Pacific Coast Groundfish Fishery

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

50 CFR Part 663

[Docket No. 940255-4054; I.D. 012894A]

RIN 0648-AF95

Pacific Coast Groundfish Fishery

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

Atmospheric Administration (NOAA), Commerce.

ACTION: Proposed rule; request for comments.

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SUMMARY: The Secretary of Commerce (Secretary) requests public comments

on a proposed rule that would annually allocate the U.S. Pacific

whiting harvest guideline or quota, in 1994 through 1996, between:

Fishing vessels that either catch and process at sea or catch and

deliver to at-sea processors; and fishing vessels that deliver to

processors located on shore. In each of the 3 years, after 60 percent

of the annual harvest guideline (or quota) for whiting is taken,

further at-sea processing in the exclusive economic zone (EEZ) would be

prohibited, and the remaining 40 percent (104,000 metric tons (mt) in

1994) would be reserved initially for fishing vessels that deliver to

shore-based processors. On or about August 15, any amount of the

harvest guideline (including any part of the 40 percent initially held

in reserve) that is determined by the Northwest Regional Director,

NMFS, not to be needed by the shoreside sector during the remainder of

the year would be made available to the at-sea processing sector. This

action is intended to promote the goals and objectives of the Pacific

Coast Groundfish Fishery Management Plan (FMP) by providing for

equitable sharing of the harvest guideline between shore-based and at-

sea processors; by contributing to the economies of coastal communities

by providing reasonable opportunity for shoreside processing of the

whiting harvest guideline; and by promoting stability in the west coast

fishing industry by diverting effort from other fully-utilized

fisheries.

DATES: Comments are invited until March 21, 1994.

ADDRESSES: Comments may be mailed to J. Gary Smith, Acting Director,

Northwest Region, National Marine Fisheries Service, 7600 Sand Point

Way NE., BIN C15700, Seattle, WA 98115-0070; or Dr. Gary Matlock,

Acting Director, Southwest Region, National Marine Fisheries Service,

501 W. Ocean Blvd., suite 4200, Long Beach, CA 90802-4213. Information

relevant to this proposed rule has been compiled in aggregate form and

is available for public review during business hours at the Office of

the NMFS Northwest Regional Director. Copies of the Environmental

Assessment/Regulatory Impact Review (EA/RIR) can be obtained from the

Pacific Fishery Management Council, 2000 SW First Avenue, suite 420,

Portland, Oregon 97201.

FOR FURTHER INFORMATION CONTACT: William L. Robinson at 206-526-6140,

or Rodney R. McInnis at 310-980-4030.

SUPPLEMENTARY INFORMATION: NOAA is issuing a proposed rule based on a

recommendation of the Pacific Fishery Management Council (Council),

under the authority of the FMP and the Magnuson Fishery Conservation

and Management Act (Magnuson Act).

Background

The domestic and foreign groundfish fisheries in the EEZ off the

coasts of Washington, Oregon, and California are managed by the

Secretary according to the FMP prepared by the Council under the

authority of the Magnuson Act. The FMP is implemented by regulations

for U.S. fishermen at 50 CFR part 663. General regulations applicable

to U.S. fishermen are at 50 CFR part 620. The FMP has been amended 6

times. Amendment 4 contains a framework process (the socio-economic

framework) that provides the authority, guidelines, and criteria for

establishing management measures that address social and economic

conditions within the fishery. These measures can be implemented by

regulation, without further amending the FMP, through the procedures

contained in Amendment 4.

Pacific whiting is the largest groundfish resource managed by the

Council, and makes up over 50 percent of the potential annual

groundfish harvest. Prior to 1980, this species was harvested primarily

by foreign fishing vessels. Foreign directed fishing for whiting ended

in 1989, when all the available whiting were allocated to U.S.

fishermen, mostly for delivery of raw fish to foreign processing

vessels under joint venture arrangements. By mid-1990 it was clear that

over-capacity of the harvesting and processing sectors in the Alaska

groundfish fisheries was causing shorter fishing seasons and that

participants were looking for alternative resources, both inside and

outside Alaska.

