Limited Access Management of Federal Fisheries in and off of Alaska

DEPARTMENT OF COMMERCE

50 CFR Part 676

[Docket No. 940683-4277; I.D. 060994B]

RIN 0648-AE79

Limited Access Management of Federal Fisheries in and off of

Alaska

AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and

Atmospheric Administration (NOAA), Commerce.

ACTION: Final rule.

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SUMMARY: NMFS issues a final rule to implement Amendment 31 to the

Fishery Management Plan (FMP) for the Groundfish Fishery of the Bering

Sea and Aleutian Islands Area (BSAI), Amendment 35 to the FMP for

Groundfish of the Gulf of Alaska (GOA), and a regulatory amendment

affecting the Pacific halibut fishery in and off of the State of Alaska

(Alaska or State). This action implements the Modified Block Proposal,

which is necessary to prevent excessive consolidation of the halibut

and sablefish fisheries. This action also clarifies the transfer

process for the Individual Fishing Quota (IFQ) program.

EFFECTIVE DATE: November 7, 1994; except the amendments to

Secs. 676.16, 676.20(f), and 676.22(g), which will become effective on

January 1, 1995.

ADDRESSES: Copies of Amendments 31, 35, and the Environmental

Assessment/Regulatory Impact Review/Final Regulatory Flexibility

Analysis for the Modified Block Proposal to the IFQ Program, may be

obtained from the North Pacific Fishery Management Council (Council),

P.O. Box 103136, Anchorage, AK 99510.

FOR FURTHER INFORMATION CONTACT: John Lepore, 907-586-7228.

SUPPLEMENTARY INFORMATION:

Background

The Modified Block Proposal, as well as the other alternatives for

the IFQ program for fixed-gear halibut and sablefish fisheries, are

described in the Environmental Assessment/Regulatory Impact Review/

Initial Regulatory Flexibility Analysis (Analysis) dated December 17,

1993. Language amending the BSAI and the GOA FMPs was developed for the

Modified Block Proposal, the Council's chosen alternative.

The amendments to the FMPs affect the sablefish fisheries in the

exclusive economic zone off Alaska, which are managed in accordance

with the BSAI and the GOA groundfish FMPs. The Council prepared both

FMPs under authority of the Magnuson Fishery Conservation and

Management Act (Magnuson Act).

The domestic fishery for halibut in and off of Alaska is managed by

the International Pacific Halibut Commission (IPHC), as provided by the

Convention between the United States and Canada for the Preservation of

the Halibut Fishery of the Northern Pacific Ocean and the Bering Sea

(Convention) and the Northern Pacific Halibut Act of 1982 (Halibut

Act). The Convention and the Halibut Act authorize the Council to

develop regulations that are in addition to, but not in conflict with,

regulations adopted by the IPHC affecting the U.S. halibut fishery.

Under this authority, the Council may develop, for approval by NMFS,

limited-access policies for the Pacific halibut fishery in Convention

waters in and off of Alaska.

The Council acted under these authorities in recommending changes

to the IFQ program for the halibut and sablefish fisheries. The

Council, through these changes, intends to promote the conservation and

management of the sablefish and halibut fisheries, and to further the

objectives of the Magnuson Act and the Halibut Act.

QS Block Proposals

Concern over the potential for excessive consolidation of fishing

privileges under the IFQ program was the impetus for the Modified Block

Proposal. The Modified Block Proposal provides that (1) initial

allocations of QS that represent less than 20,000 lb (9 mt) of IFQ in

the implementation year will be issued as a block, (2) QS that

represent 20,000 lb (9 mt) or more of IFQ in the implementation year

will be ``unblocked'' QS, and (3) QS in a block cannot be separated and

will have to be transferred as a block. For each species in each IFQ

regulatory area, a person who does not hold any unblocked QS can hold

up to two QS blocks for that area, but the sum of the two QS blocks

cannot exceed use limits in 50 CFR 676.22 (e) and (f). A person who

holds unblocked QS for an IFQ regulatory area can hold only one QS

block for that area, provided that the total QS held, blocked and

unblocked, for that IFQ regulatory area does not exceed use limits

referenced above. The Modified Block Proposal also provides that QS

blocks resulting in less than 1,000 lb (0.5 mt) of IFQ for halibut, or

3,000 lb (1.4 mt) of IFQ for sablefish, in the implementation year can

be combined. The QS block resulting from this combination cannot exceed

1,000 lb (0.5 mt) for halibut or 3,000 lb (1.4 mt) for sablefish. This

``sweeping-up'' provision will allow very small QS allocations to be

combined into ``fishable'' amounts.

