Fisheries in the Western Pacific; Compensation to Commercial Bottomfish and Lobster Fishermen due to Fishery Closures in the Papahanaumokuakea Marine National Monument, Northwestern Hawaiian Islands, 15685-15688 [E9-7860]
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Federal Register / Vol. 74, No. 65 / Tuesday, April 7, 2009 / Proposed Rules
the Administrator finds necessary for
safety in air commerce. This regulation
is within the scope of that authority
because it addresses an unsafe condition
that is likely to exist or develop on
products identified in this rulemaking
action.
Regulatory Findings
We determined that this proposed AD
would not have federalism implications
under Executive Order 13132. This
proposed AD would not have a
substantial direct effect on the States, on
the relationship between the national
Government and the States, or on the
distribution of power and
responsibilities among the various
levels of government.
For the reasons discussed above, I
certify this proposed regulation:
1. Is not a ‘‘significant regulatory
action’’ under Executive Order 12866,
2. Is not a ‘‘significant rule’’ under the
DOT Regulatory Policies and Procedures
(44 FR 11034, February 26, 1979), and
3. Will not have a significant
economic impact, positive or negative,
on a substantial number of small entities
under the criteria of the Regulatory
Flexibility Act.
You can find our regulatory
evaluation and the estimated costs of
compliance in the AD Docket.
List of Subjects in 14 CFR Part 39
Air transportation, Aircraft, Aviation
safety, Incorporation by reference,
Safety.
The Proposed Amendment
Accordingly, under the authority
delegated to me by the Administrator,
the FAA proposes to amend 14 CFR part
39 as follows:
PART 39—AIRWORTHINESS
DIRECTIVES
1. The authority citation for part 39
continues to read as follows:
Authority: 49 U.S.C. 106(g), 40113, 44701.
§ 39.13
[Amended]
2. The FAA amends § 39.13 by adding
the following new AD:
Boeing: Docket No. FAA–2009–0288;
Directorate Identifier 2008–NM–214–AD.
Comments Due Date
(a) We must receive comments by May 22,
2009.
Affected ADs
(b) None.
Service Bulletin 737–57–1293, dated
November 13, 2008.
DEPARTMENT OF COMMERCE
Unsafe Condition
National Oceanic and Atmospheric
Administration
(d) This AD results from a report received
of leaking fuel from the wing leading edge
area at the inboard end of the number 5
leading edge slat. We are issuing this AD to
prevent flammable fluids from accumulating
in the wing leading edge and draining
inboard and onto the engine exhaust nozzle,
which could result in a fire.
Compliance
(e) You are responsible for having the
actions required by this AD performed within
the compliance times specified, unless the
actions have already been done.
Corrective Actions
(f) Within 24 months after the effective
date of this AD, modify the fluid drain path
in the wing leading edge area, forward of the
wing front spar, and do all applicable related
investigative and corrective actions, by
accomplishing all applicable actions
specified in the Accomplishment
Instructions of Boeing Special Attention
Service Bulletin 737–57–1293, dated
November 13, 2008. Do all applicable related
investigative and corrective actions before
further flight.
Alternative Methods of Compliance
(AMOCs)
(g)(1) The Manager, Seattle Aircraft
Certification Office (ACO), FAA, has the
authority to approve AMOCs for this AD, if
requested using the procedures found in 14
CFR 39.19. Send information to ATTN: Sam
Spitzer, Aerospace Engineer, Propulsion
Branch, ANM–140S, FAA, Seattle Aircraft
Certification Office, 1601 Lind Avenue, SW.,
Renton, Washington 98057–3356; telephone
(425) 917–6510; fax (425) 917–6590.
(2) To request a different method of
compliance or a different compliance time
for this AD, follow the procedures in 14 CFR
39.19. Before using any approved AMOC on
any airplane to which the AMOC applies,
notify your appropriate principal
maintenance inspector (PMI) or principal
avionics inspector (PAI), as appropriate, or
lacking a principal inspector, your local
Flight Standards District Office. The AMOC
approval letter must specifically reference
this AD.
Issued in Renton, Washington, on March
12, 2009.
Ali Bahrami,
Manager, Transport Airplane Directorate,
Aircraft Certification Service.
[FR Doc. E9–7769 Filed 4–6–09; 8:45 am]
BILLING CODE 4910–13–P
Applicability
(c) This AD applies to Boeing Model 737–
600, –700, –700C, –800, –900 and –900ER
series airplanes, certificated in any category,
as identified in Boeing Special Attention
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50 CFR Part 665
[Docket No. 080304370–9128–01]
RIN 0648–AW52
Fisheries in the Western Pacific;
Compensation to Commercial
Bottomfish and Lobster Fishermen due
to Fishery Closures in the
Papahanaumokuakea Marine National
Monument, Northwestern Hawaiian
Islands
AGENCY: National Marine Fisheries
Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA),
Commerce.
ACTION: Proposed rule; request for
public comments.
