NOTICE OF OFFICE OF MANAGEMENT AND BUDGET ACTION · 2013-08-27 · Conservation and Management Act (Magnuson-Stevens Act) as amended in 2006 to mandate the Secretary of Commerce (Secretary)

NOTICE OF OFFICE OF MANAGEMENT AND BUDGET ACTION08/26/2013Date

LIST OF INFORMATION COLLECTIONS: See next page

Department of CommerceNational Oceanic and Atmospheric Administration

FOR CERTIFYING OFFICIAL: Simon SzykmanFOR CLEARANCE OFFICER: Jennifer Jessup

In accordance with the Paperwork Reduction Act, OMB has taken action on your request received

07/11/2013

ACTION REQUESTED: New collection (Request for a new OMB Control Number)RegularTYPE OF REVIEW REQUESTED:

TITLE: Alaska Crab Rationalization Program Cooperative Report

OMB ACTION: Approved with changeOMB CONTROL NUMBER: 0648-0678

EXPIRATION DATE: 08/31/2016

The agency is required to display the OMB Control Number and inform respondents of its legal significance inaccordance with 5 CFR 1320.5(b).

BURDEN: RESPONSES HOURS COSTSPrevious 0 0 0

New 10 300 40

Difference

Change due to New Statute 0 0 0

Change due to Agency Discretion 10 300 40

Change due to Agency Adjustment 0 0 0

Change due to PRA Violation 0 0 0

TERMS OF CLEARANCE:

OMB Authorizing Official: Dominic J. ManciniActing Deputy Administrator,Office Of Information And Regulatory Affairs

201306-0648-014ICR REFERENCE NUMBER:AGENCY ICR TRACKING NUMBER:

DISCONTINUE DATE:

List of ICsIC Title Form No. Form Name CFR Citation

Alaska Crab RationalizationProgram Cooperative Report

50 CFR 680.5

PAPERWORK REDUCTION ACT SUBMISSIONPlease read the instructions before completing this form. For additional forms or assistance in completing this form, contact y our agency'sPaperwork Clearance Officer. Send two copies of this form, the collection instrument to be reviewed, the supporting statement, and anyadditional documentation to: Office of Information and Regulatory Affairs, Office of Management and Budget, Docket Library, Ro om 10102, 725 17th Street NW, Washington, DC 20503.

1. Agency/Subagency originating request

2. OMB control number b. [ ] None

a. -

3. Type of information collection (check one)

a. [ ] New Collection

b. [ ] Revision of a currently approved collection

c. [ ] Extension of a currently approved collection

d. [ ] Reinstatement, without change, of a previously approved collection for which approval has expired

e. [ ] Reinstatement, with change, of a previously approved collection for which approval has expired

f. [ ] Existing collection in use without an OMB control number

For b-f, note Item A2 of Supporting Statement instructions

4. Type of review requested (check one) a. [ ] Regular submission b. [ ] Emergency - Approval requested by / / c. [ ] Delegated

5. Small entities Will this information collection have a significant economic impact on a substantial number of small entities? [ ] Yes [ ] No

6. Requested expiration date a. [ ] Three years from approval date b. [ ] Other Specify: /

7. Title

8. Agency form number(s) (if applicable)

9. Keywords

10. Abstract

11. Affected public (Mark primary with "P" and all others that apply with "x")a. Individuals or households d. Farmsb. Business or other for-profit e. Federal Governmentc. Not-for-profit institutions f. State, Local or Tribal Government

12. Obligation to respond (check one) a. [ ] Voluntary b. [ ] Required to obtain or retain benefits c. [ ] Mandatory

13. Annual recordkeeping and reporting burden a. Number of respondents

b. Total annual responses 1. Percentage of these responses collected electronically % c. Total annual hours requested d. Current OMB inventory

e. Difference f. Explanation of difference 1. Program change 2. Adjustment

14. Annual reporting and recordkeeping cost burden (in thousands of dollars) a. Total annualized capital/startup costs

b. Total annual costs (O&M)

c. Total annualized cost requested

d. Current OMB inventory

e. Difference f. Explanation of difference

1. Program change

2. Adjustment

15. Purpose of information collection (Mark primary with "P" and all others that apply with "X") a. Application for benefits e. Program planning or management b. Program evaluation f. Research c. General purpose statistics g. Regulatory or compliance d. Audit

16. Frequency of recordkeeping or reporting (check all that apply)a. [ ] Recordkeeping b. [ ] Third party disclosurec. [ ] Reporting 1. [ ] On occasion 2. [ ] Weekly 3. [ ] Monthly 4. [ ] Quarterly 5. [ ] Semi-annually 6. [ ] Annually 7. [ ] Biennially 8. [ ] Other (describe)

17. Statistical methods Does this information collection employ statistical methods [ ] Yes [ ] No

18. Agency Contact (person who can best answer questions regarding the content of this submission)

Name: Phone:

OMB 83-I 10/95

patsy.bearden

Cross-Out

patsy.bearden

Cross-Out

patsy.bearden

Cross-Out

patsy.bearden

Cross-Out

19. Certification for Paperwork Reduction Act Submissions

On behalf of this Federal Agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9

NOTE: The text of 5 CFR 1320.9, and the related provisions of 5 CFR 1320.8(b)(3), appear at the end of the instructions. The certification is to be made with reference to those regulatory provisions as set forth in the instructions.

The following is a summary of the topics, regarding the proposed collection of information, that the certification covers: (a) It is necessary for the proper performance of agency functions;

(b) It avoids unnecessary duplication;

(c) It reduces burden on small entities;

(d) It used plain, coherent, and unambiguous terminology that is understandable to respondents;

(e) Its implementation will be consistent and compatible with current reporting and recordkeeping practices;

(f) It indicates the retention period for recordkeeping requirements;

(g) It informs respondents of the information called for under 5 CFR 1320.8(b)(3):

(i) Why the information is being collected;

(ii) Use of information;

(iii) Burden estimate;

(iv) Nature of response (voluntary, required for a benefit, mandatory);

(v) Nature and extent of confidentiality; and

(vi) Need to display currently valid OMB control number;

(h) It was developed by an office that has planned and allocated resources for the efficient and effective management and use of the information to be collected (see note in Item 19 of instructions);

(i) It uses effective and efficient statistical survey methodology; and

(j) It makes appropriate use of information technology.

If you are unable to certify compliance with any of the provisions, identify the item below and explain the reason in Item 18 of the Supporting Statement.

Signature of Senior Official or designee Date

OMB 83-I 10/95

Agency Certification (signature of Assistant Administrator, Deputy Assistant Administrator, Line Office Chief Information Officer,head of MB staff for L.O.s, or of the Director of a Program or StaffOffice)

Signature Date

Signature of NOAA Clearance Officer

Signature Date

10/95

1

SUPPORTING STATEMENT

CRAB RATIONALIZATION (CR) PROGRAM: CR COOPERATIVE ANNUAL REPORT

OMB CONTROL NO. 0648-XXXX

This request is for a new information collection. INTRODUCTION In January 2004, the U.S. Congress amended Section 313(j) of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) as amended in 2006 to mandate the Secretary of Commerce (Secretary) to implement the Crab Rationalization Program (CR Program) for the Bering Sea and Aleutian Islands Management Area (BSAI) crab fisheries. The CR Program allocates BSAI crab resources among harvesters, processors, and coastal communities. The North Pacific Fishery Management Council (Council) prepared, and NMFS approved, the Fishery Management Plan for BSAI King and Tanner Crabs (Crab FMP). The Crab FMP establishes criteria for the management of certain aspects of the BSAI crab fisheries by the State of Alaska Department of Fish and Game (ADF&G) and is implemented by regulations at 50 CFR part 680. The National Marine Fisheries Service, Alaska Region (NMFS) implemented the CR Program to both maintain rigorous safeguards on use of fishing privileges for a public resource and to provide safeguards for program constituents. The CR Program components include quota share (QS) allocation, processor quota share (PQS) allocation, individual fishing quota (IFQ), individual processing quota (IPQ) issuance, quota transfers, use caps, crab harvesting cooperatives, protections for Gulf of Alaska groundfish fisheries, arbitration system, monitoring, economic data collection, and cost recovery fee collection. Under the CR Program, NMFS issued QS to eligible harvesters based on their participation during a set of qualifying years in one or more of the nine CR Program fisheries. QS is an exclusive, revocable privilege allowing the holder to harvest a specific percentage of the annual total allowable catch (TAC) in a CR Program fishery. Each year, the QS holder’s annual allocation, called IFQ, provides an exclusive harvesting privilege for a specific amount of raw crab pounds, in a specific crab fishery, in a given season. The size of each annual IFQ allocation is based on the amount of QS held by a person in relation to the total QS in a crab fishery. A. JUSTIFICATION 1. Explain the circumstances that make the collection of information necessary. In December 2011, NMFS presented a report to the Council detailing the performance of the CR Program during its first 5 years. Based on this 5-year report, the Council requested a discussion paper detailing measures that CR Program cooperatives could do to stimulate acquisition of QS

http://www.nmfs.noaa.gov/msa2005/docs/MSA_amended_msa%20_20070112_FINAL.pdf

http://www.nmfs.noaa.gov/msa2005/docs/MSA_amended_msa%20_20070112_FINAL.pdf

http://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&SID=564dca20e0dfcbcf7064c842ea76f5cc&rgn=div5&view=text&node=50:13.0.1.1.4&idno=50

