Fisheries of the Exclusive Economic Zone Off Alaska; Inshore/ Offshore Allocations of Pollock and Pacific Cod Total Allowable Catch

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

50 CFR Part 679

[Docket No. 981021263-8263-01; I.D. 090898D]

RIN 0648-AK12

Fisheries of the Exclusive Economic Zone Off Alaska; Inshore/

Offshore Allocations of Pollock and Pacific Cod Total Allowable Catch

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

Atmospheric Administration (NOAA), Commerce.

ACTION: Proposed rule; request for comments.

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SUMMARY: NMFS proposes regulations to implement Amendment 51 to the

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

Sea and Aleutian Islands Area (BSAI) and Amendment 51 to the Fishery

Management Plan for Groundfish of the Gulf of Alaska (GOA) (FMPs).

These amendments would allocate pollock in the BSAI and pollock and

Pacific cod in the GOA between inshore and offshore industry components

for the years 1999 through 2001. NMFS proposes other associated

regulatory measures as well. The amendments and the proposed

implementing regulations were submitted by the North Pacific Fishery

Management Council (Council) and are intended to promote the

socioeconomic goals and objectives of the Council and the FMPs.

DATES: Comments on the proposed rule must be received on or before

December 14, 1998.

ADDRESSES: Comments must be sent to Sue Salveson, Assistant Regional

Administrator for Sustainable Fisheries, Alaska Region, NMFS, P.O. Box

21668, Juneau, AK 99802, Attn: Lori Gravel, or delivered to the Federal

Building, 709 West 9th Street, Juneau, AK. Copies of Amendments 51/51

and the Environmental Assessment/Regulatory Impact Review/Initial

Regulatory Flexibility Analysis (EA/RIR/IRFA) prepared for Amendments

51/51 are available from the North Pacific Fishery Management Council

at 605 W. 4th Ave., Room 306, Anchorage, AK 99501, telephone 907-271-

2809.

FOR FURTHER INFORMATION CONTACT: Kent Lind, 907-586-7228.

SUPPLEMENTARY INFORMATION:

Background

NMFS manages the groundfish fisheries in the exclusive economic

zone of the BSAI and GOA under the FMPs. The Council prepared, and NMFS

approved, the FMPs under the authority of the Magnuson-Stevens Fishery

Conservation and Management Act (Magnuson-Stevens Act). Regulations

governing the groundfish fisheries of the GOA and BSAI appear at 50 CFR

parts 600 and 679.

BSAI Amendment 51, if approved, would establish the following

allocations and management measures for the years 1999 through 2001:

(1) The BSAI pollock total allowable catch (TAC), after subtraction of

reserves, would be allocated 61 percent to vessels catching pollock for

processing by the offshore component and 39 percent to vessels catching

pollock for processing by the inshore component; (2) a portion of the

inshore component Bering Sea B season allocation equal to 2.5 percent

of the BSAI pollock TAC, after subtraction of reserves, would be set

aside for harvest by catcher vessels under 125 ft (38.1 m) length

overall (LOA) and would become available on or about August 25 of each

year; and (3) all vessels harvesting pollock for processing by the

offshore component

[[Page 57997]]

would be prohibited from fishing inside the Catcher Vessel Operational

Area (CVOA) during the B season (September 1 to November 1) until the

date that NMFS closes the inshore component B season allocation to

directed fishing.

GOA Amendment 51 would extend the current allocations of pollock

and Pacific cod TACs for the years 1999 through 2001. The pollock TAC

in the GOA would continue to be allocated 100 percent to vessels

catching pollock for processing by the inshore component, and the

Pacific cod TAC in the GOA would continue to be allocated 90 percent to

vessels catching Pacific cod for processing by the inshore component

and 10 percent to vessels catching Pacific cod for processing by the

offshore component.

The Council has submitted Amendments 51/51 for Secretarial review

and a Notice of Availability of the FMP amendments was published in the

Federal Register on September 15, 1998 (63 FR 49540), with comments on

the FMP amendments invited through November 16, 1998. Comments may

address the FMP amendments, the proposed rule, or both, but must be

received by November 16, 1998, to be considered in the approval/

disapproval decision on the FMP amendments. All comments received by

November 16, 1998, whether specifically directed to the FMP amendments

or the proposed rule, will be considered in the approval/disapproval

decisions on the FMP amendments.

A major concern identified during the preliminary review of

Amendments 51/51 is that the economic analysis submitted by the Council

does not provide a basis upon which to draw unambiguous conclusions

about the probable net economic benefits to the Nation of the proposed

amendments. The reasons for this deficiency are treated in considerable

detail in the document. They pertain to basic data limitations which

make conversion from gross to net economic measures impossible.

Completion of the preliminary review with publication of the proposed

rule for Amendments 51/51 does not mean that either of these two

amendments will be approved. NMFS invites comment on the consistency of

the amendments and the proposed regulations with the Magnuson-Stevens

Act, the national standards, and other applicable laws. Comments are

specifically requested on the adequacy of the analysis to support

findings of compliance with national standards 2 (scientific

information), 4 (allocations), 5 (efficiency), 7 (costs and benefits),

8 (fishing communities), and 10 (safety of life at sea). Information

and analysis that bolster or contradict the conclusions in any of the

supporting documents are also welcome.

Reconciliation of Amendments 51/51 with the American Fisheries Act

On October 21, 1998, the President signed into law the American

Fisheries Act (AFA), which, besides affecting Amendments 51/51 in other

ways, allocates BSAI pollock differently than BSAI FMP Amendment 51 and

these proposed regulations.

Specifically, section 206 of the AFA states:

(a) Pollock Community Development Quota.--Effective January 1,

1999, 10 percent of the total allowable catch of pollock in the

Bering Sea and Aleutian Islands Management Area shall be allocated

as a directed fishing allowance to the western Alaska community

development quota program established under section 305(i) of the

Magnuson-Stevens Act (16 U.S.C. 1855(i)).

