57696 Federal Register / Vol. 71, No. 189 / Friday, September 29, 2006 / Rules and Regulations 

DEPARTMENT OF COMMERCE 

National Oceanic and Atmospheric 

Administration 

50 CFR Part 600 

[Docket No. 060731207–6242–02; I.D. 

051706F] 

RIN 0648–AU42 

Fishing Capacity Reduction Program 

for the Longline Catcher Processor 

Subsector of the Bering Sea and 

Aleutian Islands Non-pollock 

Groundfish Fishery 

AGENCY: National Marine Fisheries 

Service (NMFS), National Oceanic and 

Atmospheric Administration (NOAA), 

Commerce. 

ACTION: Final rule. 

SUMMARY: NMFS issues a final rule 

implementing the Bering Sea and 

Aleutian Islands (BSAI) Catcher 

Processor Capacity Reduction Program 

(Reduction Program) for the longline 

catcher processor subsector of the BSAI 

non-pollock groundfish fishery 

(Reduction Fishery), in compliance with 

the FY 2005 Appropriations Act. This 

program is voluntary and permit holders 

of the Reduction Fishery (Subsector 

Members) are eligible to participate. 

Subsector Members must sign and abide 

by the Capacity Reduction Agreement 

(Reduction Agreement) and, if their 

offers are selected, a Fishing Capacity 

Reduction Contract (Reduction 

Contract) with the U.S. Government. 

These key components of the Capacity 

Reduction Plan (Reduction Plan) were 

prepared by the Freezer Longline 

Conservation Cooperative (FLCC) and 

are implemented by the final 

regulations. The aggregate of all 

Reduction Agreements and those 

Reduction Contracts signed by 

Subsector Members whose offers were 

accepted by 2⁄3 votes of the Subsector 

Members, will together with the FLCC’s 

supporting documents and rationale 

that these offers represent the 

expenditure of the least money for the 

greatest capacity reduction, constitute 

the Reduction Plan to be submitted to 

the Secretary of Commerce for approval. 

Subsector Members participating in the 

Reduction Program will receive up to 

$36 million in exchange for 

relinquishing valid non-interim Federal 

License Limitation Program BSAI 

groundfish licenses endorsed for catcher 

processor fishing activity, Catcher/ 

Processor (C/P), Pacific cod, and hook 

and line gear, as well as any present or 

future claims of eligibility for any 

fishing privilege based on such permit 

(the Groundfish Reduction Permit) and 

additionally, any future fishing privilege 

of the vessel named on the permit. 

Individual fishing quota (IFQ) quota 

shares would be excluded from 

relinquishment. Following submission 

of the Reduction Plan and approval by 

the Secretary, NMFS will conduct an 

industry referendum to determine the 

industry’s willingness to repay a fishing 

capacity reduction loan to effect the 

Reduction Plan. A 2⁄3 majority vote in 

favor would bind all parties and 

complete the reduction process. NMFS 

will issue a 30-year loan to be repaid by 

those harvesters remaining in the 

Reduction Fishery. The intent of this 

final rule is to permanently reduce 

harvesting capacity in the Reduction 

Fishery. This should result in increased 

harvesting productivity for postreduction Subsector Members and help 

with conservation and management of 

the Reduction Fishery. 

DATES: This rule is effective October 30, 

2006. 

ADDRESSES: Copies of the 

Environmental Assessment/Regulatory 

Impact Review/Final Regulatory 

Flexibility Analysis (EA/RIR/FRFA) 

prepared for this action may be obtained 

from the mailing address listed here or 

by calling Michael A. Sturtevant (see 

FOR FURTHER INFORMATION CONTACT). 

Send comments regarding the burdenhour estimates or other aspects of the 

collection-of-information requirements 

contained in this final rule to Michael 

A. Sturtevant at the address specified 

above and also to the Office of 

Information and Regulatory Affairs, 

Office of Management and Budget 

(OMB), Washington, DC 20503 

(Attention: NOAA Desk Officer) or email to David_Rosker@ob.eop.gov, or fax 

to (202) 395–7825. 

FOR FURTHER INFORMATION CONTACT: 

Michael A. Sturtevant at 301–713–2390, 

fax 301–713–1306, or 

michael.a.sturtevant@noaa.gov. 

SUPPLEMENTARY INFORMATION: Electronic 

Access. This Federal Register document 

is also accessible via the Internet at 

http://www.access.gpo.gov/su-docs/ 

aces/aces140.html. 

Statutory and Regulatory Background 

NMFS published the proposed rule 

for this action in the Federal Register on 

August 11, 2006 (71 FR 46364) with a 

public comment period through 

September 11, 2006. NMFS received 

comments from three commenters and 

the comments and responses are 

discussed under the succeeding 

Comments and Responses section of this 

preamble. 

The portions of the preamble to the 

proposed rule explaining the Reduction 

Program, Approval of the Reduction 

Plan, the Referenda, and the Contract 

are crucial to understanding this final 

regulatory action and are repeated here. 

For additional information on 

underlying authority in the MagnusonStevens Fishery Conservation and 

Management Act, management of BSAI 

fisheries, and NMFS’ framework and 

specific fishing capacity reduction 

regulations, persons can consult the 

preamble to the proposed rule. 

The measures contained in this final 

rule to establish the Reduction Program 

are authorized by Title II, Section 219 of 

the FY 2005 Appropriations Act (Act) 

(Public Law 108–447; 2004 enacted H.R. 

4818, December 8, 2004), and in 

particular by Section 219(e) of the Act. 

Also, Public Law 108–199 provided the 

initial $500,000 subsidy cost to fund a 

$50 million loan and Public Law 108– 

447 provided an additional $250,000 

subsidy cost to fund $25 million more 

(in addition to providing for the 

buyback program itself). While the Act 

authorizes the establishment of fishing 

capacity reduction programs for catcher 

processor subsectors within the Alaska 

groundfish fisheries (i.e., the longline 

catcher processor subsector, the 

American Fisheries Act (AFA) trawl 

catcher processor subsector, the nonAFA trawl catcher processor subsector, 

and the pot catcher processor subsector) 

based on capacity reduction plans and 

contracts developed by industry and 

approved by NMFS, this final rule only 

addresses the longline catcher processor 

subsector of the Reduction Fishery. The 

remaining subsectors may later develop 

capacity reduction plans and contracts 

for the other three catcher processor 

subsectors. 

The FLCC on behalf of the Reduction 

Fishery drafted the Reduction 

Agreement which NMFS seeks to 

incorporate into its existing fishing 

capacity reduction regulations by this 

final rule. The Reduction Agreement, 

the Reduction Contract, and application 

of certain other existing Federal law and 

regulations referred to above are the 

basis for the Reduction Plan. The 

aggregate of all Reduction Agreements 

and Reduction Contracts signed by 

Subsector Members whose offers to 

participate in this buyback are ranked 

highest by the FLCC will constitute the 

Reduction Plan and will be submitted to 

NMFS for approval. 

The Reduction Agreement and the 

Reduction Contract are the two key 

components of the Reduction Plan and 

this final rule. Substantive provisions of 

the Reduction Agreement would be 

codified at 50 CFR 600.1105 along with 


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Federal Register / Vol. 71, No. 189 / Friday, September 29, 2006 / Rules and Regulations 57697 

a requirement for all members of the 

Reduction Fishery submitting offers to 

participate in the Reduction Program to 

execute the Reduction Contract (i.e., the 

requirement for an Offeror to execute a 

Reduction Contract will be codified and 

the Reduction Contract appended). 

Wherever the term Offeror is used in 

this preamble and regulation, it also 

includes any co-Offeror. 

The Act authorized not more than $36 

million in loans (reduction loan) to fund 

the Reduction Program. NMFS’

authority to make this loan resides in 

sections 1111 and 1112 of the Merchant 

Marine Act, 1936 (46 App. U.S.C. 1279f 

and 1279g) (MMA) (title XI). 

Reduction Program—Overview 

Participation in the Reduction 

Program would be open to any member 

of the Longline Subsector. Each 

Subsector Member will receive a notice 

of the FLCC Reduction Agreement and 

Reduction Contract and enrollment 

documents by certified mail. The FLCC 

Reduction Program is essentially 

divided into four phases: (1) 

Enrollment; (2) offer selection; (3) plan 

submission; and (4) implementation, 

after approval by referendum. Only LLP 

licenses and other assets (including 

fishing history) voluntarily submitted 

for removal from the Reduction Fishery 

shall be subject to reduction. Because 

there exist what are commonly referred 

to as ‘‘latent licenses’’ within the 

Reduction Fishery which the FLCC 

membership desires to remove, latent 

LLP licenses need not be associated 

with a vessel for inclusion as assets to 

be reduced under the Reduction 

Program. Fees for repayment of the loan 

which funds the Reduction Program 

will be collected from the Subsector 

Members who continue operations in 

the Reduction Fishery after 

implementation of the Reduction 

Program set forth in § 600.1105. 

Reduction Program—The Capacity 

Reduction Agreement 

Basic Agreement 

On April 12, 2006, the FLCC 

submitted a Reduction Agreement, 

Reduction Contract, and Executive 

Summary for a Reduction Plan for the 

Reduction Fishery to NMFS. The 

Reduction Plan’s express objective is to 

permanently reduce harvesting capacity 

in the Reduction Fishery by removal of 

Groundfish Reduction Permits, 

Reduction Fishing Privileges, and the 

Reduction Fishing Interests that are 

specified in the Reduction Contract 

(which is appended to § 600.1105). The 

FLCC will implement the process of 

qualifying and enrolling Subsector 

Members and selecting offers from 

Subsector Members to remove fishing 

capacity by means of this buyback. Once 

the FLCC has completed the selection 

process, the highest ranking offers, the 

rationale for acceptance, the Reduction 

Agreements, the Reduction Contracts 

(from Subsector Members whose offers 

were selected), and any other 

supporting documents will be submitted 

as the Reduction Plan, by the FLCC to 

NMFS for approval, on behalf of the 

Secretary of Commerce, in compliance 

with Section 219(e) of the Act. 