SUMMARY: The Consolidated
Appropriations Act, 2008, authorizes
the Secretary of Commerce (Secretary),
through NMFS, to provide monetary
compensation to eligible Northwestern
Hawaiian Islands (NWHI) commercial
lobster permit holders who were, and
commercial bottomfish permit holders
who will be, displaced by fishery
closures resulting from establishment of
the Papah naumoku kea Marine
National Monument (Monument) in the
NWHI. This proposed rule describes
and seeks public comment on a permit
compensation proposal, which
identifies eligible permit holders and
describes the permit valuation
methodology. Holders of NWHI
commercial Federal bottomfish and
lobster permits who voluntarily accept
monetary compensation would be
required to surrender their permits and
leave the fisheries.
DATES: Comments must be received by
May 4, 2009.
ADDRESSES: You may submit comments
on the proposed rule, identified by
0648–AW52, by either of the following
methods:
• Electronic Submission: Submit all
electronic public comments via the
Federal e–Rulemaking Portal
www.regulations.gov; or
• Mail: William L. Robinson, Regional
Administrator, NMFS, Pacific Islands
Region (PIR), 1601 Kapiolani Blvd.,
Suite 1110, Honolulu, HI 96814–4700.
Instructions: All comments received
are a part of the public record and will
generally be posted to
www.regulations.gov without change.
All personal identifying information (for
example, name, address, etc.) submitted
voluntarily by the commenter may be
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Federal Register / Vol. 74, No. 65 / Tuesday, April 7, 2009 / Proposed Rules
Electronic Access
This proposed rule is also accessible
on the World Wide Web at
www.gpoaccess.gov/fr.
Background
On December 26, 2007, the President
signed Public Law 110–161, the
Consolidated Appropriations Act of
2008. The Act authorizes the Secretary
to provide a mechanism for
compensating bottomfish and lobster
fishermen who were impacted as a
result of the creation of the Monument
on June 15, 2006 (Proclamation 8031, 71
FR 3644, June 26, 2006, as amended by
Proclamation 8112, 72 FR 10031, March
6, 2007). Final regulations governing the
Monument require that any commercial
lobster fishing permit be subject to a
zero annual harvest limit. Those
regulations permanently closed the
NWHI lobster fishery. The NWHI
commercial bottomfish fishery is
allowed to operate until June 15, 2011,
when it will be closed permanently (see
71 FR 51134, August 29, 2006, and 50
where i is the year index, N is the length
of the evaluation period, income to
permit holder is the proxy for net
revenue, and λ is the discount rate over
the evaluation period. Because the
discount rate is positive, the discounted
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14:34 Apr 06, 2009
Jkt 217001
CFR 404.10). Funding is authorized to
develop and implement a program to
compensate eligible persons who held
valid commercial Federal NWHI
bottomfish and lobster permits at the
time the Monument was created. The
Act appropriates $6,697,500 and directs
the Secretary to promulgate rulemaking
for a voluntary capacity reduction
program that does the following:
(1) Identifies eligible NWHI
bottomfish and lobster fishery permit
holders affected by the establishment of
the Monument;
(2) Provides a mechanism to
compensate eligible permit holders for
no more than the economic value of
their permits; and
(3) In addition to the permit
compensation provided under
subparagraph (2) above, provides an
optional funding mechanism whereby
eligible participants may choose to
receive additional compensation based
on the value of their fishing vessel and
gear, provided such vessels and gear
will no longer be used for fishing.
This proposed rule would identify
eligible permit holders and establish a
process for voluntary permit
compensation. A voluntary vessel
buyout program is contingent on the
availability of funds following the
permit compensation, and NMFS does
not propose to carry out this optional
mechanism until after the initial permit
compensation is complete. If funds are
available, NMFS would publish a
separate proposed rule that describes
and seeks public comment on a vessel
and gear buyout program.
Eligible Participants
The Act defines ‘‘eligible
participants’’ as individuals holding
commercial Federal fishing permits for
either lobster or bottomfish in the
designated waters within the
Monument, at the time the Monument
was established on June 15, 2006. NMFS
has preliminarily identified eligible
participants as holders of eight valid
commercial Federal permits for
bottomfish, and holders of 15 valid
NPV will necessarily be less than the
total of individual payments were
NMFS to propose making annual partial
payments over the 30-year period.
The proxy for NPV of net revenue is
a multiple of annual gross revenue
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commercial Federal permits for lobster.
NMFS is not authorized to provide
compensation to any persons not
meeting the definition of ‘‘eligible
participants’’ under the program
described in this proposed rule. As a
condition of participation in the
proposed program, eligible permit
holders who voluntarily accept and
receive permit compensation must
immediately surrender their NWHI
fishing permit to NMFS and agree to
relinquish any claim associated with
each permit.