The Modified Block Proposal is intended to reduce the maximum

potential consolidation relative to the current IFQ program. The

Analysis indicated that, if actual consolidation is proportional to the

estimates of maximum potential consolidation, more QS holders are

likely to remain in the halibut and sablefish fisheries under the

Modified Block Proposal than under the current IFQ program.

The Modified Block Proposal will not interfere with the

opportunities currently available under the IFQ program for larger

operations, because QS allocations for an IFQ regulatory area that

represent 20,000 lb (9 mt) or more of IFQ in 1994 will remain

unblocked. The Council decided that the Modified Block Proposal would

protect small producers, part-time participants, and entry-level

participants--who may tend to disappear because of excessive

consolidation under the current IFQ program--without compromising the

flexibility and the economic efficiency of the IFQ program as a whole.

Whether QS is blocked or unblocked will be determined by the QS

pools for each IFQ regulatory area as they exist on October 17, 1994.

Using a specific date to calculate whether to block QS ensures that all

persons are treated in a similar manner, regardless of when their QS is

issued. October 17, 1994, was chosen as the date to calculate QS

because it was long enough after the application period, which ended

July 15, 1994, to allow the QS pools to achieve QS amounts reflective

of their eventual range, but long enough before the 1995 fishing season

to allow for transfers of QS for that fishing season.

Transfer of QS Blocks

Blocked and unblocked QS will be transferable subject to the

approval of the Director, Alaska Region, NMFS (Regional Director), and

compliance with the transfer regulations found in 50 CFR part 676.

Changes are made to the transfer procedure in 50 CFR part 676 to

accommodate the Modified Block Proposal, and to clarify further the

transfer process. Further information on the rationale for these

changes, and on the Modified Block Proposal, can be found in the

proposed rule published in the Federal Register on June 28, 1994 (59 FR

33272).

Changes From the Proposed Rule in the Final Rule

1. The amendatory language to Sec. 676.20 in the proposed rule was

numbered in such a manner that existing paragraphs (a)(1) Qualified

persons and (a)(2) Vessel categories would have been deleted. This was

a technical oversight. Paragraphs (a)(1) and (a)(2) of Sec. 676.20 will

remain as published on November 9, 1993 (58 FR 59375), and will not be

amended by this final rule. The amendatory language in paragraphs

(a)(1) and (a)(2) of Sec. 676.20, which was in the proposed rule

published June 28, 1994, (59 FR 33272) will be incorporated in

paragraph (a) of Sec. 676.20 of this final rule.

2. The reference to Sec. 676.22 in Sec. 676.21(c)(2) was changed to

Sec. 676.22(j) to indicate the paragraph of the regulatory text

intended to be referenced by the citation.

Response to Comments

Twenty-two letters of comments were received regarding the Modified

Block Proposal. Twelve letters provided comments that supported the

Modified Block Proposal, eight letters provided comments in opposition,

and two letters provided no comments. These comments, which are

summarized and responded to below, were considered during the

formulation of the final rule.

Comment 1: The Modified Block Proposal is overly restrictive,

especially to the smaller vessel categories.

Response: Though the Modified Block Proposal will have a larger

impact on the smaller vessel categories, the determining factor of

whose QS will be blocked is the amount of catch landed and duration of

participation during the qualifying years, not vessel size. Some

owners/lessees of large and small vessels will be issued QS as a block,

and some owners/lessees will be issued unblocked QS. More owners/

lessees of smaller vessels will have blocked QS due to smaller harvests

during the qualifying years.

