[Federal Register Volume 76, Number 154 (Wednesday, August 10, 2011)]
[Proposed Rules]
[Pages 49423-49430]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-20187]


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DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

50 CFR Part 680

[Docket No. 0812081573-1423-02]
RIN 0648-AX47


Fisheries of the Exclusive Economic Zone Off Alaska; Bering Sea 
and Aleutian Islands Crab Rationalization Program

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

ACTION: Proposed rule; request for comments.

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SUMMARY: NMFS proposes regulations implementing Amendment 30 to the 
Fishery Management Plan for Bering Sea/Aleutian Islands King and Tanner 
Crabs (FMP). This proposed rule would amend the Bering Sea/Aleutian 
Islands Crab Rationalization Program (CR Program) to modify procedures 
for producing and submitting documents that are required under the 
Arbitration System to resolve price, delivery, and other disputes 
between harvesters and processors. This action is necessary to improve 
the quality and timeliness of market information used to conduct 
arbitration proceedings. This action is intended to promote the goals 
and objectives of the Magnuson-Stevens Fishery Conservation and 
Management Act, the FMP, and other applicable law.

DATES: Comments must be received no later than September 9, 2011.

ADDRESSES: Send comments to Assistant Regional Administrator, 
Sustainable Fisheries Division, Alaska Region, NMFS, Attn: Ellen 
Sebastian. You may submit comments, identified by ``RIN 0648-AX47,'' by 
any one of the following methods:
    <bullet> Electronic Submissions: Submit all electronic public 
comments via the Federal eRulemaking Portal Web site at http://www.regulations.gov.
    <bullet> Mail: P.O. Box 21668, Juneau, AK 99802.
    <bullet> Fax: (907) 586-7557.
    <bullet> Hand delivery to the Federal Building: 709 West 9th 
Street, Room 420A, Juneau, AK.
    All comments received are a part of the public record and will 
generally be posted to http://www.regulations.gov without change. All 
personal identifying information (e.g., name, address) voluntarily 
submitted by the commenter may be publicly accessible. Do not submit 
confidential business information or otherwise sensitive or protected 
information.
    NMFS will accept anonymous comments (enter N/A in the required 
fields, if you wish to remain anonymous). Attachments to electronic 
comments will be accepted in Microsoft Word, Excel, WordPerfect, or 
Adobe portable document file (pdf) formats only.
    Copies of Amendment 30, the Regulatory Impact Review/Initial 
Regulatory Flexibility Analysis (RIR/IRFA) and the categorical 
exclusion prepared for this action--as well as the Environmental Impact 
Statement (EIS) prepared for the CR Program--may be obtained from the 
NMFS Alaska Region at the address above or from the Alaska Region Web 
site at http://alaskafisheries.noaa.gov. NMFS determined that this 
proposed action was categorically excluded from the need to prepare an 
environmental assessment under the National Environmental Policy Act.
    Written comments regarding the burden-hour estimates or other 
aspects of the collection-of-information requirements contained in this 
proposed rule may be submitted to NMFS Alaska Region by e-mail to 
<a href="/cdn-cgi/l/email-protection#fcb3b5aebda3c09ddc948e999ac1" mailto:Submission@omb.eop.gov"><span class="__cf_email__" data-cfemail="732006111e1a00001a1c1d331c1e115d161c035d141c05">[email protected]</span></a>">OIRA_<a href="/cdn-cgi/l/email-protection#55062037383c26263c3a3b153a38377b303a257b323a23"><span class="__cf_email__" data-cfemail="732006111e1a00001a1c1d331c1e115d161c035d141c05">[email protected]</span></a></a>, or fax to 202-395-7285.

FOR FURTHER INFORMATION CONTACT: Forrest R. Bowers, 907-586-7240.

SUPPLEMENTARY INFORMATION: The king and Tanner crab fisheries in the 
exclusive economic zone of the Bering Sea and Aleutian Islands (BSAI) 
are managed under the FMP. The FMP was prepared by the North Pacific 
Fishery Management Council (Council) under the Magnuson-Stevens Fishery 
Conservation and Management Act. Amendments 18 and 19 to the FMP 
implemented the CR Program. Regulations implementing the FMP, including 
the CR Program, are located at 50 CFR part 680.

Background

    Under the CR Program, NMFS issued quota share (QS) to persons based 
on their qualifying harvest histories in the BSAI crab fisheries during 
a specific time period. Each year, the QS issued to a person yields an 
amount of individual fishing quota (IFQ), which is a permit providing 
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 pool in a crab fishery. For example, a person 
holding QS equaling 1 percent of the QS pool in a crab fishery would 
receive IFQ to harvest 1 percent of the annual total allowable catch 
(TAC) in that crab fishery. Catcher processor license holders were 
allocated catcher processor vessel owner (CPO) QS for their history as 
catcher processors; and catcher vessel license holders were issued 
catcher vessel owner (CVO) QS based on their history as a catcher 
vessel.
    Under the CR Program, 97 percent of the initial allocation of QS 
was issued to vessel owners as CPO or CVO QS; the remaining 3 percent 
was issued to vessel captains and crew as CPC or CVC QS based on their 
harvest histories as crew members onboard crab fishing vessels. Ninety 
percent of the annual CVO IFQ is issued as A shares, or Class A IFQ, 
which are subject to landing requirements in specific geographic 
regions, and must be delivered to a processor holding unused individual 
processor quota (IPQ). The remaining 10 percent of the annual CVO IFQ 
is issued as B shares, or Class B IFQ, which may be delivered to any 
processor and are not subject to regionalization. CPO, CPC, and CVC IFQ 
are not subject to regionalization and are not required to be matched 
with a processor holding IPQ.
    NMFS also issued processor quota shares (PQS) to processors based 
on their qualifying processing histories in the BSAI crab fisheries 
during a specific time period. These PQS yield annual IPQ, which 
represent a privilege to receive a certain amount of crab harvested 
with Class A IFQ. IPQ are issued in an amount equivalent to the Class A 
IFQ, creating a one-to-one correspondence between Class A IFQ and IPQ. 
Prior to the start of a crab fishing season, Class A IFQ and IPQ 
holders match their shares with one another, thereby determining their 
markets for the coming year. These matches may be modified during the 
crab season, but both parties must consent to any modifications.

