Fishing Capacity Reduction Program for the Southeast Alaska Purse Seine Salmon Fishery, 29707-29717 [2011-12650]

Agencies

• DEPARTMENT OF COMMERCE
• National Oceanic and Atmospheric Administration

[Federal Register Volume 76, Number 99 (Monday, May 23, 2011)]
[Proposed Rules]
[Pages 29707-29717]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-12650]



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DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

50 CFR Part 600

[Docket No. 100825389-1276-01]
RIN 0648-BA13


Fishing Capacity Reduction Program for the Southeast Alaska Purse 
Seine Salmon Fishery

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

ACTION: Proposed rule; request for comments.

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SUMMARY: NMFS proposes regulations to implement a fishing capacity 
reduction program and an industry fee system to repay a $23.5 million 
loan for the Southeast Alaska Purse Seine Salmon Fishery (Reduction 
Fishery). The fee system involves future landings of the Reduction 
Fishery. This action's intent is to permanently reduce the most fishing 
capacity at the least cost and establish the fee system.

DATES: Comments must be submitted in writing on or before June 22, 
2011.

ADDRESSES: You may submit comments, identified by 0648-BA13 by either 
of the following methods:
     Electronic Submissions: Submit all electronic public 
comments via the Federal eRulemaking Portal https://www.regulations.gov; 
or
     Mail: Paul Marx, Chief, Financial Services Division, NMFS, 
Attn: SE Alaska Purse Seine Salmon Rulemaking, 1315 East-West Highway, 
Silver Spring, MD 20910.
    Instructions: All comments received are a part of the public record 
and will generally be posted to https://www.regulations.gov without 
change. All Personal Identifying Information (for example, name, 
address, etc.) voluntarily submitted by the commenter may be publicly 
accessible. Do not submit Confidential Business Information or 
otherwise sensitive or protected information.
    NMFS will accept anonymous comments (enter ``N/A'' in the required 
fields, if you wish to remain anonymous). You may submit attachments to 
electronic comments in Microsoft Word, Excel, WordPerfect, or Adobe PDF 
file formats only.
    Copies of the Environmental Assessment/Regulatory Impact Review/
Initial Regulatory Flexibility Analysis (EA/RIR/IRFA) prepared for this 
action may be obtained from the mailing address above 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 
proposed 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 OIRA_Submission@omb.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:

I. Background

    The Southeast Alaska purse seine salmon fishery is a commercial 
fishery in Alaska state waters and adjacent Federal waters. It 
encompasses the commercial taking of salmon with purse seine gear, and 
participation is limited to fishermen designated by the Alaska 
Commercial Fisheries Entry Commission (CFEC). A pilot capacity 
reduction program, conducted by the Southeast Revitalization 
Association (SRA) in 2008, using a reverse auction, purchased 35 
limited entry permits reducing the number of Alaska permits in this 
fishery to 380. Of this amount, approximately 200 are currently being 
fished.
    This rule proposes to implement a voluntary buyback program for the 
Southeast Alaska purse seine salmon fishery (Program) that must be 
approved by a majority of the Alaska permit holders in a referendum 
conducted by NMFS.
    To implement the Program, this proposed rule would establish the 
administrative process for the Program, including the role of the SRA, 
application procedures, and evaluation of the Reduction Plan by NMFS, 
process for conducting the referendum, and fee payment and collection 
provisions.
    This Program is different from other industry financed fishing 
capacity reduction programs undertaken by NMFS in several aspects: (1) 
It is the first permit-only buyback, i.e., fishing history is not being 
retired and there are no restrictions on how the vessel to which the 
relinquished permit applies can be used; (2) there are no Federal 
permits involved, whereas all other NMFS supported reduction programs 
have included the buying and relinquishing of Federal permits; and (3) 
it is anticipated to attract mainly latent permits.

II. Statutory and Regulatory Basis for the Program

    The Southeast Alaska purse seine salmon fishery is managed under 
Alaska law and regulatory requirements defined under Title 5 Alaska 
Administrative Code Section 33.100. The Alaska Department of Fish & 
Game (ADF&G) develops and implements conservation measures for this 
fishery and a state limited entry permit issued by the CFEC is required 
for participation in the fishery. The authority for the SRA to conduct 
this Program is Alaska Statute 16.40.250.
    The measures contained in this proposed rule to establish the 
Program are based on the Consolidated Appropriations Act of 2005 
(Section 209 of Title II of Division B of Public Law 108-447). 
Subsequently, that Federal law was amended by Section 121 of Public Law 
109-479 (the Magnuson-Stevens Reauthorization Act of 2006), reducing 
the loan amount to no more than a $25 million 40-year loan (with 
repayment fees capped at three percent) and clarifying the respective 
roles of NMFS and the SRA relative to development and implementation of 
the Program. On December 26, 2007, Public Law 110-161 appropriated 
$235,000 for the cost of guaranteeing the loan amount (i.e., loan 
subsidy cost). Due to a 6 percent rescission to meet Congressional 
budgetary limits, the original appropriation of $250,000 was reduced to 
$235,000, thus lowering the maximum loan ceiling to $23.5 million. 
NMFS' authority to make this loan resides in sections 1111 and 1112 of 
the Merchant Marine Act, 1936 (46 App. U.S.C. 1279(f) and 
1279(g)(MMA)(title XI)).
    The Federal statute authorizing this Program waives all of the 
fishing capacity reduction program requirements of the Magnuson-Stevens 
Act (Sections 312(b)-(e)) codified at 16 U.S.C. 1801 et seq. except for 
Sections (b)(1)(C) and (d) which state: (1) it must be cost-effective; 
and (2) it is subject to a referendum approved by a majority of permit 
holders.

Program Overview

    Unlike buybacks conducted under federal statutes where permits are 
permanently revoked, under the Alaska Constitution, the state may 
reissue permits in the future if the fishery becomes too exclusive. An 
``optimum number'' study by the CFEC would be required before any 
decision could be made on whether the fishery has become too exclusive. 
There is no direct

[[Page 29708]]

management of this fishery by NMFS or any other Federal agency.
    Participation in the Program is voluntary and would be open to any 
holder of a valid entry permit issued by the CFEC to operate in the 
Southeast Alaska purse seine salmon fishery. The Program is essentially 
divided into six phases: (1) Enrollment; (2) bid selection; (3) plan 
submission and approval; (4) referendum; (5) implementation; and (6) 
fee collection. Each of these six phases will be discussed later in 
this preamble. Only Southeast Salmon Purse Seine Entry Permits 
voluntarily submitted for removal from the Reduction Fishery will be 
subject to the reduction effort. Fishing history, the fishing vessel 
itself, and other assets associated with the permits will not be 
required to be relinquished as part of this reduction effort. Fees for 
repayment of the loan will be calculated upon the annual ex-vessel 
value of all salmon harvested in the Southeast Alaska purse seine 
fishery and will be collected from those who continue fishing in the 
Reduction Fishery after implementation of the Program set forth in 
proposed Sec.  600.1107 of subpart M of part 600 of Title 50 of the 
Code of Federal Regulations.

