Fisheries of the Exclusive Economic Zone Off Alaska; Bering Sea and Aleutian Islands Crab Rationalization Program, 65615-65621 [2016-22911]

Agencies

• DEPARTMENT OF COMMERCE
• National Oceanic and Atmospheric Administration

[Federal Register Volume 81, Number 185 (Friday, September 23, 2016)]
[Proposed Rules]
[Pages 65615-65621]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-22911]


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DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

50 CFR Part 680

[Docket No. 160617541-6541-01]
RIN 0648-BG15


Fisheries of the Exclusive Economic Zone Off Alaska; Bering Sea 
and Aleutian Islands Crab Rationalization Program

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

ACTION: Proposed rule; request for comments.

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SUMMARY: NMFS issues a proposed rule to implement Amendment 47 to the 
Fishery Management Plan for Bering Sea/Aleutian Islands King and Tanner 
Crabs (Crab FMP) and to make minor clarifications to regulations 
implementing the Crab FMP. This proposed rule addresses how individual 
processing quota (IPQ) use caps apply to the Bering Sea Chionoecetes 
bairdi Tanner crab fisheries: The eastern C. bairdi Tanner (EBT) and 
the western C. bairdi Tanner (WBT). This proposed rule would exempt EBT 
and WBT IPQ crab that is custom processed at a facility through 
contractual arrangements with the processing facility owners from being 
applied against the IPQ use cap of the processing facility owners, 
thereby allowing a facility to process more crab without triggering the 
IPQ use cap. This proposed exemption is necessary to allow all of the 
EBT and WBT Class A individual fishing quota crab to be processed at 
the facilities currently processing EBT and WBT crab, and would have 
significant positive economic effects on the fishermen, processors, and 
communities that participate in the EBT and WBT fisheries. This 
proposed rule is intended to promote the goals and objectives of the 
Magnuson-Stevens Fishery Conservation and Management Act, the Crab FMP, 
and other applicable law.

DATES: Submit comments on or before October 24, 2016.

ADDRESSES: You may submit comments on this document, identified by 
NOAA-NMFS-2016-0081, by any of the following methods:
     Electronic Submission: Submit all electronic public 
comments via the Federal e-Rulemaking Portal. Go to 
www.regulations.gov/#!docketDetail;D=NOAA-NMFS-2016-0081 click the 
``Comment Now!'' icon, complete the required fields, and enter or 
attach your comments.
     Mail: Submit written comments to Glenn Merrill, Assistant 
Regional Administrator, Sustainable Fisheries Division, Alaska Region 
NMFS, Attn: Ellen Sebastian. Mail comments to P.O. Box 21668, Juneau, 
AK 99802-1668.
    Instructions: Comments sent by any other method, to any other 
address or individual, or received after the end of the comment period, 
may not be considered by NMFS. All comments received are a part of the 
public record and will generally be posted for public viewing on 
www.regulations.gov without change. All personal identifying 
information (e.g., name, address), confidential business information, 
or otherwise sensitive information submitted voluntarily by the sender 
will be publicly accessible. NMFS will accept anonymous comments (enter 
``N/A'' in the required fields if you wish to remain anonymous).
    Electronic copies of Amendment 47 to the Crab FMP, the Regulatory 
Impact Review/Initial Regulatory Flexibility Analysis (RIR/IRFA) 
(collectively referred to as the ``Analysis''), and the Categorical 
Exclusion prepared for this proposed action are available from https://www.regulations.gov or from the NMFS Alaska Region Web site at https://alaskafisheries.noaa.gov.
    The Environmental Impact Statement (Program EIS), RIR (Program 
RIR), Final Regulatory Flexibility Analysis (Program FRFA), and Social 
Impact Assessment prepared for the Crab Rationalization Program are 
available from the NMFS Alaska Region Web site at https://alaskafisheries.noaa.gov.

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

SUPPLEMENTARY INFORMATION: NMFS manages the king and Tanner crab 
fisheries in the U.S. exclusive economic zone of the Bering Sea and 
Aleutian Islands (BSAI) under the Fishery Management Plan for Bering 
Sea/Aleutian Islands King and Tanner Crabs (Crab FMP). The North 
Pacific Fishery Management Council (Council) prepared, and NMFS 
approved, the Crab FMP under the authority of the Magnuson-Stevens 
Fishery Conservation and Management Act (Magnuson-Stevens Act), 16 
U.S.C. 1801 et seq. Regulations governing U.S.

[[Page 65616]]

fisheries and implementing the Crab FMP appear at 50 CFR parts 600 and 
680.
    A notice of availability for Amendment 47 was published in the 
Federal Register on September 13, 2016; 81 FR 62850. Comment on 
Amendment 47 is invited through November 14, 2016. All relevant written 
comments received by the end of the comment period, whether 
specifically directed to the FMP amendment, this proposed rule, or 
both, will be considered in the approval/disapproval decision for 
Amendment 47 and addressed in the response to comments in the final 
rule.
    This proposed rule would modify regulations that specify how IPQ 
use caps apply to IPQ issued for EBT and WBT crab fisheries. The 
following sections describe (1) the BSAI crab fisheries under the Crab 
Rationalization Program (Program), (2) IPQ use caps and custom 
processing arrangements, (3) IPQ use caps applicable to the EBT and WBT 
crab fisheries, and (4) this proposed rule and the anticipated effects 
of the action.