(b) Inshore/Offshore.--Effective January 1, 1999, the remainder

of the pollock total allowable catch in the Bering Sea and Aleutian

Islands Management Area, after the subtraction of the allocation

under subsection (a) and the subtraction of allowances for the

incidental catch of pollock by vessels harvesting other groundfish

species (including under the western Alaska community development

quota program) shall be allocated as directed fishing allowances as

follows--

(1) 50 percent to catcher vessels harvesting pollock for

processing by the inshore component;

(2) 40 percent to catcher/processors and catcher vessels

harvesting pollock for processing by catcher/processors in the

offshore component; and

(3) 10 percent to catcher vessels harvesting pollock for

processing by motherships in the offshore component.

Because this new statute was signed into law only a few days ago,

the Council has not had the opportunity to reconcile Amendments 51/51

and the proposed regulations with the new statute. The Council has

scheduled a special meeting to examine and respond to the mandates of

the AFA and to address management measures that may be necessary to

protect endangered Steller sea lions. This meeting will be held in

Anchorage, Alaska, on November 10-13, 1998. Additional information on

this special meeting is available from the Council (see ADDRESSES) and

on the Council's web site: http://www.fakr.noaa.gov/npfmc/npfmc.htm.

Because the Council, at its November meeting, will address

reconciliation of Amendments 51/51 and this proposed rule with the AFA,

NMFS is proceeding with the publication of this proposed rule unchanged

so that such regulatory provisions that are unaffected by the AFA as

inshore/offshore allocations of pollock and Pacific cod in the GOA,

establishment of a CVOA in the Bering Sea, and technical changes to the

existing regulations can proceed in a timely manner. NMFS will

reconcile any inconsistencies between Amendments 51/51 (including their

proposed implementing regulations) and the AFA at the time of approval/

disapproval of the Amendments and in the final rule implementing them

after consultation with the Council at its November 1998 meeting and

after the public has had opportunity to comment.

History of Inshore/Offshore Allocations

Amendments 18/23

The first inshore/offshore allocations of pollock and Pacific cod

were established in 1992 under Amendments 18/23 to the FMPs. The

precipitating event that led to the development of inshore/offshore

allocations began in early 1989 when the rapid harvest of the GOA

pollock TAC by several large factory trawlers forced an early closure

of the GOA pollock fishery and prevented inshore catcher vessels and

processors from realizing their anticipated economic benefit from the

pollock fishery later in the year. At the April 1989 Council meeting,

fishermen and processors from Kodiak Island requested that the Council

consider specific allocations of fish for processing by the inshore and

offshore components of the fishery to prevent future preemption of

resources by one component of the industry. The Council considered the

request and the impacts on coastal community development and stability

of the fisheries and prepared Amendments 18/23.

After 2 years of analysis, review, and debate on the inshore/

offshore issue, the Council took final action on Amendments 18/23 in

June 1991. Amendment 18 to the BSAI FMP, as adopted by the Council,

established a Community Development Quota (CDQ) program and set aside

one half of the pollock reserve (7.5 percent of the BSAI pollock TAC)

for CDQ harvest, allocated 35 percent of the remaining BSAI pollock TAC

to vessels catching pollock for processing by the inshore component and

65 percent of the remaining BSAI pollock TAC to vessels catching

pollock for processing by the offshore component in the first year of

the allocation, with the inshore allocation increasing to 40 percent in

the second year, and 45 percent in the third and fourth years of the

amendment, respectively. Amendment 18 also established a catcher vessel

operational area (CVOA) from which

[[Page 57998]]

catcher processors and motherships would be excluded throughout the

fishing year when operating in a directed fishery for pollock.

Amendment 23 to the GOA FMP, as adopted by the Council, allocated

100 percent of the GOA pollock TAC to vessels catching pollock for

processing by the inshore component. Amendment 23 also allocated 90

percent of the GOA Pacific cod TAC to vessels catching Pacific cod for

processing by the inshore component, and 10 percent of the GOA Pacific

cod TAC to vessels catching Pacific cod for processing by the offshore

component.

NMFS's review of the amendments began on December 1, 1991. On March

4, 1992, NMFS approved Amendment 23 to the GOA FMP. On the same date,

NMFS partially disapproved Amendment 18 to the BSAI FMP by approving

the 35/65 allocation split for 1992 but disapproving the increased

inshore component allocations for 1993-1995.

In his March 4, 1992, letter notifying the Council of the approval

of Amendment 23 and partial disapproval of Amendment 18, the Under

Secretary for Oceans and Atmosphere and Administrator of NOAA

(Administrator) stated that NOAA was not opposed to the concept of an

allocation between onshore and offshore interests as an interim measure

pending development of a solution to overcapitalization--ideally, a

market-based solution. NMFS's disapproval of the BSAI pollock

allocations for 1993 through 1995 was based in part on a cost/benefit

analysis prepared by NMFS that indicated a significant net economic

loss to the Nation under the proposed allocations for years 1993

through 1995. The Administrator urged the Council to work as

expeditiously as possible toward some other method of allocating fish

than either direct competition among participants within an open access

fishery, or direct government intervention. Meanwhile, he noted,

preventing preemption by one fleet of another, safeguarding capital

investments, protecting coastal communities that are dependent on a

local fleet, and encouraging fuller utilization of harvested fish are

desirable objectives that are provided for under the Magnuson-Stevens

Act.

At its April 1992 meeting, the Council considered NMFS's actions

and decided to revise Amendment 18. The Council supplemented its

previous analysis of allocation alternatives. At a special meeting to

consider this issue in August 1992, the Council again considered the

comments of its advisory bodies and the public, adopted its preferred

alternative, and submitted it to NMFS as revised Amendment 18. As

adopted by the Council, revised Amendment 18 would have established a

35/65 inshore/offshore allocation for 1993, the first year of the

revised amendment. The inshore allocation would then have increased to

37.5 percent for 1994 and 1995, the second and third years of the

revised amendment. In addition, revised Amendment 18 proposed two

changes to the CVOA. Under revised Amendment 18, the CVOA would take

effect only during the pollock B Season (September 1 to November 1),

and motherships (and catcher processors operating as motherships) were

allowed to receive deliveries and process pollock inside the CVOA as

long as they did not engage in directed fishing for pollock themselves.