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by crew and other active participants and to stimulate equitable crew compensation. NMFS presented the discussion paper to the Council at the February 2013 Council meeting. 2. Explain how, by whom, how frequently, and for what purpose the information will be used. If the information collected will be disseminated to the public or used to support information that will be disseminated to the public, then explain how the collection complies with all applicable Information Quality Guidelines. a. CR Cooperative Annual Report (on Effectiveness of QS Transfer to Active Participants and Crew Members) Upon receiving and reviewing the discussion paper, the Council passed a motion (purpose statement) requesting that each CR Program cooperative develop and implement procedures to adopt the following measures. An annual report is due at the October 2013 Council meeting to summarize the effectiveness of each measure and the estimated number of participants in each measure. Documentation to support the summary must also be submitted. ♦ Increase availability of QS for transfer to active participants and crew members. Create

additional opportunities for persons active in the fisheries to have better access to quota. Cooperatives could adopt a variety of different measures to promote quota ownership by

members who are active. These measures could be loan assistance, buyer preferences, or rights of first offer to allow each cooperative the flexibility to address the issue in a way that it perceives to be the most appropriate for its circumstances. A small cooperative that has mostly active paticipants may appropriately establish internal financing of crew quota share purchases. A larger cooperative may better address active participation share acquisitions by granting a purchase preference to active participants.

A cooperative could report on the extent to which its members are active. Such a report

could identify the number of QS holders in the cooperative, the amount of IFQ brought to the cooperative by those QS holders both active and inactive, the changes in the number of QS holders, and the amount of QS that is held by persons who are active. The report could also separately identify members who are active as crewmembers, as well as persons meeting a specified vessel ownership interest.

♦ Decrease high QS lease rates. The high lease rates in the fisheries are said to contribute

greatly to the decline in revenues to persons who actively participate in the fisheries as vessel owners and crew. Lower lease rates could allow for more of the fisheries’ revenues to be realized by vessel owners and crews.

A cooperative could implement a lease cap in its cooperative agreement. If a

cooperative were to oversee all transactions to implement a cap on leases, that cooperative would need to monitor all transfers of shares to ensure that the cap is not exceeded. The limitation could be applied to any transfer or lease within a cooperative or

between the cooperative and any other cooperative, verifying simply that no lease rate exceeded the specified cap. The cooperative could use a system of affirmations from its members to support its report.

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The annual report (and supporting affirmations) to the Council would not specify any lease rates, but would state that lease rates were not in excess of the cap.

♦ Improve low crew compensation. To limit the effects of the leasing market and to protect

crews from the financial impacts of high lease rates, the amount of any lease payment charged to crews could be limited or capped.

A cooperative could establish minimum crew pay standards which could define the

minimum percentage of gross ex vessel revenues that a vessel may pay to its crewmembers. Such a limit could serve a purpose similar to a minimum wage law. Such a measure would be intended to more directly and comprehensively protect crew from further declines in the share of vessel revenues paid to crew that has occurred under the CR Program.

The more general goal of these measures may be to achieve equity and economic stability

in the harvest sector. Cooperative implementation could be accomplished through requirements that a cooperative:

1) include in its cooperative agreement a provision that requires all vessels to

compensate crews in excess of a specified percentage of the vessel’s gross revenues, 2) verify compliance by review of each member vessel’s gross revenues and total

crew compensation The annual report to the Council would not specify crew compensation amounts (due to

confidentiality limitations), but would affirm that all the cooperative’s vessels met the standard.

Since implementation of the program, crew compensation as a percentage of gross

revenues has varied with the amount of harvests. Some participating crews have suggested that the consolidation of quota provides a benefit, even if payments for harvest of that added quota are at a lower percentage due to charges for lease payments. In other words, some crew may believe that the acceptable minimum share of vessel revenues paid to the crew should differ with the amount of harvests.

Reasonable compensation may differ across fisheries due to a variety of factors (such as

crab prices, catch rates, working conditions, and risk). These differences are suggested by historical data from the fisheries. For example, the percentage of vessel gross revenues paid to crew in the Bristol Bay red king crab fishery has been lower than that percentage in the Bering Sea C. opilio fishery; however, daily pay in the red king crab fishery has exceeded daily pay in the C. opilio fishery. Any percentages should consider whether different percentages are appropriate for different fisheries. In addition, to the extent that harvests overlap across fisheries (such as C. bairdi harvests made in the Bristol Bay red king crab and Bering Sea C. opilio fisheries), it may be difficult (or inappropriate) to attempt to separate payments by fishery.

The voluntary annual report from each cooperative is to be provided to the Council at its October 2013 meeting.

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The estimated time for report completion, including gathering and compiling information is based on discussion among Alaska Region staff, and an averaging of several different types of annual cooperative reports required under other Alaska programs, resulting in 30 hours: • Rockfish cooperative report = 40 hr • American Fishing Act cooperative report = 12 hr • Amendment 80 cooperative report = 25 hr • Community Quota Entity annual report = 40 hr

CR Coop Annual Report, Respondent Number of respondents Total annual responses Frequency of response = 1 Total burden hours Time per response = 10 hr Total personnel cost ($25/hr) Total miscellaneous cost (39.75) Postage cost (1.35 x 5 = 6.75) Fax ($6 x 5 = 30) Photocopy cost (10 x 6 pp x 0.05 = 3.00)

10 10

300 hr

$7,500

$40

CR Coop Annual report, Federal Government Total annual responses Total burden hours Total personnel cost Total miscellaneous cost

0 0 0 0

It is anticipated that the information collected will be disseminated to the public or used to support publicly disseminated information. The Council will retain control over the information and safeguard it from improper access, modification, and destruction, consistent with National Oceanic and Atmospheric Administration (NOAA) standards for confidentiality, privacy, and electronic information. See response to Question 10 of this Supporting Statement for more information on confidentiality and privacy. The information collection is designed to yield data that meet all applicable information quality guidelines. Prior to dissemination, the information will be subjected to quality control measures and a pre-dissemination review pursuant to Section 515 of Public Law 106-554. 3. Describe whether, and to what extent, the collection of information involves the use of automated, electronic, mechanical, or other technological techniques or other forms of information technology. The CR Cooperative Annual Report may be submitted to the Council by courier, mail, or fax. 4. Describe efforts to identify duplication. This information collection is part of a specialized and technical program that is not like any other.

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5. If the collection of information involves small businesses or other small entities, describe the methods used to minimize burden. Cooperatives are not small businesses or small entities; thus this information collection does not impose a significant impact on small entities. 6. Describe the consequences to the Federal program or policy activities if the collection is not conducted or is conducted less frequently. If the collection were not conducted or conducted less frequently, the information needed by the Council detailing measures that CR Program cooperatives could implement to stimulate acquisition of QS by crew and other active participants and to stimulate equitable crew compensation would not be available and the problems of acquisition and compensation would not be solved. 7. Explain any special circumstances that require the collection to be conducted in a manner inconsistent with OMB guidelines. No special circumstances exist. 8. Provide information on the PRA Federal Register Notice that solicited public comments on the information collection prior to this submission. Summarize the public comments received in response to that notice and describe the actions taken by the agency in response to those comments. Describe the efforts to consult with persons outside the agency to obtain their views on the availability of data, frequency of collection, the clarity of instructions and recordkeeping, disclosure, or reporting format (if any), and on the data elements to be recorded, disclosed, or reported. A Federal Register Notice published on April 12, 2013 (78 FR 21912) solicited public comments. No comments were received. 9. Explain any decisions to provide payments or gifts to respondents, other than remuneration of contractors or grantees. No payment or gift is provided under this program. 10. Describe any assurance of confidentiality provided to respondents and the basis for assurance in statute, regulation, or agency policy. This information is voluntary, but in support of management of commercial fishing efforts under 50 CFR part 680, under section 402(a) of the Magnuson-Stevens Act (16 U.S.C. 1801, et seq.) and under 16 U.S.C. 1862(j). Responses to this information request are confidential under section 402(b) of the Magnuson-Stevens Act. They are also confidential under NOAA Administrative Order 216-100, which sets forth procedures to protect confidentiality of fishery statistics.