Proposed NWHI Permit Compensation
Methodology
NMFS proposes to determine the
economic value of NWHI lobster and
bottomfish Federal commercial fishing
permits by using a proxy for the Net
Present Value (NPV) of the permit that
uses imputed (estimated) values in the
absence of a documented market for the
permits. NPV is commonly used in cash
flow analyses to identify, evaluate, and
compare the value of a particular
investment. The components of the NPV
calculation include (1) an initial base
value, often revenue, for one or more
years of fishing, (2) a discount rate to
adjust the base value for the value of
future earnings, and (3) the time period
over which the base value will be
discounted. For both lobster and
bottomfish permits, NMFS proposes to
use a discount rate of 2.7 percent (the
real interest rate for a Treasury bond as
prescribed by Office of Management and
Budget, Circular A–4, Appendix C,
revised January 2008
(www.whitehouse.gov/omb/circulars/
a094/a94lappx–c.html) over a period
of 30 years. This 30–yr period is based
on the approximate life of a typical
fishing vessel and the de facto reality
that discounting outside a 30–yr time
horizon returns low values. It is also the
typical period of tax table depreciation,
and is a standard time horizon for
capital asset budgeting.
The NPV formula accounts for the
flow of the valuation variable over an
agreed time period:
based on a variety of separate
investigations of these relationships
(which are not precise, but in which
gross revenue has the benefit of being
more transparent, within the constraints
E:\FR\FM\07APP1.SGM
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publicly accessible. Do not submit
confidential business information, or
otherwise sensitive or protected
information. NMFS will accept
anonymous comments for publication
and response, as appropriate (if you
wish to remain anonymous, enter ‘‘NA’’
in the required name and organization
fields). Attachments to electronic
comments will be accepted in Microsoft
Word or Excel, WordPerfect, or Adobe
PDF file formats only.
A regulatory impact review (RIR) that
describes in more detail the permit
valuation methodology, and an
environmental assessment (EA) that
analyzes the potential impacts of the
proposed rule on the environment, are
available from William L. Robinson (see
ADDRESSES) and www.regulations.gov.
An initial regulatory flexibility analysis
(IRFA) is found in the section below.
FOR FURTHER INFORMATION CONTACT:
Toby Wood, Sustainable Fisheries
Division, NMFS PIR, 808–944–2234.
SUPPLEMENTARY INFORMATION:
Federal Register / Vol. 74, No. 65 / Tuesday, April 7, 2009 / Proposed Rules
of Federal confidentiality statutes, and
straightforward to calculate).
While NMFS proposes to use standard
NPV methodology to determine the
economic value of commercial fishing
permits in both the lobster and
bottomfish fisheries, NMFS proposes
two distinctly different time periods for
the determination of the base value.
NMFS proposes that this time period be
the three consecutive years in which
each fishery operated immediately prior
to the designation of the Monument.
These time periods are different for each
fishery in recognition of different
operational and historical circumstances
of each fishery.
Bottomfish
NWHI bottomfish permits were/are
not transferable, so there was no
established market on which to
determine their value. Thus, NMFS
proposes to determine the economic
value of each of the eight Federal
bottomfish permits individually using
the base value time period of 2003–05.
That is, the NPV of each permit,
individually, would reflect the average
ex–vessel net revenue, calculated as the
ex–vessel gross revenue proxy times a
multiplier of approximately 2.5 that
considers the discount rate, determined
by NMFS examination of documented
records for the 2003–05 time period.
Thus, the economic value of each
permit, and the NMFS compensation
offer, will be different for each of the
eight permit holders, based on the
2003–05 fishing record associated with
each permit (i.e., the average individual
ex-vessel gross revenue for 2003–05
multiplied by approximately 2.5). All
imputed values will be updated to
current dollar figures based on
Consumer Price Indices.
Lobster
NWHI lobster permits were/are
transferable, so it is theoretically
possible to consider market exchange
values were they available to NMFS.
However, this would likely be
problematic for several reasons. The
NWHI lobster permit market is small,
unmonitored, and has been largely
inactive over the past eight years. In the
later years of operation, the lobster
fishery was undergoing operational
changes including the formation of a
cooperative to manage fishing capacity
and costs, and to share revenue among
permit holders. Also, some vessels were
experimenting with higher value–added
production methods to allow the export
of live lobsters to Asian markets. All of
these factors make it difficult to
determine the economic value of each
individual lobster permit.
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14:34 Apr 06, 2009
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Thus, NMFS proposes to determine
the economic value of each of the 15
Federal lobster permits collectively
using the base value time period of
1997–99. That is, the NPV of each
permit would use a similar ex–vessel
gross revenue proxy to reflect the
average ex–vessel net revenue for the
fleet as a whole for the 1997–99 time
period, times a multiplier of
approximately 2.5 that considers the
discount rate. Thus, the economic value
of each permit, and the NMFS
compensation offer, will be identical for
all 15 permit holders. All imputed
values will be updated to current dollar
figures based on Consumer Price
Indices.
Implementation
NMFS proposes to notify eligible
permit holders in writing of their
individual permit compensation offer,
as determined by the compensation
mechanism described herein. It is
important to note that if the total
economic value of all permits combined
is greater than the authorized amount
minus administrative costs associated
with implementing the compensation
program, then the amount of monetary
compensation disbursed to all
participants would be prorated. Within
30 days of receipt of notification, each
permit holder would need to review the
permit compensation offer, and would
be required to notify NMFS in writing
of either their voluntary acceptance or
non–acceptance of the compensation
offer. Failure to inform NMFS of a
decision (i.e., acceptance or non–
acceptance decision) by the prescribed
deadline date would be deemed a non–
acceptance by the permit holder. This
determination by NMFS of non–
acceptance for compensation shall be
deemed final and is not subject to
agency appeal.