In September 1992, the Council submitted revised Amendment 18 to NMFS

for review and approval.

On November 23, 1992, after careful consideration of the revised

amendment, public comments, the record developed by the Council, and

the analysis of the potential effects of the proposed amendment, NMFS

partially disapproved revised Amendment 18. NMFS approved pollock

allocations of 35 percent and 65 percent for vessels catching pollock

for processing by the inshore and offshore components, respectively,

for the years 1993 through 1995, and the establishment of the CVOA.

However, NMFS disapproved the 2.5 percent increase for 1994 and 1995,

finding that the sole purpose of the increased allocation to the

inshore component during those years was economic, and therefore, in

violation of national standards 4, 5, and 7 of Magnuson-Stevens Act, as

well as Executive Order 12291. The final rule implementing these

decisions was published on December 24, 1992 (57 FR 61326).

Amendments 38 and 40

When the Council developed its original inshore/offshore

amendments, it stipulated that Amendments 18/23 would expire on

December 31, 1995, with the intention that by December 31, 1995, it

would have adopted and NMFS would have approved a more comprehensive,

long-term management program to address the overcapitalization and

allocation problems facing the industry, not only for pollock and

Pacific cod, but for all the groundfish and crab fisheries under the

Council's authority.

By 1995, the Council had made some progress on its long-term plan.

For example, in June 1995, it adopted license-limitation programs for

the groundfish and crab fisheries. However, the Council estimated that

it would take 2 or 3 more years to develop and implement a

comprehensive rationalization plan that could more directly address

these allocation issues. Consequently, the Council decided it would be

necessary to extend the provisions of Amendments 18/23 for an

additional 3 years to maintain stability in the industry, facilitate

further development of the comprehensive management plan, and allow for

realization of the goals and objectives of the pollock CDQ program. In

making this decision, the Council continued the mandate it established

for itself in 1992 when it recognized that a more permanent solution to

overcapacity and preemption was needed.

The Council also determined that if the provisions of Amendments

18/23 expired, the fishery would return to the ``free-for-all'' state

that existed before Amendments 18/23, and the inshore sector again

would be faced with the threat of preemption by the large and efficient

offshore sector. Thus, the Council began the process to extend the

provisions of Amendments 18/23. The provisions of Amendment 18 became

the basis for Amendment 38 to the BSAI FMP, and the provisions of

Amendment 23 became the basis for Amendment 40 to the GOA FMP.

At its meeting in June 1995, the Council voted unanimously to adopt

Amendments 38/40 through December 31, 1998, with two changes from

Amendments 18/23. First, Amendment 38 decreased the size of the CVOA by

moving the western boundary of the area 30 minutes to the east. Second,

it allowed catcher processors to engage in directed fishing for pollock

inside the CVOA if the inshore component pollock allocation was closed

to directed fishing and the offshore component allocation was still

open to directed fishing. A proposed rule to implement Amendments 38/40

was published in the Federal Register on September 18, 1995 (60 FR

48087). NMFS approved Amendments 38/40 on November 28, 1995, and a

final rule to implement Amendments 38/40 was published in the Federal

Register on December 12, 1995 (60 FR 63654).

Council Development of Amendments 51/51

In April 1997, recognizing that a comprehensive rationalization

plan to address overcapitalization and preemption issues could not be

adopted and implemented prior to the expiration of Amendments 38/40,

the Council began development of a third set of inshore/offshore FMP

amendments. These amendments became identified as

[[Page 57999]]

Amendments 51/51. In June 1997, the Council requested information in

the form of pollock industry profiles that enabled it to examine the

evolution and current status of the BSAI pollock fisheries from 1991

through 1996. At that time, the Council also decided to split the

reauthorization of the pollock CDQ program in the BSAI and the

reauthorization of BSAI inshore/offshore pollock allocations into

separate FMP amendments. Under BSAI Amendments 18 and 38, the CDQ

program had been included with the inshore/offshore pollock

allocations. However, BSAI Amendment 51 only addresses inshore/offshore

pollock allocations. The Council adopted a separate FMP amendment,

Amendment 45, to extend the BSAI pollock CDQ program on a permanent

basis. A proposed rule to implement Amendment 45 was published in the

Federal Register on September 3, 1998 (63 FR 46993).

At its September 1997 meeting, after examination of the industry

profiles prepared by Council staff, consideration of public comment,

and Council discussion, the Council adopted the following inshore/

offshore problem statements for the BSAI and GOA:

BSAI Problem Statement: The current inshore/offshore allocation

expires at the end of 1998. The Council thus faces an inevitable

allocation decision regarding the best use of the pollock resource.

Many of the issues that originally prompted the Council to adopt an

inshore/offshore allocation (e.g., concerns for preemption, coastal

community dependency, and stability), resurface with the specter of

expiration of the current allocation.

The current allocation was made on the basis of several critical

assumptions including utilization rates, foreign ownership, the

balance between social gains and assumed economic losses to the

nation, and the nature of progress on the Council's Comprehensive

Rationalization Program (CRP) initiative. Many of these assumptions

have not been revisited since approval of the original amendment. It

is not clear that these assumptions hold or that the Council and the

nation are well-served by continuing to manage the pollock fishery

without a reexamination of allocation options. The Magnuson-Stevens

Act presents the Council with a new source of guidance to evaluate

national benefits. In the context of Council deliberations over

Inshore-Offshore 3, this includes enhanced statutory emphasis on

increased utilization, reduction of waste, and fishing communities.

There have also been substantial changes in the structure and

characteristics of the affected industry sectors including number of

operations, comparative utilization rates, and outmigration and

concentration of capital. These changes are associated with several

issues, including: optimization of food production resulting from

wide differences in pollock utilization; shares of pollock

harvesting and processing; discards of usable pollock protein;

reliance on pollock by fishing communities; and decreases in the

total allowable catch of pollock. In addition, changes in fishing

patterns could lead to local depletion of pollock stocks or other

behavioral impacts to stocks which may negatively impact Steller sea

lions and other ecosystem components dependent upon stock

availability during critical seasons.

