Fishing Capacity Reduction Program for the Longline Catcher Processor Subsector of the Bering Sea and Aleutian Islands Non-pollock Groundfish Fishery, 57696-57713 [06-8354]

Agencies

• DEPARTMENT OF COMMERCE
• National Oceanic and Atmospheric Administration

[Federal Register Volume 71, Number 189 (Friday, September 29, 2006)]
[Rules and Regulations]
[Pages 57696-57713]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-8354]



[[Page 57695]]

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Part IV





Department of Commerce





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National Oceanic and Atmospheric Administration



50 CFR Part 600



Fishing Capacity Reduction Program for the Longline Catcher Processor 
Subsector of the Bering Sea and Aleutian Islands Non-pollock Groundfish 
Fishery; Final Rule

Federal Register / Vol. 71, No. 189 / Friday, September 29, 2006 / 
Rules and Regulations

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DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

50 CFR Part 600

[Docket No. 060731207-6242-02; I.D. 051706F]
RIN 0648-AU42


Fishing Capacity Reduction Program for the Longline Catcher 
Processor Subsector of the Bering Sea and Aleutian Islands Non-pollock 
Groundfish Fishery

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 the Bering Sea and 
Aleutian Islands (BSAI) Catcher Processor Capacity Reduction Program 
(Reduction Program) for the longline catcher processor subsector of the 
BSAI non-pollock groundfish fishery (Reduction Fishery), in compliance 
with the FY 2005 Appropriations Act. This program is voluntary and 
permit holders of the Reduction Fishery (Subsector Members) are 
eligible to participate. Subsector Members must sign and abide by the 
Capacity Reduction Agreement (Reduction Agreement) and, if their offers 
are selected, a Fishing Capacity Reduction Contract (Reduction 
Contract) with the U.S. Government. These key components of the 
Capacity Reduction Plan (Reduction Plan) were prepared by the Freezer 
Longline Conservation Cooperative (FLCC) and are implemented by the 
final regulations. The aggregate of all Reduction Agreements and those 
Reduction Contracts signed by Subsector Members whose offers were 
accepted by \2/3\ votes of the Subsector Members, will together with 
the FLCC's supporting documents and rationale that these offers 
represent the expenditure of the least money for the greatest capacity 
reduction, constitute the Reduction Plan to be submitted to the 
Secretary of Commerce for approval. Subsector Members participating in 
the Reduction Program will receive up to $36 million in exchange for 
relinquishing valid non-interim Federal License Limitation Program BSAI 
groundfish licenses endorsed for catcher processor fishing activity, 
Catcher/Processor (C/P), Pacific cod, and hook and line gear, as well 
as any present or future claims of eligibility for any fishing 
privilege based on such permit (the Groundfish Reduction Permit) and 
additionally, any future fishing privilege of the vessel named on the 
permit. Individual fishing quota (IFQ) quota shares would be excluded 
from relinquishment. Following submission of the Reduction Plan and 
approval by the Secretary, NMFS will conduct an industry referendum to 
determine the industry's willingness to repay a fishing capacity 
reduction loan to effect the Reduction Plan. A \2/3\ majority vote in 
favor would bind all parties and complete the reduction process. NMFS 
will issue a 30-year loan to be repaid by those harvesters remaining in 
the Reduction Fishery. The intent of this final rule is to permanently 
reduce harvesting capacity in the Reduction Fishery. This should result 
in increased harvesting productivity for post-reduction Subsector 
Members and help with conservation and management of the Reduction 
Fishery.

DATES: This rule is effective October 30, 2006.

ADDRESSES: Copies of the Environmental Assessment/Regulatory Impact 
Review/Final Regulatory Flexibility Analysis (EA/RIR/FRFA) prepared for 
this action may be obtained from the mailing address listed here or by 
calling Michael A. Sturtevant (see FOR FURTHER INFORMATION CONTACT).
    Send comments regarding the burden-hour estimates or other aspects 
of the collection-of-information requirements contained in this final 
rule to Michael A. Sturtevant at the address specified above and also 
to the Office of Information and Regulatory Affairs, Office of 
Management and Budget (OMB), Washington, DC 20503 (Attention: NOAA Desk 
Officer) or e-mail to David--Rosker@ob.eop.gov, or fax to (202) 395-
7825.

FOR FURTHER INFORMATION CONTACT: Michael A. Sturtevant at 301-713-2390, 
fax 301-713-1306, or michael.a.sturtevant@noaa.gov.

SUPPLEMENTARY INFORMATION: Electronic Access. This Federal Register 
document is also accessible via the Internet at https://
www.access.gpo.gov/su-docs/aces/aces140.html.

Statutory and Regulatory Background

    NMFS published the proposed rule for this action in the Federal 
Register on August 11, 2006 (71 FR 46364) with a public comment period 
through September 11, 2006. NMFS received comments from three 
commenters and the comments and responses are discussed under the 
succeeding Comments and Responses section of this preamble.
    The portions of the preamble to the proposed rule explaining the 
Reduction Program, Approval of the Reduction Plan, the Referenda, and 
the Contract are crucial to understanding this final regulatory action 
and are repeated here. For additional information on underlying 
authority in the Magnuson-Stevens Fishery Conservation and Management 
Act, management of BSAI fisheries, and NMFS' framework and specific 
fishing capacity reduction regulations, persons can consult the 
preamble to the proposed rule.
    The measures contained in this final rule to establish the 
Reduction Program are authorized by Title II, Section 219 of the FY 
2005 Appropriations Act (Act) (Public Law 108-447; 2004 enacted H.R. 
4818, December 8, 2004), and in particular by Section 219(e) of the 
Act. Also, Public Law 108-199 provided the initial $500,000 subsidy 
cost to fund a $50 million loan and Public Law 108-447 provided an 
additional $250,000 subsidy cost to fund $25 million more (in addition 
to providing for the buyback program itself). While the Act authorizes 
the establishment of fishing capacity reduction programs for catcher 
processor subsectors within the Alaska groundfish fisheries (i.e., the 
longline catcher processor subsector, the American Fisheries Act (AFA) 
trawl catcher processor subsector, the non-AFA trawl catcher processor 
subsector, and the pot catcher processor subsector) based on capacity 
reduction plans and contracts developed by industry and approved by 
NMFS, this final rule only addresses the longline catcher processor 
subsector of the Reduction Fishery. The remaining subsectors may later 
develop capacity reduction plans and contracts for the other three 
catcher processor subsectors.
    The FLCC on behalf of the Reduction Fishery drafted the Reduction 
Agreement which NMFS seeks to incorporate into its existing fishing 
capacity reduction regulations by this final rule. The Reduction 
Agreement, the Reduction Contract, and application of certain other 
existing Federal law and regulations referred to above are the basis 
for the Reduction Plan. The aggregate of all Reduction Agreements and 
Reduction Contracts signed by Subsector Members whose offers to 
participate in this buyback are ranked highest by the FLCC will 
constitute the Reduction Plan and will be submitted to NMFS for 
approval.
    The Reduction Agreement and the Reduction Contract are the two key 
components of the Reduction Plan and this final rule. Substantive 
provisions of the Reduction Agreement would be codified at 50 CFR 
600.1105 along with

[[Page 57697]]

a requirement for all members of the Reduction Fishery submitting 
offers to participate in the Reduction Program to execute the Reduction 
Contract (i.e., the requirement for an Offeror to execute a Reduction 
Contract will be codified and the Reduction Contract appended). 
Wherever the term Offeror is used in this preamble and regulation, it 
also includes any co-Offeror.
    The Act authorized not more than $36 million in loans (reduction 
loan) to fund the Reduction Program. NMFS' authority to make this loan 
resides in sections 1111 and 1112 of the Merchant Marine Act, 1936 (46 
App. U.S.C. 1279f and 1279g) (MMA) (title XI).