Comment 2: Most of the QS issued in smaller vessel categories will

be blocked. The QS in small blocks will have less value, making those

blocks difficult to market.

Response: The response to Comment 1 addresses why most QS issued in

smaller vessel categories will be blocked. Any determination on the

value of blocked or unblocked QS, whether in large or small quantities,

is purely speculative. Blocked QS may be more or less valuable than

unblocked QS, depending upon market forces. Small blocks, with their

lesser overall dollar value, will make the IFQ Program more accessible

to new entrants. Furthermore, the Modified Block Proposal allows very

small blocks to be combined into fishable amounts under the ``sweep-

up'' provision.

Comment 3: All QS should be blocked or unblocked. It is inequitable

and discriminatory to block some QS and not other QS.

Response: Blocking all QS was considered along with the Modified

Block Proposal in the Analysis (see Sitka Block Alternative and Full/

Partial Block Alternative). The Council selected the Modified Block

Proposal from among the other block proposals because: (1) Like the

other block alternatives, it prevented excessive consolidation of QS;

and (2) unlike the other block alternatives, it did not interfere with

the opportunities currently available to larger operations in the

fixed-gear Pacific halibut and sablefish fisheries by blocking all QS.

The guidelines for FMPs at 50 CFR 602.14 (national standard 4--

Allocations) indicates that total parity in allocations is not

necessary to comport with fairness and equity. Allocation decisions by

the Council may be fair and equitable if those decisions are justified

in terms of the objectives of the FMP amendment. The Modified Block

Proposal was designed to preserve the way of life for fishermen and

their families and the dependence of local communities on the fishery,

which are legitimate social factors provided in the guidelines and

identified by the Council. Furthermore, the Modified Block Proposal

does not discriminate between residents of different states, which is

the standard specified at Sec. 602.14(b).

Comment 4: The Modified Block Proposal is inequitable because

persons who were initially issued QS who owned/leased large vessels

will receive most of their QS unblocked, allowing them to purchase more

QS up to the use cap. Persons who were initially issued QS, however,

who owned/leased small vessels will be issued their QS in blocks,

preventing them from purchasing QS up to the use cap.

Response: As explained in the response to Comment 3, the Modified

Block Proposal is not inequitable under the guidelines in 50 CFR part

602. Furthermore, although the Modified Block Proposal restricts the

number of QS blocks that can be held by a person (up to two blocks per

species and area), it does not prevent a person from purchasing QS up

to the use cap. For example, if a person is initially issued QS in a

block, that person, like a person who was initially issued unblocked

QS, can purchase unblocked QS up to the use cap.

Comment 5: The Modified Block Proposal creates a monopoly that

violates the anti-trust laws. The IFQ Program should be administered

under a ``free market'' system. Gear restrictions, rather than limited

access, should be used to manage the resource.

Response: The Modified Block Proposal does not create a monopoly,

nor does it violate anti-trust laws. The Modified Block Proposal was

designed to reduce consolidation by ensuring that more persons would

hold QS under the Modified Block Proposal than may have held QS without

it. The consolidation that may have occurred without the Modified Block

Proposal could be more accurately characterized as a process that tends

toward monopolistic control of the resource.

QS, whether blocked or unblocked, is a harvest privilege that may

be transferred. The value of transferred QS is not limited by the

program. The value of QS will be determined by market forces, and,

therefore, the IFQ Program is administered under a ``free market''

approach.

Although gear restrictions can assist in managing a fishery,

effective management requires a holistic approach. The IFQ Program is

one of the many management tools used by NMFS to manage effectively the

Pacific halibut and sablefish fisheries.

Comment 6: The Modified Block Proposal will create different

classes of QS holders depending on how much QS each person is issued.

The restrictions on the amount of blocks that can be held, along with

the various sizes of blocks, may necessitate the use of brokerage firms

to facilitate transfers.