Those Subsector Members submitting 

approved offers would give up all 

Federal fishery licenses, fishery permits, 

and area and species endorsements 

issued for any vessel named on the 

Groundfish Reduction Permit, as well as 

any present or future claims of 

eligibility for any fishery privilege based 

upon such permit. The Subsector 

Members would also have to relinquish 

Reduction Fishing History consisting of: 

(1) The Reduction Privilege Vessel’s full 

and complete documented harvest of 

groundfish; (2) for any documented 

harvest of the Reduction Privilege 

Vessel, any right or privilege to make 

any claim related to any fishery 

privilege that might qualify for any 

future fishing license (see Section 8.b. of 

the Contract for additional details); (3) 

any documented harvest on any other 

vessel (Reduction Fishing Vessel) that 

gave rise to the Groundfish Reduction 

Permit; and (4) all fishing history 

associated with the latent LLP license 

identified on the Selected Offer and any 

fishing history associated with the 

fishing vessel that gave rise to the latent 

LLP license that remains in the Offeror’s 

possession as of August 11, 2006 (i.e., 

date of publication of the proposed rule 

in the Federal Register). 

Regarding the vessel named on the 

Groundfish Reduction Permit (the 

Reduction Privilege Vessel), the Offeror 

will accept the imposition of Federal 

vessel documentation restrictions that 

have the effect of permanently revoking 

the Reduction Privilege Vessel’s legal 

ability to fish anywhere in the world as 

well as its legal ability to operate under 

foreign registry or control—including 

the Reduction Privilege Vessel’s: 

fisheries trade endorsement under the 

Commercial Fishing Industry Vessel 

Anti-Reflagging Act (46 U.S.C. 12108); 

eligibility for the approval required 

under section 9(c)(2) of the Shipping 

Act, 1916 (46 U.S.C. App. 808(c)(2)), for 

the placement of a vessel under foreign 

flag or registry, as well as its operation 

under the authority of a foreign country; 

and the privilege otherwise to ever fish 

again anywhere in the world (the 

Reduction Fishing Privilege). 

The Reduction Fishing Interest that 

would be removed would not include 

any: Right, title and/or interest to 

harvest, process or otherwise utilize 

individual fishing quota (‘‘IFQ’’) quota 

share in the halibut, sablefish and crab 

fisheries pursuant to 50 CFR parts 679 

and 680. 

Reduction Agreement Terms and 

Definitions 

Capitalized terms used in the 

Reduction Agreement are defined in 

Schedule A to the Reduction 

Agreement; other terms are defined 

within the text of the Reduction 

Agreement. Those Reduction Agreement 

terms that are essential to understanding 

the regulatory provisions are set forth in 

§ 600.1105(b) and include ‘‘Application 

Form’’, ‘‘Capacity Reduction Agreement 

or Reduction Agreement’’, ‘‘Closing 

Vote’’, ‘‘Current Offeror’’, ‘‘Fishing 

Capacity Reduction Contract or 

Reduction Contract’’, ‘‘FLCC Counsel’’, 

‘‘LLP License’’, ‘‘Offer(s)’’, ‘‘Rejected 

Offer’’, and ‘‘Website’’. Other terms 

important to understanding these 

regulations and the Reduction Contract, 

including ‘‘Reduction Privilege Vessel’’, 

are also set forth in § 600.1105(b). 

Reduction Agreement: Major Sections 

There are three major sections of the 

Reduction Agreement: Qualification and 

Enrollment of Subsector Members; 

Selection of Offers to Remove Fishing 

Capacity by the Reduction Plan; and 

Submission of Reduction Plan. NMFS 

codifies these provisions as Federal 

regulations in 50 CFR 600.1105. 

Qualification and Enrollment. 

Subsector Members may enroll in the 

Reduction Program at any time prior to 

closing the selection of offers to reduce 

capacity. Enrollment is accomplished by 

executing a Reduction Agreement and 

submitting specified supporting 

documents evidencing an applicant’s 

status as a Subsector Member. Each of 

the supporting documents will be 

reviewed by Tagart Consulting who will 

serve as the Auditor for the Reduction 

Program. The Auditor will review all 

documents for strict compliance with 

the regulatory provisions of § 600.1105. 

Each Reduction Agreement becomes 

effective 10 days after written notice is 

sent by the Auditor to each holder of a 

LLP license endorsed for BS or AI 

catcher processor activity, C/P, Pacific 

cod and hook and line gear, informing 

that more than 70 percent of Subsector 

Members have submitted complete 

applications certified by the Auditor as 

complying with § 600.1105. For more 

specific information on qualification 

and enrollment of Subsector Members, 

see § 600.1105(c) of this final rule. 


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Selection of Offers to Remove Fishing 

Capacity by the Reduction Plan. Once 

more than 70 percent of the Subsector 

Members have effective Reduction 

Agreements, the offer selection process 

begins. An offer is a binding offer to 

relinquish to the United States 

Government the assets identified in the 

offer in consideration of a dollar amount 

certain set by the Offeror, and may not 

be withdrawn once entered, unless it is 

rejected during the selection process. 

Essentially, during the offer process, 

Subsector Members will alternate on a 

weekly basis between Submission 

Periods (see § 600.1105(d)(3)(ii)) and 

Ranking Periods (see 

§ 600.1105(d)(5)(ii)). During any 

Submission Period, a Subsector Member 

may offer, for inclusion in the 

Reduction Program, its LLP license(s) 

and withdrawal of the vessel(s) 

designated on the LLP license(s) from 

all fisheries. During the Ranking Period, 

nonoffering Subsector Members may 

rank the offers submitted during the 

prior Submission Period. At the end of 

each Ranking Period, the Auditor will 

tabulate and post on a website the 

results of ranking the offers up to a total 

offer price of $36 million. Those offers 

ranked within the $36 million are 

Selected Offers and those that are not 

ranked within the $36 million are 

Rejected Offers with the Rejected Offers 

being voided and no longer binding on 

the offering member(s). 

Once the offer rankings are posted, a 

new Submission Period begins with the 

process repeated until at least 2⁄3 of the 

Nonoffering Subsector Members call for 

a closing vote. If 2⁄3 of the Nonoffering 

Members accept the Selected Offers 

proposed in the closing vote, the 

selection process to remove capacity by 

the Reduction Plan terminates. If not, 

the selection process resumes with a 

new Submission Period. For more 

specific information on ranking and 

selection of offers to remove capacity, 

see § 600.1105(d). 

Plan Submission, Including 

Repayment. After the Selection Process 

is complete, the FLCC will develop the 

Reduction Plan in compliance with the 

Act, the MSA, and other applicable laws 

and regulations for submission to NMFS 

for approval on behalf of the Secretary 

of Commerce. The Reduction Plan will 

include the LLP licenses and other 

fishing interests selected by the offer 

process as the assets to be purchased in 

the Reduction Program, and provide for 

repayment over a 30-year term. The 

Reduction Plan must also include the 

FLCC’s supporting documents and 

rationale for recognizing that these 

offers represent the expenditure of the 

least money for the greatest capacity 

reduction. Acceptance of the Offers are 

at the sole discretion of NMFS on behalf 

of the Secretary of Commerce. Further, 

the FLCC will give notice of the 

Reduction Plan to the North Pacific 

Fishery Management Council as 

required by the Act. 

Repayment of the loan will begin by 

collection of annual fees collected from 

the Subsector Members operating in the 

Reduction Fishery after implementation 

of the Reduction Program. The amount 

of such fee will be calculated on an 

annual basis as: the principal and 

interest payment amount necessary to 

amortize the loan over a 30-year term, 

divided by the Reduction Fishery 

portion of the BSAI Pacific cod initial 

total allowable catch (ITAC) allocation 

in metric tons (converted to pounds), 

provided that the fees should not exceed 

5 percent of the average ex-vessel 

production value of the Reduction 

Fishery. In the event that the total 

principal and interest due exceeds 5 

percent of the ex-vessel Pacific cod 

revenues, a penny per pound round 

weight fee will be calculated based on 

the latest available revenue records and 

NMFS conversion factors for pollock, 

arrowtooth flounder, Greenland turbot, 

skate, yellowfin sole and rock sole. For 

more specific information on 

submission of the Reduction Plan, 

including fees to repay the Reduction 

Loan, see § 600.1105(e). 

The Reduction Program—Other Matters 

Relating to the Reduction Agreement 

and Reduction Plan 

Review/Disputes 

The Reduction Agreement (but not 

these final regulations) provides for an 

expedited process to review any 

decision by the Auditor and for 

settlement of disputes utilizing an 

expedited review process by preselected legal counsel and, if necessary, 

binding arbitration. Also, all Offerors 

must comply with FLCC bylaws. By 

motion unanimously accepted by the 

members of the FLCC on February 21, 

2005, the members of the FLCC 

approved the FLCC’s development of a 

capacity reduction program in 

compliance with the Act (the Motion). 

Decisions of the Auditor and the FLCC 

Under § 600.1105(f), the Offerors are 

subject to the terms and conditions set 

forth in the Reduction Agreement to 

settle any disputes regarding the 

decisions of the Auditor or the FLCC. 

That section also explains the scope of 

the Auditor’s examination. 

