Fisheries of the Exclusive Economic Zone Off Alaska; Allocating Bering Sea and Aleutian Islands King and Tanner Crab Fishery Resources, 10174-10295 [05-3486]

Agencies

• DEPARTMENT OF COMMERCE
• National Oceanic and Atmospheric Administration

[Federal Register Volume 70, Number 40 (Wednesday, March 2, 2005)]
[Rules and Regulations]
[Pages 10174-10295]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-3486]



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Part II





Department of Commerce





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National Oceanic and Atmospheric Administration



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15 CFR Part 902

50 CFR 679 and 6805



Fisheries of the Exclusive Economic Zone Off Alaska; Allocating Bering 
Sea and Aleutian Islands King and Tanner Crab Fishery Resources; Final 
Rule

Federal Register / Vol. 70, No. 40 / Wednesday, March 2, 2005 / Rules 
and Regulations

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DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

15 CFR Part 902

50 CFR Parts 679 and 6805

[Docket No. 040831251-5032-02; I.D. 082504A]
RIN 0648-AS47


Fisheries of the Exclusive Economic Zone Off Alaska; Allocating 
Bering Sea and Aleutian Islands King and Tanner Crab Fishery Resources

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

ACTION: Final rule.

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SUMMARY: NMFS issues a final rule implementing Amendments 18 and 19 to 
the Fishery Management Plan for Bering Sea/Aleutian Islands (BSAI) King 
and Tanner Crabs (FMP). Amendments 18 and 19 amend the FMP to include 
the Voluntary Three-Pie Cooperative Program (hereinafter referred to as 
the Crab Rationalization Program or Program). Congress amended the 
Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-
Stevens Act) to require the Secretary of Commerce to approve and 
implement the Program. The action is necessary to increase resource 
conservation, improve economic efficiency, and improve safety. This 
action is intended to promote the goals and objectives of the Magnuson-
Stevens Act, the FMP, and other applicable law.

DATES: Effective on April 1, 2005.

ADDRESSES: Copies of Amendments 18 and 19, the Final Regulatory 
Flexibility Analysis (FRFA), and the Environmental Impact Statement 
(EIS) for this action may be obtained from the NMFS Alaska Region, P.O. 
Box 21668, Juneau, AK 99802, Attn: Lori Durall, and on the Alaska 
Region, NMFS, Web site at https://www.fakr.noaa.gov/
sustainablefisheries/crab/eis/default.htm. The EIS contains as 
appendices the Regulatory Impact Review (RIR), Initial Regulatory 
Flexibility Analysis (IRFA), and Social Impact Assessment (SIA) 
prepared for this action.
    Written comments regarding the burden-hour estimates or other 
aspects of the collection-of-information requirements contained in this 
final rule may be submitted to NMFS, Alaska Region, and by e-mail to 
David--Rostker@omb.eop.gov, or fax to 202-395-7285.

FOR FURTHER INFORMATION CONTACT: Susan Salveson, 907-586-7228 or 
sue.salveson@noaa.gov.

SUPPLEMENTARY INFORMATION: In January 2004, the U.S. Congress amended 
section 313(j) of the Magnuson-Stevens Act through the Consolidated 
Appropriations Act of 2004 (Pub. L. 108-199, section 801). As amended, 
section 313(j)(1) requires the Secretary to approve and implement by 
regulation the Program, as it was approved by the North Pacific Fishery 
Management Council (Council) between June 2002 and April 2003, and all 
trailing amendments, including those reported to Congress on May 6, 
2003. In June 2004, the Council consolidated its actions on the Program 
into the Council motion, which is contained in its entirety in 
Amendment 18. Additionally, in June 2004, the Council developed 
Amendment 19, which represents minor changes necessary to implement the 
Program. The Notice of Availability for these amendments was published 
in the Federal Register on September 1, 2004 (69 FR 53397). NMFS 
approved Amendments 18 and 19 on November 19, 2004.
    NMFS published a proposed rule to implement Amendments 18 and 19 in 
the Federal Register on October 29, 2004 (69 FR 63200). NMFS solicited 
public comments on the proposed rule through December 13, 2004. NMFS 
received 49 letters of public comment. NMFS summarized these letters 
into 234 separate comments, and responded to them under Response to 
Comments, below.
    The Program allocates BSAI crab resources among harvesters, 
processors, and coastal communities. The Council developed the Program 
over a 6-year period to accommodate the specific dynamics and needs of 
the BSAI crab fisheries. The Program builds on the Council's 
experiences with the halibut/sablefish Individual Fishing Quota (IFQ) 
program and the American Fisheries Act (AFA) cooperative program for 
Bering Sea pollock. The Program is a limited access system that 
balances the interests of several groups who depend on these fisheries. 
The Program addresses conservation and management issues associated 
with the current derby fishery, reduces bycatch and associated discard 
mortality, and increases the safety of crab fishermen by ending the 
race for fish. Share allocations to harvesters and processors, together 
with incentives to participate in crab harvesting cooperatives, will 
increase efficiencies, provide economic stability, and facilitate 
compensated reduction of excess capacities in the harvesting and 
processing sectors. Community interests are protected by Community 
Development Quota (CDQ) allocations and regional landing and processing 
requirements, as well as by several community protection measures.
    This preamble first provides a Crab Rationalization Program 
overview that presents a general description of all of the Program 
components. Subsequent sections address the response to public comments 
and changes in the rule from proposed to final. Please refer to the 
proposed rule for additional information on the Program.

Crab Rationalization Program Overview

    The Program applies to the following BSAI crab fisheries: Bristol 
Bay red king crab (Paralithodes camtschaticus), Western Aleutian 
Islands (Adak) golden king crab (Lithodes aequispinus)--west of 
174[deg] W. long., Eastern Aleutian Islands (Dutch Harbor) golden king 
crab--east of 174[deg] W. long., Western Aleutian Islands (Adak) red 
king crab--west of 179[deg] W. long., Pribilof Islands blue king crab 
(P. platypus) and red king crab, St. Matthew Island blue king crab, 
Bering Sea snow crab (Chionoecetes opilio), and Bering Sea Tanner crab 
(C. bairdi). Golden king crab is also known as brown king crab. In this 
document, the phrases ``crab fishery'' and ``crab fisheries'' refer to 
these fisheries, unless otherwise specified. A License Limitation 
Program (LLP) license will no longer be required to participate in 
these crab fisheries.
    Several crab fisheries under the FMP are excluded from the Program, 
including the Norton Sound red king crab fishery, which is operated 
under a ``superexclusive'' permit program intended to protect the 
interests of local, small-vessel participants. Also excluded from this 
Program are the Aleutian Islands Tanner crab fishery, Aleutian Islands 
red king crab fishery east of 179[deg] W. long., and the Bering Sea 
golden king crab, scarlet king crab (L. couesi), triangle Tanner crab 
(C. angulatus), and grooved Tanner crab (C. tanneri) fisheries. An LLP 
license will be required to participate in the FMP crab fisheries 
excluded from the Program.