1991

In 1991, the Council recommended, and the Secretary approved, a

proposal to allocate the 228,000-mt 1991 Pacific whiting quota 104,000

mt to catcher/processors and 88,000 mt to fishing vessels that do not

process (including vessels that delivered whiting both to shoreside

plants and to motherships), with 36,000 mt reserved for priority access

for the shoreside sector (56 FR 43718, September 4, 1991). The actual

1991 harvest was 117,000 mt by factory trawlers, 80,000 mt delivered to

motherships, and 21,000 mt delivered to shoreside processors.

1992

In 1992, no more than 98,800 mt of whiting initially could be

processed at sea, 80,000 mt was allocated to vessels delivering to

shoreside processors, and 30,000 mt was retained in reserve with a

priority for use by the shoreside sector. The 30,000-mt reserve was

released to at-sea processing operations on September 4, and an

additional 24,000 mt of the initial shoreside allocation was made

available for at-sea processing on October 1. In 1992, factory trawlers

again harvested 117,000 mt, motherships received 36,000 mt and 56,000

mt was delivered to shoreside processing plants.

A more detailed discussion of the history of this fishery through

1992 is contained in the March 18, 1993 Federal Register (58 FR 14543)

and in the Council's EA/RIR for this proposed rule.

1993

In 1993, the first 112,000 mt of the 142,000 mt harvest guideline

was available for open competition (``olympic fishery''), with the

remaining 30,000 mt held in reserve for shoreside processing. This

assumed that vessels delivering shoreside would harvest about 12,000 mt

during the olympic fishery, for a total of 42,000 mt for the year. When

it became apparent that shoreside deliveries were substantially lower

than expected during the olympic fishery, an emergency rule was issued

that prohibited processing at sea when 100,000 mt was taken by the at-

sea processing sector. Therefore, 42,000 mt was reserved for vessels

delivering shoreside in 1993. The regulations also included a provision

for releasing any unneeded portion of the shoreside allocation on

September 1, to ensure the harvest guideline would be fully utilized.

However, shore-based processors used their entire allocation and no

additional whiting were made available for processing at sea in 1993.

The at-sea processing sector harvested 99,103 mt in 1993 (84,588 mt by

catcher/processors and 14,515 mt by vessels that delivered to

motherships). Shore-based landings were about 41,859 mt in 1993. In

total, 140,962 mt of whiting were caught in 1993, over 99 percent of

the 142,000 mt harvest guideline.

1994

The fleet composition in the 1994 whiting fishery may be quite

different than in 1992 and 1993. A license limitation (``limited

entry'') program was implemented under Amendment 6 to the FMP, and

became effective on January 1, 1994. The limited entry program requires

trawl vessels targeting on groundfish to have a limited entry permit.

Limited entry permits were issued to vessels that landed a minimum

amount of groundfish during the window period (July 11, 1984--August 1,

1988). Permits also were issued to vessels purchased or under

construction or conversion during the window period that later had a

certain level of participation in the fishery. The permits may be

bought and sold. Therefore, the traditional vessels that were active in

the whiting fishery during the window period initially received permits

while entrants after 1988 (which includes the catcher/processor fleet)

are not able to operate in the fishery unless they buy or lease permits

sufficient for these vessels to operate. In 1993, 16 catcher/processors

operated in the whiting fishery. As of January 20, 1994, it appears

that one catcher/processor may initially receive a limited entry permit

while several others might acquire enough limited entry permits to

operate as a catcher/processor (rather than a mothership) in the 1994

whiting fishery. However, the catcher/processor fleet is expected to be

much smaller than in 1992 and 1993--the whiting market is weak and too

few permits are likely to be available for purchase to accommodate the

entire whiting catcher/processor fleet. The final composition of the

whiting fleet for 1994 and beyond will not be known until the fishery

is underway, but it is clear that future participation by the catcher/

processor fleet will be constrained by implementation of the limited

entry program in 1994.

Statement of the Problem

Both the fishing and processing sectors of the whiting fishery

continue to be overcapitalized, which means there is more capacity than

needed to take and to process the entire harvest guideline. The at-sea

processing sector is more mobile and thus able to follow whiting that

migrate from south to north during the March-October/November fishing

season. Catcher/processors and catcher vessels delivering to

motherships do not lose fishing time by having to return to shore to

offload. Until 1994, there have been more at-sea processing vessels (as

many as 26 in a given year) than shore-based plants (10-12 major

plants). The at-sea processing fleet generally prefers shorter, intense

seasons to minimize operating costs, and to ``fill in'' between other

fisheries, particularly the pollock fisheries off Alaska. The shore-

based plants clearly are not mobile and are limited by the availability

of whiting as it migrates within range of local ports. Shore-based

processing plants tend to prefer a longer, slower season to maintain

their work force and markets when other fisheries are less productive.

