[Federal Register Volume 78, Number 60 (Thursday, March 28, 2013)]
[Rules and Regulations]
[Pages 18879-18896]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-07162]


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DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

50 CFR Part 660

[Docket No. 120313185-3252-01]
RIN 0648-BC01


Fisheries Off West Coast States; Pacific Coast Groundfish 
Fishery; Trawl Rationalization Program; Reconsideration of Allocation 
of Whiting

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

ACTION: Final rule.

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SUMMARY: This action revises several portions of the Pacific Coast 
Groundfish Fishery Trawl Rationalization Program (program) regulations 
in response to a court order requiring the National Marine Fisheries 
Service (NMFS) to reconsider the initial allocation of Pacific whiting 
(whiting) to the shorebased individual fishing quota (IFQ) fishery and 
the at-sea mothership fishery. Additionally, NMFS concludes after 
review of public comments and the record as a whole, that the Pacific 
Fishery Management Council's (Council's) recommendation to maintain the 
existing initial allocations of whiting is consistent with the 
Magnuson-Stevens Fishery Conservation and Management Act (MSA), the 
Pacific Coast Groundfish Fishery Management Plan (Groundfish FMP), and 
other applicable law. This final rule will affect the transfer of quota 
share (QS) and individual bycatch quota (IBQ) between QS accounts in 
the shorebased IFQ fishery, and severability of catch history 
assignments (CHAs) in the mothership fishery, both of which will be 
allowed on specified dates, with the exception of widow rockfish. Widow 
rockfish is no longer an overfished species and transfer of QS for this 
species will be reinstated pending reconsideration of the allocation of 
widow rockfish QS in a future action. The divestiture period for widow 
rockfish QS in the IFQ fishery will also be delayed indefinitely.

DATES: This rule is effective April 1, 2013.

ADDRESSES: Information relevant to this final rule, which includes a 
final environmental assessment (EA), and a final regulatory flexibility 
analysis (FRFA), including a regulatory impact review (RIR), are 
available from William W. Stelle, Jr., Regional Administrator, 
Northwest Region, NMFS, 7600 Sand Point Way NE., Seattle, WA 98115-
0070. Electronic copies of this final rule are also available at the 
NMFS Northwest Region Web site: http://www.nwr.noaa.gov.

FOR FURTHER INFORMATION CONTACT: Ariel Jacobs, 206-526-4491; (fax) 206-
526-6736; Ariel.Jacobs@noaa.gov.

SUPPLEMENTARY INFORMATION:

Background

    This final rule revises several provisions of the Pacific coast 
trawl rationalization program and supersedes regulatory delays and/or 
revisions NMFS established through temporary emergency action in a 
final rule published on August 1, 2012 (77 FR 45508), and extended on 
January 17, 2013 (78 FR 3848). Specifically, this action will:
    (1) Allow transfer of QS or IBQ (except for widow rockfish QS) 
between QS permit holders in the shorebased IFQ fishery beginning 
January 1, 2014;
    (2) Require QS permit holders in the shorebased IFQ fishery holding 
QS or

[[Page 18880]]

IBQ in excess of the accumulation limits to divest themselves of excess 
QS (except for widow rockfish QS) or IBQ by November 30, 2015;
    (3) Allow limited entry trawl permit holders in the mothership 
fishery to request a change (or transfer) of mothership/catcher vessel 
(MS/CV) endorsement and its CHA beginning September 1, 2014;
    (4) Require MS/CV endorsed limited entry trawl permit owners to 
divest themselves of ownership in permits in excess of the accumulation 
limits by August 31, 2016; and
    (5) Extend the divestiture period delay and moratorium on transfer 
of widow rockfish QS in the shorebased IFQ fishery indefinitely.
    Each of these elements, along with additional background 
information, were described in detail in the proposed rule (78 FR 72, 
January 2, 2013), and are not repeated here.

NMFS Decision on Reconsideration of the Initial Allocation of Whiting

    NMFS has determined that the Council's recommendation to maintain 
the existing initial whiting allocations (No Action Alternative) is 
consistent with the MSA, the Groundfish FMP, the court's order in 
Pacific Dawn v. Bryson, No. C10-4829 TEH (N.D. Cal.) (Pacific Dawn), 
and other applicable law. This determination is based on NMFS' review 
of the entire record, including the Council's record and NMFS' 
consideration of comments received on the proposed rule. After 
considering the required statutory factors and the goals and objectives 
of the trawl rationalization program and the Groundfish FMP, NMFS has 
determined that the existing initial whiting allocations provide for a 
fair and equitable allocation to the shorebased IFQ program and the 
mothership coop program. These initial allocations of whiting take the 
form of QS for both harvesters and processors in the shorebased IFQ 
program, and CHA for harvesters in the mothership fishery. For the 
purposes of this action, ``quota'' is used to describe allocations of 
both CHA and QS to harvesters in the shorebased IFQ and mothership 
fisheries, as well as to describe allocation of QS to shoreside 
processors.
    In the context of the relatively narrow remand ordered by the court 
in Pacific Dawn, NMFS has determined that many MSA factors show minimal 
differences, or none at all, between the alternatives under 
consideration. Additionally, where there are differences, they are 
tempered by the relatively modest shifts in quota among the various 
alternatives and other relatively minor variations that result. For 
example, comparing the No Action Alternative to the alternative most 
favoring recent history (Alternative 4) reveals overall modest shifts 
in quota from status quo holders to others (17% for shorebased 
harvesters, 3% for shoreside processors, and 18% for mothership 
harvesters) and generally modest shifts among most individual permit 
holders and processors. This is principally the result of the fact that 
a majority of participants in the whiting fishery have generally 
continuous participation in the fishery. Given this, and in balancing 
the various factors in this decision (including control date, 
investment and dependence, disruption, efficiency, employment, current 
and historic participation, communities), NMFS has concluded there are 
fundamental and compelling reasons to maintain the existing initial 
allocations of whiting. Of most importance, maintaining existing 
allocations takes into account the intent of the 2003 control date and 
principal policy goals of the trawl rationalization program (including 
reducing overcapitalization and ending the race for fish). Maintaining 
status quo also reduces concentration of quota among participants and 
achieves a wider geographic distribution of initial program benefits. 
NMFS believes these key factors, among other considerations, outweigh 
the reasons supporting alternatives that favor more recent history 
(e.g., recognizing recent fishery participants' dependence and 
investments, reducing future quota leasing or acquisition costs, 
reducing quota to recent non-participants, and reflecting more recent 
market and fishery conditions). More detailed discussion on the 
specific statutory factors under MSA section 1853a(c)(5)(A) and related 
provisions is set forth in the preamble to the proposed rule and not 
repeated here.
    Maintaining the initial whiting allocations, including the use of 
qualifying years of 1994-2003 for whiting harvesters and 1998-2004 for 
whiting processors, supports the Council's and NMFS' efforts to reduce 
overcapitalization and end the race for fish by not rewarding increases 
in harvesting or processing that occurred after the end of the 
qualifying periods (i.e., after the 2003 control date). The existing 
whiting allocations also support the importance of the control date for 
this and future rationalization programs, minimize the concentration of 
harvester quota, and provide for a wider initial geographic 
distribution of the program benefits along the coast and the 
corresponding fishing communities.

Importance of the Control Date

    Two fundamental purposes of Amendment 20 were to reduce 
overcapitalization in the groundfish fishery and to end the race for 
fish. The Council adopted and announced the 2003 control date to 
further these purposes, seeking to discourage speculative 
capitalization and discourage effort by putting participants on notice 
that any fishing history earned beyond 2003 may not count towards a 
future allocation system. Since the original notice of the 2003 control 
date in the Federal Register on January 9, 2004 (69 FR 1563), there has 
been continuous and systematic work to develop the trawl 
rationalization program. Throughout the reconsideration, many 
participants testified or provided written comment with respect to how 
the announcement of the control date affected their business decisions. 
NMFS acknowledges that a control date is not a guarantee that any 
specific period will count toward initial allocations. NMFS believes, 
however, that recognition of the business and investment decisions made 
by participants who interpreted the control date as signaling the 
likely end of the qualifying period is consistent with the fundamental 
purposes of Amendment 20. While no mechanism exists to separate 
speculative from non-speculative effort after the control date, 
maintaining the control date for harvesters does not reward any 
speculative behavior after the control date and does not penalize those 
who honored the control date. Additionally, an important signal is sent 
for future programs (nationally as well as on the Pacific Coast)--the 
use of control dates is still a valid tool to deter increases in effort 
or capitalization that would undermine conservation and management 
goals pending development of a limited access privilege program.
    Moreover, for processors, the record establishes valid reasons to 
end the qualifying period for processors one year after the 2003 
control date, including accounting for processor investments that took 
place prior to the announcement of the control date but that did not 
begin to earn processing history until 2003 and 2004. In addition, the 
purpose of applying control dates to onshore processors, while 
important, is not necessarily as significant as for harvesters, who 
have a greater ability to move into and out of various fisheries to 
gain potential fishing history. These factors, in addition to the fact 
that it was not clear until 2005 that the 2003 control date potentially 
applied to

[[Page 18881]]

processors, support the decision that a one year shift, to 2004, was a 
reasonable cutoff date for processors.
    While maintaining the end of the qualifying periods necessarily 
excludes providing credit for more recent participation, publication of 
the control date and the continuous and active deliberation of the 
Council provided notice to all participants that this was a 
possibility. Thus, those participants who did increase their 
investments or effort in the fishery were on notice that any history 
established in later years might not count towards initial allocations. 
Additionally, participants had the opportunity to purchase permits from 
others to bolster their catch history totals to potentially reflect 
their increased investments and effort (as the record reflects did 
occur). The fairness of maintaining the initial cut-off dates also is 
reflected in the public comments of participants that supported No 
Action Alternative despite the fact that they would receive higher 
levels of quota if an alternative favoring more recent history were 
adopted.
    Although the length of time between the original control date and 
the agency approval in 2010, implementation of the program in 2011, and 
this decision in 2013 is longer than the time span in most programs 
that announce control dates, this is explained by the complexity of the 
program, which resulted in significant time needed to involve the 
public and fishery participants, develop alternatives, develop 
appropriate analytical documents, reach a final decision, implement 
that decision, and then engage in this reconsideration process. 
Additionally, the Council and NMFS have fully considered all applicable 
fishing and processing history for this decision, leaving no gap in the 
available information considered.

Minimize Concentration of Quota

    The record reflects that basing initial whiting allocations on 
alternatives that include more recent history would generally have the 
effect of concentrating quota for harvesters in fewer hands, creating 
fewer winners and more losers compared to maintaining the existing 
allocations (see EA, Section 4.5.3.2 and FRFA). Moreover, when viewed 
in the context of the trawl rationalization program as a whole, moving 
the end date of the qualifying period to a more recent year could have 
the effect of creating ``double-dip'' gains and losses for certain 
participants due to having different allocation periods for whiting 
compared to some non-whiting species. For example, there were seven 
permits that, after 2003, reduced their share of harvest in the non-
whiting fishery while increasing their share in the whiting fishery 
(see EA, Section 2.2.3.2). Using an allocation period other than the No 
Action Alternative would benefit those participants with more whiting 
history in recent years because they would receive an amount of non-
whiting quota allocated under a 2003 cut-off while simultaneously 
receiving increased whiting quota (i.e., double-dipping) if a later end 
year was used for whiting allocations, creating inequities in the 
allocation of target species.

Wider Geographic Distribution of the Initial Benefits of the Program

    The record reflects that maintaining the existing allocations would 
provide a more even distribution of initial whiting allocations along 
the coast and to the corresponding fishing communities. Shifting to 
alternatives favoring more recent history could contribute to a 
northward shift in initial quota distribution, and accordingly a 
similar shift in any benefits stemming from that initial allocation 
(see EA, Section 4.3.3). The northward shift is expected to be 
relatively small (less than 8 percent of the total quota--2 percent for 
processors and 6 percent for harvesters between the No Action 
Alternative and Alternative 4), and the analysis shows whiting landings 
have been shifting northward in recent years (due to fish availability 
and investments in ports). Although the 8 percent difference is 
relatively modest, NMFS believes that maintaining the initial whiting 
allocations supports historic fishing communities in more southern 
locations and creates a wider geographic distribution of the initial 
benefits associated with allocations. Maintaining initial whiting 
allocations would further support one of the guiding principles in the 
development of Amendment 20 (see Am 20 EIS, Section 1.2.3)--to minimize 
negative impacts resulting from localized concentrations of fishing 
[and processing] effort. For processors, in addition to the 
distribution of wealth associated with initial allocations, the wider 
distribution of initial allocation of whiting QS may provide some 
additional influence over where deliveries are made along the coast 
than if the initial allocation were based on more recent qualifying 
years that would shift allocations and potentially landings northward.