Harvest Sector

    Qualified harvesters are allocated quota share (QS) in each crab 
fishery. To receive a QS allocation, a harvester must hold a permanent, 
fully transferable LLP license endorsed for that crab fishery. Using 
LLP licenses for defining eligibility in the Program maintains current 
fishery participation. Quota

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share represents an exclusive but revokable privilege that provides the 
QS holder with an annual allocation to harvest a specific percentage of 
the total allowable catch (TAC) from a fishery. IFQs are the annual 
allocations of pounds of crab for harvest that represent a QS holder's 
percentage of the TAC. A harvester's allocation of QS for a fishery is 
based on the landings made by his or her vessel in that fishery. 
Specifically, each allocation is the harvester's average annual portion 
of the total qualified catch during a specific qualifying period. 
Qualifying periods were selected to balance historical and recent 
participation. Different periods were selected for different fisheries 
to accommodate closures and other circumstances in the fisheries in 
recent years.
    Quota share is designated as either catcher vessel (CV) shares or 
catcher/processor (CP) shares, depending on the nature of the LLP 
license and whether the vessel processed the qualifying harvests on 
board. Catcher vessel IFQ will be issued in two classes, Class A IFQ 
and Class B IFQ. Crabs harvested with Class A IFQ will require delivery 
to a processor holding unused processing quota. Class A IFQ landings 
also will be subject to a regional delivery requirement. Under this 
regional requirement, landings will be delivered either in a North or 
in a South region (in most fisheries). Crabs harvested with Class B IFQ 
can be delivered to any processor and will not be regionally 
designated. Landings in excess of IFQ will be forfeited in all cases. 
Class B IFQ are intended to provide ex-vessel price negotiating 
leverage to harvesters. For each region of each fishery, the allocation 
of Class B IFQ will be 10 percent of the total allocation of IFQ to the 
CV sector.
    Transfer of QS and IFQ, either by sale or lease, will be allowed, 
subject to limits including caps on the amount of shares a person may 
hold or use. To be eligible to receive transferred QS or IFQ, a person 
must meet specific eligibility criteria. Initial recipients of QS, CDQ 
groups, and eligible crab community entities are exempt from the 
transfer eligibility criteria.
    Separate caps will be imposed to limit the amount of QS and IFQ a 
person can hold and to limit the use of IFQ on board a vessel. These 
caps are intended to prevent negative impacts from what can be 
described as excessive consolidation of shares. Excessive share 
holdings are prohibited by the Magnuson-Stevens Act. Different caps 
were chosen for the different fisheries because fleet characteristics 
and dependence differ across fisheries. Separate caps on QS holdings 
are established for CDQ groups, which represent rural western Alaska 
communities. Processor holdings of QS will also be limited by caps on 
vertical integration. Quota share holders can retain and use initial 
allocations of QS above the caps.

Crew Sector

    To protect their interests in the fisheries, qualifying crew will 
be allocated 3 percent of the initial QS pool. These shares are 
intended to provide long term benefits to captains and crew. The 
Council originally intended this provision to apply only to vessel 
captains. However, NMFS has determined that documentation necessary to 
allocate Crew QS, called C shares by the Council, requires that these 
shares be initially issued to individuals who hold a State of Alaska 
Interim Use Permit. In most cases, this individual will be the captain; 
however, the State does not require that the holder of the Interim Use 
Permit be the vessel captain. The allocation to crew will be based on 
the same qualifying years and computational method used for QS 
allocations to LLP license holders. Crew (C) QS will be issued as CVC 
QS and CPC QS, depending on the activity in the qualifying years. To 
ensure that Crew QS and IFQ benefit at-sea participants in the 
fisheries, Crew IFQ can be used only when the IFQ holder is on board 
the vessel.
    To be eligible to receive an allocation, an individual is required 
to have historic and recent participation. Historic participation is 
demonstrated by at least one landing in each of three of the qualifying 
years. Recent participation is demonstrated by at least one landing in 
two of the three most recent seasons, with some specific exceptions.
    CV Crew IFQ (called CVC IFQ) will be required to be delivered to 
shore-based processors for processing. CVC IFQ is not subject to 
specific delivery requirements until July 1, 2008. After July 1, 2008, 
CVC IFQ will be subject to the Class A IFQ/Class B IFQ distinction with 
commensurate regional delivery requirements unless the Council 
determines, after review, not to apply those designations. Before July 
1, 2007, the Council intends to review CVC IFQ landing patterns to 
determine whether the distribution of landings among processors and 
communities of CVC IFQ differs from the distribution of IFQ landings.
    CP crew will be allocated CPC QS and IFQ that include a harvesting 
and on-board processing privilege. Crab harvested with CPC IFQ also can 
be delivered to shore-based processors.
    Crew QS and IFQ can be transferred to eligible individuals. Leasing 
of Crew IFQ is permitted before July 1, 2008. After July 1, 2008, 
leasing will be permitted only in the case of a documented hardship 
(such as a medical hardship or loss of vessel) for the term of the 
hardship, subject to a maximum of 2 years over a 10-year period. Use 
caps apply to individual Crew QS holdings.

Processing Sector

    A processing privilege, analogous to the harvesting privilege 
allocated to harvesters, will be allocated to processors. Qualified 
processors will be allocated processor quota share (PQS) in each crab 
fishery. PQS represents an exclusive but revocable privilege to receive 
deliveries of a specific portion of the annual TAC from a fishery. The 
annual allocation of pounds of crab based on the PQS is IPQ. IPQ will 
be issued for 90 percent of the IFQ allocated harvesters, equaling the 
amount of IFQ allocated as Class A IFQ. Processor privileges will not 
apply to the remaining TAC allocated as Class B IFQ, or for Crew IFQ 
until July 1, 2008. IPQs will be regionally designated for processing 
(corresponding to the regional designation of the Class A IFQ).
    PQS allocations are based on processing history during a specified 
qualifying period for each fishery. A processor's initial allocation of 
PQS in a fishery will equal its share of all qualified pounds of crab 
processed in the qualifying period. Processor shares are transferable, 
including the leasing of IPQs and the sale of PQS, subject to caps and 
to community protection measures. IPQs can be used without transfer at 
any facility or plant operated by a processor. New processors can enter 
the fishery by purchasing PQS or IPQ or by purchasing crab harvested 
with Class B IFQ or crab harvested by CDQ groups or the Adak community 
entity.
    A PQS holder is limited to holding 30 percent of the PQS issued for 
a fishery, except that initial allocations of shares above this limit 
can be retained and used. In addition, in the snow crab fishery, no 
processor is permitted to use or hold in excess of 60 percent of the 
IPQs issued for the Northern region.

Catcher/Processor Sector

    Catcher/processors (CPs) have a unique position in the Program 
because they participate in both the harvesting and processing sectors. 
To be eligible for CP QS, a person is required to hold a permanent, 
fully transferable LLP license designated for CP use. In

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addition, a person must have processed crab on board the CP, whose 
history gave rise to the LLP license, in either 1998 or 1999. Persons 
meeting these qualification requirements will be allocated CP QS in 
accordance with the allocation rules for QS for all qualified catch 
that was processed on board. These shares represent a harvest privilege 
and an on-board processing privilege. Catcher/Processor QS does not 
have regional designations.