Reduction Program--Overview

    Participation in the Reduction Program would be open to any member 
of the Longline Subsector. Each Subsector Member will receive a notice 
of the FLCC Reduction Agreement and Reduction Contract and enrollment 
documents by certified mail. The FLCC Reduction Program is essentially 
divided into four phases: (1) Enrollment; (2) offer selection; (3) plan 
submission; and (4) implementation, after approval by referendum. Only 
LLP licenses and other assets (including fishing history) voluntarily 
submitted for removal from the Reduction Fishery shall be subject to 
reduction. Because there exist what are commonly referred to as 
``latent licenses'' within the Reduction Fishery which the FLCC 
membership desires to remove, latent LLP licenses need not be 
associated with a vessel for inclusion as assets to be reduced under 
the Reduction Program. Fees for repayment of the loan which funds the 
Reduction Program will be collected from the Subsector Members who 
continue operations in the Reduction Fishery after implementation of 
the Reduction Program set forth in Sec.  600.1105.

Reduction Program--The Capacity Reduction Agreement

Basic Agreement

    On April 12, 2006, the FLCC submitted a Reduction Agreement, 
Reduction Contract, and Executive Summary for a Reduction Plan for the 
Reduction Fishery to NMFS. The Reduction Plan's express objective is to 
permanently reduce harvesting capacity in the Reduction Fishery by 
removal of Groundfish Reduction Permits, Reduction Fishing Privileges, 
and the Reduction Fishing Interests that are specified in the Reduction 
Contract (which is appended to Sec.  600.1105). The FLCC will implement 
the process of qualifying and enrolling Subsector Members and selecting 
offers from Subsector Members to remove fishing capacity by means of 
this buyback. Once the FLCC has completed the selection process, the 
highest ranking offers, the rationale for acceptance, the Reduction 
Agreements, the Reduction Contracts (from Subsector Members whose 
offers were selected), and any other supporting documents will be 
submitted as the Reduction Plan, by the FLCC to NMFS for approval, on 
behalf of the Secretary of Commerce, in compliance with Section 219(e) 
of the Act.
    Those Subsector Members submitting approved offers would give up 
all Federal fishery licenses, fishery permits, and area and species 
endorsements issued for any vessel named on the Groundfish Reduction 
Permit, as well as any present or future claims of eligibility for any 
fishery privilege based upon such permit. The Subsector Members would 
also have to relinquish Reduction Fishing History consisting of: (1) 
The Reduction Privilege Vessel's full and complete documented harvest 
of groundfish; (2) for any documented harvest of the Reduction 
Privilege Vessel, any right or privilege to make any claim related to 
any fishery privilege that might qualify for any future fishing license 
(see Section 8.b. of the Contract for additional details); (3) any 
documented harvest on any other vessel (Reduction Fishing Vessel) that 
gave rise to the Groundfish Reduction Permit; and (4) all fishing 
history associated with the latent LLP license identified on the 
Selected Offer and any fishing history associated with the fishing 
vessel that gave rise to the latent LLP license that remains in the 
Offeror's possession as of August 11, 2006 (i.e., date of publication 
of the proposed rule in the Federal Register).
    Regarding the vessel named on the Groundfish Reduction Permit (the 
Reduction Privilege Vessel), the Offeror will accept the imposition of 
Federal vessel documentation restrictions that have the effect of 
permanently revoking the Reduction Privilege Vessel's legal ability to 
fish anywhere in the world as well as its legal ability to operate 
under foreign registry or control--including the Reduction Privilege 
Vessel's: fisheries trade endorsement under the Commercial Fishing 
Industry Vessel Anti-Reflagging Act (46 U.S.C. 12108); eligibility for 
the approval required under section 9(c)(2) of the Shipping Act, 1916 
(46 U.S.C. App. 808(c)(2)), for the placement of a vessel under foreign 
flag or registry, as well as its operation under the authority of a 
foreign country; and the privilege otherwise to ever fish again 
anywhere in the world (the Reduction Fishing Privilege).
    The Reduction Fishing Interest that would be removed would not 
include any: Right, title and/or interest to harvest, process or 
otherwise utilize individual fishing quota (``IFQ'') quota share in the 
halibut, sablefish and crab fisheries pursuant to 50 CFR parts 679 and 
680.

Reduction Agreement Terms and Definitions

    Capitalized terms used in the Reduction Agreement are defined in 
Schedule A to the Reduction Agreement; other terms are defined within 
the text of the Reduction Agreement. Those Reduction Agreement terms 
that are essential to understanding the regulatory provisions are set 
forth in Sec.  600.1105(b) and include ``Application Form'', ``Capacity 
Reduction Agreement or Reduction Agreement'', ``Closing Vote'', 
``Current Offeror'', ``Fishing Capacity Reduction Contract or Reduction 
Contract'', ``FLCC Counsel'', ``LLP License'', ``Offer(s)'', ``Rejected 
Offer'', and ``Website''. Other terms important to understanding these 
regulations and the Reduction Contract, including ``Reduction Privilege 
Vessel'', are also set forth in Sec.  600.1105(b).

Reduction Agreement: Major Sections

    There are three major sections of the Reduction Agreement: 
Qualification and Enrollment of Subsector Members; Selection of Offers 
to Remove Fishing Capacity by the Reduction Plan; and Submission of 
Reduction Plan. NMFS codifies these provisions as Federal regulations 
in 50 CFR 600.1105.
    Qualification and Enrollment. Subsector Members may enroll in the 
Reduction Program at any time prior to closing the selection of offers 
to reduce capacity. Enrollment is accomplished by executing a Reduction 
Agreement and submitting specified supporting documents evidencing an 
applicant's status as a Subsector Member. Each of the supporting 
documents will be reviewed by Tagart Consulting who will serve as the 
Auditor for the Reduction Program. The Auditor will review all 
documents for strict compliance with the regulatory provisions of Sec.  
600.1105. Each Reduction Agreement becomes effective 10 days after 
written notice is sent by the Auditor to each holder of a LLP license 
endorsed for BS or AI catcher processor activity, C/P, Pacific cod and 
hook and line gear, informing that more than 70 percent of Subsector 
Members have submitted complete applications certified by the Auditor 
as complying with Sec.  600.1105. For more specific information on 
qualification and enrollment of Subsector Members, see Sec.  
600.1105(c) of this final rule.

