[Federal Register Volume 61, Number 212 (Thursday, October 31, 1996)]
[Notices]
[Pages 56217-56221]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-27902]
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DEPARTMENT OF COMMERCE
[Docket No. 960412111-6297-04; I.D. 102396C]
RIN 0648-ZA20
West Coast Salmon Fisheries; Northwest Emergency Assistance
Plan--Washington Salmon License Buy Out
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA), Commerce.
ACTION: Final program notice.
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SUMMARY: NMFS issues this notice to describe the final program
requirements and to respond to comments on proposed bidding options for
the 1996 Washington Salmon License Buy Out (WSLB). Pursuant to the
authority under the Interjurisdictional Fisheries Act (IFA), the
Secretary of Commerce (Secretary) has made funds available to the
Washington Department of Fish and Wildlife (WDFW) to buy out salmon
permits. The objectives of the program are to provide financial
assistance to commercial salmon fishermen adversely impacted by the
salmon fishery disaster, and to aid the long-term viability of the
fishery resource.
DATES: Effective upon October 25, 1996.
FOR FURTHER INFORMATION CONTACT: Stephen Freese, (206) 526-6113.
SUPPLEMENTARY INFORMATION: On August 2, 1995, the Secretary declared
that a fishery resource disaster continued in 1995 for the salmon
fisheries of the Pacific States of California (north of San Francisco),
Oregon, and Washington, excluding Puget Sound. Under the authority of
the IFA of 1986 (16 U.S.C. 4107(d)), as amended, an additional $12.7
million in Federal financial assistance was made available for affected
salmon fishermen, of which $5.25 million was set aside for a WSLB
program. However, the Governor of Washington has requested that $50,000
be transferred to the Data Collection Jobs Program for use in a troll
data collection study. If approved, this $50,000 will be taken from the
funds initially allocated for the purchase of troll licenses, and will
reduce the 1996 WSLB funds available to $5.2 million. The Secretary
already provided $4 million for a similar program in 1995, bringing the
total amount allocated to license buy outs to $9.2 million. (See
Federal Register notice of October 11, 1994 (59 FR 51419), with
subsequent amendments published on January 31, 1995 (60 FR 3908), and
June 22, 1995 (60 FR 32507)).
On April 23, 1996, NMFS published a Federal Register notice (61 FR
17879) that provided the public with notice of a proposed WSLB program
and requested comment on four proposed bidding options. The August 1,
1996, final notice (61 FR 40197) announced the final description for
the Northwest Emergency Assistance Plan (NEAP) Habitat Restoration
Program and the Data Collection Jobs Program, but cited state and local
concerns and a lack of public consensus as grounds for the agency's
deferral of the final decision on a buy out program until new bidding
options were developed and the public was given notice and an
opportunity to comment.
NMFS and the State of Washington then worked together to develop
two new options that were similar to the options presented in the April
23, 1996, Federal Register notice, but with important differences. One
difference was that the calculation of uninsured loss was no longer
necessary under the recently amended IFA. (The IFA was amended during
the public comment period associated with the April 23, 1996 notice.)
This calculation was replaced by an analogous calculation, ``salmon
disaster impact'' (SDI), which is equal to 2.5 times the difference
between a fisherman's highest gross salmon fishery income derived from
fishing during any calendar year 1986 through 1991 (base year), and the
sum of the least amount of gross salmon fishery income derived from
commercial salmon fishing during any calendar year from 1991 through
1995 (comparison year). The use of SDI in place of an uninsured loss
determination puts similar restrictions on new participants as were
placed on the original participants in the 1995 WSLB. Another
difference was that the two new options placed lower ceilings on the
maximum amount a fisherman can receive for his permit.
The following options were presented for public comment in the
notice of August 29, 1996 (61 FR 45408).
Option 1--License holders may offer their licenses for any amount
up to $40,000 or their SDI, whichever is less. Licenses will be
purchased starting with the lowest bid. In the event of a tie,
preference will be given to the fisherman with the highest SDI.