Arbitration System

    The CR Program requires holders of Class A IFQ to deliver their 
catch to processors holding IPQ for a specific crab fishery within a 
specific geographic region. Potential disputes among harvesters and 
processors during price and delivery negotiations can occur, and the 
share matching requirements can exacerbate these disputes. To fairly 
address potential price and delivery disputes that may arise between 
Class A IFQ holders and IPQ holders, the CR

[[Page 49424]]

Program includes an arbitration system. Disputes are most likely to 
occur in cases where the Class A IFQ holder is not affiliated with an 
IPQ holder through common ownership or control and the IPQ holder will 
not consent to modification of the preseason share matching, thereby 
allowing the IPQ holder to dictate prices or other conditions without 
the ability of the Class A IFQ holder to move to an alternative market. 
Class A IFQ holders who are unaffiliated, or independent, of IPQ 
holders are commonly known as unaffiliated Class A IFQ holders. 
Conversely, Class A IFQ holders who are affiliated with IPQ holders 
through common ownership and control are known as affiliated Class A 
IFQ holders. Affiliated Class A IFQ holders are not eligible to use the 
arbitration system to settle price or other disputes. Affiliated Class 
A IFQ holders do not require an arbitration system, because they are 
integrated with IPQ holders and do not have distinct and potentially 
adversarial negotiating positions as may be the case with unaffiliated 
Class A IFQ and IPQ holders.
    The arbitration system allows unaffiliated Class A IFQ holders to 
initiate an arbitration proceeding in the event of a dispute to allow 
an independent third party to provide a review of harvester and 
processor negotiation positions and provide an independent and binding 
resolution to issues under dispute. Regulations describing the 
arbitration system are found at 50 CFR 680.20. An extensive discussion 
of the components of the arbitration system is found in the preambles 
to the proposed rule (September 1, 2004; 69 FR 53397) and final rule 
(March 2, 2005; 70 FR 10174) that implemented the CR Program, as well 
as in the final EIS prepared for the Program, and is not reiterated 
here (see ADDRESSES).
    To facilitate arbitration proceedings, the arbitration system 
establishes a series of contractual requirements that CVO QS, PQS, 
Class A IFQ, and IPQ holders must meet that dictate how the arbitration 
system will function. Regulations require that all unaffiliated CVO QS 
and Class A IFQ holders join an Arbitration Organization (AO). 
Similarly, affiliated CVO QS and Class A IFQ holders are required to 
join a separate AO. PQS and IPQ holders are required to join a third 
AO. Regulations further require that these three AOs enter into a 
series of contracts that will allow the arbitration system to function. 
Although affiliated Class A IFQ and IPQ holders must join AOs, the 
primary role of the arbitration system is to facilitate negotiations 
among the unaffiliated Class A IFQ and IPQ holders. Therefore, this 
proposed rule would primarily affect unaffiliated Class A IFQ and IPQ 
holders. For clarity in this proposed rule, the AO representing 
unaffiliated CVO QS and Class A IFQ holders will be called the 
unaffiliated Class A IFQ arbitration organization, the AO representing 
affiliated CVO QS and Class A IFQ holders will be called the affiliated 
Class A IFQ arbitration organization, and the AO representing PQS and 
IPQ holders will be called the IPQ arbitration organization.
    Under the arbitration system, all AOs must establish contracts to 
hire an independent third-party data provider, who will provide up-to-
date information on matches between Class A IFQ and IPQ holders for 
crab deliveries and contracts to hire independent experts to facilitate 
arbitration proceedings. Only the unaffiliated Class A IFQ AOs and the 
IPQ AOs can enter into contracts to hire: (1) A market analyst, who 
provides a pre-season market report of likely market conditions for 
each crab fishery to aid in price negotiations and arbitrations; (2) a 
formula arbitrator, who prepares a non-binding price formula that 
describes the historic division of first whole-sale values among 
harvesters and processors that can be used in price negotiations and 
arbitrations; and (3) a contract arbitrator, who reviews the positions 
of the parties during an arbitration proceeding and issues a binding 
decision based on a last-best offer form of arbitration.
    Under current regulations, contracts with the market analyst, 
formula arbitrator, and contract arbitrator must be established by June 
1 and can only be established by the mutual agreement of unaffiliated 
Class A IFQ AOs and IPQ AOs. ``Mutual agreement,'' as defined in 50 CFR 
680.2, requires the consent and agreement of unaffiliated Class A IFQ 
AOs that represent an amount of unaffiliated Class A IFQ equal to more 
than 50 percent of all the unaffiliated Class A IFQ in a fishery, and 
IPQ AOs that represent an amount of IPQ equal to more than 50 percent 
of all the IPQ in a fishery based upon the Annual Arbitration 
Organization Reports. This mutual agreement requirement is intended to 
ensure that the majority of the unaffiliated Class A IFQ and IPQ 
holders reach agreement on the contracts that will provide necessary 
services for the functioning of the arbitration system, but avoid the 
potential that the process could be compromised by the inability of all 
unaffiliated Class A IFQ or IPQ holders to reach unanimity on the 
contracts.
    During an arbitration proceeding, the contract arbitrator is 
required to consider the market report and the non-binding price 
formula when considering the offers provided by the parties to the 
arbitration proceeding. Because the market report and the non-binding 
price formula play a central role in the decision-making process of the 
contract arbitrator, the information used in their preparation and the 
timing of their production can affect their utility and importance.