Regionalization

    The regional delivery requirements for QS are intended to preserve 
the historic geographic distribution of landings in the fisheries. 
Communities in the Pribilof Islands are the prime beneficiaries of this 
regionalization provision. Two regional designations will be created in 
most fisheries. The North region is all areas in the Bering Sea north 
of 56[deg]20' N latitude. The South region is all other areas. Catcher 
vessel QS, Class A IFQ, PQS, and IPQ will be regionally designated. 
Crab harvested with regionally designated IFQ will be required to be 
delivered to a processor in the designated region. Likewise, a 
processor with regionally designated IPQ is required to accept delivery 
of and process crab in the designated region. Legal landings in a 
region in the qualifying years will result in QS and PQS designated for 
that region.
    The Program has two exceptions to the North/South regional 
designations. In the Western Aleutian Islands golden king crab fishery, 
50 percent of the Class A IFQ and IPQ will be designated as west shares 
to be delivered west of 174[deg] W. longitude. The remaining 50 percent 
of the Class A IFQ and IPQ will have no regional designation and will 
not be subject to a regional delivery requirement. The west designation 
will be applied to all Class A IFQ and IPQ regardless of the historic 
location of landings in the fishery. A second exception is the Bering 
Sea Tanner crab fishery, which will have no regional designation. This 
fishery is anticipated to be conducted primarily as a concurrent 
fishery with the regionalized Bristol Bay red king crab and Bering Sea 
snow crab fisheries, making the regional designation of Tanner crab 
landings unnecessary.

Crab Harvesting Cooperatives

    Harvesters may form voluntary crab harvesting cooperatives in order 
to collectively harvest their IFQ holdings. A minimum membership of 
four unique QS holders is required for crab harvesting cooperative 
formation. A crab harvesting cooperative is required to apply for a 
crab harvesting cooperative IFQ permit. The crab harvesting cooperative 
IFQ permit will display the aggregate amount of IFQ in each crab 
fishery that will be yielded by the collective QS holdings of the 
members. IFQ could be transferred between crab harvesting cooperatives, 
subject to NMFS' approval. For inter-cooperative transfers, the crab 
harvesting cooperative will need to designate the crab harvesting 
cooperative member engaged in the transaction for purposes of applying 
the use cap of that member to the IFQ that is being transferred to the 
crab harvesting cooperative. Crab harvesting cooperative members will 
be allowed to leave a crab harvesting cooperative or change crab 
harvesting cooperatives on an annual basis prior to the August 1 
deadline for the annual crab harvesting cooperative IFQ permit 
application. Vessels that are used exclusively to harvest crab 
harvesting cooperative IFQ will not be subject to use caps. Crab 
harvesting cooperatives are free to associate with one or more 
processors to the extent allowed by antitrust law.

Community Protection Measures

    The Program includes several provisions intended to protect 
communities from adverse impacts that could result from the Program. 
Communities eligible for the community protection measures are those 
with 3 percent or more of the qualified landings in any crab fishery 
included in the Program. Based on these criteria, NMFS has determined 
that the following crab communities meet this criteria: Adak, Akutan, 
Unalaska, Kodiak, King Cove, False Pass, St. George, St. Paul, and Port 
Moller. All of these communities are identified as eligible crab 
communities (ECCs) for purposes of community protection measures.
    ``Cooling off'' provision. Until July 1, 2007, PQS and IPQ based on 
processing history from the ECCs can not be transferred from those 
communities. The use of IPQ outside the community during this period is 
limited to 20 percent of the IPQ and for specific hardships. PQS and 
IPQ from three crab fisheries are exempt from the cooling off 
provision: Tanner crab, Western Aleutian Islands red king crab, and 
Western Aleutian Islands golden king crab.
    IPQ issuance limits. IPQ issuance limits are established to limit 
the annual issuance of IPQ in seasons when the Bristol Bay red king 
crab or snow crab TAC exceeds a threshold amount. Under these 
circumstances, Class A IFQ issued in excess of these thresholds will 
not be required to be delivered to a processor with IPQ but will be 
subject to the regional delivery requirements.
    Sea time waiver. Sea time eligibility requirements for the purchase 
of QS are waived for CDQ groups and community entities in ECCs, 
allowing those communities to build and maintain local interests in 
harvesting. CDQ groups and ECCs are eligible to purchase PQS but are 
not permitted to purchase Crew QS.
    Right of first refusal (ROFR). ECCs, except for Adak, will have a 
ROFR on the transfer of PQS and IPQ originating from processing history 
in the community if the transfer will result in relocation or use of 
the shares outside the community. Adak is not eligible for the ROFR 
provision because Adak will receive a direct allocation of Western 
Aleutian Islands golden king crab. In addition, the City of Kodiak and 
the Kodiak Island Borough in the Gulf of Alaska (GOA) have a ROFR on 
the transfer of PQS and IPQ from communities in the GOA north of 
56[deg]20' N. latitude.

Community Development Quota Program and Community Allocations

    Community Development Quota Program. The CDQ Program is be expanded 
to include the Eastern Aleutian Islands golden king crab fishery and 
the Western Aleutian Islands red king crab fishery. In addition, the 
CDQ allocations in all crab fisheries covered by the Program are 
increased from 7.5 to 10 percent of the TAC. The increase will not 
apply to the CDQ allocation of Norton Sound red king crab because this 
fishery is excluded from the Program. The crab CDQ fisheries will be 
managed as separate commercial fisheries by the State under authority 
deferred to it under the FMP. The State will establish observer 
coverage requirements, State permitting requirements, and transfer 
provisions among the CDQ groups. It also will monitor catch to 
determine when IFQ have been reached, enforce any penalties associated 
with IFQ overages, and monitor compliance with the requirement that CDQ 
groups must deliver at least 25 percent of their allocation to shore-
based processors.
    Crab harvested under the CDQ allocations (except Norton Sound red 
king crab) are subject to some of the Federal requirements that apply 
to all crab fisheries under the Program including permitting, 
recordkeeping and reporting, a vessel monitoring system, and the cost 
recovery fees.
    CDQ groups can participate in the crab fisheries as holders of both 
QS and PQS. Some CDQ groups will be initial

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recipients of QS because they hold LLP licenses and the appropriate 
catch history. In addition, CDQ groups are exempt from the transfer 
eligibility requirement related to sea time so they are eligible to 
obtain QS by transfer, subject to QS use caps for CDQ groups. CDQ 
groups also will be able to obtain PQS by transfer because there are no 
transfer restrictions on who can hold PQS. While harvesting crab with 
IFQ, CDQ groups are subject to the same regulations as apply to other 
IFQ holders. The purchase and holding of QS and PQS by the CDQ groups 
is subject to the administrative regulations for the CDQ Program at 50 
CFR part 679. These regulations include information on reporting, prior 
approval, and use requirements for all CDQ investments, which include 
QS and PQS.
    Adak allocation. An allocation of 10 percent of the TAC of Western 
Aleutian Islands golden king crab will be made to the community of 
Adak. The allocation to Adak will be made to a nonprofit entity 
representing the community, with a board of directors elected by the 
community. As an alternative and in the interim, the allocation and 
funds derived from it could be held in trust by the Aleut Enterprise 
Corporation for a period not to exceed 2 years, if the Adak community 
non-profit entity is not formed prior to implementation of the Program. 
Oversight of the use of the allocation for ``fisheries related 
purposes'' is deferred to the State under the FMP. NMFS will have no 
direct role in oversight of the use of this allocation. The State will 
provide an implementation review to the Council to ensure that the 
benefits derived from the allocation accrue to the community and 
achieve the goals of the fisheries development plan. The Adak 
allocation will be managed as a separate commercial fishery by the 
State in a manner similar to management of the crab CDQ fisheries. As 
with the CDQ allocations, crab harvested under the Adak allocation will 
be subject to several requirements that apply to all crab fisheries 
under the Program including permitting, recordkeeping and reporting, a 
vessel monitoring system, and the cost recovery fees.
    Community purchase. Any non-CDQ community in which 3 percent or 
more of any crab fishery was processed could form a non-profit entity 
to receive QS, IFQ, PQ and IPQ transfers on behalf of the community. 
The non-profit entity will be called an eligible crab community 
organization (ECCO).