The BSAI Crab Fisheries Under the Program

    The Program was implemented on March 2, 2005 (70 FR 10174). The 
Program established a limited access privilege program for nine crab 
fisheries in the BSAI, including the EBT and WBT crab fisheries, and 
assigned quota share (QS) to persons based on their historic 
participation in one or more of those nine BSAI crab fisheries during a 
specific period. Under the Program, NMFS issued four types of QS: 
Catcher vessel owner (CVO) QS was assigned to holders of License 
Limitation Program (LLP) licenses who delivered their catch to 
shoreside crab processors or to stationary floating crab processors; 
catcher/processor vessel owner QS was assigned to LLP license holders 
who harvested and processed their catch at sea; catcher/processor crew 
QS was issued to captains and crew on board catcher/processor vessels; 
and catcher vessel crew QS was issued to captains and crew on board 
catcher vessels. Each year, a person who holds QS may receive an 
exclusive harvest privilege for a portion of the annual total allowable 
catch, called individual fishing quota (IFQ).
    NMFS also issued processor quota share (PQS) under the Program. 
Each year, PQS yields an exclusive privilege to process a portion of 
the IFQ in each of the nine BSAI crab fisheries. This annual exclusive 
processing privilege is called individual processor quota (IPQ). Only a 
portion of the QS issued yields IFQ that is required to be delivered to 
a processor with IPQ. QS derived from deliveries made by catcher vessel 
owners (i.e., CVO QS) is subject to designation as either Class A IFQ 
or Class B IFQ. Ninety percent of the IFQ derived from CVO QS is 
designated as Class A IFQ, and the remaining 10 percent is designated 
as Class B IFQ. Class A IFQ must be matched and delivered to a 
processor with IPQ. Class B IFQ is not required to be delivered to a 
processor holding IPQ for that fishery. Each year there is a one-to-one 
match of the total pounds of Class A IFQ with the total pounds of IPQ 
issued in each crab fishery.
    NMFS issued QS and PQS for the EBT and WBT crab fisheries. Unlike 
the QS and PQS issued for most other Program fisheries, the QS and PQS 
issued for the EBT and WBT crab fisheries are not subject to regional 
delivery and processing requirements, commonly known as 
regionalization. Therefore, the Class A IFQ that results from EBT and 
WBT QS, and the IPQ that results from EBT and WBT PQS, can be delivered 
to, and processed at, any otherwise eligible processing facility.
    In addition, the PQS and resulting IPQ issued for the EBT and WBT 
crab fisheries are not subject to right-of-first-refusal (ROFR) 
provisions included in the Program. The ROFR provisions provide certain 
communities with an option to purchase PQS or IPQ that would otherwise 
be used outside of the community holding the ROFR.
    Because the EBT and WBT crab fisheries are not subject to 
regionalization or ROFR provisions, crab harvested under a Class A IFQ 
permit in these fisheries can be delivered to processors in a broad 
geographic area more easily than crab harvested under Class A IFQ 
permits in Program fisheries subject to regionalization and ROFR 
provisions. The rationale for exempting the EBT and WBT crab fisheries 
from regionalization and ROFR provisions is described in the Program 
EIS (see ADDRESSES), and in the final rule implementing the Program (70 
FR 10174, March 2, 2005).

IPQ Use Caps and Custom Processing Arrangements

    When the Council recommended the Program, it expressed concern 
about the potential for excessive consolidation of QS and PQS, in which 
too few persons control all of the QS or PQS and the resulting annual 
IFQ and IPQ. The Council determined that excessive consolidation could 
have adverse effects on crab markets, price setting negotiations 
between harvesters and processors, employment opportunities for 
harvesting and processing crew, tax revenue to communities in which 
crab are landed, and other factors considered and described in the 
Program EIS. To address these concerns, the Program limits the amount 
of QS that a person can hold (i.e., own), the amount of IFQ that a 
person can use, and the amount of IFQ that can be used on board a 
vessel. Similarly, the Program limits the amount of PQS that a person 
can hold, the amount of IPQ that a person can use, and the amount of 
IPQ that can be processed at a given facility. These limits are 
commonly referred to as use caps.
    In most of the nine BSAI crab fisheries under the Program, 
including the Tanner crab fisheries, a person is limited to holding no 
more than 30 percent of the PQS initially issued in the fishery, and to 
using no more than the amount of IPQ resulting from 30 percent of the 
initially issued PQS in a given fishery, with a limited exemption for 
persons receiving more than 30 percent of the initially issued PQS. No 
person in the EBT or WBT crab fisheries received in excess of 30 
percent of the initially issued PQS (see Section 2.5.2 of the 
Analysis). Therefore, no person may use an amount of EBT or WBT IPQ 
greater than an amount resulting from 30 percent of the initially 
issued EBT or WBT PQS. The rationale for the IPQ use caps is described 
in the Program EIS and the final rule implementing the Program (70 FR 
10174, March 2, 2005).
    The Program is designed to minimize the potential for a person to 
evade the PQS ownership and IPQ use caps through corporate affiliations 
or other legal relationships. To accomplish this, Sec.  680.7(a)(7) 
prohibits an IPQ holder from using more IPQ than the maximum amount of 
IPQ that may be held by that person. Section 680.7(a)(7) also provides 
that IPQ use by a person is calculated by summing the total amount of 
IPQ that is held by that person and IPQ held by other persons who are 
affiliated with that person. The term ``affiliation'' is defined in 
Sec.  680.2 as a relationship between two or more entities where one 
entity directly or indirectly owns or controls 10 percent or more of 
the other entity. Additional terms used in the definition of 
``affiliation'' are described in Sec.  680.2.
    Under Sec.  680.7(a)(7), any IPQ crab that is ``custom processed'' 
at a facility an IPQ holder owns will be applied against the IPQ use 
cap of the facility owner, unless specifically exempted by Sec.  
680.42(b)(7). A custom processing arrangement exists when an IPQ holder 
has a contract with the owners of a processing facility to have his or 
her crab processed at that facility, and the