At the conclusion of the 30-day
response period, NMFS or its authorized
contractor would review all responses
from permit holders, identify those who
have accepted NMFS’ offer of permit
compensation, and disburse
compensation funds to the permit
holders who have accepted. A permit
holder’s acceptance of compensation
funds would immediately invalidate the
holder’s Federal permit in the NWHI
bottomfish and/or lobster fishery, as
appropriate, and such permit would be
immediately surrendered to NMFS.
NMFS would notify the permit holder,
at the time that compensation funds are
disbursed, that his or her permit is no
longer valid, and the vessel would no
longer be eligible to participate in the
fishery for which compensation has
been received. Vessel owners who have
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15687
not accepted NMFS’ offer of permit
compensation are authorized to
continue fishing in accordance with the
terms and conditions of their respective
permits, and to the extent otherwise
permitted by law. Permit holders should
note that commercial fishing for lobster
in waters of the Monument is now
prohibited, and that fishing for
commercial bottomfish and associated
pelagic species will be prohibited in
waters of the Monument after June 15,
2011. NMFS solicits comments on the
proposed compensation methodology
and process.
Transferability of Compensation
Given that the NWHI lobster fishery
was closed permanently as a result of
the designation of the Monument, any
permit compensation would be
provided to the holder of the permit that
was valid on the date of the
Monument’s designation, i.e., June 15,
2006. Although the NWHI bottomfish
fishery remains open until June 15,
2011, the permits are not transferrable,
so the bottomfish permit compensation
would be available only to the holder of
the permit at the time the compensation
funds are disbursed. Since bottomfish
permits are not transferable, any claim
to permit compensation is both non–
transferable and non–assignable.
Accordingly, only the NWHI bottomfish
permit holder of record shall be deemed
an eligible participant for purposes of
receiving permit compensation under
this program.
Future Vessel and Gear Buyout
Compensation
Contingent on the availability of
appropriated funds after all permit
compensation payouts have been made,
NMFS proposes to offer compensation
to buy back vessels and gear from
eligible participants, based on the fair
market value of the vessels and gear. For
purposes of this proposed program,
‘‘eligible participants’’ shall have the
same meaning as described in the
permit compensation program above.
Because of the limited funds
appropriated by Congress for this
purpose, there is no guarantee that
NMFS actually will offer compensation
for any, or all, vessels and gear that
otherwise may qualify for this program.
NMFS proposes to use a standard
approach in vessel buyout, i.e., reverse
auction, where each eligible permit
holder would specify a buyout price for
retiring their vessel(s) from commercial
fishing. NMFS would rank and accept
bids, and disburse funds, beginning
with the lowest bid and continuing
through the bids sequentially until
remaining funds were exhausted. Public
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comments are sought on this approach
and possible alternatives, including
methods for valuing vessels and
associated gear, and other standard
approaches, such as a lottery system or
blind auction.
Consistent with the purposes of this
buyout, NMFS would require, as a
condition of compensation, proof that
the vessel and gear have been
permanently removed from use in all
U.S. commercial fisheries, as defined in
46 U.S. Code § 12101(a). Proof of
permanent removal from fisheries may
be satisfied by taking any of the
following actions:
(1) Providing evidence of scrapping
the vessel, which would require
disassembly and/or scuttling the vessel
in an ecologically safe manner. This
method suggests additional costs which
would need to be considered in the
buyout process; or
(2) Surrendering the vessel’s fishery
endorsement and transferring the vessel
to non-fishing uses. For example,
vessels could be transferred to a U.S.
public entity, a U.S. nonprofit
organization, or a foreign national
government for use in research
(including fisheries research),
education, training, humanitarian work,
safety or law enforcement, etc.,
depending on the group’s objectives.
NMFS proposes that vessel owners
bear all costs associated with the
scrapping or transfer of vessels that are
bought out under this program. Funds
received from the buyout compensation
can be used for this purpose.
Classification
The NMFS Assistant Administrator
has determined that this proposed rule
is consistent with the Consolidated
Appropriations Act of 2008 and other
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14:34 Apr 06, 2009
Jkt 217001
applicable laws, subject to further
consideration after public comment.
This proposed rule has been
determined to be significant for
purposes of Executive Order 12866.
An IRFA was prepared, as required by
section 603 of the Regulatory Flexibility
Act. The IRFA describes the economic
impact this proposed rule, if adopted,
would have on small entities as follows.
A description of the action, why it is
being considered, and the legal basis for
this action are found at the beginning of
this section in the preamble and in the
SUMMARY section of the preamble.
The analysis follows:
This proposed rule will impact the vessel
owners who held 15 NWHI lobster permits
and eight NWHI bottomfish permits at the
time the Monument was designated. These
permit holders were determined initially by
NMFS to be eligible for compensation under
The Act. The Small Business
Administration’s accepted definition of a
small fish harvester as a vessel that produces
no more than $4.0 million in gross revenue
annually. Using this definition, all permit
holders who are eligible for compensation are
defined as small entities. There are no
disproportionate economic impacts from this
action based on vessel size or home port.