Need for Proposed Action

    As the CR Program has progressed, it has become clear to the 
unaffiliated Class A IFQ and IPQ holders--as well as to the market 
analyst, the formula arbitrator, and the contract arbitrator--that 
certain aspects of the existing requirements for the timing and content 
of the market report and non-binding price formula limit the 
effectiveness of the arbitration system. This proposed rule would 
modify four aspects of the arbitration system to improve its 
effectiveness by: (1) Allowing AOs to mutually agree to establish 
contracts that would forgo the preparation of market reports and non-
binding price formulas if a CR Program crab fishery is unlikely to (and 
does not) open; (2) modifying the timeline for release of the non-
binding price formula for the western Aleutian Islands golden king crab 
(WAG) and eastern Aleutian Islands golden king crab (EAG) fisheries; 
(3) modifying the information used in the market report and allowing 
AOs to mutually agree to modify the timing for release of the market 
report in each CR Program fishery; and (4) clarifying the authority of 
the AOs, market analyst, formula arbitrator, contract arbitrators, and 
third-party data provider to adopt additional arbitration system 
procedures that are not in conflict with arbitration system 
regulations. The need for and effect of each of these proposed actions 
are described in greater detail below.

Action 1: Allow AOs To Forgo Preparation of Market Reports and Non-
Binding Price Formulas if a Crab Fishery Is Unlikely To and Does Not 
Open

    This proposed action would allow AOs representing unaffiliated 
Class A IFQ holders and IPQ holders to mutually agree that when a crab 
fishery is unlikely to open, neither a market report nor a non-binding 
formula would be prepared for the fishery. If mutual agreement is 
reached, the proposed action would require the AOs representing 
unaffiliated Class A IFQ holders and IPQ holders to include provisions 
in the contracts with the market analyst and formula arbitrator that 
would reflect the mutual agreement of the AOs to forgo preparation of a

[[Page 49425]]

market report and non-binding price formula for the fishery; require 
preparation of the market report and non-binding price formula in the 
event that an opening is later announced for the fishery; and specify a 
timeline for the production of the market report and non-binding price 
formula, which must occur before June 30.
    This proposed action would allow the AOs, and, by extension, the 
unaffiliated Class A IFQ and IPQ holders who are members of the AOs and 
who pay the costs for producing these reports, the option to forgo 
incurring expenses associated with the production of those reports when 
it appears unlikely that a fishery will open. The potential cost 
savings to the AOs could range from a few thousand to several tens of 
thousands of dollars. Additional details on the potential cost savings 
are provided in the analysis prepared for this proposed action.
    Status of stocks for CR Program crab fisheries is assessed annually 
and it is possible that some CR Program crab fisheries will not open in 
a given year. For example, during the first five years of the CR 
Program, the western Aleutian Islands red king crab and Pribilof 
Islands red and blue king crab fisheries have failed to open, and the 
Saint Matthew Island blue king crab fishery has only been open during 
the 2009-2010 and 2010-2011 fishing seasons. Regardless of whether a 
fishery is scheduled to open, regulations at 50 CFR 680.20(e)(4)(ii) 
require that the market report and non-binding price formula must be 
prepared for each crab fishery no later than 50 days before the opening 
date for the first crab fishing season for that crab QS fishery. 
Because most crab fisheries have an October 15 season opening date, 
most of the market reports and non-binding price formulas must be 
produced by August 26 each year. However, in most cases, the State of 
Alaska does not announce whether a CR Program crab fishery will be open 
or closed until October 1.
    The proposed action would allow the AOs to mutually agree to forgo 
the production of the market report and non-binding price formula if a 
fishery is unlikely to and does not open. This agreement would be 
required to be included in the contract the AOs establish with the 
market analyst and formula arbitrator. If the AOs mutually agree to 
include this provision in their contract with the market analyst and 
the formula arbitrator, the contract would also have to require the 
production of the market report and non-binding price formula in the 
event that a fishery previously not anticipated to open does actually 
open. The proposed regulations at Sec. Sec.  680.20 (f) and (g) would 
leave the details about the timeline for producing these reports in the 
event of a fishery opening to the mutual agreement of the AOs, only 
requiring that the market report and non-binding price formula be 
produced prior to June 30. The mutual agreement to forgo the issuance 
of a market report would need to be incorporated into the contract with 
the market analyst.
    Regulations at Sec.  680.20(e)(5) require that the AOs provide NMFS 
with the names of the persons serving as the market analyst and provide 
copies of the contracts with the market analyst and formula arbitrator 
no later than June 1 of each year. Therefore, the contract with the 
market analyst and formula arbitrator, including any terms that would 
allow forgoing the production of a market report and non-binding price 
formula for a fishery, would need to be incorporated in the contract 
between the AOs and the market analyst no later than June 1. If the AOs 
could not reach mutual agreement on these terms by June 1, then the 
existing regulatory requirements to produce a market report and non-
binding price formula no later than 50 days before a fishery opening 
would apply.
    As discussed above, because most fisheries have an October 15 
opening date, this would require most market reports to be produced no 
later than August 26. The Council recommended this approach so that AOs 
unable to reach mutual agreement on whether to forgo production of 
market reports and non-binding price formula would have sufficient time 
to comply with the 50-day requirements at Sec.  680.20 for their 
production.
    The Council determined, and NMFS agrees, that production of a 
market report for fisheries unlikely to open is unnecessary and 
presents a financial burden to fishery participants. Elimination of the 
requirement to produce a market report for fisheries unlikely to open 
presents a minor risk that participants in a fishery will have 
inadequate information to inform price negotiations in the event that a 
fishery unexpectedly opens; however, NMFS agrees with the Council that 
this risk is mitigated by the requirement that AOs develop a 
contingency plan for describing how a market report will be produced 
when a fishery unexpectedly opens or when AOs disagree concerning 
whether a fishery will open.