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11. Provide additional justification for any questions of a sensitive nature, such as sexual behavior and attitudes, religious beliefs, and other matters that are commonly considered private. This information collection does not involve information of a sensitive nature. 12. Provide an estimate in hours of the burden of the collection of information. Estimated total respondents: 10. Estimated total responses: 10. Estimated total burden: 300 hr. Estimated total personnel costs: $7,500. 13. Provide an estimate of the total annual cost burden to the respondents or record-keepers resulting from the collection (excluding the value of the burden hours in Question 12 above). Estimated total miscellaneous costs: $40. 14. Provide estimates of annualized cost to the Federal government. No costs or burden will occur to the Federal government. 15. Explain the reasons for any program changes or adjustments. This is a new program. 16. For collections whose results will be published, outline the plans for tabulation and publication. NMFS will not publish any results from this program. 17. If seeking approval to not display the expiration date for OMB approval of the information collection, explain the reasons why display would be inappropriate. Not Applicable. 18. Explain each exception to the certification statement. Not Applicable. B. COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL METHODS This collection does not employ statistical methods.

1 Council motion – February 2013 C-4(a)-(c) Bering Sea and Aleutian Islands crab management

Bering Sea and Aleutian Islands crab fisheries – C-4(a)-(c) Council motion – February 2013 North Pacific Fishery Management Council

C-4(a) – Modification of community provisions

Actions 1 through 5 The Council took final action, selecting a preferred alternative for five actions. The Council adopted the following purpose and need statement for these actions:

The Bering Sea/Aleutian Islands crab rationalization program recognizes the unique relationship between specific crab-dependent communities and their shore-based processors, and has addressed that codependence by establishing community “right of first refusal” agreements as a significant feature of the program. These right of first refusal agreements apply to the Processor Quota Shares initially issued within each community, and are entered into and held by Eligible Crab Community Organizations on behalf of each respective community. To date, there have been several significant Processor Quota Share transactions, resulting in Eligible Crab Community Organizations now owning holding substantial portions of the PQS in each rationalized fishery. However, the ability of the right of first refusal to lapse may diminish the intent to protect community interests. Also, limiting the time period to exercise the right may conflict with the ability to exercise and perform under the right of first refusal. In addition, some communities, when exercising the right of first refusal may have no interest in purchasing assets located in another community and feel the right of first refusal contract should exclude any such requirement. Lastly, under the current structure, right holders and NOAA Fisheries have limited information concerning the transfer and use of PQS and IPQ subject to the right. Additional notices from PQS holders to right holders and NOAA Fisheries concerning the use of IPQ and transfer of PQS and IPQ would allow community entities to more effectively protect their interests through the rights of first refusal.

The Council selects as its preferred alternative the following:

Action 1: Increase a right holding entity’s time to exercise the right and perform as required. Alternative 2: Increase an entity’s time to exercise the right and perform.

1) Require parties to rights of first refusal contracts to extend the period for exercising the right of first refusal from 60 days from receipt of the contract to 90 days from receipt of the contract.

2) Require parties to rights of first refusal contracts to extend the period for performing under the contract after exercising the right from 120 days from receipt of the contract to 150 days from receipt of the contract.

Action 2: Increase community protections by removing or modifying the (two) ROFR lapse provisions. Provision 1 Alternative 2 – Remove provision under which ROFR lapses if IPQ are used outside the community.


Require parties to rights of first refusal contracts to remove the provision that rights lapse, if the IPQ are used outside the community for a period of three consecutive years

Provision 2 Alternative 3 – Allow PQS holder to identify the right holder, if a community entity fails to exercise the right on a transfer of PQS

If the right is triggered by a sale subject to the right, a new ROFR contract would be signed at the time of transfer, in which the PQS buyer names the community that gets the ROFR (either the original right holder or receiving right holder). The right holder must be an existing entity that was eligible to hold a ROFR at the time of the implementation of the program in the region in which the IPQ must be landed.

Action 3: Apply the right to only PQS or PQS and assets in the subject community. Alternative 1 – status quo

The right of first refusal applies to all assets included in a sale of PQS subject to the right, with the price determined by the sale contract.

Action 4: Require community approval for IPQ subject to the right to be processed outside the subject community. Alternative 1 – Status quo Intra-company transfers of PQS and IPQ outside the subject community are permitted without requiring the PQS holder to notify the community entity that holds the right. Action 5: Require additional notices to right holders and NMFS

Require the following notices from PQS holders: 1) To the right holder, a prior notice of all transfers of IPQ or PQS that are subject to the right

(regardless of whether the PQS holder believes the right applies to the transfer) (as a required contract provision);

2) To NMFS as a part of any application to transfer PQS subject to the right to any party other than the right holder, either:

a. A certification of the transferor of the PQS that the right holder was provided with 90 days notice of the right and did not exercise the right during that period (in which case the PQS may transfer and the right will no longer apply); or

b. A certification of the new PQS holder and the right holder that a contract has been entered establishing the right with respect to the new PQS holder or that the right holder has elected to waive the right with respect to the new holder.

3) To the right holder annually, the location of use of IPQ that are subject to a right and whether the IPQ were used by the PQS holder (as a required contract provision).

4) To NMFS, as part of the annual application for IPQ, certification of a current ROFR agreement in place with the community entity.

Action 6 The Council took no action on the sixth action at this meeting. The Council has adopted the following purpose and need statement for this action:

At least one PQS transfer is believed to have occurred without the right holder (Aleutia Corporation) being informed of the transaction, denying that right holder of the ability to


exercise its right of first refusal to acquire PQS as intended by the program. This lack of notice allowed the transfer of PQS to a party other than the right holder and the movement of the processing to another community. Providing that right holder with a direct allocation of PQS could mitigate the negative impacts arising from that transaction. In addition, providing for notice of the location of use of IPQ and transfers of PQS to right holders could prevent similar circumstances from arising in the future and make the right more effective in protecting communities’ historical interests in processing and ensure that community entities are better able to assert their interests as provided for by the right.

Action 6: Issuance of newly created PQS to Aleutia Corporation Alternative 1 – Status quo No further of issuance of PQS Alternative 2 – Issuance of PQS to Aleutia Bristol Bay red king crab PQS shall be allocated to Aleutia Corporation in an amount that would result in that corporation receiving up to 0.55 percent of the PQS in that fishery. This allocation would be made exclusively from newly issued PQS.

C-4(b) – Active participation requirements

The Council intends to take no further action on this amendment package.

C-4(c) – Discussion paper on cooperative provisions for crew

The Council requests that each of the BSAI crab rationalization cooperatives voluntarily provide an annual report detailing measures the cooperative is taking to facilitate the transfer of quota share to active participants ,including crew members and vessel owners, and available measures which affect high lease rates and crew compensation. The annual reports should convey to the Council the effectiveness of the measures implemented through the cooperatives and the estimated level of member participation in any voluntary measures and include supporting information and data. These reports are requested to be delivered for the October meeting each year.

Cooperative measures to address active participant and crew issues North Pacific Fishery Management Council February 2013 1

Cooperative measures to address active participant and crew issues North Pacific Fishery Management Council February 2013

At its December 2011 meeting, the Council received a report reviewing the performance of the crab rationalization program during its first 5 years. Based on the report and public testimony, the Council identified certain aspects of the program that it would like to give additional attention. Among those issues, the Council requested a discussion paper concerning certain cooperative measures that might be considered to promote acquisition of quota shares by crew and other active participants in the crab fisheries and equitable crew compensation. The Council specifically requested that the paper examine the “best practice” requirements for cooperative agreements. These cooperative agreement requirements could include:

Provisions to promote quota share ownership among crew and active participants.

Maximum lease rate caps.

Maximum amount of lease rates that may be charged against crew compensation.

Minimum crew pay standards such as a minimum threshold of gross vessel revenue for crew compensation.

This paper examines the use of cooperative agreements to address these four requirements. At this meeting, the Council also requested an analysis of active participation requirements for holders of quota shares. That analysis suggests that implementation of any active participation through direct NOAA Fisheries administration would be very complicated and burdensome. Cooperative administration of such a measure may avoid some of those costs and complications. This paper also discusses the potential to use cooperative agreements to administer active participation requirements, as an alternative to direct administration by NOAA Fisheries. Background Since implementation of the crab program (prior to the 2005-2006 season), critics of the program have pointed to high lease rates, fleet consolidation, absentee QS ownership, and changes in crew compensation as some of the program’s greatest shortcomings. Fleet consolidation reduced overcapacity quickly, as the Bristol Bay red king crab and Bering Sea C. opilio fleets contracted to an average of less than one-third of their sizes in the years preceding implementation of the program (see Table 1). Table 1. Average catch and average number of vessels by fishery before and after implementation of the rationalization program.

Fishery SeasonsAverage number of participating

vesselsAverage total catch

2001-2005 189 24,511,1602005/2006 - 2010/11 73 49,603,907

2001-2004 243 10,409,2232005/2006 - 2010/11 74 14,528,729

2001/2 - 2004/5 18 2,945,4512005/2006 - 2010/11 4 2,753,592

2001/2 - 2004/5 8 2,695,6002005/2006 - 2010/11 3 2,349,696

Sources: ADFG fish tickets for first time period and NMFS RAM catch data for second period.

