Fishing Capacity Reduction Program for the Southeast Alaska Purse Seine Salmon Fishery, 61985-61995 [2011-25750]

Agencies

• DEPARTMENT OF COMMERCE
• National Oceanic and Atmospheric Administration

[Federal Register Volume 76, Number 194 (Thursday, October 6, 2011)]
[Rules and Regulations]
[Pages 61985-61995]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-25750]


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DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

50 CFR Part 600

[Docket No. 100825389-1597-02]
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: Final rule.

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SUMMARY: NMFS establishes regulations to implement a fishing capacity 
reduction (buyback) program and an industry fee system to repay a 
$23,476,500 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: Effective November 7, 2011.

ADDRESSES: Copies of the Environmental Assessment/Regulatory Impact 
Review/Final Regulatory Flexibility Analysis (EA/RIR/FRFA) prepared for 
this action may be obtained from Paul Marx, Chief, Financial Services 
Division, NMFS, Attn.: SE Alaska Purse Seine Salmon Rulemaking, 1315 
East-West Highway, Silver Spring, MD 20910 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 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) 427-
8799, 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). In 2008, a pilot capacity 
reduction program, conducted by the Southeast Revitalization 
Association (SRA), using a reverse auction, purchased 35 limited entry 
permits in the Southeast Alaska Salmon fishery, reducing the number of 
Alaska permits in this fishery to 380. Approximately 200 permits are 
currently being fished.
    This rule implements a voluntary buyback program loosely modeled on 
the aforementioned Alaska pilot program.
    This rule establishes the administrative process for the Program, 
including the role of the SRA, application procedures, evaluation of 
the Reduction Plan by NMFS, process for conducting a referendum, and 
fee payment and collection provisions.
    This Program is different from the 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 rule to establish the Program are 
based on the Consolidated Appropriations Act of 2005 (Section 209 of 
Title II of Division B of Pub. L. 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 6.1 
percent rescission to meet Congressional budgetary limits, the original 
appropriation of $250,000 was reduced to $234,765, thus lowering the 
maximum loan ceiling to $23,476,500. 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 management of this fishery by NMFS or any other 
Federal agency.
    Participation in the Program is voluntary and is 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) the loan 
repayment 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

[[Page 61986]]

the Reduction Fishery are subject to the reduction effort. Fishing 
history, the fishing vessel itself, and other assets associated with 
the permits are not 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 Sec.  600.1107 of subpart M of part 600 of 
Title 50 of the Code of Federal Regulations.
    On May 23, 2011, NMFS published proposed regulations in the Federal 
Register (76 FR 29707) to implement the program. This final rule 
implements the program with changes as described below and will be 
effective on November 7, 2011.