Other Provisions of the Reduction 

Agreement 

Regulatory provisions mirroring the 

Reduction Agreement’s provisions for 

Enforcement/Specific Performance, 

Miscellaneous, Amendment, and 

Warranties are specified at 

§§ 600.1105(g), (h), (i), and (j), 

respectively. 

Approval of the Reduction Plan 

The criteria for NMFS, on behalf of 

the Secretary, to approve any Reduction 

Plan are specified at § 600.1105(k). 

Among other things, the Assistant 

Administrator of NMFS must find that 

the Reduction Plan is consistent with 

the Act and the MSA, and that it will 

result in the maximum sustained 

reduction in fishing capacity at the least 

cost and in the minimum amount of 

time. 

The FLCC has not yet submitted the 

Reduction Plan to NMFS for approval 

and cannot do so until after this final 

rule is published. If the FLCC submitted 

the Reduction Plan before the 

publication of this final rule, it may be 

necessary for the FLCC to revise and resubmit the Reduction Plan to conform 

with the provisions of the final rule. 

The Referenda 

NMFS will conduct an industry 

referendum to determine the industry’s 

willingness to repay a fishing capacity 

reduction loan to purchase the licenses, 

fishing rights, etc. identified in the 

Reduction Plan subsequent to the 

publication of this final rule. A 

successful referendum by 2/3 of the 

members of the Reduction Fishery 

would bind all parties and complete the 

reduction process. 

The current Fishing Capacity 

Reduction Framework regulatory 

provisions of § 600.1010 stipulate 

procedural and other requirements for 

NMFS to conduct referenda on fishing 

capacity reduction programs. Section 

600.1105(l) makes those framework 

referenda requirements applicable to the 

Reduction Program for the Longline 

Subsector. After approval of the 

Reduction Program via a referendum, 

the Reduction Program will be 

implemented. 

The Contract 

An appendix to this § 600.1105 sets 

forth the Contract component of the 

Reduction Program for the Longline 

Subsector. The appendix, or Contract, 

will also be codified along with the 

regulatory text of § 600.1105. 

Comments and Responses 

The public comment period on the 

subject proposed rule (71 FR 46364) 


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Federal Register / Vol. 71, No. 189 / Friday, September 29, 2006 / Rules and Regulations 57699 

closed at midnight on September 11, 

2006. A total of three commenters 

submitted comments (two via e-mail 

and one faxed comments to NMFS). 

Two comments were from individuals. 

One was a brief comment supporting the 

reduction of longlines and the rule. The 

other was a brief comment opposing the 

rule because it is voluntary and instead 

supports a mandatory reduction in fish 

catch. The third commenter was the 

legal counsel, Bauer Moynihan & 

Johnson LLP, who represents the 

Freezer Longline Conservation 

Cooperative (FLCC) in any review or 

arbitration under the Capacity 

Reduction Agreement. The comments 

by the FLCC’s counsel raised three 

concerns: (1) The need to make clear 

that Reduction Contracts were not 

required to enroll in the Reduction 

Program and were only required of 

Selected Offerors; (2) that only fishing 

history connected to the license and/or 

vessels identified on a Selected Offer 

should be relinquished; and (3) that the 

description of the Reduction Plan was 

incomplete in the preamble’s discussion 

of the Reduction Program. All 

comments are elaborated on below and 

NMFS responses are provided. 

Comment 1: The commenter 

expressed support for reducing longline 

fishing stating their belief that the fewer 

longlines there are, the better it would 

be for the ocean and all marine life 

living in it. 

Response: The rule is designed to 

reduce the number of permitted longline 

catcher processor vessels fishing in the 

BSAI non-pollock groundfish fishery, 

and will not necessarily reduce the 

number of longline sets. The commenter 

gave no specific rationale for their 

suggestion that the number of longlines 

be reduced. The purpose and need for 

this action is to reduce excess capacity 

in one of the major non-pollock 

groundfish sectors and help achieve the 

conservation and economic objectives of 

the fishery management plan. There is 

no known scientific basis for reducing 

the number of longlines as suggested by 

the commenter. 

Comment 2: The commenter is 

opposed to the reduction program in 

this fishery being voluntary and instead 

encourages that the program be made 

mandatory. The commenter supports a 

mandatory program to reduce the catch 

in the BSAI area to preserve fish for 

future generations. 

Response: The reduction program is 

required to be a voluntary program by 

statute (Title II, Section 219 of the FY 

2005 Appropriations Act; Public Law 

108–447). The rule is designed to reduce 

the number of licensed fishing vessels 

not the amount of catch. Each year the 

North Pacific Fishery Management 

Council and NMFS consider the best 

scientific information for the BSAI 

groundfish fishery, including any new 

stock assessment information, fishing 

mortality, natural mortality, and other 

pertinent scientific information in 

setting harvest quotas for the coming 

fishing year. Currently, no stocks of fish 

in the BSAI groundfish fishery are 

overfished or subject to overfishing. 

NMFS is confident that sound 

management currently practiced on 

these stocks will adequately preserve 

these stocks. 

Comment 3: The commenter pointed 

out that the Summary (at 71 FR 46364) 

and § 600.1105(c)(2) (at 71 FR 46369) of 

the proposed rule incorrectly indicates 

that each Subsector Member wanting to 

enroll with the FLCC to participate in 

the Reduction Program must execute 

and deliver a Reduction Contract as part 

of their application. The commenter 

states that the Reduction Agreement 

(designed by industry) is the mechanism 

whereby persons establish their 

eligibility to enroll and that only those 

Subsector Members whose offers are 

selected must execute a Reduction 

Contract. The commenter asks that the 

language regarding the requirements for 

enrollment as a Subsector Member be 

revised to delete the requirement that a 

Reduction Contract be executed as a 

condition to enrollment. 

Response: NMFS agrees that to 

participate in the process by enrolling 

with the FLCC in the Reduction 

Program, Subsector Members only need 

to sign a Reduction Agreement. While 

all members of the BSAI groundfish 

longline subsector are Subsector 

Members and all may vote on offers to 

relinquish permits in the buyback, only 

Subsector Members who have enrolled 

with the FLCC in the Reduction 

Program may submit offers. NMFS also 

agrees with the commenter that only 

those Subsector Members whose offers 

are selected must execute a Reduction 

Contract. Any Selected Offer by a 

participating Subsector Member must be 

submitted with a signed Reduction 

Contract. NMFS has modified the 

Summary and § 600.1105(c)(2) of the 

rule to clarify that a Reduction Contract 

is only required for those Subsector 

Members submitting Selected Offers. 

Comment 4: The commenter is 

opposed to the Contract’s Section 8.c. 

(actually Section 8.d.) requirement in 

the Appendix to § 600.1105 (at 71 FR 

46375) that all fishing history associated 

with any latent license that remains in 

the Offeror’s possession as of August 11, 

2006, must be relinquished by any 

Offeror. The commenter states that this 

requirement is inconsistent with the 

Reduction Agreement and the intent of 

the FLCC, and that only fishing history 

connected to the license and/or vessels 

identified on a Selected Offer should be 

relinquished. 

Response: NMFS agrees that only 

fishing history associated with any 

latent permit that is identified on the 

Selected Offer (and subsequently on the 

Reduction Contract) should be 

relinquished rather than all fishing 

history associated with any latent 

license that was in the Offeror’s 

possession on August 11, 2006. In the 

proposed rule, NMFS was attempting to 

collect all fishing history associated 

with latent permits held by the Offeror; 

however, NMFS recognizes the 

inconsistency with the Reduction 

Agreement and supports the intent of 

the FLCC to provide flexibility to 

Subsector Members, who hold more 

than one LLP license, in relinquishing 

their licenses. NMFS has modified the 

Section 8.d. requirement in the Contract 

contained in the Appendix to 

§ 600.1105 so that it is limited to 

relinquishing all fishing history 

associated with the latent LLP license 

identified on the Selected Offer, 

including any fishing history associated 

with the fishing vessel that gave rise to 

the latent LLP license that remained in 

the Offeror’s possession as of August 11, 

2006. 

Comment 5: The commenter indicated 

that the description of the Reduction 

Plan was incomplete in the preamble’s 

discussion of the Reduction Program at 

71 FR 46365. The commenter stated that 

the Reduction Agreements and 

Reduction Contracts, while elements of 

the Reduction Plan, do not by 

themselves constitute the Reduction 

Plan and referred to § 600.1105(e) (at 71 

FR 46372) of the proposed rule which 

identified other elements of the 

Reduction Plan. 

Response: NMFS has modified the 

description of the Reduction Plan in the 

preamble’s discussion of the Reduction 

Program to include mention of the 

FLCC’s supporting documents and 

rationale that these offers represent the 

expenditure of the least money for the 

greatest capacity reduction, together 

with the Reduction Agreements and 

Reduction Contracts, as constituting the 

Reduction Plan. This is now consistent 

with the Summary and § 600.1105(e). 

Classification 

The Assistant Administrator for 

Fisheries, NMFS, determined that this 

final rule is consistent with Title II, 

Section 219 of the FY 2005 

Appropriations Act, Public Law 108–

447, and with the Magnuson-Stevens 


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Fishery Conservation and Management 

Act, codified at 16 U.S.C. 1801 et seq. 

In compliance with the National 

Environmental Policy Act, NMFS 

prepared an environmental assessment 

for this final rule. The assessment 

discusses the impact of this final rule on 

the natural and human environment and 

integrates a Regulatory Impact Review 

(RIR) and a Final Regulatory Flexibility 

Analysis (FRFA). NMFS will send the 

assessment, the review and analysis to 

anyone who requests a copy (see 

ADDRESSES). 