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    Selection of Offers to Remove Fishing Capacity by the Reduction 
Plan. Once more than 70 percent of the Subsector Members have effective 
Reduction Agreements, the offer selection process begins. An offer is a 
binding offer to relinquish to the United States Government the assets 
identified in the offer in consideration of a dollar amount certain set 
by the Offeror, and may not be withdrawn once entered, unless it is 
rejected during the selection process.
    Essentially, during the offer process, Subsector Members will 
alternate on a weekly basis between Submission Periods (see Sec.  
600.1105(d)(3)(ii)) and Ranking Periods (see Sec.  600.1105(d)(5)(ii)). 
During any Submission Period, a Subsector Member may offer, for 
inclusion in the Reduction Program, its LLP license(s) and withdrawal 
of the vessel(s) designated on the LLP license(s) from all fisheries. 
During the Ranking Period, nonoffering Subsector Members may rank the 
offers submitted during the prior Submission Period. At the end of each 
Ranking Period, the Auditor will tabulate and post on a website the 
results of ranking the offers up to a total offer price of $36 million. 
Those offers ranked within the $36 million are Selected Offers and 
those that are not ranked within the $36 million are Rejected Offers 
with the Rejected Offers being voided and no longer binding on the 
offering member(s).
    Once the offer rankings are posted, a new Submission Period begins 
with the process repeated until at least \2/3\ of the Nonoffering 
Subsector Members call for a closing vote. If \2/3\ of the Nonoffering 
Members accept the Selected Offers proposed in the closing vote, the 
selection process to remove capacity by the Reduction Plan terminates. 
If not, the selection process resumes with a new Submission Period. For 
more specific information on ranking and selection of offers to remove 
capacity, see Sec.  600.1105(d).
    Plan Submission, Including Repayment. After the Selection Process 
is complete, the FLCC will develop the Reduction Plan in compliance 
with the Act, the MSA, and other applicable laws and regulations for 
submission to NMFS for approval on behalf of the Secretary of Commerce. 
The Reduction Plan will include the LLP licenses and other fishing 
interests selected by the offer process as the assets to be purchased 
in the Reduction Program, and provide for repayment over a 30-year 
term. The Reduction Plan must also include the FLCC's supporting 
documents and rationale for recognizing that these offers represent the 
expenditure of the least money for the greatest capacity reduction. 
Acceptance of the Offers are at the sole discretion of NMFS on behalf 
of the Secretary of Commerce. Further, the FLCC will give notice of the 
Reduction Plan to the North Pacific Fishery Management Council as 
required by the Act.
    Repayment of the loan will begin by collection of annual fees 
collected from the Subsector Members operating in the Reduction Fishery 
after implementation of the Reduction Program. The amount of such fee 
will be calculated on an annual basis as: the principal and interest 
payment amount necessary to amortize the loan over a 30-year term, 
divided by the Reduction Fishery portion of the BSAI Pacific cod 
initial total allowable catch (ITAC) allocation in metric tons 
(converted to pounds), provided that the fees should not exceed 5 
percent of the average ex-vessel production value of the Reduction 
Fishery. In the event that the total principal and interest due exceeds 
5 percent of the ex-vessel Pacific cod revenues, a penny per pound 
round weight fee will be calculated based on the latest available 
revenue records and NMFS conversion factors for pollock, arrowtooth 
flounder, Greenland turbot, skate, yellowfin sole and rock sole. For 
more specific information on submission of the Reduction Plan, 
including fees to repay the Reduction Loan, see Sec.  600.1105(e).

The Reduction Program--Other Matters Relating to the Reduction 
Agreement and Reduction Plan

Review/Disputes

    The Reduction Agreement (but not these final regulations) provides 
for an expedited process to review any decision by the Auditor and for 
settlement of disputes utilizing an expedited review process by pre-
selected legal counsel and, if necessary, binding arbitration. Also, 
all Offerors must comply with FLCC bylaws. By motion unanimously 
accepted by the members of the FLCC on February 21, 2005, the members 
of the FLCC approved the FLCC's development of a capacity reduction 
program in compliance with the Act (the Motion).

Decisions of the Auditor and the FLCC

    Under Sec.  600.1105(f), the Offerors are subject to the terms and 
conditions set forth in the Reduction Agreement to settle any disputes 
regarding the decisions of the Auditor or the FLCC. That section also 
explains the scope of the Auditor's examination.

Other Provisions of the Reduction Agreement

    Regulatory provisions mirroring the Reduction Agreement's 
provisions for Enforcement/Specific Performance, Miscellaneous, 
Amendment, and Warranties are specified at Sec. Sec.  600.1105(g), (h), 
(i), and (j), respectively.

Approval of the Reduction Plan

    The criteria for NMFS, on behalf of the Secretary, to approve any 
Reduction Plan are specified at Sec.  600.1105(k). Among other things, 
the Assistant Administrator of NMFS must find that the Reduction Plan 
is consistent with the Act and the MSA, and that it will result in the 
maximum sustained reduction in fishing capacity at the least cost and 
in the minimum amount of time.
    The FLCC has not yet submitted the Reduction Plan to NMFS for 
approval and cannot do so until after this final rule is published. If 
the FLCC submitted the Reduction Plan before the publication of this 
final rule, it may be necessary for the FLCC to revise and re-submit 
the Reduction Plan to conform with the provisions of the final rule.

The Referenda

    NMFS will conduct an industry referendum to determine the 
industry's willingness to repay a fishing capacity reduction loan to 
purchase the licenses, fishing rights, etc. identified in the Reduction 
Plan subsequent to the publication of this final rule. A successful 
referendum by 2/3 of the members of the Reduction Fishery would bind 
all parties and complete the reduction process.
    The current Fishing Capacity Reduction Framework regulatory 
provisions of Sec.  600.1010 stipulate procedural and other 
requirements for NMFS to conduct referenda on fishing capacity 
reduction programs. Section 600.1105(l) makes those framework referenda 
requirements applicable to the Reduction Program for the Longline 
Subsector. After approval of the Reduction Program via a referendum, 
the Reduction Program will be implemented.

The Contract

    An appendix to this Sec.  600.1105 sets forth the Contract 
component of the Reduction Program for the Longline Subsector. The 
appendix, or Contract, will also be codified along with the regulatory 
text of Sec.  600.1105.

Comments and Responses

    The public comment period on the subject proposed rule (71 FR 
46364)