Bristol Bay red king crab

Eastern Aleutian Islands golden king crab

Western Aleutian Island golden king crab

Bering Sea C. opilio

Note: 1011/2012 uses TAC in place of harvests for Western Aleutian Islands golden king crab and Eastern Aleutian Islands golden king crab to protect confidentiality.

AGENDA C-4c February 2013


Since the number of QS holders has changed little since implementation of the program, a large share of this consolidation is asserted to arise from leasing of shares. The term leasing is often used loosely to refer to short term transfers of shares. The program structure, however, complicates any discussion or consideration of these leases. To induce cooperative membership, the program includes a prohibition on transfers of annual allocations of individual fishing quota (IFQ), except by cooperatives. This prohibition, together with the operational efficiencies gained in a cooperative, has led to almost all quota share holders (i.e., holders of long term shares) joining cooperatives and almost all IFQ being held by cooperatives. A cooperative receives annual allocations of IFQ based on quota share (or long term share) holdings of its members and oversees the harvest and distribution of those IFQ. Although cooperatives trade IFQ, the large majority of all transfers are within cooperatives. These intra-cooperative transfers result in little information being available to know the extent to which transfers that most people would characterize as a traditional lease (i.e., the purchase of IFQ) are the source of consolidation. Under the program’s structure, those cooperative held IFQ may be harvested by any vessel registered to fish the cooperative’s IFQ, without any documented transfer. Since all IFQ attributable to cooperative members’ QS are allocated to the cooperative without identification of the member that contributed QS from which the allocation arises, IFQ use cannot be tracked back to a QS holder. Consequently, a vessel’s harvest of IFQ cannot be assigned to a specific QS holder. Even if vessel IFQ usage could be traced to an individual QS holder, participants in the fisheries suggest that a variety of arrangements exist under which vessels coordinate harvests of IFQ by member vessels (some of which may not be considered leases).1 While the masking effect of the cooperative IFQ allocations prevents identification of the specific source of IFQ use by a vessel, the complexity of share distributions and the variety of ownership structures also limits the extent to which leasing and lease rates can be fully identified. Even if it is assumed that all of the IFQ attributable to a member’s QS are harvested by the vessel owned by that QS holder, the prevalence of overlapping (but not identical) ownership of vessels and QS holdings limits the ability of analysts to identify IFQ use arising from a lease (or a short term transfer at a negotiated price), rather than IFQ use arising from transfers that are simply share management arrangements by a business. Often such transfers are undertaken as a business practice among affiliated entities at non-market rates that are structured for internal management reasons, rather than at negotiated lease prices. These arrangements further complicate any understanding of leasing practices and lease rates.2 Despite these challenges, the Council has remained concerned with leasing practices and their effects on the fisheries and fishery participants. Specifically, the Council has expressed concern that leasing practices and associated exorbitant lease rates contribute to a substantial share of the fisheries’ value being distributed to persons who are not active in the fisheries as either vessel owners or crewmembers. Although reliable comprehensive lease data are not available, anecdotal information from the fisheries suggests that some leases in the Bristol Bay red king crab fishery may result in compensation to QS holders who transfer their IFQ of as much as 75 percent of the ex vessel revenue of crab landed with those IFQ. In the Bering Sea C. opilio fishery, rates are said to be for as much as 65 percent of the ex vessel revenue arising from the transferred IFQ. The removal of revenues through share leases by inactive quota holders is said to have two effects. First, these lower revenues to vessel owners are said to decrease the amount of revenue available for vessel maintenance and improvements. The absence of revenues may pose a challenge to vessel owners who must decide the extent of improvements and maintenance for their

1 These complications have also led to uninterpretable data being collected in the Economic Data Reporting program. To date, that program’s collection of lease data contains no definition of leasing, leaving submitters to apply their own interpretation of the term when completing the form. 2 These reporting issues contributed to the Council’s decision to restructure the economic data collection program recently. Form revisions and rulemaking are underway to implement those changes in the near future.


vessels. When faced with mortgage payments and ongoing operational costs, vessel maintenance and improvements, particularly those that are more discretionary in nature, are less likely. A second possible affect is that crew compensation may decline. If a large share of a vessel’s revenue is devoted to lease payments, crew (who typically are compensated with a share of the vessels adjusted revenues) may receive less pay. Although information is not available to assess QS holder participation in the fisheries, data are available to examine changes in crew compensation since implementation of the program. These data can be used to assess the effects of the program on crew.3 These effects vary across participants, but consolidation of catch on fewer vessels has led to crews receiving greater average annual compensation from the fisheries, but catching a substantially greater amount of crab. In the first 5 years of the program, average crew pay is approximately three times the average of the three pre-program years for which data are available (1998, 2001, and 2004) (see Table 2 and Table 3).4 Average crew pay in the Bering Sea C. opilio fishery since program implementation is more than double the average pay from 2001 and 2004 (when the TAC in that fishery was comparable to the TACs since the program was implemented). In 1998, when the TAC in the fishery was near historical highs, average crew compensation was relatively similar to the post program level (with the exception of 2011, the most recent year). In 1998 year, average vessel harvests exceeded the average harvest since the program was implemented by almost one-third, but vessel gross revenues were lower due to a lower crab price. In 2011, average crew compensation increased as a result of a substantial increase in the C. opilio price with relatively high average vessel catch. In that year, the average price rose to slightly higher than $2.50 per pound from approximately $1.30 in the preceding year. These factors led to average crew compensation in the fishery of slightly less than $50,000. While crewmembers, on average, are making larger amounts annually, the average share of a vessel’s revenues paid to crew (including the captain) has declined from approximately 35 percent in both fisheries prior to implementation of the program, to lows of below 20 percent in the Bristol Bay red king crab fishery in 2010 and to approximately 23 percent in the Bering Sea C. opilio fishery before rebounding slightly in 2011. Most (if not all) vessel owners are believed to have continued to pay crew a share of vessel revenues after deduction of certain operating expenses (such as food and fuel). The difference in compensation since implementation of the program is believed to have arisen from the deduction of lease payments (made to quota share holders who lease their IFQ to vessel owners for harvest) and mortgage payments or quota costs for purchases of quota share fished by the vessel.5 In 2011 (the most recent year), a portion of the fleet attempted to counter this decrease in the share of vessel revenues being paid to crew, in part, through resisting high lease rates.6 These efforts appear to have been somewhat successful, as the percentage of ex vessel revenues paid to crew increased from the preceding year by more than 1 percentage point in the Bristol Bay red king crab fishery and in aggregate in both fisheries on vessels that fish both the red king crab and Bering Sea C. opilio fisheries. This slight 3 The most obvious effect of the rationalization program on crew arose from the contraction of the fleet. The contraction of fleets in the various fisheries to between one-third and one-half of their pre-program size has resulted in the loss of approximately 975 crew jobs in the Bristol Bay red king crab fishery and approximately 675 crew jobs in the Bering Sea C. opilio fishery. While these losses have clearly affected a large number of individuals, additional effects have been felt by those crew who have retained their positions in the fisheries. 4 Note that all dollar amounts are adjusted for inflation based on the consumer price index (CPI-U) to 2011 dollars. 5 While the deduction of lease payments may be the immediate source of the reduction, it should be noted that modification of crew payments (such as changing from crew share payment system to another payment system or changing the structure of deductions away from charging royalties) could result in the same payment without directly relating the changes to lease royalties (or other quota costs). 6 It should be noted that vessel owners also reap benefits if they successfully reduce lease rates, since a substantial share of net revenues (after deductions) are retained by the vessel owner.


increase in the percentage of revenues paid to crew and the large increase in average vessel revenues arising from the increase in Bering Sea C. opilio prices contributed to a substantial increase in average captain and crew compensation on vessels that fish both fisheries in 2011. Table 2. Average crew compensation before rationalization (1998, 2001, and 2004 through 2011).

1998 190 56,289 203,761 23,907 9,468 35.3

2001 182 36,195 218,518 26,951 10,590 35.7

2004 220 58,802 326,749 37,440 14,769 35.7

2005 83 194,812 1,010,460 73,177 27,863 25.0

2006 76 201,666 817,790 55,608 21,632 23.4

2007 70 269,194 1,297,633 82,283 32,623 22.6

2008 75 246,932 1,338,084 83,302 35,249 22.8

2009 67 223,270 1,084,294 63,086 25,593 20.1

2010 61 229,189 1,716,929 94,186 37,736 19.3

2011 57 130,096 1,354,360 79,555 31,165 20.7

1998 162 1,098,577 848,016 101,588 34,745 36.2

2001 158 112,589 218,042 23,483 8,539 31.4

2004 167 123,606 298,051 35,090 14,067 35.1

2005 147 158,943 312,263 36,640 15,031 34.6

2006 73 453,455 561,169 40,274 15,489 23.6

2007 63 496,195 924,722 65,863 25,848 24.4

2008 72 780,820 1,393,415 98,927 36,232 23.5

2009 71 721,180 1,091,346 72,512 28,282 22.7

2010 63 703,543 918,880 59,089 23,773 22.8

2011 65 760,386 1,940,135 126,151 48,972 23.1

Source: Crab Economic Data Reporting.