[[Page 65617]]

IPQ holder does not have an ownership interest in that processing 
facility or is otherwise affiliated with the owners of that processing 
facility. In custom processing arrangements, the IPQ holder contracts 
with a facility operator to have the IPQ crab processed according to 
that IPQ holder's specifications. Custom processing arrangements 
typically occur when an IPQ holder does not own a shoreside processing 
facility or cannot economically operate a stationary floating crab 
processor.
    Shortly after implementation of the Program, the Council submitted 
and NMFS approved Amendment 27 to the Crab FMP (74 FR 25449, May 28, 
2009). Amendment 27 was designed to improve operational efficiencies in 
crab fisheries with historically low total allowable catches or that 
occur in more remote regions by exempting certain IPQ crab processed 
under a custom processing arrangement from applying against the IPQ use 
cap of the owner of the facility at which IPQ crab are custom 
processed. For ease of reference, this preamble refers to this 
exemption as a ``custom processing arrangement exemption.'' NMFS refers 
the reader to the preamble to the final rule implementing Amendment 27 
to the Crab FMP for additional information regarding the rationale for 
custom processing arrangement exemptions in specific BSAI crab 
fisheries. Section 680.42(b)(7) describes the three requirements that 
must be met for the custom processing arrangement exemption to apply.
    First, the custom processing arrangement exemption applies to IPQ 
issued in six BSAI crab fisheries. Section 680.42(b)(7)(ii)(A) lists 
the six BSAI crab fisheries for which the custom processing arrangement 
exemption applies--Bering Sea C. opilio with a North Region 
designation, Eastern Aleutian Islands golden king crab, Pribilof 
Islands blue and red king crab, Saint Matthew blue king crab, Western 
Aleutian Islands golden king crab processed west of 174[deg] W. long., 
and Western Aleutian Islands red king crab. As described later in this 
preamble, the custom processing arrangement exemption implemented under 
Amendment 27 does not apply to custom processing arrangements in the 
EBT and WBT crab fisheries.
    Second, the custom processing arrangement exemption applies 
provided there is no affiliation between the person whose IPQ crab is 
processed at that facility and the IPQ holders who own that facility. 
As noted earlier, ``affiliation'' is defined under Sec.  680.2 as a 
relationship between two or more entities where one directly or 
indirectly owns or controls 10 percent or more of the other entity. 
Under Sec.  680.42(b)(7)(i), NMFS does not count IPQ crab that are 
custom processed at a facility owned by an IPQ holder against the IPQ 
use cap of the owner of the processing facility as long as the person 
whose IPQ crab is custom processed at that facility does not directly 
or indirectly own or control 10 percent or more of the entity that owns 
the processing facility. In such a case, NMFS credits a person who 
holds IPQ and who owns a processing facility only with the amount of 
IPQ crab used by that person, or any affiliates of that person, when 
calculating IPQ use caps. In sum, these regulations allow processing 
facility owners who also hold IPQ to use their facility, or facilities, 
to establish custom processing arrangements with other IPQ holders to 
process more crab without exceeding IPQ use caps, thereby increasing 
the amount of crab available for processing at the facility (i.e., 
throughput) and providing a more economically viable processing 
operation. These regulations effectively allow more than 30 percent of 
the IPQ for the six BSAI crab fisheries to be processed at a facility 
if there is no affiliation between the person whose IPQ crab is 
processed at that facility and the IPQ holders who own that facility.
    Third, a custom processing arrangement exemption applies provided 
the facility at which the IPQ crab are custom processed meets specific 
location requirements. Under Sec.  680.42(b)(7)(ii)(B), IPQ crab that 
are custom processed do not count against the IPQ use cap of persons 
owning the facility if the facility is located within the boundaries of 
a home rule, first class, or second class city in the State of Alaska 
in existence on the effective date of regulations implementing 
Amendment 27 (June 29, 2009) and is either 1) a shoreside crab 
processor or 2) a stationary floating crab processor that is located 
within a harbor and moored at a dock, docking facility, or other 
permanent mooring buoy, with specific provisions applicable to the City 
of Atka. The specific provisions applicable to facilities operating 
within the City of Atka are not directly relevant to the EBT and WBT 
crab fisheries and this proposed rule, and are not addressed further. 
Additional information on the location requirements for facilities is 
found in the preamble to the final rule implementing Amendment 27 (74 
FR 25449, May 28, 2009).
    Finally, Sec.  680.7(a)(8) prohibits a shoreside crab processor or 
a stationary floating crab processor in which no IPQ holder has a 10 
percent or greater ownership interest in the processing facility from 
receiving more than 30 percent of the IPQ issued for a particular crab 
fishery. However, as with facilities that have an IPQ holder with a 10 
percent or greater ownership interest, IPQ crab processed at these 
facilities under a custom processing arrangement does not apply against 
the limit on the maximum amount of IPQ crab that can be processed at 
such a facility.
    Regulations implementing Amendment 27 also created a custom 
processing exemption for IPQ crab subject to ROFR provisions (see Sec.  
680.42(b)(7)(ii)(C) and Section 2.5.2.1 of the Analysis). However, as 
noted earlier in this preamble, ROFR requirements do not apply to EBT 
and WBT crab and modifications to IPQ use cap calculations for IPQ crab 
subject to ROFR provisions that were made by Amendment 27 are not 
described further in this proposed rule. As a result of Amendment 27, 
EBT and WBT crab are the only Program fisheries in which all IPQ crab 
apply to the IPQ use caps of the facility owners, even though the 
processing of EBT and WBT is done by the same companies and facilities 
that process all other Program crab fisheries, which have custom 
processing arrangement exemptions and certain exemptions for IPQ crab 
subject to ROFR.