NMFS prepared a FRFA, as required 

by section 603 of the Regulatory 

Flexibility Act (RFA), to describe the 

economic impacts this final rule would 

have on small entities. NMFS intends 

the analysis to aid us in considering 

regulatory alternatives that could 

minimize the economic impact on 

affected small entities. The final rule 

does not duplicate or conflict with other 

Federal regulations. 

Summary of FRFA 

The Small Business Administration 

(SBA) has defined small entities as all 

fish harvesting businesses that are 

independently owned and operated, not 

dominant in its field of operation, and 

with annual receipts of $4 million or 

less. In addition, processors with 500 or 

fewer employees for related industries 

involved in canned or cured fish and 

seafood, or preparing fresh fish and 

seafood, are also considered small 

entities. Small entities within the scope 

of this final rule include individual U.S. 

vessels and dealers. There are no 

disproportionate impacts between large 

and small entities. 

Description of the Number of Small 

Entities 

The FRFA uses the most recent year 

of data available to conduct the analysis 

(2003). The vessels that might be 

considered large entities were either 

affiliated under owners of multiple 

vessels or were catcher processors. 

However, little is known about the 

ownership structure of the vessels in the 

fleet, so it is possible that the FRFA 

overestimates the number of small 

entities. In the Reduction Fishery, 24 of 

the 39 vessels meet the threshold for 

small entities. The remaining 13 vessels 

are not considered small entities for 

purposes of the RFA. There are 5 

additional fishermen with permits but 

no vessels in the Longline Subsector 

who would benefit if they later purchase 

vessels and participate in the postReduction Fishery because there will be 

less competition for the harvest. Also, 

they would benefit if they chose to be 

bought out; and there would be no 

impact to them if they did not buy a 

vessel and were not selected for the 

buyback. Implementation of the 

buyback program would not change the 

overall reporting structure and record 

keeping requirements of the vessels in 

the BSAI Pacific cod fisheries. However, 

this program would impose collection of 

information requirements totaling 16 

hours 10 minutes. 

Most firms operating in the Reduction 

Fishery have annual gross revenues of 

less than $4 million. The FRFA analysis 

estimates that 24 of the 39 active 

longline catcher processor vessels (i.e., 

39 vessels constitute the Longline 

Subsector) that participated in 2003 are 

considered small entities. The 

ownership characteristics of vessels 

operating in the Reduction Fishery are 

not available and therefore it is not 

possible to determine with certainty, if 

they are independently owned and 

operated, or affiliated in one way or 

another with a larger parent company. 

Furthermore, because analysts cannot 

quantify the exact number of small 

entities that may be directly regulated 

by this action, a definitive finding of 

non-significance for this final action 

under the RFA is not possible. However, 

because the final rule will not result in 

changes to allocation percentages and 

participation is voluntary, net effects are 

expected to be minimal relative to the 

status quo. 

The final rule’s impact will be 

positive for both those whose offers 

NMFS accepts and for post-reduction 

catcher processors whose landing fees 

repay the reduction loan because the 

Offerors and catcher processors would 

have voluntarily assumed the impact: 

1. Offerors would have volunteered to 

make offers at dollar amounts of their 

own choice. Presumably, no Offeror 

would volunteer to make an offer with 

an amount that is inconsistent with the 

Offeror’s interest; and 

2. Reduction loan repayment landing 

fees would be authorized, and NMFS 

could complete the Reduction Program, 

only if at least two-thirds of Subsector 

Members voting in a post-offer 

referendum voted in favor of the 

Reduction Plan. Presumably, Subsector 

Members who are not Selected Offerors 

would not vote in favor of the Reduction 

Plan unless they concluded that the 

Reduction Program’s prospective 

capacity reduction was sufficient to 

enable them to increase their postreduction revenues enough to justify the 

fee. 

Those participants remaining in the 

fishery after the buyback will incur 

additional fees of up to 5 percent of the 

ex-vessel production value of postreduction landings. However, the 

additional costs could be mitigated by 

increased harvest opportunities by postreduction fishermen. 

This final rule would affect neither 

authorized BSAI Pacific cod ITAC and 

other non-pollock groundfish harvest 

levels nor harvesting practices. 

NMFS rejected the no action 

alternative considered in the EA 

because NMFS would not be in 

compliance with the mandate of Section 

219 of the Act to establish a buyback 

program. In addition, the longline 

catcher processor subsector of the nonpollock groundfish fishery would 

remain overcapitalized. Although too 

many vessels compete to catch the 

current subsector total allowable catch 

(TAC) allocation, fishermen remain in 

the fishery because they have no other 

means to recover their significant 

capital investment. Overcapitalization 

reduces the potential net value that 

could be derived from the non-pollock 

groundfish resource, by dissipating 

rents, driving variable operating costs 

up, and imposing economic 

externalities. At the same time, excess 

capacity and effort diminish the 

effectiveness of current management 

measures (e.g. landing limits and 

seasons, bycatch reduction measures). 

Overcapitalization has diminished the 

economic viability of members of the 

fleet and increased the economic and 

social burden on fishery dependent 

communities. 

NMFS determined that this final rule 

is not significant for purposes of 

Executive Order 12866 based on the 

RIR/FRFA. 

This final rule contains information 

collection requirements subject to the 

Paperwork Reduction Act (PRA). The 

Office of Management and Budget 

(OMB) previously approved this 

information collection under OMB 

Control Number 0648–0376 with 

requirements for 878 respondents with 

a total response time of 38,653 hours. 

NMFS estimates that the public 

reporting burden for this information 

collection would average 4 hours for 

making an offer (which includes 

executing the Reduction Agreement and 

Reduction Contract) and 4 hours for 

voting in a referendum. Persons affected 

by this final rule will also be subject to 

other collection-of-information 

requirements referred to in the final rule 

and also approved under OMB Control 

Number 0648–0376. These requirements 

and their associated response times are: 

completing and filing a fish ticket (10 

minutes), submitting monthly fish buyer 

reports (2 hours), submitting annual fish 

buyer reports (4 hours), and fish buyer/ 

fish seller reports when a person fails 


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either to pay or to collect the loan 

repayment fee (2 hours). 

These response estimates include the 

time for reviewing instructions, 

searching existing data sources, 

gathering and maintaining the data 

needed, and completing and reviewing 

the information collection. Public 

comment is sought regarding: whether 

this collection of information is 

necessary for the proper performance of 

the functions of the agency, including 

whether the information 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. 

Interested persons may send comments 

regarding this burden estimate, or any 

other aspect of this data collection, 

including suggestions for reducing the 

burden, to both NMFS and OMB (see 

ADDRESSES). 

Notwithstanding any other provision 

of law, no person is required to respond 

to, and no person is subject to a penalty 

for failure to comply with, an 

information collection subject to the 

PRA requirements unless that 

information collection displays a 

currently valid OMB control number. 

This action should not result in any 

adverse effects on endangered species or 

marine mammals. 

List of Subjects in 50 CFR Part 600 

Fisheries, Fishing capacity reduction, 

Fishing permits, Fishing vessels, 

Intergovernmental relations, Loan 

programs—business, Reporting and 

recordkeeping requirements. 

Dated: September 21, 2006. 

John Oliver, 

Deputy Assistant Administrator for 

Operations, National Marine Fisheries 

Service. 

■ For the reasons set out in the 

preamble, NMFS amends 50 CFR part 

600, subpart M, as follows: 

PART 600—MAGNUSON-STEVENS 

ACT PROVISIONS 

Subpart M—Specific Fishery or 

Program Fishing Capacity Reduction 

Regulations 

■ 1. The authority citation for 50 CFR 

part 600, subpart M, is revised to read 

as follows: 

Authority: 5 U.S.C. 561, 16 U.S.C. 1801 et 

seq., 16 U.S.C. 1861a(b) through (e), 46 App. 

U.S.C. 1279f and 1279g, section 144(d) of 

Division B of Pub. L. 106–554, section 2201 

of Pub. L. 107–20, and section 205 of Pub. 

L. 107–117, Pub. L. 107–206, Pub. L. 108–7, 

Pub. L. 108–199, and Pub. L. 108–447. 

■ 2. Section 600.1105 is added to 

subpart M to read as follows: 

§ 600.1105 Longline catcher processor 

subsector of the Bering Sea and Aleutian 

Islands (BSAI) non-pollock groundfish 

fishery program. 

(a) Purpose. This section implements 

the capacity reduction program that 

Title II, Section 219(e) of Public Law 

108–447 enacted for the longline catcher 

processor subsector of the Bering Sea 

and Aleutian Islands (BSAI) nonpollock groundfish fishery. 

(b) Definitions. Unless otherwise 

defined in this section, the terms 

defined in § 600.1000 of subpart L of 

this part expressly apply to this section. 

The following terms have the following 

meanings for the purpose of this section: 

Act means Title II, Section 219 of 

Public Law 108–447. 

AI means the Aleutian Islands. 

Application Form means the form 

published on the FLCC’s website that 

sets forth whether the qualifying LLP 

License is a Latent License and 

identifies the individual(s) authorized to 

execute and deliver Offers and Offer 

Ranking Ballots on behalf of the 

Subsector Member. 

Auditor means Jack V. Tagart, Ph.D., 

d.b.a. Tagart Consulting. 

Authorized Party means the 

individuals authorized by Subsector 

Members on the application form to 

execute and submit Offers, Rankings, 

protests and other documents and/or 

notices on behalf of Subsector Member. 

Ballot means the form found on the 

auditor’s website used to cast a vote in 

favor of, or in opposition to, the 

currently Selected Offers. 

BS means the Bering Sea. 

BSAI means the Bering Sea and the 

Aleutian Islands. 

