[Federal Register Volume 62, Number 152 (Thursday, August 7, 1997)] [Proposed Rules] [Pages 42474-42478] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 97-20851] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 600 [Docket No. 970728182-7182-01; I.D. 071697A] RIN 0648-AG16 Magnuson-Stevens Act Provisions; Financial Disclosure AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. [[Page 42475]] ACTION: Proposed rule. ----------------------------------------------------------------------- SUMMARY: NMFS issues this proposed rule to revise the rules of conduct and financial disclosure regulations applicable to Regional Fishery Management Council (Council) nominees, appointees, and voting members. The proposed revisions would implement a provision of the Magnuson- Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) that was amended by the Sustainable Fisheries Act (SFA) in 1996. The new provision prohibits Council members from voting on matters that would have a significant and predictable effect on a financial interest disclosed in accordance with existing regulations. The recusal requirement will not become effective until the Secretary of Commerce (Secretary) promulgates final regulations, which is scheduled to occur by October 11, 1997. DATES: Comments must be received by September 8, 1997. ADDRESSES: Comments should be sent to Dr. Gary C. Matlock, F/SF, NMFS, 1315 East-West Highway, Silver Spring, MD 20910. Comments regarding the collection-of-information requirement contained in this rule should be sent to the above address and to the Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), Washington, DC 20503 (Attention: NOAA Desk Officer). FOR FURTHER INFORMATION CONTACT: Margaret Frailey Hayes, Assistant General Counsel for Fisheries, NOAA Office of General Counsel, 301-713- 2231. SUPPLEMENTARY INFORMATION: Background In the 1986 amendments to the Magnuson Fishery Conservation and Management Act (Public Law 99-659), Congress created a requirement for voting members and Executive Directors of each Council to disclose any financial interest they held in the harvesting, processing, or marketing of fishery resources under the jurisdiction of their respective Council. The financial interests of the member included those held by that member, the spouse, minor child, or partner of the member, and any organization (other than the Council) in which the member was serving as an officer, director, trustee, partner, or employee. If they disclosed their financial interests as required by the statute, the amendments exempted Council members and Executive Directors from the provisions of 18 U.S.C. 208, which generally prohibit persons from making decisions on behalf of the Federal Government during their employment when a conflict of interest arises. If a member did not comply with the financial disclosure requirements, the prohibitions and penalties of 18 U.S.C. 208 would apply. Congress intended that Council members could have a direct financial interest in fisheries. Governors are required to nominate persons who are ``knowledgeable'' or ``experienced'' regarding the conservation and management or commercial or recreational harvest of the fishery resources within the jurisdiction of the Council (16 U.S.C. 302(b)(2)(A)). Congress also believed, however, that the public has a right to know of any voting Council member's financial interests in fishery matters under the purview of a Council. Council members could, therefore, participate in matters of general public concern that were likely to have a direct and predictable effect on their financial interests in harvesting, processing, or marketing activities in a fishery if such interests were disclosed on the member's statement of financial interests. Even if their financial interests were reported, however, they could not participate in a particular matter primarily of individual concern, such as a contract, in which they had a financial interest under rules now codified at 50 CFR 600.225(b)(8)(i). On October 11, 1996, the President signed into law the SFA, which made numerous amendments to the Magnuson-Stevens Act (16 U.S.C. 1801 et seq.). This proposed rule would amend 50 CFR 600.225, Rules of Conduct, and 50 CFR 600.235, Financial Disclosure, to implement the SFA amendments to the Magnuson-Stevens Act concerning recusal of Council members from votes involving matters in which they have a financial interest. The proposed regulations would remove 50 CFR 600.225(b)(8)(ii), which prohibits a Council member from voting on any matter of general public concern that is likely to have a ``direct and predictable effect'' on a member's financial interest unless it has been disclosed. That language would be replaced with new Sec. 600.235(c), described below under ``Financial Disclosure.'' The proposed rules would retain the first sentence in 50 CFR 600.225(b)(8), which prohibits any Council member from participating in a ``particular matter primarily of individual concern'' in which he or she has a financial interest. Examples of such matters are contracts with the member's employer, grants to the member's academic institution, and management measures that affect only the member's business and a few other fishery participants. Section 302(j) of the Magnuson-Stevens Act requires the disclosure by ``affected individuals'' of financial interests in any harvesting, processing, or marketing activity that is being, or will be undertaken, within any fishery under the jurisdiction of the individual's Council. The financial interests include those of the affected individual's spouse, minor child, or partner, or any organization other than the Council in which the individual is serving as an officer, director, trustee, partner, or employee. The SFA defines ``affected individuals'' as persons nominated by a Governor, and voting members appointed by the Secretary of Commerce from among those nominees, under section 302(b)(2) of the Magnuson- Stevens Act. The term also includes the Indian representative on the Pacific Council, if he or she is not subject to disclosure or recusal requirements under Indian tribal government laws. Voting members of Councils who are excluded from the definition are Regional Administrators of NMFS, and the principal state officials and designees named by