There are no recordkeeping, reporting, or
other compliance requirements associated
with this proposed rule. There are no Federal
rules that duplicate, overlap, or conflict with
this rule. There would be no adverse
economic impact to any of the eligible NWHI
bottomfish and lobster permit holders
resulting from this rule.
For bottomfish permit holders, the amount
of monetary compensation would be derived
from an NPV calculation using average exvessel net revenue projected over 30 years,
and would be imputed as the ex-vessel gross
revenue for 2003–05 times a multiplier of
approximately 2.5, which is based on the 30–
yr discount rate.
The lobster permit holders would receive
compensation in the form of equal payments
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derived from NPV of the fleet–wide average
ex-vessel net revenue for 1997–99, and
imputed using a similar ex-vessel gross
revenue determination times the multiplier
of approximately 2.5, based on the 30–yr
discount rate. The 1997–99 period represents
the last years that lobster fishing in the NWHI
operated under NMFS harvest guidelines.
The NPV for the lobster fishery would use
the same discount rate and time period as the
value imputed for bottomfish permit holders.
The real interest rate for 30-year treasury
notes and bonds as prescribed by Office of
Management and Budget, Circular A–4,
Appendix A, is 2.7 percent.
While the intention is to base the imputed
value on net revenue calculations, this is
difficult given the unavailability of
individual cost data. Therefore, NMFS will
use a proxy for net revenue based on total,
or gross, revenue. Since profit margins within
each fishery are assumed to be similar, this
would not affect relative amounts of
compensation. In addition, with a relatively
low real discount rate (2.7 percent) and long
time frame (30 years), the differences
between net and total revenues will be
mitigated.
NMFS will estimate the permit values
using official NMFS and State of Hawaii
commercial fishing records for the respective
time periods. For a more thorough
description of the methodology used to
determine the economic values of these
permits, see Appendix A to the RIR (see
ADDRESSES). Any residual funds following
the permit compensation program would be
available for the vessel and gear buyout
program using a standard vessel buyout
approach, such as a reverse auction, lottery
system, or blind auction.
Authority: Pub. L. 110–161.
Dated: April 2, 2009.
Samuel D. Rauch III,
Deputy Assistant Administrator for
Regulatory Programs, National Marine
Fisheries Service.
[FR Doc. E9–7860 Filed 4–6–09; 8:45 am]
BILLING CODE 3510–22–S
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]]>Agencies
[Federal Register Volume 74, Number 65 (Tuesday, April 7, 2009)]
[Proposed Rules]
[Pages 15685-15688]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-7860]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration
50 CFR Part 665
[Docket No. 080304370-9128-01]
RIN 0648-AW52
Fisheries in the Western Pacific; Compensation to Commercial
Bottomfish and Lobster Fishermen due to Fishery Closures in the
Papahanaumokuakea Marine National Monument, Northwestern Hawaiian
Islands
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA), Commerce.
ACTION: Proposed rule; request for public comments.
-----------------------------------------------------------------------
SUMMARY: The Consolidated Appropriations Act, 2008, authorizes the
Secretary of Commerce (Secretary), through NMFS, to provide monetary
compensation to eligible Northwestern Hawaiian Islands (NWHI)
commercial lobster permit holders who were, and commercial bottomfish
permit holders who will be, displaced by fishery closures resulting
from establishment of the Papah naumoku kea Marine National Monument
(Monument) in the NWHI. This proposed rule describes and seeks public
comment on a permit compensation proposal, which identifies eligible
permit holders and describes the permit valuation methodology. Holders
of NWHI commercial Federal bottomfish and lobster permits who
voluntarily accept monetary compensation would be required to surrender
their permits and leave the fisheries.
DATES: Comments must be received by May 4, 2009.
ADDRESSES: You may submit comments on the proposed rule, identified by
0648-AW52, by either of the following methods:
Electronic Submission: Submit all electronic public
comments via the Federal e-Rulemaking Portal www.regulations.gov; or
Mail: William L. Robinson, Regional Administrator, NMFS,
Pacific Islands Region (PIR), 1601 Kapiolani Blvd., Suite 1110,
Honolulu, HI 96814-4700.
Instructions: All comments received are a part of the public record
and will generally be posted to www.regulations.gov without change. All
personal identifying information (for example, name, address, etc.)
submitted voluntarily by the commenter may be
[[Page 15686]]
publicly accessible. Do not submit confidential business information,
or otherwise sensitive or protected information. NMFS will accept
anonymous comments for publication and response, as appropriate (if you
wish to remain anonymous, enter ``NA'' in the required name and
organization fields). Attachments to electronic comments will be
accepted in Microsoft Word or Excel, WordPerfect, or Adobe PDF file
formats only.