Comments and Responses

    In the proposed rule, NMFS solicited public comments on the 
regulatory revisions and on NMFS' preliminary determination that the 
Council's recommendation to maintain the initial allocations of whiting 
for the shorebased IFQ fishery and the at-sea mothership fishery is 
consistent with the MSA, the Groundfish FMP, and other applicable law. 
The comment period ended February 1, 2013. NMFS received 19 written 
comments on the proposed rule reflecting comments from individuals, 
organizations and other agencies. NMFS also received oral comments 
regarding the existing initial whiting allocations at a meeting during 
the comment period. The U.S. Department of the Interior submitted a 
letter indicating that it had no comment. One written comment also 
addressed the proposed regulatory revisions. The comments received and 
NMFS' responses are below.

Process

    Comment 1: NMFS has the responsibility of reviewing the record as a 
whole and ensuring that the action is consistent with the Groundfish 
FMP and the MSA. NMFS must not simply defer to the Council.
    Response: NMFS agrees that it must make the final decision and 
cannot simply defer to the Council with respect to whether the 
recommendation to maintain the existing initial whiting allocations and 
make associated regulatory revisions is consistent with the Groundfish 
FMP, the MSA, including the national standards, and other applicable 
law. NMFS has taken its own hard look at the entire record, including 
public comment on the proposed rule, and determined that this action 
satisfies those requirements.
    Comment 2: The public reconsideration process was thorough, 
lengthy, open, and transparent. To make appropriate decisions, Council 
members need stakeholder involvement and the Council reviewed and heard 
numerous public comments and advisory body statements from various 
perspectives. In addition, the majority of Council members that 
participated in the reconsideration were not members of the Council 
when it took its original action in 2008, which allowed for thorough 
review of the fairness and equity of that decision.
    Response: NMFS agrees that stakeholder involvement is the 
foundation of an open public Council process and is an important 
component of decision making, especially with respect to allocations. 
The Council, including NMFS representatives, reviewed and considered 
many comments from various perspectives at Council meetings and NMFS 
has further considered stakeholder input through the comments received 
on the proposed rule.

[[Page 18882]]

    Comment 3: It is unclear what role the NOAA Catch Share Policy 
played in the reconsideration of initial whiting allocations. Further, 
based on the section of the NOAA Catch Share Policy entitled 
``evaluating catch share applicability,'' three of the characteristics 
for use in determining whether a fishery is a suitable candidate for a 
catch share program--overcapitalization, overfished stocks, and 
bycatch--do not appear to be present in the whiting fishery in 2010 and 
therefore it is unclear whether the whiting fishery was a good 
candidate for a catch share program.
    Response: NMFS considered the NOAA Catch Share Policy (the Policy) 
as part of the reconsideration. Generally, the Policy recommends that 
allocations be revisited on a regular basis and that an allocation 
decision should include consideration of conservation, economic, and 
social criteria in furtherance of the goals of the underlying FMP. The 
reconsideration of initial whiting allocations reflected consideration 
of the factors identified in the Policy. The decision to include 
whiting in the trawl rationalization program was approved in Amendment 
20 and implemented in 2011. NMFS also considered provisions of the 
Policy at that time. Amendment 20 was developed to address among other 
things, overcapitalization, overfishing, and bycatch, including bycatch 
of overfished species, in the groundfish trawl fishery (75 FR 78344). 
The decision to include the whiting fisheries as part of the trawl 
rationalization program is not part of the reconsideration of initial 
whiting allocations or this rule.
    Comment 4: Consideration of a factor means that it must be weighed 
and taken into account, not noted and ignored. NMFS must provide a 
reasoned analysis that connects the factor with the decision it makes 
with respect to initial whiting allocations.
    Response: NMFS agrees that consideration of a factor entails more 
than noting its existence. However, when making an allocation decision, 
the factors that must be considered do not require any particular 
outcome. For example, the requirement to consider current harvests when 
establishing a fair and equitable initial allocation does not mandate 
that the qualifying periods for initial whiting allocations be expanded 
to include years beyond the existing cut-offs. As the record 
demonstrates, there is a rational basis for excluding more recent years 
from the qualifying periods. The existing initial allocations further 
the goals and objectives of Amendment 20 and avoid rewarding increases 
in harvesting or processing at a time when the fishery was 
overcapitalized, and a time after participants were aware that history 
beyond 2003 may not qualify for use in an allocation formula.

Current and Historical Harvests

    Comment 5: More recent years should be used in the qualifying 
period for allocating whiting to processors to reflect changes in the 
marketplace. The whiting market has changed since the end of the 
existing qualifying periods, specifically with the growth of the market 
for the whiting headed and gutted product. The changes made the fishery 
more efficient and economically stable after 2004, so more recent years 
should be more heavily weighted to establish a fair and equitable 
allocation.
    Response: NMFS agrees that there have been changes in the markets 
for whiting. These changes have led to changes in the amounts and types 
of product made out of whiting. Since the early 1990s, shorebased 
processors have converted whiting into headed and gutted (H&G), surimi, 
fillets, and fish meal products. In the early 1990s, there was a much 
greater emphasis on surimi. New plants came on line in response to the 
demand for surimi caused by the phase out of Japanese and Korean fleets 
off the U.S. and Russian waters. In recent years there has been a much 
greater emphasis on H&G products, sparked by the increased world demand 
for H&G products. In the early 1990s, the market for H&G products was a 
limited domestic market and now the H&G market is international.
    The surimi market has declined, based on changes in the Japanese 
and Korean demand and from foreign competition. As a result, surimi 
plants have either shut down or reduced production. Prior to 2004, up 
to five plants were producing surimi. Currently, there is only one 
shorebased plant that is producing whiting surimi and that plant is 
also producing H&G products.
    In response to changing world markets, company restructuring, and 
other factors, there has always been entry and exit within the whiting 
processing sector. There have also been changes in relative prices of 
products that in turn determine the mix of various products. Underlying 
both the development of the surimi processing capacity, and now H&G 
processing capacity, have been declining trends in world groundfish 
production.
    Overall, the major companies of the processing industry that 
existed prior to 2004 still exist in 2012. For companies that no longer 
exist, the quota that would have been allocated to those entities has 
been distributed to existing companies in proportion to the size of 
their quota allocations under the existing initial allocations. NMFS 
recognizes the influence of H&G prices and the new world markets, but 
does not believe these changes should result in selecting an 
alternative that includes more recent years in the whiting allocation 
formula, as all companies are partaking in the expanded market for H&G 
whiting and can continue to do so irrespective of the amount of the 
whiting QS received by that entity. Furthermore, recent entrants into 
the processing sector entered at a time when they could benefit from 
the expanded market for H&G whiting, which could allow them to be 
competitive despite receiving no, or a lesser amount, of an initial 
whiting allocation. They also entered at a time after the control date 
had been announced and while the Council was actively pursuing 
development of the trawl rationalization program. NMFS believes that it 
is fair and equitable to use qualifying years that more heavily reflect 
the investments and processing history that occurred prior to 2004, 
consistent with the intent of discouraging speculative increases in 
capacity and minimizing disruption to processors that invested under 
the old management regime prior to the Council beginning its efforts to 
rationalize the fishery.
    Comment 6: Using more recent years in the qualifying period 
promotes conservation because larger fish tend to occur in northern 
waters, and northern processors have a better opportunity to process 
larger and higher quality fish. Under alternatives that would shift 
more quota to the north, fewer larger fish can be harvested, leaving 
more fish in the water to spawn and sustain the fishery. Using more 
recent years would also promote conservation because H&G product has 
higher recovery rates than surimi product which dominated the whiting 
fishery in earlier years.
    Response: NMFS agrees that northern processors may have a greater 
opportunity to process larger and higher quality fish. However, NMFS 
disagrees that using more recent years promotes conservation to any 
meaningful extent. Any conservation benefit associated with the 
alternatives is extremely small and highly speculative, and does not 
justify selecting an alternative that uses more recent years when 
considered in light of all the factors.
    The EA analyzes the potential biological impacts associated with 
the alternatives that were considered. Generally, for whiting, 
harvesting a larger proportion of older fish in any given year is 
likely to have an upward

[[Page 18883]]

influence on stock productivity relative to harvesting the same amounts 
of whiting with a smaller proportion of older fish. In an extreme 
hypothetical where all harvests were delayed until September of each 
year--when whiting are typically larger and located further to the 
north--a 10 percent increase in stock productivity was projected when 
compared to having all harvest occurring in April.
    In contrast, the amount of quota that could initially be shifted 
geographically and potentially result in changes in the location of 
harvest is much smaller than in the all-harvest hypothetical above. To 
begin, the allocation alternatives are unlikely to affect the location 
of harvest in the mothership fishery or the catcher/processor fishery 
because these fisheries are not tied to a need for shorebased 
processing. Together, the mothership and catcher/processor fisheries 
are allocated 58 percent of the non-tribal commercial allocation (24 
percent for the mothership sector and 34 percent for the catcher-
processors). Of the remaining 42 percent of the non-tribal commercial 
allocation given to the shorebased IFQ fishery, the allocation most 
likely to have any short term effects on geographic area of harvest is 
the QS issued to processors, which is a maximum of 20 percent of the 42 
percent allocated to the shoreside fishery, or 8.4 percent of the non-
tribal commercial whiting allocation. The EA also indicates that the 
effects of initial allocations on the distribution of fishing among 
communities are difficult to predict because over the long term quota 
will likely move toward those ports where profit margins tend to be the 
highest, regardless of the initial allocations (see EA Section 4.3.3). 
Using the 10 percent hypothetical result as a maximum, and applying 
that result to the 8.4 percent of the non-tribal commercial whiting 
allocation to processors, results in an upper bound on the impact on 
stock productivity of less than 1 percent. Even this is likely an 
overstatement, however, given that only a relatively small amount of 
the quota actually shifts to more northern based processors when 
comparing the No Action Alternative to Alternative 4 (which most favors 
recent history).
    NMFS also notes that when adding Canadian and Tribal fisheries to 
the analysis, the potential for conservation benefits becomes smaller. 
For 2011, the total U.S. and Canadian Total Allowable Catch (TAC) limit 
was 393,751 mt. The U.S. portion of the TAC was 290,903 mt, which 
includes the U.S. shorebased allocation of 92,818 mt. The 20 percent of 
shorebased whiting QS allocated to processors is approximately 5% of 
the U.S. and Canadian coastwide TAC. NMFS further notes that depending 
on the strength of the year classes, it may be difficult, even in the 
northern portion of the fishery, to avoid small fish (see Status of the 
Pacific hake (Whiting) stock in U.S. and Canadian Waters in 2012, 
International Joint Technical Committee for Pacific Hake, Final 
Document 2/29/2012, pages 27-28, http://www.nwr.noaa.gov/fisheries/management/whiting/pacific_whiting.html).
    The EA concludes that given the relatively small amount of quota 
that may be reallocated among geographic regions, the fact that QS 
trading will likely change geographic distribution regardless of the 
initial allocations, and considering fleet mobility, the effect of the 
initial allocations on area of harvest and resulting biological impacts 
are negligible. Additionally, even assuming recovery rates for H&G 
products are greater than those for surimi, NMFS does not anticipate 
that initial allocations to processors will have a significant 
influence on the type of whiting products produced by processors, 
especially in the long term. As a result, there does not appear to be a 
difference in conservation among the alternatives in terms of product 
recovery. Also see response to comment 5 addressing the transition from 
surimi to H&G for the whiting fishery.
    In sum, selecting an alternative that uses more recent years in the 
qualifying period is not justified based on differences in biological 
impacts and NMFS believes that other considerations justify maintaining 
the existing initial allocations.
    Comment 7: The purpose of considering current and historical 
harvests for processors is that it allows a council and the Secretary 
to consider the relative value of investments made in processing 
capacity early in the development of a fishery compared to the value of 
investments in processing made late in a fishery that is already 
heavily overcapitalized. This is one of the considerations that should 
go into the decision of which years of processing participation are 
best used for fair and equitable allocations to processors.
    Response: NMFS agrees and has concluded that investments in 
processing capacity made earlier in the fishery should be more heavily 
taken into account when determining the initial allocation qualifying 
periods. This is in part because the allocation of quota to processors 
was intended to minimize disruption to processors that had invested 
under an expectation of operating under the pre-Amendment 20 fishing 
regime, and also because any investments made after the announcements 
of the control date were made at a time when it was evident that the 
Council was actively pursuing an effort to rationalize the trawl 
fishery.
Dependence, Investment, Participation, and Latent Permits
    Comment 8: A significant portion of quota was allocated to permits 
that had no history of landings in the fishery after 2003. The EA 
indicated that allocations went to 21 permits that had no participation 
in the shorebased whiting fishery during the seven years between 2004 
and 2010, representing 10.2% of the shorebased whiting quota. 
Furthermore, the EA also identified that whiting allocations went to 14 
permits (representing 9.6% of the quota allocated to the mothership 
sector) that had no participation in the mothership sector during the 
same seven years between 2004 and 2010. Considering the number of 
permits that received quota but have not participated in the fishery 
since 2003, it is evident that the existing qualifying periods were 
based at least partially on some industry members' desire to sell their 
quota and retire. The initial allocations should instead be based on 
what is best for those currently participating. When considering 
investment as a measure of dependence, NMFS should focus only on 
whiting and not on other fisheries.
    Response: NMFS acknowledges that quota was allocated to some 
permits that did not directly participate by harvesting or landing 
whiting in the whiting fishery in the years between 2004 and 2010. 
However, NMFS does not believe that this fact warrants including more 
recent years in the qualifying period because many of the permit owners 
owned other permits that were active in the whiting fishery during 
those years, participated in other fisheries including other sectors of 
the whiting fishery, or held those inactive permits as an investment.
    Groundfish fisheries on the West Coast are frequently prosecuted 
based on a ``portfolio'' approach where fishermen participate in 
various sectors or corollary fisheries throughout a given year and 
between years to maximize benefits. To the extent permits received 
quota but did not actively participate in West Coast fisheries during 
the years referenced, the quota was still allocated to the permit owner 
at the time of initial allocation and reflects the investment of the 
participant in the permit. As discussed in the EA, a limited entry 
trawl permit is a highly fishery-dependent investment that must be 
renewed annually. Public comment,