Protections for Participants in Other Fisheries

    The Program will greatly increase the flexibility for crab 
fishermen to choose when and where to fish for their IFQ, and this 
increased flexibility will provide crab fishermen with increased 
opportunity to participate in other fisheries. Restrictions on 
participation in other fisheries, also called sideboards, will restrict 
a vessel's harvests to its historical landings in all GOA groundfish 
fisheries (except the fixed-gear sablefish fishery). Restrictions will 
be applied to vessels but will also restrict landings made using a 
groundfish LLP license derived from the history of a vessel so 
restricted, even if that LLP license is used on another vessel. 
Groundfish sideboards in the GOA will be managed by NMFS through fleet-
wide sideboard directed fishing closures in Federal waters and for the 
parallel fishery in state waters.

Arbitration System

    BSAI crab fisheries have a history of contentious price 
negotiations. Harvesters have often acted collectively to negotiate an 
ex-vessel price with processors, which at times delayed fishing. The 
Arbitration System was developed to resolve failed price negotiations 
arising from the creation of QS/IFQ and PQS/IPQ. The complications 
include price negotiations that could continue indefinitely and result 
in costly delays and the ``last person standing'' problem where the 
last Class A IFQ holder deliveries will have a single IPQ holder to 
contract with, effectively limiting any ability to use other processor 
markets for negotiating leverage. To ensure fair price negotiations, 
the Arbitration System includes a provision for open negotiations among 
IPQ and IFQ holders as well as various negotiation approaches, 
including: (a) A share matching approach where IPQ holders make known 
to unaffiliated IFQ holders that have uncommitted IFQ available the 
amount of uncommitted IPQ they have available so the IFQ holder can 
match up its uncommitted IFQ by indicating an intent to deliver its 
catch to that IPQ holder; (b) a lengthy season approach that allows 
parties to postpone binding arbitration until sometime during the 
season; and (c) a binding arbitration procedure to resolve price 
disputes between an IPQ holder and eligible IFQ holders.
    The arbitration process will begin preseason with a market report 
for each fishery prepared by an independent market analyst selected by 
the PQS and QS holders and the establishment of a non-binding fleet 
wide benchmark price formula by an arbitrator who has consulted with 
fleet representatives and processors. Information provided by the 
sectors for these reports will be historical in nature and at least 3 
months old. This non-binding price will guide the above described 
negotiations. Information sharing among IPQ and IFQ holders, collective 
negotiations, and release of arbitration results will be limited to 
minimize the antitrust risks of participants in the Program. The 
participants in the Arbitration System will also select Contract 
Arbitrators who will assist in Binding Arbitration.
    The binding arbitration procedure is a last best (or final) offer 
format. The IPQ holder, each IFQ holder, and each crab harvesting 
cooperative could submit an offer. For each IFQ holder or cooperative, 
the arbitrator will select between the IFQ holder's offer and the IPQ 
holder's offer. After an arbitration decision is rendered, an eligible 
IFQ holder with uncommited IFQ could opt-in to the completed contract 
by accepting all terms of the arbitration decision as long as the IPQ 
holder held sufficient uncommitted IPQ.

Monitoring and Enforcement

    NMFS and the State of Alaska will coordinate monitoring and 
enforcement of the crab fisheries. Harvesting and processing activity 
will need to be monitored for compliance with the implementing 
regulations. Methods for catch accounting and catch monitoring plans 
will generate data to provide accurate and reliable round weight 
accounting of the total catch and landings to manage QS and PQS 
accounts, prevent overages of IFQ and IPQ, and determine 
regionalization requirements and fee liabilities. Monitoring measures 
will include landed catch weight and species composition, bycatch, and 
deadloss to estimate total fishery removals.

Economic Data Collection

    The Program includes a comprehensive economic data collection 
program to aid the Council and NMFS in assessing the success of the 
Program and developing amendments necessary to mitigate any unintended 
consequences. An Economic Data Report (EDR), containing cost, revenue, 
ownership, and employment data, will be collected on a periodic basis 
from the harvesting and processing sectors. The data will be used to 
study the economic impacts of the Program on harvesters, processors, 
and communities. Pursuant to section 313(j) of the Magnuson-Stevens 
Act, the data and identifiers will also be used for

[[Page 10178]]

Program enforcement and determination of qualification for QS. 
Consequently, identifiers and data will be disclosed to NOAA 
Enforcement, NOAA GC, the Antitrust Division of the Department of 
Justice, the Federal Trade Commission, and RAM. With limited 
exceptions, participation in the data collection program is mandatory 
for all participants in the crab fisheries.

Cost Recovery and Fee Collection

    NMFS will establish a cost recovery fee system, required by section 
304(d)(2) of the Magnuson-Stevens Act, to recover actual costs directly 
related to the management and enforcement of the Program. The crab cost 
recovery fee will be paid in equal shares by the harvesting and 
processing sectors and will be based on the ex-vessel value of all crab 
harvested under the Program, including CDQ crab and Adak crab. NMFS 
also will enter into a cooperative agreement with the State of Alaska 
to use IFQ cost recovery funds in State management and observer 
programs for BSAI crab fisheries. The crab cost recovery fee is 
prohibited from exceeding 3 percent of the annual ex-vessel value. 
Within this limit, the collection of up to 133 percent of the actual 
costs of management and enforcement under the Program is authorized, 
which provides for fuller reimbursement of management costs after 
allocation of 25 percent of the cost recovery fees to the crew loan 
program.

Crew Loan Program

    To aid captains and crew in purchasing QS, a low interest loan 
program (similar to the loan program under the halibut and sablefish 
IFQ program) will be created. This program will be funded by 25 percent 
of the cost recovery fees as required by the Magnuson-Stevens Act. Loan 
money will be accessible only to active participants and could be used 
to purchase either QS or Crew QS. Quota share purchased with loan money 
will be subject to all use and leasing restrictions applicable to Crew 
QS for the term of the loan. This final rule does not contain 
regulations to implement the crew loan program. The loan program will 
be developed by NMFS Financial Services.