A regulatory impact review (RIR) that describes in more detail the
permit valuation methodology, and an environmental assessment (EA) that
analyzes the potential impacts of the proposed rule on the environment,
are available from William L. Robinson (see ADDRESSES) and
www.regulations.gov. An initial regulatory flexibility analysis (IRFA)
is found in the section below.
FOR FURTHER INFORMATION CONTACT: Toby Wood, Sustainable Fisheries
Division, NMFS PIR, 808-944-2234.
SUPPLEMENTARY INFORMATION:
Electronic Access
This proposed rule is also accessible on the World Wide Web at
www.gpoaccess.gov/fr.
Background
On December 26, 2007, the President signed Public Law 110-161, the
Consolidated Appropriations Act of 2008. The Act authorizes the
Secretary to provide a mechanism for compensating bottomfish and
lobster fishermen who were impacted as a result of the creation of the
Monument on June 15, 2006 (Proclamation 8031, 71 FR 3644, June 26,
2006, as amended by Proclamation 8112, 72 FR 10031, March 6, 2007).
Final regulations governing the Monument require that any commercial
lobster fishing permit be subject to a zero annual harvest limit. Those
regulations permanently closed the NWHI lobster fishery. The NWHI
commercial bottomfish fishery is allowed to operate until June 15,
2011, when it will be closed permanently (see 71 FR 51134, August 29,
2006, and 50 CFR 404.10). Funding is authorized to develop and
implement a program to compensate eligible persons who held valid
commercial Federal NWHI bottomfish and lobster permits at the time the
Monument was created. The Act appropriates $6,697,500 and directs the
Secretary to promulgate rulemaking for a voluntary capacity reduction
program that does the following:
(1) Identifies eligible NWHI bottomfish and lobster fishery permit
holders affected by the establishment of the Monument;
(2) Provides a mechanism to compensate eligible permit holders for
no more than the economic value of their permits; and
(3) In addition to the permit compensation provided under
subparagraph (2) above, provides an optional funding mechanism whereby
eligible participants may choose to receive additional compensation
based on the value of their fishing vessel and gear, provided such
vessels and gear will no longer be used for fishing.
This proposed rule would identify eligible permit holders and
establish a process for voluntary permit compensation. A voluntary
vessel buyout program is contingent on the availability of funds
following the permit compensation, and NMFS does not propose to carry
out this optional mechanism until after the initial permit compensation
is complete. If funds are available, NMFS would publish a separate
proposed rule that describes and seeks public comment on a vessel and
gear buyout program.
Eligible Participants
The Act defines ``eligible participants'' as individuals holding
commercial Federal fishing permits for either lobster or bottomfish in
the designated waters within the Monument, at the time the Monument was
established on June 15, 2006. NMFS has preliminarily identified
eligible participants as holders of eight valid commercial Federal
permits for bottomfish, and holders of 15 valid commercial Federal
permits for lobster. NMFS is not authorized to provide compensation to
any persons not meeting the definition of ``eligible participants''
under the program described in this proposed rule. As a condition of
participation in the proposed program, eligible permit holders who
voluntarily accept and receive permit compensation must immediately
surrender their NWHI fishing permit to NMFS and agree to relinquish any
claim associated with each permit.
Proposed NWHI Permit Compensation Methodology
NMFS proposes to determine the economic value of NWHI lobster and
bottomfish Federal commercial fishing permits by using a proxy for the
Net Present Value (NPV) of the permit that uses imputed (estimated)
values in the absence of a documented market for the permits. NPV is
commonly used in cash flow analyses to identify, evaluate, and compare
the value of a particular investment. The components of the NPV
calculation include (1) an initial base value, often revenue, for one
or more years of fishing, (2) a discount rate to adjust the base value
for the value of future earnings, and (3) the time period over which
the base value will be discounted. For both lobster and bottomfish
permits, NMFS proposes to use a discount rate of 2.7 percent (the real
interest rate for a Treasury bond as prescribed by Office of Management
and Budget, Circular A-4, Appendix C, revised January 2008
(www.whitehouse.gov/omb/circulars/a094/a94_appx-c.html) over a period
of 30 years. This 30-yr period is based on the approximate life of a
typical fishing vessel and the de facto reality that discounting
outside a 30-yr time horizon returns low values. It is also the typical
period of tax table depreciation, and is a standard time horizon for
capital asset budgeting.
The NPV formula accounts for the flow of the valuation variable
over an agreed time period:
[GRAPHIC] [TIFF OMITTED] TP07AP09.005
where i is the year index, N is the length of the evaluation period,
income to permit holder is the proxy for net revenue, and [lambda] is
the discount rate over the evaluation period. Because the discount rate
is positive, the discounted NPV will necessarily be less than the total
of individual payments were NMFS to propose making annual partial
payments over the 30-year period.
The proxy for NPV of net revenue is a multiple of annual gross
revenue based on a variety of separate investigations of these
relationships (which are not precise, but in which gross revenue has
the benefit of being more transparent, within the constraints
[[Page 15687]]
of Federal confidentiality statutes, and straightforward to calculate).