Response: The Modified Block Proposal does not create different

classes of QS holders. As explained in the response to Comment 1, the

Modified Block Proposal establishes the criteria for determining

whether QS will be blocked and unblocked. A person, if issued QS in a

block, is not prohibited from obtaining unblocked QS. The transferable

nature of QS will allow persons to hold blocked and/or unblocked QS, as

long as the other requirements on holding QS are met.

The Modified Block Proposal may increase QS transaction costs

because some persons (i.e., those who already hold the maximum blocks

allowed) will be required to transfer away one block before another

block can be transferred to them. This cost may be exacerbated if the

person who is making this transaction has a specific QS amount as a

target. The Analysis for the Modified Block Proposal contemplated and

addressed this increase in transaction costs for transfers. NMFS

concluded from the Analysis that the benefits of curbing excessive

consolidation outweighed the increase of transaction costs for

transfers.

Comment 7: Because blocks cannot be divided under the Modified

Block Proposal, seizure of assets by the Internal Revenue Service to

collect on delinquent taxes would mean that the entire block would be

seized, rather than just the portion of QS necessary to satisfy the

delinquency.

Response: This course of events (i.e., seizing the entire block to

satisfy a debt) was evaluated during the formulation of the rule. NMFS

decided that the administrative costs associated with dividing blocks

was not justifiable, especially because any inconvenience that may

occur by seizing the entire block is due to the QS block holder's own

delinquency. QS blocks can be sold to satisfy the existing debt like

any other indivisible asset. After the debt has been satisfied, excess

funds can be returned to the person whose block had been seized.

Comment 8: The Modified Block Proposal will create greater

administrative and enforcement costs for NMFS.

Response: There will be no significant increase in administrative

or enforcement costs because of the Modified Block Proposal. The

Modified Block Proposal will affect the initial allocation and transfer

of QS. This can be monitored by the computer at Restricted Access

Management Division, NMFS, Alaska Region, which is currently programmed

to perform this task. The Modified Block Proposal will not affect IFQ

resource harvesting or deliveries, minimizing any impacts on

enforcement.

Comment 9: The Modified Block Proposal will decrease consolidation

of fishing operations under the IFQ program.

Response: The Modified Block Proposal was intended to prevent

excessive consolidation that might have occurred under the IFQ program.

This rationale is discussed at length in the Analysis for the Modified

Block Proposal and the proposed rule published in the Federal Register

on June 28, 1994 (59 FR 33272). In brief, the Modified Block Proposal

will prevent excessive consolidation by blocking a portion of the total

amount of QS issued and by restricting the number of blocks that can be

held by an individual. These actions will increase the potential

minimum holders of QS to an amount greater than under the status quo.

Comment 10: The Modified Block Proposal will create block sizes

that will provide easy access to the IFQ fisheries and maintain

diversity in the longline fleet.

Response: Under the Modified Block Proposal, all initially issued

QS that would result in less than 20,000 lb (9 mt) of IFQ using the

1994 total allowable catch (TAC) would be blocked. This means that a

variety of block sizes will be created, and will be available for

transfer. Persons who would like to enter the fishery would be able to

secure a smaller block, and then subsequently transfer the smaller

block for a larger block as the fishing operation grows and the

experience of the person increases. This ``step'' approach, made

possible by the Modified Block Proposal, assists in the growth of each

operation to efficient economies of scale.

Also, the size and amount of QS blocks will remain constant, except

for consolidation of the smallest blocks under the ``sweep-up''

provision. This means that at least the minimum number of QS block

holders will hold blocks of various sizes, providing diversity in the

longline fleet.

Comment 11: The Modified Block Proposal will benefit coastal

communities dependent on the IFQ fisheries by reducing the amount of QS

that can be consolidated into larger operations, ensuring a more

uniform landing pattern of fishery product, and providing higher levels

of harvesting employment.