Mean vessel harvest

(pounds)

Number of

vesselsFishery


Year


Mean captain pay

($US)

Notes: Excludes any vessels on which crew were paid in excess of 75 percent of the vessel's gross revenues. Period after rationalization is 2005 and after in the Bristol Bay red king crab fishery and 2006 and after in the Bering Sea C. opilio fishery. All dollar amounts are adjusted to 2011 dollars.

Mean vessel revenues

($US)

Mean crewmember

pay ($US)

Mean percent of gross vessel

revenues paid to crew (including

captain)


Table 3. Crew compensation on vessels that fished both Bristol Bay red king crab and Bering Sea C. opilio before rationalization (1998, 2001, and 2004) and after rationaliztaion (2006 through 2011).

The relationship between compensation and quota consolidation becomes clearer, if the fleet is separated into quartiles of pounds fished (see Table 4). Within each year, in almost all cases, the percent of revenues paid to crew decreases as pounds of crab harvested increases. In other words, as a vessel consolidates quota (by either leasing or purchasing quota), a smaller share of the revenues of the vessel are paid to crews. Although the contractual arrangements likely differ across vessels, this pattern suggests that quota costs are being absorbed, in part, by crew. Vessel owners share quota acquisition costs by deducting those costs from gross revenues prior to applying the crew compensation percentage to net revenues to determine payments to crew. In the first few years of the program, a downward trend in the share of revenues paid to crews is suggested, particularly within the quartiles harvesting the greatest amounts of crab. This trend likely arises, in part, from an adjustment to the change to rationalization. Whether the downward trend reflects a distribution of additional costs (such as fuel costs arising from fuel price increases) that are disproportional to added revenues or simply an labor market adjustment (arising from vessel owners who perceive an opportunity to reduce crew compensation due to overall conditions in the labor market) is uncertain. This trend seems to have abated in the more recent years, as the percentage of ex vessel revenues paid to crew has fluctuated from year-to-year. Most notably, in 2011 in the Bristol Bay red king crab fishery, the percentage of ex vessel revenues paid to crew increased in all quartiles except the lowest quartile. This suggests that efforts to reduce the downward pressure of lease charges against crew compensation appears to have had some effect.

Mean Median Mean Median Mean Median Mean Median

1998 151 1,071,273 1,018,863 127,395 121,108 258,845 241,267 35.9 35.3

2001 143 452,313 383,665 52,242 45,094 101,015 90,385 34.1 34.3

2004 162 649,796 610,987 75,713 72,911 154,995 141,605 35.7 35.5

2006 56 1,483,918 1,351,238 106,392 104,292 211,990 201,115 24.0 24.2

2007 55 2,372,439 2,102,188 154,639 156,231 322,239 304,663 23.0 22.4

2008 61 2,980,617 2,890,325 196,536 193,192 420,938 399,019 22.6 22.4

2009 57 2,356,263 2,181,501 146,961 145,014 318,907 284,371 21.1 20.9

2010 56 2,798,649 2,569,278 161,081 160,567 344,781 334,273 19.9 19.2

2011 53 3,548,382 3,187,901 223,231 225,834 489,948 460,036 21.9 20.9


Vessel revenuesCrew pay

(excluding captain)Year

Percent of gross to crew (including

captain)

Number of

vessels

Notes: 2005 omitted, as Bering Sea C. opilio fishery prosecuted as limited entry derby and Bristol Bay red king crab prosecuted as share-based fishery. Excludes any vessels on which crew were paid in excess of 75 percent of the vessel's gross revenues. All dollar amounts are adjusted to 2011 dollars.

Captain pay


Table 4. Crew compensation by quartile of pounds fished (1998, 2001, 2004 through 2011).

Mean

pounds

harvested


Mean crewmember

pay (excluding captain)

Percent of gross to crew

(including captain)

Mean pounds

harvested


Mean crewmember



(including captain)

1998 47/48 24,360 94,948 4,412 33.5 42,387 151,142 7,452 36.4

2001 45/46 14,209 87,167 4,484 33.2 25,222 153,668 7,880 36.5

2004 55 27,841 155,863 7,302 35.2 47,509 267,862 12,633 34.5

2005 20/21 61,177 308,985 15,419 32.8 111,565 573,128 24,117 28.6

2006 19 67,950 291,631 12,792 29.2 126,775 539,361 19,786 26.6

2007 17/18 98,619 475,406 22,172 32.9 192,984 944,352 28,522 22.7

2008 18/19 85,454 500,900 19,691 29.0 172,991 946,710 31,640 25.0

2009 16/17 92,251 447,608 16,172 26.9 184,818 894,010 23,176 19.9

2010 15/16 91,593 672,457 26,652 28.2 192,946 1,448,955 32,165 16.6

2011 14/15 60,365 633,120 22,278 27.4 101,410 1,075,792 27,453 19.9

1998 40/41 539,777 420,859 20,263 37.3 934,607 711,288 29,448 36.0

2001 39/40 45,411 88,506 3,157 27.4 77,664 151,143 6,082 30.7

2004 41/42 64,885 157,921 7,457 33.9 95,520 232,032 11,347 34.7

2005 36/37 84,930 177,560 8,663 32.4 122,265 254,399 13,084 36.1

2006 18/19 153,219 182,589 8,404 30.2 308,944 382,163 11,966 22.4

2007 15/16 185,828 346,518 16,056 32.4 346,523 651,836 21,927 24.5

2008 18 308,833 521,787 20,420 27.8 557,810 1,023,385 33,932 25.2

2009 17/18 300,835 434,538 15,794 26.9 512,418 764,198 24,139 23.6

2010 15/16 272,788 355,139 13,563 27.6 489,180 624,567 21,305 25.2

2011 16/17 302,207 875,870 27,985 27.0 570,582 1,400,821 49,257 27.0

Mean pounds

harvested


Mean crewmember



(including captain)

Mean pounds harvested

Mean vessel

revenues

Mean crewmember



(including captain)

1998 60,997 220,962 10,011 35.1 96,844 346,085 15,902 36.0

2001 35,552 218,050 10,829 37.3 69,304 412,320 19,040 35.6

2004 62,574 351,874 15,875 36.7 97,283 531,397 23,268 36.3

2005 209,205 1,088,529 30,527 21.5 390,937 2,037,794 40,797 17.3

2006 212,079 912,578 23,052 20.5 399,862 1,527,589 30,897 17.1

2007 294,186 1,407,262 35,943 19.3 482,900 2,323,924 43,459 16.0

2008 282,308 1,521,728 47,571 21.8 438,476 2,338,936 41,275 15.6

2009 249,735 1,213,069 32,082 19.4 358,570 1,745,039 30,390 14.7

2010 243,171 1,811,094 43,287 17.6 379,055 2,859,069 48,145 15.1

2011 123,352 1,283,847 31,382 19.1 228,247 2,353,326 42,721 16.6

1998 1,222,998 938,038 37,642 34.7 1,686,333 1,313,656 51,344 36.8

2001 115,683 226,640 8,971 34.0 209,994 402,855 15,825 33.5

2004 128,412 311,502 15,586 36.4 204,208 487,413 21,720 35.4

2005 156,099 332,575 16,419 35.8 270,478 480,878 21,787 34.0

2006 480,291 607,615 17,092 21.8 849,371 1,045,408 24,020 20.3

2007 501,859 931,504 26,427 21.3 931,170 1,732,893 38,372 19.9

2008 818,908 1,493,960 37,662 21.8 1,437,727 2,534,529 52,914 19.2

2009 736,305 1,097,858 29,859 21.0 1,311,810 2,032,299 42,643 19.4

2010 708,306 926,423 23,966 20.3 1,316,975 1,734,156 35,619 18.6

2011 783,536 2,015,552 48,527 19.8 1,348,463 3,378,403 68,873 18.8


Second quartile of pounds harvested

Notes: Excludes any vessels on which crew were paid in excess of 75 percent of the vessel's gross revenues. Period after rationalization is 2005 through 2010 in the Bristol Bay red king crab fishery and 2006 through 2010 in the Bering Sea C. opilio fishery. All dollar amounts are adjusted to 2011 dollars.