III. Enrollment Phase

    Participants who wish to relinquish their permits will be required 
to complete a Bid, Relinquishment Contract, Conditional Notice and 
Conditional Relinquishment form. A copy of these documents will be 
mailed by the SRA to each person who is the holder of record of a valid 
entry permit issued by CFEC to operate in the Reduction Fishery. A copy 
of those documents is appended to this proposed rule for public 
comment.
    The Bid identifies the eligible bidder and specifies requirements 
with which the bidder must comply upon acceptance of bid.
    The Relinquishment Contract is the agreement entered into by the 
bidder and the SRA whereby the bidder agrees to relinquish a permit 
upon acceptance of the bid, and before payment of the bid amount.
    The Conditional Notice is the CFEC form restricting renewal and 
transfer of each permit for which a bid was accepted.
    The Conditional Relinquishment is the CFEC form signed by the 
bidder to voluntarily give up a permit and abide by upon SRA acceptance 
of the bid.
    To participate in the Capacity Reduction Program, a Permit Holder 
submits a fully completed and executed Bid, Relinquishment Contract, 
Conditional Notice, and Conditional Relinquishment. Each application 
must be submitted to the SRA, c/o Elgee, Rehfeld, Mertz, LLC, 
Professional Plaza Building B, 9309 Glacier Highway, Suite B-200, 
Juneau, Alaska 99801. The Bid and other required documents must be 
received by the SRA no later than the bid closing date identified in 
the above mentioned mailing to Permit Holders. Once submitted, a bid is 
irrevocable and cannot be withdrawn or amended. If a Permit Holder 
holds more than one permit, the Permit Holder must submit a separate 
Bid for each permit that he/she offers to relinquish.
    By submitting a Bid, the Permit Holder warrants and represents that 
he/she has read and understood the terms of the Bid, Relinquishment 
Contract, Conditional Notice, and Conditional Relinquishment, and has 
had the opportunity to seek independent legal counsel regarding such 
documents and the consequences of submitting the Bid.
    By submitting the Bid, the permit holder expressly acknowledges 
that he/she makes an irrevocable offer to relinquish a permit for a 
specific price to CFEC, and once having submitted the Bid, the bidder 
is not entitled to withdraw or in any way amend the Bid. The permit 
would be relinquished for the price set forth in the Bid contingent on 
acceptance by the SRA at the closing of the Selection Process. Any 
attempted withdrawal by a bidder will be invalid, and the Bid will 
remain a binding, irrevocable offer, unaffected by the attempted 
withdrawal.

IV. Bid Selection Phase

    The SRA will begin the Selection Process upon its receipt of the 
first application and will continue until: (a) The bid closing date 
specified by SRA; or (b) the ranking of the next lowest bid would cause 
the total program costs to exceed $23.5 million.
    During the selection process, the SRA, in consultation with CFEC, 
will examine each submitted Bid for consistency and the necessary 
elements, including the validity of the permit and whether any 
authorized party holds a security interest in the permit. The SRA will 
notify the Permit Holder if the Bid is non-conforming and, in such 
cases, the Permit Holder may submit a revised, conforming Bid if within 
the prescribed period (i.e., until the bid closing date). A Bid that is 
submitted by the Permit Holder but is not accepted by the SRA, 
including a nonconforming bid that is not revised by the bid closing 
date, will be deemed terminated and both the Permit Holder and the SRA 
will have no further obligation. The SRA will rank all conforming bids 
by using a reverse auction in which the SRA ranks the bid with the 
lowest dollar amount and successively ranks each additional bid with 
the next lowest dollar amount, until there are no more bids or the 
ranking of the next lowest bid would cause the total program cost to 
exceed $23.5 million. In the event of a tie with bids which results in 
the tied bids exceeding $23.5 million, the SRA will select the tied bid 
received first.
    Upon termination of the selection process, the SRA shall determine 
whether the number of ranked bids it is willing to accept is sufficient 
to achieve a substantial reduction in harvest capacity and increases 
economic efficiencies (i.e., increases harvesting productivity) for 
those Permit Holders remaining in the fishery. If the SRA makes such a 
determination and thereafter accepts bids, the SRA will send CFEC the 
Conditional Notice form restricting renewal and transfer of each permit 
for which a bid was accepted.
    Once the SRA completes the selection process and after the bid 
closing date, the SRA will sign all accepted Bids and the SRA will 
notify each Permit Holder, via certified mail, of the effective date of 
the Bid. While the Bid is an irrevocable offer, it remains subject to 
the requirement for an industry referendum (VI. below). Bid selection 
occurs prior to the referendum because the Reduction Plan resulting 
from the Bid selection process is the course of action upon which the 
referendum participants are voting.

V. Plan Submission and Approval Phase

    Within 30 days after the conclusion of the selection process, the 
SRA will submit the Reduction Plan to NMFS for final approval on behalf 
of the Secretary of Commerce (Secretary). The aggregate of all Bids, 
Relinquishment Contracts, Conditional Notices, and Conditional 
Relinquishments signed by permit holders whose bids are accepted by the 
SRA will together, with supporting rationale, constitute the Reduction 
Plan. The supporting rationale must demonstrate that the Reduction Plan 
would permanently reduce the most harvesting capacity in the Reduction 
Fishery at the least cost, increase harvesting productivity for post-
reduction permit holders participating in the fishery, and improve 
flexibility in the conservation and management of the fishery. The 
Reduction Plan will include a listing of accepted bids arranged by bid 
amount from lowest to highest bid attended by a statement from the SRA 
that all other bids received, if any, were higher than the largest 
dollar amount of the last bid accepted.

[[Page 29709]]

    The primary requirements for the Assistant Administrator of NMFS, 
on behalf of the Secretary, to approve a Reduction Plan are specified 
at Sec.  600.1107(e)(2). Among other requirements, the Assistant 
Administrator of NMFS must find that the Reduction Plan is consistent 
with the amended Consolidated Appropriations Act of 2005 and the 
applicable sections of the Magnuson-Stevens Act.

