trawl allocation among the four main subdivisions: Shore-based whiting, shore-based non-whiting, MS, and C/P. These allocations would take the form of QS for the shore-based sectors and of non-whiting groundfish species catch limits for the at-sea sectors (MS and C/P). Initial sector allocation of canary rockfish would be decided in the biennial harvest specification and management measures process.

The initial sector allocation of the trawl-dominant overfished species under Amendment 21 would be as follows:

• For darkblotched rockfish, there would be an allocation of 9 percent or 25 mt, whichever is greater, of the total LE trawl allocation of darkblotched rockfish to the whiting fisheries (at-sea and shore-based combined). The distribution of the whiting trawl allocation of darkblotched to individual whiting sectors would be done pro rata relative to the sectors' whiting allocation. The remainder would be made available to the shore-based non-whiting trawl fishery.

• For Pacific ocean perch, there would be an allocation of 17 percent or 30 mt, whichever is greater, of the total LE trawl allocation of Pacific ocean perch to the whiting fisheries (at-sea and shore-based combined). The distribution of the whiting trawl allocation of Pacific ocean perch to individual whiting sectors would be done pro rata relative to the sectors' whiting allocation. The remainder would be made available to the shore-based non-whiting trawl fishery.

• For widow rockfish, there would be an initial allocation of 52 percent of the total LE trawl allocation of widow

rockfish to the whiting sectors if the stock is under rebuilding or 10 percent of the total LE trawl allocation or 500 mt of the trawl allocation to the whiting sectors, whichever is greater, if the stock is rebuilt. If the stock is overfished when the initial allocation is implemented, the latter allocation scheme automatically kicks in when it is declared rebuilt. The distribution of the whiting trawl allocation of widow to individual whiting sectors would be done pro rata relative to the sectors' whiting allocation. The remainder would be made available to the shore-based non-whiting trawl fishery.

4. Yield Set-Asides for Bycatch of Non-Overfished Species by the Two At-Sea Sectors

The estimated fishing mortality of Amendment 21 species in the at-sea whiting fishery (MS and C/P sectors) other than Pacific whiting and the three trawl-dominant overfished species would be set-aside from the LE trawl allocations prior to making the initial shore-based trawl sector allocations. Set-aside amounts would not be allocations specified in the PCGFMP. It is anticipated that the projected incidental bycatch amounts in the at-sea whiting fishery will change in the future as better information becomes available. Therefore, set-asides would be implemented in and could be modified through the biennial specifications and management measures process.

5. Halibut

As set forth in the proposed rule at § 660.55(m), Amendment 21 would establish a trawl mortality bycatch limit for legal and sublegal halibut in Area 2A (off Washington, Oregon and California) at 15 percent of the Area 2A constant exploitation yield (CEY) for legal size halibut, not to exceed 130,000 lbs for the first 4 years of trawl rationalization and not to exceed 100,000 lbs starting in the fifth year. This total bycatch limit may be adjusted downward or upward through the biennial specifications and management measures process. Part of the overall TCL would be a set-aside of 10 mt of Pacific halibut, to accommodate bycatch in the at-sea Pacific whiting fishery and in the shore-based trawl fishery south of 40°10′ N. lat. (estimated at approximately 5 mt each).

By holding the limit at 130,000 lbs for 4 years and providing flexibility to make adjustments, the Council intended to address the uncertainty of how these constraints would affect the fleet and give the fleet time to learn strategies and areas for minimizing its halibut bycatch.

6. Process for Future Re-Allocations

The Council considered allowing the allocations in Amendment 21 that are specified in the PCGFMP to be modified through a framework action as part of the biennial management measures, but decided to recommend that these allocations specified in the PCGFMP be modified through an FMP amendment. The rationale was that the FMP amendment process imposes a higher standard for considering a change to the fishery, and that the Amendment 21 allocations should be durable and not subject to reconsideration every 2 years in the biennial management process. Many representatives of the trawl industry recommended maintaining this process to provide more long-term stability to allow better business planning.

7. Declaration as Overfished

Amendment 21 would not affect the FMP provision to temporarily suspend any formal allocations for a species if it is declared overfished. Shorter-term ad hoc allocations would then be decided in an approved rebuilding plan (or in the biennial management process while the stock is still being managed under a rebuilding plan).

8. 5-Year Review

Amendment 21 would provide for a formal review of all Amendment 21 allocations 5 years after implementation. This 5-year review is also a provision in the Amendment 20 preferred alternative to formally review the trawl rationalization program 5 years after implementation.

IV. Proposed Rule

As referenced above, while NMFS is reviewing Amendments 20 and 21 in their entirety, due to the complexity of the proposed program, this proposed rule focuses only on certain key components that would be necessary to have permits and endorsements issued in time for use in the 2011 fishery and in order to have the 2011 specifications reflect the new allocation scheme. On May 12, 2010, NMFS published a notice of availability of Amendments 20 and 21, and consistent with requirements of the MSA, must make a decision to approve, disapprove, or partially approve the amendments by August 10, 2010. Comments on the approvability of the amendments must be submitted to NMFS by July 12, 2010.

At the April, 2010 Council meeting in Portland, Oregon, the Council deemed a version of these regulations as being necessary or appropriate to implement Amendments 20 and 21 and directed the Council staff to make specific revisions to the regulations, and additional edits as appropriate. The Council staff and NMFS coordinated on revisions to those regulations. The Council's Executive Director has deemed that these regulations continue to be necessary or appropriate for the purpose of implementing the plan amendments consistent with the Council's policy intent.