Even under limited entry, the potential exists for the at-sea

processing sector to preempt the shoreside sector's opportunity for a

longer processing season if enough at-sea processing capacity enters

the whiting fishery. Although limited entry may reduce the number of

catcher/processors that harvest whiting, it has no effect on the number

of at-sea processors that may choose to offer at-sea markets to catcher

boats.

The shore-based fleet and processing plants now are established

components of the whiting industry, not likely to be totally preempted

by the at-sea fleet. They are, however, vulnerable to severe economic

impacts should landings be precipitously reduced by unrestricted at-sea

processing taking much of the harvest guideline in a fast, early

fishery. The Council believes that even partial preemption of shoreside

processing opportunities will result in an inequitable redistribution

of economic benefits between sectors of the industry. The greatest

change in the fishery in 1994 will be due to implementation of the

limited entry program. Even though the traditional catcher vessels

might appear to be protected from the rapid and intense competition of

the catcher/processor fleet, concern remains that market opportunities

might be severely restricted by an at-sea processing fleet consisting

of motherships (including former catcher/processors acting as

motherships) or of catcher/processors accumulating enough permits to

operate in the fishery. The mothership fleet provides a viable market

for the traditional catcher vessels, and to this extent is beneficial

to the catcher fleet. However, if the mothership fishery attracts a

large number of catcher/processors acting only as motherships, and if

they are able to process whiting almost as rapidly as when they acted

as catcher/processors (which is expected), the harvest guideline still

could be taken in a matter of weeks (as early as May 31, 1994,

according to Table 7-2 in the EA/RIR). The Council believes the

traditional catcher fleet's market opportunities are enhanced when

there are viable, competing markets both onshore and offshore over a

longer period of time, and therefore a less intense, slower fishery

appears to benefit market choices for these vessels.

The Council also is concerned that preemption of harvesting

opportunities for whiting catcher boats will result in those vessels

transferring additional fishing effort into the traditional groundfish

fisheries for rockfish, sablefish, and flatfish, which already are

fully utilized. Increased effort in the non-whiting groundfish fishery

could result in shortened seasons and more restrictive trip limits for

all groundfish fishing vessels, could economically disadvantage many

fishermen, and could exacerbate the current problem of excessive

discards and wastage attributed to restrictive regulations. To the

extent that the Council can maintain employment for the traditional

joint venture fishing vessels in the Pacific whiting fishery, adverse

impacts on the other groundfish fisheries will be lessened.

In addition, the Council and the industry desire stability in the

regulatory process. For each of the last 3 years, the Council submitted

recommendations for allocations to the Secretary. Uncertainty as to

what the allocation would be and delays in announcing the allocation

prevented participants in the whiting fishery from planning their

harvesting and processing operations prior to the season. The industry

was unable to plan ahead because it did not have a firm foundation on

which to base its business decisions.

In summary, the problems the Council has identified and is seeking

to solve are: Too much fishing and processing capacity and not enough

fish; inequitable distribution of economic benefits among the competing

sectors; and regulatory instability that has prevented the industry

from making timely business decisions.

To resolve these problems, the Council identified the following

priorities:

(1) Ensure that [the] shore-based sector has reasonable

opportunity to participate; (2) foster stability of shore-based

processing sector by providing replacement revenues for other

faltering fisheries; (3) help stabilize faltering rural coastal

economies by providing fishing, processing and supporting industry

revenues to replace income declines in other industries; (4) achieve

maximum net benefit to the nation by putting economic benefits

directly into coastal communities and distributing income impacts/

benefits along traditional geographic paths; (5) spread fishery over

time and area, reducing potential pulse fishery impacts on whiting,

salmon and rockfish stocks; (6) prevent effort shift to other

species; (7) address management of the entire groundfish resource

rather than piecemeal; (8) contribute to increased long-term product

yield and employment opportunities by spreading harvest over a

longer season; (9) discourage additional capital investment in

harvesting or processing facilities.