VI. The Referendum

    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, and Sec.  600.1017(a)(1)-(4) stipulate prohibitions 
related to voting in a referendum. The proposed Sec.  600.1107(e)(3) 
makes those framework referenda requirements applicable to this 
Program.
    If NMFS approves the Reduction Plan, NMFS will conduct a referendum 
to determine the industry's willingness to repay a fishing capacity 
reduction loan for purchase of the permits identified in the Reduction 
Plan. NMFS will publish a notice in the Federal Register requesting 
votes by Permit Holders on whether to accept or reject the Reduction 
Plan for implementation. NMFS will issue ballots to eligible voters, 
tally votes received, and notify voters on the outcome of the 
referendum.
    A successful referendum by a majority of the Permit Holders in the 
Reduction Fishery would bind all parties and complete the reduction 
process. NMFS will publish a notice in the Federal Register advising 
the public that the referendum was successful and that NMFS will begin 
tendering the reduction program's reduction payments to the selected 
bidders.
    An unsuccessful referendum would void accepted Bids and other 
supporting documents without further obligation from the SRA or the 
bidders.

VII. Implementation Phase

    Within 60 days after a successful referendum, CFEC will provide 
notice to NMFS of the permits retired from the Reduction Fishery. NMFS, 
after receiving the notice of the retired permits, will then tender the 
accepted bid amounts to the accepted bidders. If the SRA accepts a 
total number of bids in an aggregate amount less than $23.5 million, 
any remaining funds could be available for reduction payments as part 
of a later, separate Reduction Plan.
    The Reduction Loan will be amortized over a forty-year term. The 
Reduction Loan's original principal amount may not exceed $23.5 
million, but may be less if the ultimate reduction cost is less. The 
final Reduction Loan periodic payment amount will be determined by NMFS 
analysis of the ability of the post-reduction fishery to service the 
debt. The Reduction Loan's interest rate will be the U.S. Treasury's 
cost of borrowing equivalent maturity funds plus two percent. The 
framework provisions of Sec. Sec.  600.1012-600.1017 will apply to any 
reduction loan, fee payment and collection set forth in this proposed 
rule to the extent they do not conflict with this proposed rule.

VIII. Fee Collection

    Post-reduction Permit Holders operating in the fishery will be 
obligated to pay the fee in accordance with Sec.  600.1107(f). The fee 
will be expressed as a percentage of the ex-vessel price of all salmon 
harvested and landed in the fishery. For example, if the fee is three 
percent and the ex-vessel value is $0.50, then the fee per pound of 
salmon will equal $0.015 per pound. The amount of such fee will be 
calculated by NMFS on an annual basis as the principal and interest 
payment amount necessary to amortize the loan over a 40-year term. The 
maximum fee rate is three percent of total ex-vessel production 
revenues. In the event that payments made under the Reduction Plan at 
the maximum fee level are insufficient to repay the Reduction Loan 
within the 40-year term, NMFS will extend the term of the repayment 
until the Reduction Loan is paid in full.
    Fees must be assessed and collected on all salmon harvested in the 
fishery. Although the fee could be up to three percent of the ex-vessel 
price of all post-reduction landings, the fee will be less than three 
percent if NMFS projects that a lesser rate can amortize the Reduction 
Loan over the 40-year term.
    It is possible that the fishery may not open during some years. 
Consequently, the fishery will not produce fee revenue with which to 
service the Reduction Loan during these years. However, interest will 
continue to accrue on the principal balance. When this happens, if the 
fee is not already at the maximum three percent, NMFS will increase the 
fee to the maximum three percent in the next season that the fishery is 
open, apply all subsequent fee revenue first to the payment of accrued 
interest, and continue the maximum fee rates until the principal and 
interest payments become current. Once all principal and interest 
payments are current, NMFS will make annual determinations on adjusting 
the fee rate.
    The dealer who first purchases the salmon landed in the fishery 
(``fish buyer'') will be responsible for collecting and submitting the 
repayment fees to NMFS on a monthly basis. Both Alaska Department of 
Fish and Game daily fish tickets and the State of Alaska's Commercial 
Operator Annual Report (COAR) produced annually each March following 
the close of the previous season will be used to monitor fee 
collection.
    The current Fishing Capacity Reduction Framework regulatory 
provisions of Sec.  600.1013 (Fee payment and collection), Sec.  
600.1014 (Fee collection deposits, disbursements, records, and 
reports), 600.1015 (Late charges), Sec.  600.1016 (Enforcement), Sec.  
600.1017 (Prohibitions and penalties), and Sec.  600.1017(a)(8)-(16) in 
particular, will apply to any fee collection in this fishery.
    The framework rule's provisions at Sec.  600.1014 governs how fish 
buyers must deposit, and later disburse to NMFS, the fees which they 
have collected as well as how they must keep records of, and report 
about, collected fees. Under the framework rule's provisions at Sec.  
600.1014, fish buyers must, at the end of each business week, deposit 
collected fees in federally insured accounts. Fees will be submitted to 
NMFS monthly and are due no later than fifteen (15) calendar days 
following the end of each calendar month. Fee collection reports must 
accompany these disbursements. Fish buyers must maintain specified fee 
collection records for at least three years and submit to NMFS annual 
reports of fee collection and disbursement activities by February 1 of 
each calendar year.
    Under Sec.  600.1015, the late charge to fish buyers for fee 
collection, deposit, and/or disbursement will be one and one-half (1.5) 
percent per month of the fee due. The full late charge will apply to 
the fee for each month or portion of a month that the fee remains 
unpaid.
    To provide more accessible services, streamline collections, and 
save taxpayer dollars, fish buyers may disburse collected fee deposits 
to NMFS by using a secure Federal system on the Internet known as 
Pay.gov. Pay.gov enables fish buyers to use their checking accounts to 
electronically disburse their collected fee deposits to NMFS. Fish 
buyers who have access to the Internet should consider using this quick 
and easy collected fee disbursement method. Fish buyers may access 
Pay.gov at: https://www.pay.gov/paygov/.