Option 2--License holders may offer their licenses for any amount
up to $50,000 or their SDI, whichever is less.
[[Page 56218]]
Bids will be ranked according to the offer ratio. The offer ratio is
the division of the offer amount by the SDI. Licenses will be ranked
and purchased starting with those bids that have the lowest offer
ratios. In the event of a tie between identical offer ratios, the
lowest offer will be given preference. Successful participants cannot
purchase or operate another Washington State commercial salmon troll,
salmon delivery, Gray's Harbor-Columbia River salmon gillnet, Willapa
Bay-Columbia River salmon gillnet, or salmon charter license for 10
years beginning January 1, 1997, unless the license was owned or
operated by that person in 1995.
Comments and Responses
In response to the August 29, 1996, notice of proposed program,
NMFS received 17 comment letters, two from fishing associations and 15
from fishermen, covering 15 comments.
Comment 1: The definition of ``fishing income'' should be revised
to include only fishing income from Washington deliveries because
including income from Oregon and California deliveries is unfair for
fishermen who only have a Washington license. If Oregon or California
implement buy out programs, only landings in those states should count
for fishing income. Furthermore, the commenter felt that successful
bidders to the 1995 and 1996 buy out programs should not be able to
qualify for future programs.
Response 1: Redefinition of ``fishing income'' as income from
Washington deliveries would affect those fishermen who have also
invested in licenses from other states. The resource conditions
underlying the Secretary's two disaster declarations in Northern
California, Oregon, and Washington have also affected these investments
in other states. Furthermore, both NMFS and the State of Washington
agree that the current definition of ``fishing income'' should be
maintained in order to expand participation in the 1996 WSLB, maintain
consistency with the 1995 WSLB and with the other NEAP programs,
minimize the paperwork burden on fishermen, and avoid further delay in
implementing the 1996 WSLB. The design and implementation of future buy
out programs will depend on the relevant state and Federal regulations,
funding sources, public needs, and state and Federal policy concerns.
Comment 2: The base years should be changed to the years 1975 to
1980 and the comparison years should be changed to the years 1981 to
1996 to reflect the sharp decline in the Washington troll fishery that
occurred in 1981-82.
Response 2: The Secretary's 1995 declaration limits the disaster
period, or comparison years, to the years 1991 through 1995. Using
years prior to 1986 for the ``good'' years, or base years, especially
the years 1975 to 1980, would not be representative of the potential
earnings fishermen would normally expect to earn, absent the disaster.
Prices, general stock levels, fisheries management practices, user
group allocations and the number of participants for the 1986-91 period
differed greatly from the 1975-80 period. Furthermore, after numerous
consultations with affected fishermen, a general consensus developed
around using 1986-90 as the base years for calculation of losses due to
the salmon resource disaster. A review of pertinent fishing data also
supports using these years for comparison with the disaster years
outlined in the prior NEAP-related Federal Register notices.
Comment 3: Six commenters opposed Option 2's ten-year license
purchase exclusion, especially since fishermen who participated in the
1995 WSLB were allowed to purchase new Washington permits. Two
commenters supported the exclusion provision, and one commenter stated
that such an exclusion should have been imposed from the beginning of
the program.