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closed at midnight on September 11, 2006. A total of three commenters 
submitted comments (two via e-mail and one faxed comments to NMFS). Two 
comments were from individuals. One was a brief comment supporting the 
reduction of longlines and the rule. The other was a brief comment 
opposing the rule because it is voluntary and instead supports a 
mandatory reduction in fish catch. The third commenter was the legal 
counsel, Bauer Moynihan & Johnson LLP, who represents the Freezer 
Longline Conservation Cooperative (FLCC) in any review or arbitration 
under the Capacity Reduction Agreement. The comments by the FLCC's 
counsel raised three concerns: (1) The need to make clear that 
Reduction Contracts were not required to enroll in the Reduction 
Program and were only required of Selected Offerors; (2) that only 
fishing history connected to the license and/or vessels identified on a 
Selected Offer should be relinquished; and (3) that the description of 
the Reduction Plan was incomplete in the preamble's discussion of the 
Reduction Program. All comments are elaborated on below and NMFS 
responses are provided.
    Comment 1: The commenter expressed support for reducing longline 
fishing stating their belief that the fewer longlines there are, the 
better it would be for the ocean and all marine life living in it.
    Response: The rule is designed to reduce the number of permitted 
longline catcher processor vessels fishing in the BSAI non-pollock 
groundfish fishery, and will not necessarily reduce the number of 
longline sets. The commenter gave no specific rationale for their 
suggestion that the number of longlines be reduced. The purpose and 
need for this action is to reduce excess capacity in one of the major 
non-pollock groundfish sectors and help achieve the conservation and 
economic objectives of the fishery management plan. There is no known 
scientific basis for reducing the number of longlines as suggested by 
the commenter.
    Comment 2: The commenter is opposed to the reduction program in 
this fishery being voluntary and instead encourages that the program be 
made mandatory. The commenter supports a mandatory program to reduce 
the catch in the BSAI area to preserve fish for future generations.
    Response: The reduction program is required to be a voluntary 
program by statute (Title II, Section 219 of the FY 2005 Appropriations 
Act; Public Law 108-447). The rule is designed to reduce the number of 
licensed fishing vessels not the amount of catch. Each year the North 
Pacific Fishery Management Council and NMFS consider the best 
scientific information for the BSAI groundfish fishery, including any 
new stock assessment information, fishing mortality, natural mortality, 
and other pertinent scientific information in setting harvest quotas 
for the coming fishing year. Currently, no stocks of fish in the BSAI 
groundfish fishery are overfished or subject to overfishing. NMFS is 
confident that sound management currently practiced on these stocks 
will adequately preserve these stocks.
    Comment 3: The commenter pointed out that the Summary (at 71 FR 
46364) and Sec.  600.1105(c)(2) (at 71 FR 46369) of the proposed rule 
incorrectly indicates that each Subsector Member wanting to enroll with 
the FLCC to participate in the Reduction Program must execute and 
deliver a Reduction Contract as part of their application. The 
commenter states that the Reduction Agreement (designed by industry) is 
the mechanism whereby persons establish their eligibility to enroll and 
that only those Subsector Members whose offers are selected must 
execute a Reduction Contract. The commenter asks that the language 
regarding the requirements for enrollment as a Subsector Member be 
revised to delete the requirement that a Reduction Contract be executed 
as a condition to enrollment.
    Response: NMFS agrees that to participate in the process by 
enrolling with the FLCC in the Reduction Program, Subsector Members 
only need to sign a Reduction Agreement. While all members of the BSAI 
groundfish longline subsector are Subsector Members and all may vote on 
offers to relinquish permits in the buyback, only Subsector Members who 
have enrolled with the FLCC in the Reduction Program may submit offers. 
NMFS also agrees with the commenter that only those Subsector Members 
whose offers are selected must execute a Reduction Contract. Any 
Selected Offer by a participating Subsector Member must be submitted 
with a signed Reduction Contract. NMFS has modified the Summary and 
Sec.  600.1105(c)(2) of the rule to clarify that a Reduction Contract 
is only required for those Subsector Members submitting Selected 
Offers.
    Comment 4: The commenter is opposed to the Contract's Section 8.c. 
(actually Section 8.d.) requirement in the Appendix to Sec.  600.1105 
(at 71 FR 46375) that all fishing history associated with any latent 
license that remains in the Offeror's possession as of August 11, 2006, 
must be relinquished by any Offeror. The commenter states that this 
requirement is inconsistent with the Reduction Agreement and the intent 
of the FLCC, and that only fishing history connected to the license 
and/or vessels identified on a Selected Offer should be relinquished.
    Response: NMFS agrees that only fishing history associated with any 
latent permit that is identified on the Selected Offer (and 
subsequently on the Reduction Contract) should be relinquished rather 
than all fishing history associated with any latent license that was in 
the Offeror's possession on August 11, 2006. In the proposed rule, NMFS 
was attempting to collect all fishing history associated with latent 
permits held by the Offeror; however, NMFS recognizes the inconsistency 
with the Reduction Agreement and supports the intent of the FLCC to 
provide flexibility to Subsector Members, who hold more than one LLP 
license, in relinquishing their licenses. NMFS has modified the Section 
8.d. requirement in the Contract contained in the Appendix to Sec.  
600.1105 so that it is limited to relinquishing all fishing history 
associated with the latent LLP license identified on the Selected 
Offer, including any fishing history associated with the fishing vessel 
that gave rise to the latent LLP license that remained in the Offeror's 
possession as of August 11, 2006.
    Comment 5: The commenter indicated that the description of the 
Reduction Plan was incomplete in the preamble's discussion of the 
Reduction Program at 71 FR 46365. The commenter stated that the 
Reduction Agreements and Reduction Contracts, while elements of the 
Reduction Plan, do not by themselves constitute the Reduction Plan and 
referred to Sec.  600.1105(e) (at 71 FR 46372) of the proposed rule 
which identified other elements of the Reduction Plan.
    Response: NMFS has modified the description of the Reduction Plan 
in the preamble's discussion of the Reduction Program to include 
mention of the FLCC's supporting documents and rationale that these 
offers represent the expenditure of the least money for the greatest 
capacity reduction, together with the Reduction Agreements and 
Reduction Contracts, as constituting the Reduction Plan. This is now 
consistent with the Summary and Sec.  600.1105(e).

Classification

    The Assistant Administrator for Fisheries, NMFS, determined that 
this final rule is consistent with Title II, Section 219 of the FY 2005 
Appropriations Act, Public Law 108-447, and with the Magnuson-Stevens

[[Page 57700]]

Fishery Conservation and Management Act, codified at 16 U.S.C. 1801 et 
seq.
    In compliance with the National Environmental Policy Act, NMFS 
prepared an environmental assessment for this final rule. The 
assessment discusses the impact of this final rule on the natural and 
human environment and integrates a Regulatory Impact Review (RIR) and a 
Final Regulatory Flexibility Analysis (FRFA). NMFS will send the 
assessment, the review and analysis to anyone who requests a copy (see 
ADDRESSES).
    NMFS prepared a FRFA, as required by section 603 of the Regulatory 
Flexibility Act (RFA), to describe the economic impacts this final rule 
would have on small entities. NMFS intends the analysis to aid us in 
considering regulatory alternatives that could minimize the economic 
impact on affected small entities. The final rule does not duplicate or 
conflict with other Federal regulations.