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    Fish buyers who do not have access to the Internet or who simply do 
not wish to use the Pay.gov electronic system must disburse collected 
fee deposits to NMFS by sending a check to our lockbox at: NOAA 
Fisheries Southeast Alaska Salmon Purse Seine Buyback, P.O. Box XXXX, 
St. Louis, MO 63197-9000.
    Fish buyers must complete a fee collection report for each 
disbursement. Fish buyers using Pay.gov will find an electronic fee 
collection report form to accompany electronic disbursements. Fish 
buyers who do not use Pay.gov must include a hard copy fee collection 
report with each of their disbursements and may access the NMFS website 
for a PDF version of the fee collection report at: https://www.nmfs.noaa.gov/mb/financial_services/buyback.htm.
    Before the fee's effective date, NMFS will separately mail a copy 
of the final rule, along with detailed fee payment, collection, 
deposit, disbursement, recording, and reporting information and 
guidance, to each fish seller and buyer of whom NMFS has notice. The 
fact that any fish seller or buyer might not, for whatever reason, 
receive a copy of the notice or of the information and guidance does 
not relieve the fish seller or buyer from his/her fee obligations under 
the applicable regulations.
    All parties interested in this action should carefully read the 
following framework rule sections, whose detailed provisions apply to 
the fee system for repaying the reduction program's loan:
    1. Sec.  600.1012;
    2. $ 600.1013;
    3. Sec.  600.1014;
    4. Sec.  600.1015;
    5. Sec.  600.1016; and
    6. Sec.  600.1017.
    NMFS, in accordance with the framework rule's provisions at Sec.  
600.1013(d), establishes the initial fee for the program's reduction 
fishery as 3 percent of the annual ex-vessel value of all salmon 
harvested in the fishery.
    Please see the framework rule's provisions at Sec.  600.1000 for 
the definition of ``delivery value'' and of the other terms relevant to 
this proposed rule. Each disbursement of the reduction loan's principal 
amount will begin accruing interest as of the date of each such 
disbursement. This loan's interest rate is the applicable rate, plus 
two percent, which the U.S. Treasury determines at the end of the 
fiscal year.

IX. Specific Performance

    The proposed regulatory provisions at Sec.  600.1107(g) mirror the 
Bid's provisions for Specific Performance. Development of a capacity 
reduction program provides a unique opportunity for permit holders to 
manage capacity themselves. Failure of an accepted bidder to perform 
the obligations under the Relinquishment Contract will result in 
irreparable damage to the SRA and other Permit Holders. Therefore, 
money damages are inadequate to redress the harm caused to the bidders 
by a breach of contract. Specific performance is the only adequate 
remedy.

X. Enforcement/Prohibitions and Penalties

    The provisions and requirements of Sec.  600.1016 and Sec.  
600.1017 shall also apply to fish sellers and fish buyers subject to 
this fishery. Specifically, the proposed rule to amend Sec.  600.1017 
by adding language that prohibits buyers from buying fish from 
reduction fishery participants who do not pay the required landing fee 
and prohibits reduction fishery participants from selling fish to 
buyers who do not collect the fees.

Classification

    Pursuant to section 304 (b)(1)(A) of the Magnuson-Stevens Act, the 
NMFS Assistant Administrator has determined that this proposed rule is 
consistent with the provisions of the Magnuson-Stevens Act, and Title 
II, Section 209 of Public Law 108-447 as amended by Section 121 of 
Public Law 109-479, subject to further consideration after public 
comment.
    This proposed rule has been determined to be not significant for 
purposes of Executive Order 12866.
    In addition to public comment about the proposed rule's substance, 
NMFS also seeks public comment on any ambiguity or unnecessary 
complexity arising from the language used in this proposed rule.
    In compliance with the National Environmental Policy Act, NMFS 
prepared an environmental assessment (EA) for this proposed rule. The 
assessment discusses the impact of this proposed rule on the natural 
and human environment and integrates a Regulatory Impact Review (RIR) 
and an Initial Regulatory Flexibility Analysis (IRFA). NMFS will send 
the assessment, the review and analysis to anyone who requests a copy 
(see ADDRESSES).
    NMFS prepared an IRFA, as required by section 603 of the Regulatory 
Flexibility Act (RFA), to describe the economic impacts this proposed 
rule, if adopted, 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 proposed 
rule does not duplicate or conflict with other Federal regulations.
Summary of IRFA
    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 proposed rule 
include individual U.S. vessels, Permit Holders, and dealers. There are 
no disproportionate impacts between large and small entities.
Description of the Number of Small Entities
    Most firms operating in the Reduction Fishery have annual gross 
revenues of less than $4 million. The IRFA analysis estimates that most 
of the 212 active vessels that participated in 2008 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 the proposed action under 
the RFA is not possible. However, because the proposed action would not 
result in changes to allocation percentages and participation is 
voluntary, net effects would be expected to be minimal relative to the 
status quo.
    The proposed rule's impact would be positive for both those whose 
bids NMFS accepts and for post-reduction harvesters whose landing fees 
repay the reduction loan because the Bidders and harvesters would have 
voluntarily assumed the impact:
    1. Bidders would have volunteered to make bids at dollar amounts of 
their own choice. Presumably, no Bidder would volunteer to make a bid 
with an amount that is inconsistent with the Bidder's interest; and
    2. Reduction loan repayment landing fees would be authorized, and 
NMFS could complete the Reduction Program, only if a majority of Permit 
Holders voted in favor of the Reduction Plan. Presumably, harvesters 
who are not selected would not vote in favor of the Reduction Plan 
unless they concluded that the Reduction Program's prospective capacity 
reduction was

[[Page 29711]]

sufficient to enable them to increase their post-reduction revenues 
enough to justify the fee.
    3. Those participants remaining in the fishery after the buyback 
will incur additional fees of up to 3 percent of the ex vessel 
production value of post reduction landings. However, the additional 
costs should be mitigated by increased harvest opportunities by post 
reduction fishermen. NMFS believes that this proposed rule would affect 
neither authorized harvest levels nor harvesting practices.
    NMFS rejected the no action alternative considered in the EA 
because if it failed to act, NMFS would not be in compliance with the 
mandate of Section 209 of the authorizing legislation to establish a 
buyback program. In addition, the Southeast Alaska purse seine salmon 
fishery would remain overcapitalized. Overcapitalization reduces the 
potential net value that could be derived from the salmon resource by 
dissipating rents, driving variable operating costs up, and imposing 
economic externalities on the fishermen. Overcapitalization has 
diminished the economic viability of members of the fleet and increased 
the economic and social burden on fishery dependent communities.
    This proposed 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 submitting a Bid (which includes executing the Bid Agreement and 
the Reduction Contract) and 4 hours for voting in a referendum. Persons 
affected by this proposed rule would also be subject to other 
collection-of-information requirements referred to in the proposed 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 either to pay or to 
collect the loan repayment fee (2 hours).
    NMFS amends the existing OMB control number as a result of the 
implementation of this capacity reduction program. The revision has 
been submitted to OMB for approval. 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 proposed collection of information is necessary for the proper 
performance of the functions of the agency, including whether the 
information will 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 would 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: May 17, 2011.
Samuel D. Rauch III,
Deputy Assistant Administrator for Regulatory Programs, National Marine 
Fisheries Service.

    For the reasons set out in the preamble, 50 CFR part 600, subpart 
M, is proposed to be amended as follows:

PART 600--MAGNUSON-STEVENS ACT PROVISIONS

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

    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, Pub. L. 108-447, Pub. L. 109-479, Pub. L. 110-161, 
Section 209 of Title II of Division B of Pub. L. 108-447, Section 
121 of Pub. L. 109-447, Section 121 of Pub. L. 109-479, Pub. L. 110-
161, and 46 U.S.C. 53701 et seq.