Action 2: Modify the Timing for Release of the Aleutian Islands Golden 
King Crab Fishery Non-Binding Price Formula

    Under current State regulations, the EAG and WAG fisheries open on 
August 15 of each year. This opening date means that the non-binding 
price formula developed for both fisheries must be released no later 
than June 26, as current regulations require that the formula be 
released at least 50 days prior to the opening date for these 
fisheries. However, the opening date for the EAG and WAG fisheries 
prevents the formula arbitrator from using the most current information 
from the Commercial Operators Annual Report (COAR), which is a key 
source of information on wholesale prices used in the non-binding price 
formula. COAR documents are typically not available until early July; 
therefore, data from the preceding season is not incorporated in the 
non-binding price formula. Testimony to the Council from the formula 
arbitrator, the unaffiliated Class A IFQ and IPQ AOs, and participants 
in these fisheries indicate that delaying the issuance of the non-
binding price formula until the most recent COAR is available would 
provide more informative and useful reports for price negotiations.
    This proposed action would amend the existing regulations at Sec.  
680.20(g) to require the non-binding price formula be released at least 
30 days prior to the start of these fisheries to provide the formula 
arbitrator time to incorporate data from the most recent COAR. Fishery 
participants testifying to the Council indicated that producing the 
non-binding price formula at least 30 days prior to the start of the 
fisheries, rather than at least 50 days prior to the start of the 
fisheries, would not be expected to adversely affect price 
negotiations. Participants in the fisheries noted that a more complete 
and current non-binding price formula using COAR data from the most 
recent EAG and WAG fisheries would outweigh any potential disadvantage 
of a slightly shorter period of time to review the non-binding price 
formula before fishing begins. The Council determined and NMFS agrees 
that this proposed action would provide the affected fishing industry 
with the most recent data for use in the non-binding price formula 
while providing as much lead time as possible before the start of the 
fisheries for consideration of the non-binding price formula in any 
potential negotiations.

[[Page 49426]]

Action 3: Modify the Information Used and Timing for Release of the 
Market Report

    Existing regulations at Sec.  680.20(f) require that the market 
report be released no later than 50 days prior to the opening of a 
fishery and that it cannot be supplemented with additional information 
once released. Existing regulations permit the inclusion of publicly 
available information, as well as data from proprietary sources in the 
market report. The CR Program established the 50-day release date and 
prohibition on subsequent supplements to the market report to reduce 
the risk that the market report could contain proprietary data released 
during a fishing season. Any such data could unduly influence the 
results of the market report by creating incentives for processors or 
harvesters to present data that cannot be reviewed publicly and have 
that data incorporated in a manner that would influence the results of 
the market report for the benefit of one party, thereby increasing the 
risk of tainting the market report with information that could be used 
for anticompetitive purposes.
    To address these concerns, regulations at Sec.  680.20(f)(2)(v) 
require that any price information contained in the market report: (1) 
Include only data that is based on information regarding activities 
occurring more than three months prior to the generation of the market 
report; (2) include only statistics for which there are at least five 
providers reporting data upon which each statistic is based and for 
which no single provider's data represents more than 25 percent of a 
weighted basis of that statistic; and (3) be sufficiently aggregated 
such that any information disseminated in the market report would not 
identify specific price information by an individual provider of 
information. These provisions are intended to prevent the use of 
private information in the report that could skew the conclusions 
reached by the market analyst in a manner that might benefit a specific 
private interest and could therefore be anticompetitive.
    While these requirements limit the potential for a harvester or 
processor to submit data for his or her benefit, these requirements 
also limit the usefulness of the market report because much of the data 
contained in the report are no longer indicative of market conditions 
by the time the market report is released. Furthermore, aggregation of 
data across five or more sources may not always be possible in the 
small market of crab producers, limiting the availability of data from 
private sources for any market report. Because of these concerns, 
representatives of the unaffiliated Class A IFQ and IPQ AOs recommended 
several changes to the market report.
    The AOs recommended that, by at least 50 days prior to a fishery 
opening, the AOs representing the unaffiliated Class A IFQ and IPQ 
holders should be permitted to mutually agree to the timeline for 
release of the market report, and that these AOs could mutually agree 
to allow supplements to the market report at any time prior to June 30. 
Additionally, the AOs recommended that the market report use only 
publicly available information and that the AOs be provided discretion 
in recommending contents of the market report. The Council agreed that 
the current requirement for market reports to be complete at least 50 
days prior to the season prevents inclusion of the most current and 
relevant pricing information and that the prohibition on supplements to 
the report prevents subsequent report modification to provide useful 
market information inseason or after completion of the initial report. 
The Council concurred with the AOs that market reports would be more 
timely and informative if those reports can be produced and 
supplemented at any time and recommended that the market report contain 
only publicly available information to reduce the risk that any 
information provided by a private source could taint the market report 
for anticompetitive purposes. For the purposes of this proposed action, 
publicly available information means data and information published in 
a manner that makes them available, either for a fee or at no cost, to 
the public at large. The Council also recommended allowing the AOs to 
negotiate the timing of release of the market report and the inclusion 
of any supplements to enhance the timeliness, accuracy, and usefulness 
of the market report.
    NMFS agrees with the Council that the flexibility afforded by this 
proposed action should allow AOs to provide the most useful, timely 
information to participants in need of market information for price 
negotiations. This proposed action presents some risk that majority QS 
and PQS holders could assert their position in the AOs to provide a 
market report that is not particularly beneficial to holders of 
relatively small amounts of QS or PQS, and who may be likely to derive 
the greatest benefit from the market reports. The Council and NMFS find 
the risk to be minor and that the benefits of the proposed action 
outweigh this slight and unlikely risk.
    To be consistent with the Council's recommendations, this proposed 
action would amend regulations at Sec.  680.20(f) to remove the ability 
for IFQ and IPQ holders to submit proprietary data for inclusion in the 
market report, require that the information that the market analyst 
considers be publicly available, and allow AOs to mutually agree to 
negotiate the content and the timing for release of the market report. 
As with Action 1, while the proposed regulations would allow the AOs to 
mutually agree to a date for release of the market report, regulations 
would require release of the market report prior to June 30. NMFS also 
proposes to amend regulations at Sec.  680.20(f) to clarify that if the 
AOs cannot mutually agree to the contents, timing for release, or a 
provision addressing whether any supplements for the market report will 
be permitted, the market report would have to be released 50 days prior 
to the start of a crab fishery, and supplements to the market report 
would not be permitted. This would ensure that a market report will be 
prepared for each fishery if the AOs cannot reach mutual agreement. The 
Council recommended that existing requirements should apply if mutual 
agreement is not possible to ensure that all parties have some market 
report available for consideration during price negotiations even if 
the data in that report may not be as current as that available later 
in the year.