Summary of FRFA

    The Small Business Administration (SBA) has defined small entities 
as all fish harvesting businesses that are independently owned and 
operated, not dominant in its field of operation, and with annual 
receipts of $4 million or less. In addition, processors with 500 or 
fewer employees for related industries involved in canned or cured fish 
and seafood, or preparing fresh fish and seafood, are also considered 
small entities. Small entities within the scope of this final rule 
include individual U.S. vessels and dealers. There are no 
disproportionate impacts between large and small entities.
Description of the Number of Small Entities
    The FRFA uses the most recent year of data available to conduct the 
analysis (2003). The vessels that might be considered large entities 
were either affiliated under owners of multiple vessels or were catcher 
processors. However, little is known about the ownership structure of 
the vessels in the fleet, so it is possible that the FRFA overestimates 
the number of small entities. In the Reduction Fishery, 24 of the 39 
vessels meet the threshold for small entities. The remaining 13 vessels 
are not considered small entities for purposes of the RFA. There are 5 
additional fishermen with permits but no vessels in the Longline 
Subsector who would benefit if they later purchase vessels and 
participate in the post-Reduction Fishery because there will be less 
competition for the harvest. Also, they would benefit if they chose to 
be bought out; and there would be no impact to them if they did not buy 
a vessel and were not selected for the buyback. Implementation of the 
buyback program would not change the overall reporting structure and 
record keeping requirements of the vessels in the BSAI Pacific cod 
fisheries. However, this program would impose collection of information 
requirements totaling 16 hours 10 minutes.
    Most firms operating in the Reduction Fishery have annual gross 
revenues of less than $4 million. The FRFA analysis estimates that 24 
of the 39 active longline catcher processor vessels (i.e., 39 vessels 
constitute the Longline Subsector) that participated in 2003 are 
considered small entities. The ownership characteristics of vessels 
operating in the Reduction Fishery are not available and therefore it 
is not possible to determine with certainty, if they are independently 
owned and operated, or affiliated in one way or another with a larger 
parent company. Furthermore, because analysts cannot quantify the exact 
number of small entities that may be directly regulated by this action, 
a definitive finding of non-significance for this final action under 
the RFA is not possible. However, because the final rule will not 
result in changes to allocation percentages and participation is 
voluntary, net effects are expected to be minimal relative to the 
status quo.
    The final rule's impact will be positive for both those whose 
offers NMFS accepts and for post-reduction catcher processors whose 
landing fees repay the reduction loan because the Offerors and catcher 
processors would have voluntarily assumed the impact:
    1. Offerors would have volunteered to make offers at dollar amounts 
of their own choice. Presumably, no Offeror would volunteer to make an 
offer with an amount that is inconsistent with the Offeror's interest; 
and
    2. Reduction loan repayment landing fees would be authorized, and 
NMFS could complete the Reduction Program, only if at least two-thirds 
of Subsector Members voting in a post-offer referendum voted in favor 
of the Reduction Plan. Presumably, Subsector Members who are not 
Selected Offerors would not vote in favor of the Reduction Plan unless 
they concluded that the Reduction Program's prospective capacity 
reduction was sufficient to enable them to increase their post-
reduction revenues enough to justify the fee.
    Those participants remaining in the fishery after the buyback will 
incur additional fees of up to 5 percent of the ex-vessel production 
value of post-reduction landings. However, the additional costs could 
be mitigated by increased harvest opportunities by post-reduction 
fishermen.
    This final rule would affect neither authorized BSAI Pacific cod 
ITAC and other non-pollock groundfish harvest levels nor harvesting 
practices.
    NMFS rejected the no action alternative considered in the EA 
because NMFS would not be in compliance with the mandate of Section 219 
of the Act to establish a buyback program. In addition, the longline 
catcher processor subsector of the non-pollock groundfish fishery would 
remain overcapitalized. Although too many vessels compete to catch the 
current subsector total allowable catch (TAC) allocation, fishermen 
remain in the fishery because they have no other means to recover their 
significant capital investment. Overcapitalization reduces the 
potential net value that could be derived from the non-pollock 
groundfish resource, by dissipating rents, driving variable operating 
costs up, and imposing economic externalities. At the same time, excess 
capacity and effort diminish the effectiveness of current management 
measures (e.g. landing limits and seasons, bycatch reduction measures). 
Overcapitalization has diminished the economic viability of members of 
the fleet and increased the economic and social burden on fishery 
dependent communities.
    NMFS determined that this final rule is not significant for 
purposes of Executive Order 12866 based on the RIR/FRFA.
    This final rule contains information collection requirements 
subject to the Paperwork Reduction Act (PRA). The Office of Management 
and Budget (OMB) previously approved this information collection under 
OMB Control Number 0648-0376 with requirements for 878 respondents with 
a total response time of 38,653 hours.
    NMFS estimates that the public reporting burden for this 
information collection would average 4 hours for making an offer (which 
includes executing the Reduction Agreement and Reduction Contract) and 
4 hours for voting in a referendum. Persons affected by this final rule 
will also be subject to other collection-of-information requirements 
referred to in the final rule and also approved under OMB Control 
Number 0648-0376. These requirements and their associated response 
times are: completing and filing a fish ticket (10 minutes), submitting 
monthly fish buyer reports (2 hours), submitting annual fish buyer 
reports (4 hours), and fish buyer/fish seller reports when a person 
fails

[[Page 57701]]

either to pay or to collect the loan repayment fee (2 hours).
    These response estimates include the time for reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
information collection. Public comment is sought regarding: whether 
this collection of information is necessary for the proper performance 
of the functions of the agency, including whether the information shall 
have practical utility; the accuracy of the burden estimate; ways to 
enhance the quality, utility, and clarity of the information to be 
collected; and ways to minimize the burden of the collection of 
information, including through the use of automated collection 
techniques or other forms of information technology. Interested persons 
may send comments regarding this burden estimate, or any other aspect 
of this data collection, including suggestions for reducing the burden, 
to both NMFS and OMB (see ADDRESSES).
    Notwithstanding any other provision of law, no person is required 
to respond to, and no person is subject to a penalty for failure to 
comply with, an information collection subject to the PRA requirements 
unless that information collection displays a currently valid OMB 
control number.
    This action should not result in any adverse effects on endangered 
species or marine mammals.

List of Subjects in 50 CFR Part 600

    Fisheries, Fishing capacity reduction, Fishing permits, Fishing 
vessels, Intergovernmental relations, Loan programs--business, 
Reporting and recordkeeping requirements.

    Dated: September 21, 2006.
John Oliver,
Deputy Assistant Administrator for Operations, National Marine 
Fisheries Service.

0
For the reasons set out in the preamble, NMFS amends 50 CFR part 600, 
subpart M, as follows:

PART 600--MAGNUSON-STEVENS ACT PROVISIONS

Subpart M--Specific Fishery or Program Fishing Capacity Reduction 
Regulations

0
1. The authority citation for 50 CFR part 600, subpart M, is revised to 
read as follows:

    Authority: 5 U.S.C. 561, 16 U.S.C. 1801 et seq., 16 U.S.C. 
1861a(b) through (e), 46 App. U.S.C. 1279f and 1279g, section 144(d) 
of Division B of Pub. L. 106-554, section 2201 of Pub. L. 107-20, 
and section 205 of Pub. L. 107-117, Pub. L. 107-206, Pub. L. 108-7, 
Pub. L. 108-199, and Pub. L. 108-447.

0
2. Section 600.1105 is added to subpart M to read as follows:


Sec.  600.1105  Longline catcher processor subsector of the Bering Sea 
and Aleutian Islands (BSAI) non-pollock groundfish fishery program.