[[Page 18884]]

both at the Council meetings and through comments on the proposed rule, 
also indicated that some fishermen actively chose to invest in permits 
in the hope that they would receive initial allocation quota amounts 
that would accommodate their intended fishing strategies. As noted in 
public comment on the proposed rule in support of the existing 
allocations of whiting, the initial harvester allocation to current 
permit owners recognizes recent participation and investments in the 
fishery. After the 2003 control date, 18 permits were sold to new 
permit owners and the permit's catch history went to those new permit 
owners. Another commenter made a similar comment that business 
decisions were made to retire vessels after the control date rather 
than investing in vessel upgrades and maintenance, with the 
understanding that the intent of the program was to promote 
consolidation within an overcapitalized fishery. Furthermore, as 
discussed below, when considering permits that were truly inactive in 
either the shorebased or mothership sectors of the whiting fishery 
after 2003, only approximately 1.5 percent of the history based quota 
was allocated to those permits. Finally, the topic raised by the 
commenter regarding the business decisions made by those who acquire QS 
through initial allocation (e.g., whether to sell or lease that quota 
to another participant or eventually sell the QS/CHA once it becomes 
transferable) are present irrespective of the qualifying period chosen.
    With respect to inactive permits being owned by an entity that also 
actively participated in the whiting fisheries through the use of other 
permits, for shorebased whiting permit QS allocation recipients, 4 of 
the 21 permits referenced by the commenter were owned by entities that 
also controlled other shorebased whiting permits. Those four permits 
received No Action QS allocations totaling 2.35% (i.e., 2.9% of the 
total shorebased whiting allocation to permits). Similarly, 4 of the 13 
permits referenced by the commenter (the EA demonstrates there were 13 
rather than 14 as stated in the comment, Section 4.5.2.1) that received 
CHA were owned by entities that also control other MS whiting permits. 
Those four permits received No Action CHA allocations totaling 3.8% 
(i.e., 3.8% of the total MS whiting CHA allocation to permits). In 
addition, for permits that received either shorebased whiting QS or 
mothership CHA allocations, there were a total of 15 permits that had 
no shorebased whiting or Mothership whiting history after 2003. Those 
15 permits received No Action Shorebased whiting QS allocations 
totaling 3.8% (i.e., 4.75% of the total shorebased whiting allocation 
to permits), and No Action Mothership CHA allocations totaling 1.46% 
(i.e., 1.46% of the total MS whiting CHA allocation to permits). Six of 
those 15 permits were owned by entities that also controlled other 
shorebased whiting permits. Those six permits received No Action 
shorebased whiting QS allocations totaling 2.46% (i.e., 3.1% of the 
total shorebased whiting allocation to permits). None of the 15 permits 
were owned by entities that also controlled other MS/CV whiting 
permits. When looking at the whiting fishery as a whole, only 1.46% of 
the CHAs and only 1.65% of the shorebased QS was allocated to permits 
that were truly latent in both the mothership and shorebased sectors. 
NMFS defines ``truly latent'' permits as those that received either 
mothership CHA or shorebased quota share allocations where the permit 
itself was not fished in either the mothership fishery or the shoreside 
whiting fishery, and the owner of the permits also did not fish other 
owned permits in the mothership or shoreside whiting fishery after 
2003.
    Additionally, after accounting for participation in other 
fisheries, including those off Alaska, there were a total of only nine 
permits (shorebased or mothership) where the owner apparently had no 
fishing activity off the West Coast or Alaska after 2003. These nine 
permits translate into only 1.3 percent of the shorebased QS and 1.0 
percent of the mothership catch history assignment used for the 2011 
and 2012 fisheries.
    Accordingly, the existing allocations allocate only a very small 
portion of quota to permits that are held by owners that did not 
participate in whiting, West Coast, or Alaskan fisheries or own other 
permits that did participate after 2003.
    Comment 9: NMFS seemed to have difficulty defining dependence 
although the meaning of dependence in the MSA is clear and means to 
rely upon the fishery for financial support and income. Also, it is not 
fair and equitable to give quota to permits which, based upon the 
available objective information, did not participate in the fishery for 
some time and arguably no longer demonstrate any financial dependence 
on the fishery.
    Response: NMFS did not have difficulty defining dependence in the 
proposed rule. In the proposed rule, NMFS noted that the MSA does not 
provide a definition of dependence, provided an explanation of the 
meaning of dependence, and noted that factors related to dependence may 
be measured in numerous ways. As stated, in general terms, dependence 
upon the fishery relates to the degree to which participants rely on 
the whiting fishery as a source of wealth, income, or employment to 
financially support their business. Current harvests, historical 
harvests, levels of investment over time, and levels of participation 
over time are all aspects of dependence, as they can all be connected 
to the processes that fishers and processors use to generate income. 
For purposes of this decision, NMFS believes that including all 
potential sources of income in assessing the level of dependence is 
appropriate.
    NMFS also considered the Council's approach as discussed in Section 
5.4.2 of the EA. The EA cites the NOAA technical memorandum ``The 
Design and Use of Limited Access Privilege Programs,'' (Anderson and 
Holliday 2007), which notes that ``various measures of dependence on 
the fishery [exist] including percent of revenue or opportunities to 
participate in other fisheries, and inter-relations with other fishery 
related business especially with respect to employment.'' The existing 
initial allocations do not provide history based quota to harvesters 
after 2003 or processors after 2004. As described above, that does not 
mean that investment and dependence during that period were ignored. 
Rather, the issue of investment and dependence for more recent years 
has been thoroughly explored, and there are valid policy reasons for 
excluding those years as discussed elsewhere. One important fact to 
recognize is that most current harvesters and processors in the fishery 
were also historical participants during the qualifying periods for 
initial allocation, and the shifts in quota among the initial 
allocation alternatives considered were relatively modest overall and 
for a majority of the participants. Permit owners receiving initial 
allocation received quota reflecting their historic participation and 
current permit ownership (reflective of dependence and investment) as 
well as a share of the buyback quota that was equally distributed.
    Comment 10: Catch history years should be 1994-2010 or 2000-2010 to 
be fair and equitable and permits with no active involvement after 2004 
should not be allocated whiting quota. Another commenter stated that 
NMFS should adopt 2000-2010 for the catch history years and adopt a 
present participation requirement that would require permits to have 
landed at least 500 mt of whiting in the period 2003-2010 to

[[Page 18885]]

recognize the factors required for consideration in allocation 
decisions.
    Response: As discussed in the preamble and in response to other 
comments, NMFS has concluded that excluding years beyond 2003 for 
harvesters and beyond 2004 for processors results in a fair and 
equitable allocation. Selecting an alternative that would include years 
beyond the existing cut-offs would be contrary to the policies 
underlying Amendment 20. Requiring permits to have landed at least 500 
mt of whiting in the period 2003-2010 is not necessary to recognize the 
factors required in consideration of an allocation decision. 
Furthermore, adopting a present participation requirement for the 
period of 2003-2010 that would exclude any inactive permits would be 
inconsistent with the Groundfish FMP history since the Council rejected 
``Use It or Lose It'' rules in 1994 relating to the development of 
Amendment 6 to the FMP (adopting the limited entry program). Similarly, 
requiring a participation requirement spanning the years after the 
announcement of the control date creates an incentive and a reward for 
increasing participation at a time the Council was attempting to 
address overcapitalization. Finally, the requirement suggested by the 
comment could undermine decisions made relative to investments in 
permits.
    Comment 11: It is instructive that other fishery management 
councils are considering the problem of allocation of quota to license 
holders with minimal history or participation. The North Pacific 
Council, in a February 2013 problem statement stated that 
``distributing shares with minimal history may be argued to be 
inconsistent with the requirement to allocate shares based on fishery 
dependence.'' Further, in a footnote, the council paper noted that 
acquisition of a permit ``is clearly an investment in the fishery,'' 
but ``reflects only an investment in a fishery privilege, and not an 
investment in a fishery operation.'' (Citing Item C-3(b) for the 
upcoming North Pacific Council meeting).
    Response: First, NMFS notes that the Pacific Council and NMFS 
considered investments in and dependence upon the fishery in making 
this decision on whiting allocation. Second, NMFS notes that when 
fishery management councils develop catch share or other programs, 
councils may choose to weigh the factors differently based on the 
specific facts before them, including the factor of dependence and 
investment. NMFS notes that for purposes of the Pacific groundfish 
fishery and the decision on reallocation of initial whiting quota, a 
permit is viewed as a highly fishery dependent investment. Permits have 
no alternative use outside of accessing the trawl fishery; therefore 
permit owners are entirely dependent on the trawl groundfish fishery 
for recovery of their investment in permits. Other fishing assets, such 
as vessels, have some value in alternative uses.
Employment
    Comment 12: Several commenters addressed the issue of employment. 
Some commenters expressed concern that companies that have scaled down 
their employment more recently would qualify for more quota based on 
their historical participation, while companies with larger recent 
harvesting and processing history will lose employment if they cannot 
afford to lease or buy quota. Another commenter stated employment on 
catcher vessels that benefitted from improved market conditions during 
2000-2010 will be strongly disadvantaged given a 1994-2003 qualifying 
period because their quota shares will be less than their participation 
in recent years. Another commenter said 1994-2003 (status quo) 
maintained, on average, their fleet's historic and current access to 
whiting, their number of vessels, and their number of crewmember jobs 
in both the shorebased and mothership fisheries. Another commenter 
noted the analysis shows that overall the stability or level of 
employment does not vary much between all alternatives, including 
status quo; however, there are anticipated effects on individual 
fishing businesses based on any change from status quo.
    Response: The final EA addresses impacts to employment (see section 
5.4.3.5). While there may be some initial local shifts or variations in 
employment among the alternatives, the analysis did not anticipate 
notable variations in the stability or level of employment overall. As 
discussed elsewhere in the responses to comments, the relatively modest 
differences in the alternatives overall and for a majority of 
individuals also likely means even initial changes in employment will 
be limited. Overall, NMFS believes it has adequately considered impacts 
to employment in the harvesting and processing sectors in arriving at 
its decision.
Leasing, Competitive Advantage, and Efficiency Issues
    Comment 13: Quota allocation to processors can provide a 
significant competitive advantage. Processors are unique from 
harvesters in that their investments are rooted to the community and 
the local fisheries that support that community, making dependence 
different for a processor than for a harvester. Initial allocations 
should use processing history from 2000-2010 because that period of 
time captures current and historical harvests and reflects a period of 
time when the fishery had recovered from being overfished and reached 
record revenues for fishery participants. Some processor companies made 
significant investments over the last decade to upgrade their 
facilities that supports using more recent years.
    Response: NMFS is aware that initial quota allocation may provide 
advantages to one processor over another. However, given that the 
overall amount of quota that may shift between processors is only 3%, 
the degree of competitive advantage or even its existence depends on 
the business decisions of the quota recipient and numerous other 
considerations such as processor location, presence of local 
competition, access to markets, fleet dynamics, and status of the 
whiting stock, among other factors.
    One main purpose of allocating 20 percent of the shorebased whiting 
quota to processors was recognition of the significant processing 
investments that had been made in reliance upon the fishery prior to 
the announcements of the control date and the development of Amendment 
20. The allocation to processors was, in part, an attempt to minimize 
the disruption during the transition to the new system and provide some 
consideration and measure of stability. (See EA section 10.1, statement 
of Mr. Anderson; Amendment 20 EIS, Section 2.6.6).
    NMFS and the Council acknowledge that testimony indicated that 
investments were made by some processors after 2004, including 
investments in infrastructure to process other stocks, such as 
sardines. However, it is reasonable to provide initial allocations more 
heavily weighted to reflect the investments and dependence on the 
fishery that occurred prior to the time it was evident that the Council 
was pursuing a change to the management system. Development of the 
trawl rationalization program could be most disruptive to processors 
that invested prior to 2004 because the program was likely to result in 
changes to the timing of landings, and potentially result in fewer 
vessels participating in the fishery--part of the effort to reduce 
overcapitalization. Given the establishment of the 2003 control date 
and subsequent clarification after the 2004 season that the 2003 
control date could apply to processors, businesses that entered the 
processing sector or