    2. Section 600.1107 is added to subpart M to read as follows:


Sec.  600.1107  Southeast Alaska Purse Seine Salmon Fishery capacity 
reduction program, including fee payment and collection system.

    (a) Purpose. This section implements the fishing capacity reduction 
program for the Southeast Alaska purse seine salmon fishery enacted by 
Section 209 of Public Law 108-447 and amended by Section 121 of Public 
Law 109-479, with appropriations authorized by Section 121 of Public 
Law 109-479 and Public Law 110-161. The intent of the program is to 
permanently reduce, through an industry-financed permit buyback, the 
most harvesting capacity in the Reduction Fishery at the least cost, 
increase harvesting productivity for post-reduction Permit Holders and 
improve flexibility in the conservation and management of the fishery. 
Fishery participants will finance this program through a federal loan 
that will be repaid over 40 years through a fee collection system. The 
intent of the fee collection system is to establish the post-reduction 
Permit Holders' obligation to repay the Reduction Loan's principal and 
accrued interest over the repayment term, and to ensure repayment of 
the loan.
    (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:
    Acceptance means SRA acceptance of a bid.
    Act means Section 209 of Title II of Division B of Public Law 108-
447, Consolidated Appropriations Act of 2005, as amended by Section 121 
of Public Law 109-447, Magnuson-Stevens Reauthorization Act of 2006.
    Authorized party means the individuals authorized by the Permit 
Holder on the application form to execute and submit Bids, protests and 
other documents and/or notices on behalf of the Permit Holder.
    Bid means a bidder's irrevocable offer to relinquish a permit.
    Bid amount means the dollar amount submitted by a bidder.
    Bidder means a permit holder who submits a bid.
    Commercial Fisheries Entry Commission (CFEC) means the Alaska state 
commission mandated to conserve and maintain the economic health of 
Alaska's commercial fisheries by

[[Page 29712]]

limiting the number of participating fishers, by issuing permits and 
vessel licenses to qualified individuals in both limited and unlimited 
fisheries, and by providing due process hearings and appeals.
    CFEC documents means any documents issued by the CFEC in connection 
with the Southeast Alaska purse seine salmon fishery.
    Conditional notice means the CFEC form that any Bidder must sign 
and agree to abide by upon submission of a Bid Agreement (Attachment 2 
in the Appendix to this Sec.  600.1107).
    Conditional relinquishment means the CFEC form that any Permit 
Holder, agreeing to relinquish a permit, must sign and agree to abide 
by upon SRA acceptance of the bid (Attachment 3 in the Appendix to this 
Sec.  600.1107).
    Fishery means the Southeast Alaska administrative area as defined 
under Title 5 Alaska Administrative Code Section 33.100 for salmon with 
purse seine gear.
    Magnuson-Stevens Act means the Magnuson-Stevens Fishery 
Conservation and Management Act codified at 16 U.S.C. 1801 et seq.
    Permit (Southeast Salmon Purse Seine Entry Permit) means a valid 
entry permit issued by CFEC to operate in the Southeast Alaska purse 
seine salmon fishery.
    Permit holder means an individual who at the time of bidding is the 
holder of record of a permit.
    Reduction fishery means the Southeast Alaska Purse Seine Salmon 
Fishery.
    Reduction loan means the loan used to purchase the relinquished 
permits pursuant to the approved Reduction Plan.
    Reduction loan amount means the Reduction Loan's original principal 
amount up to $23,500,000.
    Reduction plan means the aggregate of all Bids, Relinquishment 
Contracts, Conditional Notices, Conditional Relinquishments, and 
supporting documents and rationale, submitted to the Secretary for 
approval.
    Relinquishment contract means the contract that any Permit Holder 
agreeing to relinquish a permit pursuant to Alaska Statute (A.S. 
16.43.150(i)) must sign and agree to abide by upon acceptance of the 
Bid, and before payment of the bid amount (Attachment 1 in the Appendix 
to this Sec.  600.1107).
    Secretary means the Secretary of Commerce or his/her designee.
    Southeast Revitalization Association (SRA) means the qualified 
fishery association authorized to develop and implement this capacity 
reduction program under Alaska Statute 16.40.250 and Federal law.
    (c) Enrollment in the capacity reduction program--(1) Distribution. 
The SRA shall mail a copy of the following four documents via certified 
mail to each Permit Holder: Bid; Fleet Consolidation Relinquishment 
Contract (Relinquishment Contract); Conditional Notice to CFEC and 
Request by Permit Holder; and Conditional Relinquishment of Southeast 
Salmon Purse Seine Entry Permit. Such mailing shall include a closing 
date after which the SRA will not accept new bids.
    (2) Application. Any Permit Holder, regardless of whether having 
received the mailing described in paragraph (c)(1) of this section, may 
participate in the Capacity Reduction Program by submitting all of the 
following documents to the SRA no later than the bid closing date:
    (i) A fully executed Bid consistent with the Appendix to this 
section;
    (ii) A photocopy of the permit evidencing the applicant's 
qualification as a participant in the fishery;
    (iii) A fully executed Relinquishment Contract: Southeast Alaska 
Salmon Purse Seine Permit Holders consistent with the appendix B to 
this section;
    (iv) A fully executed Conditional Notice to CFEC and Request by 
Permit Holder consistent with the appendix C to this section; and
    (v) A fully executed Conditional Relinquishment of Southeast Salmon 
Purse Seine Entry Permit consistent with the appendix D to this 
section.
    (A) The submitted Bid shall include the following information: 
name, address, telephone number, social security number, and (if 
available) electronic mail address of the submitting Permit Holder, 
permit number, and whether any authorized party holds a security 
interest in the permit. Each application must be submitted to the SRA, 
c/o Elgee, Rehfeld, Mertz, LLC, Professional Plaza Building B, 9309 
Glacier Highway, Suite B-200, Juneau, Alaska 99801.
    (B) The SRA will notify the Permit Holder if the Bid is non-
conforming and, in such cases, the Permit Holder may submit a revised, 
conforming Bid within the prescribed period (i.e., until the bid 
closing date).
    (3) Enrollment period. Applications that meet all requirements will 
be accepted until the bid selection process is completed but no later 
than the bid closing date specified by SRA.
    (4) Effective date. The effective date of any Bid shall be when the 
SRA has completed the selection process and signed the Bid.
    (5) Notice. The SRA will notify each Accepted Bidder, via certified 
mail, of the effective date of the Bid Agreement.
    (6) Conflicts. Where terms and conditions in the Bid, 
Relinquishment Contract, Conditional Notice, and Conditional 
Relinquishment conflict with this regulation, the terms and conditions 
in the regulation are controlling.
    (d) Bid selection process. The fishing capacity removed by the 
Reduction Plan shall be represented by the total number of valid CFEC 
permits, whether active or latent, that are voluntarily offered by 
Permit Holders and selected by the SRA up to an aggregate amount of 
$23.5 million. Due to a rescission of funds, the underlying 
appropriations for this Reduction Program were reduced from $250,000 to 
$235,000, resulting in a loan ceiling of $23.5 million.
    (1) Overview. The Selection Process shall begin upon the receipt by 
SRA of the first application and shall continue until: The bid closing 
date specified by SRA (Sec.  600.1107(c)(1)); or the ranking of the 
next lowest bid would cause the total program costs to exceed $23.5 
million. When either one of these events is reached, the Selection 
Process shall be completed.
    (i) During the selection process, the SRA in consultation with the 
CFEC shall examine each submitted Bid for consistency and the necessary 
elements, including the validity of the permit and whether any 
authorized party holds a security interest in the permit.
    (ii) [Reserved]
    (2) Bids. By submitting the Bid, the bidder expressly acknowledges 
that he makes an irrevocable offer to relinquish to CFEC a permit for a 
specific price, and once having submitted the Bid, the bidder is not 
entitled to withdraw or in any way amend the Bid. The permit will be 
relinquished for the price set forth in the Bid contingent on such Bid 
being accepted by the SRA at the closing of the Selection Process. Any 
attempted withdrawal by a bidder shall be invalid, and the Bid shall 
remain a binding, irrevocable offer, unaffected by the attempted 
withdrawal. Any bid that is submitted by a Permit Holder but is not 
accepted by the SRA shall be deemed terminated and both the Permit 
Holder and the SRA will have no further obligation with respect to the 
Bid.
    (i) If a Permit Holder holds more than one permit, the Permit 
Holder must submit a separate Bid for each permit that he/she offers to 
relinquish.
    (ii) By submitting a Bid, the Permit Holder warrants and represents 
that he/she has read and understands the terms of the Program 
Regulations, Bid, Relinquishment Contract, Conditional