Action 4: Clarify the Authority of the AOs, Market Analyst, Formula 
Arbitrator, Contract Arbitrators, and Third-Party Data Provider

    The arbitration program established by the CR Program requires AOs 
to enter into a series of contracts with harvesters, processors, market 
analysts, arbitrators, and, if desirable, a third-party data provider. 
Regulations require each of these contracts to contain several specific 
provisions. However, the regulations do not specify all aspects of the 
arbitration system. For example, regulations at Sec. Sec.  680.20(f) 
and (g) do not provide specific details about how the market reports 
and non-binding price formula documents should be released, how 
specific data-quality issues within these documents should be 
considered and addressed, or how new information should be 
incorporated. Because the regulations are specific on certain 
requirements and silent as to other aspects, arbitration administrators 
(i.e., the AO representatives, contract arbitrators, formula 
arbitrators, market analysts, and third party data providers) have 
questioned their authority to agree

[[Page 49427]]

to provisions or develop procedures that could improve the arbitration 
program but that are not explicitly contained in regulation. Absent a 
regulation that clearly specifies this authority, it could be argued 
that these actions are beyond the scope of an arbitration 
administrator's powers.
    As a result, arbitration administrators have expressed some concern 
that potential liability could influence decisionmaking. For example, 
if an arbitrator is concerned that a participant may litigate if the 
arbitrator makes a certain finding, the arbitrator's independence could 
be compromised. Likewise, arbitration organizations might choose not to 
make changes in the arbitration structure that are agreed to by 
participants in both harvesting and processing sectors, but are not 
addressed by the regulations, if they fear potential lawsuits related 
to those changes. At the extreme, the threat of liability could make it 
difficult to find persons willing to perform arbitration services.
    Although not specifically stated in the regulations originally 
developed to implement the CR Program, a review of the EIS prepared for 
the CR Program supports the conclusion that the Council intended for 
arbitration administrators to have the discretion to adapt the 
arbitration system to address perceived problems in program 
administration. Specifically, the EIS notes that administration of the 
arbitration system ``would be undertaken primarily by industry, 
avoiding government involvement in the price setting process and 
providing greater flexibility to adopt agreed to modifications without 
government action.''
    This flexibility was viewed by the Council and NMFS as necessary to 
avoid time consuming and costly processes of the Council and NMFS to 
amend the program through the standard regulatory process. The Council 
believed that broader administrative authority by the arbitration 
administrators would improve the efficiency of administration of the 
arbitration system. Although many industry participants have argued 
that the arbitration administrators have broad authority to adopt 
provisions to improve the operations of the arbitration system, absent 
a regulation clearly specifying this authority, it could be argued that 
these actions are beyond the scope of their powers.
    For these reasons, the Council recommended that the regulations be 
modified to specifically state that arbitration administrators have the 
authority to establish procedures and make administrative decisions 
concerning the arbitration program that are in addition to those 
requirements specified in regulation, provided those actions are not in 
conflict with any of the regulatory requirements. NMFS agrees with the 
Council's recommendations and proposes this additional clarification in 
a new paragraph at Sec.  680.20(i). This proposed clarification of 
authority is intended to remove any inhibitions of arbitration 
administrators to adopt procedures and make decisions that would 
improve the operation of the arbitration system.

Expected Effects of the Proposed Action

    The RIR describes the predicted effects of the proposed action on 
harvesters, processors, arbitration administrators, communities, 
management and enforcement, consumers, and the nation. Only the effects 
of the proposed action on harvesters, processors, and arbitration 
administrators are described here. Overall, this action would be 
expected to slightly reduce the costs for harvesters and processors to 
comply with the arbitration system requirements by eliminating the 
requirements that market reports and non-binding price formulas be 
prepared for fisheries that are not open for fishing, provide a more 
timely and useful non-binding price formula for the eastern and western 
Aleutian Islands golden king crab fisheries, provide more timely and 
useful market reports that may be used during price negotiations 
between harvesters and processors, and provide additional flexibility 
and clarity for the arbitration administrators when establishing 
policies and procedures not detailed in the regulations.
    A minor overall net benefit to the Nation is likely to arise from 
this proposed action. Action 1 is likely to decrease costs, Actions 2 
and 3 are likely to improve the quality and timing of information 
provided to participants in the arbitration system, and Action 4 is 
likely to provide additional clarity for arbitration administrators. 
Overall, this proposed action would most benefit unaffiliated Class A 
IFQ and IPQ holders participating in the arbitration system.

Summary of Regulatory Changes

    This action proposes the following changes to the existing 
regulatory text at 50 CFR part 680:
    <bullet> Modify Sec.  680.20(f)(1) to permit AOs by mutual 
agreement to include a provision in the contract with the market 
analyst to forgo the production of a market report if a crab fishery is 
not anticipated to open for fishing. If such a provision is included in 
the contract with the market analyst, the contract must also contain 
provisions to require the market analyst to produce a market report 
before June 30 in the event that the fishery that was not anticipated 
to open does subsequently open for fishing. In the absence of such an 
agreement and contract provisions, a market report would be required to 
be produced for that crab fishery no later than 50 days before the 
start of a crab fishery;
    <bullet> Modify Sec.  680.20(f)(2) to require that a market report 
contain only publicly available data, and that the AOs could, by mutual 
agreement, include a provision in their contract with the market 
analyst that would permit the production of supplemental reports for a 
fishery. The contract with the market analyst would have to specify the 
terms under which supplements to the market report would be produced if 
such a provision is included in the contract;
    <bullet> Modify Sec.  680.20(f)(4) to permit AOs, by mutual 
agreement, to include a provision in the contract with the market 
analyst that would allow the production of the market report for a crab 
fishery on a schedule that differs from the regulatory requirement to 
produce a market report not later than 50 days before the start of a 
crab fishery. If such a provision is included, the contract with the 
market analyst would have to specify the terms under which a market 
report would be produced and would have to require the release of the 
market report prior to the close of the fishery. In the absence of such 
an agreement by the AOs, the contract with the market analyst would 
require the production of a market report no later than 50 days before 
the start of a crab fishery;
    <bullet> Modify Sec.  680.20(f)(4)(ii) to specify that the Market 
Analyst is providing the Market Report. This modification was not a 
part of the Council's action on Amendment 30, but this proposed 
regulatory amendment is an appropriate opportunity to correct the lack 
of specificity in this paragraph;
    <bullet> Modify Sec.  680.20(g)(1) to permit AOs, by mutual 
agreement, to include a provision in the contract with the formula 
arbitrator to forgo the production of a non-binding price formula if a 
crab fishery is not anticipated to open for fishing. If such a 
provision is included, the contract must also contain provisions that 
would require the formula arbitrator to produce a non-binding price 
formula before June 30 in the event that a fishery that was not 
anticipated to open does subsequently open for fishing. In the absence 
of such an agreement and