[[Page 18886]]

made investments after 2003 did so with a degree of risk regarding 
receiving any initial allocations or larger allocations.
    NMFS recognizes that how quota is initially allocated to processors 
has some influence on the competitive advantage of processors between 
themselves and with respect to new entrants, including the potential 
for increased bargaining power with harvesters. However, other 
processors may have locational advantages whether it is to 
infrastructure (e.g., cold storage facilities, highways, water supply 
and waste removal) or closer access to the resource itself (some 
processing of whiting has occurred in inland locations). Northern 
processors, in addition to being located closer to where much of the 
harvest has recently occurred, also have a locational advantage in the 
sense that they have more immediate access to tribal whiting resources 
as tribal fisheries are located in northern Washington. Since 2003, one 
processor in particular has processed over 99% of the tribal shorebased 
whiting harvests.
    Any competitive advantages processors gain under the alternatives 
are relatively modest given that the entire allocation is only 20 
percent of the shorebased fishery. Overall, only 3 percent of the 
processor quota shifts from status quo holders to others, and the 
levels of shift among most individual processors are similarly modest, 
especially when compared to overall volumes of fish processed and 
revenues generated.
    Additionally, although the effect is relatively modest, based on 
the analysis in the EA regarding the potential for northward shift in 
quota, and public comment relative to the competitive advantages for 
processors from being allocated quota, maintaining the existing initial 
allocations rather than selecting an alternative that uses more recent 
years could also help mitigate negative impacts resulting from 
localized concentrations of fishing and processing effort while 
providing the initial allocations necessary for the trawl 
rationalization program to function.
    Comment 14: One commenter stated that five new processors entered 
the fishery after 2004 and that NMFS failed to explain why it is 
rational to exclude these new entrants. For example one processor that 
went out of business in 2000 received quota under the existing 
allocations but a processor that began processing whiting in 2006 and 
has risen to become a significant player in the whiting market received 
no quota.
    Response: NMFS did not allocate quota to processors that went out 
of business. For processors that would have been allocated quota but 
did not exist at the time of initial allocation, that quota was 
distributed to the other qualifying processors proportional to their 
initial QS amounts. Any new entrant after 2005 is in the same situation 
as a new entrant in 2012, as neither would have initially allocated 
quota and would need to purchase or lease quota if doing so was a 
desired part of their business strategy. After the 2005 clarification 
that the 2003 control date applied to processors, new entrants were on 
notice that their history might not count towards initial allocations. 
NMFS notes that depending on how processor is defined (e.g., company, 
buying/processing site, etc.) the number of new processor entrants 
after 2004 will vary. The EA notes that eight processors entered the 
shorebased whiting processing market for the first time after 2004 and 
did not receive an initial allocation, and of these eight processors 
only two consistently processed whiting since entering the fishery.
    Comment 15: The cost of leasing quota was not appropriately 
analyzed or considered. The added costs of purchasing or leasing quota 
from inactive permit holders is contrary to National Standard 7, which 
states that ``Conservation and management measures shall, where 
practicable, minimize costs and avoid unnecessary duplication.'' In 
addition, the costs associated with increasing observer costs, the 
Pacific Coast Groundfish Fishery buyback program and the soon to be 
implemented cost recovery program are new costs that NMFS failed to 
consider when making a decision as to whether the initial allocation of 
quota should be changed or not. The costs associated with leasing quota 
will be particularly constraining on smaller businesses. Local small 
community companies need whiting quota to keep their businesses going. 
Larger processing companies can afford to lease or buy IFQ no matter 
what the price. Smaller, family-owned vessels will be lost over time to 
corporations owning multiple vessels or other assets. One of the 
commenters also made an attempt to estimate the fair market values and 
leasing costs of whiting quota. The projections were approximately as 
follows: value of shorebased whiting allocated to the 21 permits that 
were reportedly inactive during 2004-2010 is $8,500,000 and that the 
annual cost of leasing this IFQ is conservatively $680,000. For the 
mothership sector, the fair market value of the whiting quota allocated 
to the 14 permits reportedly inactive during 2004-2010 is $4,320,000 
and that the annual cost of leasing this quota is near $350,000.
    Response: Leasing is an expected activity in many fisheries. Before 
the trawl rationalization program, limited entry permits were being 
leased by fishermen in order to gain access to trawl fisheries. 
Consistent with the MSA requirement to establish a policy and criteria 
for transferability, through sale or lease, of limited access 
privileges such as whiting IFQ, 16 USC 1853a(c)(7), the ability to 
lease quota was an element of the trawl rationalization program 
analyzed and adopted through Amendment 20. Some level of leasing is 
expected under the program. Leasing is expected in the Shorebased IFQ 
Program in particular given that 20% of the whiting catch history-based 
quota of shorebased harvesters was allocated to processors--as a result 
many shorebased whiting fishermen, especially those not strongly 
affiliated with a processor, may have to lease quota to return to pre-
trawl rationalization catch levels.
    The environmental impact statement for Amendment 20 (Amendment 20 
EIS) considered the economic condition of the fishery, which was one of 
the motivations for considering alternate management approaches for the 
trawl fishery. The Amendment 20 EIS also considered efficient 
utilization of the resource in the design elements of the program, 
especially compared to the previous trip limit management fishery. It 
also weighed the costs and benefits of such a program, including 
initial allocations and leasing costs, on different user groups such as 
harvesters, processors, and potential new entrants for the IFQ and MS 
fisheries (see Amendment 20 EIS sections 4.4, 4.6.2.5, 4.6.3.4, 
4.6.3.7, 4.7.2.3, 4.9.2.2, and 4.9.3.7). The issue of leasing costs was 
also addressed in the final rule implementing the trawl rationalization 
program. (75 FR 60868, 74 October 1, 2010, Comment 27).
    In addition to the Amendment 20 EIS, the EA for the reconsideration 
of whiting allocation weighed the costs and benefits of allocation on 
different user groups, including harvesters, processors, potential new 
entrants, and communities for the IFQ and MS fisheries (see EA sections 
4.3, 4.5.3, 5.4, and 5.8). The EA also discussed costs of leasing in 
other fisheries and potential effects on Pacific groundfish fisheries 
(EA section 3.3.2.6 and 4.5.3.1), and the value of limited entry 
permits as an investment whether actively fished in recent years or not 
(EA section 3.3.2.5 and 4.3). Regarding leasing costs, the EA

[[Page 18887]]

for this action recognized that leasing costs will occur, that the 
benefits of the program (which requires an initial allocation) outweigh 
the costs, and that, ultimately, quota will tend towards the most 
efficient users, especially once trading is allowed.
    NMFS recognizes that those receiving initial allocations may be 
placed at a competitive advantage over new entrants or existing 
participants who must purchase more quota if they desire to maintain 
their recent harvest levels. (EA section 5.4). However, any new costs 
associated with leasing also come with new benefits--the opportunity to 
acquire a desired amount of quota that can then be harvested without 
competing in a race for fish, along with the other benefits anticipated 
under the trawl rationalization program. The EA demonstrates that quota 
was transferred to many shorebased whiting fishermen in 2011, allowing 
successful harvest well in excess of some participants' initial 
allocations. (EA section 3.3.2.7). NMFS also considered the costs 
associated with the buyback program that was implemented in 2005 (70 FR 
40225, July 13, 2005). The loan associated with the buyback program 
financed most of the cost of a fishing capacity reduction program in 
the Pacific Coast groundfish fishery and corollary fisheries. To repay 
the loan, participants in the Shorebased IFQ Program and the MS Coop 
Program currently pay five percent of the full delivery value of fish 
harvested and delivered to processors. In addition, the MSA requires 
that cost recovery be a component of a LAPP such as the trawl 
rationalization program. Under the proposed cost recovery program (78 
FR 7371, February 1, 2013), participants in the Shorebased IFQ Program 
and the MS Coop Program would be required to pay a fee, not to exceed 
three percent of the ex-vessel value of fish delivered to processors, 
to cover part of the costs of management, data collection, and 
enforcement of the trawl rationalization program. Costs associated with 
the trawl rationalization program, including the costs of observer 
coverage, were also considered in the Amendment 20 EIS, section 2.6.3, 
A-2.3.3. NMFS notes that the agency currently covers the majority of 
the costs for observers off the West Coast (but not the North Pacific). 
NMFS also notes that there is a national effort underway to explore the 
use of electronic monitoring as one potential tool to address the costs 
associated with observers. See http://www.nmfs.noaa.gov/sfa/reg_svcs/Councils/ccc_2013/K_NMFS_EM_WhitePapers.pdf.
    Although some alternatives could more closely align initial 
allocation amounts with recent levels of harvest associated with a 
given permit, and potentially minimize leasing costs to those 
participants in the short term, when balanced with the other 
considerations, NMFS has determined that the Council's recommendation 
is consistent with National Standard 7 and minimizes costs to the 
extent practicable. The costs associated with the buyback program 
(which benefitted the industry by helping to reduce the level of 
overcapacity and substantially expanded fishing opportunity for all 
vessels, as reflected by higher trip limits), the observer program, and 
the statutorily required cost recovery program, do not alter NMFS' 
conclusion. NMFS notes that some commenters felt that NMFS did properly 
analyze and consider the impact of the initial allocation on costs and 
benefits, as required by National Standard 7, and that status quo 
balances costs and benefits by allocating to a large amount of 
recipients with a geographic spread among those that received initial 
allocations.
    The commenter that provided estimates of fair market values of 
quota and leasing costs used a multiplier of 3.75 applied to the ex-
vessel value of whiting to determine fair market value of whiting QS. 
NMFS does not have sufficient information to evaluate the use of a 
multiplier of 3.75 to project the value of quota, particularly as quota 
has yet to be traded. However, the EA considered that the ratio of QS 
to ex-vessel value ranged from 4:1 to 9:1 in a Canadian groundfish 
trawl fisher might be representative. Based on information developed 
from quota pounds sold or leased via the Jefferson State Trading 
Company Web site (http://jeffersonstatetradingco.com/cgi-bin/auction/auction.pl), which tracks the trading of quota pounds for this program, 
the leasing ratio of 30% of the ex-vessel value may be high but 
representative. Even assuming that the projections provided by the 
commenter are accurate, it does not alter NMFS conclusions for the 
reasons described above and throughout this final rule.
    In response to the comment about the impacts of costs on smaller 
businesses, and smaller, family-owned vessels, in general, impacts of 
the allocation decision on both small and large businesses were 
considered, and regulations are in place that attempt to minimize any 
undue burden placed upon small businesses (e.g., accumulation limits). 
As discussed below in the summary of the final regulatory flexibility 
analysis (FRFA), over the years 1998 to 2010, there were 17 processors 
that participated in the fishery and that meet the recent participation 
criteria of the various alternatives. After taking into account 
ownership and affiliation relationships, there are 12 processing 
entities based on Small Business Administration (SBA) definitions. Of 
these 12 processing entities, there are 9 small processing entities and 
three large processing entities that are affected by this rule. The 
FRFA also notes that regardless of the allocation alternative chosen 
some small businesses will be affected.
    As discussed in response to comment 14, although NMFS agrees that 
in some circumstances the initial allocations of quota could result in 
some degree of competitive advantage, the degree of that advantage is 
dependent on numerous factors. Furthermore, owning whiting QS is not 
required to process whiting. New entrants or processors with lower 
initial allocations may choose to lease or purchase quota as part of 
their business plans, but may also use other methods to incentivize 
delivery of whiting to their facilities. Furthermore, any advantages 
processors may gain under the alternative considered are relatively 
modest given the entire allocation is only 20 percent of the shorebased 
whiting QS, overall only 3 percent of the processor quota shifts from 
status quo holders to others, and the levels of shift among most 
individual processors are similarly modest, especially when compared to 
overall volumes of fish processed and revenues generated.
    Comment 16: An article critical of the effects of leasing in the 
Canadian halibut fishery, ``The elephant in the room: The hidden costs 
of leasing individual transferable fishing quotas,'' Evelyn Pinkerton, 
Danielle N. Edwards, Marine Policy 33 (2009) 707-713, was not 
sufficiently considered in the context of whether the existing 
allocations are consistent with National Standard 5, which states that 
``Conservation and management measures shall, where practicable, 
consider efficiency in the utilization of fishery resources; except 
that no such measures have economic allocation as its sole purpose.'' 
The failure to give the most quota to the most active participants 
through 2010 creates new leasing costs and is not justified in terms of 
economic objectives.
    Response. NMFS considered the article referenced by the commenters, 
and its position that certain conditions that allow for the efficiency 
benefits of individual transferable quotas (ITQs) to accrue are not 
present in the Canadian halibut fishery; therefore, the authors