[[Page 29713]]

Notice and Conditional Relinquishment, and has had the opportunity to 
seek independent legal counsel regarding such documents and the 
consequences of submitting the Bid Agreement.
    (3) Ranking. The SRA shall rank all conforming bids by using a 
reverse auction in which the SRA ranks the Bid with the lowest dollar 
amount and successively ranks each additional Bid with the next lowest 
dollar amount until there are no more Bids or the ranking of the next 
lowest bid would cause the total program cost to exceed $23.5 million. 
In the event of a tie with bids which results in the tied bids 
exceeding $23.5 million, the SRA will select the tied bid first 
received.
    (4) Acceptance and post-acceptance restriction of renewals and 
transfers. Upon expiration of the bid closing date, the SRA shall 
determine whether the number of ranked bids it is willing to accept is 
sufficient to achieve a substantial reduction in harvest capacity and 
increased economic efficiencies for those Permit Holders remaining in 
the fishery. If the SRA makes such a determination and thereafter 
accepts bids, SRA shall send CFEC the Conditional Notice form 
restricting renewal and transfer of each permit for which a bid was 
accepted. The Bid, Relinquishment Contract, Conditional Notice and 
Conditional Relinquishment are terminated for any rejected bid and the 
applicant is no longer bound by the terms of these documents.
    (e) Plan submission and approval--(1) Submitting the reduction 
plan. Within 30 days of concluding the selection process, the SRA shall 
submit the Reduction Plan, consisting of the aggregate of all Bid 
Agreements, Relinquishment Contracts, Conditional Notices and 
Conditional Relinquishments, together with supporting documents and 
rationale, to NMFS for final approval on behalf of the Secretary. The 
Reduction Plan shall include a listing of accepted bids arranged by bid 
amount from lowest to highest bid, attended by a statement from the SRA 
that all other bids received were higher than the largest dollar amount 
of the last bid accepted.
    (2) Required findings. In order to approve a Reduction Plan, the 
Assistant Administrator of NMFS, on behalf of the Secretary, must find 
that: The Reduction Plan is consistent with the amended Consolidated 
Appropriations Act of 2005 and applicable sections of the Magnuson-
Stevens Act, particularly that it is cost-effective; the Reduction Plan 
will result in the maximum sustained reduction in fishing capacity at 
the least cost; and the Reduction Plan will increase harvesting 
productivity for post-reduction Permit Holders participating in the 
fishery.
    (3) The referendum. If NMFS approves the Reduction Plan and 
subsequent to the publication of a final rule resulting from this 
proposed rule, NMFS shall conduct a referendum to determine the 
industry's willingness to repay a fishing capacity reduction loan to 
purchase the permits identified in the Reduction Plan. NMFS shall 
publish a notice in the Federal Register requesting votes by Permit 
Holders on whether to accept or reject the Reduction Plan for 
implementation. The notice shall state the starting and ending dates 
and times of the voting period, which shall be not less than three (3) 
nor more than seven (7) calendar days from the date of such notice.
    (i) Such notice shall state the name and address of record of each 
eligible voter, as well as the basis for having determined the 
eligibility of those voters. This shall constitute notice and 
opportunity to respond about adding eligible voters, deleting 
ineligible voters, and/or correcting any voter's name and address of 
record. If, in NMFS' discretion, the comments received in response to 
such notice warrants it, or for other good cause, NMFS may modify such 
list by publishing another notice in the Federal Register. NMFS shall 
issue ballots to eligible voters, tally votes, and notify voters 
whether the referendum was successful or unsuccessful in approving the 
Reduction Plan consistent with the provisions of Sec.  600.1010.
    (ii) A successful referendum by a majority of the Permit Holders in 
the Reduction Fishery shall bind all parties and complete the reduction 
process. NMFS shall publish a notice in the Federal Register advising 
the public that the referendum was successful and that NMFS will begin 
tendering the reduction program's reduction payments to the selected 
bidders. Thereafter the Reduction Program shall be implemented.
    (iii) The provisions of Sec.  600.1010 and Sec.  600.1017(a)(1)-(4) 
shall apply to any referendum on the Reduction Plan of this section to 
the extent that they do not conflict with this section or with subpart 
M of this part.
    (f) Implementation--(1) Reduction payments. Within 60 days of a 
successful referendum, the CFEC will provide notice to NMFS of the 
permits retired from the Reduction Fishery. Upon receiving such 
notification, NMFS will then tender the accepted bid amounts to the 
Permit Holders. Reduction payments may not exceed $23.5 million and if 
the SRA accepts a total number of bids in an aggregate amount less than 
$23.5 million, any remaining funds would be available for reduction 
payments as part of a later, separate Reduction Plan conforming to 
these regulations. Upon NMFS tendering the reduction program's payments 
to the selected Permit Holders, each such Permit Holder must 
permanently stop all fishing with the relinquished permit(s).
    (2) Repayment term. As authorized by the Act, the Reduction Loan 
shall be amortized over a forty (40) year term. The Reduction Loan's 
original principal amount may not exceed $23.5 million, but may be less 
if the ultimate reduction cost is less. The final Reduction Loan 
periodic payment amount will be determined by NMFS' analysis of the 
ability of the post-reduction fishery to service debt. The provisions 
of Sec. Sec.  600.1012-600.1017 shall apply to any reduction loan, fee 
payment and collection under this section to the extent they do not 
conflict with this section or with subpart M of this part.
    (3) Loan repayment. Permit Holders operating in the fishery shall 
be obligated to pay the fee in accordance with this section. In the 
event that payments made under the Reduction Plan are insufficient to 
pay the Reduction Loan within the 40-year term, NMFS shall extend the 
term of the repayment until the Reduction Loan is paid in full.
    (i) Interest. The Reduction Loan's interest rate will be the U.S. 
Treasury's cost of borrowing equivalent maturity funds plus two 
percent. NMFS will determine the Reduction Loan's initial interest rate 
when NMFS borrows from the U.S. Treasury the funds with which to 
disburse reduction payments. Interest will begin accruing on the 
Reduction Loan from the date on which NMFS disburses such loan. The 
initial interest rate will change to a final interest rate at the end 
of the Federal fiscal year in which NMFS borrows the funds from the 
U.S. Treasury. The final interest rate will be two percent plus a 
weighted average, throughout that fiscal year, of the U.S. Treasury's 
cost of borrowing equivalent maturity funds. The final interest rate 
will be fixed and will not vary over the remainder of the reduction 
loan's 40-year term. The Reduction Loan will be subject to a level debt 
amortization. There is no prepayment penalty.
    (ii) Fees. Post-reduction Permit Holders operating in the fishery 
shall be obligated to pay the fee in accordance with Sec.  600.1107(f). 
The amount of such fee will be calculated by NMFS on an annual basis as 
the principal and interest payment amount necessary to amortize the 
loan over a 40-year term. The fee shall be expressed as a