IPQ Use Caps Applicable to the EBT and WBT Crab Fisheries

    As noted earlier, the EBT and WBT crab fisheries are not crab 
fisheries to which the custom processing arrangement exemption applies, 
and EBT and WBT IPQ crab that are processed under a custom processing 
arrangement apply against a person's IPQ use cap if that person owns 
the facility (i.e., has a 10 percent or greater direct or indirect 
ownership interest) at which those IPQ crab are custom processed. Given 
that the EBT and WBT IPQ use caps are set at 30 percent, a minimum of 
four persons who are not affiliated with each other (i.e., a 10 percent 
or greater direct or indirect ownership interest) must receive and 
process EBT or WBT IPQ crab to ensure that all Class A IFQ can be 
delivered and processed with no person exceeding the IPQ use caps.
    When the Council recommended and NMFS implemented Amendment 27, the 
Council and NMFS did not create a custom processing arrangement for the 
EBT and WBT crab fisheries. The preamble to the proposed rule 
implementing Amendment 27 explains that the Council and NMFS did not 
recommend a custom processing arrangement exemption for EBT and WBT IPQ 
crab because EBT and WBT

[[Page 65618]]

crab QS do not have regional landing requirements and therefore can be 
effectively delivered to any otherwise eligible processor with matching 
IPQ in any location (73 FR 54351, September 19, 2008). Table 2-5 in 
Section 2.6.1 of the Analysis shows that during the 2006/2007 crab 
fishing year, there were six processing facilities owned by five 
unaffiliated processors receiving EBT Class A IFQ crab, and there were 
five processing facilities owned by four unaffiliated processors 
receiving WBT Class A IFQ crab. Since then, there has been 
consolidation in the BSAI crab processing sector, thus reducing the 
number of processing facilities that are unaffiliated with one another. 
This consolidation has occurred through the merger of two companies and 
the recent exit of a company from the fishery. Additionally, PQS has 
been purchased by entities that do not own or operate processing 
facilities. As Section 2.6 of the Analysis describes (see ADDRESSES), 
for the first year since the start of the Program, there were only 
three unique unaffiliated persons (processors) who received EBT and WBT 
IPQ crab at their facilities during the 2015/2016 crab fishing year. 
These three processors are the Maruha-Nichiro Corporation, which 
includes Alyeska Seafoods, Peter Pan Seafoods, and Westward Seafoods; 
Trident Seafoods; and Unisea Seafoods. Information in section 2.6 of 
the Analysis explains that these three processors also own and operate 
all of the facilities that processed EBT and WBT IPQ crab during the 
2015/2016 crab fishing year.