First quartile of pounds harvestedNumber

of vessels per

quartile

Fishery Year



Fishery Year


Third quartile of pounds harvested


Fourth quartile of pounds harvested


An alternative way to examine crew compensation is to examine daily pay (see Table 5). Since implementation of the program, daily crew pay (counting only days fishing, transiting, and offloading) appears to have declined. If it is assumed that 10 days are spent doing boat and gear work (in addition to the time fishing, transiting and offloading), daily pay appears to have changed little since implementation of the program. It should also be noted that daily pay does not appear to follow any trend, but has fluctuated annual. These fluctuations likely arise from changing conditions in the fisheries (such as changes in catch rates, crab prices, and vessel operating costs). Notably, in the most recent year (2011), average daily crew compensation (assuming 10 days of boat and gear work) increased to its highest level in any year. If only days on the grounds are included, the 2011 average daily pay level is similar to the average daily compensation prior to the rationalization program. The change in 2011 (in comparison to other years since the program was implemented) arises largely from an increase in crab prices, with some contribution likely from efforts on the part of vessel owners to resist high lease rates. Table 5. Daily crew compensation 1998, 2001, and 2004 through 2011).

Mean number of

days

Mean daily captain pay

($)

Mean daily crew

member pay ($)

Mean number of

days

Mean daily captain pay

($)

Mean daily crew

member pay ($)

1998 190 8.0 3,126 1,234 18.0 1,339 530

2001 182 6.1 4,730 1,869 16.1 1,697 668

2004 220 7.0 5,698 2,235 17.0 2,216 872

2005 83 26.6 3,079 1,203 36.6 2,053 794

2006 76 22.3 2,785 1,094 32.3 1,777 693

2007 69 32.4 2,783 1,112 42.4 2,020 805

2008 75 32.6 2,800 1,204 42.6 2,027 870

2009 66 30.7 2,323 954 40.7 1,628 666

2010 61 35.9 2,818 1,146 45.9 2,121 859

2011 56 18.7 4,861 1,888 28.7 2,905 1,133

1998 162 66.1 1,536 525 76.1 1,334 456

2001 158 33.4 697 253 43.4 537 195

2004 167 13.9 2,631 1,045 23.9 1,487 593

2005 147 11.1 3,679 1,525 21.1 1,790 738

2006 73 39.7 1,142 434 49.7 844 322

2007 62 36.8 1,964 763 46.8 1,450 565

2008 72 48.8 2,124 808 58.8 1,699 640

2009 70 50.5 1,544 606 60.5 1,235 484

2010 63 44.0 1,391 573 54.0 1,091 447

2011 64 48.4 2,751 1,090 58.4 2,201 869


Fishery

Fishing, transiting and offloading

Notes: Mean crew size is a count of all crew paid shares excluding the captain. Excludes any vessels on which crew were paid in excess of 75 percent of the vessel's gross revenues. Excludes vessels harvesting CDQ allocations for Bristol Bay red king crab in 1998, 2001, and 2004 and for Bering Sea C. opilio for 1998, 2001, 2004, and 2005. All dollars are adjusted to 2011 dollars.

Fishing, transiting and offloading plus 10 days boat and gear work


YearNumber

of vessels



To consider addressing these problems, the Council has identified four measures that it would like to explore in this paper: 1) limits on lease rates, 2) limits on the portion of lease rates that may be charged to crew, 3) minimum crew compensation, and 4) measures to promote transfer of shares to active participants. The remainder of this paper briefly discusses these provisions suggested by the Council. As a part of the development of an amendment package, the Council must first develop a purpose and need statement to guide and support the action. The Council’s purpose and need statement should be based on its Magnuson Stevens Act management authority. This authority stems from both the general provisions of the Magnuson Stevens Act, which are applicable to all Council actions and the specific authority granted the Council to establish the crab rationalization program. That legislation provided:

Subsequent to implementation [of the program], the Council may submit and the Secretary may implement changes to or repeal of conservation and management measures, including measures authorized in this section, for crab fisheries of the Bering Sea and Aleutian Islands in accordance with applicable law, including this Act as amended by this subsection, to achieve on a continuing basis the purposes identified by the Council.7

This appears to provide the Council with authority to amend the program to achieve the purpose and need identified at the time the program was adopted. That purpose and need statement provides:

Vessel owners, processors and coastal communities have all made investments in the crab fisheries, and capacity in these fisheries far exceeds available resources. The BSAI crab stocks have also been highly variable and have suffered significant declines. Although three of these stocks are presently under rebuilding plans, the continuing race for fish frustrates conservation efforts. Additionally, the ability of crab harvesters and processors to diversify into other fisheries is severely limited and the economic viability of the crab industry is in jeopardy. Harvesting and processing capacity has expanded to accommodate highly abbreviated seasons, and presently, significant portions of that capacity operate in an economically inefficient manner or are idle between seasons. Many of the concerns identified by the NPFMC at the beginning of the comprehensive rationalization process in 1992 still exist for the BSAI crab fisheries. Problems facing the fishery include: 1. Resource conservation, utilization and management problems; 2. Bycatch and its' associated mortalities, and potential landing deadloss; 3. Excess harvesting and processing capacity, as well as low economic returns; 4. Lack of economic stability for harvesters, processors and coastal communities; and 5. High levels of occupational loss of life and injury. The problem facing the Council, in the continuing process of comprehensive rationalization, is to develop a management program which slows the race for fish, reduces bycatch and its associated mortalities, provides for conservation to increase the efficacy of crab rebuilding strategies, addresses the social and economic concerns of communities, maintains healthy harvesting and processing sectors and promotes efficiency and safety in the harvesting sector. Any such system should seek to achieve equity between the harvesting and processing sectors, including healthy, stable and competitive markets.

The following discussion of the specific measures that follows identifies some possible sources of authority, should the Council elect to advance an action concerning any of the four issues it has identified. 7 See Consolidated Appropriations Act of 2004, Sec. 801 amending the Magnuson Steven Act Sec. 313(j)(3).


The regulatory structure that defines fishing privileges under the crab program allows for the transfer of both quota shares and IFQ subject to limits on use and holdings of those shares. IFQ, however, may only be transferred within and among cooperatives. In addition, leasing of IFQ (defined as the harvest of IFQ by a vessel not owned by the quota share holder or on which the quota share holder is not present) is only permitted by cooperatives. Transfers of IFQ within a cooperative are overseen only by the cooperative, allowing a cooperative to distribute and redistribute IFQ among member vessels with no administrative limitations or delays. The only IFQ transfers administered by NOAA Fisheries are those between cooperatives. Cooperative vessels are exempt from vessel use caps, freeing cooperative vessels from any regulatory limit on the amount of a cooperative’s allocation they may harvest. This cooperative structure provides participants with relatively high operational flexibilities, particularly in comparison to fishing opportunities outside of cooperatives. Because of the contrast between cooperative and non-cooperative fishing opportunities, almost all fishing has occurred in cooperatives. As a result, it is self-evident that the changes brought on by leasing (including changes in active participation and crew compensation) have arisen almost exclusively in cooperatives. The Council’s motion requesting this paper suggests that the measures be considered as requirements of cooperative agreements. The rationale for using cooperative agreements for implementing the measures is clear when considering the structure of the rationalization program. Each of the suggested measures is intended to address effects that arise largely from the share trading and redistribution, which occur exclusively within and among cooperatives. The Council has asked that the paper examine cooperative implementation of these measures, in part, to address the problems at their root. Cooperative implementation may also provide other advantages, which are discussed in the specific sections addressing each of the various measures.8 Generally, cooperative implementation could be accomplished through each cooperative being required to incorporate certain provisions in its cooperative agreement to establish the measure. Cooperatives could also collect information from members verifying compliance with the measure. In addition, each cooperative could be required to report to the Council showing its compliance with the measure. These three requirements could be used to establish the measure and ensure that participants follow through with internal oversight of the measure. In addition, the measures should be developed in a manner that provides specific direction to the cooperatives and fishery participants who are subject to the measure. Only measures that are specific can reliably achieve the intended results. Promoting quota holdings by active participants The first measure the Council has suggested for consideration is a measure to promote the acquisition of quota by persons active in the fisheries. This measure may be intended to address an overall policy goal of creating additional opportunities for persons active in the fisheries to have better access to quota. Persons who are active in the fisheries may maintain a better understanding of fishery conditions. This understanding is argued to create a stewardship ethic, helping to ensure that the resource is maintained. Active quota holders are also argued to be more engaged in day-to-day operations and have a better appreciation of risks in the fisheries and how those risks evolve. This understanding of risks may translate into better vessel maintenance and operations, improving safety in the fisheries. A requirement that persons holding QS maintain would also consistent with the dictate of the Magnuson-Stevens Act that

8 At times, it has been suggested that industry could independently adopt measures that cap lease payments, limit the extent to which lease payments may be charged to crew, or establish a minimum crew pay standard as a percentage of vessel revenues. Some members of industry have expressed concern that these arrangements could create antitrust concerns, as they could be construed by a court as an attempt by industry to limit prices or payments. As a result, cooperative administration of these measures is suggested to require Council direction.