Annual Reports and Program Review

    NMFS, in conjunction with the State of Alaska, will produce annual 
reports on the Program. Before July 1, 2007, the Council will review 
the PQS, binding arbitration, and C share components of the Program. 
After July 1, 2008, the Council will conduct a preliminary review of 
the Program. A full review of the entire Program will be undertaken in 
2010. Additional reviews will be conducted every 5 years. These reviews 
are intended to objectively measure the success of the Program in 
achieving the goals and objectives specified in the Council's problem 
statement and the Magnuson-Stevens Act. These reviews will examine the 
impacts of the Program on vessel owners, captains, crew, processors, 
and communities, and include an assessment of options to mitigate 
negative impacts.

Summary of Regulation Changes in Response to Public Comments

    This section provides a summary of the major changes made to the 
final rule in response to public comments. All of the specific changes, 
and the reasons for making these changes, are contained under Response 
to Comments.

Harvester, Crew, and Processor Sectors

    The following significant changes from the proposed to final rule 
in response to public comments are necessary to meet the requirements 
of Amendment 18 and 19. In the final rule NMFS:
    (1) Revised the way in which Class A IFQ and Class B IFQ are 
allocated to individual IFQ holders who hold PQS or IPQ, or who are 
affiliated with PQS or IPQ holders, so that Class A IFQ is issued in 
proportion to the amount of IPQ that is held by the IPQ holder or 
affiliates.
    (2) Revised the definition of ``affiliation'' to clarify the term 
``otherwise controls''.
    (3) Clarified that CVC QS and IFQ are not subject to regional 
designation and the Class A and Class B IFQ assignment for the first 
three years of the program--until July 1, 2008.
    (4) Revised the QS use caps that apply to non-individual PQS and 
IPQ holders so that the application of those caps considers the QS 
holding of that PQS and IPQ holder and the total QS holdings of all 
persons affiliated with that PQS or IPQ holder.
    (5) Revised the PQS and IPQ use caps that apply to PQS and IPQ 
holders so that the PQS or IPQ holdings of that PQS or IPQ holder and 
the total PQS or IPQ holdings of all persons affiliated with that PQS 
or IPQ holder are used in the calculation of the PQS or IPQ holder's 
caps.
    (6) Clarified that an ``individual and collective'' rule applies 
for computing QS use caps for individual PQS holders, CDQ groups, and 
all other QS holders. This methodology sums all QS holdings by a person 
and the percentage of ownership by that person in any QS holding 
entity. This method is more consistent with Amendment 18.
    (7) Added provisions on applying limits on the amount of ``custom 
processing'' that may be undertaken at any one processing facility, or 
at any facility, or group of facilities that is owned by an IPQ holder.
    (8) Clarified the limited exemption that applies to using legal 
landings based on the activities of a vessel which received an LLP by 
transfer in order to remain in a fishery.

Crab Harvesting Cooperatives

    In response to Council and public comments, NMFS removed the 
requirement in Sec.  680.21 that crab harvesting cooperatives be formed 
under the Fishermen's Collective Marketing Act (FCMA, 15 U.S.C. 512). 
With this change, QS holders that hold PQS and IPQ, as well as QS 
holders affiliated with PQS and IPQ holders, can participate in crab 
harvesting cooperatives. To address antitrust concerns, NMFS: (1) 
Clarified that issuance of a crab harvesting cooperative IFQ permit is 
not a determination that the crab harvesting cooperative is formed or 
is operating in compliance with antitrust laws; and (2) added that 
members of crab harvesting cooperatives, that are not FCMA 
cooperatives, should consult counsel before commencing any activity 
under the crab harvesting cooperative if members are uncertain about 
the legality under the antitrust laws of the crab harvesting 
cooperative's proposed conduct. Additionally, NMFS added definitions of 
crab harvesting cooperatives and FCMA cooperatives at Sec.  680.2.
    Additionally, NMFS changed the regulations at Sec.  680.42(c)(5) so 
that a CVC or CPC QS holder is subject to the owner on board 
restriction regardless of whether he or she joins a crab harvesting 
cooperative. NMFS revised the final rule at Sec.  680.21(a)(1)(iii)(B) 
to allow CVC QS holders who join a crab harvesting cooperative to 
withhold their Class B IFQ from submission to the crab harvesting 
cooperative. This will take effect after the third year of the Program 
when CVC QS becomes subject to the Class A/Class B IFQ split. NMFS 
revised the final rule at Sec.  680.21(a)(1)(iii)(A)-(B) to permit QS 
holders to hold memberships in one crab harvesting cooperative per 
fishery. If a QS holder joins a crab harvesting cooperative for 
fishery, all of that QS holder's IFQ for that fishery will be submitted 
to the crab harvesting cooperative.
    NMFS revised intercooperative transfers at Sec.  680.21(e) to 
require the designation of the members of the crab

[[Page 10179]]

harvesting cooperatives that are engaged in the transfer for purposes 
of applying the use caps of the members to the cooperative IFQ that is 
being transferred between the crab harvesting cooperatives.

ROFR

    The final rule revises proposed provisions for an ECC's ROFR of 
purchase of PQS or IPQ that is being proposed by a PQS/IPQ holder for 
use outside the community. These revisions are in response to public 
comment and are intended to more closely reflect the original intent of 
the Council. First, the final rule clarifies that an ECC has discretion 
on whether or not to designate an ECC entity to represent it in ROFR 
and enter into civil contract arrangements for this purpose. If an ECC 
entity is not designated within a reasonable period of time, then the 
ECC permanently waives its opportunity to exercise ROFR. Second, 
statute terms for civil contracts establishing ROFR between eligible 
ECCs and holders of PQS/IPQ have been removed from the regulations. 
Instead, the regulations now refer to the provisions in section 313(j) 
of the Magnuson-Stevens Act. This approach ensures consistency with the 
Magnuson-Stevens Act and is appropriate because NMFS does not enforce 
these contract terms.

Arbitration System

    NMFS made the following significant changes from the proposed to 
final rule in response to public comments. These changes are necessary 
to meet the requirements of Amendment 18 and 19. In the final rule 
NMFS:
    (1) Clarified that only IFQ holders can initiate the Binding 
Arbitration procedure.
    (2) Revised the timeline for the 2005 season for QS holders and PQS 
holders to join an Arbitration Organization which is responsible for 
selecting a group of experts that can assist in price negotiations: the 
market analyst, formula arbitrator, and contract arbitrator.
    (3) Revised the mechanism for exchanging information between 
uncommitted IPQ holders and uncommitted Arbitration IFQ holders to 
allow for a third-party to provide data in an arms-length relationship.
    (4) Established a minimum of 25 percent of the total IFQ held by an 
FCMA cooperative that must be committed to an IPQ holder in order to 
engage in share matching.
    (5) Clarified the timing under which a Binding Arbitration 
procedure must occur and the process whereby it can occur.
    (6) Clarified the ability of persons to participate in FCMA 
cooperatives and collectively negotiate, and the limits to which FCMA 
cooperatives may exchange information among cooperatives.
    (7) Removed the requirement that the transferors require persons 
receiving QS/IFQ or PQS/IPQ by transfer to join an Arbitration 
Organization, and requiring the transferees to do that themselves.
    (8) Required that CVO IFQ, CVC IFQ after July 1, 2008, and IPQ 
would not be issued for a crab QS fishery until the Market Analyst, 
Formula Arbitrator, or Contract Arbitrators have been selected for that 
fishery.
    (9) Clarified the type of Arbitration Organization which a person 
must join depending on their holdings of QS/IFQ and PQS/IPQ.