While NMFS proposes to use standard NPV methodology to determine
the economic value of commercial fishing permits in both the lobster
and bottomfish fisheries, NMFS proposes two distinctly different time
periods for the determination of the base value. NMFS proposes that
this time period be the three consecutive years in which each fishery
operated immediately prior to the designation of the Monument. These
time periods are different for each fishery in recognition of different
operational and historical circumstances of each fishery.
Bottomfish
NWHI bottomfish permits were/are not transferable, so there was no
established market on which to determine their value. Thus, NMFS
proposes to determine the economic value of each of the eight Federal
bottomfish permits individually using the base value time period of
2003-05. That is, the NPV of each permit, individually, would reflect
the average ex-vessel net revenue, calculated as the ex-vessel gross
revenue proxy times a multiplier of approximately 2.5 that considers
the discount rate, determined by NMFS examination of documented records
for the 2003-05 time period. Thus, the economic value of each permit,
and the NMFS compensation offer, will be different for each of the
eight permit holders, based on the 2003-05 fishing record associated
with each permit (i.e., the average individual ex-vessel gross revenue
for 2003-05 multiplied by approximately 2.5). All imputed values will
be updated to current dollar figures based on Consumer Price Indices.
Lobster
NWHI lobster permits were/are transferable, so it is theoretically
possible to consider market exchange values were they available to
NMFS. However, this would likely be problematic for several reasons.
The NWHI lobster permit market is small, unmonitored, and has been
largely inactive over the past eight years. In the later years of
operation, the lobster fishery was undergoing operational changes
including the formation of a cooperative to manage fishing capacity and
costs, and to share revenue among permit holders. Also, some vessels
were experimenting with higher value-added production methods to allow
the export of live lobsters to Asian markets. All of these factors make
it difficult to determine the economic value of each individual lobster
permit.
Thus, NMFS proposes to determine the economic value of each of the
15 Federal lobster permits collectively using the base value time
period of 1997-99. That is, the NPV of each permit would use a similar
ex-vessel gross revenue proxy to reflect the average ex-vessel net
revenue for the fleet as a whole for the 1997-99 time period, times a
multiplier of approximately 2.5 that considers the discount rate. Thus,
the economic value of each permit, and the NMFS compensation offer,
will be identical for all 15 permit holders. All imputed values will be
updated to current dollar figures based on Consumer Price Indices.
Implementation
NMFS proposes to notify eligible permit holders in writing of their
individual permit compensation offer, as determined by the compensation
mechanism described herein. It is important to note that if the total
economic value of all permits combined is greater than the authorized
amount minus administrative costs associated with implementing the
compensation program, then the amount of monetary compensation
disbursed to all participants would be prorated. Within 30 days of
receipt of notification, each permit holder would need to review the
permit compensation offer, and would be required to notify NMFS in
writing of either their voluntary acceptance or non-acceptance of the
compensation offer. Failure to inform NMFS of a decision (i.e.,
acceptance or non-acceptance decision) by the prescribed deadline date
would be deemed a non-acceptance by the permit holder. This
determination by NMFS of non-acceptance for compensation shall be
deemed final and is not subject to agency appeal.
At the conclusion of the 30-day response period, NMFS or its
authorized contractor would review all responses from permit holders,
identify those who have accepted NMFS' offer of permit compensation,
and disburse compensation funds to the permit holders who have
accepted. A permit holder's acceptance of compensation funds would
immediately invalidate the holder's Federal permit in the NWHI
bottomfish and/or lobster fishery, as appropriate, and such permit
would be immediately surrendered to NMFS. NMFS would notify the permit
holder, at the time that compensation funds are disbursed, that his or
her permit is no longer valid, and the vessel would no longer be
eligible to participate in the fishery for which compensation has been
received. Vessel owners who have not accepted NMFS' offer of permit
compensation are authorized to continue fishing in accordance with the
terms and conditions of their respective permits, and to the extent
otherwise permitted by law. Permit holders should note that commercial
fishing for lobster in waters of the Monument is now prohibited, and
that fishing for commercial bottomfish and associated pelagic species
will be prohibited in waters of the Monument after June 15, 2011. NMFS
solicits comments on the proposed compensation methodology and process.
Transferability of Compensation
Given that the NWHI lobster fishery was closed permanently as a
result of the designation of the Monument, any permit compensation
would be provided to the holder of the permit that was valid on the
date of the Monument's designation, i.e., June 15, 2006. Although the
NWHI bottomfish fishery remains open until June 15, 2011, the permits
are not transferrable, so the bottomfish permit compensation would be
available only to the holder of the permit at the time the compensation
funds are disbursed. Since bottomfish permits are not transferable, any
claim to permit compensation is both non-transferable and non-
assignable. Accordingly, only the NWHI bottomfish permit holder of
record shall be deemed an eligible participant for purposes of
receiving permit compensation under this program.
Future Vessel and Gear Buyout Compensation
Contingent on the availability of appropriated funds after all
permit compensation payouts have been made, NMFS proposes to offer
compensation to buy back vessels and gear from eligible participants,
based on the fair market value of the vessels and gear. For purposes of
this proposed program, ``eligible participants'' shall have the same
meaning as described in the permit compensation program above. Because
of the limited funds appropriated by Congress for this purpose, there
is no guarantee that NMFS actually will offer compensation for any, or
all, vessels and gear that otherwise may qualify for this program.