Governors under section 302(b)(1) of the Magnuson- Stevens Act. Council Executive Directors, who previously had been subject to the financial disclosure reporting requirements, are no longer ``affected individuals.'' Financial Disclosure The SFA's most significant revision to section 302(j) of the Magnuson-Stevens Act is the addition of a provision that prohibits an affected individual from voting on a Council decision that would have a significant and predictable effect on the affected individual's financial interests in harvesting, processing, or marketing activities. That effect exists if there is a close causal link between the Council decision and an ``expected and substantially disproportionate benefit'' to the financial interest of the affected individual relative to the financial interests of other participants in the same gear type or sector of the fishery. This rule would define ``expected and substantially disproportionate benefit'' as a quantifiable positive or negative impact with regard to a matter likely to affect a fishery or sector of the fishery in which the affected individual has a significant interest, as indicated by (1) a greater than 10 percent interest in the total harvest of the fishery or sector of the fishery in question, (2) a greater than 10 percent interest in the marketing or [[Page 42476]] processing of the total harvest of the fishery or sector of the fishery in question, or (3) full or partial ownership of more than 10 percent of the vessels using the same gear type within the fishery or sector of the fishery in question. We interpret the statutory term ``benefit'' to include both positive and negative impacts on the member's financial interest. The purpose of the 1996 amendments was to address real or perceived conflicts of interest, i.e., situations where Council members might have a greater incentive to protect their own financial interests than to consider the welfare of all fishery participants and the national interest. In this context, actual or perceived conflicts of interest occur when a member's income or investment is threatened, just as much as when they may be augmented. Avoiding a negative is as advantageous as gaining a positive. To limit ``benefit'' to positive impacts would unfairly bias the Council system toward preservation of the status quo. If members who stood to gain from a proposed Council action could not vote, but members who might suffer a loss from the same action could do so, proposals for change would be handicapped. The choice of a particular percentage as indicative of a ``significant'' interest is a difficult one. The Councils manage fisheries as small as seven vessels and as large as thousands of vessels. The agency is considering a tiered approach, with different percentage indicators for different-sized sectors of the fishing industry, but has been unable to construct a workable model. We invite comments and specific suggestions on dealing with this issue. Affected individuals who have financial interests in businesses or not-for-profit organizations closely related to harvesting, processing, or marketing activities are covered by section 302(j) of the Magnuson- Stevens Act and must disclose those interests. Examples are suppliers of bait, manufacturers of fishing gear, business or economic consultants to the fishing industry, and representatives of environmental organizations that address fisheries issues. Because the effects of Council decisions on this type of financial interest are unlikely to be ``significant or predictable,'' we do not foresee recusals by such individuals under proposed Sec. 600.235(c); however, such individuals could not participate in a ``particular matter primarily of individual concern'' under Sec. 600.225(b)(8). Under the proposed rule, an affected individual who is a representative of an association of fishermen, processors, or dealers would be required to disclose, in addition to his/her own interests, the financial interests of the association in harvesting, processing, or marketing activities that are or will be undertaken within any fishery under the jurisdiction of his or her Council. The financial interests of the association would be considered as separate from the financial interests of its individual members. A vote on a Council decision that might have a significant and predictable effect on the members of the association would not be considered to have a significant and predictable effect on the financial interests of the representative. Procedures An affected individual would be able to recuse him or herself by simply announcing an intent not to vote on a Council decision that is likely to have a direct and predictable effect on that individual's financial interest. The proposed regulations would provide that, if an affected individual has a significant interest that prohibits him or her from voting, he or she may still participate in Council deliberations on that matter. The proposed regulations would set out the process for raising the issue of whether a Council decision would have a significant and predictable effect on an individual's financial interest, the information that would be considered in making that determination, and procedures for review of a determination. The proposed regulations would specify the NOAA General Counsel attorney advising the Council as the designated official who would determine whether the affected individual must recuse him or herself. The determination by the NOAA attorney would be based upon the information contained in the member's financial disclosure report and any other reliable and probative information provided in writing. All information provided would be made part of the public record for the decision. If the NOAA attorney determines that the member may not vote, the member may state for the record how he or she would have voted. Any Council member would be able to file a request for review of the determination to the NOAA General Counsel within 10 days of the determination. The member whose vote is at issue would have an opportunity to respond to such request for review by another Council member. The NOAA General Counsel would issue a decision within 30 days from the date of receipt of the request for review. As specified in section 302(j)(7)(E) of the Magnuson-Stevens