Monitoring and Enforcement

    NMFS made two major changes to requirements for CPs as a result of 
public comment. Both changes reduce the burden on participants in the 
crab fishery. First, NMFS reduced the required reporting interval for 
crab catch by CPs from once every twenty four hours to weekly. Second, 
NMFS removed requirements for CPs to provide an observer work area on 
board their vessels. NMFS also clarified regulations governing the use 
of the Interagency Electronic Reporting System (IERS) to ensure that 
vessels that are unable to use the Internet may report catch using an 
alternative, NMFS approved, method such as an email attachment to 
report catch.

Economic Data Collection

    In response to public comment requesting additional time to prepare 
and submit the historic EDRs, the submission interval for the EDR is 
increased from 60 days to 90 days at Sec. Sec.  680.6(a)(2), 
680.6(c)(2), 680.6(e)(2) and 680.6(g)(2), to provide both the time to 
gather records and complete an accurate EDR. Also in response to public 
comment, the time interval allowed for verification of data by all 
submitters is extended in the final rule at Sec.  680.6(i)(2) to 20 
days from the 15 days interval identified in the proposed rule.

Cost Recovery and Fee Collection

    The cost recovery fee system remains relatively unchanged from the 
proposed rule. NMFS received only one comment for the cost recovery fee 
system. NMFS responded affirmatively to this comment by adjusting the 
methodology by which CPs must calculate and submit fees to reduce any 
disparity between fees paid by CPs and shoreside processors. An 
explanation of the revised methodology for CP fee calculation is 
contained in the response to comments.

Response to Comments

Harvest Sector

    Comment 1: QS should belong to the American public, not fishing 
industry. It is not fair to the American public to have the interests 
of only those who enrich themselves have a say over the resource.
    Response: Allocating QS and PQS to fishery participants is a 
provision of Amendment 18. Section 313(j) of the Magnuson-Stevens Act 
requires NMFS to implement the Program provisions as specified in 
Amendment 18.
    Comment 2: If a vessel sinks, it should lose all rights to fish 
forever.
    Response: The sunken vessel provision that allocates QS to LLP 
license holders who have had a vessel sink are part of Amendment 18. 
Under section 313(j) of the Magnuson-Stevens Act, NMFS does not possess 
the discretion to alter the sunken vessel provision as it exists in 
Amendment 18. Any change to this provision requires an amendment to the 
Program and should be addressed with the Council.
    Comment 3: The term ``IFQ TAC'' used in Sec.  680.40(h)(5)(ii) in 
the calculation of the Class A IFQ allocation and the IPQ allocation is 
not defined. Care should be taken in defining the term to show that 
prior to July 1, 2008, CVC QS yield IFQ that are not subject to the 
Class A IFQ landing requirements and that IPQ should be issued for 90 
percent of the CVO IFQ allocation. After July 1, 2008, CVC QS holders 
will receive Class A IFQ and IPQ will be issued for 90 percent of the 
CVO and CVC IFQ allocation. Clarify definition and calculation of IPQ 
and Class A IFQ allocations.
    Response: NMFS agrees and has modified the final rule at Sec.  
680.40(h)(5)(ii) to more clearly reflect the nature of the Class A IFQ, 
the allocations that may occur, and the definition of CVC and CVO QS 
and IFQ.
    Comment 4: Section 680.41(c)(2)(ii)(D)(2)(i) and (ii) does not 
adequately parallel the Council motion. For corporations and other 
entities, one ``owner'' (not ``member'') must meet the sea time 
requirement. In addition, that same owner must hold at least a 20 
percent ownership interest in the entity. The section does not exactly 
parallel these requirements. Use language from the Council motion.
    Response: NMFS agrees and has modified the final rule at

[[Page 10180]]