[[Page 49428]]

contract provisions, a non-binding price formula would be required to 
be produced for that crab fishery no later than 50 days before the 
start of a crab fishery;
    <bullet> Modify Sec.  680.20(g)(2) to require that the non-binding 
price formula produced for the western Aleutian Islands golden king 
crab fishery and the eastern Aleutian Islands golden king crab fishery 
be produced no later than 30 days prior to the start of those crab 
fisheries; and
    <bullet> Add paragraph (i) to Sec.  680.20 to clarify that 
arbitration administrators may establish procedures, policies, and make 
administrative decisions concerning the administration of the 
arbitration system that are in addition to regulatory requirements, 
provided those procedures, policies, or administrative decisions are 
not otherwise in conflict with any requirement contained in the 
arbitration system regulations.

Classification

    The Assistant Administrator for Fisheries, NOAA, has determined 
that this proposed rule is consistent with Amendment 30, the Magnuson-
Stevens Fishery Conservation and Management Act, and other applicable 
laws, subject to further consideration after public comment.
    This proposed rule has been determined to be not significant for 
purposes of Executive Order 12866.
    An IRFA was prepared that describes the economic impact this 
proposed rule, if adopted, would have on small entities. Copies of the 
RIR/IRFA prepared for this proposed rule are available from NMFS. The 
RIR/IRFA prepared for this proposed rule incorporates by reference an 
extensive RIR/FRFA prepared for Amendments 18 and 19 to the FMP that 
detailed the impacts of the CR Program on small entities.
    The IRFA for this proposed action describes the action, why this 
action is being proposed, the objectives and legal basis for the 
proposed rule, the type and number of small entities to which the 
proposed rule would apply, and the projected reporting, recordkeeping, 
and other compliance requirements of the proposed rule. It also 
identifies any overlapping, duplicative, or conflicting Federal rules 
and describes any significant alternatives to the proposed rule that 
accomplish the stated objectives of the Magnuson-Stevens Act and other 
applicable statutes, and that would minimize any significant adverse 
economic impact of the proposed rule on small entities. The description 
of the proposed action, its purpose, and its legal basis are described 
in the preamble and are not repeated here.
    Under each of these actions, holders of CVO QS and holders of PQS 
would be regulated in the contracts that they must establish as a 
condition of receiving Class A IFQ and IPQ, respectively. The holders 
of these shares are the entities that are directly regulated by this 
action. Of the estimated 221 QS holders in the fisheries, 210 are 
estimated to be small entities. Of the estimated 25 PQS holders, 17 are 
estimated to be small entities.
    All of the directly regulated persons would be expected to benefit 
from this action relative to the status quo alternative because the 
proposed action is expected to reduce the costs of compliance with the 
arbitration system, provide more timely and useful market reports and 
non-binding price formulas for use in negotiations, and provide clarity 
concerning the administration of the arbitration system.
    Among the two alternatives considered for each of the four proposed 
actions, the Council and NMFS determined that the proposed actions 
would best minimize potential adverse economic impacts on the directly 
regulated entities. Action 1 Alternative 1, the status quo alternative, 
would continue to require that a market report and non-binding price 
formula be prepared for a crab fishery that is closed to fishing. 
Alternative 2, the proposed action, would provide the AOs with the 
discretion not to produce a market report and non-binding price formula 
if a fishery does not open, thereby reducing costs to the quota holders 
directly regulated.
    No additional alternatives were analyzed because both a market 
report and non-binding price formula are prepared or they are not, and 
an additional alternative would not be necessary or appropriate to 
address the proposed action. Alternatives that would rely on 
preliminary notice from State of Alaska fishery managers of intent to 
close a fishery, after which arbitration organizations would not be 
required to contract for a market report or non-binding formula for 
that fishery were considered and not analyzed. The need for formal 
notice from fishery managers could be misinterpreted and disruptive to 
planning for fishing in the upcoming fishing season. Additionally, 
alternatives that would create a strict timeframe for applying the 
exemption, as well as for producing the market report and non-binding 
formula were considered and not analyzed. These alternatives are 
believed to be overly restrictive and administratively burdensome, 
limiting the ability of arbitration organizations to appropriately 
respond to changes in circumstances in providing the reports and 
formulas.
    Action 2 Alternative 1, the status quo alternative, would continue 
to require that a non-binding price formula for the eastern and western 
Aleutian Islands golden king crab fisheries be prepared at least 50 
days prior to the fishery openings. Alternative 2, the proposed action, 
would require that a non-binding price formula be prepared at least 30 
days prior to the fishery opening, thereby ensuring that relevant price 
information can be incorporated in the non-binding price formula.
    No additional alternatives were considered because the AOs and 
formula arbitrator stated that a minimum of 30 days between the release 
of the non-binding price formula and the start of the season is 
required to provide harvesters and processors with the time necessary 
to review the non-binding price formula, and an additional alternative 
would not be necessary or appropriate to address the proposed action.
    Action 3 Alternative 1, the status quo alternative, would continue 
to require that market reports be released at least 50 days prior to 
the opening of a fishery, that they not be supplemented with additional 
information once released, and that they be based on publicly available 
information, as well as data from proprietary sources within certain 
parameters described in the preamble. Alternative 2, the proposed 
action, would provide the AOs with the discretion to mutually agree to 
negotiate the timing for release of a market report and to include any 
supplements to help provide a timely, accurate, and more useful 
product. Alternative 2 also would require that the information that the 
market analyst considers be publicly available.
    No additional alternatives were analyzed because Alternative 2 
provides the AOs with the discretion to determine the timing of the 
report and the need to produce supplements if required. An alternative 
that would fix a specific date for the production of a market report 
and any supplements, or that required the use of proprietary data, 
would fail to address the purpose of this proposed action, which is to 
provide a timely and complete report as needed by the participants in 
the arbitration system. These alternatives were believed to be overly 
prescriptive, limiting the ability of arbitration organizations to 
agree to terms for the production of market reports that would be most 
useful and informative to