    (a) Purpose. This section implements the capacity reduction program 
that Title II, Section 219(e) of Public Law 108-447 enacted for the 
longline catcher processor subsector of the Bering Sea and Aleutian 
Islands (BSAI) non-pollock groundfish fishery.
    (b) Definitions. Unless otherwise defined in this section, the 
terms defined in Sec.  600.1000 of subpart L of this part expressly 
apply to this section. The following terms have the following meanings 
for the purpose of this section:
    Act means Title II, Section 219 of Public Law 108-447.
    AI means the Aleutian Islands.
    Application Form means the form published on the FLCC's website 
that sets forth whether the qualifying LLP License is a Latent License 
and identifies the individual(s) authorized to execute and deliver 
Offers and Offer Ranking Ballots on behalf of the Subsector Member.
    Auditor means Jack V. Tagart, Ph.D., d.b.a. Tagart Consulting.
    Authorized Party means the individuals authorized by Subsector 
Members on the application form to execute and submit Offers, Rankings, 
protests and other documents and/or notices on behalf of Subsector 
Member.
    Ballot means the form found on the auditor's website used to cast a 
vote in favor of, or in opposition to, the currently Selected Offers.
    BS means the Bering Sea.
    BSAI means the Bering Sea and the Aleutian Islands.
    BSAI Pacific Cod ITAC means the Total Allowable Catch for Pacific 
cod after the subtraction of the 7.5 percent Community Development 
Program reserve.
    Capacity Reduction Agreement or Reduction Agreement means an 
agreement entered into by the Subsector Members and the FLCC under 
which the FLCC is permitted to develop and submit a Capacity Reduction 
Plan to the Secretary.
    Certificate of Documentation (COD) means a document issued by the 
U.S. Coast Guard's National Documentation Center that registers the 
vessel with the United States Government.
    Closing Vote means a vote held pursuant to paragraph (d)(7) of this 
section, after two-thirds (\2/3\) or more of the Nonoffering Subsector 
Members submit Ranking Forms electing to accept the Selected Offerors 
and close the Selection Process, and there are no unresolved Protests 
or Arbitrations.
    Current Offer means an Offer submitted by a Subsector Member to the 
Auditor during any Submission Period and, with regard to such Offer, 
Offeror has not become a Rejected Offeror. The term ``Current Offer'' 
includes Selected Offers.
    Current Offeror means an Offering Subsector Member that has 
submitted an Offer to the Auditor during any Submission Period and, 
with regard to such Offer, Offeror has not become a Rejected Offeror. 
The term ``Current Offeror'' includes Selected Offerors.
    Database means the online LLP License database maintained by NMFS 
as downloaded by the Auditor pursuant to paragraph (c)(1) of this 
section.
    Effective Date means the date the Capacity Reduction Agreement 
becomes effective pursuant to section 4.e of the Capacity Reduction 
Agreement.
    Fishing Capacity Reduction Contract or Reduction Contract means the 
contract that any Current Offeror must sign and agree to abide by if 
NMFS accepts the offer by signing the Reduction Contract.
    FLCC Counsel means Bauer Moynihan & Johnson LLP or other counsel 
representing the FLCC in any review or arbitration under the Capacity 
Reduction Agreement.
    Latent License means an LLP License on which a vessel was not 
designated at the time an Offer is submitted.
    LLP License means a Federal License Limitation Program groundfish 
license issued pursuant to Sec.  679.4(k) of this chapter or successor 
regulation that is noninterim and transferable, or that is interim and 
subsequently becomes noninterim and transferable, and that is endorsed 
for BS or AI catcher processor fishing activity, C/P, Pacific cod and 
hook and line gear.
    Longline Subsector means the longline catcher processor subsector 
of the BSAI non-pollock groundfish fishery as defined in the Act.
    Longline Subsector ITAC means the longline catcher processor 
subsector remainder of the Total Allowable Catch after the subtraction 
of the 7.5 percent Community Development Program reserve.
    Nonoffering Subsector Member shall have the meaning ascribed 
thereto in paragraph (d)(5)(i) of this section.
    Offer Content means all information included in Offers submitted to 
the Auditor pursuant to paragraph (d)(2)(ii) of this section.

[[Page 57702]]

    Offer Form means the form found on the Auditor's website used to 
make an offer.
    Offer(s) means a binding offer(s) from a Subsector Member to sell 
its LLP, right to participate in the fisheries, the fishing history 
associated with such LLP, and any vessel set forth on the Offer Form 
submitted by Offeror pursuant to the terms of this Capacity Reduction 
Agreement.
    Opening Date means the first Monday following the Effective Date 
set forth in paragraph (c)(3) of this section.
    Person includes any natural person(s) and any corporation, 
partnership, limited partnership, limited liability company, 
association or any other entity whatsoever, organized under the laws of 
the United States or of a state.
    Prequalification Offer shall have the meaning ascribed thereto in 
paragraph (d)(2)(iii) of this section.
    Ranking Form means the form posted by the Auditor pursuant to 
paragraph (d)(5)(iii) of this section.
    Ranking Period shall have the meaning ascribed thereto in paragraph 
(d)(5)(ii) of this section.
    Reduction Fishery means the BSAI non-pollock groundfish fishery.
    Reduction Fishing Interests shall have the meaning ascribed thereto 
in the Fishing Capacity Reduction Contract.
    Reduction Plan means a business plan prepared by the Subsector 
Members in accordance with Section 1 of the Capacity Reduction 
Agreement and forwarded to the Secretary for approval.
    Reduction Privilege Vessel means the vessel listed on the Offeror's 
License Limitation Program license.
    Rejected Offer means an Offer that has been through one or more 
Rankings and is not a Selected Offer following the latest Ranking 
Period, with respect to which the Offering Subsector Member's 
obligations have terminated pursuant to paragraphs (d)(2)(i) and 
(d)(6)(v) of this section.
    Rejected Offeror means a Subsector Member that has submitted an 
Offer which has been ranked and was not posted as a Selected Offer 
pursuant to paragraph (d)(6)(ii) of this section.
    Restricted Access Management (RAM) means the Restricted Access 
Management Program in the Alaska Region, NMFS, located in Juneau, 
Alaska.
    Secretary means the Secretary of Commerce or a designee.
    Selected Offer shall have the meaning ascribed thereto in paragraph 
(d)(6)(iv) of this section.
    Selected Offeror means a Subsector Member that has submitted an 
Offer which has been ranked and is posted as a Selected Offer pursuant 
to paragraph (d)(6)(ii) of this section.
    Selection Process means the process set forth in paragraph (d) of 
this section for selecting the fishing capacity to be removed by the 
Reduction Plan.
    Submission Period(s) or Submitting Period(s) shall have the meaning 
ascribed thereto in paragraph (d)(3)(ii) of this section.
    Subsector Member(s) means a member(s) of the Longline Subsector.
    Web site means the internet Web site developed and maintained on 
behalf of the FLCC for implementation of the Selection Process 
described herein with a URL address of https://
www.freezerlonglinecoop.org.
    (c) Qualification and enrollment of subsector members--
    (1) Distribution. A copy of the Reduction Agreement, Application 
Form, and Reduction Contract shall be mailed to each holder of record 
of an LLP License endorsed for BS or AI catcher processor activity, C/
P, Pacific cod and hook and line gear, as the Auditor determines from 
the Database downloaded by the Auditor as of January 30, 2006, 
regardless of whether the LLP License is indicated in the Database as 
noninterim and transferable or otherwise.
    (2) Application. Any person, regardless of whether having received 
the mailing described in paragraph (c)(1) of this section, may as a 
Subsector Member apply to enroll with the FLCC to participate in the 
Reduction Program, by submitting all of the following documents:
    (i) Fully executed Reduction Agreement;
    (ii) Photocopy of the LLP License(s) evidencing Subsector Member's 
qualification as a member of the Longline Subsector;
    (iii) Unless applying as the holder of a Latent License, a 
photocopy of Federal Fisheries Permit for the vessel(s) designated on 
the LLP License(s) on the date the Reduction Agreement is signed by the 
Subsector Member;
    (iv) Unless applying as the holder of a Latent License, a photocopy 
of the Certificate of Documentation (COD) for the vessel(s) designated 
on the LLP License(s) on the date the Reduction Agreement is signed by 
the Subsector Member; and
    (v) An executed Application Form which sets forth whether the 
qualifying LLP License is a Latent License and identifies the 
individual(s) authorized to execute and deliver Offers and Offer 
Ranking Ballots on behalf of the Subsector Member.
    (3) Examination by Auditor--(i) In general. Each application must 
be submitted to the Auditor who will examine applications for 
completeness and inconsistencies, whether on the face of the documents 
or with the Database. Any application which is incomplete or which 
contains inconsistencies shall be invalid. The Auditor shall notify by 
e-mail or mail an applicant of the basis for the Auditor's finding an 
application invalid. An applicant may resubmit a revised application. 
If the application meets all requirements, the Auditor may accept the 
application as valid and enroll the applicant.
    (ii) Interim LLP Licenses. If an LLP License is interim and/or 
nontransferable, the applicant's enrollment shall be accepted as a 
Subsector Member and may fully participate in the Selection Process. 
However, any posting of an Offer submitted with respect to such LLP 
License shall note the status of such LLP License until that Subsector 
Member submits to the Auditor a letter from the RAM confirming that it 
is within the Subsector Member's control to cause the qualifying LLP 
License to be issued as noninterim and transferable upon withdrawal of 
all applicable appeals.
    (4) Enrollment period. Applications that meet all requirements will 
be accepted until the Selection Process is completed.
    (5) Effective date. The Effective Date of any Reduction Agreement 
shall be ten (10) calendar days after written notice is sent by the 
Auditor to each holder of record of an LLP License endorsed for BS or 
AI catcher processor activity, C/P, Pacific cod and hook and line gear 
(as determined by the Auditor from the Auditor's examination of the 
Database) advising that the number of Subsector Members that have 
delivered to the Auditor a complete Application, including a fully 
executed Reduction Agreement, exceeds seventy percent (70 percent) of 
the members of the Longline Subsector (as determined by the Auditor 
from the Auditor's examination of the Database).
    (6) Notice. All notices related to the effective date of the 
Reduction Agreement shall be sent by the Auditor via registered mail.
    (7) Withdrawal. A Subsector Member, unless such Subsector Member is 
a Current Offeror or Selected Offeror, may terminate the Reduction 
Agreement at any time with respect to that Subsector Member by giving 
ten (10) calendar days written notice to the Auditor preferably via e-
mail. Withdrawal of a Subsector Member shall not affect the validity of 
the Reduction Agreement with respect to any other Subsector Members. 
Once effective, the Reduction Agreement shall continue in full force 
and effect regardless of whether subsequent withdrawals reduce the 
number of