[[Page 29714]]

percentage of the ex-vessel value of all salmon harvested and landed in 
the fishery. In the event that payments made under the Reduction Plan 
are insufficient to repay the Reduction Loan within the 40-year term, 
NMFS shall extend the term of the repayment until the Reduction Loan is 
paid in full.
    (A) Fees must be assessed and collected on all salmon harvested in 
the fishery. Although the fee could be up to three percent of the ex-
vessel price of all post-reduction landings, the fee will be less than 
three percent if NMFS projects that a lesser rate can amortize the 
Reduction Loan over the 40-year term. To verify that the fees collected 
do not exceed three percent of the fishery revenues, NMFS will compare 
the annual total of principal and interest due with the latest 
available annual revenues in the fishery to ensure that it is equal to 
or less than three percent of the total ex-vessel production revenues. 
In the event that any of the components necessary to calculate the next 
year's fee are not available, or postponed, the fee will remain at the 
previous year's amount until such time as new calculations are made and 
communicated to the post-reduction fishery participants.
    (B) If the fishery does not open during a year, interest will 
continue to accrue on the principal balance even though no fee revenue 
will be generated. When this happens, if the fee is not already at the 
maximum three percent, NMFS shall increase the fee to the maximum three 
percent, apply all subsequent fee revenue first to the payment of 
accrued interest, and continue the maximum fee rates until the 
principal and interest payments become current. Once all principal and 
interest payments are current, NMFS will make a determination about 
adjusting the fee rate.
    (iii) Collection. The buyer who first purchases the salmon landed 
in the fishery shall be responsible for collecting and submitting the 
repayment fees to NMFS monthly. The fees shall be submitted to NMFS no 
later than fifteen (15) calendar days following the end of each 
calendar month.
    (iv) Recordkeeping and reporting. The dealer who first purchases 
the salmon landed in the fishery shall be responsible for compliance 
with the applicable recordkeeping and reporting requirements.
    (A) All requirements and penalties set forth in the provisions of 
Sec. Sec.  600.1013 (Fee payment and collection), 600.1014 (Fee 
collection deposits, disbursements, records, and reports), 600.1015 
(Late charges), and 600.1017 (Prohibitions and penalties) shall apply 
to any dealer who purchases salmon in the fishery, and to any fee 
collection under this section, to the extent they do not conflict with 
this section or with subpart M of this part.
    (B) [Reserved]
    (g) Specific performance under the relinquishment contract. The 
parties to the Relinquishment Contract have agreed that the opportunity 
to develop and submit a capacity reduction program for the fishery 
under the terms of the Act is both unique and finite. The failure of a 
Permit Holder, whose bid was accepted, to perform the obligations under 
the Relinquishment Contract will result in irreparable damage to the 
SRA and all the other Permit Holders. Accordingly, the parties to the 
Relinquishment Contract expressly acknowledge that money damages are an 
inadequate means of redress and agree, that upon failure of the Permit 
Holder to fulfill his obligations under the Relinquishment Contract, 
that specific performance of those obligations may be obtained by suit 
in equity brought by the SRA in any court of competent jurisdiction 
without obligation to arbitrate such action.
    (h) Enforcement for Failure to Pay Fees. The provisions and 
requirements of Sec.  600.1016 (Enforcement) shall also apply to fish 
sellers and fish buyers subject to this fishery.
    (i) Prohibitions and Penalties. Sec.  600.1017 is amended as 
follows: Fish buyers are prohibited from purchasing fish from fish 
sellers who do not pay the required landing fees. Fish sellers are 
prohibited from selling to fish buyers who do not pay the required 
landing fees.

Appendix A to Sec.  600.1107--BID

    This Bid (Bid) is entered between the individual named in 
section III, 11(a) of the Agreement and the Southeast Revitalization 
Association (SRA).