[[Page 49429]]

fishery participants. In addition, an alternative to remove the 
requirement for any market report was also considered, but not 
analyzed. The market report is thought to provide beneficial baseline 
market information for negotiations. In addition, small, independent 
participants in the program are thought to derive benefit from 
information in the market report which might otherwise be costly for 
them to gather. As a consequence, the alternative to remove the market 
report requirement was determined to be inconsistent with the basic 
program objectives for price arbitration in the CR Program fisheries.
    Action 4 Alternative 1, the status quo alternative, would not 
provide any additional clarity to arbitration administrators on their 
ability to establish policies and procedures not specifically described 
in existing regulations at Sec.  680.20. Alternative 2, the proposed 
action, would clarify that AOs can establish procedures and make 
administrative decisions concerning the arbitration program that are 
not explicitly specified in the regulations provided those actions are 
not in conflict with any requirement contained in the arbitration 
system regulations.
    An alternative that would grant immunity to arbitration 
administrators for their actions taken in the administration of the 
arbitration system was considered, but not analyzed. Regulations that 
grant arbitral immunity would effectively restrict the ability of 
courts to adjudicate certain actions against specific persons. While 
there are clear benefits to arbitration systems from arbitral immunity, 
and courts have applied arbitral immunity for arbitrators and 
arbitration organizations, it is uncertain whether the Magnuson-Stevens 
Fishery Conservation and Management Act authorizes NMFS to promulgate 
regulations that grant such immunity. The Council stated its belief 
that the preferred alternative (by clarifying the scope of authority of 
arbitration administrators) would strengthen any argument that common 
law or other immunity should be extended to any acts taken to 
administer the arbitration program (including the development of 
arbitration procedures).
    The proposed actions in this rule would modify existing 
recordkeeping and reporting requirements, but do not propose any 
additional recordkeeping and reporting requirements. Specifically, the 
proposed actions would modify the timing, preparation, and release of 
information used in the market reports and non-binding price formulas. 
The analysis revealed no Federal rules that would conflict with, 
overlap, or be duplicated by the alternatives under consideration.
    This proposed rule contains a collection-of-information requirement 
subject to review and approval by OMB under the Paperwork Reduction Act 
(PRA). This requirement has been submitted to OMB for approval under 
OMB Control No. 0648-0516. Public reporting burden for the market 
report is estimated to average four hours per response, including the 
time for reviewing instructions, searching existing data sources, 
gathering and maintaining the data needed, and completing and reviewing 
the collection of information.
    Public comment is sought regarding: Whether this proposed 
collection of information is necessary for the proper performance of 
the functions of the agency, including whether the information shall 
have practical utility; the accuracy of the burden estimate; ways to 
enhance the quality, utility, and clarity of the information to be 
collected; and ways to minimize the burden of the collection of 
information, including through the use of automated collection 
techniques or other forms of information technology. Send comments on 
these or any other aspects of the collection of information to NMFS 
Alaska Region (the address is available in the ADDRESSES section), and 
e-mail to OIRA <a href="/cdn-cgi/l/email-protection#cc9fb9aea1a5bfbfa5a3a28ca3a1aee2a9a3bce2aba3ba"><span class="__cf_email__" data-cfemail="5f0c2a3d32362c2c3630311f30323d713a302f71383029">[email protected]</span></a>, or fax to 202-395-7285.
    Notwithstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to the 
requirements of the PRA, unless that collection of information displays 
a currently valid OMB Control Number.

List of Subjects in 50 CFR Part 680

    Alaska, Fisheries.

    Dated: August 3, 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 680 is 
proposed to be amended as follows:

PART 680--SHELLFISH FISHERIES OF THE EXCLUSIVE ECONOMIC ZONE OFF 
ALASKA

    1. The authority citation for 50 CFR part 680 continues to read as 
follows:

    Authority:  16 U.S.C. 1862; Pub. L. 109-241; Pub. L. 109-479.

    2. In Sec.  680.20,
    a. Revise paragraphs (e)(4)(i), (e)(4)(ii), and (f)(1);
    b. Revise paragraphs (f)(2) introductory text, and paragraphs 
(f)(2)(i) and (f)(2)(ii), and remove paragraphs (f)(2)(iii) through 
(v);
    c. Redesignate paragraphs (f)(2)(vi) through (f)(2)(viii) as 
paragraphs (f)(2)(iii) through (f)(2)(v) respectively, and revise newly 
redesignated paragraph (f)(2)(v);
    d. Revise paragraphs (f)(4)(i), (f)(4)(ii), and (g)(1);
    e. Revise paragraph (g)(2)(viii)(B); and
    f. Add new paragraph (i) to read as follows:


Sec.  680.20  Arbitration system.