Emergency Rule

    At its December 2015 meeting, the Council determined that the 
unforeseen and recent exit of one Tanner crab processor from processing 
caused the remaining processors currently operating in the Bering Sea 
region to be constrained by IPQ use caps in the Tanner crab fisheries. 
With the loss of this unique, unaffiliated processor, less than the 
required minimum of four unique and unaffiliated processors remain 
active in the EBT and WBT crab fisheries; therefore, only 90 percent of 
the Class A IFQ could have been delivered to, and only 90 percent of 
the IPQ could have been used at, facilities owned and operated by the 
remaining processors--Maruha-Nichiro Corporation, Trident Seafoods, and 
Unisea Seafoods--without exceeding the IPQ use caps. The remaining 10 
percent of the EBT Class A IFQ/IPQ and WBT Class A IFQ/IPQ would have 
had to be delivered to processing facilities unaffiliated with these 
three processors, or left unharvested (see Section 2.6.1 of the 
Analysis for more detail). Based on these conditions and the low 
probability that a new, unaffiliated processor would enter the fishery 
at that time, the Council voted to request that NMFS promulgate an 
emergency rule to temporarily allow a custom processing exemption to 
the IPQ use caps for the 2015/2016 crab fishing year in the EBT and WBT 
crab fisheries. Without emergency action, 10 percent of the Tanner crab 
Class A IFQ likely would have been stranded (826,322 pounds of EBT and 
615,489 pounds of WBT for the 2015/2016 crab fishing year).
    The Council and NMFS considered a range of factors before the 
Council recommended and NMFS implemented the emergency rule. First, the 
Council and NMFS considered whether developing or using an alternative 
shorebased processing facility in the Bering Sea that was not 
affiliated with the Maruha-Nichiro Corporation, Trident Seafoods, or 
Unisea Seafoods would be a feasible processing option for the remainder 
of the 2015/2016 crab fishing year. At the time, there was no 
unaffiliated company that expressed interest in entering the fishery. 
Additionally, the Council and NMFS determined that the regulatory 
closure date for the EBT and WBT crab fisheries provided very limited 
time for IPQ holders to find an alternative processing facility.
    Second, the Council and NMFS also considered whether alternative 
shoreside processing facilities not affiliated with the Maruha-Nichiro 
Corporation, Trident Seafoods, or Unisea Seafoods, such as facilities 
in Kodiak, AK, could be used. The Council and NMFS concluded that 
transporting EBT or WBT crab to those locations would result in longer 
trips with increased fuel and operating costs for harvesters, result in 
lost fishing days while the crab are being transported, and increase 
the potential for deadloss (death) of crab.
    Third, the Council and NMFS considered whether the use of a 
stationary floating crab processor would be a feasible processing 
option for the remainder of the 2015/2016 crab fishing year. At the 
time, there was no unaffiliated company that expressed interest in 
entering the fishery. The Council and NMFS concluded that establishing 
a contract with a stationary floating crab processor, outfitting the 
vessel, and establishing a market for delivered Class A IFQ EBT and WBT 
crab in the short amount of time available before the end of the 
fisheries during the 2015/2016 crab fishing year would present many of 
the same logistical challenges that are present for alternative 
shoreside processing facilities. These factors made it highly unlikely 
that a new, unaffiliated processor would enter the fishery using a 
floating processor.
    Finally, the Council and NMFS determined that any IPQ holder hoping 
to secure an alternative shoreside processing facility or a stationary 
floating crab processor during the 2015/2016 crab fishing year would 
have had very little negotiating leverage with any unaffiliated 
processing facility given the amount of time remaining for the EBT and 
WBT crab season. That lack of negotiating leverage in establishing 
delivery terms and conditions could impose additional costs on IPQ 
holders and harvesters that may make such deliveries uneconomic. The 
Council and NMFS concluded that there did not appear to be any viable 
delivery options available for 10 percent of the EBT and WBT Class A 
IFQ during the remainder of the 2015/2016 crab fishing year.
    On January 26, 2016 (81 FR 4206), NMFS published an emergency rule 
that temporarily exempted EBT and WBT IPQ crab that was custom 
processed at a facility through contractual arrangements with the 
facility owners from being applied against the IPQ use cap of the 
facility owners. The temporary rule expired on June 30, 2016. 
Additional detail on the factors considered by the Council and NMFS are 
described in the preamble to the emergency rule (January 26, 2016, 81 
FR 4206).

This Proposed Rule and Its Anticipated Effects

    At its June 2016 meeting, the Council voted to recommend Amendment 
47, which would create a custom processing arrangement exemption for 
EBT and WBT crab. The Council determined that all of the factors that 
supported their recommendation for an emergency rule for the 2015/2016 
crab fishing year continue to exist. The Council recognized that 
consolidation within the Tanner crab processing sector has constrained 
the ability of the processing sector to process all of the EBT and WBT 
Class A IFQ crab without exceeding the IPQ use caps. The Council 
determined that without additional unique and unaffiliated processing 
facilities entering the Tanner crab processing sector for the 2016/2017 
crab fishing year or beyond, there is a significant risk that the 
portion of the Tanner crab allocation in excess of the caps would not 
be processed. Without the ability to have all EBT and WBT Class A IFQ 
processed, that portion of the Tanner crab allocation in excess of the 
caps would likely go unharvested

[[Page 65619]]

because sufficient processing facilities do not exist in the Bering Sea 
region.
    The Council also acknowledged that while additional consolidation 
within the EBT and WBT processing sector could occur under Amendment 
47, the Council does not expect additional consolidation to occur for 
reasons explained below. NMFS also did not intend for the IPQ use caps 
to strand a portion of the fishery, however, without the proposed 
exemption, harvesters, processors, and communities would lose the 
potential benefits from the stranded portion of crab. The management 
objective of this action is to provide a custom processing arrangement 
exemption for the EBT and WBT crab fisheries so that the full Tanner 
crab allocation can be harvested and processed.