III. Summary of Comments and Responses

    NMFS received five comments in response to the proposed rule. Three 
were from individuals, one from the Alaska Commercial Fisheries Entry 
Commission, and one from the SRA. The three individuals each expressed 
opposition to the Program for a variety of reasons.
    Comment 1: Each of the three individuals expressed concerns that 
the Program would make it more difficult for new participants to enter 
the fishery by increasing the cost of permits.
    Response: Although permit values have been increasing over the last 
few years, many factors are influencing the rising prices including 
higher catch levels of pink salmon and higher salmon prices. If permit 
holders believe the Program would further exacerbate the permit values, 
they will have the opportunity to vote against the Program in a 
referendum.
    Comment 2: Two of the individuals expressed concern that the 
Program will be comprised of inactive fishing permits.
    Response: NMFS acknowledges that inactive permits will likely be 
removed from the fishery. However, the permits could be fished in the 
future if no action is taken. The permit holders must decide if the 
cost of removing these latent permits is worth an additional 3% fee on 
future catch and will make that decision in the referendum.
    Comment 3: Two of the individuals expressed concern about inactive 
permit holders who may hold permits for speculative purposes, 
dominating the referendum and buying back inactive permits.
    Response: NMFS acknowledges that inactive permit holders constitute 
a significant portion of the fishery. The authorizing legislation 
requires approval from a majority of permit holders. NMFS believes that 
limiting the ability of certain permit holders to vote in the 
referendum could be perceived as arbitrary and is contrary to the 
statute.
    Comment 4: Two commenters requested that the enrollment process be 
clarified to note that the initial determination that an application 
conforms to the prescribed requirements is made by an independent 
accounting firm and not the SRA.
    Response: NMFS agrees the enrollment process needs to be clarified 
to note that the initial determination that an application conforms to 
the prescribed requirements is made by an independent accounting firm 
and not the SRA, and has accordingly revised Sec.  
600.1107(c)(2)(v)(A).
    Comment 5: Two commenters noted an inconsistency in the enrollment 
process and requested that NMFS allow the SRA a period of 21 days after 
the bid closing date to consult with CFEC and examine bid results to 
complete the selection process.
    Response: NMFS acknowledges the inconsistency and has changed both 
Sec.  600.1107(c)(3) and Sec.  600.1107(d)(1) to reflect that the SRA a 
period of 21 days after the bid closing date to consult with CFEC and 
examine bid results to complete the selection process.
    Comment 6: Two commenters requested that NMFS clarify the bid 
selection process in the event that two identical bids are received on 
the same day and suggested that a random method be used such as drawing 
lots.
    Response: NMFS agrees that the language in Sec.  600.1107(d)(3) 
should be less ambiguous and has revised the language to state that in 
the event of a tie, the first bid received, if known, shall be 
selected. If the receipt time cannot be determined, neither bid will be 
accepted. A permit holder can ensure the receipt time is documented 
when using a reliable express delivery service. This solution is more 
equitable than some random method such as drawing lots, which could 
merely lead to further disputes as to the integrity of that process.
    Comment 7: Two commenters stated that the referendum voting process 
does not provide sufficient time for NMFS to determine the accuracy of 
eligible voters, issue ballots, and for fishermen to return the 
ballots. They recommended providing a period of 21 days to conduct the 
referendum.
    Response: NMFS agrees that the voting period should be expanded and 
has revised Sec.  600.1107(e)(3) to allow a voting period of 21 to 30 
days.
    Comment 8: Two commenters requested that the list of eligible 
referendum voters to be published in the Federal Register contain a 7-
day period to accept comments from the public.
    Response: NMFS agrees that the public needs an opportunity to 
comment about any discrepancy before the referendum occurs but believes 
more time is necessary and therefore has revised Sec.  
600.1107(e)(3)(i) to allow the public 15 days to comment.

IV. Summary of Revisions

    NMFS revises the following sections of the regulations of subpart M 
to 50 CFR part 600:
    (1) Section 600.1107(c)(2)(v)(A). This section is revised to note 
that the initial determination that an application conforms to the 
prescribed requirements is made by an independent accounting firm and 
not the SRA.
    (2) Section 600.1107(c)(3). This section is amended to allow the 
SRA a period of 21 days after the bid closing date to consult with CFEC 
and examine bid results to complete the selection process.
    (3) Section 600.1107(d)(1). This section is also amended to allow 
the SRA a period of 21 days after the bid closing date to consult with 
CFEC and examine bid results to complete the selection process.
    (4) Section 600.1107(d)(3). This section is revised to state that 
in the event of a tie, the first bid received, if known, shall be 
selected. If the receipt time cannot be determined, neither bid will be 
accepted.
    (5) Section 600.1107(e)(3). This section is revised to allow a 
voting period of not less than 21 days and not more than 30 days.
    (6) Section 600.1107(e)(3)(i). This section is revised to provide 
the public with a 15 day period to accept comments on the list of 
eligible referendum voters to be published in the Federal Register.

V. Enrollment Phase

    Participants who wish to relinquish their permits are 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 final rule.
    The Bid identifies the eligible bidder and specifies requirements 
with which the bidder must comply upon acceptance of bid.

[[Page 61987]]

    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 to agree to abide by the 
terms in that form 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.

VI. Bid Selection Phase

    The SRA will begin the Selection Process upon its receipt of the 
first application and will continue until: (1) The bid closing date 
specified by SRA; or (2) 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 $23,476,500. In the event of a tie with bids which results in 
the tied bids exceeding $23,476,500, the SRA will select the tied bid 
received first. If the receipt time cannot be determined, neither bid 
will be accepted.
    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.

VII. 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.
    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.

VIII. 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. An unsuccessful referendum would void accepted Bids and other 
supporting

[[Page 61988]]

documents without further obligation from the SRA or the bidders.

IX. 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 $23,476,500, 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 $23,476,500, 
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 rule to 
the extent they do not conflict with this rule.