BSAI Pacific Cod ITAC means the 

Total Allowable Catch for Pacific cod 

after the subtraction of the 7.5 percent 

Community Development Program 

reserve. 

Capacity Reduction Agreement or 

Reduction Agreement means an 

agreement entered into by the Subsector 

Members and the FLCC under which the 

FLCC is permitted to develop and 

submit a Capacity Reduction Plan to the 

Secretary. 

Certificate of Documentation (COD) 

means a document issued by the U.S. 

Coast Guard’s National Documentation 

Center that registers the vessel with the 

United States Government. 

Closing Vote means a vote held 

pursuant to paragraph (d)(7) of this 

section, after two-thirds (2⁄3) or more of 

the Nonoffering Subsector Members 

submit Ranking Forms electing to accept 

the Selected Offerors and close the 

Selection Process, and there are no 

unresolved Protests or Arbitrations. 

Current Offer means an Offer 

submitted by a Subsector Member to the 

Auditor during any Submission Period 

and, with regard to such Offer, Offeror 

has not become a Rejected Offeror. The 

term ‘‘Current Offer’’ includes Selected 

Offers. 

Current Offeror means an Offering 

Subsector Member that has submitted 

an Offer to the Auditor during any 

Submission Period and, with regard to 

such Offer, Offeror has not become a 

Rejected Offeror. The term ‘‘Current 

Offeror’’ includes Selected Offerors. 

Database means the online LLP 

License database maintained by NMFS 

as downloaded by the Auditor pursuant 

to paragraph (c)(1) of this section. 

Effective Date means the date the 

Capacity Reduction Agreement becomes 

effective pursuant to section 4.e of the 

Capacity Reduction Agreement. 

Fishing Capacity Reduction Contract 

or Reduction Contract means the 

contract that any Current Offeror must 

sign and agree to abide by if NMFS 

accepts the offer by signing the 

Reduction Contract. 

FLCC Counsel means Bauer Moynihan 

& Johnson LLP or other counsel 

representing the FLCC in any review or 

arbitration under the Capacity 

Reduction Agreement. 

Latent License means an LLP License 

on which a vessel was not designated at 

the time an Offer is submitted. 

LLP License means a Federal License 

Limitation Program groundfish license 

issued pursuant to § 679.4(k) of this 

chapter or successor regulation that is 

noninterim and transferable, or that is 

interim and subsequently becomes 

noninterim and transferable, and that is 

endorsed for BS or AI catcher processor 

fishing activity, C/P, Pacific cod and 

hook and line gear. 

Longline Subsector means the 

longline catcher processor subsector of 

the BSAI non-pollock groundfish fishery 

as defined in the Act. 

Longline Subsector ITAC means the 

longline catcher processor subsector 

remainder of the Total Allowable Catch 

after the subtraction of the 7.5 percent 

Community Development Program 

reserve. 

Nonoffering Subsector Member shall 

have the meaning ascribed thereto in 

paragraph (d)(5)(i) of this section. 

Offer Content means all information 

included in Offers submitted to the 

Auditor pursuant to paragraph (d)(2)(ii) 

of this section. 


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Offer Form means the form found on 

the Auditor’s website used to make an 

offer. 

Offer(s) means a binding offer(s) from 

a Subsector Member to sell its LLP, right 

to participate in the fisheries, the fishing 

history associated with such LLP, and 

any vessel set forth on the Offer Form 

submitted by Offeror pursuant to the 

terms of this Capacity Reduction 

Agreement. 

Opening Date means the first Monday 

following the Effective Date set forth in 

paragraph (c)(3) of this section. 

Person includes any natural person(s) 

and any corporation, partnership, 

limited partnership, limited liability 

company, association or any other entity 

whatsoever, organized under the laws of 

the United States or of a state. 

Prequalification Offer shall have the 

meaning ascribed thereto in paragraph 

(d)(2)(iii) of this section. 

Ranking Form means the form posted 

by the Auditor pursuant to paragraph 

(d)(5)(iii) of this section. 

Ranking Period shall have the 

meaning ascribed thereto in paragraph 

(d)(5)(ii) of this section. 

Reduction Fishery means the BSAI 

non-pollock groundfish fishery. 

Reduction Fishing Interests shall have 

the meaning ascribed thereto in the 

Fishing Capacity Reduction Contract. 

Reduction Plan means a business plan 

prepared by the Subsector Members in 

accordance with Section 1 of the 

Capacity Reduction Agreement and 

forwarded to the Secretary for approval. 

Reduction Privilege Vessel means the 

vessel listed on the Offeror’s License 

Limitation Program license. 

Rejected Offer means an Offer that has 

been through one or more Rankings and 

is not a Selected Offer following the 

latest Ranking Period, with respect to 

which the Offering Subsector Member’s 

obligations have terminated pursuant to 

paragraphs (d)(2)(i) and (d)(6)(v) of this 

section. 

Rejected Offeror means a Subsector 

Member that has submitted an Offer 

which has been ranked and was not 

posted as a Selected Offer pursuant to 

paragraph (d)(6)(ii) of this section. 

Restricted Access Management (RAM) 

means the Restricted Access 

Management Program in the Alaska 

Region, NMFS, located in Juneau, 

Alaska. 

Secretary means the Secretary of 

Commerce or a designee. 

Selected Offer shall have the meaning 

ascribed thereto in paragraph (d)(6)(iv) 

of this section. 

Selected Offeror means a Subsector 

Member that has submitted an Offer 

which has been ranked and is posted as 

a Selected Offer pursuant to paragraph 

(d)(6)(ii) of this section. 

Selection Process means the process 

set forth in paragraph (d) of this section 

for selecting the fishing capacity to be 

removed by the Reduction Plan. 

Submission Period(s) or Submitting 

Period(s) shall have the meaning 

ascribed thereto in paragraph (d)(3)(ii) 

of this section. 

Subsector Member(s) means a 

member(s) of the Longline Subsector. 

Web site means the internet Web site 

developed and maintained on behalf of 

the FLCC for implementation of the 

Selection Process described herein with 

a URL address of http:// 

www.freezerlonglinecoop.org. 

(c) Qualification and enrollment of 

subsector members—

(1) Distribution. A copy of the 

Reduction Agreement, Application 

Form, and Reduction Contract shall be 

mailed to each holder of record of an 

LLP License endorsed for BS or AI 

catcher processor activity, C/P, Pacific 

cod and hook and line gear, as the 

Auditor determines from the Database 

downloaded by the Auditor as of 

January 30, 2006, regardless of whether 

the LLP License is indicated in the 

Database as noninterim and transferable 

or otherwise. 

(2) Application. Any person, 

regardless of whether having received 

the mailing described in paragraph 

(c)(1) of this section, may as a Subsector 

Member apply to enroll with the FLCC 

to participate in the Reduction Program, 

by submitting all of the following 

documents: 

(i) Fully executed Reduction 

Agreement; 

(ii) Photocopy of the LLP License(s) 

evidencing Subsector Member’s 

qualification as a member of the 

Longline Subsector; 

(iii) Unless applying as the holder of 

a Latent License, a photocopy of Federal 

Fisheries Permit for the vessel(s) 

designated on the LLP License(s) on the 

date the Reduction Agreement is signed 

by the Subsector Member; 

(iv) Unless applying as the holder of 

a Latent License, a photocopy of the 

Certificate of Documentation (COD) for 

the vessel(s) designated on the LLP 

License(s) on the date the Reduction 

Agreement is signed by the Subsector 

Member; and 

(v) An executed Application Form 

which sets forth whether the qualifying 

LLP License is a Latent License and 

identifies the individual(s) authorized to 

execute and deliver Offers and Offer 

Ranking Ballots on behalf of the 

Subsector Member. 

(3) Examination by Auditor—(i) In 

general. Each application must be 

submitted to the Auditor who will 

examine applications for completeness 

and inconsistencies, whether on the face 

of the documents or with the Database. 

Any application which is incomplete or 

which contains inconsistencies shall be 

invalid. The Auditor shall notify by email or mail an applicant of the basis for 

the Auditor’s finding an application 

invalid. An applicant may resubmit a 

revised application. If the application 

meets all requirements, the Auditor may 

accept the application as valid and 

enroll the applicant. 

(ii) Interim LLP Licenses. If an LLP 

License is interim and/or 

nontransferable, the applicant’s 

enrollment shall be accepted as a 

Subsector Member and may fully 

participate in the Selection Process. 

However, any posting of an Offer 

submitted with respect to such LLP 

License shall note the status of such LLP 

License until that Subsector Member 

submits to the Auditor a letter from the 

RAM confirming that it is within the 

Subsector Member’s control to cause the 

qualifying LLP License to be issued as 

noninterim and transferable upon 

withdrawal of all applicable appeals. 

(4) Enrollment period. Applications 

that meet all requirements will be 

accepted until the Selection Process is 

completed. 

(5) Effective date. The Effective Date 

of any Reduction Agreement shall be ten 

(10) calendar days after written notice is 

sent by the Auditor to each holder of 

record of an LLP License endorsed for 

BS or AI catcher processor activity, C/ 

P, Pacific cod and hook and line gear (as 

determined by the Auditor from the 

Auditor’s examination of the Database) 

advising that the number of Subsector 

Members that have delivered to the 

Auditor a complete Application, 

including a fully executed Reduction 

Agreement, exceeds seventy percent (70 

percent) of the members of the Longline 

Subsector (as determined by the Auditor 

from the Auditor’s examination of the 

Database). 

(6) Notice. All notices related to the 

effective date of the Reduction 

Agreement shall be sent by the Auditor 

via registered mail. 