Response: NMFS concurs with this comment. Along with reducing

excessive consolidation, the Modified Block Proposal was designed to

benefit local coastal communities traditionally dependent on the

Pacific halibut and sablefish fixed-gear fisheries. As explained

earlier, QS blocks will maintain diversity in the longline fleet by

reducing the amount of QS available for consolidation by larger

operations. Also, smaller, locally owned and operated vessels are more

likely to deliver to local communities than larger vessels. This is

because large vessels typically have the capacity to store large

quantities of fishery product for extended periods of time, thus

enabling these vessels to deliver to ports other than those located in

local coastal communities.

By increasing the potential minimum number of QS holders, the

Modified Block Proposal will provide more employment for fishermen and

crew members. By increasing the potential for delivery of fishery

product in coastal communities, the Modified Block Proposal will

provide more employment in the fishery processing sector for those

communities.

Comment 12: The Modified Block Proposal can be repealed or modified

at a later date if it turns out to be overly restrictive.

Response: NMFS concurs with this comment. On the other hand, if the

Modified Block Proposal is not adopted at this time, adoption at a

later time will not accomplish the same goals. Transfers and

consolidation of QS that could occur if the Modified Block Proposal is

not in place when the IFQ program is implemented might cause

irrevocable damage to coastal communities and the small vessel fleet.

Classification

The Council prepared a final regulatory flexibility analysis (FRFA)

that indicates the action will have a significant economic impact on a

substantial number of small entities. By reducing consolidation, the

Modified Block Proposal may increase the total cost of harvesting the

resource, thereby decreasing the net economic benefits of the IFQ

Program and increasing harvesting costs to small entities. The analysis

in the FRFA also indicates that by reducing consolidation, the Modified

Block Proposal may result in higher levels of harvesting employment.

Higher levels of harvesting employment and maintenance of diversity in

fishing operations participating in the IFQ Program are the main goals

of the Modified Block Proposal. A copy of the FRFA is available from

the Council (see ADDRESSES).

This final rule has been determined to be not significant for

purposes of E.O. 12866.

List of Subjects in 50 CFR Part 676

Fisheries, Reporting and recordkeeping requirements.

Dated: October 3, 1994.

Gary Matlock,

Program Management Officer, National Marine Fisheries Service.

For the reasons set out in the preamble, 50 CFR part 676 is amended

as follows:

PART 676--LIMITED ACCESS MANAGEMENT OF FEDERAL FISHERIES IN AND OFF

OF ALASKA

1. The authority citation for 50 CFR part 676 continues to read as

follows:

Authority: 16 U.S.C. 773 et seq. and 1801 et seq.

Sec. 676.16 [Amended]

2. Section 676.16 is amended by removing and reserving paragraphs

(i) and (n).

3. Section 676.20 is amended by revising paragraph (a) and the

first sentence of the introductory text of paragraph (f) to read as

follows:

Sec. 676.20 Individual allocations.

* * * * *

(a) Initial allocation of quota share. The Regional Director shall

initially assign to qualified persons, on or after October 18, 1994,

halibut and sablefish fixed gear fishery QS that are specific to IFQ

regulatory areas and vessel categories. QS will be assigned as a block

in the appropriate IFQ regulatory area and vessel category if that QS

would have resulted in an allocation of less than 20,000 lb (9 mt) of

IFQ for halibut or sablefish based on the 1994 TAC for fixed gear in

those fisheries for specific IFQ regulatory areas and the QS pools of

those fisheries for specific IFQ regulatory areas as of October 17,

1994.

* * * * *

(f) * * * The Regional Director shall assign halibut or sablefish

IFQs to each person holding unrestricted QS for halibut or sablefish,

respectively, up to the limits prescribed at Sec. 676.22 (e) and (f). *

* *

* * * * *

4. Section 676.21 is revised to read as follows:

Sec. 676.21 Transfer of QS and IFQ.

Transfer of QS or IFQ means any transaction requiring QS, or the

use thereof in the form of IFQ, to pass from one person to another,

permanently or for a fixed period of time, except that transactions

requiring IFQ cards to be issued in the name of a vessel master

employed by an individual or a corporation are not transfers of QS or

IFQ.