[[Page 18888]]

argue in part that vessels operating with initially granted quota are 
more financially viable than new entrants and can afford to pay higher 
quota lease fees, eventually having the effect of bidding up the lease 
price.
    NMFS notes that there was also a published comment in response to 
this article questioning the article's data and assertions. (A 
rejoinder to E. Pinkerton et al. The elephant in the room: The hidden 
costs of leasing individual transferable fishing quotas, Bruce R. 
Turris, Marine Policy 34 (2010) 431-436). One of the main conclusions 
of the published response was that it would be incorrect to suggest 
that quota will not be transferred to the most economically efficient 
operators. The commenter noted that even with transaction costs and 
other limitations, tradable quota should move to more efficient 
operators, and further noted that those who initially start out with 
quota may be more profitable than new entrants or those that need to 
lease more quota, but that issue is one of income distribution and not 
an efficiency issue. The initial authors published a short response to 
the comment, asserting that the commenter did not directly address the 
major points of their article and that their data analysis was 
appropriate. (Ignoring market failure in quota leasing? Evelyn 
Pinkerton, Danielle N. Edwards. Marine Policy 34 (2010) 1110-1114.)
    The debate appears to be one of whether the halibut program in 
Canada is achieving efficiency at all or whether the halibut program is 
more efficient than the former derby style of fishery it replaced. This 
debate is also about the distribution of rent--who shares in the 
profits or income generated in the fishery. The debate is not whether 
there have been efficiency gains, but whether additional gains can be 
achieved. Pinkerton claims they have not achieved full efficiency 
because of market inefficiencies and the lack of access to capital for 
some participants. However, it is not clear why participants who were 
granted quota would not try to be as efficient as possible and why they 
would not get out and lease their quota if they were less efficient. 
High lease prices may suggest that efficiency is high as owner 
operators are making high profits and are unwilling to lease quota to 
other fishermen unless the lease price is at the level where it is more 
profitable to lease than fish. In terms of the reconsideration of 
initial whiting allocations, these articles discuss the effects of 
leasing, which was a component of Amendment 20 and will exist 
regardless of the years chosen for determining the allocation of quota. 
See response to comment 15.
    With respect to the net economic benefit to the nation, the effects 
of the alternatives are similar. The initial allocation of whiting is a 
one-time distribution of wealth in the form of QS and CHA to members of 
the fishing industry, which allows for implementation of the program. 
In addition to assisting existing participants' transition to the new 
management system, the initial allocation will likely affect harvester 
and processor competitiveness. To the degree that initial allocations 
match up with the harvesters that will use the quota, transition costs 
will be lessened. However, whatever initial allocation alternative is 
selected does not affect the long-term efficiency and operation of the 
fishery. In the short run, there may be transition costs and disruption 
to participants' operations depending on how closely the initial 
allocations are distributed to the most efficient participants. To the 
degree that initial allocations match up with the harvesters and 
processors that will use the quota, transition costs and disruption 
will be lessened as the fishery moves to its long-term, more efficient 
state. Regardless of the allocation alternative chosen, it is unlikely 
that the initial allocation will be that allocation that represents the 
most efficient users. NMFS does not currently know which users are the 
most efficient and which users in the future will be the most 
efficient. Note that the biggest users of the resource may not be the 
most efficient users. Over the long term, it is expected that 
operations will move, or quota will be traded, to the ports in which 
the highest profits can be earned, taking into account all forms of 
costs such as average distance to fishing grounds and catch and bycatch 
rates.
    With the choice of maintaining the existing initial allocations 
over alternatives that reflect more recent history, NMFS and the 
Council are providing to those who have historically participated in 
the fishery (the majority of which are also recent participants) and 
are anticipated to have a better chance to benefit from the market 
processes described above. NMFS considered how the short and long term 
impacts of leasing may vary between the alternative whiting allocations 
and has concluded that the benefits of more heavily favoring history 
prior to the end of the existing qualifying periods furthers the 
purposes of Amendment 20, rewards investments and dependence consistent 
with the policies underlying announcing a control date, and minimizes 
disruption to those participants that made business decisions based on 
the assumption that quota formulas were unlikely to include more recent 
years.
    With regard to the comment on National Standard 5, the trawl 
rationalization program was designed, in part, to reduce fleet capacity 
and to economically rationalize the groundfish trawl fishery. Reducing 
excess capacity is expected to improve the efficiency in the 
utilization of fishery resources as well as reduce the levels of 
incidental catch. NMFS' decision to maintain the initial whiting 
allocations would not change any of those program design features that 
would allow more efficient utilization of the resource, such as 
reductions in fleet capacity, reduced regulatory discards, and once the 
moratorium is lifted, quota trading. After considering the relevant 
factors, including costs associated with leasing, NMFS has determined 
that the existing initial allocations consider efficiency in the 
utilization of fishery resources, where practicable, and are consistent 
with National Standard 5.
    Comment 17: The North Pacific Council has recognized the problem of 
absentee ownership of crab harvest shares by persons or corporations 
with little or no involvement in the prosecution of the fisheries, 
which limits the amount of quota available for active participants in 
the Bearing Sea/Aleutian Islands (BSAI) Crab Rationalization Program. 
The same problem exists in the Pacific whiting fishery under the status 
quo allocations.
    Response: NMFS agrees that the North Pacific Council is considering 
the issue of absentee ownership of crab harvest shares, and notes that 
in its report of the February 2013 North Pacific Council meeting, the 
Council:

elected to take no further action considering alternatives to define 
active participation requirements for vessel owner harvest shares. 
Currently, holders of those shares have no ongoing requirement to 
remain active in the fisheries as either vessel owners or 
crewmembers. The Council also received a discussion paper concerning 
the development of cooperative measures to i) promote share 
acquisition by action participants; ii) address high quota lease 
rates; and iii) ensure reasonable crew compensation. Although the 
Council elected to take no regulatory action, it expressed concern 
with high lease rates, crew compensation, and the availability of 
quota shares to active participants in the fisheries. To that end, 
the Council passed a motion requesting that each cooperative in the 
program submit a voluntary report annually describing measures taken 
by the cooperative to facilitate share acquisitions by active 
participants and affecting high lease rates and crew compensation * 
* *. The motion

[[Page 18889]]

suggests that these reports be provided at the Council's October 
meeting.

News and Notes, North Pacific Fishery Management Council, February 
2013, page 4, available at http://www.fakr.noaa.gov/npfmc/PDFdocuments/newsletters/news213.pdf.

    Relative to the reconsideration of the initial allocation of 
whiting, NMFS acknowledges that in the future there may be similar 
issues that need to be considered and potentially addressed during the 
five year review. However, the crab rationalization program and the 
Pacific groundfish trawl rationalization program are significantly 
different and it is not possible to predict that the issues and 
potential solutions will be the same.
    Comment 18. NMFS should determine how many of the inactive, or 
latent, permits from 2004-2010 actively harvested their whiting 
allocations during the post-rationalized fishery, 2011-2012.
    Response: NMFS considered the information in the final EA, which 
shows the number of permits that did not land fish in 2011. Information 
for 2012 was not available for use during the reconsideration.

Comments on Control Date

    Comment 19: Control dates are merely advisory and do not obligate 
the Council or NMFS to use them. The MSA does not contain any 
overarching considerations such as a control date that trump the 
National Standards and other statutory criteria. The control date 
should not be used as a basis for maintaining the existing initial 
allocations.
    Response: NMFS acknowledges that a control date is not a guarantee 
that any specific period will count toward initial allocations. NMFS 
believes, however, that recognition of the business and investment 
decisions made by participants who interpreted the control date as 
signaling the likely end of the qualifying period is consistent with 
the fundamental purposes of Amendment 20, including reducing 
overcapacity. Commenters supporting existing allocations noted that it 
is important to adhere to control dates to prevent speculative 
increases in harvesting or processing, and that doing so supports a 
fundamental objective of the program to address longstanding 
overcapacity issues in both the harvesting and processing sectors of 
the whiting fishery. The overarching considerations described in the 
propose rule reflect consideration of the factors identified in 
National Standard 4 and the MSA provisions at 16 U.S.C. 1853a(c)(5)(A) 
in light of all relevant factors, including the other National 
Standards and the control date. After considering those factors, and 
taking into account public comment on the proposed rule, NMFS has 
considered all of the factors related to the initial allocations and 
has concluded that use of the 2003 control date as the cut-off period 
for harvesters, and use of 2004 for processors is rational. As 
described in the preamble and in response to other comments, the 
control date and the underlying policy goals of Amendment 20, while 
important, are not the sole basis for NMFS' decision.
    Comment 20: While it was a lengthy process between announcing the 
control date and implementation, the process was lengthy because of the 
complexity of the trawl rationalization program, including the 
allocation decisions The control date could not be considered ``stale'' 
because there was no period of inactivity between the control date and 
implementation, there was no major change in the broad policy fishery 
managers were pursuing or in the fundamental design of the program.
    Response: NMFS agrees that the control date is not ``stale.'' The 
EA documents the extensive process required for developing the trawl 
rationalization program and the numerous stages for stakeholder input. 
(EA table 1-1, 1-2). Considering the amount of time necessary to 
develop the program, the length of time between the control date and 
program implementation, as well as this reconsideration, is reasonable. 
Furthermore, NMFS has not ignored the years beyond the control date, 
but rather has considered all the required information, including 
harvests after 2003, in deciding to maintain the existing initial 
allocations.
    Comment 21: Not adhering to control dates as announced when 
allocating initial quota sets a dangerous precedent, and could 
potentially result in increased harvesting or processing capacity in an 
attempt to increase the initial allocation of quota in the development 
of future limited entry or limited access privilege programs (LAPPs). 
Relying on the control date is consistent with National Standard 4 and 
the groundfish FMP management goals that list conservation as the first 
goal, as well as the Amendment 20 EIS that states that failure to use a 
control date may exacerbate conservation concerns. Several other 
commenters also noted that they would benefit by receiving increased 
harvester allocations if more recent years were included, but they 
believe that reliance on the control dates is fair because everyone in 
the fishery knew the consequences of fishing after the control date and 
therefore support the existing allocations.
    Response: NMFS agrees that, in general terms, control dates serve a 
useful purpose of deterring speculative increased capacity or effort 
during the development of LAPPs. NMFS further agrees that not using the 
announced date of 2003 for harvesters could have a negative effect in 
the future when the Pacific Council or other councils begin to consider 
limited entry or LAPP programs, and further notes that there is a 
rational basis for modifying the control date by one year for 
processors. Further, NMFS believes that the reliance on the control 
date expressed by many commenters benefited the underlying purposes of 
Amendment 20 pending its implementation. The fact that several 
participants commented that they would benefit financially from 
selecting an alternative that uses more recent years, but nevertheless 
support the existing allocations, is indicative of the fairness and 
equity of the Council's recommendation and NMFS' decision.
    Comment 22: Harvests after the control date should be rewarded 
because fishing and processing was happening in the Pacific coast 
whiting fishery where and when there were market opportunities.
    Response: As noted in the proposed rule, no mechanism exists to 
separate speculative from non-speculative effort after the control date 
and by maintaining the control date for harvesters, any speculative 
behavior after the control date is not rewarded and those who acted 
consistent with the control date and goals of Amendment 20 are not 
penalized. As explained in this final rule, and after consideration of 
the statutory factors, NMFS has determined that the control date of 
2003 as the cut-off for the harvester qualifying period is rational, as 
is the use of 2004 as the cut-off for the processor qualifying period, 
and the end result is a fair and equitable initial allocation.
    Comment 23: The policies supporting a control date for harvesters 
do not apply to processors, and are at best a theoretical and indirect 
concern. Processor interests in acquiring quota are to ensure that fish 
continue to support the processing plants. Processors do not 
speculatively increase capacity to acquire quota as an asset to later 
be bought, sold, leased, or traded. Testimony at the June 2012 Council 
meeting indicated concern about undercapitalization in the processing 
sector, not overcapitalization.
    Response: The control date was intended to put the industry on 
notice and deter speculative increases in effort