Therefore, the problem facing the Council is to identify what

allocation would best serve to ensure compliance with the new Act

and address the issues identified above.

GOA Problem Statement: Allowing the current Gulf of Alaska

Inshore/Offshore allocative regime to expire December 31, 1998,

would allow the same preemption of resident fleets by factory

trawlers in the pollock and Pacific cod fisheries which occurred in

1989. It was this dramatic preemption which triggered the original

proposal for an inshore/offshore allocation. In 1989, there was

still pollock available in the Bering Sea when the preemption

occurred when vessels moved into the Gulf to take advantage of fish

with high roe content.

A rollover of the current Gulf of Alaska inshore/offshore

program which allocates 100 percent of the pollock and 90 percent of

the Pacific cod to inshore operations is a proactive action to

prevent the reoccurrence of the original problem.

Alternatives Considered by the Council

In addition to the development of the inshore/offshore problem

statements, the Council adopted a complex set of inshore/offshore

alternatives at its September 1997 meeting. During the course of the

next several Council meetings, these evolved into five basic

alternatives and included various suboptions within each alternative.

However, for the GOA, the Council considered only Alternatives 1 and 2.

Alternative 1: No action. The existing BSAI and GOA inshore/

offshore allocations would expire at the end of 1998.

Alternative 2: Reauthorize existing BSAI and GOA inshore/offshore

allocations without change. This alternative includes suboptions for a

1-year and 3-year effective period for the amendment.

Alternative 3: Adopt new BSAI pollock allocations within the

following ranges. This alternative includes a range of allocations

among three sectors: Inshore sector 25 to 45 percent, ``true''

motherships 5 to 15 percent, and offshore sector 40 to 70 percent. The

analysis defines ``true'' motherships as offshore motherships that

process but do not harvest groundfish. This alternative includes

options that assign ``true'' motherships (and their allocation

percentage) to either the inshore or offshore sectors, or establish a

separate ``true'' mothership allocation. Additional options establish a

set-aside of 40 to 60 percent of the inshore and ``true'' mothership

sector allocations for small catcher vessels (defined as catcher

vessels less than 125 ft (38.1 m) LOA), and a set-aside of 9 to 15

percent of the offshore quota for catcher vessels delivering to catcher

processors.

Alternative 4: ``Harvester's Choice'' for small catcher vessels.

This alternative establishes a stand alone or separate allocation for

small catcher vessels (defined as catcher vessels less than 125 ft

(38.1 m) LOA). This allocation is equal to 40 to 60 percent of the

inshore quota, plus 9 to 15 percent of the offshore quota, plus 100

percent of the ``true'' mothership quota, depending on the sector

allocations established under Alternative 3. Small catcher vessels are

free to deliver their allocation to any processing sector and the

processing sectors compete among themselves for the opportunity to

process pollock harvested by small catcher vessels.

Alternative 5: ``Harvester's Choice'' for catcher vessels 155 ft

(47.2 m) LOA and shorter. This alternative is the same as Alternative 4

except that the catcher vessel allocation is available to all catcher

vessels 155 ft (47.2 m) LOA and shorter.

Also included as options under Alternative 2 through 5 were four

CVOA suboptions: (1) Retain the CVOA as currently defined, (2) prohibit

catcher processors from operating inside the CVOA during both pollock

seasons, (3) prohibit motherships from operating inside the CVOA during

either pollock A season or pollock B season but not both, and (4)

repeal the CVOA.

Finally, the Council considered two expiration date options for

Alternatives 3 through 5: (1) The selected alternative(s) do not

expire, but serve as interim measures until the Council's comprehensive

rationalization plan has been completed, and (2) the selected

alternative(s) remain in effect for a 3-year period.

Council Adoption of BSAI Amendment 51

At its June 1998 meeting, after examination of the EA/RIR/IRFA,

consideration of the recommendations of its Advisory Panel (AP) and

Scientific and Statistical Committee (SSC), and after extensive public

testimony and deliberation, the Council voted 7-4 to adopt Amendment 51

to the BSAI with the following changes from the allocation scheme

established under Amendment 38: (1) Shift four percent of the BSAI

pollock TAC, after subtraction of reserves, would be shifted to the

inshore component resulting in a 39/61

[[Page 58000]]

inshore/offshore allocation split; (2) set aside a portion of the

inshore component Bering Sea B season allocation, equal to 2.5 percent

of the BSAI pollock TAC after subtraction of reserves, for small

catcher vessels, and to become available on or about August 25 of each

year; and (3) prohibit catcher vessels delivering to the offshore

component from fishing inside the CVOA during the B season from

September 1 until the inshore component B season allocation is closed

to directed fishing. Amendment 51 would remain in effect for the years

1999 through 2001.

BSAI pollock allocation. Under BSAI Amendment 51, the BSAI pollock

TAC, after subtraction of reserves, would be allocated 61 percent to

vessels catching pollock for processing by the offshore component and

39 percent to vessels catching pollock for processing by the inshore

component. In developing this preferred alternative, much of the

Council discussion focused on a last minute proposal by major inshore

and offshore industry representatives that would have established a 3-

way allocation split: 40 percent inshore, 50.5 percent offshore, and

9.5 percent to ``true'' motherships. A separate category for ``true''

motherships would have enabled the remaining factory trawlers in the

offshore sector to establish a harvesters cooperative similar to the

cooperative operating in the hake fishery off the Pacific coast.

However, several Council members expressed unease with the cooperative

idea and uncertainty about the potential spillover effects into other

fisheries. As a result, the Council rejected the industry agreement and

chose to maintain a 2-way allocation split.

In rejecting the industry's 3-way split proposal, the Council noted

that the industry proposal came very late in the process and that many

affected members of the public did not have adequate time to analyze

and comment on it. While the statutory moratorium on the development of

new individual fishing quota (IFQ) programs does not prohibit the

Council from adopting a 3-way allocation split, some Council members

expressed concern that adopting a 3-way allocation split for the

explicit purpose of facilitating a harvesters cooperative could be seen

as violating the intent of the Congressional moratorium on IFQ

programs.