(a) Transfer procedure. A person who receives QS by transfer may

not use IFQ resulting from that QS for harvesting halibut or sablefish

with fixed gear until an Application for Transfer of QS/IFQ

(Application for Transfer) is approved by the Regional Director. The

Regional Director shall provide an Application for Transfer form to any

person on request. Persons who submit an Application for Transfer to

the Regional Director for approval will receive notification of the

Regional Director's decision to approve or disapprove the Application

for Transfer, and, if applicable, the reason(s) for disapproval, by

mail posted on the date of that decision, unless another communication

mode is requested on the Application for Transfer. QS or IFQ accounts

affected by an Application for Transfer approved by the Regional

Director will change on the date of approval. Any necessary IFQ permits

will be sent with the notice of the Regional Director's decision.

(b) Application for Transfer approval criteria. Except as provided

in paragraph (e) of this section, an Application for Transfer will not

be approved until the Regional Director has determined that:

(1) The person applying for transfer received the QS or IFQ to be

transferred:

(i) By initial assignment by the Regional Director as provided in

Sec. 676.20(a); or

(ii) By approved transfer;

(2) The person applying to receive the QS or IFQ meets the

requirements of eligibility in paragraph (c) of this section;

(3) The person applying for transfer and the person applying to

receive the QS or IFQ have their notarized signatures on the

Application for Transfer;

(4) There are no fines, civil penalties, or other payments due and

owing, or outstanding permit sanctions, resulting from Federal fishery

violations involving either person;

(5) The person applying to receive the QS or IFQ currently exists;

(6) The transfer would not cause the person applying to receive the

QS or IFQ to exceed the use limits in Sec. 676.22 (e) or (f);

(7) The transfer would not violate the provisions of paragraph (f)

of this section; and

(8) Other pertinent information requested on the Application for

Transfer has been supplied to the satisfaction of the Regional

Director.

(c) Eligibility to receive QS or IFQ by transfer. All persons

applying to receive QS or IFQ must submit an Application for

Eligibility to Receive QS/IFQ (Application for Eligibility), containing

accurate information, to the Regional Director. The Regional Director

will not approve a transfer of IFQ or QS to a person until the

Application for Eligibility for that person is approved by the Regional

Director. The Regional Director shall provide an Application for

Eligibility form to any person on request.

(1) A person must indicate on the Application for Eligibility

whether the eligibility sought is as:

(i) An individual; or

(ii) A corporation, partnership, or other entity.

(2) A person may submit the Application for Eligibility with the

Application for Transfer or file the Application for Eligibility prior

to submitting the Application for Transfer. If a person, as described

in paragraph (c)(1)(ii) of this section, files the Application for

Eligibility prior to submitting the Application for Transfer, and that

person's status subsequently changes, as described in Sec. 676.22(j),

that person must resubmit an Application for Eligibility before

submitting, or with, the Application for Transfer.

(3) The Regional Director's approval of an Application for

Eligibility will be mailed to the person by certified mail.

(4) The Regional Director will notify the applicant if an

Application for Eligibility is disapproved. This notification of

disapproval will include:

(i) The disapproved Application for Eligibility; and

(ii) An explanation why the Application for Eligibility was not

approved.

(5) Reasons for disapproval of an Application for Eligibility may

include, but are not limited to:

(i) Fewer than 150 days of experience working as an IFQ crew

member;

(ii) Lack of compliance with the U.S. citizenship or corporate

ownership requirements specified by the definition of ``person'' at

Sec. 676.11;

(iii) An incomplete Application for Eligibility; or

(iv) Fines, civil penalties, or other payments due and owing, or

outstanding permit sanctions, resulting from Federal fishery

violations.

(d) Transfers of QS blocks. (1) A QS block must be transferred as

an undivided whole, unless the size of the QS block exceeds the use

limits specified at Sec. 676.22. If the QS block to be transferred

exceeds the use limits specified at Sec. 676.22, the Regional Director

will divide the block into two blocks, one block containing the maximum

amount of QS allowable under the QS use limits and the other block

containing the residual QS.