Response 3: The 1995 License Buy Out Program was intended to
achieve two goals: (1) To compensate commercial fishermen for uninsured
lost income, and (2) to aid the long-term viability of the fishery
resource. Each salmon license has the same potential capacity for
producing effort because licenses are transferable among fishermen and
vessels. Given the high number of slightly active permit holders, the
1995 WSLB was predicated on removing the maximum number of permits in
order to have the greatest effect on capacity. This reflected a concern
that, if high prices were paid for licenses, many productive fishermen
would participate in the program and then return to the fishery by
purchasing a low-priced permit from a marginal producer. This concern
was countered, however, by numerous industry comments that the 1995
program focused only on the marginal producer. Therefore, Option 2 is
designed to enhance the participation of more productive fishermen, who
arguably have been most impacted by the resource disaster. The 10-year
license ownership and operation prohibition has two purposes: (1) To
achieve the NEAP goal of capacity reduction and prevent capacity
recycling, since less capacity, in the form of fewer permits, is likely
to exit the fishery due to the higher prices and limited government
funds; and (2) to provide an adequate and reasonable counterbalance to
those who may submit and receive higher offers. While the 1996 WSLB
enhances the competitiveness of high offers, which some members of the
public believe will disadvantage smaller bidders, this enhanced
competitiveness is offset by the 10-year license purchase or operation
prohibition.
Comment 4: Long term relief for unsuccessful bidders should be
better defined.
Response 4: Implementation of the 1996 WSLB will exhaust all
available funds under the NEAP and the IFA and future Federal programs
will depend on additional appropriations. However, a long-term benefit
does accrue to unsuccessful bidders, regardless of future funding. The
fishermen who remain in the fishery will face decreased competition as
a result of the buy out, and the decreased capacity should also
accelerate stock recovery.
Comment 5: Option 1 provides the greatest benefits to the greatest
number of fishermen.
Response 5: Offers submitted under Option 1 would probably be
lower, thereby enabling the government to retire more permits and
compensate a greater number of fishermen. Conversely, higher prices
would be paid under Option 2, leading to fewer licenses being
purchased. Option 2 intended to counterbalance concerns that purchasing
the maximum number of permits effectively excludes from competition
many of those who suffered the greatest losses. However, under either
option, all eligible fishermen may participate and ultimately, the
competition among bidders will determine who benefits and to what
extent. Likewise, under either option, the WSLB may directly benefit
those who exit the fishery, but will also indirectly benefit those
remaining fishermen who will face fewer competitors on the fishing
grounds and in the marketplace.
Comment 6: Commenters both supported and opposed a lower maximum
offer limit for the 1996 WSLB. Four commenters complained that the
maximum offer limits were too low, arguing that they are offering up a
lifetime fishing career, and some will be using NEAP funds for
retirement purposes. One commenter stated that, under Option 2, if the
1996 WSLB maximum amounts equal the maximum amount paid under the 1995
program, 1996 participants would make a greater sacrifice, because they
would be excluded from the fishery for 10 years but would receive no
greater
[[Page 56219]]
compensation than the 1995 participants. On the other hand, another
commenter stated that, in order to attract the major producers, the
maximum offer amount should be at least $100,000. Many fishermen did
not participate in the 1995 WSLB because the $100,000 limit was below
the value of their business.
Response 6: The NEAP is a voluntary program, and as with the other
NEAP programs, the WSLB is not designed to be an entitlement or
retirement program. However, after consideration of the public
comments, input from state and local officials, and analysis of the
1995 WSLB program, both NMFS and the State of Washington agree that a
maximum offer limit of $75,000 is appropriate. This represents a
compromise between the proposed $50,000 limit and the 1995 limit--the
lower of $100,000 or 75 percent of the fisherman's uninsured loss.
Raising Option 2's maximum offer limit to $75,000 may increase the
number of participants who suffered greater impacts from the salmon
fishery disaster, and better offsets their exclusion from the fishery
for 10 years. On the other hand, a $75,000 maximum offer limit may also
lead to higher offers, thereby increasing the competitiveness of offers
made by participants with lower salmon disaster impacts.
Comment 7: Several commenters discussed Option 2. One commenter
criticized Option 2, arguing that for many vessels, the comparison year
income will be zero due to fishery closures. Therefore, the commenter
claimed that Option 2 is biased in favor of larger boats that were
better able to generate high base year income and consequently higher
SDIs. Another commenter supported Option 2, stating that full-time
fishermen deserve to be bought out.