[[Page 18890]]

and capitalization, regardless of sector. Section 3.3.2.4 of the EA 
discusses the key indicators that were used to identify overcapacity 
issues within the fishery. Fishing season length is a key indicator of 
overcapacity in a fishery because in the absence of excess capacity, a 
fishing season could potentially run through December 31, assuming 
other constraining factors are taken into account. Although allowable 
harvests increased in the years from 2004-2010, season length in the 
shorebased whiting fishery decreased during this period. The weekly 
harvest pattern for the shorebased fishery during this period 
demonstrates substantial excess capacity. Fleet weekly harvest was used 
as a proxy for effort and capacity in the shorebased sector (both 
harvesters and processors). Even if the fleets were capable of 
sustained fishing at only one half their lowest annual maximum weekly 
rate, the amount of time required to take the maximum allocation 
available in recent years would be far less than the potential number 
of season days available. Despite a situation of excess capacity, after 
2004 the number of vessels participating was generally on an upward 
trend in both the shorebased and mothership sectors. While one 
commenter noted that with respect to processors, speculation and 
overcapacity was a theoretical or indirect concern, another commenter 
noted that in industrial fisheries like Pacific whiting, all harvests 
are landed and processed. Therefore the harvest and subsequent 
processing of that harvest provides a proxy for investments and 
dependence in the fishery by harvesters and processors. The purpose of 
applying control dates to onshore processors, while important, is not 
necessarily as significant as for harvesters, who have a greater 
ability to move into and out of various fisheries to gain potential 
fishing history. In addition, comments on the proposed rule and public 
testimony at Council meetings noted that including 2004 in the 
qualifying period for processors takes into account more recent 
investments that were made in 2003 but that did not come online and 
start acquiring history until 2004. These factors, in addition to the 
fact that it was not clear until 2005 that the 2003 control date 
potentially applied to processors, support the decision that a one year 
shift, to 2004, was a reasonable cutoff date for processors.
    Although one commenter testified at the June 2012 Council meeting 
that the shorebased processing sector was undercapitalized, other 
public testimony indicated that the fishery was heavily overcapitalized 
and there was no shortage of processing capacity available, and that 
the control date was meant as to deter the entire industry from 
injecting more capital into an already overcapitalized fishery, or at 
the very least put them on notice that doing so was not guaranteed to 
be rewarded by being credited for initial allocations. NMFS also notes 
that a commenter asserted that those who made investments in harvesting 
and processing capacity later in the development of a fishery, after it 
was already overcapitalized, have made investments that are at a net 
loss to society and therefore should not necessarily be rewarded for 
their investments with allocations of quota.
    Control dates are largely preemptive tools meant to signal that 
speculation will not be rewarded. NMFS is unable to determine whether 
speculation would have been worse had no control date been issued. 
However, in the absence of a control date, that incentive would have 
been present. For all these reasons, NMFS believes it is appropriate to 
continue to apply the 2004 cut-off date to processors.
    Comment 24: The Federal Register notices regarding the control date 
were unclear on how the control date applied to processors, even after 
the clarification in 2005.
    Response: NMFS agrees that the original announcement of the 2003 
control date, 69 FR 1563, did not explicitly state that it applied to 
processors. However, the notice published in 2005, 70 FR at 29714, 
reiterated the 2003 control date and clarified that it did not preclude 
processors from participating in the trawl rationalization program and 
being eligible for quota. The original announcement that was clarified 
stated that the control date ``will apply to any person potentially 
eligible for IQ shares,'' but the list of eligible persons did not 
include processors. In clarifying that processors could be eligible for 
initial allocation, the 2005 notice included processors as an entity 
eligible for IQ shares to which the 2003 control date would apply. 
However, NMFS recognizes that processors were not expressly included 
until after the end of the 2004 season and thus potentially not on 
notice, which is one reason why NMFS determines that it is reasonable 
to extend the cut-off for processors to 2004.
Comments on Current and Historical Participation of Fishing Communities
    Comment 25: The Council and NMFS considered current and historical 
participation of fishing communities, partially through the allocation 
of quota to processors. The existing allocations spread the processor 
allocation along the coast among seven processors in five communities 
from Westport, WA to Eureka, CA. All of the alternatives other than the 
No Action Alternative would shift quota north devaluing the FMP 
objective to protect communities.
    Response: NMFS agrees that the record reflects that maintaining the 
existing allocations would provide a more even distribution of initial 
whiting allocations along the coast and to the corresponding fishing 
communities. Shifting to alternatives favoring more recent history 
could contribute to a northward shift in initial quota distribution, 
and accordingly any benefits stemming from that initial allocation (see 
EA, Section 4.3.3). The northward shift is expected to be relatively 
small (less than 8 percent of the total quota--2 percent for processors 
and 6 percent for harvesters between the No Action Alternative and 
Alternative 4) and the analysis shows whiting landings have been 
shifting northward in recent years (due to fish availability and 
investments in ports). Some commenters noted that this northward shift 
would benefit two processors at the cost to all of the remaining 
processors. Similarly, a few harvesters would benefit at the cost of 
many. Although the shift in quota would be relatively modest, NMFS 
believes that maintaining the initial whiting allocations supports 
historic fishing communities in more southern locations and creates a 
wider geographic distribution of the initial wealth associated with 
allocations. Maintaining initial whiting allocations would further 
support one of the guiding principles in the development of Amendment 
20 (see Am 20 EIS, Section 1.2.3)--to minimize negative impacts 
resulting from localized concentrations of fishing [and processing] 
effort. For processors, in addition to the distribution of wealth 
associated with initial allocations, the wider distribution of initial 
allocation of whiting QS may provide some additional influence over 
where deliveries are made along the coast than if the initial 
allocations are based on more recent qualifying years that would shift 
allocations and potentially landings northward. However, as discussed 
in response to other comments, it is difficult to determine the degree 
of competitive advantage or the impacts of the geographic location of 
QS allocated to processors on location of future harvest. Ultimately, 
the QS issued to processors should assist in

[[Page 18891]]

mitigating for the changes expected in the timing and location of 
harvest expected over the long-term under the trawl rationalization 
program.
Comments on industry support for allocation
    Comment 26: One commenter said that the law is clear; NMFS cannot 
make the decision about the proper allocation method based on political 
considerations or popularity, only on the facts of the case and the 
applicable law. In addition, no referendum was held so it is impossible 
to determine exactly the degree of support for the initial allocation 
system.
    Response: NMFS agrees that the agency cannot make the decision 
based on political considerations or popularity. As described in detail 
in this final rule, the agency has independent reasons that support its 
decision to maintain the existing initial allocations. NMFS further 
agrees that the agency cannot determine exactly the ``degree of 
support'' for the agency's adoption of the No Action Alternative 
because a referendum was not held; however the record is clear that the 
majority of participants that commented during the Council process and 
on the proposed rule support the Council/agency proposal. The extensive 
and transparent public process followed for this reconsideration, and 
the fact that a majority of commenters support the Council's 
recommendation, including some of those that would receive higher 
allocations under other alternatives, is one factor that the agency 
considered. Irrespective of the degree of industry support, NMFS 
believes the agency's decision results in a fair and equitable 
allocation.
    Comment 27: Several commenters stated that they supported the 
existing initial allocations and noted that the Council and NMFS did a 
thorough and transparent reconsideration process, in which a major 
portion of the affected stakeholders participated.
    Response: NMFS agrees.
    Comment 28: Some commenters noted that industry continues to 
support the No Action Alternative as a fair and equitable decision that 
balances the necessary conditions, avoids disruption to the fishery, 
and upholds the validity of control dates and the integrity of the 
Council process. Industry support for the No Action Alternative is 
highlighted by several members of industry who would benefit under 
alternatives that included years after the control dates, yet they 
continue to support the No Action Alternative for the same reasons.
    Response: NMFS agrees that the no action alternative is a fair and 
equitable allocation. A review of the record indicates that there were 
members of the industry that testified or commented in support of the 
No Action Alternative, although they would stand to benefit through a 
revised initial allocation. Any allocation scheme will create winners 
and losers. NMFS acknowledges the fact that some members of industry 
who might gain quota under other alternatives still support maintaining 
the existing initial allocations.
    Comment 29: The trawl rationalization program (including the status 
quo initial allocation) has generated conservation benefits for 
groundfish stocks and economic benefits for the fishing industry and 
communities. Discards of overfished species have dropped dramatically, 
and per vessel revenues have increased, despite the fact that the 
fishery was previously overcapitalized, had been subject to 
overfishing, and had been declared an economic disaster in 2000. 
Several comments supported maintaining the existing whiting allocations 
and emphasized: the importance of honoring the control date and the 
underlying policy goals of Amendment 20, the fact that those who 
increased effort or capitalization post the control date did so with 
notice any history earned may not count towards an initial allocation, 
and the protection of historic fishing communities and a wider 
distribution of the initial allocations among those communities.
    Response: NMFS agrees and has concluded that the reasons supporting 
maintaining the existing allocations for the shorebased IFQ and 
mothership whiting fisheries (e.g., taking in to account the intent of 
the 2003 control date and the policy goals of Amendment 20, not 
rewarding speculative behavior, minimizing concentration of quota, and 
achieving wider geographic distribution of initial program benefits) 
outweigh the reasons supporting alternatives that favor more recent 
history (e.g., providing greater amounts of quota to the recent fishery 
participants to recognize their recent fishery dependence/investments, 
potentially reducing future leasing or acquisition costs, reducing 
quota to latent permits, and reflecting the more recent market and 
fishery conditions). The initial allocation is a fair and equitable 
allocation and is consistent with the requirements of the MSA, the 
Groundfish FMP, other applicable law, and the court's order in Pacific 
Dawn.
Comments on Widow Rockfish QS
    Comment 30: One commenter noted that while the draft regulatory 
language extends the prohibition on transferability of widow rockfish 
QS, it does not provide for the limited exception that would address 
outcomes of court actions such as might occur in probate or bankruptcy. 
The commenter requested that the regulations be clarified to state that 
any prohibition on the transferability of widow rockfish QS would also 
be subject to the current limited exception that allows transferability 
under a U.S. court order or authorization as approved by NMFS.
    Response: NMFS agrees with the commenter that the regulations 
should be clarified to state that the current exception applies to 
transfer of widow rockfish QS and has modified the regulatory language, 
as described below. The existing prohibition on QS transferability 
allows for transferability under the limited exception raised by the 
commenter. The extension of the prohibition on transferability of widow 
rockfish QS should have more explicitly included the extension of the 
limited exception.

Change From the Proposed Rule

    This rule extends the moratorium on transfer of widow rockfish QS 
in the IFQ fishery indefinitely, pending reconsideration of the 
allocation of QS for widow rockfish. In response to a public comment, a 
change has been made for the final rule to clarify that transfer of 
widow rockfish QS may be allowed under U.S. court order or 
authorization, and as approved by NMFS. This is consistent with the 
current transfer exception for QS or IBQ between QS accounts at Sec.  
660.140(d)(3)(ii)(B)(2). NMFS will make this change at Sec.  
660.140(d)(3)(ii)(B)(2). Additionally, two minor changes were made for 
clarity in Sec.  660.140(d)(4)(v) and in Sec.  660.150(g)(3)(i)(D).

Classification

    Pursuant to section 304(b)(1)(A) of the MSA, the NMFS has 
determined that this final rule is consistent with the Groundfish FMP, 
the MSA, and other applicable law. To the extent that the regulations 
in this rule differ from what was deemed by the Council, NMFS invokes 
its independent authority under 16 U.S.C. 1855(d).
    NMFS finds good cause to waive the 30-day delay in effectiveness 
pursuant to 5 U.S.C. 553(d)(3), so that this final rule is effective on 
April 1, 2013. As described in the preamble to the proposed rule (78 FR 
72, January 2, 2013), the initial allocations of whiting to the 
shorebased IFQ and mothership sectors were challenged in Pacific Dawn. 
On February 21, 2012, the court in that case issued an order remanding

[[Page 18892]]

the regulations establishing the initial allocations of whiting for the 
shorebased IFQ fishery and the at-sea mothership fishery ``for further 
consideration.'' The order requires NMFS to implement revised 
regulations before the 2013 Pacific whiting fishing season begins on 
April 1, 2013. Waiving the 30-day delay in effectiveness is necessary 
to comply with the court-ordered deadline. Reconsideration of the 
initial allocations was a significant undertaking that required 
development and consideration of different alternatives, review of new 
information, development of new analyses, and preparation of draft and 
final environmental assessments and proposed regulations through the 
Pacific Fishery Management Council, which held three Council meetings 
and took public comment at all of them. NMFS and the Council devoted 
substantial effort and resources to accomplish this reconsideration by 
April 1, including providing a 30-day comment period on the proposed 
rule to allow time for public comment. Except for the portion of Sec.  
660.140(d)(3)(ii)(B)(2) that addresses widow rockfish, the regulatory 
revisions contained within this rule reinstate certain provisions that 
were suspended by temporary action (77 FR 45508, August 1, 2012; 78 FR 
3848, January 17, 2013) pending reconsideration of the initial 
allocations and, as specified in the regulatory text, do not actually 
affect regulated entities until January 1, 2014, at the earliest. Thus, 
there is more than sufficient time for the public to become aware of 
and to come into compliance with or take other actions regarding these 
provisions. Some provisions of this rule (e.g. allowing participants in 
the program to transfer quota and requiring divestiture of quota in 
excess of accumulation limits) were components of the original program 
implemented under Amendment 20 to the FMP (see 75 FR 78344; Dec. 15, 
2010) that NMFS delayed until it could respond to the court order. The 
public is well aware of these measures and does not need to come into 
compliance with them within the next 30 days. NMFS previously provided 
for a 30-day delay in effectiveness of these measures when it issued 
the rule implementing Amendment 20. In addition, for the portion of 
Sec.  660.140(d)(3)(ii)(B)(2) that continues the current restriction on 
transfer of widow rockfish quota shares, the public is aware that this 
prohibition is in place under the temporary actions cited above and as 
such, do not require any additional time to prepare to comply with the 
restriction. For the above reasons, there is good cause under 5 U.S.C. 
553(d)(3) to establish an effective date less than 30 days after date 
of publication.
    NMFS prepared an Environmental Assessment (EA) for the 
reconsideration of initial whiting allocation and concluded that there 
will be no significant impact on the human environment as a result of 
this rule. NMFS prepared a finding of no significant impact (FONSI) 
which can be found in Section 6.2 of the EA. A copy of the EA is 
available on NMFS' Web site at http://www.nwr.noaa.gov/Groundfish-Halibut/Groundfish-Fishery-Management/Trawl-Program/index.cfm. Aspects 
related to this action were previously discussed in the final 
environmental impact statement (EIS) for Amendment 20 to the Pacific 
Coast Groundfish FMP which discussed the structure and features of the 
original trawl rationalization program.
    This final rule has been determined to be not significant for 
purposes of Executive Order 12866.
    A Regulatory Impact Review (RIR) was prepared on the action in its 
entirety and is included as part of the final regulatory flexibility 
analysis (FRFA) on the regulatory changes. The FRFA and RIR describe 
the impact this rule will have on small entities. The FRFA incorporates 
the IRFA, a summary of the significant issues raised by the public 
comments in response to the IRFA, and NMFS responses to those comments, 
and a summary of the analyses completed to support the action. A copy 
of the FRFA is available from NMFS (see ADDRESSES) and a summary of the 
FRFA, per the requirements of 5 U.S.C. 604(a), follows:
    No significant issues were raised by the public comments that were 
directed to the IRFA itself. However, economic issues were raised in 
the comments to the Proposed Rule. These mainly concerned the 
application of the MSA criteria for determining allocations. These 
issues are addressed in the comments above. Although not directed to 
the IRFA, there was one comment that touched on the effects on leasing 
for small companies. This is addressed above in Comment 15.