(2) QS blocks representing less than 1,000 lb (0.5 mt) of IFQ for

halibut or less than 3,000 lb (1.9 mt) for sablefish, based on the

factors listed in Sec. 676.20(a), for the same IFQ regulatory area and

vessel category, may be consolidated into larger QS blocks, provided

that the consolidated QS blocks do not represent greater than 1,000 lb

(0.5 mt) of IFQ for halibut or greater than 3,000 lb (1.4 mt) of IFQ

for sablefish based on the factors listed in Sec. 676.20(a). A

consolidated QS block cannot be divided and is considered a single

block for purposes of use and transferability.

(e) Transfer of QS or IFQ with restrictions. If QS or IFQ must be

transferred as a result of a court order, operation of law, or as part

of a security agreement, but the person receiving the QS or IFQ by

transfer does not meet all of the eligibility requirements of this

section, the Regional Director will approve the Application for

Transfer with restrictions. The Regional Director will not assign IFQ

resulting from the restricted QS to any person. IFQ with restrictions

may not be used for harvesting halibut or sablefish with fixed gear.

The QS or IFQ will remain restricted until:

(1) The person who received the QS or IFQ with restrictions meets

the eligibility requirements of this section and the Regional Director

approves an Application for Eligibility for that person; or

(2) The Regional Director approves the Application for Transfer

from the person who received the QS or IFQ with restrictions to a

person who meets the requirements of this section.

(f) Transfer restrictions. (1) Except as provided in paragraph (e)

or paragraph (f)(2) of this section, only persons who are IFQ crew

members, or that were initially assigned catcher vessel QS, and meet

the other requirements in this section may receive catcher vessel QS.

(2) Except as provided in paragraph (f)(3) of this section, only

persons who are IFQ crew members may receive catcher vessel QS in IFQ

regulatory area 2C for halibut or in the IFQ regulatory area east of

140 deg. W. long. for sablefish.

(3) Catcher vessel QS initially assigned to an individual may be

transferred to a corporation that is solely owned by the same

individual. Such transfers of catcher vessel QS in IFQ regulatory area

2C for halibut or in the IFQ regulatory area east of 140 deg. W. long.

for sablefish will be governed by the use provisions of Sec. 676.22(i);

the use provisions pertaining to corporations at Sec. 676.22(j) shall

not apply.

(4) The Regional Director will not approve an Application for

Transfer of catcher vessel QS subject to a lease or any other condition

of repossession or resale by the person transferring QS, except as

provided in paragraph (g) of this section, or by court order, operation

of law, or as part of a security agreement. The Regional Director may

request a copy of the sales contract or other terms and conditions of

transfer between two persons as supplementary information to the

transfer application.

(g) Leasing QS (applicable until January 2, 1998). A person may not

use IFQ resulting from a QS lease for harvesting halibut or sablefish

until an Application for Transfer complying with the requirements of

paragraph (b) of this section and the lease agreement are approved by

the Regional Director. A person may lease no more than 10 percent of

that person's total catcher vessel QS for any IFQ species in any IFQ

regulatory area to one or more persons for any fishing year. After

approving the Application for Transfer, the Regional Director shall

change any IFQ accounts affected by an approved QS lease and issue all

necessary IFQ permits. QS leases must comply with all transfer

requirements specified in this section. All leases will expire on

December 31 of the calendar year for which they are approved.

5. Section 676.22 is amended by revising paragraph (g) to read as

follows:

Sec. 676.22 Limitations on the use of QS and IFQ.

* * * * *

(g) Limitations on QS blocks. No person, individually or

collectively, may hold more than two blocks for each species in any IFQ

regulatory area, except that if that person, individually or

collectively, holds unblocked QS for a species in an IFQ regulatory

area, such person may only hold one QS block for that species in that

IFQ regulatory area. For purposes of this section, holding, or to hold,

blocks of QS means being registered by NMFS as the person who received

QS by initial assignment or approved transfer.

* * * * *

[FR Doc. 94-24933 Filed 10-6-94; 8:45 am]

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