limited access privileges be held by persons who substantially participate in the fisheries (see Magnuson Stevens Act Sec. 303A(c)(5)(E) or 16 USC 1853a (c)(5)(E)). While promotion of quota holdings by persons active in the fishery may be argued to have benefits, it is difficult to understand the effects of any such measure, given the vagueness of the current proposal. Cooperatives could adopt a variety of different measures to promote quota ownership by members who are active, such as loan assistance, buyer preferences, or rights of first offer. The specific measures being suggested by the Council are not defined by the motion. The Council could choose one of two means of pursuing the action. First, the Council could develop specific requirements for cooperative agreements, which require a cooperative to adopt certain measures to promote acquisition of quota shares by persons meeting active participation requirements (such as vessel ownership or crewing requirements). The cooperative could also be required to monitor the provision and annually report to the Council on the transfers that have occurred and the extent to which transfers were received by persons who are active. This type of a requirement could be difficult to develop. Specific thresholds for active participation will need to be defined. Consequences for failing to meet those thresholds may also need to be defined. Persons could be prevented from forming a cooperative in subsequent years or could simply be subject to enforcement actions. Since cooperatives in the program are strictly voluntary, development of measures to address failing to meet requirements could be complicated. While peer pressure from fellow cooperative members may be effective in creating incentives for complaint behavior, imposing a penalty or limitation on members of a cooperative who are active in the fisheries for the failure of another member to meet an active participation requirement may be perceived to be problematic. If the Council wishes to pursue a specific cooperative requirement, considerations such as these may be relevant. An alternative could be to adopt a more general requirement that each cooperative develop and adopt its own measures to facilitate the acquisition of quota shares by active participants. This alternative would allow each cooperative the flexibility to address the issue in a way that it perceives to be the most appropriate for its circumstances. Each cooperative could also be required to report annually on the performance of the measures. Although a less specific requirement may be less effective in some instances, it may also allow cooperatives flexibility to address their own circumstances. A small cooperative that has mostly active participants may appropriately establish internal financing of crew quota share purchases. A larger cooperative may better address active participation share acquisitions by granting a purchase preference to active participants. This added flexibility may come at a cost, if cooperatives choose to minimally address the issue with measures that do little to ensure that transfers are made to active participants. Under either of the suggested alternatives, the Council could also require cooperatives to annually report on the extent to which its cooperative’s members are active. Such a report could identify the number of quota share holders in the cooperative, the amount of IFQ brought to the cooperative by those quota share holders that are active and inactive, as well as the changes in the number of quota share holders and amount of quota shares that are held by persons who are active. The report could also separately identify members who are active as crewmembers, as well as persons meeting a specified vessel ownership interest. Limits on lease rates The high lease rates in the fisheries are said to contribute greatly to the decline in revenues to persons who actively participate in the fisheries as vessel owners and crew. It is suggested that lower lease rates would allow for more of the fisheries’ revenues to be realized by vessel owners and crews. These


additional revenues could address concerns that vessel owners have reduced revenues for vessel maintenance and that crews have suffered declines in compensation under the rationalization program. As noted earlier, understanding leasing in the crab fisheries is complicated by the regulatory structure. Most transfers of shares occur inside cooperative and, as such, are not directly reported to NOAA Fisheries. These internal distributions of IFQ are typically directed by members, without cooperative managers having full knowledge of the terms of the transaction (particularly financial terms). Similarly, transfers between cooperatives are often made at the direction of members, without cooperative managers having full information concerning the transfers. For cooperatives to take on a role of overseeing all transactions to implement a cap on leases would require that cooperatives take on the role of monitoring all transfers of shares to ensure that the cap is not exceeded. To effectively monitor transactions in this manner will require that the Council develop a definition of a lease. Defining a lease for purposes of limiting the lease rate (or the amount of revenues that may be transferred in exchange for use of the shares) may seem relatively straightforward, in comparison to defining a lease for purposes of determining the overall market lease rate. For example, the limitation could be applied to any transfer of IFQ within a cooperative or between cooperatives. While the documentation of specific lease rates could be problematic, as a variety of arrangements (including in-kind transfers) among a variety of different entities are likely, verification that lease rates do not exceed a specified level may be possible. If adopted, a lease cap could be implemented by requiring each cooperative to include in its cooperative agreement a provision that prohibits leases in excess of the cap. Cooperatives could also be required to report on leases within the cooperative and between the cooperative and any other cooperative, verifying simply that no lease rate exceeded the specified cap. The cooperative could use a system of affirmations from its members to support its report. It should be noted that the report (and supporting affirmations) would not specify any lease rates, but only that lease rates did not exceed the cap. Whether a measure such as caps on lease rates will achieve desired effects, however, is uncertain. While limiting cash payments to persons who lease QS could complicate efforts by those persons to realize the maximum return from their share holdings, such a limit may not mean that alternative means of achieving the maximum return are not developed. The simplest means of avoiding the cap would be to enter arrangements that avoid the characterization of the share distribution as a lease. Transfers between persons active in the fisheries can include shares of other species or other goods obscuring lease rates. Persons not active in the fishery may use partnerships and corporate share holding arrangements to avoid leases. For example, partnership agreements could be entered annually (or less frequently) that specify that IFQ yielded by certain quota shares will be distributed within a cooperative for harvest by a specific vessel owned by one partner. An inactive quota share holder (who holds no interest in the vessel) may transfer quota to the quota holding partnership and hold a large interest in that partnership, effectively receiving payments equivalent to a lease that pays in excess of the cap. The specific arrangements could be tailored to accommodate a rule developed by the Council to ensure that the distribution of IFQ to the vessel for harvest would not be considered a lease, since the vessel owner may hold an interest in the quota holding entity. The Council could attempt to close off these opportunities by providing better definition of instances that would be considered a lease for imposing the cap. A lease could be defined as use of IFQ on a vessel that is not owned in part or crewed by the holder of the quota shares that yielded the IFQ. A threshold ownership amount could be established for determining common ownership of a vessel and the held quota shares. Through this definition of leasing, the Council might effectively drive inactive quota share holders into partnerships with persons active in the fishery, but these measures may not fully address the concern of persons whose only interest in the fisheries are quota holdings receiving a substantial amount of the value associated with harvests from the fisheries.


Capping lease payments that may be charged to crew Crews in the crab fisheries are typically paid a share (or percentage) of adjusted vessel revenues. Historically, adjustments have been made for normal vessel expenses, such as bait and fuel. Since implementation of the rationalization program, many vessel operators have also made adjustments for quota share lease payments. To limit the effects of the leasing market and these lease payment on crew, it is suggested that the amount of any lease payments that may be charged to crews could be limited. Limiting these charges could be used to attempt to protect crews from the financial impacts of high lease rates and widespread leasing practices in the fisheries, which may be contended to contribute to both equity and economic stability in the harvesting sector. Any limit on lease charges passed on to crews could be implemented in a manner similar to the suggested implementation of the limit on lease rates, discussed above. A cooperative could be required to include a provision in its cooperative agreement prohibiting charging lease rates to crew in excess of a threshold percentage. Cooperatives could also be required to report to the Council that no crews were charged in excess of the threshold. Cooperatives could use affirmations from members to support their reports. Although capping the amount of lease payments that may be charged to crews is intended to insulate crew from the effects of leasing in the fisheries, whether such a measure would be effective is uncertain. Vessel owners can structure contracts a variety of ways to arrive at the same payment. If lease rates charges are limited, it may be possible to add other charges or adjust the crew share percentage to arrive at the same crew payment that would have been made, if the full lease rate was charged.9 It is difficult to envision how a measure could be developed to address these modifications, given the variety of structures crew contracts can take and the number of elements that may be incorporated into those contracts. Minimum crew pay standards An alternative to capping lease payments that may be charged to crew could be to establish minimum crew pay standards. Such a standard could define the minimum percentage of gross ex vessel revenues that a vessel may pay to its crewmembers. Such a limit could serve a purpose similar to a minimum wage law. Such a measure would be intended to more directly and comprehensively protect crew from further declines in the share of vessel revenues paid to crew that has occurred under the rationalization program. The more general goal of these measures may be to achieve equity and economic stability in the harvest sector. As with the preceding measures, cooperative implementation could be accomplished through requirements that a cooperative: 1) to include in its cooperative agreement a provision that requires all vessels to compensate crews in excess of a specified percentage of the vessel’s gross revenues, 2) collect from each members’ vessels gross revenues and total crew compensation that can be used to verify compliance, and 3) annually report to the Council concerning compliance with the requirement. The annual report may not require a cooperative to specifically report on crew compensation amounts (due to confidentiality limitations), but would simply be an affirmation that the cooperative’s vessels all met the standard. A cooperative, however, may elect to provide more specific information concerning crew compensation.