Response 7: Developing a ranking system acceptable to all groups is
difficult, especially given the polarization of the industry into two
groups--those with high SDIs and those with low SDIs. NMFS recognizes
that most successful bidders under the 1995 WSLB suffered relatively
low uninsured losses. NMFS proposed Option 2 in response to public
comments that those with greater losses, and who are arguably most
dependent on the fishery, deserve a better chance to participate in the
program. Option 2 allows all eligible fishermen to participate but also
factors in the impacts of the resource disaster upon each participant.
Comment 8: One commenter felt that exceptions should be made to
Option 2's qualifying criteria, which base offers upon earnings
history, to allow new license holders to use the past earnings history
of previous owners of the license.
Response 8: The IFA limits assistance to commercial fishermen who
are affected by the fishery resource disaster. Fishermen who have
entered the fishery during the disaster period through the purchase of
permits and vessels are presumed to have been relatively unaffected by
the disaster, since they were not fishing when the disaster period
occurred, and did not watch their long-term investment decline.
Comment 9: One commenter thought that the unsuccessful bidders to
the 1995 WSLB should be given preference.
Response 9: As discussed in the Federal Register notice of August
29, 1996 (61 FR 45408), neither the 1995 WSLB notice nor any other
notice stated that fishermen who failed to participate in the 1995
program would be excluded or disadvantaged in future programs.
Furthermore, NMFS has the discretion to create new grant programs with
the same or different terms, limitations, and conditions, even with
related funding sources and similar program goals.
Comment 10: The NEAP funding should be audited.
Response 10: All government financial assistance programs are
subject to audit. Currently, Commerce's Office of Inspector General is
reviewing the NEAP.
Comment 11: NMFS should offer a set buy back offer of $5,000 to
$8,000 for those that do not have much of a history in the fishery.
Response 11: The recommendation may have merit in terms of reducing
the number of latent permits outstanding and assisting new entrants to
the fishery. However, as stated in previous Federal Register notices,
NMFS believes that assistance under the NEAP should be closely linked
with individual's loss or SDI.
Comment 12: One commenter claimed that the Puget Sound Gillnet
fishery needs a fishing capacity reduction program and questioned why
the Puget Sound Gillnet fishery was the only Washington State
commercial salmon fishery excluded from the program.
Response 12: Puget Sound was excluded because the factors
underlying the fishery resource disaster declared by the Secretary on
May 26, 1994, were not deemed to have extended to Puget Sound. Coastal
and Columbia River salmon fisheries suffered the greatest declines
during the 1991-95 disaster period. In contrast, Puget Sound
gillnetters recorded substantial landings in 1994 and no sufficient
data indicate a natural resource disaster in Puget Sound in 1995.
Comment 13: One commenter charged that Washington State is
siphoning off money under the guise of administrative costs.
Response 13: One of the primary objectives of NEAP has been to hold
down administrative costs. NMFS believes that the State of Washington
has performed its administrative duties with a minimal degree of
overhead costs. Under the 1995 WSLB, NMFS allocated $300,000 to WDFW
for administrative costs. WDFW spent only 3 percent, or $119,000, of
the $4 million grant award on administrative costs, and used the
balance to purchase additional permits. The 1996 WSLB provides $250,000
for administrative costs, with the remaining $5 million for license buy
out payments for fishermen. If NMFS approves the Governor of
Washington's request to transfer $50,000 from the WSLB to the Data
Collection Jobs Program, WDFW will have $4.95 million available for
license buyouts.
Comment 14: Two commenters wanted the offer ranking system to take
into account the number of years a fisherman has held and operated a
Washington license, because long-time fishermen have suffered more due
to the salmon resource disaster. Furthermore, they argued that older
fishermen have fewer career options or may have not been able to
generate as high an SDI as younger fishermen.
Response 14: The emphasis of the WSLB is on compensating losses,
not seniority. The program strives to achieve the maximum degree of
fairness with respect to the losses suffered.
Comment 15: One commenter claimed that the NEAP fails to account
for the economic damage caused to salmon markets and to trade
associations--two top priority areas that need to be addressed.