The Council convened an ad hoc industry subcommittee in July 1993

in Portland, Oregon, to develop an allocation option that would be

acceptable to all sectors. The subcommittee included a representative

from each major sector in the whiting industry: catcher vessels

delivering at-sea, shoreside, and ``at-large;'' shoreside processors;

catcher/processors; and mothership processors. The ad hoc committee,

after considering a number of alternatives, successfully negotiated a

3-year agreement that was acceptable to all participants, and

subsequently was adopted by the Council and recommended to the

Secretary (Option 1 in the EA/RIR or the proposed rule).

The Council's recommendation provides that the first 60 percent of

the annual whiting harvest guideline will be available to all vessels

in open competition. The remaining 40 percent is reserved initially for

shore-based activities. When the 60 percent has been harvested, no

further at-sea processing will be allowed for the remainder of the year

or until August 15, when an additional portion of the harvest guideline

may be made available. NMFS will assess how much of the harvest

guideline will be utilized by shore-based processors during the

remainder of the year, and any surplus to shore-based needs will be

made available to all permitted vessels on August 15. The allocation

would remain in effect for 3 years, 1994-1996. Any Pacific whiting

harvested or processed in state ocean waters (0-3 nautical miles

offshore) will be counted toward the EEZ limits.

The Council also considered the alternatives of continuing the 1993

percentages (of 30 percent for vessels delivering shoreside and 70

percent for at-sea processing (Option 2 in the EA/RIR), and continuing

the ``olympic''-style fishery with no allocations to either sector

(Option 3 in the EA/RIR).

The ad hoc committee also reached a consensus agreement to assume

that only the traditional whiting catcher fleet (limited entry vessels

with ``A'' permits) would be allowed to operate in the whiting fishery.

The Committee believed that the limited entry fleet, which contains

approximately 40 catcher vessels from the traditional whiting fishery

and possibly one catcher/processor, is sufficient to harvest any likely

harvest guideline for whiting in the next 3 years. However, NOAA cannot

foresee what choices fishermen will make and cannot guarantee that the

entire harvest guideline will be taken by the current limited entry

fleet. Participation in the limited entry fishery is determined under

Amendment 6 to the FMP, which allows for participation by vessels that

are not in the current limited entry fleet (by issuance of ``designated

species B permits''), based on seniority in the fishery, if the current

limited entry fleet will not use the entire harvest guideline.

Therefore, the FMP provides for temporary participation by vessels that

do not have ``A'' permits to ensure that the harvest guideline for

whiting will be fully utilized.

Impacts of the Proposed Rule

The socio-economic framework in the FMP, under which this action is

taken, requires the Council to consider a number of factors in its

recommendation to directly allocate the resource among users. (See

section III.C.3 of the appendix to 50 CFR part 663.) One factor that

must be considered by the Council is ``any consensus harvest sharing

agreement or negotiated settlement between the affected participants in

the fishery.'' However, the fact that an agreement has been negotiated

is not in itself a sufficient basis for the Secretary to approve the

Council's recommendation. The socio-economic framework also requires

consideration of a number of biological, social, and economic factors,

as well as consistency with the goals and objectives of the FMP, the

Magnuson Act and other applicable law. These factors are more fully

discussed in the Council's EA/RIR (see ADDRESSES) and are summarized

below.

In its analysis, the Council developed a model to predict how much

whiting would be taken by each sector under each option and under

certain conditions and assumptions (section 7.2.3 of the EA/RIR). The

resulting ranges of estimated production for the shore-based sector are

listed in the following table.

Estimated Harvest Guideline (HG) and Whiting Catch by the Shore-based Fishery Under the Assumptions Used in the

EA/RIR

[in thousands of metric tons]

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Reserve

Year HG (40% HG) Option 1 (proposed) Option 2 (1993 %'s) Option 3 (no alloc.)

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1994................ 260 104.0 60-134 mt........... 59-77 mt............ 21-57 mt.

23-52%.............. 23-30%.............. 8-22%.

1995................ \1\222 88.8 59-112 mt........... 59-66 mt............ 15-47 mt.

27-50%.............. 27-30%.............. 7-21%.

1996................ \1\166 66.4 59-80 mt............ 50 mt............... 8-32 mt.

36-48%.............. 30%................. 5-19%.