Proposed Regulations To Implement Amendment 47

    This proposed rule would modify Sec.  680.42(b)(7)(ii)(A) by adding 
EBT and WBT IPQ crab to the list of BSAI crab fisheries already 
receiving a custom processing arrangement exemption. This would allow 
EBT and WBT IPQ crab received for custom processing by the three 
processors currently operating in these fisheries to qualify for a 
custom processing arrangement exemption and not apply against the IPQ 
use caps for these processors. With this proposed rule, all EBT and WBT 
IPQ crab received under custom processing arrangements at the 
facilities owned by the three existing EBT and WBT processors (Maruha-
Nichiro Corporation, Trident Seafoods, or Unisea Seafoods) would not be 
counted against the IPQ use cap of the facility or the facility owners. 
The custom processing arrangement exemption would allow these 
processors to custom process crab for unaffiliated IPQ holders who have 
custom processing arrangements with the processors, thereby allowing 
harvesters to fully harvest and deliver their EBT and WBT Class A IFQ 
crab to IPQ holders with a custom processing arrangement at facilities 
operating in these fisheries.
    The anticipated effects of this proposed rule include allowing the 
full processing of all EBT and WBT Class A IFQ crab and the associated 
economic and social benefits of that processing activity for 
harvesters, the existing Tanner crab processors, and the communities 
where processing facilities are located. These communities include 
Akutan, Dutch Harbor/Unalaska, King Cove, and Saint Paul. The proposed 
rule would allow all of the Tanner crab Class A IFQ to be harvested and 
processed by existing processors and thus avoid the adverse economic 
and social impacts created by the lack of adequate processing capacity 
that would otherwise result if the EBT and WBT crab fisheries could not 
be fully processed. Ten percent of the EBT and WBT Class A IFQ crab 
represents approximately $3.4 million in ex-vessel value and $4.95 
million in first wholesale value based on estimated ex-vessel and first 
wholesale values of EBT and WBT crab in the 2015/2016 crab fishing year 
(see Section 2.9 of the Analysis for additional detail).
    The Council and NMFS considered whether this proposed rule could 
result in further consolidation of Tanner crab processing to fewer 
facilities than currently operating. Under this proposed rule, there 
would be no regulatory barriers for processing companies to further 
consolidate processing facilities for Tanner crab. Since EBT and WBT 
crab are not subject to regionalization or ROFR, there would be no 
regulatory limitations preventing all of the EBT and WBT IPQ crab from 
being processed by one company at one facility.
    The Council and NMFS determined that operational factors make it 
unlikely that additional consolidation will occur. First, the extent to 
which the proposed exemption allows further consolidation depends on 
whether processors choose to enter custom processing arrangements with 
IPQ holders. The choice to enter those arrangements would depend 
largely on the benefit to the IPQ holder arising from using the IPQ at 
the holder's own facility or custom processing the IPQ at a plant 
unaffiliated with the IPQ holder. Collectively, the three companies and 
their facilities that process Tanner crab have substantial holdings of 
IPQ (see Table 2-3 of the Analysis). It is likely more economical for 
these companies to process the IPQ they hold at their facilities rather 
than negotiate a custom processing agreement with another processor, 
which would reduce the likelihood of further consolidation.
    Second, the extent of further consolidation depends on the business 
decisions that participants make regarding their participation in other 
crab fisheries, such as Bristol Bay red king crab and Bering Sea 
opilio. None of the current Tanner crab processors only process Tanner 
crab; all companies and facilities that process Tanner crab also 
process Bristol Bay red king crab and Bering Sea opilio. Crab 
processing tends to be labor intensive, requiring relatively large 
crews. The cost of transporting, housing, and provisioning crews to run 
crab processing lines at a plant can be high. Processors that are 
active in other BSAI crab fisheries may be more likely to continue 
processing in the Tanner crab fisheries to help maintain a consistent 
amount of crab available for processing at the facility (see Section 
2.9.2 of the Analysis for more information).
    Third, processors are likely to maintain processing facilities near 
the fishing grounds. Proximity to the fishing grounds may help prevent 
or reduce deadloss, dead crab landed at the dock, which is associated 
with increased transit time between the fishing grounds and offload. 
Additionally, proximity to the fishing grounds can help harvesters 
maximize their efficiency and prevent the need to spend significant 
time transiting to and from processing facilities for offload. Given 
these factors, the Council and NMFS concluded that additional 
consolidation of processing activity in the EBT and WBT fisheries is 
unlikely under current and projected operations.
    The proposed rule would provide a benefit to processors willing to 
custom process Class A IFQ for EBT and WBT crab, and those IPQ holders 
that do not own processing facilities and must have their crab custom 
processed. The proposed custom processing arrangement exemption for EBT 
and WBT IPQ crab would avoid the adverse economic impacts created by 
the 30 percent IPQ use cap for Tanner crab fisheries to IPQ holders 
that own and operate processing facilities. This proposed rule would 
also benefit those IPQ holders that do not have processing facilities 
since their IPQ could be custom processed by an existing facility and 
their custom processing arrangement would not count against the 30 
percent IPQ use cap (see Section 2.9.2 of the Analysis for further 
information).
    This proposed rule is expected to benefit harvesters who hold Class 
A IFQ for EBT and WBT crab. Without this proposed rule, harvesters with 
EBT or WBT Class A IFQ likely would be unable to fully harvest 
allocations provided to them due to IPQ use cap limitations imposed on 
IPQ holders and the three existing processors that receive EBT and WBT 
crab. This proposed rule would allow Class A IFQ holders in the EBT and 
WBT crab fisheries to fully harvest their IFQ allocations, because 
those Class A IFQ holders who match with IPQ holders that do not own 
processing facilities would be able to deliver their IFQ to a 
processing facility that has a custom processing arrangement with that 
IPQ holder.
    The effects of this proposed rule on communities and community 
sustainability are expected to be