[[Page 57703]]

Subsector Members below that level required to effectuate the Reduction 
Agreement. Attempted withdrawal by a Current Offeror or Selected 
Offeror shall be invalid, and such Offer shall remain a binding, 
irrevocable Offer, unaffected by the attempted withdrawal.
    (d) Selection of fishing capacity to be removed by Reduction Plan. 
The fishing capacity removed by the Reduction Plan will be the 
Reduction Fishing Interests voluntarily offered through the Reduction 
Plan by offering Subsector Members and as selected by the Nonoffering 
Subsector Members, up to an aggregate amount of thirty six million 
dollars ($36,000,000) as set forth in this paragraph (d).
    (1) Overview. The Selection Process will begin upon the Effective 
Date of the Reduction Agreement. The Selection Process will alternate 
on a weekly basis between:
    (i) Submitting Periods, during which individual Subsector Members 
may submit Offers of fishing capacity they wish to include in the 
Reduction Plan; and
    (ii) Ranking Periods, during which Nonoffering Subsector Members 
will rank the submitted Offers.
    (2) Offers--(i) Binding agreement. An Offer from a Subsector Member 
shall be a binding, irrevocable offer from a Subsector Member to 
relinquish to NMFS the Reduction Fishing Interests for the price set 
forth on the Offer contingent on such Offer being a Selected Offer at 
the closing of the Selection Process. Once submitted, an Offer may not 
be revoked or withdrawn while that Offer is a Current Offer or Selected 
Offer. An Offer that is submitted by a Subsector Member, but is not a 
Selected Offer during the subsequent Ranking Period, shall be deemed to 
be terminated and the Subsector Member shall have no further obligation 
with respect to performance of that Offer.
    (ii) Offer content. All Offers submitted to the Auditor shall 
include the following information: LLP License number; LLP License 
number(s) of any linked crab LLP Licenses; license MLOA (MLOA--maximum 
length overall of a vessel is defined at Sec.  679.2 of this chapter); 
the license area, gear and species endorsements; a summary of the 
Pacific cod catch history for the calendar years 1995-2004; and the 
offered price. The Offer shall also state whether a vessel is currently 
designated on the LLP License and as such will be withdrawn from all 
fisheries if the Offer is selected for reduction in the Reduction Plan. 
If so, the Offer shall identify such vessel by name, official number, 
and current owner. In addition, the Offer shall provide a summary of 
the Pacific cod catch history for the calendar years 1995-2004 of the 
vessel to be retired from the fisheries. All summary catch histories 
included in Offers shall be calculated utilizing both the weekly 
production report and best blend methodology and shall separately state 
for each methodology the Pacific cod catch in metric tons and as a 
percentage of the overall catch for the longline catcher processor 
subsector on an annual basis for each of the required years. If the 
vessel stated to be withdrawn from the fisheries is not owned by the 
LLP License owner of record, the Offer shall be countersigned by the 
owner of record of the vessel. An Offer offering a Latent License shall 
state on the Offer Form that the offered LLP License is a Latent 
License. The Offer Form shall also include a comment section for any 
additional information that Offerors wish to provide to the Subsector 
Members concerning the Offer.
    (iii) Prequalification of Offers. A Subsector Member may submit a 
Prequalification Offer to the Auditor at any time prior to the Opening 
Date. A Prequalification Offer shall contain all elements of an Offer, 
except that a price need not be provided. The Auditor shall notify the 
Subsector Member submitting a Prequalification Offer as to any 
deficiencies as soon as practicable. All details of a Prequalification 
Offer shall be kept confidential by the Auditor.
    (3) Submitting an Offer--(i) Offer submission. Commencing on the 
first Tuesday following the Opening Date and during all Submission 
Periods until the Selection Process is closed, any Subsector Member may 
submit an Offer. All Offers are to be on the applicable form provided 
on the FLCC website, executed by an Authorized Party and submitted to 
the Auditor by facsimile. Any Subsector Member may submit an Offer 
during any Submission Period, even if that Subsector Member has not 
submitted an Offer in any previous Submission Period. If a Subsector 
Member holds more than one LLP License, such Subsector Member may, but 
is not required to, submit an Offer for each LLP License held during a 
Submission Period.
    (ii) Submission Periods. The initial Submission Period shall 
commence at 9 a.m. (Pacific time) on the Tuesday following the Opening 
Date and end at 5 p.m. (Pacific time) on the Friday of that week. 
Subsequent Submission Periods shall commence at 9 a.m. (Pacific time) 
on the first Tuesday following the preceding Ranking Period and end at 
5 p.m. (Pacific time) on the Friday of that week. All times set forth 
in the Reduction Agreement and used in the Offer process shall be the 
time kept in the Pacific time zone as calculated by the National 
Institute of Standards and Technology.
    (iii) Validity of Offer. The Auditor shall examine each Offer for 
consistency with the Database and information contained in the 
enrollment documents. If there is an inconsistency in the information 
contained in the Offer, any of the elements required of an Offer 
pursuant to paragraph (d)(2)(ii) of this section are missing, or the 
Auditor does not receive the original Offer Form before the Offers are 
to be posted pursuant to paragraph (d)(4) of this section, the Auditor 
shall notify the offering Subsector Member by e-mail or mail that the 
Offer is nonconforming as soon as practicable after discovering the 
basis of invalidity. The Subsector Member may submit a revised, 
conforming Offer prior to the close of that Submission Period or, in 
any subsequent Submission Period. Only one Offer may be submitted with 
respect to an LLP License during a Submission Period. In the event a 
Subsector Member submits more than one Offer with respect to an LLP 
License during a Submission Period, the first conforming Offer received 
by the Auditor shall be binding and irrevocable and any subsequent 
Offers shall be deemed invalid.
    (iv) Warranty. By submitting an Offer, the Offering Subsector 
Member, warrants and represents that the Offering Subsector Member has 
read and understands the terms of the Reduction Agreement, the Offer, 
and the Reduction Contract and has had the opportunity to seek 
independent legal counsel regarding such documents and/or agreements 
and the consequences of submitting an Offer.
    (4) Posting Offers--(i) Current offers. For each Offer received 
during a Submission Period, the Auditor shall post on the Website no 
later than 5 p.m. (Pacific time) on the following Tuesday all of the 
details of such Offer as set forth on the Offer Form. In addition, the 
Auditor shall post, as available to Auditor, a summary by year of up to 
ten (10) years catch history during the period 1995-2004 in total round 
weight equivalents and percentage of Longline Subsector ITAC harvested 
for any vessel that is included in the Offer. Subsector Member (or 
vessel owner, if other than the Subsector Member) expressly authorizes 
Auditor to release the catch history summary information previously 
prepared for that Subsector Member or vessel owner by the Auditor as 
part of the analysis of FLCC's membership's