Response 15: NMFS and the State of Washington are aware that the
salmon resource disaster has affected other salmon-related businesses.
However, the NEAP was funded under the IFA, which authorizes assistance
to persons engaged in commercial fisheries, which the Secretary has
limited to commercial fishermen only.
Final 1996 WSLB Description
The 1996 WSLB has two goals: (1) To compensate commercial fishermen
for harm suffered from the salmon resource disaster, and (2) to aid the
long-term viability of the fishery resource. In establishing the 1996
WSLB, NMFS has considered comments from state officials and the public,
the results of the 1995 program, and the constraints of the legal
authority under which the program operates.
[[Page 56220]]
Based on the above considerations, NMFS has selected Option 2 as
the model on which to base the 1996 WSLB. Option 2 provides greater
opportunity for more productive fishermen to exit the fishery, and
prevents the removed fishing capacity from cycling back into the
fishery for 10 years. Furthermore, as mentioned above, the 1996 WSLB
differs from the 1995 WSLB in important aspects. The 1996 WSLB will be
based on a fisherman's SDI, which is equal to 2.5 times the difference
between a fisherman's highest gross salmon fishery income derived from
fishing during any calendar year 1986 through 1991 (base year), and the
sum of the least amount of salmon fishery income derived from
commercial salmon fishing during any calendar year from 1991 through
1995 (comparison year). Fishermen can use the same information they
developed for the 1995 WSLB to determine their SDI. In addition, a
competitive offer ranking system will be used, and participants who
receive buy outs will be prohibited from purchasing or operating a
commercial salmon license for 10 years, unless the participant owned
that license in 1995.
Eligibility Criteria
To be eligible, the applicant must fulfill the following
requirements:
1. Must have possessed or was eligible to possess one of the
following Washington State commercial salmon fishery licenses in 1994
and possessed the same license in 1995:
a. Salmon troll license;
b. Salmon delivery license;
c. Salmon gill net--Grays Harbor-Columbia River;
d. Salmon gill net--Willapa Bay-Columbia River; or
e. Salmon charter.
2. Must demonstrate an SDI greater than $0.
3. Must not have earned more than $2,000,000 in net revenues
annually from commercial fishing for the period between 1991 and 1994.
Bidding Procedure
License holders may offer their licenses for any amount up to
$75,000 or their SDI, whichever is less. Offers will be ranked
according to the offer ratio. The offer ratio is the division of the
offer amount by the SDI. Licenses will be ranked and purchased starting
with those offers that have the lowest offer ratios. In the event of a
tie between identical offer ratios, the lowest offer will be given
preference. Successful participants cannot purchase or operate another
Washington State commercial salmon troll, salmon delivery, Gray's
Harbor-Columbia River salmon gillnet, Willapa Bay-Columbia River salmon
gillnet, or salmon charter license for 10 years beginning January 1,
1997, unless the license was owned or operated by that person in 1995.
Additional Terms, Limitations, and Conditions
A license holder may offer more than one license, but income used
in the calculation of an offer that is accepted may not be used in the
calculation of any other offer. Licenses will be purchased in order of
ranking until funds are exhausted. The State of Washington, in
consultation with NMFS, will reserve the right to reject any and all
offers if it is determined by NMFS that such action is in the best
interests of the program or if revisions to the program are warranted
in the future. Proprietary information submitted by applicants will
only be disclosed to state and Federal officials who are responsible
for the NEAP, or otherwise when required by court order or other
applicable law. This information is subject to the Freedom of
Information Act.
Example of Bidding Procedure
Step 1: Determine SDI
Step 1A: Base Year Selection:
Select the highest year of gross income during the base period 1986
through 1991. For Fisherman A, this is $38,000. For Fisherman B, this
is $8,000.
Step 1B: Comparison Year Selection:
Select the lowest year of gross income during the comparison year
of 1991 though 1995. For fisherman A, this is $3,000. For Fisherman B,
this is $0.