Reconsideration of Initial Allocation of Whiting

    The Council considered four alternatives for allocating whiting. 
The following analysis compares the No Action Alternative to 
Alternative 4 as they show greatest differences between the pre-control 
date fishery and post-control date fishery. The No Action Alternative 
allocates whiting using the years 1994 to 2003 for harvesters 
(shoreside and mothership) and 1998-2004 for processors. Alternative 4 
allocates whiting using the years 2000-2010 for both harvesters 
(shoreside and mothership) and processors.
    Over the years 1994-2010, there were 65 fishing permit holders that 
participated in the shoreside fishery and 37 permit holders that 
participated in the mothership fishery. Over the years 1998 to 2010, 
there were 17 processors that participated in the fishery and that meet 
the recent participation criteria of the various alternatives. For 
quota share purposes there are 17 potential processing plants based on 
fish ticket information. After taking into account ownership and 
affiliation relationships, there are 12 processing entities based on 
SBA definitions. Of these 12 processing entities, there are nine small 
processing entities and three large processing entities that are 
affected by this rule. Comparing the No Action Alternative to 
Alternative 4 in terms of 2011 ex-vessel revenues, information on the 
gainers and losers in each of these affected groups can be developed 
from information in the Environmental Assessment (EA). The allocation 
of 98,000 mt to the 2011 shorebased whiting fishery was worth 
approximately $21 million (ex-vessel value). Based on the No Action 
Alternative allocations, eighty percent of these quota pounds were 
allocated to fishing permits ($17 million) and 20 percent to the 
shorebased processors ($4 million). The allocation of 57,000 mt whiting 
to the whiting mothership catcher vessels was worth $12 million in ex-
vessel value. It is important to note that 2011 was a peak year for the 
shorebased fishery and a near-peak year for the mothership fishery (see 
Figure 3-5 of the EA). (Note: although ex-processor or ``first 
wholesale'' revenues are higher than ex-vessel values and would be a 
better indicator of processing activity levels, data on ex-processor 
sales were not readily available for use by the Council. A better 
indicator of the gains and losses by groups would be changes in profits 
(revenues less operating costs)).
    The Northwest Fisheries Science Center (NWFSC) has developed an 
estimate of economic net revenue that is an indicator of profits. 
Economic net revenue seeks to measure economic profit, which includes 
the opportunity costs of operating a commercial fishing vessel. The 
NWFSC collected and assessed 2008 cost-earning data on vessels 
participating in the shoreside groundfish fisheries including whiting. 
Vessels that participate in the shoreside whiting fishery are typically 
classified as either ``whiting'' vessels or ``Alaska'' vessels 
depending on whether or not

[[Page 18893]]

they operated in Alaska. Whiting vessels are defined as those with at 
least $100,000 revenue, of which at least 33% comes from whiting. 
Alaska vessels are defined as those vessels that earned at least 
$100,000 in revenue of which at least 50% comes from Alaska fisheries. 
Based on the responses received, whiting vessels earned 37% of their 
revenue from West Coast-caught whiting in 2008, Alaska vessels 46%. The 
average economic net revenue of a whiting vessel in 2008 was $167,457, 
which represents 19.2% of revenue from all fisheries. Limited entry 
trawl vessels classified as Alaska vessels had an average economic net 
revenue of $493,915, 28.3% of the $1,744,793 revenue earned from all 
sources by these vessels. These estimates are based on revenue and cost 
information directly related to the operation of a commercial fishing 
vessel such as those associated with office space. Revenues are from 
West Coast landings, Alaska landings, at-sea deliveries, sale and 
leasing of permits, chartering for research purposes and other 
activities related to the operation of the vessel. Compared to other 
years, these estimates may be high as whiting revenues and overall 
groundfish revenues were at their highest annual level during the 2001-
2010 period during 2008. However, crab revenues during 2008 on the West 
Coast were at their lowest level since 2003.
    Compared with the No Action Alternative, under Alternative 4 
approximately 17% ($3.7 million) of the allocation to shorebased 
catcher vessels would be transferred away from the No Action 
Alternative/status quo holders; twenty eight permit holders would gain 
quota share including six permits that did not qualify under the No 
Action Alternative (Table 4-4 of the EA). The largest gain by a single 
permit holder is 3.3% ($700,000). Alternative 4 would lead to 37 
permits losing quota share including 12 permits that would not receive 
any quota share. The largest loss by a single permit holder would be 
2.0% of quota share ($340,000). A total of 41 out of 65 permits will 
see a change of less than $100,000 (increase or decrease) in revenues 
in comparing Alternative 4 to the No Action Alternative.
    In comparing Alternative 4 to the No Action Alternative for 
shorebased processors, approximately 2.7% ($567,000) of the shoreside 
allocation of $21 million would be transferred away from the No Action/
status quo holders; ten processing plants would gain, including seven 
processing plants that did not qualify under the No Action Alternative 
(Table 4-29 of the EA). The largest gain by a single plant is 1.0% of 
quota share ($214,000). Alternative 4 would lead to seven processing 
plants losing quota share including three plants that would not receive 
any quota share. The largest loss by a single plant is 0.9% of quota 
share ($189,000). Twelve out of 17 processing plants would see a change 
of less than $100,000. (Note--The Draft EA used processor counts that 
included one processor that operated four processing plants. Each of 
these four plants established a QS account and received separate 
processors' QS allocations under No Action--status quo. For this 
analysis, especially in regards to estimating impacts on communities, 
it was decided each of these four processing plants should be treated 
separately. This treatment changes the number of processors that were 
active in the fishery at some point during 1994-2010 from 16 to 19 
(see, for example, Figure 4-13 in the EA). However, two of those 
processing plants are no longer in existence and so did not receive 
processors' QS allocations under No Action--status quo. Consequently in 
the Final EA's displays that include counts of processors receiving QS 
allocations under the alternatives, the processor count is reduced from 
19 to 17 (see, for example, Table 4-30 in the EA).)
    In comparing Alternative 4 to the No Action Alternative for whiting 
mothership catcher vessels, approximately 18% ($2 million) of the total 
catch history assignment would be transferred away from the status quo 
holders; 16 mothership catcher vessel endorsed permits would gain 
(Table 4-16 of the EA). No new permits would qualify. The largest gain 
by a single permit holder would be 4.5% of catch history assignment 
($545,000). Alternative 4 would lead to 21 permits with reduced catch 
history assignments, including 10 permits that would not receive any 
catch history assignment. The largest loss by a single catch history 
assignment holder would be 2.7% ($333,000). Eighteen out of 36 permits 
would see a change of less than $100,000.
    In terms of net economic benefit to the nation, the effects of the 
alternatives are similar. According to the Pacific States Marine 
Fisheries Council (PSMFC's) Scientific and Statistical Committee:

    The way the fisheries are actually prosecuted (geographic 
location of fishing and landings, timing of fishing, and 
participants) will, in the long-term, tend not to be affected by who 
receives the initial allocation of catch shares. Over time, the use 
of the catch shares will likely migrate through leases or sales to 
the participants who can put them to their most profitable use. This 
means that the eventual biological, ecological, and economic 
performance of the fisheries will be relatively independent of the 
initial allocation of catch shares. It has been the experience of 
many catch share programs that such transitions occur rather 
quickly, often within the first few years. As a consequence, the 
initial allocation of quota shares is not an effective tool to 
direct fishing or processing effort to particular geographic 
locations.

    The initial allocation of whiting is a one-time distribution of 
wealth in the form of quota shares and catch history assignments to 
members of the fishing industry. The initial allocation is essentially 
the granting of a capital asset that will affect harvester and 
processor competitiveness and assist existing participants in the 
transition to the new management system. To the degree that the initial 
allocation matches up with the harvesters that will use the quota, 
transition costs and disruption will be lessened as the fishery moves 
to its long-term, more efficient state.
    Similarly, those processors who receive an initial allocation may 
experience a boost in their competitive advantage due to the infusion 
of new wealth (the value of the QS received). The initial allocation 
does not affect the long-term efficiency and operation of the fishery. 
However, liquidity constraints, and perhaps other unknown constraints, 
may mean that there are some short-term inefficiencies. For example, 
this one time distribution of wealth may affect expenditures in the 
communities depending on location and spending patterns of recipients 
of these quota shares and catch history assignments. The EA provides 
the following regarding impacts on communities:

    The effects of the initial allocations on the distribution of 
fishing among communities are difficult to predict. Quota is 
tradable and highly divisible, giving it a fluidity such that it 
will likely move toward those ports in which profit margins tend to 
be the highest, regardless of the initial allocations. Where profit 
margins are similar, allocations given to entities that are already 
invested in whiting fishery-dependent capital assets are likely to 
stay with those entities at least in the near term. Similarly, where 
profit margins are similar, there will likely be some tendency in 
the near term for quota that is traded to move toward locations 
where whiting fishery-dependent capital assets already exist. 
Regardless of how the quota is distributed, vessels may move 
operations between ports during the year based on the geographic 
distribution of fishing opportunities. Processors are likely to use 
their shares in the port in which their facilities are located, 
however, some processors have facilities in more than one port and 
so may shift harvest between ports in response to the location of 
fishing

[[Page 18894]]

opportunities. At the same time, the recent shift of harvest toward 
more northern ports appears to be a response to investments in those 
ports, indicating that the location of fish is not the only factor 
driving the location of landings. Over the long term, it is expected 
that operations will move, or quota will be traded, to the ports in 
which the highest profits can be earned, taking into account all 
forms of costs such as average distance to fishing grounds and catch 
and bycatch rates.

    While the discussion above concerns the long term efficiency and 
operation of the fishery, short term distributional effects matter to 
NMFS and the Council. The initial allocation of quota shares affects 
each participant's business operation, investments, and community. With 
the choice of the No Action Alternative over alternatives that reflect 
more recent history, NMFS and the Council are providing to those who 
have historically participated in the fishery (the majority of which 
are also recent participants) a potentially better chance to benefit 
from the market processes described above.