(7) Withdrawal. A Subsector Member, 

unless such Subsector Member is a 

Current Offeror or Selected Offeror, may 

terminate the Reduction Agreement at 

any time with respect to that Subsector 

Member by giving ten (10) calendar days 

written notice to the Auditor preferably 

via e-mail. Withdrawal of a Subsector 

Member shall not affect the validity of 

the Reduction Agreement with respect 

to any other Subsector Members. Once 

effective, the Reduction Agreement shall 

continue in full force and effect 

regardless of whether subsequent 

withdrawals reduce the number of 


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Subsector Members below that level 

required to effectuate the Reduction 

Agreement. Attempted withdrawal by a 

Current Offeror or Selected Offeror shall 

be invalid, and such Offer shall remain 

a binding, irrevocable Offer, unaffected 

by the attempted withdrawal. 

(d) Selection of fishing capacity to be 

removed by Reduction Plan. The fishing 

capacity removed by the Reduction Plan 

will be the Reduction Fishing Interests 

voluntarily offered through the 

Reduction Plan by offering Subsector 

Members and as selected by the 

Nonoffering Subsector Members, up to 

an aggregate amount of thirty six million 

dollars ($36,000,000) as set forth in this 

paragraph (d). 

(1) Overview. The Selection Process 

will begin upon the Effective Date of the 

Reduction Agreement. The Selection 

Process will alternate on a weekly basis 

between: 

(i) Submitting Periods, during which 

individual Subsector Members may 

submit Offers of fishing capacity they 

wish to include in the Reduction Plan; 

and 

(ii) Ranking Periods, during which 

Nonoffering Subsector Members will 

rank the submitted Offers. 

(2) Offers—(i) Binding agreement. An 

Offer from a Subsector Member shall be 

a binding, irrevocable offer from a 

Subsector Member to relinquish to 

NMFS the Reduction Fishing Interests 

for the price set forth on the Offer 

contingent on such Offer being a 

Selected Offer at the closing of the 

Selection Process. Once submitted, an 

Offer may not be revoked or withdrawn 

while that Offer is a Current Offer or 

Selected Offer. An Offer that is 

submitted by a Subsector Member, but 

is not a Selected Offer during the 

subsequent Ranking Period, shall be 

deemed to be terminated and the 

Subsector Member shall have no further 

obligation with respect to performance 

of that Offer. 

(ii) Offer content. All Offers submitted 

to the Auditor shall include the 

following information: LLP License 

number; LLP License number(s) of any 

linked crab LLP Licenses; license MLOA 

(MLOA—maximum length overall of a 

vessel is defined at § 679.2 of this 

chapter); the license area, gear and 

species endorsements; a summary of the 

Pacific cod catch history for the 

calendar years 1995–2004; and the 

offered price. The Offer shall also state 

whether a vessel is currently designated 

on the LLP License and as such will be 

withdrawn from all fisheries if the Offer 

is selected for reduction in the 

Reduction Plan. If so, the Offer shall 

identify such vessel by name, official 

number, and current owner. In addition, 

the Offer shall provide a summary of the 

Pacific cod catch history for the 

calendar years 1995–2004 of the vessel 

to be retired from the fisheries. All 

summary catch histories included in 

Offers shall be calculated utilizing both 

the weekly production report and best 

blend methodology and shall separately 

state for each methodology the Pacific 

cod catch in metric tons and as a 

percentage of the overall catch for the 

longline catcher processor subsector on 

an annual basis for each of the required 

years. If the vessel stated to be 

withdrawn from the fisheries is not 

owned by the LLP License owner of 

record, the Offer shall be countersigned 

by the owner of record of the vessel. An 

Offer offering a Latent License shall 

state on the Offer Form that the offered 

LLP License is a Latent License. The 

Offer Form shall also include a 

comment section for any additional 

information that Offerors wish to 

provide to the Subsector Members 

concerning the Offer. 

(iii) Prequalification of Offers. A 

Subsector Member may submit a 

Prequalification Offer to the Auditor at 

any time prior to the Opening Date. A 

Prequalification Offer shall contain all 

elements of an Offer, except that a price 

need not be provided. The Auditor shall 

notify the Subsector Member submitting 

a Prequalification Offer as to any 

deficiencies as soon as practicable. All 

details of a Prequalification Offer shall 

be kept confidential by the Auditor. 

(3) Submitting an Offer—(i) Offer 

submission. Commencing on the first 

Tuesday following the Opening Date 

and during all Submission Periods until 

the Selection Process is closed, any 

Subsector Member may submit an Offer. 

All Offers are to be on the applicable 

form provided on the FLCC website, 

executed by an Authorized Party and 

submitted to the Auditor by facsimile. 

Any Subsector Member may submit an 

Offer during any Submission Period, 

even if that Subsector Member has not 

submitted an Offer in any previous 

Submission Period. If a Subsector 

Member holds more than one LLP 

License, such Subsector Member may, 

but is not required to, submit an Offer 

for each LLP License held during a 

Submission Period. 

(ii) Submission Periods. The initial 

Submission Period shall commence at 9 

a.m. (Pacific time) on the Tuesday 

following the Opening Date and end at 

5 p.m. (Pacific time) on the Friday of 

that week. Subsequent Submission 

Periods shall commence at 9 a.m. 

(Pacific time) on the first Tuesday 

following the preceding Ranking Period 

and end at 5 p.m. (Pacific time) on the 

Friday of that week. All times set forth 

in the Reduction Agreement and used in 

the Offer process shall be the time kept 

in the Pacific time zone as calculated by 

the National Institute of Standards and 

Technology. 

(iii) Validity of Offer. The Auditor 

shall examine each Offer for consistency 

with the Database and information 

contained in the enrollment documents. 

If there is an inconsistency in the 

information contained in the Offer, any 

of the elements required of an Offer 

pursuant to paragraph (d)(2)(ii) of this 

section are missing, or the Auditor does 

not receive the original Offer Form 

before the Offers are to be posted 

pursuant to paragraph (d)(4) of this 

section, the Auditor shall notify the 

offering Subsector Member by e-mail or 

mail that the Offer is nonconforming as 

soon as practicable after discovering the 

basis of invalidity. The Subsector 

Member may submit a revised, 

conforming Offer prior to the close of 

that Submission Period or, in any 

subsequent Submission Period. Only 

one Offer may be submitted with respect 

to an LLP License during a Submission 

Period. In the event a Subsector Member 

submits more than one Offer with 

respect to an LLP License during a 

Submission Period, the first conforming 

Offer received by the Auditor shall be 

binding and irrevocable and any 

subsequent Offers shall be deemed 

invalid. 

(iv) Warranty. By submitting an Offer, 

the Offering Subsector Member, 

warrants and represents that the 

Offering Subsector Member has read 

and understands the terms of the 

Reduction Agreement, the Offer, and the 

Reduction Contract and has had the 

opportunity to seek independent legal 

counsel regarding such documents and/ 

or agreements and the consequences of 

submitting an Offer. 

(4) Posting Offers—(i) Current offers. 

For each Offer received during a 

Submission Period, the Auditor shall 

post on the Website no later than 5 p.m. 

(Pacific time) on the following Tuesday 

all of the details of such Offer as set 

forth on the Offer Form. In addition, the 

Auditor shall post, as available to 

Auditor, a summary by year of up to ten 

(10) years catch history during the 

period 1995–2004 in total round weight 

equivalents and percentage of Longline 

Subsector ITAC harvested for any vessel 

that is included in the Offer. Subsector 

Member (or vessel owner, if other than 

the Subsector Member) expressly 

authorizes Auditor to release the catch 

history summary information previously 

prepared for that Subsector Member or 

vessel owner by the Auditor as part of 

the analysis of FLCC’s membership’s 


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catch history previously conducted by 

the Auditor on behalf of the FLCC. 

(ii) Posting order. Offers shall be 

posted on the Website by the Auditor in 

alphabetical order of the Offering 

Subsector Member’s name. 

(iii) Questions as to Offer. The 

Auditor shall respond to no questions 

from Subsector Member regarding Offers 

except to confirm that the posting 

accurately reflects the details of the 

Offer. If an Offering Subsector Member 

notices an error in an Offer posting on 

the Website, such Subsector Member 

shall notify the Auditor as soon as 

practicable. The Auditor shall review 

such notice, the posting and the original 

Offer. If an error was made in posting 

the Auditor shall correct the posting as 

soon as practicable and notify the 

Subsector Members via e-mail or mail of 

the correction. In the event such an 

error is not discovered prior to Ranking, 

an Offering Subsector Member shall be 

bound to the terms of the submitted 

Offer, not the terms of the posted Offer. 

(iv) Archive. The Auditor shall 

maintain on the Website an archive of 

prior Offers posted, which shall be 

available for review by all Subsector 

Members. 

(5) Ranking—(i) Eligibility. Each 

Subsector Member that has not 

submitted an Offer during the preceding 

Submission Period, or whose vessel is 

not included as a withdrawing vessel in 

an Offer during the preceding 

Submission Period (i.e., a Nonoffering 

Subsector Member), may submit to the 

Auditor a Ranking Form during a 

Ranking Period. With respect to 

Ranking, a Subsector Member that holds 

more than one LLP License may 

participate in the Ranking process for 

each LLP License not included in an 

Offer. 

(ii) Ranking Period. The initial 

Ranking Period shall commence 

immediately after the Offers from the 

preceding Submission Period have been 

posted and end at 5 p.m. (Pacific time) 

on the Friday of that week. Subsequent 

Ranking Periods shall commence 

immediately after the Offers from the 

preceding Submission Period have been 

posted and end at 5 p.m. (Pacific time) 

on the Friday of that week. 