NMFS proposes to use a standard approach in vessel buyout, i.e.,
reverse auction, where each eligible permit holder would specify a
buyout price for retiring their vessel(s) from commercial fishing. NMFS
would rank and accept bids, and disburse funds, beginning with the
lowest bid and continuing through the bids sequentially until remaining
funds were exhausted. Public
[[Page 15688]]
comments are sought on this approach and possible alternatives,
including methods for valuing vessels and associated gear, and other
standard approaches, such as a lottery system or blind auction.
Consistent with the purposes of this buyout, NMFS would require, as
a condition of compensation, proof that the vessel and gear have been
permanently removed from use in all U.S. commercial fisheries, as
defined in 46 U.S. Code Sec. 12101(a). Proof of permanent removal from
fisheries may be satisfied by taking any of the following actions:
(1) Providing evidence of scrapping the vessel, which would require
disassembly and/or scuttling the vessel in an ecologically safe manner.
This method suggests additional costs which would need to be considered
in the buyout process; or
(2) Surrendering the vessel's fishery endorsement and transferring
the vessel to non-fishing uses. For example, vessels could be
transferred to a U.S. public entity, a U.S. nonprofit organization, or
a foreign national government for use in research (including fisheries
research), education, training, humanitarian work, safety or law
enforcement, etc., depending on the group's objectives.
NMFS proposes that vessel owners bear all costs associated with the
scrapping or transfer of vessels that are bought out under this
program. Funds received from the buyout compensation can be used for
this purpose.
Classification
The NMFS Assistant Administrator has determined that this proposed
rule is consistent with the Consolidated Appropriations Act of 2008 and
other applicable laws, subject to further consideration after public
comment.
This proposed rule has been determined to be significant for
purposes of Executive Order 12866.
An IRFA was prepared, as required by section 603 of the Regulatory
Flexibility Act. The IRFA describes the economic impact this proposed
rule, if adopted, would have on small entities as follows. A
description of the action, why it is being considered, and the legal
basis for this action are found at the beginning of this section in the
preamble and in the SUMMARY section of the preamble. The analysis
follows:
This proposed rule will impact the vessel owners who held 15
NWHI lobster permits and eight NWHI bottomfish permits at the time
the Monument was designated. These permit holders were determined
initially by NMFS to be eligible for compensation under The Act. The
Small Business Administration's accepted definition of a small fish
harvester as a vessel that produces no more than $4.0 million in
gross revenue annually. Using this definition, all permit holders
who are eligible for compensation are defined as small entities.
There are no disproportionate economic impacts from this action
based on vessel size or home port. There are no recordkeeping,
reporting, or other compliance requirements associated with this
proposed rule. There are no Federal rules that duplicate, overlap,
or conflict with this rule. There would be no adverse economic
impact to any of the eligible NWHI bottomfish and lobster permit
holders resulting from this rule.
For bottomfish permit holders, the amount of monetary
compensation would be derived from an NPV calculation using average
ex-vessel net revenue projected over 30 years, and would be imputed
as the ex-vessel gross revenue for 2003-05 times a multiplier of
approximately 2.5, which is based on the 30-yr discount rate.
The lobster permit holders would receive compensation in the
form of equal payments derived from NPV of the fleet-wide average
ex-vessel net revenue for 1997-99, and imputed using a similar ex-
vessel gross revenue determination times the multiplier of
approximately 2.5, based on the 30-yr discount rate. The 1997-99
period represents the last years that lobster fishing in the NWHI
operated under NMFS harvest guidelines. The NPV for the lobster
fishery would use the same discount rate and time period as the
value imputed for bottomfish permit holders. The real interest rate
for 30-year treasury notes and bonds as prescribed by Office of
Management and Budget, Circular A-4, Appendix A, is 2.7 percent.
While the intention is to base the imputed value on net revenue
calculations, this is difficult given the unavailability of
individual cost data. Therefore, NMFS will use a proxy for net
revenue based on total, or gross, revenue. Since profit margins
within each fishery are assumed to be similar, this would not affect
relative amounts of compensation. In addition, with a relatively low
real discount rate (2.7 percent) and long time frame (30 years), the
differences between net and total revenues will be mitigated.
NMFS will estimate the permit values using official NMFS and
State of Hawaii commercial fishing records for the respective time
periods. For a more thorough description of the methodology used to
determine the economic values of these permits, see Appendix A to
the RIR (see ADDRESSES). Any residual funds following the permit
compensation program would be available for the vessel and gear
buyout program using a standard vessel buyout approach, such as a
reverse auction, lottery system, or blind auction.
Authority: Pub. L. 110-161.
Dated: April 2, 2009.
Samuel D. Rauch III,
Deputy Assistant Administrator for Regulatory Programs, National Marine
Fisheries Service.
[FR Doc. E9-7860 Filed 4-6-09; 8:45 am]
BILLING CODE 3510-22-S