In adopting its preferred allocation alternative for BSAI Amendment

51, the Council indicated that a shift of pollock TAC to the inshore

component was warranted for several reasons. First, the Council noted

that the analysis prepared for Amendments 38/40 concluded that the

expected net losses to the Nation's economy were probably overstated in

the cost/benefit analysis prepared for Amendments 18/23. A majority of

the Council believed that the rationale for partially disapproving the

original Amendment 18 in 1991 no longer was valid and that the

allocation proposed under Amendment 51 was closer to the Council's

original intent under Amendment 18. Second, the Council noted that the

EA/RIR/IRFA prepared for Amendments 51/51 concludes that the inshore

sector realizes greater gross revenues per metric ton of pollock than

the offshore sector due to the higher recovery rates achieved by the

inshore sector. The analysis generates gross revenue estimates for the

various processing components using 1996 data and concludes that 4

percent of the BSAI pollock TAC (the amount shifted under Amendment 51)

would generate the following gross revenues if processed by each of the

following industry components, respectively: Inshore component $24.1

million; mothership component, $21.4 million; offshore component $21.7

million. Third, the Council noted that coastal communities in Alaska

where onshore processors are located are disproportionately dependent

on pollock processing compared to the communities in which offshore

processors are based.

Small catcher vessel set-aside. Over the course of developing

Amendments 51/51 the Council received substantial testimony from owners

and operators of smaller catcher boats who indicated that, under the

current BSAI inshore/offshore regime, their share of the catch was

eroding constantly. The industry sector profiles prepared as part of

the EA/RIR/IRFA also confirmed that the share of the BSAI pollock

harvest taken by catcher vessels under 125 ft (38.1 m) LOA has eroded

since 1991. The percentage of total catcher vessel pollock harvest

taken by catcher vessels under 125 ft (38.1 m) LOA declined from 65

percent in 1991 to 42 percent in 1996 despite the fact that the number

of catcher vessels under 125 ft (38.1 m) LOA increased from 71 to 89

during the same time period. Recognizing this trend, and the fact that

many of these small catcher vessels are considered ``small entities''

under the Regulatory Flexibility Act (RFA), the Council examined a

range of options to preserve the pollock harvest share of smaller

catcher vessels as outlined above.

Most of the alternatives considered by the Council included TAC

set-asides for small catcher vessels that would be available for

harvest during the A and B pollock seasons. However, NMFS informed the

Council that the agency's TAC monitoring system would be unable to

monitor TAC set-asides based on vessel size without major changes in

recordkeeping and reporting requirements that could not be implemented

by January 1999. Based on this constraint, and on the advice of its

Advisory Panel, the Council chose to establish a small catcher vessel

set-aside that would be available prior to the pollock B season.

Because only small catcher vessels delivering to inshore processors

would be allowed to fish during this period, recordkeeping and

reporting changes would not be required to monitor the set-aside.

Based on this information, the Council voted to set aside a portion

of the inshore component Bering Sea B season allocation for small

catcher vessels (defined as catcher vessels under 125 ft (38.1 m) LOA).

The amount of this set-aside would be equal to 2.5 percent of the BSAI

pollock TAC after subtraction reserves. This small vessel set-aside

would become available on or about August 25 of each year with the

actual opening date announced by NMFS in the Federal Register on an

annual basis. NMFS would base the actual start date for the set-aside

fishery on the amount of the set-aside, the projected harvest rate, and

the number of small catcher vessels expected to participate so that

overharvest or underharvest of the set-aside is minimized.

While the amount of the set-aside would be equal to 2.5 percent of

the BSAI TAC after subtraction of reserves, the set-aside would be

available in the Bering Sea only, and would be taken out of the inshore

component B season allocation. The effect of this action would be to

allow small catcher vessels to begin fishing for the inshore component

B season allocation on or about August 25, effectively giving them a 6-

day ``head start'' over catcher vessels that are 125 ft (38.1 m) LOA or

longer. Any underages or overages of the set-aside would be added to or

subtracted from the amount available to the inshore component Bering

Sea B season.

Exclusion of offshore catcher vessels from the CVOA. BSAI Amendment

51, if approved, would exclude all vessels engaged in directed fishing

for pollock for processing by the offshore component from fishing

inside the CVOA during the B season from September 1 until the date

that NMFS closes the inshore component B season allocation to directed

fishing. The Council, in adopting this change, noted that the

proportion of catch taken by mothership operations has increased at the

expense of catcher processors over

[[Page 58001]]

the period examined by the EA/RIR/IRFA (1991 through 1996). Under

current regulations, catcher vessels that deliver pollock to either the

inshore or offshore component for processing may operate within the

CVOA. Additionally, vessels in the offshore component that do not catch

groundfish but do process pollock, such as motherships, may operate

within the CVOA. Although these regulations permit a catcher processor

to operate as a mothership within the CVOA, catcher processors

typically catch pollock in a directed fishery during the B season and

are therefore excluded from the CVOA. Catcher vessels that deliver

their catch to offshore catcher processors must operate within

relatively close proximity to their processor because codends, once

retrieved, cannot be towed for significant distances without damaging

the pollock. On the other hand, motherships can operate where their

offshore catcher vessels are fishing, either inside or outside the

CVOA. As a result of the current regulations, mothership operations may

have a competitive advantage over catcher processors because they have

the opportunity to operate inside the CVOA during the B season where

pollock may be more abundant. By excluding all catcher vessels that

harvest pollock for processing by the offshore component in the CVOA

during the B season, the Council sought to establish a more level

playing field between the two elements of the offshore component--

catcher processors and motherships.

Council Adoption of GOA Amendment 51

After receiving the recommendations of the AP, SSC and public

testimony, the Council voted unanimously to extend the provisions of

GOA Amendment 40 without change for an additional 3 years. GOA

Amendment 51, if approved, would allocate 100 percent of the GOA

pollock TAC and 90 percent of the GOA Pacific cod TAC to vessels

catching pollock and Pacific cod for processing by the inshore

component. Ten percent of the GOA Pacific cod TAC would be allocated to

vessels catching Pacific cod for processing by the offshore component.