9 If the Council wishes to proceed with an action to limit lease payments charged to crew it should also consider that quota charges that serve a similar function as lease charges (such as mortgage payment charges) may have a similar effect on crew compensation. The Council should consider whether its measure should be written to include these other charges.


As with other cooperative measures under discussion here, the Council should consider factors that may either limit the success of this proposed measure or pose challenges in defining the measure. Since implementation of the program, crew compensation as a percentage of gross revenues has varied with the amount of harvests. Some participating crews have suggested that the consolidation of quota provides a benefit, even if payments for harvest of that added quota are at a lower percentage due to charges for lease payments. In other words, some crew may believe that the acceptable minimum share of vessel revenues paid to the crew should differ with the amount of harvests. Whether appropriate minimum percentages can be defined that protects crews on vessels that harvest substantially different amounts of crab is uncertain.

Owner operated vessels and vessels that harvest quota of crewmembers could also pose a challenge. It is possible that owner operated vessels and vessels that catch a substantial amount of quota held by crew may be able to achieve the standard by disguising payments for vessel ownership or quota holdings as crew compensation. Developing a measure that accurately separates pay for working as the captain on the vessel (or payments for share holdings) from payments for crewing could be difficult. Reasonable compensation may differ across fisheries due to a variety of factors (such as crab prices, catch rates, working conditions, and risk). These differences are suggested by historical data from the fisheries. For example, the percentage of vessel gross revenues paid to crew in the Bristol Bay red king crab fishery has been lower than that percentage in the Bering Sea C. opilio fishery; however, daily pay in the red king crab fishery has exceeded daily pay in the C. opilio fishery. Any percentages should consider the whether different percentages are appropriate for different fisheries. In addition, to the extent that harvests overlap across fisheries (such as C. bairdi harvests made in the Bristol Bay red king crab and Bering Sea C. opilio fisheries), it may be difficult (or inappropriate) to attempt to separate payments by fishery. Another consideration (that is more concerning) is whether the adoption of such a measure would lead to all (or most) vessels simply paying the proposed minimum payment. Some vessel owners may be tempted to adopt the minimum payment as the Council’s recommended crew compensation, rather than as an acceptable minimum. If this practice is adopted, some crew could be harmed substantially. Active participation requirements While the high degree of flexibility allowed cooperatives in use of their IFQ has permitted quota share holders to achieve operational efficiencies increasing the benefits derived from their share holdings, it has also allowed for inactive quota share holders, which concerns the Council and some stakeholders. These QS holders have used cooperative membership to derive ongoing benefits from the fisheries despite maintaining no role in the fisheries beyond leasing of their fishing privileges to vessel operators. Many stakeholders do not object to these QS holders receiving compensation for their share holdings, as those holdings are derived from fishery investments (either in QS directly or in licenses and vessels from which QS allocations were derived). Some stakeholders, however, question whether these QS holders should be permitted to continue to hold QS and receive continuing annual payments from the fisheries, as their holdings may limit the ability of some vessel owners and other active participants in the fisheries from gaining more secure positions through the development of long term share holdings. To the extent that these lease arrangements have limited the amount of QS on the market, vessel owners and active crewmembers are subject to the vagaries of the lease markets for a large share of the vessel’s harvests, rather than having a more certain allocation that arises from QS holdings. A means of redressing this circumstance could be to develop a requirement that any cooperative member meet an active participation requirement. For example, a cooperative could be required to verify that all of its members either own a threshold interest in a vessel that actively fishes in the crab fisheries or meet a crewing threshold in the fisheries. These requirements could be similar to the suggested requirements of


the Council’s current active participation alternatives. Incorporating these active participation requirements into cooperative requirements, however, could reduce the administrative burden of the agency considerably, by shifting that burden to cooperatives. Each cooperative would need to maintain vessel ownership and vessel and crew harvest records of member quota share holders sufficient to demonstrate compliance with the active participation requirements, as needed to support an annual report.10 Conclusion The Council requested this paper as a first step in its consideration of a variety of measures to address issues related to share purchase opportunities for persons active in the crab fisheries and high lease payments in the fisheries and the effects of those payments on active participants. The paper outlines possible measures that the Council could consider to develop alternatives for analysis. If the Council wishes to proceed with an action, it will need to first develop a purpose and need statement identifying its reasons for undertaking action to address these issues. Relying on that purpose and need statement, it can then identify alternatives that will address perceived specific issues.

10 Shifting the burden to cooperatives could have the effect of distributing those costs among cooperatives in proportion to the complexity of their circumstance, possibly creating a direct incentive for cooperatives (and their members) to maintain simple ownership structures for purposes of meeting active participation requirements. Under agency administration, this incentive is lacking since any administrative cost borne by industry would be through cost recovery.

21912 Federal Register / Vol. 78, No. 71 / Friday, April 12, 2013 / Notices

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

Proposed Information Collection; Comment Request; Crab Rationalization (CR) Program: Annual Report

AGENCY: National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Notice.

SUMMARY: The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995. DATES: Written comments must be submitted on or before June 11, 2013. ADDRESSES: Direct all written comments to Jennifer Jessup, Departmental Paperwork Clearance Officer, Department of Commerce, Room 6616, 14th and Constitution Avenue NW., Washington, DC 20230 (or via the Internet at [email protected]). FOR FURTHER INFORMATION CONTACT: Requests for additional information or copies of the information collection instrument and instructions should be directed to Patsy A. Bearden, (907) 586– 7008 or [email protected]. SUPPLEMENTARY INFORMATION:

I. Abstract This request is for a new information

collection. Since implementation of the Crab

Rationalization (CR) Program (prior to the 2005–2006 season), critics of the program have pointed to high lease rates, fleet consolidation, absentee quota share (QS) ownership, and changes in crew compensation as some of the program’s greatest shortcomings.

At its December 2011 meeting, the North Pacific Fisheries Management Council (Council) requested and received a report from the National Marine Fisheries Service (NMFS) reviewing the performance of the CR Program during its first 5 years. Based on the report and public testimony, the Council identified certain aspects of the program that need additional attention. The Council requested a discussion paper concerning certain measures from CR cooperatives that might promote acquisition of QS by crew and other active participants and promote equitable crew compensation. The Council specifically requested that the

paper examine the ‘‘best practice’’ requirements for cooperative agreements. The paper was presented to the Council at the February 2013 meeting.

After receiving the presentation of the paper, the Council passed a motion in February 2013 requesting that each cooperative in the CR Program voluntarily provide an annual report to the Council to describe the measures the cooperative is taking to increase the transfer of quota share to active participants and crew members. While the high flexibility allowed cooperatives in use of their IFQ has permitted QS holders to achieve operational efficiencies, it has also allowed for inactive QS holders and inequitable crew compensation. Holdings of inactive QS holders may limit the amount of QS on the market. One solution may be to require that any cooperative member must meet an active participation requirement.

The annual report would also describe measures the cooperative is taking to lower currently high lease rates and to increase currently low crew compensation. The high lease rates in the fisheries may contribute to the decline in revenues to persons who actively participate in the fisheries as vessel owners and crew. Lower lease rates may allow for more of the fisheries’ revenues to be realized by vessel owners and crews. Crews in the crab fisheries are typically paid a share (or percentage) of adjusted vessel revenues, with adjustments made for normal vessel expenses, such as bait and fuel. Since implementation of the CR Program, many vessel operators have also made adjustments for QS lease payments. To limit the effects of the leasing market and to protect crews from the financial impacts of high lease rates, the amount of any lease payments charged to crews could be limited or capped.

The annual report should describe the effectiveness of the measures implemented through the cooperatives and the estimated level of member participation in any voluntary measures, and should include supporting information and data. These reports are to be provided to the Council at its October meeting.

II. Method of Collection Respondents have a choice of either

electronic or paper forms. Methods of submittal include email, mail, and facsimile transmission of paper forms.

III. Data OMB Control Number: None. Form Number: None.

Type of Review: Regular submission (request for a new collection).

Affected Public: Business or other for- profit organizations.

Estimated Number of Respondents: 10.

Estimated Time per Response: CR Cooperative Annual Report, 10 hours.

Estimated Total Annual Burden Hours: 100.

Estimated Total Annual Cost to Public: $50 in recordkeeping/reporting costs.

IV. Request for Comments

Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency’s estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.

Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they also will become a matter of public record.

Dated: April 8, 2013. Gwellnar Banks, Management Analyst, Office of the Chief Information Officer. [FR Doc. 2013–08568 Filed 4–11–13; 8:45 am]

BILLING CODE 3510–22–P

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

Proposed Information Collection; Comment Request; Processed Products Family of Forms

AGENCY: National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Notice.

SUMMARY: The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995.

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mailto:[email protected]

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Documents

NOTICE OF OFFICE OF MANAGEMENT AND BUDGET ACTION · 2013-08-27 · Conservation and Management Act (Magnuson-Stevens Act) as amended in 2006 to mandate the Secretary of Commerce (Secretary)