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\1\Based on 80 percent of the estimated U.S.-Canada acceptable biological catch. The actual harvest guideline

will not be announced until January 1 each year, and the actual harvest guideline for 1995 and 1996 may vary

from these estimates. (Source: Tables 7-2 and 7-3 (EA/RIR))

Biological and Environmental Impacts

No significant biological or environmental impact is expected as a

result of the proposed rule. The bycatch of rockfish and salmon is

expected to be similar whether the proposed rule is implemented.

Although it is possible that a short, intense pulse fishery could have

localized impacts on bycatch species, it also provides the potential

for avoiding species more likely to be caught at other times of year.

The incentive to minimize bycatch may be less if the season is short

and vessels race to take their allocation. However, observers have been

carried onboard both the at-sea processors and shore-based catcher

vessels for the purpose of monitoring bycatch. In general, bycatch

rates of yellowtail rockfish and Pacific ocean perch are more likely to

increase if the fishery occurs predominantly in the northern areas, and

bycatch of bocaccio/chilipepper rockfish are more likely to increase if

fishing occurs off California. A number of regulations were implemented

in 1993 for the purpose of minimizing bycatch of salmon and rockfish in

the whiting fishery (50 CFR 663.23(b)(3)).

Although the Council heard testimony that a later and longer season

would benefit the whiting resource because the fish would be larger

later in the season and it would take fewer fish to fill the harvest

guideline, the actual difference in yield is small. An analysis

conducted in 1992 indicated that even if the entire harvest guideline

were taken in September compared to April, the potential increase in

yield would be about 10 percent. This 10 percent would include

increases to liver and gonad weight, and therefore is not likely to

represent an equal increase in marketable flesh. Since none of the

options considered by the Council provided for the entire fishery being

taken in September, the increase in yield from an extended season would

be less than 10 percent.

Economic Impacts

The economic cost-benefit analysis developed by the Council for the

1993 allocation did not provide adequate information to support any

allocation decision. However, one more year of fishing and marketing

experience, and revised data were incorporated into a new analysis.

Even though data were available in the recent analysis that did not

exist at the time the previous analysis was prepared, the results still

should be interpreted with caution and are contingent on assumptions

about the effects of limited entry, and the quality of the data.

However, given these limitations, the Council's cost/benefit analysis

does provide consistent ranking of the three options, suggesting that

the proposed rule may provide the greatest net economic benefit to the

nation, even though the amount of that difference may be quite small.

In all instances the no allocation option (Option 3) was ranked lowest

in terms of net economic benefit to the nation. The differences between

Options 1 and 2 were insignificant in most cases. Three important

factors, based on 1993 prices, appear to drive the results: (1) Shore-

based headed and gutted operations are the most profitable (highest net

economic benefit); (2) shore-based waste utilization adds to the net

economic benefit; and (3) surimi prices are highest for catcher/

processors. Applying the new data to assumed levels of participation by

each sector, and using observed prices, the total difference between

the proposed rule and the no allocation option is only about $3 million

over the three-year period. Even though the exact dollar amount may not

be known, this indicates a small economic difference among the options.

The Council concluded that although the net economic benefits are

similar for Options 1 and 2, the no allocation (Option 3) was clearly

inferior. In short, the cost-benefit analysis concluded that shore-

based activities appear to produce a slightly greater net economic

benefit, in part due to the slower operating pace and to the multi-

faceted nature of the shore-based sector.

However, the Council perceives a clearer difference between the

options with respect to distributional effects, believing maintenance

of a robust shore-based whiting fishery is essential for the

preservation of the social and economic structure of the west coast

fishing industry.

Social Impacts

The Council believes that the proposed rule will provide the

greatest stability to the harvesting and processing communities. The

Council is concerned about the impacts on traditional fishermen and the

rural coastal communities where they reside, focusing on those

displaced by Americanization of the joint venture fisheries as well as

those displaced from other declining fisheries and industries. An

integrated industry is important in dealing with severe stock declines

in other fisheries, most notably in the salmon industry, which also is

stressing the shore-based processing industry.