[[Page 57704]]

catch history previously conducted by the Auditor on behalf of the 
FLCC.
    (ii) Posting order. Offers shall be posted on the Website by the 
Auditor in alphabetical order of the Offering Subsector Member's name.
    (iii) Questions as to Offer. The Auditor shall respond to no 
questions from Subsector Member regarding Offers except to confirm that 
the posting accurately reflects the details of the Offer. If an 
Offering Subsector Member notices an error in an Offer posting on the 
Website, such Subsector Member shall notify the Auditor as soon as 
practicable. The Auditor shall review such notice, the posting and the 
original Offer. If an error was made in posting the Auditor shall 
correct the posting as soon as practicable and notify the Subsector 
Members via e-mail or mail of the correction. In the event such an 
error is not discovered prior to Ranking, an Offering Subsector Member 
shall be bound to the terms of the submitted Offer, not the terms of 
the posted Offer.
    (iv) Archive. The Auditor shall maintain on the Website an archive 
of prior Offers posted, which shall be available for review by all 
Subsector Members.
    (5) Ranking--(i) Eligibility. Each Subsector Member that has not 
submitted an Offer during the preceding Submission Period, or whose 
vessel is not included as a withdrawing vessel in an Offer during the 
preceding Submission Period (i.e., a Nonoffering Subsector Member), may 
submit to the Auditor a Ranking Form during a Ranking Period. With 
respect to Ranking, a Subsector Member that holds more than one LLP 
License may participate in the Ranking process for each LLP License not 
included in an Offer.
    (ii) Ranking Period. The initial Ranking Period shall commence 
immediately after the Offers from the preceding Submission Period have 
been posted and end at 5 p.m. (Pacific time) on the Friday of that 
week. Subsequent Ranking Periods shall commence immediately after the 
Offers from the preceding Submission Period have been posted and end at 
5 p.m. (Pacific time) on the Friday of that week.
    (iii) Ranking Form. Prior to each Ranking Period, the Auditor will 
post a Ranking Form on the Website in ``pdf'' file format. Each 
eligible Subsector Member wishing to rank the current Offers shall rank 
the Offers on the Ranking Form numerically in the Subsector Member's 
preferred order of purchase. The Offer that Subsector Member would most 
like to have accepted should be ranked number one (1), and subsequent 
Offers ranked sequentially until the Offer that the Subsector Member 
would least like to see accepted is ranked with the highest numerical 
score. A Subsector Member wishing to call for a Closing Vote shall, in 
lieu of ranking the Current Offers, mark the Ranking Form to accept the 
Selected Offers selected during the prior Ranking Period and close the 
Selection Process. To be valid, the Ranking Form must rank each Current 
Offer listed on the Ranking Form or, if applicable, be marked to call 
for a Closing Vote. Ranking Forms shall be submitted by sending a 
completed Ranking Form, signed by an Authorized Party, to the Auditor 
by facsimile or mail prior to the end of the Ranking Period. A 
Subsector Member is not required to rank the Offers during a Ranking 
Period or call for a Closing Vote.
    (iv) Validity of Subsector Member Ranking. The Auditor shall 
examine each Ranking Form for completeness, whether the form either 
ranks the Offers or calls for a Closing Vote (but not both), and 
authorized signature. Any incomplete or otherwise noncompliant Ranking 
Form(s) shall be invalid, and shall not be included in the Rankings of 
the Current Offers. The Auditor shall notify the Subsector Member of 
the reason for declaring any Ranking Form invalid as soon as 
practicable. A Subsector Member may cure the submission of an invalid 
Ranking Form by submitting a complying Ranking Form if accomplished 
before the end of the applicable Ranking Period.
    (6) Ranking results--(i) Compiling the rankings. Unless two-thirds 
(\2/3\) of the Nonoffering Subsector Members have called for a Closing 
Vote, the Auditor shall compile the results of the Ranking Forms by 
assigning one point for each position on a Ranking Form. That is, the 
Offer ranked number one (1) on a Ranking Form shall be awarded one (1) 
point, the Offer ranked two (2) shall receive two (2) points, and 
continuing on in this manner until all Offers have been assigned points 
correlating to its ranking on each valid Ranking Form. The Offer with 
the least number of total points assigned shall be the highest ranked 
Offer, and the Offer with the greatest total points assigned shall be 
the lowest ranked Offer.
    (ii) Posting rankings. The Auditor shall post the results of the 
compilation of the Ranking Forms on the Website in alphabetical order 
based on the Offering Subsector Member's name no later than 5 p.m. 
(Pacific time) on the Monday following the Ranking Period. The Auditor 
shall post the highest consecutive ranking Offers that total thirty six 
million dollars ($36,000,000) or less. Those Offering Subsector Members 
whose Offers are posted shall be deemed Selected Offerors and their 
Offers shall be deemed Selected Offers. Those Offering Subsector 
Members whose Offers are not posted shall be deemed Rejecte