[[Page 65620]]

beneficial. This proposed rule would continue the delivery of EBT and 
WBT Class A IFQ crab to processors at facilities owned by the Maruha-
Nichiro Corporation, Trident Seafoods, or Unisea Seafoods in BSAI 
communities. This would increase economic activity, the amount of 
income generated, and the amount of tax revenues in communities where 
existing processing facilities are located relative to not creating an 
exemption. Therefore, the effects of the proposed rule would be 
beneficial overall to communities with processors with EBT and WBT IPQ 
as compared with no action. However, if further consolidation occurs 
under this proposed action, companies may suspend crab processing at 
facilities in particular communities, causing adverse economic impacts 
on communities that lose Tanner crab processing activity. As explained 
above, there are several factors that make further consolidation 
unlikely.
    Although this proposed rule would provide a benefit to the existing 
three processors with processing facilities, this rule would not 
preclude the ability for new, unaffiliated processing companies to 
enter the EBT and WBT fisheries, establish custom processing 
arrangements with IPQ holders, and process EBT and WBT crab. Section 
2.9.2 of the Analysis provides more detail on the potential for new 
unaffiliated processing companies to enter the EBT and WBT crab 
fisheries.

Proposed Regulation To Make a Minor Clarification

    This proposed rule would also modify Sec.  680.42(b)(7)(ii)(B) to 
clarify the meaning of the phrase ``on the effective date of this 
rule'' that occurs in Sec.  680.42(b)(7)(ii)(B). The phrase ``on the 
effective date of this rule'' in Sec.  680.42(b)(7)(ii)(B) refers to 
the effective date of the regulations that implemented Amendment 27 to 
the Crab FMP and that added Sec.  680.42(b)(7)(ii)(B) to the 
regulations (74 FR 25449, May 28, 2009). Regulations implementing 
Amendment 27 to the Crab FMP were published on May 28, 2009, and became 
effective on June 29, 2009. The phrase ``on the effective date of this 
rule'' was inadvertently left in the regulatory text and not replaced 
with the actual effective date of the rule. This proposed rule would 
revise the phrase ``on the effective date of this rule'' to read ``on 
June 29, 2009'' to reduce any confusion about the applicable date for 
the requirements in Sec.  680.42(b)(7)(ii)(B). This minor correction 
does not substantively change the intent or effect of Sec.  
680.42(b)(7)(ii)(B).

Classification

    Pursuant to sections 304(b)(1)(A) and 305(d) of the Magnuson-
Stevens Act, the NMFS Assistant Administrator has determined that this 
proposed rule is consistent with Amendment 47, the Crab FMP, other 
provisions of the Magnuson-Stevens Act, and other applicable law, 
subject to further consideration of comments received during the public 
comment period.
    This proposed rule has been determined to be not significant for 
the purposes of Executive Order 12866.
    An initial regulatory flexibility analysis (IRFA) was prepared, as 
required by section 603 of the Regulatory Flexibility Act. The IRFA 
describes the economic impact this proposed rule, if adopted, would 
have on small entities. Copies of the IRFA are available from NMFS (see 
ADDRESSES).
    The IRFA describes this proposed rule, why this rule is being 
proposed, the objectives and legal basis for this proposed rule, the 
type and number of small entities to which this proposed rule would 
apply, and the projected reporting, recordkeeping, and other compliance 
requirements of this proposed rule. It also identifies any overlapping, 
duplicative, or conflicting Federal rules and describes any significant 
alternatives to this proposed rule that would accomplish the stated 
objectives of the Magnuson-Stevens Act and other applicable statutes 
and that would minimize any significant adverse economic impact of this 
proposed rule on small entities. The description of this proposed rule, 
its purpose, and its legal basis are described in the preamble and are 
not repeated here.