The Council believed that an extension of the existing allocation

percentages would maintain stability in the GOA pollock and Pacific cod

fisheries and would prevent a reoccurrence of the preemption by large

factory trawlers that led to the original inshore/offshore amendments.

Technical Changes That Will Be Made by This Proposed Rule

In addition to the basic regulatory provisions contained in

Amendments 51/51, this proposed rule would make two technical changes

to the existing regulatory definitions of the inshore and offshore

components. First, definitions of the inshore and offshore components

at 50 CFR 679.2 would be revised to indicate that all groundfish

processors operating in the BSAI or GOA must be identified as belonging

to either the inshore or offshore component regardless of whether they

process pollock harvested in a directed fishery for pollock in the BSAI

or GOA, or Pacific cod harvested in a directed fishery for Pacific cod

in the GOA. This change appears to be necessary because NMFS must

assign all catch of pollock in the BSAI and GOA and all catch of

Pacific cod in the GOA to either the inshore or offshore components

when the catch of those species is taken in a directed fishery for

pollock or Pacific cod, and when it is taken as incidental catch in

fisheries directed at other species. Second, the inshore component

definition would be revised to eliminate obsolete language defining how

NMFS determines a single geographic location for inshore floating

processors. This language no longer is necessary because NMFS now

requires that processors identify themselves as inshore or offshore

when applying for Federal groundfish permits.

Classification

At this time, NMFS has not determined that Amendments 51/51 are

consistent with the national standards, other provisions of the

Magnuson-Stevens Act, and other applicable laws. NMFS, in making that

determination, will take into account the data, views, and comments

received during the comment period.

An RIR was prepared for this action that describes the management

background, the purpose and need for action, the management action

alternatives, and the economic and social impacts of the alternatives.

For BSAI Amendment 51, the RIR evaluated a range of alternatives from a

return to pre-1992 ``open access'' management, through retention of the

current allocation scheme, to a series of incremental reallocations of

TAC among the several BSAI industry components. For GOA Amendment 51,

the RIR evaluated two alternatives, a return to pre-1992 ``open

access'' management, and retention of the current allocation scheme.

The Council prepared an IRFA as part of the RIR that addresses the

economic impacts of the preferred alternative on small entities. The

IRFA concludes that BSAI Amendment 51 would have a significant economic

impact on a substantial number of small entities in the BSAI, but GOA

Amendment 51 would not have a significant economic impact on a

substantial number of small entities in the GOA. A copy of the IRFA is

available from the Council (See ADDRESSES).

The IRFA determines that the only small businesses that participate

directly in the BSAI pollock fishery are independent catcher vessels.

All other business entities that participate directly in the BSAI

pollock fishery (catcher processors, motherships, shoreside processors,

and processor-affiliated catcher vessels) are considered large entities

under the RFA. Independent catcher vessels participate in both sectors

of the BSAI pollock fishery. Of the 49 independent catcher vessels

estimated to be small entities, 45 are under 125 ft (38.1 m) LOA and 4

are 125 ft (38.1 m) LOA or larger. The estimated numbers of catcher

vessels that participated in the 1996 BSAI pollock fishery by sector,

vessel size, and small or large entity status are displayed in the

following table:

----------------------------------------------------------------------------------------------------------------

Small entities Large entities

Catcher vessel size and sector -----------------------------------------------------------------

125' 125'

----------------------------------------------------------------------------------------------------------------

Inshore sector................................ 35 2 17 15

Offshore sector............................... 9 2 16 0

Both sectors.................................. 1 0 12 9

Total..................................... 45 4 45 24

----------------------------------------------------------------------------------------------------------------

[[Page 58002]]

If implemented, BSAI Amendment 51 presents three types of impacts

on independent catcher vessels. First, the allocation shift itself

would impact catcher vessels participating in both sectors. Second, the

small vessel TAC set-aside would have impacts on catcher vessels of all

sizes. Finally, the exclusion of offshore catcher vessels from the CVOA

would impact catcher vessels delivering to the offshore sector. Each of

these impacts is summarized below.

Impacts of the Allocation Shift on Season Lengths. Quantitative

predictions about the impacts of the Council's preferred alternative on

net revenues of catcher vessels are impossible because information on

gross and net revenues for individual catcher vessels is not available.

However, using data from 1997, the most recent full year for which data

are available, it is possible to estimate how BSAI pollock fishing

season lengths would have been affected under the Council's preferred

alternative if it had been in effect in 1997.

If BSAI Amendment 51 had been in place during 1997, inshore catcher

vessels equal to or longer than 125 ft (38.1 m) would have gained an

additional 3 fishing days during the A season (January 20 to April 1)

and would have lost one fishing day during the B season for a net gain

of 2 fishing days. Two small entities fall into this category. Offshore

catcher vessels over 125 ft (38.1 m) LOA would have lost 2 fishing days

during the A season (January 25 to April 1) and 2 fishing days during

the B season for a net loss of 4 fishing days or 7.1 percent of their

total fishing days compared to the actual 1997 fishery. Two small

entities fall into this category. The value of a fishing day during the

A season may be marginally greater than the value of a fishing day

during the B season because the catchability of pollock in the BSAI is

generally greater during the A season, and most processors give

fishermen a monetary bonus based on proceeds from the roe season.

As noted above, 45 of the 49 catcher vessel small entities that

participated in the BSAI pollock fishery in 1996 are under 125 ft (38.1

m). If BSAI Amendment 51 had been in place during 1997, inshore catcher

vessels under 125 ft (38.1 m) LOA would have gained an additional 3

fishing days during the A season, would have lost 1 fishing day during

the B season and would have gained 6 fishing days during the small

catcher vessel set-aside fishery for a net gain of 8 fishing days.