Similarly, the traditional whiting fishery must be viewed in the

context of the overall groundfish fishery. Most traditional whiting

fishermen (those receiving ``A'' permits in the limited entry fishery)

operate in other groundfish fisheries as well. These fisheries have

been managed under increasingly restrictive landing limits, and are

harvested near their levels of maximum sustainable yield (MSY), which

means they cannot sustain additional effort. Of the three options

considered, Option 1 (the proposed rule) provides the greatest

stability to the harvesting and processing communities in part because

it provides for the longest season for the shoreside sector (which

could last until late July/mid-October in 1994-1996) and should divert

the greatest effort from other fully-utilized fisheries. Diversion of

effort from these other fisheries is intended to prolong their seasons,

delay reductions in trip limits, and maintain employment opportunities

in both fishing and processing sectors.

In contrast, the catcher/processor trawl fleet entered the fishery

off Washington, Oregon, and California in 1990 and has targeted only on

whiting. Consequently, its participation in the whiting fishery does

not divert effort from other west coast fisheries, and, by taking the

harvest guideline quickly, may reduce market opportunities for catcher

vessels that do not process.

The no allocation option (Option 3) could encourage a brief fishery

conducted primarily by at-sea processors, with the entire harvest

guideline being taken by the end of June. This would divert effort back

to the other fully-utilized groundfish fisheries, could accelerate the

need for reduced trip limits in those fisheries, and result in

shortened seasons for the shoreside fishing and processing industries.

Fishing opportunities for the at-sea fleet also have been

substantially reduced, particularly off Alaska and the former Soviet

Union, and therefore whiting has become more important to this fleet as

well. The Council concluded that the social and demographic description

included in the December 1992 EA/RIR (prepared for the 1993 allocation

decision) clearly showed that the relative importance of whiting to the

coastal communities exceeds the relative importance to the Seattle

metropolitan area where most of the at-sea processing fleet is based

(although a large percentage of employees are recruited from throughout

the western United States). The Council agrees that neither sector

should receive a disproportionate amount of the harvest guideline, as

could occur under the no allocation option (Option 3). It also believes

that the greater national benefit will be derived by giving some

protection to the traditional catcher vessels that deliver to shore-

based processors, and the communities in which they are based.

Although each of these options would influence participation by

each sector, none of the options would preempt any sector entirely. The

social impacts of Option 1 upon the Seattle-based at-sea processing

fleet are small relative to those already occurring under the limited

entry program. Because the fleet composition under the limited entry

program is still relatively unknown, undertaking a rigorous social

analysis is premature.

The Council also recommended Option 1 because industry consensus in

support of this option indicated a willingness to compromise that is

unprecedented and should be encouraged.

Net Benefit to the Nation

In addition to the findings above, the Council found other

compelling reasons to support the proposed rule and concluded that it

would provide the greatest net benefit to the nation.

Option 1 addresses concerns that there be equal sharing of the

conservation burden between the at-sea and the shoreside processing

sectors. A percentage allocation more equitably shares between sectors

both the conservation burden when the harvest guideline is low, and the

benefit when the harvest guideline is high. The harvest guideline in

1994 is much higher than previously expected, almost twice the 1993

level, but is expected to be lower in 1995 and 1996.

Even though the tonnage available in 1994 is substantially higher

than in 1993, additional overcapitalization is not expected. The shore-

based industry already is developed and the 104,000 mt reserve is close

to the 100,000 mt estimate of shoreside capacity in the EA/RIR.

(Maximum annual harvest by shore-based whiting fishery was estimated at

134,000 mt in 1994-1996.)

The proposed rule, if implemented, would apply only for the next 3

years, a long-enough horizon for stability in planning, but short

enough to indicate to the public that the Council may reconsider this

issue after the fleet has had a chance to adjust to the limited entry

program and whiting markets have stabilized.

The proposed rule is not a major departure from the approved 1993

allocation percentage of 30 percent for the shoreside sector. The

Council recommendation for 1994-1996 would give shoreside priority to

40 percent of the harvest guideline, supplementing any amount taken

during the olympic fishery for the first 60 percent. Also, with

implementation of the limited entry program, participation by the at-

sea processing fleet may be much lower than in 1993, although the exact

level will not be known until the fishery occurs.

The reserve release assures that the harvest guideline will be

fully utilized. The release date of August 15 is 2 weeks earlier than

in the past, and provides a longer opportunity for the at-sea fleet if

a release is made to them. August 15 also coincides with the opening of

the pollock ``B'' season in Alaska, and therefore would provide a more

subdued level of effort and a more orderly fishery than if the reserve

were released much earlier or later in the year.