(iii) Ranking Form. Prior to each 

Ranking Period, the Auditor will post a 

Ranking Form on the Website in ‘‘pdf’’

file format. Each eligible Subsector 

Member wishing to rank the current 

Offers shall rank the Offers on the 

Ranking Form numerically in the 

Subsector Member’s preferred order of 

purchase. The Offer that Subsector 

Member would most like to have 

accepted should be ranked number one 

(1), and subsequent Offers ranked 

sequentially until the Offer that the 

Subsector Member would least like to 

see accepted is ranked with the highest 

numerical score. A Subsector Member 

wishing to call for a Closing Vote shall, 

in lieu of ranking the Current Offers, 

mark the Ranking Form to accept the 

Selected Offers selected during the prior 

Ranking Period and close the Selection 

Process. To be valid, the Ranking Form 

must rank each Current Offer listed on 

the Ranking Form or, if applicable, be 

marked to call for a Closing Vote. 

Ranking Forms shall be submitted by 

sending a completed Ranking Form, 

signed by an Authorized Party, to the 

Auditor by facsimile or mail prior to the 

end of the Ranking Period. A Subsector 

Member is not required to rank the 

Offers during a Ranking Period or call 

for a Closing Vote. 

(iv) Validity of Subsector Member 

Ranking. The Auditor shall examine 

each Ranking Form for completeness, 

whether the form either ranks the Offers 

or calls for a Closing Vote (but not both), 

and authorized signature. Any 

incomplete or otherwise noncompliant 

Ranking Form(s) shall be invalid, and 

shall not be included in the Rankings of 

the Current Offers. The Auditor shall 

notify the Subsector Member of the 

reason for declaring any Ranking Form 

invalid as soon as practicable. A 

Subsector Member may cure the 

submission of an invalid Ranking Form 

by submitting a complying Ranking 

Form if accomplished before the end of 

the applicable Ranking Period. 

(6) Ranking results—(i) Compiling the 

rankings. Unless two-thirds (2⁄3) of the 

Nonoffering Subsector Members have 

called for a Closing Vote, the Auditor 

shall compile the results of the Ranking 

Forms by assigning one point for each 

position on a Ranking Form. That is, the 

Offer ranked number one (1) on a 

Ranking Form shall be awarded one (1) 

point, the Offer ranked two (2) shall 

receive two (2) points, and continuing 

on in this manner until all Offers have 

been assigned points correlating to its 

ranking on each valid Ranking Form. 

The Offer with the least number of total 

points assigned shall be the highest 

ranked Offer, and the Offer with the 

greatest total points assigned shall be 

the lowest ranked Offer. 

(ii) Posting rankings. The Auditor 

shall post the results of the compilation 

of the Ranking Forms on the Website in 

alphabetical order based on the Offering 

Subsector Member’s name no later than 

5 p.m. (Pacific time) on the Monday 

following the Ranking Period. The 

Auditor shall post the highest 

consecutive ranking Offers that total 

thirty six million dollars ($36,000,000) 

or less. Those Offering Subsector 

Members whose Offers are posted shall 

be deemed Selected Offerors and their 

Offers shall be deemed Selected Offers. 

Those Offering Subsector Members 

whose Offers are not posted shall be 

deemed Rejected Offerors. 

(iii) Selected Offer information or 

confidentiality. The Auditor shall post 

the name of the Offering Subsector 

Member, the amount of the Offer, and a 

summary of the total number of Ranking 

Forms received and the number of such 

forms on which the Members called for 

a Closing Vote. Other than the foregoing, 

the Auditor shall not post any details of 

the compilation of the Ranking Forms. 

(iv) Selected Offerors. Selected 

Offerors may not withdraw their Offers 

unless in subsequent rankings their 

Offers no longer are within the highest 

ranking Offers and they become 

Rejected Offerors. A Selected Offeror 

may, however, modify a Selected Offer 

solely to the extent such modification 

consists of a reduction in the Offer 

price. A Selected Offeror may submit a 

modified Offer to the Auditor during the 

next Offering Period as set forth in 

paragraph (d)(3) of this section. Unless 

a Selected Offeror becomes a Rejected 

Offeror in a subsequent Ranking, a 

Selected Offeror shall be bound by the 

terms of the lowest Selected Offer 

submitted as if such modified Offer had 

been the original Selected Offer. In the 

event a Selected Offeror submits a 

modified Offer and such Offer is not 

ranked because sufficient votes are 

received to call for a Closing Vote, the 

previously Selected Offer shall remain 

the Selected Offer. 

(v) Rejected Offerors. The Offer of a 

Rejected Offeror is terminated and the 

Rejected Offeror is no longer bound by 

the terms of its Offer. A Rejected Offeror 

may, at its sole discretion, resubmit the 

same Offer, submit a revised Offer, or 

elect not to submit an Offer during any 

subsequent Submission Period until the 

Selection Process is closed. 

(vi) Ties. In the event there is a tie 

with respect to Offers which results in 

the tied Offers exceeding thirty-six 

million dollars ($36,000,000), the tied 

Offers and all Offers ranked lower than 

the tied Offers shall be deemed to be 

rejected and the Rejected Offerors may, 

at their option, submit an Offer in a 

subsequent Submission Period. 

(vii) Archive. Auditor shall maintain 

on the Website an archive of prior Offer 

Rankings as posted over the course of 

the Selection Process, which shall be 

available for Subsector Member review. 

(7) Closing. The Selection Process will 

close when two-thirds (2⁄3) or more of 

the Nonoffering Subsector Members of 

the Longline Subsector, as determined 

by the Auditor, affirmatively vote to 


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accept the Selected Offerors selected 

during the prior Ranking Period as part 

of the Reduction Plan to be submitted to 

the Secretary. 

(i) Call for Vote. A Closing Vote will 

be held when: at least two-thirds (2⁄3) of 

the Nonoffering Subsector Members 

submit Ranking Forms electing to accept 

the Selected Offerors and close the 

Selection Process in lieu of Ranking the 

current Offers; and there are no 

unresolved Protests or Arbitrations. The 

Auditor shall notify all Subsector 

Members by e-mail or mail and posting 

a notice on the Website as soon as 

practicable that a Closing Vote is to be 

held. Such notice shall state the starting 

and ending dates and times of the voting 

period, which shall be not less than 

three (3) nor more than seven (7) 

calendar days from the date of such 

notice. A voting period shall commence 

at 9 a.m. (Pacific time) on Monday and 

end at 5 p.m. on the Friday of that week. 

(ii) Voting. No less than three (3) 

calendar days prior to the voting period, 

the Auditor will post a Closing Ballot on 

the Website in ‘‘pdf’’ file format. Each 

eligible Nonoffering Subsector Member 

wishing to vote shall print out the 

Closing Ballot, and, with respect to each 

of the currently Selected Offers on the 

Closing Ballot, vote either in favor of or 

opposed to accepting that Selected Offer 

and submit a completed and signed 

Closing Ballot to the Auditor preferably 

by facsimile prior to the end of the 

Voting Period. 

(iii) Ballot verification. The Auditor 

shall examine each submitted Closing 

Ballot for completeness and authorized 

signature. Any incomplete Closing 

Ballot shall be void, and shall not be 

included in the voting results. The 

Auditor shall not notify the Subsector 

Member of an invalid Closing Ballot. 

(iv) Voting results. The Auditor shall 

post the results of the Vote as soon as 

practicable after voting closes. Each 

Offer on the Closing Ballot that receives 

votes approving acceptance of such 

Offer from two-thirds (2⁄3) or more of the 

total number of Nonoffering Subsector 

Members shall be a Selected Offeror and 

shall be the basis for the Reduction Plan 

submitted to NMFS. Any Offer on the 

Closing Ballot that does not receive such 

two-thirds (2⁄3) approval shall be 

rejected and shall not be included 

among the Offers included among the 

Reduction Plan submitted to NMFS. 

(v) Notification to NMFS. Upon 

closing of the Selection Process, FLCC 

shall notify NMFS in writing of the 

identities of the Selected Offerors and 

provide to NMFS a completed and fully 

executed original Reduction Agreement 

from each of the Selected Offerors and 

a certified copy of the fully executed 

Reduction Agreement and Reduction 

Contract. 

(e) Submission of Reduction Plan, 

including repayment. Upon completion 

of the offering process, the FLCC on 

behalf of the Subsector Members shall 

submit to NMFS the Reduction Plan 

which shall include the provisions set 

forth in this paragraph (e). 

(1) Capacity reduction. The Reduction 

Plan shall identify as the proposed 

capacity reduction, without auction 

process, the LLP Licenses as well as the 

vessels and the catch histories related to 

the LLP Licenses, linked crab LLP 

Licenses, and any other fishing rights or 

other interests associated with the LLP 

Licenses and vessels included in the 

Selected Offers. The aggregate of all 

Reduction Agreements and Reduction 

Contracts signed by Subsector Members 

whose offers to participate in this 

buyback were accepted by votes of the 

Subsector Members, will together with 

the FLCC’s supporting documents and 

rationale for recognizing that these 

offers represent the expenditure of the 

least money for the greatest capacity 

reduction, constitute the Reduction Plan 

to be submitted to NMFS for approval 

on behalf of the Secretary of Commerce. 

(2) Loan repayment—(i) Term. As 

authorized by Section 219(B)(2) of the 

Act, the capacity reduction loan (the 

‘‘Reduction Loan’’) shall be amortized 

over a thirty (30) year term. The 

Reduction Loan’s original principal 

amount may not exceed thirty-six 

million dollars ($36,000,000), but may 

be less if the reduction cost is less. 