Step 1C: Subtraction
Subtract the selected comparison year gross income from the
selected base year income. For Fisherman A, this is $38,000 minus
$3,000, or $35,000. For Fisherman B, this is $8,000 minus $0, or
$8,000.
Step 1D: Multiplication
Multiply the difference between the comparison year and base year
gross income by 2.5. For Fisherman A, this is $35,000 multiplied by
2.5, or $87,500. For Fisherman B, this is $8,000 multiplied by 2.5, or
$20,000.
Step 1E: SDI Determination
SDI is the result of steps 1A through 1D. Fisherman A's SDI is
$87,500 (($38,000-$3,000) x 2.5=$87,500). Fisherman B's SDI is $20,000
(($8,000-$0) x 2.5=$20,000).
Step 2: Determine Maximum Offer Amount
The maximum offer amount is $75,000 or the fisherman's SDI,
whichever is less. Fisherman A's SDI is $87,500, which is greater than
$75,000. Therefore, Fisherman A's maximum bid is limited to $75,000
because $75,000 is the maximum any fisherman can receive. Fisherman B's
maximum bid is $20,000 because his SDI is less than $75,000.
Step 3: Determine Bid
Fishermen can choose to submit an offer that ranges from $1 up to
their maximum offer limit. Fisherman A's range is from $1 to $75,000.
Fisherman B's range is from $1 to $20,000.
Ranking of Bids
If both Fisherman A and Fisherman B elected to submit their
respective maximum offers, Fisherman A's offer would be the first
accepted because the 0.857 ($75,000/$87,500) offer ratio is less than
1.0. If Fisherman B elected to submit an offer of $11,000, then
Fisherman B's offer ratio would be 0.550 ($11,000/$20,000). Because
Fisherman B's offer ratio is lower than Fisherman A's offer ratio,
Fisherman B's offer would be accepted first. In the event of a tie with
identical offer ratios, preference will be given to the fishermen with
the lowest offer amount. If Fisherman A submits an offer of $75,000
(ratio=.857) and Fisherman B submits an offer of $17,140 (ratio=.857),
Fisherman B's offer would be accepted first because it is less than
Fisherman A's offer.
Catalogue of Federal Domestic Assistance
The program is listed in the Catalogue of Federal Domestic
Assistance under No. 11.452, Unallied Industry Projects.
Classification
This action has been determined to be not significant for purposes
of E.O. 12866. The Assistant General Counsel for Legislation and
Regulation of the Department of Commerce certified to the Chief Counsel
for Advocacy of the Small Business Administration that this notice
would not have a significant economic impact on a substantial number of
small entities because only a small portion of West Coast salmon
fishermen will be directly affected. NMFS estimates that only
approximately 3.6 percent of the industry will receive financial
assistance through the WSLB. Therefore, the impacts of the notice are
not significant within the meaning of the Regulatory Flexibility Act.
They are not likely to lead to a reduction in the annual gross revenues
by more than 5 percent or an increase in total costs of production by
more than 5 percent, nor would this action result in any greater
compliance costs.
[[Page 56221]]
This program involves a collection-of-information requirement
subject to the Paperwork Reduction Act (PRA). The collection of this
information has been approved by the Office of Management and Budget
(OMB), under OMB control number 0648-0288. Notwithstanding any other
provision of law, no person is required to respond to, nor shall a
person be subject to a penalty for failure to comply with, a collection
of information subject to the requirements of the PRA unless that
collection of information displays a currently valid OMB control
number.
Authority: Public Law 99-659 (16 U.S.C. 4107 et seq.); Public
Law 102-396.
Dated: October 24, 1996.
Nancy Foster,
Acting Assistant Administrator for Fisheries, National Marine Fisheries
Service.
[FR Doc. 96-27902 Filed 10-25-96; 4:48 pm]
BILLING CODE 3510-22-W