I. Definitions

    Unless otherwise defined, the following terms have the following 
meanings for the purpose of this Agreement.
    Acceptance means SRA acceptance of a Bid.
    Act means Section 209 of Title II of Division B of Public Law 
108-447, Consolidated Appropriations Act of 2005; as amended by 
Section 121 of Public Law 109-447, Magnuson-Stevens (MSA) 
Reauthorization Act of 2006.
    Bid means a bidder's irrevocable offer to relinquish a permit.
    Bid amount means the dollar amount submitted by a bidder.
    Bidder means a permit holder who submits a bid.
    Conditional notice means the Commercial Fisheries Entry 
Commission (CFEC) form that any Bidder must sign and agree to abide 
by upon submission of a Bid Agreement.
    Conditional relinquishment means the CFEC form that any Permit 
Holder, agreeing to relinquish a permit, must sign and agree to 
abide by upon SRA acceptance of the bid.
    Fishery means the Southeast Alaska administrative area as 
defined under Title 5 Alaska Administrative Code Section 33.100 for 
salmon with purse seine gear.
    Permit means a valid entry permit issued by CFEC to operate in 
the Southeast Alaska purse seine salmon fishery.
    Permit holder means an individual who at the time of bidding is 
the holder of record of a permit.
    Reduction plan means the aggregate of all Bids, Relinquishment 
Contracts (Appendix B), Commercial Fisheries Entry Commission 
(``CFEC'') Conditional Notice and Conditional Relinquishment 
(Appendices C & D), and supporting documents and rationale; 
submitted to the Secretary for approval.
    Referendum means the voting procedure to determine the Permit 
Holder's willingness to repay a fishing capacity reduction loan to 
purchase the permits identified in the Plan.
    Relinquishment contract means the contract that any bidder 
agreeing to relinquish a permit pursuant to Alaska Statute (A.S. 
16.43.150(i)) must sign and agree to abide by upon acceptance of the 
Bid, and before payment of the bid amount.
    Secretary means the Secretary of Commerce or his/her designee.
    Southeast Revitalization Association (SRA) means the qualified 
fishery association authorized to develop and implement this 
capacity reduction program under Alaska Statute 16.40.250 and 
Federal law.

II. Recitals

    Whereas Alaska Statute 16.40.250 and the Act authorize a fishing 
capacity reduction program for the fishery;
    Whereas, within 30 days of concluding the selection process, the 
SRA shall submit the Reduction Plan, together with supporting 
documents and rationale, to NMFS for final approval on behalf of the 
Secretary;
    Whereas, the reduction Plan's express objective is to reduce 
fishing capacity by permanently revoking permits thereby promoting 
economic efficiency, improving flexibility in the conservation and 
management of the fishery and obtain the maximum reduction in 
permits at the least cost;
    Whereas, the SRA can implement the Reduction Plan only after 
giving notice to all Permit Holders and subsequent approval of the 
reduction Plan by referendum;
    Whereas, the Agreement submitted by the bidder and the SRA is an 
integral element of the Reduction Plan;
    Now, therefore, for good and valuable consideration, the 
sufficiency of which is hereby acknowledged, the SRA and bidder 
agree as follows:

III. Terms and Conditions

    1. Form. By completing and submitting this Bid to the SRA the 
bidder hereby offers to permanently relinquish, and have the CFEC 
revoke, the permit. The SRA signing the Bid and subsequent NMFS 
payment to bidder in the exact bid amount set forth in section III, 
11(f) of the Bid is full and complete consideration.

[[Page 29715]]

    2. Irrevocable. The bidder expressly acknowledges that by 
submitting the Bid he/she makes an irrevocable offer to relinquish 
the permit and once having submitted the Bid is not entitled to 
withdraw or in any manner amend the Bid. The receipt date that the 
SRA marks on the Bid constitutes the date of the bidder's submittal.
    3. Warranty. The bidder warrants and represents that he/she is 
the holder of record of the permit, according to the CFEC records, 
and that he/she has read and understands the terms of the Program 
Regulations, Bid, Relinquishment Contract, Conditional Notice and 
the Conditional Relinquishment and has had the opportunity to seek 
independent legal counsel regarding such documents and the 
consequences of submitting the Bid.
    4. Validity. The SRA, in consultation with the CFEC, shall 
examine each Bid for completeness and consistency. The SRA shall 
notify the bidder if the Bid is non-conforming. In such cases, the 
bidder may submit a revised, conforming Bid within the prescribed 
period (i.e., until the bid closing date).
    5. Ranking. The SRA shall rank the bid amount entered in section 
III, 11(f) of this Bid by using a reverse auction in which the SRA 
ranks the Bid with the lowest dollar amount and successively ranks 
each additional Bid with the next lowest dollar amount until there 
are no more Bids or the ranking of the next lowest Bid would exceed 
the total program cost. In the event of a tie with bids which 
results in the tied bids exceeding $23.5 million, the SRA will 
select the tied bid first received.
    6. Acceptance and Rejection. If the Bid is accepted, the SRA 
shall formally notify the bidder in writing. If the SRA rejects the 
Bid, the SRA will formally notify the bidder in writing and the Bid 
shall terminate without further obligation.
    7. Restriction of Transfer of permit: Upon acceptance, the SRA 
will send the CFEC the Conditional Notice, restricting transfer of 
the permit until such time as: the SRA notifies the bidder that the 
Plan is not in compliance with the Act and will not be approved; or 
NMFS notifies the bidder the referendum was unsuccessful.
    8. Payment. Within 60 days from the close of the voting period 
of a successful referendum, the CFEC will provide notice to NMFS of 
the permits retired from the Reduction Fishery. Upon receiving such 
notice, NMFS will then tender the accepted bid amounts to the Permit 
Holders.
    9. Specific Performance. The failure of a bidder whose Bid was 
accepted to comply with the terms of this Bid will result in 
irreparable damage to the SRA and its members because the Bid was 
part of the basis for the Plan submitted to the Secretary for 
approval. Accordingly, the SRA and bidder expressly acknowledge that 
money damages are an inadequate means of redress and agree that 
specific performance of those obligations may be obtained by suit in 
equity brought by the SRA in any court of competent jurisdiction 
without obligation to arbitrate such action.
    10. Submission. This Bid must be submitted within the prescribed 
period to the SRA, c/o Elgee, Rehfeld, Mertz, LLC, Professional 
Plaza Building B, 9309 Glacier Highway, Suite B-200, Juneau, AK 
99801.
    11. Complete Bid Information: To fully and accurately complete 
this Bid, the bidder must fully complete the following questions and 
provide an exact photocopy of the permit. The Bidder must further 
sign this form, Appendices B, C, and D and acknowledge the signature 
before a notary public.
    (a) BIDDER'S NAME. This must be the full and exact legal name of 
record of the person bidding. Insert the name of the bidder.

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    (b) BIDDER'S ADDRESS OF RECORD. Insert the full and exact 
address of record for the bidder.

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    (c) BIDDER'S TELEPHONE NUMBER. Insert the full and exact 
telephone number of the bidder.

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    (d) BIDDER'S ELECTRONIC MAIL ADDRESS (if available). Insert the 
full and exact e-mail address of the bidder.

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    (e) PERMIT. Insert the full and exact permit number(s) of the 
bidder. Enclose with this Bid an exact p