In addition to the above considerations, NOAA also has considered

the Council's response to the following three questions asked at the

November 1993 Council meeting:

1. Why is allocating between the sectors by regulation superior to

allowing the market to determine the shares between sectors? Each of

the sectors has the capacity to take a substantial portion, if not all,

of the whiting harvest guideline in the next 3 years. It is not clear

if each would choose to do so given current low prices and uncertainty

in the availability of markets. The shore-based and at-sea sectors

operate optimally at different rates, however, with the shore-based

component generally preferring a longer, slower fishery and the at-sea

component best served with a relatively shorter, more intense

operation. Extended seasons at sea and on-shore actually enhance market

opportunities for catcher boats that would have their choice of

markets. Furthermore, providing an opportunity for all sectors would

divert effort from other fully utilized fisheries that already are

severely restricted. Additional effort into those fisheries would have

a cascading effect, causing earlier and/or more restrictive management

measures and even greater stress on shore-based processors of those

species. (Whiting is the only trawl-caught species off Washington,

Oregon, and California that is processed offshore to any large extent.)

Allowing the at-sea processing sector to even partially preempt the

shoreside sector would reduce national net benefits to the nation from

the fishery and destabilize the successfully developed shoreside

economic infrastructure. Thus, there is ample justification to allocate

between sectors. The proposed rule would provide each sector with a

reasonable opportunity to utilize this public resource. However, if a

sector does not need or intend to use its opportunity to the fullest

extent possible, any unused portion of the harvest guideline would be

made available to the entire whiting fishery.

2. Will this proposal encourage further capitalization in either

sector? None of the options, including the preferred option, are

expected to encourage further capitalization in either sector. The at-

sea and shore-based processing sectors and the catcher fleet are fully

developed and are believed to be capable of taking the proposed

amounts. Even though the tonnage available in 1994 is substantially

higher than in 1993 (and is the highest level in the 3-year period

under consideration), market prices for whiting currently are at such

low levels that it is unlikely that additional processing capacity

would be attracted. At issue is the extent that existing capacity will

be utilized on whiting, other species, or not at all.

3. With 104,000 mt reserved for shore-based operations in 1994,

what are the net benefits to the nation from providing an exclusive

opportunity to the shoreside sector to use twice its historical level?

In 1993, the Secretary was concerned that the conservation burden of a

reduced harvest guideline be equitably shared among the sectors.

Similarly, the benefit of an increased harvest guideline also should be

equitably shared between the sectors, particularly since it is not

expected to result in increased capitalization, but rather in how

effectively the existing infrastructure is used. Thus, it would not be

reasonable to limit the shoreside sector to only what they processed in

1993 or any prior year.

The shoreside industry needs a longer operating window to be viable

than the at-sea sector needs. Production by early August will be a key

component in determining if shore-based processors will need the entire

reserve. Any unneeded portion of the harvest guideline will be made

available to the entire fishery on or about August 15, assuring there

is adequate time to conduct successful operations on the remainder of

the harvest guideline. In 1992 and 1993, the at-sea fleet was able to

harvest considerably more than its initial allocation due to the

release of whiting not needed by shoreside processors.

The historical level of catch or production is not the only

consideration. In 1993, both the shore-based and at-sea processing

fleets were constrained from catching as much whiting as they wanted.

The 40 percent reserve recognizes anticipated lower participation by

catcher/processors in 1994 and beyond, consistent with implementation

of the limited entry program in January 1, 1994.

NOAA has reviewed the Council's recommendation and supporting

analysis and initially has determined that the proposed rule is

consistent with the Magnuson Act and its national standards and other

applicable Federal laws.

NOAA also requests comments on the advisability of releasing

additional amounts of whiting after August 15, but only if necessary to

ensure full utilization of the harvest guideline.

Clarification

The regulatory text would revise an incorrect cross-reference at

Sec. 663.7 which should read Sec. 663.23(b)(4)(v).

Classification

This proposed rule is published under authority of the Magnuson

Act, 16 U.S.C. 1801 et seq., and was prepared at the request of the

Pacific Fishery Management Council. The Assistant Administrator for

Fisheries, NOAA (Assistant Administrator), has initially determined

that this proposed rule is necessary for management of the Pacific

coast groundfish fishery and that it is consistent with the Magnuson

Act and other applicable law.