RAW 1

    This action also would revise several regulations that were delayed 
on an emergency basis in response to the Court order. RAW 1 delayed the 
ability to transfer QS and IBQ between QS accounts in the shorebased 
IFQ fishery, and to the ability to sever mothership/catcher vessel 
endorsement and its associated catch history assignment (CHA) from 
limited entry trawl permits in the mothership fishery, pending the 
outcome of the reconsideration.
    NMFS postponed the ability to trade quota shares as well as the 
ability of mothership catcher vessels to trade their endorsements and 
catch history assignments separately from their limited entry permits. 
NMFS also postponed all trading of QS species/species groups because 
for many affected parties, their QS allocations (especially for bycatch 
species) are a composite of whiting-trip calculations and non-whiting 
trip calculations. Postponing these activities, while NMFS and the 
Council reconsidered the whiting allocation, minimized confusion and 
disruption in the fishery from trading quota shares that have not yet 
been firmly established by regulation. For example, if QS trading was 
not delayed, QS permit owners would be transferring QS amounts that 
potentially could change (increase or decrease) after the 
reconsideration.
    For similar reasons, NMFS also delayed the ability to transfer a 
mothership catcher vessel (MS/CV) endorsement and associated catch 
history assignment from one limited entry trawl permit to another in 
the mothership sector. The ability to sell or trade a limited entry 
permit with the endorsement and catch history remains. The use of the 
catch history assignment to be assigned to a co-op to be fished 
continues. These delays were expected to be temporary in nature and to 
benefit both small and large entities as they help smooth the 
transition to any changes in how Pacific whiting is allocated, and 
reduce the uncertainty to existing and potential new holders of these 
allocations.
    With these revised regulations, those who find themselves with 
excess QS (except for widow QS) and IBQ, have until November 30, 2015, 
to divest. MS/CV-endorsed limited entry trawl permit owners will have 
to divest themselves of ownership in permits in excess of the 
accumulation limits by August 31, 2016. This rule allows limited entry 
trawl permit holders in the mothership sector to request a change (or 
transfer) of MS/CV endorsement and its associated CHA beginning 
September 1, 2014. Finally, this rule allows transfer of QS or IBQ, 
except widow rockfish QS, between QS permit holders beginning January 
1, 2014.
    The Small Business Administration has established size criteria for 
all major industry sectors in the U.S., including fish harvesting and 
fish processing businesses. A business involved in fish harvesting is a 
small business if it is independently owned and operated and not 
dominant in its field of operation (including its affiliates) and if it 
has combined annual receipts not in excess of $4.0 million for all its 
affiliated operations worldwide. A seafood processor is a small 
business if it is independently owned and operated, not dominant in its 
field of operation, and employs 500 or fewer persons on a full time, 
part time, temporary, or other basis, at all its affiliated operations 
worldwide. A business involved in both the harvesting and processing of 
seafood products is a small business if it meets the $4.0 million 
criterion for fish harvesting operations. A wholesale business 
servicing the fishing industry is a small business if it employs 100 or 
fewer persons on a full time, part time, temporary, or other basis, at 
all its affiliated operations worldwide. For marinas and charter/party 
boats, a small business is one with annual receipts not in excess of 
$7.0 million.
    NMFS now collects small business information as part of its permit 
renewal processes. For quota share purposes there are 17 potential 
processing plants based on fish ticket information. After taking into 
account ownership and affiliation relationships, there are 12 
processing entities based on SBA definitions. Of these 12 processing 
entities, there are nine small processing entities and three large 
processing entities that are affected by this rule. Sixteen of the 
limited entry trawl permits that participated in the shorebased whiting 
fishery are associated with large companies and 49 of these permits are 
associated with small companies. In the mothership fishery, 14 catcher 
vessel permits are associated with large companies and 23 with small 
companies. When permits associated with the shoreside fishery and the 
mothership fisheries are combined, there are 66 limited entry permits 
of which 21 are associated with large companies. Given the review of 
the various alternatives, the amount of ex-vessel revenues that may 
change hands, and how each alternative differs slightly in the mixture 
of large and small entities that qualify for whiting quota share, 
maintaining the No Action/status quo allocations should not have a 
significant economic impact on a substantial number of small entities.
    No Federal rules have been identified that duplicate, overlap, or 
conflict with the action.
    Section 212 of the Small Business Regulatory Enforcement Fairness 
Act of 1996 states that, for each rule or group of related rules for 
which an agency is required to prepare a FRFA, the agency shall publish 
one or more guides to assist small entities in complying with the rule, 
and shall designate such publications as ``small entity compliance 
guides.'' The agency shall explain the actions a small entity is 
required to take to comply with a rule or group of rules. As part of 
this rulemaking process, a public notice that also serves as small 
entity compliance guide was prepared. Copies of this final rule and 
public notice are available from NMFS Northwest Regional Office, and 
are posted on its Web site (http://www.nwr.noaa.gov/fisheries/management/about_groundfish/index.html), and will be emailed to 
members of our groundfish fishery email listserve.
    NMFS issued Biological Opinions under the Endangered Species Act 
(ESA) on August 10, 1990, November 26, 1991, August 28, 1992, September 
27, 1993, May 14, 1996, and December 15, 1999, pertaining to the 
effects of the Pacific Coast groundfish fisheries on Chinook salmon 
(Puget Sound, Snake River spring/summer, Snake River fall, upper 
Columbia River spring, lower Columbia River, upper Willamette River, 
Sacramento River winter, Central Valley spring, California coastal), 
coho salmon (Central California coastal,

[[Page 18895]]

southern Oregon/northern California coastal), chum salmon (Hood Canal 
summer, Columbia River), sockeye salmon (Snake River, Ozette Lake), and 
steelhead (upper, middle and lower Columbia River, Snake River Basin, 
upper Willamette River, central California coast, California Central 
Valley, south/central California, northern California, southern 
California). These biological opinions have concluded that 
implementation of the Pacific Coast groundfish fishery is not expected 
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.
    NMFS issued a Supplemental Biological Opinion on March 11, 2006, 
concluding that neither the higher observed bycatch of Chinook in the 
2005 whiting fishery nor new data regarding salmon bycatch in the 
groundfish bottom trawl fishery required a reconsideration of its prior 
``no jeopardy'' conclusion. NMFS also reaffirmed its prior 
determination that implementation of the Groundfish FMP is not likely 
to jeopardize the continued existence of any of the affected ESUs. 
Lower Columbia River coho (70 FR 37160, June 28, 2005) and Oregon 
Coastal coho (73 FR 7816, February 11, 2008) were relisted as 
threatened under the ESA. The 1999 biological opinion concluded that 
the bycatch of salmonids in the Pacific whiting fishery were almost 
entirely Chinook salmon, with little or no bycatch of coho, chum, 
sockeye, and steelhead.
    On December 7, 2012, NMFS completed a biological opinion concluding 
that the groundfish fishery is not likely to jeopardize non-salmonid 
marine species including listed eulachon, green sturgeon, humpback 
whales, Steller sea lions, and leatherback sea turtles. The opinion 
also concludes that the fishery is not likely to adversely modify 
critical habitat for green sturgeon and leatherback sea turtles. An 
analysis included in the same document as the opinion concludes that 
the fishery is not likely to adversely affect green sea turtles, olive 
ridley sea turtles, loggerhead sea turtles, sei whales, North Pacific 
right whales, blue whales, fin whales, sperm whales, Southern Resident 
killer whales, Guadalupe fur seals, or the critical habitat for Steller 
sea lions.
    As Steller sea lions and humpback whales are also protected under 
the Marine Mammal Protection Act, incidental take of these species from 
the groundfish fishery must be addressed under MMPA section 
101(a)(5)(E). On February 27, 2012, NMFS published notice that the 
incidental taking of Steller sea lions in the West Coast groundfish 
fisheries was addressed in NMFS' December 29, 2010, Negligible Impact 
Determination (NID) and this fishery has been added to the list of 
fisheries authorized to take Steller sea lions (77 FR 11493, Feb. 27, 
2012). NMFS is currently developing MMPA authorization for the 
incidental take of humpback whales in the fishery.
    On November 21, 2012, the U.S. Fish and Wildlife Service (FWS) 
issued a biological opinion concluding that the groundfish fishery will 
not jeopardize the continued existence of the short-tailed albatross. 
The (FWS) also concurred that the fishery is not likely to adversely 
affect the marbled murrelet, California least tern, southern sea otter, 
bull trout, nor bull trout critical habitat.
    Pursuant to Executive Order 13175, this rule was developed after 
meaningful consultation and collaboration, through the Council process, 
with the tribal representative on the Council. The revised regulations 
have no direct effect on the tribes.

List of Subjects in 50 CFR Part 660

    Fisheries, Fishing, and Indian fisheries.

    Dated: March 22, 2013.
Alan D. Risenhoover,
Director, Office of Sustainable Fisheries, performing the functions and 
duties of the Deputy Assistant Administrator for Regulatory Programs, 
National Marine Fisheries Service.
    For the reasons stated in the preamble, 50 CFR part 660 is amended 
as follows:

PART 660--FISHERIES OFF WEST COAST STATES

0
1. The authority citation for part 660 continues to read as follows:

    Authority: 16 U.S.C. 1801 et seq., 16 U.S.C. 773 et seq., and 16 
U.S.C. 7001 et seq.


0
2. In Sec.  660.140, revise paragraphs (d)(3)(ii)(B)(2) and (d)(4)(v) 
to read as follows:


Sec.  660.140  Shorebased IFQ Program.

* * * * *
    (d) * * *
    (3) * * *
    (ii) * * *
    (B) * * *
    (2) Transfer of QS or IBQ between QS accounts. Beginning January 1, 
2014, QS permit owners may transfer QS (except for widow rockfish QS) 
or IBQ to another QS permit owner, subject to accumulation limits and 
approval by NMFS. QS or IBQ is transferred as a percent, divisible to 
one-thousandth of a percent (i.e., greater than or equal to 0.001%). 
Until January 1, 2014, QS or IBQ cannot be transferred to another QS 
permit owner, except under U.S. court order or authorization and as 
approved by NMFS. QS or IBQ may not be transferred between December 1 
through December 31 each year. QS or IBQ may not be transferred to a 
vessel account. The prohibition on transferability of widow rockfish QS 
is extended indefinitely pending final action on reallocation of widow 
rockfish QS, except under U.S. court order or authorization and as 
approved by NMFS.
* * * * *
    (4) * * *
    (v) Divestiture. Accumulation limits will be calculated by first 
calculating the aggregate non-whiting QS limit and then the individual 
species QS or IBQ control limits. For QS permit owners (including any 
person who has ownership interest in the owner named on the permit) 
that are found to exceed the accumulation limits during the initial 
issuance of QS permits, an adjustment period will be provided during 
which they will have to completely divest their QS or IBQ in excess of 
the accumulation limits. QS or IBQ will be issued for amounts in excess 
of accumulation limits only for owners of limited entry permits as of 
November 8, 2008, if such ownership has been registered with NMFS by 
November 30, 2008. The owner of any permit acquired after November 8, 
2008, or if acquired earlier, not registered with NMFS by November 30, 
2008, will only be eligible to receive an initial allocation for that 
permit of those QS or IBQ that are within the accumulation limits; any 
QS or IBQ in excess of the accumulation limits will be redistributed to 
the remainder of the initial recipients of QS or IBQ in proportion to 
each recipient's initial allocation of QS or IBQ for each species. Any 
person that qualifies for an initial allocation of QS or IBQ in excess 
of the accumulation limits will be allowed to receive that allocation, 
but must divest themselves of the QS (except for widow rockfish QS) or 
IBQ in excess of the accumulation limits by November 30, 2015. Holders 
of QS or IBQ in excess of the control limits may receive and use the QP 
or IBQ pounds associated with that excess, up to the time their 
divestiture is completed. Once the divestiture period is completed, any 
QS or IBQ held by a person (including any person who has ownership 
interest in the owner named on the permit) in excess of the 
accumulation limits will be revoked and

[[Page 18896]]

redistributed to the remainder of the QS or IBQ owners in proportion to 
the QS or IBQ. On or about January 1, 2016, NMFS will redistribute the 
revoked QS or IBQ excess percentages to the QS or IBQ owners in 
proportion to their QS or IBQ holdings based on ownership records as of 
January 1, 2016. No compensation will be due for any revoked shares.
* * * * *

0
3. In Sec.  660.150,
0
a. Revise paragraphs (g)(2)(iv)(B), add paragraph (g)(2)(iv)(C), and 
revise (g)(3)(i)(D) to read as follows:


Sec.  660.150  Mothership (MS) Coop Program.

* * * * *
    (g) * * *
    (2) * * *
    (iv) * * *
    (B) Application. NMFS will begin accepting applications for a 
change in MS/CV endorsement registration beginning September 1, 2014. A 
request for a change in MS/CV endorsement registration must be made 
between September 1 and December 31 of each year. Any transfer of MS/CV 
endorsement and its associated CHA to another limited entry trawl 
permit must be requested using a Change in Registration of a 
Mothership/Catcher Vessel Endorsement/Catch History Assignment 
Application form and the permit owner or an authorized representative 
of the permit owner must certify that the application is true and 
correct by signing and dating the form. In addition, the form must be 
notarized, and the permit owner selling the MS/CV endorsement and its 
CHA must provide the sale price of the MS/CV endorsement and its 
associated CHA. If any assets in addition to the MS/CV endorsement and 
its associated CHA are included in the sale price, those assets must be 
itemized and described.
    (C) Effective date. Any change in MS/CV endorsement registration 
from one limited entry trawl permit to another limited entry trawl 
permit will be effective on January 1 in the year following the 
application period.
* * * * *
    (3) * * *
    (i) * * *
    (D) Divestiture. For MS/CV-endorsed permit owners that are found to 
exceed the accumulation limits during the initial issuance of MS/CV-
endorsed permits, an adjustment period will be provided during which 
they will have to completely divest of ownership in permits that exceed 
the accumulation limits. Any person that NMFS determines, as a result 
of the initial issuance of MS/CV-endorsed permits, to own in excess of 
20 percent of the total catch history assignment in the MS Coop Program 
applying the individual and collective rule described at Sec.  
660.150(g)(3)(i)(A) will be allowed to receive such permit(s), but must 
divest themselves of the excess ownership by August 31, 2016. Owners of 
such permit(s) may receive and use the MS/CV-endorsed permit(s), up to 
the time their divestiture is completed. After August 31, 2016, any MS/
CV-endorsed permits owned by a person (including any person who has 
ownership interest in the owner named on the permit) in excess of the 
accumulation limits will not be issued (renewed) until the permit owner 
complies with the accumulation limits.

[FR Doc. 2013-07162 Filed 3-27-13; 8:45 am]
BILLING CODE 3510-22-P