X. Loan Repayment Fee Collection

    Post-reduction Permit Holders operating in the fishery will be 
obligated to pay a fee for the repayment of the loan 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), Sec.  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/.
    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 979002, 
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 Web 
site 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

[[Page 61989]]

definition of ``delivery value'' and of the other terms relevant to 
this 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, which the U.S. 
Treasury determines at the end of the fiscal year, plus two percent.

XI. 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.

XII. 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 final rule amends 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 final 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.
    This final rule has been determined to be not significant for 
purposes of Executive Order 12866.
    In compliance with the National Environmental Policy Act, NMFS 
prepared an environmental assessment (EA) for this rule. The assessment 
discusses the impact of this final rule on the natural and human 
environment and integrates a Regulatory Impact Review (RIR) and a Final 
Regulatory Flexibility Analysis (FRFA). NMFS will send the assessment, 
the review and analysis to anyone who requests a copy (see ADDRESSES).
    NMFS prepared a FRFA, as required by section 603 of the Regulatory 
Flexibility Act (RFA), to describe the economic impacts this rule would 
have on small entities. NMFS intends the analysis to aid the agency in 
considering regulatory alternatives that could minimize the economic 
impact on affected small entities. The rule does not duplicate or 
conflict with other Federal regulations.

Summary of FRFA

    The Small Business Administration (SBA) has defined small entities 
as all fish harvesting businesses that are independently owned and 
operated, not dominant in its field of operation, and with annual 
receipts of $4 million or less. In addition, processors with 500 or 
fewer employees for related industries involved in canned or cured fish 
and seafood, or preparing fresh fish and seafood, are also considered 
small entities. Small entities within the scope of this 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 FRFA 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. However, because the 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 final 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 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 reducing the possibility that latent 
permits will be activated thus reducing harvest levels and stabilizing 
year-to-year price fluctuations. NMFS believes that this final rule 
would affect neither authorized harvest levels nor harvesting 
practices.
    Other than the preferred alternative, which is being implemented in 
this rule, NMFS considered the no action alternative in developing this 
action. 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 final rule contains information collection requirements 
subject to the Paperwork Reduction Act (PRA). The Office of Management 
and Budget (OMB) previously approved this information collection under 
OMB Control Number 0648-0376.
    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. NMFS estimates that the public 
reporting burden for this information collection totals 878 respondents 
with a total response time of 38,653 hours. NMFS estimates that each 
respondent will take an average of 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 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

[[Page 61990]]

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).
    These response estimates include the time for reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
information collection. Public comment is sought regarding: Whether 
this collection of information is necessary for the proper performance 
of the functions of the agency, including whether the information 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: September 30, 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 amended as follows:

PART 600--MAGNUSON-STEVENS ACT PROVISIONS

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

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


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

0
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 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 (Appendix B to 
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 (Appendix C to 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 $23,476,500.
    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 (Appendix A to Sec.  
600.1107).

[[Page 61991]]

    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 Appendix A 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. The initial 
determination that an application conforms to the prescribed 
requirements is made by this independent accounting firm and not the 
SRA.
    (B) The SRA or the independent accounting firm 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 the SRA. The SRA will have a 
period of 21 days after the bid closing date to consult with CFEC and 
examine bid results to complete the selection process.
    (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 
$23,476,500. Due to a rescission of funds, the underlying 
appropriations for this Reduction Program were reduced from $250,000 to 
$234,765, resulting in a loan ceiling of $23,476,500.
    (1) Overview. The Selection Process shall begin upon the receipt by 
the SRA of the first application and shall continue until: The bid 
closing date specified by the SRA (paragraph (c)(1) of this section); 
or the ranking of the next lowest bid would cause the total program 
costs to exceed $23,476,500. The SRA will have a period of 21 days 
after the bid closing date to consult with CFEC and examine bid results 
to complete the selection process. 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 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 $23,476,500. In 
the event of a tie with bids which results in the tied bids exceeding 
$23,476,500, the SRA will select the tied bid first received, if known. 
If the receipt time cannot be determined, neither bid will be accepted.
    (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, the 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

[[Page 61992]]

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 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 twenty one (21) nor more than 
thirty (30) 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, and will provide a 15 day period to make these changes. 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. 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 $23,476,500 and if 
the SRA accepts a total number of bids in an aggregate amount less than 
$23,476,500, 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 $23,476,500, 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 paragraph (f) of 
this section. 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 
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.

[[Page 61993]]

    (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/her 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. 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.
    2. Irrevocable. The bidder expressly acknowledges that by 
submitting the Bid he/she makes an irrevocable offer to relinquish 
the