Number and Description of Small Entities Regulated by This Proposed 
Rule

    For Regulatory Flexibility Act purposes only, NMFS has established 
a small business size standard for businesses, including their 
affiliates, whose primary industry is commercial fishing (see 50 CFR 
200.2). A business primarily engaged in commercial fishing (NAICS code 
11411) is classified as a small business if it is independently owned 
and operated, is not dominant in its field of operation (including its 
affiliates), and has combined annual receipts not in excess of $11 
million for all its affiliated operations worldwide.
    The Small Business Act (SBA) has established size criteria for all 
other major industry sectors in the United States, including fish 
processing businesses. On January 26, 2016, the SBA issued a final rule 
revising the small business size standards for several industries, 
effective February 26, 2016 (81 FR 4469). The final rule modified the 
size standard for ``seafood product preparation and packaging'' (NAICS 
code 311710) that applies to seafood processors. The final rule also 
modified the definition of a small entity operating as a seafood 
processor to include all entities that are independently owned and 
operated, not dominant in their field of operation, and have a combined 
annual employment of fewer than 750 or fewer persons on a full-time, 
part-time, temporary, or other basis, at all their affiliated 
operations worldwide.
    The entities directly regulated by this action are those entities 
that process EBT and WBT crab. It does not include entities that 
harvest Class A IFQ EBT and WBT crab. From 2012 through 2014, there 
were no processors considered small entities that would have been 
directly regulated by the proposed action.
    This action would also directly regulate registered crab receivers 
(RCRs) as all Program crab must be received by an RCR. Some RCRs are 
the same entities that process Tanner crab, and others are those that 
have their Tanner crab custom processed. In 2015/2016, there were 10 
RCRs that received Tanner crab, seven of which are considered large 
entities due to their affiliations with large seafood processing 
companies. The remaining three are considered small entities because 
they are not-for-profit organizations.

Recordkeeping and Reporting Requirements

    This proposed action would not require any new recordkeeping and 
reporting requirements, or any modification of existing requirements.

Federal Rules That May Duplicate, Overlap, or Conflict With This 
Proposed Rule

    No relevant Federal rules have been identified that would 
duplicate, overlap, or conflict with this proposed rule.

Description of Significant Alternatives to This Proposed Rule That 
Minimize Economic Impacts on Small Entities

    The action alternative would allow the full harvest and processing 
of the Tanner crab total allowable catch. This action is not expected 
to have negative economic impacts on the small entities directly 
impacted by this action. The Council also considered a limited duration 
option which would have created a temporary rule to provide a fix for 
the near term, but would require the Council to take further action if 
it intended to create a more long-term

[[Page 65621]]

revision. The Council did not select this option as it already has the 
ability to examine processing activity in the Tanner crab fishery at 
any time and take future action on this subject. This option would not 
have had less economic impact on small entities as compared to the 
proposed rule as the proposed rule is not expected to have negative 
impacts.

List of Subjects in 50 CFR Part 680

    Alaska, Reporting and recordkeeping requirements.

    Dated: September 19, 2016.
Samuel D. Rauch III,
Deputy Assistant Administrator for Regulatory Programs, National Marine 
Fisheries Service.

    For the reasons set out in the preamble, 50 CFR part 680 is 
proposed to be amended as follows:

PART 680--SHELLFISH FISHERIES OF THE EXCLUSIVE ECONOMIC ZONE OFF 
ALASKA

0
1. The authority citation for 50 CFR part 680 continues to read as 
follows:

    Authority: 16 U.S.C. 1862; Pub. L. 109-241; Pub. L. 109-479.

0
2. In Sec.  680.42, revise paragraphs (b)(7)(ii) introductory text, and 
(b)(7)(ii)(A) and (B) to read as follows:


Sec.  680.42  Limitations on use of QS, PQS, IFQ, and IPQ.

* * * * *
    (b) * * *
    (7) * * *
    (ii) The IPQ crab meets the conditions in paragraphs (b)(7)(ii)(A) 
and (B) of this section or the IPQ crab meets the conditions in 
paragraph (b)(7)(ii)(C) of this section:
    (A) The IPQ crab is:
    (1) BSS IPQ crab with a North region designation;
    (2) EAG IPQ crab;
    (3) EBT IPQ crab;
    (4) PIK IPQ crab;
    (5) SMB IPQ crab;
    (6) WAG IPQ crab provided that IPQ crab is processed west of 174 
degrees west longitude;
    (7) WAI IPQ crab; or
    (8) WBT IPQ crab.
    (B) That IPQ crab is processed at:
    (1) Any shoreside crab processor located within the boundaries of a 
home rule, first class, or second class city in the State of Alaska in 
existence on June 29, 2009; or
    (2) Any stationary floating crab processor that is:
    (i) Located within the boundaries of a home rule, first class, or 
second class city in the State of Alaska in existence on June 29, 2009;
    (ii) Moored at a dock, docking facility, or at a permanent mooring 
buoy, unless that stationary floating crab processor is located within 
the boundaries of the city of Atka in which case that stationary 
floating crab processor is not required to be moored at a dock, docking 
facility, or at a permanent mooring buoy; and
    (iii) Located within a harbor, unless that stationary floating crab 
processor is located within the boundaries of the city of Atka on June 
29, 2009, in which case that stationary floating crab processor is not 
required to be located within a harbor.
* * * * *
[FR Doc. 2016-22911 Filed 9-22-16; 8:45 am]
 BILLING CODE 3510-22-P