Sec.  680.41(c)(2)(ii)(D)(2)(i) and (ii) to more clearly show that one 
individual must meet both requirements in order to receive QS or IFQ by 
transfer. However, the final rule maintains the term ``member'' because 
not all persons who may hold QS or PQS will have ``owners.'' As an 
example, non-profit corporations don't have ``owners.''
    Comment 5: The provisions Sec.  680.41(l)(2) and (4) concerning the 
transfer of CVO QS and CVC QS, respectively, should be deleted in their 
entirety. They specifically provide, ``Notwithstanding QS use 
limitations under Sec.  680.42, CVO (CVC) QS may be transferred to any 
person eligible to receive CVO or CPO (CVC or CPC) QS as defined under 
paragraph (c) of this section.'' These provisions appear to override 
any use caps contained at Sec.  680.42 (the only section of the 
regulation defining use caps).
    Response: NMFS agrees and has revised Sec.  680.41(i)(5) in the 
final rule to clarify that the approval criteria for transfer do not 
preclude the use caps at Sec.  680.42.
    Comment 6: The rule limiting the acquisition of LLP licenses (and 
history) in excess of the cap after June 10, 2002, should apply to 
Sec.  680.42(b)(3) and (4) (CDQ caps and vertical integration caps), as 
well as the general caps. Add in control date to this section.
    Response: NMFS agrees and has revised Sec.  680.42(a)(1) to 
accommodate this comment. This revised regulatory text also notes that 
a ``person will not be issued QS in excess of the use cap established 
in this section based on QS derived from landings attributed to an LLP 
license obtained via transfer after June 10, 2002,'' except under 
limited conditions addressed under the response to comment 40. This 
provision would apply to both CDQ groups and the vertical integration 
caps.
    Comment 7: For CDQ groups, the individual and collective rule 
should be used to determine holdings for applying the caps at Sec.  
680.42(b)(3).
    Response: NMFS agrees and has modified the final rule at Sec.  
680.42(b)(3) to clarify that the QS and IFQ use caps apply individually 
and collectively to CDQ groups to meet the intent of Amendment 18.
    Comment 8: Table 7 mixes the concepts of eligibility and 
qualification. Eligibility defines the persons eligible to receive an 
allocation. For CVO and CPO, holders of permanent LLP licenses are 
eligible for an initial allocation. For CVC and CPC, persons meeting 
the historical participation requirement (i.e., landings in 3 of the 
qualifying years for vessels) and recency requirements (i.e., landings 
in 2 of the 3 most recent years) are considered eligible. Once persons 
are found eligible, their allocations are based on the qualifying years 
shown in Column B. The same subset of years would apply to all 
participants (CVO, CPO, CVC, and CPC). Column E is incorrect. In 
addition, Columns C and D define CVC and CPC eligibility, not 
qualification. Revise table to reflect difference between eligibility 
and qualification.
    Response: NMFS agrees and has revised Table 7 in the final rule to 
the reflect the difference between eligibility and qualification.
    Comment 9: Table 7 leaves out the season beginning in 1991 for 
Bering Sea Tanner crab. The seasons shown in (2) and (3) are one 
season, not two. Revise dates in the table to include the 1991 BS 
Tanner season.
    Response: NMFS agrees and has revised the dates in Table 7 to 
include the 1991 BS Tanner crab season in the final rule.
    Comment 10: Table 7 defines seasons with an opening and closing 
date. Often the last landing of the season is made after the closing 
date. The regulation should be clear that legal landings made after the 
closing date will be counted for allocations. Clarify that these 
landings will count for determining allocations.
    Response: NMFS will consider legal landings made after the closing 
date of the fishery in the calculation of PQS and QS to be issued 
provided that the harvests were made during the periods established in 
Table 7.
    Comment 11: Allocating QS only for fisheries for which the holder's 
LLP license is endorsed is unfair, inequitable, and dramatically limits 
the amount of QS an LLP license holder will receive. Specifically, if a 
vessel has substantial history in a crab fishery, but did not qualify 
for an LLP license endorsement for that fishery, then the LLP license 
holder should receive QS based on that history.
    Response: Allocating QS only for catch history in fisheries for 
which the holder's LLP license is endorsed is a provision of the 
Council's motion, which is Amendment 18. Section 313(j) of the 
Magnuson-Stevens Act requires NMFS to implement the Program provisions 
as specified in Amendment 18. The Council developed the method for 
distributing QS based on a linkage to permanent fully transferrable LLP 
license (with limited exemptions) after considerable debate and 
analysis in the EIS/RIR/IRFA prepared to support Amendment 18 and this 
final rule.
    Comment 12: NMFS should explain how QS distribution will 
accommodate resolution of appeals on LLP licenses and on QS allocation 
after initial QS allocation.
    Response: NMFS anticipates that all LLP license appeals that affect 
the interim status of crab LLP licenses will be resolved by the time 
that this action is effective and the application period commences. 
However, other potential sources of Program application claims, for 
example, regarding landings and processing histories, will likely not 
be complete until during or after the application period. Some features 
of the Program such as one-time permanent regional QS and PQS 
assignments require that NMFS base its primary initial issuance 
computations and distribution on as complete a QS/PQS pool as possible. 
Therefore it is essential that all persons who believe they may be 
eligible for QS/PQS apply during the open application period, whether 
or not their LLP license status or other situation makes them 
ineligible for QS/PQS at that time. NMFS would not issue QS unless and 
until a person's crab LLP license gained appropriate status or other 
claim was resolved in their favor by Final Agency Action of RAM, the 
Office of Administrative Appeals, or the Regional Administrator. At 
that time, NMFS would issue QS or PQS as appropriate to their 
application.
    However, no distribution of annual IFQ or IPQ would be made for the 
newly issued QS/PQS until the next time at which NMFS makes a 
distribution of annual TAC to QS/PQS holders for that crab fishery so 
as not to disrupt the balance of existing QS and PQS amounts, 
arbitration agreements, use cap credits, etc. Regional assignments of 
QS/PQS issued initially but on a delayed basis would be based on 
original regional ratios computed from data developed for the primary 
initial QS issuance event.
    Comment 13: Council intent, as stated in Amendment 18, was to 
calculate each holder's QS as a weighted average. The proposed rule, at 
Sec.  680.40(c)(2), uses a simple average determined by calculating the 
holder's percentage in each of the history years, adding up the 
percentages, and dividing by the number of years. This section should 
be changed to comply with Council intent. The Council followed AFA, 
where the boats rejected the simple average approach in favor of adding 
up all the QS holder's pounds in the aggregate, and then dividing by 
the aggregate total pounds in all of the history years (weighted 
average). Guideline harvest level (GHL) volatility in snow crab, for 
example, illustrates why. The aggregate annual landings vary 
significantly over the history years, meaning that a QS holder with 
very high landings in a low

[[Page 10181]]

GHL year would get more QS than a consistent participant. Someone who 
sat out a low GHL year (good idea for the health of the industry and 
fishery) would be severely penalized.
    Response: The methodology used at Sec.  680.40(c)(2) does use a 
weighted average when calculating the amount of QS that will be issued. 
The method requires determining the percentage of the total qualified 
landings a person and summing up the percentage of the total qualified 
landings of all persons that are qualified to receive QS. A person's 
percentage of the total qualified landings is divided by the percentage 
of the percentage of all the qualified landings in that fishery. This 
methodology is explained in detail in the preamble to the proposed rule 
(see 69 FR 63208) and in the final rule at Sec.  680.40(c)(2)(iv).
    Comment 14: The QS pool is so large that overfishing results. 
Quotas should be cut by 50 percent this year and 10 percent each year 
thereafter.
    Response: NMFS disagrees. The QS pool represents the portion of 
available TAC for a fishery that will be allocated to QS holders 
annually. The QS pool yields IFQ every year which is the pounds of crab 
the QS holder may harvest, based on the amount of crab available for 
harvest. Each year, the TAC is determined through a scientific process 
that is designed to maintain healthy stocks and reduce the risk of 
overfishing.
    Comment 15: The surviving spouse provision in the proposed rule at 
Sec.  680.41(n) provides that if a QS holder dies, his spouse has 3 
years to lease out his QS. There are no additional regulations in the 
proposed rule to explain what happens after that time. If this 
provision is similar to the halibut/sablefish QS surviving spouse 
provision, then the surviving spouse will have to either sell the QS or 
qualify to have the QS transferred to their name. They qualify by 
having 150 days of sea time-fishing only, no tendering or research 
vessel time. If they do qualify, then they have to be on board during 
the harvesting and delivery of the product.
    This would be a hardship for a surviving spouse of a crab QS 
holder. Crab fishing is much different than halibut fishing, and 
provides a large portion of a family's annual income. A surviving 
spouse probably would not be able to leave the children and job and go 
out to the Bering Sea to crab fish for weeks at a time, a few times a 
year, even if she could qualify. I don't think it is the wish or 
intention of QS holders to leave their spouses and families in such a 
bind. In these cases, the spouse, along with the QS holder, have made 
significant personal and financial investment in this fishery.
    Response: Amendment 18 does not make a specific exemption to allow 
a beneficiary to receive an additional opportunity to lease IFQ or IPQ, 
other than the provisions established under the rule. In fact, the 
three year lease period allowed for beneficiaries of QS and PQS to use 
the IFQ or IPQ is designed to mirror existing leasing by beneficiaries 
under the halibut and sablefish IFQ program. Extending this limited 
leasing ability beyond three years would frustrate the overall intent 
of the Program, which is to limit leasing after several years have 
transpired.
    A beneficiary of QS or PQS may sell the QS or PQS, or fish the IFQ 
or IPQ themselves after the three year period. Additionally, for CVO 
and CPO QS, if the beneficiary owns at least 10 percent of a vessel, 
they can hire someone else to fish the IFQs after the three year 
period. This provision is unlike the halibut/sablefish IFQ program 
where second generation QS holders cannot hire skippers to fish for 
them.
    Comment 16: It is important that any active fisherman who holds 
Class B IFQ have the ability to transfer those shares to any other 
active fisherman. For example, an active fisherman who holds Class B 
IFQ for red king crab and golden king crab should be able to transfer 
his shares for either or both species to another active fisherman. This 
accommodates the fact that an active fisherman may have earned IFQ for 
a species that he is not fishing in a particular season, but should be 
able to transfer to another active fisherman who is fishing that 
species in that same season.
    Response: Under the rule, Class B IFQ may be transferred to any 
eligible recipient mid-season, including an active participant in the 
fisheries.
    Comment 17: The final rule should clearly instruct RAM to initially 
allocate our BSAI crab IFQs directly and individually to the owners of 
IFQ qualified vessels (corporations, LLCs, and partnerships) in 
proportion to their stock ownership or interest in the vessels that 
earned each respective BSAI crab fishing history. This will help NMFS 
avoid numerous, time-consuming transfers and sale procedures, and 
substantially reduce federal paperwork.
    Response: QS will be issued to the holder of the LLP license at the 
time of application, and not to the owners of a corporation, or other 
organization, that holds the LLP license. The exact allocation of QS 
among the owners of a corporation would be an additional administrative 
burden on NMFS and the exact allocation may be subject to contractual 
agreements among the owners that NMFS would be required to interpret 
and would be subject to appeal. In some cases, owners may wish to have 
the LLP license holding corporation also hold the QS. NMFS will 
allocate QS to the entity that holds the LLP license. If the owners of 
a corporation wish to receive a portion of the QS, that can be 
accomplished by a subsequent transfer from the QS holding corporation 
to the corporation's owners. The rule has not been modified.
    Comment 18: The final rule should include a provision that provides 
for post delivery transfers of IFQ. Too often small errors in 
estimating the average weight of crab has adversely affect the crew's 
ability to judge the poundage of crab on board. Allowing transfers of 
IFQ after delivery would provide vessel operators with the flexibility 
needed to make the right decisions, and be consistent with national 
standard 1 of the Magnuson-Stevens Act.
    Response: Transfers of IFQ after deliveries are particularly 
problematic for NMFS to track and monitor. In particular, NMFS does not 
have the ability to keep ``real time'' accounts accurate enough to 
allow this type of transfer. Amendment 18 does not provide any 
provisions for IFQ overages or the ability to undertake post-delivery 
transfers. While there may be some overages in some of the fisheries, 
NMFS does not anticipate that these overages will be severe in most 
cases and after the Program has been in place for a period of time, the 
likelihood of these overages will decrease.
    Comment 19: The final rule should include language that allows flow 
thru of grandfathered ownership to an individual past the current one 
percent cap. For example, in the proposed rule an individual is allowed 
their historic ownership of QS past the one percent cap if earned in 
the qualification years and vessel history is acquired prior to January 
1, 2002. Because QS will be awarded to LLP license ownership groups 
initially, the regulations should make sure the QS can flow thru to 
individual owners based on their ownership make up with no penalty 
assessed if their grandfathered QS exceeds one percent.
    Response: Amendment 18 is clear that the exemption to the QS and 
IFQ use caps for corporations or other entities that are initially 
issued QS or IFQ in excess of the use caps do not extend to the 
individual members that comprise that corporation or other entity. The 
use cap exemption is limited to the entity that initially received the 
QS or IFQ, not to its constituent members who can only receive QS or 
IFQ from the entity