Act, if the General Counsel's decision reverses a recusal determination, that decision may not be treated as cause to invalidate or reconsider the Council's action. The proposed regulations would implement the part of section 307(1) of the Magnuson-Stevens Act that makes it unlawful for an affected individual to knowingly and willfully fail to disclose or to falsely disclose any financial interest required to be disclosed or to knowingly vote on a Council decision in violation of section 302(j). The penalties for violation include removal of the affected individual from the Council and/or a civil penalty of up to $100,000 per violation. Classification This rule 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 proposed rule, if adopted, would not have a significant economic impact on a substantial number of small entities. This proposed rule would implement statutory provisions of the SFA relative to the disclosure of financial interests of Council nominees, appointees, and members in harvesting, processing, or marketing activities that are or will be undertaken in fisheries under the jurisdiction of the individual's Council. Certain Council members may be required to recuse themselves from voting on a Council decision that would have a significant and predictable effect on a financial interest disclosed in accordance with these regulations. This proposed rule would have no effect on the conduct of business of any small entities. As such, no Initial Regulatory Flexibility Analysis has been prepared. This rule contains a collection-of-information requirement subject to the PRA. The financial disclosure form that must be completed by affected individuals has been approved by OMB under control number 0648-0192. Public reporting burden for this collection of information is estimated to average 0.58 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completining and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden, to OMB and NMFS (see ADDRESSES). [[Page 42477]] Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the Paperwork Reduction Act (PRA), unless that collection of information displays a currently valid OMB control number. List of Subjects in 50 CFR Part 600 Administrative practice and procedure, Confidential business information, Fisheries, Fishing, Fishing vessels, Foreign relations, Intergovernmental relations, National Oceanic and Atmospheric Administration, Penalties, Reporting and recordkeeping requirements, Statistics. Dated: August 1, 1997. David L. Evans, Deputy Assistant Administrator for Fisheries, National Marine Fisheries Service. For the reasons set out in the preamble, 50 CFR part 600 is proposed to be amended as follows: PART 600--MAGNUSON-STEVENS ACT PROVISIONS 1. The authority citation for part 600 continues to read as follows: Authority: 5 U.S.C. 561 and 16 U.S.C. 1801 et seq. 2. In Sec. 600.225, the last sentence in paragraph (b)(4) is removed, and paragraph (b)(8) is revised to read as follows: Sec. 600.225 Rules of conduct. * * * * * (b) * * * (8) No Council member may participate personally and substantially as a member through decision, approval, disapproval, recommendation, the rendering of advice, investigation, or otherwise in a particular matter primarily of individual concern, such as a contract, in which he or she has a financial interest. 3. Section 600.235 is revised to read as follows: Sec. 600.235 Financial disclosure. (a) Definitions. For purposes of this section: (1) ``Affected individual'' means an individual who is-- (i) Nominated by the Governor of a state or appointed by the Secretary to serve as a voting member of a Council in accordance with section 302(b)(2) of the Magnuson-Stevens Act; or (ii) A representative of an Indian tribe appointed to the Pacific Council by the Secretary under section 302(b)(5) of the Magnuson- Stevens Act who is not subject to disclosure and recusal requirements under the laws of an Indian tribal government. (2) ``Designated official'' means an attorney designated by the NOAA General Counsel. (b) Reporting. (1) The Magnuson-Stevens Act requires the disclosure by each affected individual of any financial interest of the affected individual in any harvesting, processing, or marketing activity, or related industry, that is being, or will be, undertaken within any fishery under the jurisdiction of the individual's Council, and of any such financial interest of the affected individual's spouse, minor child, partner, or any organization (other than the Council) in which that individual is serving as an officer, director, trustee, partner, or employee. The information required to be reported must be disclosed on NOAA Form 88-195, ``Statement of Financial Interests for Use by Voting Members and Nominees of Regional Fishery Management Councils'' (Financial Interest Form), or such other form as the Secretary may prescribe. (2) The report must be filed by each nominee for Secretarial appointment with the Assistant Administrator by April 15 or, if nominated after March 15, 1 month after nomination by the Governor. A seated voting member appointed by the Secretary must file a Financial Interest Form with the Executive Director of the appropriate Council within 45 days of taking office; must file an update of his or her statement with the Executive Director of the appropriate Council within 30 days of the time any such financial interest is acquired or substantially changed by the affected individual or the affected individual's spouse, minor child, partner, or any organization (other than the Council) in which that individual is serving as an officer, director, trustee, partner, or employee; and must update his or her form annually and file that update with the Executive Director of the appropriate Council by February 1 of each year. (3) The Executive Director must, in a timely manner, provide copies of the financial disclosure forms and all updates to the NMFS Regional Administrator for the geographic area concerned, the Regional Attorney who advises the Council, the Department of Commerce Assistant General Counsel for Administration, and the NMFS Office of Sustainable Fisheries. The completed financial interest forms will be kept on file in the office of the NMFS Regional Administrator for the geographic area concerned and at the Council