Thirty-five small entities fall into this category and one small entity

delivers to both sectors. All of these small entities will benefit from

the Council's preferred alternative. Offshore catcher boats under 125

ft (38.1 m) LOA would have lost 2 fishing days during both the A season

and B season, and would have gained approximately 5 fishing days during

the small catcher vessel set-aside fishery, assuming they were able to

secure inshore markets, for a net gain of 1 fishing day. Nine small

entities fall into this category. Because offshore catcher vessels

would be excluded from the CVOA during the B season, these catcher

vessels would lose at least one fishing day while they transit to

waters outside the CVOA prior to the start of the B season and,

therefore, would be unable to take advantage of the entire 6-day set-

aside fishery.

Estimating the effects of the small catcher vessel set-aside. A

set-aside fishery for small catcher vessels has never been conducted in

the BSAI or GOA groundfish fisheries. Consequently, it is difficult to

project the costs and benefits of such a fishery on small entities.

Anecdotal information from inshore processors indicates that all of the

inshore processors in the BSAI intend to participate in this fishery

and that they intend to operate their plants at full capacity. This

suggests that the 25 offshore catcher vessels under 125 ft (38.1 m) (9

of which are small entities) may be able to secure inshore markets for

this 6-day fishery. However, offshore catcher vessels may not be able

to participate in the entire set-aside fishery if they intend to be in

position to begin fishing for their offshore processors outside the

CVOA beginning September 1. Inshore processors also have stated that

they may use large catcher vessels as tenders to ferry pollock from the

fishing grounds to the plants. The use of tenders would enable small

catcher vessels to fish non-stop during the opening, although they

would likely receive a lower price for fish transferred to large

catcher vessels at sea than for fish delivered to a plant. At present,

projecting the net revenues to the small catcher vessel fleet as a

result of this set-aside is impossible because the prices that inshore

processors are willing to pay for these fish are unknown. Inshore

processors may have little incentive to bargain with small catcher

vessels because any unharvested quota from this fishery would become

immediately available to all inshore catcher vessels on September 1.

Because inshore processors own (or have financial affiliations with)

most of the large inshore catcher vessels, inshore processors may

benefit financially if the set-aside is under-harvested.

Impacts from excluding offshore catcher vessels from the CVOA.

Under BSAI Amendment 51, catcher vessels that deliver to the offshore

component would be prohibited from fishing inside the CVOA during B

season, from September 1 until the date that NMFS closes the inshore

component B season allocation to directed fishing. Excluding offshore

catcher vessels from the CVOA would impact catcher vessels delivering

to motherships more than catcher vessels delivering to factory

trawlers. Codends, once retrieved, cannot be towed for significant

distances without damaging the pollock, which means that offshore

catcher vessels must operate within relatively close proximity to their

processor. For this reason, a catcher vessel delivering to a factory

trawler that is fishing outside the CVOA must also fish outside the

CVOA unless both vessels are fishing very close to the boundary of the

CVOA. Currently, catcher vessels delivering to motherships do not face

this restriction because motherships are allowed to operate within the

CVOA, and the mothership fleet has a history of operating within the

CVOA during the B season. During public testimony, representatives for

mothership operations expressed concerns about vessel safety if they

are required to fish outside the CVOA during the B season. The extent

to which these concerns are justified is difficult to evaluate. The US

Coast Guard indicated that no statistics exist to suggest that fishing

outside the CVOA is more dangerous than fishing inside the CVOA.

However, excluding offshore catcher vessels from the CVOA would force

these vessels to operate further offshore during the B season, which

may have some unquantifiable impact on vessel safety. It could also

impose additional costs on these vessels to the extent that they are

forced to transit farther from port to begin fishing.

Effects of GOA Amendment 51 on small entities. The IRFA concludes

that GOA Amendment 51 would affect the entire GOA commercial fishing

fleet. In 1996, the most recent year for which vessel participation

information is available, 1,508 vessels participated in the groundfish

fisheries of the GOA; 1,254 longline vessels, 148 pot vessels, and 202

trawl vessels. Most of these vessels are considered small entities

under the RFA. The commercial pollock catch in the GOA totaled 51,000

mt in 1996 with an exvessel value of $10.3 million. The Pacific cod

catch in the GOA totaled 68,000 mt in 1996 with an exvessel value of

$25.2 million. Most of the businesses involved in the support service

industry for the groundfish

[[Page 58003]]

fisheries of the GOA (e.g., equipment, supplies, fuel, groceries,

entertainment, transportation) are also considered to be small

entities.

GOA Amendment 51, which would allocate 100 percent of the pollock

TAC and 90 percent of the Pacific cod TAC to the vessels fishing for

processing by the inshore component, would positively impact nearly all

small entities participating in the pollock and Pacific cod fisheries

of the GOA because nearly all of these small entities are part of the

inshore component. The absence of Amendment 51 would open up the GOA

pollock and Pacific cod fisheries to exploitation by large catcher

processors, which are not small entities, and the current small entity

participants in the GOA pollock and Pacific cod fisheries would be

largely displaced as a result.

This proposed rule has been determined to be not significant for

the purposes of E.O. 12866.

The Council prepared an environmental assessment (EA) for these FMP

amendments that discusses the impact on the environment as a result of

this rule. The fisheries for pollock and Pacific cod and the affected

human environment are described in the FMPs, the environmental impact

statement prepared for Amendments 18/23, the EA prepared for Amendments

38/40, and in the EA prepared for this action. A copy of the EA is

available from the Council (see ADDRESSES).

A formal section 7 consultation under the Endangered Species Act

was initiated for Amendments 51/51. A biological opinion is under

preparation that will determine whether the fishing activities

conducted under Amendments 51/51 and its implementing regulations are

likely to jeopardize the continued existence of any endangered or

threatened species under the jurisdiction of NMFS or result in the

destruction or adverse modification of critical habitat.

List of Subjects in 50 CFR Part 679

Alaska, Fisheries, Recordkeeping and reporting requirements.

Dated: October 23, 1998.

Gary C. Matlock,

Director, Office of Sustainable Fisheries, National Marine Fisheries

Service.