* * * * *
    (e) * * *
    (4) * * *
    (i) For each crab fishing year, QS holders who are members of 
Arbitration QS/IFQ Arbitration Organization(s) and PQS holders who are 
members of PQS/IPQ Arbitration Organization(s), by mutual agreement, 
will select one Market Analyst, one Formula Arbitrator, and Contract 
Arbitrator(s) for each crab QS fishery. The number of Contract 
Arbitrators selected for each fishery will be subject to the mutual 
agreement of those Arbitration Organizations. The selection of the 
Market Analyst and the Formula Arbitrator must occur in time to ensure 
the Market Report and non-binding price formula are produced within the 
time line established in paragraphs (f)(4)(i) and (g)(2)(viii)(B) of 
this section.
    (ii) The Arbitration Organizations representing Arbitration QS 
holders and PQS holders in a crab fishery shall establish by mutual 
agreement the contractual obligations of the Market Analyst, Formula 
Arbitrator, and Contract Arbitrator(s) for each fishery. The 
contractual obligations of the Market Analyst, the formula Arbitrator 
and Contract Arbitrators will be enforced by the parties to the 
contract.
* * * * *
    (f) * * *
    (1) Except as provided in paragraph (f)(1)(ii) of this section:
    (i) The Arbitration QS/IFQ Arbitration Organizations and the PQS/
IPQ Arbitration Organizations shall establish a contract with the 
Market Analyst to produce a Market Report for each crab QS fishery. The 
terms of this contract must specify that the Market Analyst must 
produce a Market Report that shall provide an analysis of the market 
for products of that fishery.
    (ii) The Arbitration QS/IFQ Arbitration Organizations and the PQS/
IPQ Arbitration Organizations may, by mutual agreement, include a 
provision in the contract with the Market Analyst to forgo production 
of a Market Report

[[Page 49430]]

for a crab QS fishery if the Arbitration QS/IFQ Arbitration 
Organizations and the PQS/IPQ Arbitration Organizations anticipate that 
the crab QS fishery will not open for fishing during a crab fishing 
year. If such a provision is included in the contract with the Market 
Analyst, the Arbitration QS/IFQ Arbitration Organizations and the PQS/
IPQ Arbitration Organizations must include a provision in the contract 
with the Market Analyst to produce a Market Report not later than June 
30 for the crab QS fishery that was expected to remain closed but 
subsequently opens for fishing during the crab fishing year.
    (2) The contract with the Market Analyst must specify that:
    (i) The Market Analyst will base the Market Report on a survey of 
the market for crab products produced by the fishery.
    (ii) The Market Analyst will note generally the sources from which 
he or she gathered information. The Market Report must include only 
publicly available data and information. Data and information will be 
considered publicly available if they are published in a manner that 
makes them available, either for a fee or at no cost, to the public at 
large.
* * * * *
    (v) The Market Analyst must not issue interim or supplemental 
reports for any crab QS fishery unless the Arbitration QS/IFQ 
Arbitration Organizations and the PQS/IPQ Arbitration Organizations, by 
mutual agreement, include a provision in the contract with the Market 
Analyst for the production of interim or supplemental reports for a 
crab QS fishery. If the Arbitration QS/IFQ Arbitration Organizations 
and the PQS/IPQ Arbitration Organizations have a mutual agreement to 
produce interim or supplemental reports, the contract with the Market 
Analyst must specify the terms and conditions under which those interim 
or supplemental reports will be produced.
* * * * *
    (4) * * *
    (i) In all subsequent years and except as provided in paragraph 
(f)(1)(ii) of this section, the Market Report for each crab QS fishery 
must be produced not later than 50 days prior to the first crab fishing 
season for that crab QS fishery, unless the Arbitration QS/IFQ 
Arbitration Organizations and the PQS/IPQ Arbitration Organizations, by 
mutual agreement, include a provision in the contract with the Market 
Analyst to establish a different date for production of the Market 
Report for that crab QS fishery.
    (ii) The contract with the Market Analyst must specify that the 
Market Analyst will provide the Market Report in that crab fishing year 
to:
* * * * *
    (g) * * *
    (1) Except as provided in paragraph (g)(1)(ii) of this section:
    (i) The Arbitration QS/IFQ Arbitration Organizations and the PQS/
IPQ Arbitration Organizations shall establish a contract with the 
Formula Arbitrator to produce a Non-Binding Price Formula for each crab 
QS fishery.
    (ii) The Arbitration QS/IFQ Arbitration Organizations and the PQS/
IPQ Arbitration Organizations may, by mutual agreement, include a 
provision in the contract with the Formula Arbitrator to forgo 
production of a Non-Binding Price Formula for a crab QS fishery if the 
Arbitration QS/IFQ Arbitration Organizations and the PQS/IPQ 
Arbitration Organizations anticipate that the crab QS fishery will not 
open for fishing during a crab fishing year. If such a provision is 
included in the contract with the Formula Arbitrator, the Arbitration 
QS/IFQ Arbitration Organizations and the PQS/IPQ Arbitration 
Organizations must include a provision in the contract with the Formula 
Arbitrator to produce a Non-Binding Price Formula not later than June 
30 for the crab QS fishery that was expected to remain closed but 
subsequently opens for fishing during the crab fishing year.
* * * * *
    (2) * * *
    (viii) * * *
    (A) * * *
    (B) In all subsequent years and except as provided in paragraph 
(g)(1)(ii) of this section, the Non-Binding Price Formula must be 
produced not later than 50 days prior to the first crab fishing season 
for that crab QS fishery, except that the Non-Binding Price Formulas 
for the western Aleutian Islands golden king crab fishery and the 
eastern Aleutian Islands golden king crab fishery must be produced not 
later than 30 days prior to the first crab fishing season for those 
crab QS fisheries.
* * * * *
    (i) Other Procedures, Policies, and Decisions.
    The arbitration organizations, market analysts, arbitrators, or 
third party data providers are authorized to adopt arbitration system 
procedures, including additional provisions in the various contracts, 
provided those procedures are not inconsistent with any other provision 
in the regulations.
* * * * *
[FR Doc. 2011-20187 Filed 8-9-11; 8:45 am]
BILLING CODE 3510-22-P


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