offices, and will be made available for public inspection at such offices during normal office hours. (4) Councils must retain the disclosure form for each affected individual for at least 5 years after the expiration of that individual's last term. (c) Restrictions on voting. (1) No affected individual may vote on any Council decision that would have a significant and predictable effect on a financial interest disclosed in his/her report filed under paragraph (b) of this section. (2) As used in this section, a Council decision will be considered to have a ``significant and predictable effect on a financial interest'' if there is a close causal link between the decision and an expected and substantially disproportionate benefit to the financial interest of any affected individual or the affected individual's spouse, minor child, partner, or any organization (other than the Council) in which that individual is serving as an officer, director, trustee, partner, or employee, relative to the financial interests of other participants in the same gear type or sector of the fishery. (3) ``Expected and substantially disproportionate benefit'' means a quantifiable positive or negative impact with regard to a matter likely to affect a fishery or sector of the fishery in which the affected individual has a significant interest, as indicated by: (i) A greater than 10 percent interest in the total harvest of the fishery or sector of the fishery in question; (ii) A greater than 10 percent interest in the marketing or processing of the total harvest of the fishery or sector of the fishery in question; or (iii) Full or partial ownership of more than 10 percent of the vessels using the same gear type within the fishery or sector of the fishery in question. (d) Voluntary recusal. An affected individual who believes that a Council decision would have a significant and predictable effect on that individual's financial interest disclosed under paragraph (b) of this section may, at any time before a vote is taken, announce to the Council an intent not to vote on the decision. (e) Participation in deliberations. Notwithstanding paragraph (c) of this section, an affected individual may participate in Council deliberations relating to the decision after notifying the Council of the voting recusal and identifying the financial interest that would be affected. (f) Requests for determination. (1) At the request of an affected individual, the designated official shall determine for the record whether a Council decision would have a significant and [[Page 42478]] predictable effect on that individual's financial interest. The determination will be based upon a review of the information contained in the individual's financial disclosure form and any other reliable and probative information provided in writing. All information considered will be made part of the public record for the decision. The affected individual may request a determination by notifying the designated official-- (i) Within a reasonable time before the Council meeting at which the Council decision will be made; or (ii) During a Council meeting before a Council vote on the decision. (2) The designated official may initiate a determination on the basis of-- (i) His or her knowledge of the fishery and the financial interests disclosed by an affected individual; or (ii) Written and signed information received within a reasonable time before a Council meeting or, if the issue could not have been anticipated before the meeting, during a Council meeting before a Council vote on the decision. (3) At the beginning of each Council meeting, or during a Council meeting at any time reliable and probative information is received, the designated official shall announce the receipt of information relevant to a determination concerning recusal, the nature of that information, and the identity of the submitter of such information. (4) If the designated official determines that the affected individual may not vote, the individual may state for the record how he or she would have voted. However, a reversal of that determination under paragraph (g) of this section may not be treated as cause for invalidation or reconsideration of the Council's decision. (g) Review of determinations. (1) Any Council member may file a written request to the NOAA General Counsel for review of the designated official's determination. A request for review must be received within 10 days of the determination. (2) A request must include a full statement in support of the review, including a concise statement as to why the Council's decision did or did not have a significantly disproportionate benefit to the financial interest of the affected individual relative to the financial interests of other participants in the same gear type or sector of the fishery, and why the designated official's determination should be reversed. (3) If the request for review is from a Council member other than the affected individual whose vote is at issue, the requester must provide a copy of the request to the affected individual at the same time it is submitted to the NOAA General Counsel. The affected individual may submit a response to the NOAA General Counsel within 10 days from the date of his/her receipt of the request for review. (4) The NOAA General Counsel must complete the review and issue a decision within 30 days from the date of receipt of the request for review. The NOAA General Counsel will limit the review to the record before the designated official at the time of the determination, the request, and any response. (h) Exemption from other statutes. The provisions of 18 U.S.C. 208, regarding conflicts of interest, do not apply to an affected individual who is in compliance with the requirements of this section for filing a financial disclosure report. (i) Violations and penalties. It is unlawful for an affected individual to knowingly and willfully fail to disclose, or to falsely disclose, any financial interest as required by this section, or to knowingly vote on a Council decision in violation of this section. In addition to the penalties applicable under Sec. 600.735, a violation of this provision may result in removal of the affected individual from Council membership. [FR Doc. 97-20851 Filed 8-6-97; 8:45 am] BILLING CODE 3510-22-F