For the reasons set out in the preamble, 50 CFR part 679 is

proposed to be amended as follows:

PART 679--FISHERIES OF THE EXCLUSIVE ECONOMIC ZONE OFF ALASKA

1. The authority citation for 50 CFR part 679 continues to read as

follows:

Authority: 16 U.S.C. 773 et seq., 1801 et seq., and 3631 et seq.

2. In Sec. 679.2, the definitions of ``inshore component'' and

``offshore component'' are revised to read as follows:

Sec. 679.2 Definitions.

* * * * *

Inshore component (applicable through December 31, 2001) means the

following three categories of the U.S. groundfish fishery that process

groundfish harvested in the GOA or BSAI:

(1) Shoreside processing operations.

(2) Vessels less than 125 ft (38.1 m) LOA, that process no more

than 126 mt per week in round-weight equivalents of an aggregate amount

of pollock and Pacific cod.

(3) Vessels that process pollock or Pacific cod harvested in a

directed fishery for those species at a single geographic location in

Alaska State waters during a fishing year.

* * * * *

Offshore component (applicable through December 31, 2001) means all

vessels not included in the definition of ``inshore component'' that

process groundfish harvested in the BSAI or GOA.

* * * * *

3. In Sec. 679.7, paragraph (a)(7) heading is revised to read as

follows:

Sec. 679.7 Prohibitions.

* * * * *

(a) * * *

(7) Inshore/offshore (Applicable through December 31, 2001).* * *

* * * * *

4. In Sec. 679.20, the applicable dates in the headings of

paragraphs (a)(6), (b)(1)(iv), (b)(2)(i), (b)(2)(ii), and (c)(4) are

revised to read: ``Applicable through December 31, 2001.''; paragraph

(a)(6)(i) is revised; and paragraph (a)(6)(vi) is added to read as

follows:

Sec. 679.20 General limitations.

* * * * *

(a) * * *

(6) * * *

(i) BSAI pollock. The apportionment of pollock in each BSAI subarea

or district and season will be allocated 39 percent to vessels catching

pollock for processing by the inshore component and 61 percent to

vessels catching pollock for processing by the offshore component.

* * * * *

(vi) Bering Sea subarea pollock set-aside fishery for catcher

vessels less than 125 ft (38.1 m) LOA--(A) Calculation of amount. An

amount equal to 2.5 percent of the BSAI pollock TAC, after subtraction

of reserves, will be set aside from the inshore component B season

allowance. This set-aside will become available to catcher vessels less

than 125 ft (38.1 m) LOA catching pollock for processing by the inshore

component on or about August 25 of each year as set out at

Sec. 679.23(e)(2)(ii)(E).

(B) Underages and overages. Any harvest underage or overage of the

small vessel set-aside established under paragraph (a)(6)(vi)(A) will

be added to or subtracted from inshore component B season allowance.

* * * * *

5. In Sec. 679.22, paragraph (a)(5) is revised to read as follows:

Sec. 679.22 Closures.

(a) * * *

(5) Catcher Vessel Operational Area (CVOA) (applicable through

December 31, 2001). The CVOA is defined as the area of the BSAI east of

167 deg. 30' W. long., west of 163 deg. W. long., and south of 56 deg.

N. lat. (see Figure 2 of this part).

(i) Effective time period. The CVOA is established annually during

the B season, defined at Sec. 679.23(e)(2)(i)(B), from September 1

until the date that NMFS closes the inshore component B season

allocation to directed fishing.

(ii) Offshore component restrictions. Vessels in the offshore

component or vessels catching pollock for processing by the offshore

component are prohibited from conducting directed fishing for pollock

in the CVOA unless they are operating under a CDP approved by NMFS.

(iii) Fisheries other than pollock. Vessels that harvest or process

groundfish in directed fisheries for species other than pollock may

operate within the CVOA consistent with the other provisions of this

part.

6. In Sec. 679.23, paragraph (e)(2) is revised to read as follows:

Sec. 679.23 Seasons.

* * * * *

(e) * * *

(2) Directed fishing for pollock. (i) Subject to other provisions

of this part, and except as provided in paragraphs (e)(2)(ii) through

(e)(2)(iv) of this section, directed fishing for pollock is authorized

only during the following two seasons:

(A) A season. From 0001 hours A.l.t. January 1 through 1200 hours

A.l.t. April 15.

(B) B season. From 1200 hours A.l.t. September 1 through 1200 hours

A.l.t. November 1.

(ii) Offshore component restrictions (applicable through December

31,

[[Page 58004]]

2001)--(A) Offshore A season. Subject to the other provisions of this

part, directed fishing by the offshore component or by vessels

delivering to the offshore component is authorized from 1200 hours

A.l.t. January 26 through 1200 hours A.l.t. April 15.

(B) Offshore A season ``fair start'' requirement. Directed fishing

for pollock by the offshore component, or by vessels catching pollock

for processing by the offshore component is prohibited through 1200

hours, A.l.t., February 5, for any vessel that is used to fish in a

non-CDQ fishery for groundfish in the BSAI or GOA, or for king or

Tanner crab in the BSAI prior to 1200 hours, A.l.t., January 26 of the

same year.

(iii) Set-aside for catcher vessels less than 125 ft (38.1 m) LOA

(applicable through December 31, 2001). Subject to other provisions of

this part, directed fishing for pollock by catcher vessels less than

125 ft (38.1 m) LOA catching pollock for processing by the inshore

component will be authorized beginning on or about August 25 of each

year by notification in the Federal Register. NMFS will base the

opening date on the amount of the set-aside, the projected harvest

rate, and the number of vessels expected to participate in the set-

aside fishery.

(iv) B season ``fair start'' requirement. Except as provided for in

paragraph (e)(2)(iii) of this section, directed fishing for pollock is

prohibited from 1200 hours A.l.t., September 1 through 1200 hours,

A.l.t., September 8, for any vessel that is used to fish for groundfish

with trawl gear in a non-CDQ fishery in the BSAI or GOA between 1200

hours A.l.t., August 25, and 1200 hours A.l.t., September 1.

* * * * *

[FR Doc. 98-28893 Filed 10-28-98; 8:45 am]

BILLING CODE 3510-22-P