A primary modification from the regulations reviewed by the Council in April, other than the ones specifically directed by the Council, is a revision of the sections regarding the formulas for the initial allocations. After the April meeting, NOAA and the Council staff corrected the regulations to ensure that they accurately reflect the amendments. The preamble highlights some questions regarding these formulas, and specifically seeks comment on them. Other changes have been made to ensure consistency with the amendments, to ensure consistency within the regulations, and to clarify some of the language.

Specifically, this rule would establish the formal allocations set forth under Amendment 21 and establish procedures for initial issuance and appeals of permits, endorsements, and QS under the IFQ and coop programs. While there are changes in many sections of these draft regulations for the trawl rationalization program, the main areas that are new for the trawl rationalization program are highlighted below.

• Section 660.25 contains general rules regarding permit requirements, including requirements for new permits and endorsements required for trawl rationalization: MS permits, MS/CV endorsements, and C/P endorsements.

• Section 660.55 is the allocation section and contains the proposed allocations set forth in Amendment 21.

• Section 660.111 contains definitions specific to the trawl fisheries, including new terminology that would be used under the proposed rationalization program, such as “catch history assignment,” “IFQ,” “first receivers,” and “processor obligations.”

• Section 660.140 would set forth the requirements for the proposed IFQ program for the shore-based trawl sector. The provisions contained in this proposed rule would include initial requirements, including: The species covered; the general program structure and management; accumulation limits and how to define ownership and control; divestiture; the application process, and deadlines; eligibility criteria; how QS would be calculated; how to reassign landings history for Pacific whiting; IADs, and limitations

on appeals; and rules regarding transfers of permits during the application period.

• Section 660.150 would set forth the requirements for the proposed MS Coop Program. The provisions contained in this proposed rule would include initial requirements including the species covered; the general program structure and management; accumulation limits and how to define ownership and control; divestiture; the application process, and deadlines; eligibility criteria for MS permits, MS/CV endorsement, and CHA assignments; characteristics of permits, how CHA would be assigned; IADs, and limitations on appeals; and rules regarding transfers of permits during the application period.

• Section 660.160 would set forth the requirements for the proposed CP Coop Program. The provisions contained in this proposed rule would include initial requirements, including: The species covered; the general program structure and management; the application process and deadlines; eligibility criteria; IADs and limitations on appeals; and rules regarding transfers of permits during the application period.

In addition, this proposed rule would also restructure the entire Pacific Coast groundfish regulations at 50 CFR part 660 by moving from one subpart (subpart G) to five subparts (subparts C-G). This restructuring of existing groundfish regulations is necessary to make room for the expansion of regulations with the new trawl rationalization program and to make the regulations more clearly organized according to sectors within the groundfish fishery. The following table lists the distribution of the sections of 50 CFR part 660 subpart G to the new subparts in 50 CFR 660 subparts C through G in this restructuring.

Old

New

§ 660.301 Purpose and scope

§ 660.10, Subpart C Purpose and scope.

§ 660.302 Definitions

§ 660.11, Subpart C General definitions.

§ 660.111, Subpart D Trawl fishery definitions.

§ 660.211, Subpart E Fixed gear fishery definitions.

§ 660.311, Subpart F Open access fishery definitions.

§ 660.351, Subpart G Recreational fishery definitions.

§ 660.303 Reporting and recordkeeping

§ 660.113, Subpart C Recordkeeping and reporting.

§ 660.113, Subpart D Trawl fishery recordkeeping and reporting.

§ 660.213, Subpart E Fixed gear fishery recordkeeping and reporting.

§ 660.313, Subpart F Open access fishery recordkeeping and reporting.

§ 660.353, Subpart G Recreational fishery recordkeeping and reporting.

§ 660.305 Vessel identification

§ 660.20, Subpart C Vessel and gear identification.

§ 660.219, Subpart C Fixed gear identification and marking.

§ 660.319, Subpart C Open access fishery gear identification and marking.

§ 660.306 Prohibitions

§ 660.12, Subpart C General groundfish prohibitions.

§ 660.112, Subpart D Trawl fishery prohibitions.

§ 660.212, Subpart E Fixed gear fisheries prohibitions.

§ 660.312, Subpart F Open access fisheries prohibitions.

§ 660.352, Subpart G Recreational fishery prohibitions.

§ 660.312 Vessel Monitoring System (VMS) requirements

§ 660.14, Subpart C Vessel Monitoring System (VMS) requirements.

§ 660.314 Groundfish observer program

§ 660.16, Subpart C Groundfish observer program.

§ 660.18, Subpart C Certification and decertification procedures for observers, catch monitors, catch monitor providers and observer providers.

§ 660.116, Subpart D Trawl fishery observer requirements.

§ 660.216, Subpart E Fixed gear fishery observer requirements.

§ 660.316, Subpart F Open access fishery observer requirements.

§ 660.356, Subpart G Recreational fishery observer requirements.

§ 660.320 Allocations

§ 660.55, Subpart C Allocations.

§ 660.321 Black rockfish harvest guideline

§ 660.55(l), Subpart C Black rockfish harvest guideline.

§ 660.322 Sablefish allocations

§ 660.55(h), Subpart C Sablefish allocations (north of 36° N. lat.).

§ 660.323 Pacific whiting allocations, allocation attainment, and inseason allocation reapportionment

§ 660.55(i), Subpart C.

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