The Council prepared an Environmental Assessment (EA) for this

proposed rule (contained in the EA/RIR), and concluded that there would

be no significant impact on the environment. A copy of the EA may be

obtained from the Council (see ADDRESSES).

The General Counsel of the Department of Commerce certified to the

Small Business Administration that this proposed rule, if adopted,

would not have a significant economic impact on a substantial number of

small entities under the Regulatory Flexibility Act, 5 U.S.C. 601 et

seq. Although the whiting fleet contains less than 20 percent of the

total number of groundfish vessels, if this proposed rule diverts

effort from other traditional groundfish stocks, more than 20 percent

of the fleet could potentially be affected. However, none of the

options is expected to have impacts that would qualify under any of the

criteria for determining ``significant'' impacts, nor would they force

any small business entity to cease operation. In fact, in comparison to

the status quo, the proposed rule could result in greater fishing

opportunities for non-whiting vessels and thus increased revenues. For

these reasons, it is determined that the proposed rule potentially

would affect a substantial number of small entities, but would not

cause significant economic impacts on those entities. Therefore, an

initial regulatory flexibility analysis (IRFA) is not required. Also,

the Council has requested that this notice announce a correction to

page 77 of the EA/RIR, the last sentence in the first paragraph, so

that it reads: ``The Council concludes that this proposed rule, if

adopted, would not have significant effects on small entities in 1994-

1996.''

This rule is not subject to review under E.O. 12866.

List of Subjects in 50 CFR Part 663

Fisheries, Fishing, Reporting and recordkeeping requirements.

Dated: February 17, 1994.

Charles Karnella,

Acting Deputy Assistant Administrator for Fisheries, National Marine

Fisheries Service.

For the reasons set out in the preamble, 50 CFR part 663 is

proposed to be amended as follows:

PART 663--PACIFIC COAST GROUNDFISH FISHERY

1. The authority citation for part 663 continues to read as

follows:

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

Sec. 663.7 [Amended]

2. In Sec. 663.7, paragraph (o), reference to ``Sec. 663.23(b)(v)''

is revised to read ``Sec. 663.23(b)(4)(iv)''.

3. In Sec. 663.23 paragraph (b)(4) is added to read as follows:

Sec. 663.23 Catch restrictions.

* * * * *

(b) * * *

(4) Pacific Whiting--Allocation. The following provisions apply

from 1994 through 1996--(i) The Shoreside Reserve. When 60 percent of

the annual harvest guideline for Pacific whiting has been or is

projected to be taken, further at-sea processing of Pacific whiting

will be prohibited pursuant to paragraph (b)(4)(iv) of this section.

The remaining 40 percent of the harvest guideline is reserved for

harvest by vessels delivering to shoreside processors.

(ii) Release of the Reserve. That portion of the annual harvest

guideline that the Regional Director determines will not be used by

shoreside processors by the end of that fishing year shall be made

available for harvest by all fishing vessels, regardless of where they

deliver, on August 15 or as soon as practicable thereafter.

(iii) Estimates. Estimates of the amount of Pacific whiting

harvested will be based on actual amounts harvested, projections of

amounts that will be harvested, or a combination of the two. Estimates

of the amount of Pacific whiting that will be used by shoreside

processors by the end of the fishing year will be based on the best

information available to the Regional Director from state catch and

landings data, the survey of domestic processing capacity and intent,

testimony received at Council meetings, and/or other relevant

information.

(iv) Announcements. The Assistant Administrator will announce in

the Federal Register when 60 percent of the whiting harvest guideline

has been, or is about to be, harvested, specifying a time after which

further at-sea processing of Pacific whiting in the fishery management

area is prohibited. The Assistant Administrator will announce in the

Federal Register any release of the reserve on August 15 or as soon as

practicable thereafter. In order to prevent exceeding the limits or

underutilizing the resource, adjustments may be made effective

immediately by actual notice to fishermen and processors, by phone,

fax, Northwest Region computerized bulletin board (contact 206-526-

6128), letter, press release, and/or U.S. Coast Guard Notice to

Mariners (monitor channel 16 VHF), followed by publication in the

Federal Register, in which instance public comment will be sought for a

reasonable period of time thereafter. If insufficient time exists to

consult with the Council, the Regional Director will inform the Council

in writing of actions taken.

* * * * *

[FR Doc. 94-4108 Filed 2-18-94; 12:14 pm]

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