[[Page 10182]]

through transfers. Therefore, each member of that entity is subject to 
the QS and IFQ use caps without exemption. The exemption to the QS and 
IFQ use caps does not extend to persons who receive QS or IFQ by 
transfer.
    Comment 20: The proposed rule at Sec.  680.41(l)(2) and (4) 
incorrectly waives all use caps with respect to harvest shares. The 
motion establishes use caps.
    Response: NMFS agrees and has modified the wording in the final 
rule at Sec.  680.42(i)(5). See also response to comment 5.
    Comment 21: The proposed rule at Sec.  680.42(b)(4) exempts all PQS 
holders from the individual IFQ caps and applies a higher use cap to 
those persons. The motion intended a very limited exemption that would 
not apply to individuals.
    Response: NMFS agrees and has modified the provision in the final 
rule at Sec.  680.42(b)(4) to better reflect the intent of Amendment 18 
by establishing that individual PQS holders do not receive an exemption 
to the overall QS and IFQ use cap that applies to non-individual PQS 
holders who also hold QS or IFQ.
    Comment 22: If all vessels with catch history in the Eastern 
Aleutian Islands golden king crab fishery in the qualifying years were 
granted QS then there would not be such a concentration of QS holders 
in that fishery. Allocating QS only to holders of an LLP license 
endorsed for that fishery would result in a violation of the excessive 
shares provision of the Magnuson-Stevens Act.
    Response: NMFS agrees that allocating QS to all vessels with catch 
history in the fishery would result in more QS holders in that fishery, 
however, Amendment 18 is clear that QS will only be issued for catch 
history for which the holder's LLP license is endorsed, with one 
limited exemption. Section 313(j) of the Magnuson-Stevens Act requires 
NMFS to implement the Program as specified in Amendment 18.
    Comment 23: In the early stages of the Crab Rationalization 
Program, it was discussed whether or not golden king crab should be 
included; as it was a fishery that still had never fully been utilized. 
Instead of excluding golden king crab, the opposite took place, in that 
the golden king crab fishery qualification period of 1996-2000, all 
years, is the most stringent of all crab fisheries. The golden king 
crab qualifications are further compounded because golden king crab is 
the only crab fishery that is not allowed to drop one year in its 
calculations. Not allowing the dropping of a year is a blatant 
discriminatory measure. The golden king crab IFQ qualification years 
are years in which the golden king crab fishery GHLs were not fully 
harvested and the fishery lasted 12 months. The golden king crab 
fishery GHL has only become fully utilized for the first time in the 
year 2000. The proposed window of years for golden king crab was when 
the smallest number of approximately 15-17 vessels, had ever 
participated in the history of the golden king crab fishery.
    The result is a select group of vessels will receive excessive 
golden king crab QS. Approximately 6 to 8 vessels would receive 
approximately 70 percent to 80 percent of the QS. Therefore, the golden 
king crab window of years has disenfranchised many of the other golden 
king crab LLP license holders; to benefit a select group of excessive 
share recipients. Golden king crab is the only fishery that ``must'' 
use the recent years of history up until implementation, as the GHLs 
were finally fully harvested.
    There was a lot of testimony to the Council requesting the 
qualification period include the current years in which the GHLs were 
finally fully harvested. NOAA General Counsel also stated on the record 
that fishing history up until time of final action should be 
considered. Additionally the court ruling over the Halibut IFQ lawsuit, 
stated that fishing history up until final action should be considered. 
Yet the Council did not consider the years of history beyond 2000.
    In conclusion, the qualification period for the golden king crab 
fishery does not conform to the National Standards under the Magnuson-
Stevens Act. National Standards state that no such measure shall have 
economic allocation as its sole purpose. It is easy to point out that 
the specific years selected for golden king crab are for the sole 
purpose of economic allocation to a select few vessels. National 
standards state that ``allocations should be fair and equitable to all 
fisherman'', not just a select few vessels as in golden king crab 
fishery. National Standards state that allocations shall be carried out 
in such a manner that no particular entity acquires an excessive share, 
not the excessive shares that are proposed in golden king crab fishery. 
National Standards must be adhered to.
    Response: Amendment 18 establishes the qualifying years for the 
golden king cr