Subsector Members acknowledge that in 

the event payments made under the 

Reduction Plan are insufficient to repay 

the actual loan, the term of repayment 

shall be extended by NMFS until the 

loan is paid in full. 

(ii) Interest. The Reduction Loan’s 

interest rate will be the U.S. Treasury’s 

cost of borrowing equivalent maturity 

funds plus 2 percent. NMFS will 

determine the Reduction Loan’s initial 

interest rate when NMFS borrows from 

the U.S. Treasury the funds with which 

to disburse reduction payments. The 

initial interest rate will change to a final 

interest rate at the end of the Federal 

fiscal year in which NMFS borrows the 

funds from the U.S. Treasury. The final 

interest rate will be 2 percent plus a 

weighted average, throughout that fiscal 

year, of the U.S. Treasury’s cost of 

borrowing equivalent maturity funds. 

The final interest rate will be fixed, and 

will not vary over the remainder of the 

reduction loan’s 30-year term. The 

Reduction loan will be subject to a level 

debt amortization. There is no 

prepayment penalty. 

(iii) Fees. The Reduction Loan shall 

be repaid by fees collected from the 

Longline Subsector. The fee amount will 

be based upon: The principal and 

interest due over the next twelve 

months divided by the product of the 

Hook & Line, Catcher Processor 

(Longline Subsector; sometimes referred 

to as the ‘‘H&LCP Subsector’’) portion of 

the BSAI Pacific cod ITAC (in metric 

tons) set by the North Pacific Fishery 

Management Council (NPFMC) in 

December of each year multiplied by 

2,205 (i.e., the number of pounds in a 

metric ton). In the event that the 

Longline Subsector portion for the 

ensuing year is not available, the 

Longline Subsector portion forecast 

from the preceding year will be used to 

calculate the fee. 

(A) The fee will be expressed in cents 

per pound rounded up to the next onetenth of a cent. For example: If the 

principal and interest due equal 

$2,900,000 and the Longline Subsector 

portion equals 100,000 metric tons, then 

the fee per round weight pound of 

Pacific cod will equal 1.4 cents per 

pound. [2,900,000 /(100,000 × 2,205) = 

.01315]. The fee will be accessed and 

collected on Pacific cod to the extent 

possible and if not, will be accessed and 

collected as provided for in this 

paragraph (e). 

(B) Fees must be accessed and 

collected on Pacific cod used for bait or 

discarded. Although the fee could be up 

to 5 percent of the ex-vessel production 

value of all post-reduction Longline 

Subsector landings, the fee will be less 

than 5 percent if NMFS projects that a 

lesser rate can amortize the fishery’s 

reduction loan over the reduction loan’s 

30-year term. In the event that the total 

principal and interest due exceeds 5 

percent of the ex-vessel Pacific cod 

revenues, a penny per pound round 

weight fee will be calculated based on 

the latest available revenue records and 

NMFS conversion factors for pollock, 

arrowtooth flounder, Greenland turbot, 

skate, yellowfin sole and rock sole. 

(C) The additional fee will be limited 

to the amount necessary to amortize the 

remaining twelve months principal and 

interest in addition to the 5 percent fee 

accessed against Pacific cod. The 

additional fee will be a minimum of one 

cent per pound. In the event that 

collections exceed the total principal 

and interest needed to amortize the 

payment due, the principal balance of 

the loan will be reduced. To verify that 

the fees collected do not exceed 5 

percent of the fishery revenues, the 

annual total of principal and interest 

due will be compared to the latest 

available annual Longline Subsector 

revenues to ensure it is equal to or less 


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than 5 percent of the total ex-vessel 

production revenues. In the event that 

any of the components necessary to 

calculate the next year’s fee are not 

available, or for any other reason NMFS 

believes the calculation must be 

postponed, the fee will remain at the 

previous year’s amount until such a 

time that new calculations are made and 

communicated to the post reduction 

fishery participants. 

(D) It is possible that the fishery may 

not open during some years and no 

Longline Subsector portion of the ITAC 

is granted. Consequently, the fishery 

will not produce fee revenue with 

which to service the reduction loan 

during those years. However, interest 

will continue to accrue on the principal 

balance. When this happens, if the fee 

rate is not already at the maximum 5 

percent, NMFS will increase the 

fisheries’ fee rate to the maximum 5 

percent of the revenues for Pacific cod 

and the species mentioned in paragraph 

(e)(2)(iii)(B), apply all subsequent fee 

revenue first to the payment of accrued 

interest, and continue the maximum fee 

rates until all principal and interest 

payments become current. Once all 

principal and interest payments are 

current, NMFS will make a 

determination about adjusting the fee 

rate. 

(iv) Reduction loan. NMFS has 

promulgated framework regulations 

generally applicable to all fishing 

capacity reduction programs (§ 600.1000 

et seq.). The reduction loan shall be 

subject to the provisions of § 600.1012, 

except that: the borrower’s obligation to 

repay the reduction loan shall be 

discharged by the owner of the Longline 

Subsector license regardless of which 

vessel catches fish under this license 

and regardless of who processes the fish 

in the reduction fishery in accordance 

with § 600.1013. Longline Subsector 

license owners in the reduction fishery 

shall be obligated to collect the fee in 

accordance with § 600.1013. 

(v) Collection. The LLP License holder 

of the vessel harvesting in the postcapacity reduction plan Longline 

Subsector shall be responsible for selfcollecting the repayment fees owed by 

that LLP License holder. Fees shall be 

submitted to NMFS monthly and shall 

be due no later than fifteen (15) calendar 

days following the end of each calendar 

month. 

(vi) Record keeping and Reporting. 

The holder of the LLP License on which 

a vessel harvesting in the post-capacity 

reduction plan Longline Subsector is 

designated shall be responsible for 

compliance with the applicable record 

keeping and reporting requirements. 

(3) Agreement with Secretary. Each 

Selected Offeror, and vessel owner if not 

the Subsector Member, that has 

submitted a Selected Offer shall 

complete and deliver to the FLCC for 

inclusion in the Reduction Plan 

submitted to NMFS, designee for the 

Secretary, a completed and fully 

executed Reduction Contract. Any and 

all LLP License(s) and or vessels set 

forth on a Selected Offer shall be 

included as Reduction Fishing Interests 

in such Reduction Contract. 

(f) Decisions of the Auditor and the 

FLCC. Time is of the essence in 

developing and implementing a 

Reduction Plan and, accordingly, the 

Offerors shall be limited to, and bound 

by, the decisions of the Auditor and the 

FLCC. 

(1) The Auditor’s examination of 

submitted applications, Offers, 

Prequalification Offers and Rankings 

shall be solely ministerial in nature. 

That is, the Auditor will verify whether 

the documents submitted by Subsector 

Members are, on their face, consistent 

with each other and the Database, in 

compliance with the requirements set 

forth in the Reduction Agreement, and, 

signed by an Authorized Party. The 

Auditor may presume the validity of all 

signatures on documents submitted. The 

Auditor shall not make substantive 

decisions as to compliance (e.g., 

whether an interim LLP License satisfies 

the requirements of the Act, or whether 

a discrepancy in the name appearing on 

LLP Licenses and other documents is 

material). 

(2) [Reserved] 

(g) Enforcement/specific performance. 

The parties to the Reduction Agreement 

have agreed that the opportunity to 

develop and submit a capacity 

reduction program for the Longline 

Subsector under the terms of the Act is 

both unique and finite and that failure 

of a Selected Offeror, and vessel owner, 

if not a Subsector Member, to perform 

the obligations provided by the 

Reduction Agreement will result in 

irreparable damage to the FLCC, the 

Subsector Members and other Selected 

Offerors. Accordingly, the parties to the 

Reduction Agreement expressly 

acknowledge that money damages are 

an inadequate means of redress and 

agree that upon the failure of the 

Selected Offeror, and vessel owner if not 

a Subsector Member, to fulfill its 

obligations under the Reduction 

Agreement that specific performance of 

those obligations may be obtained by 

suit in equity brought by the FLCC in 

any court of competent jurisdiction 

without obligation to arbitrate such 

action. 

(h) Miscellaneous—(1) Time/ 

Holidays. All times related to the 

Selection Process shall be the time kept 

in the Pacific time zone as calculated by 

the National Institute of Standards and 

Technology. In the event that any date 

occurring within the Selection Process 

is a Federal holiday, the date shall roll 

over to the next occurring business day. 

(2) Termination. The Reduction 

Agreement shall automatically 

terminate if no vote of acceptance is 

completed by December 31, 2007. The 

Reduction Agreement may be 

terminated at any time prior to approval 

of the Reduction Plan by NMFS, on 

behalf of the Secretary, by written notice 

from 50 percent of Subsector Members. 

(3) Choice of law/venue. The 

Reduction Agreement shall be construed 

and enforced in accordance with the 

laws of the State of Washington without 

regard to its choice of law provisions. 

The parties submit to the exclusive 

personal jurisdiction of the United 

States District Court located in Seattle, 

Washington, with respect to any 

litigation arising out of or relating to the 

Reduction Agreement or out of the 

performance of services hereunder. 

(4) Incorporation. All executed 

counterparts of the Reduction 

Agreement, Application Forms and 

Offers constitute the agreement between 

the parties with respect to the subject 

matter of the Reduction Agreement and 

are incorporated into the Reduction 

Agreement as if fully written. 

(5) Counterparts. The Reduction 

Agreement may be executed in multiple 

counterparts and will be effective as to 

signatories on the Effective Date. The 

Reduction Agreement may be executed 

in duplicate originals, each of which 

shall be deemed to be an original 

instrument. All such counterparts and 

duplicate originals together shall 

constitute the same agreement, whether 

or not all parties execute each 

counterpart. 

(i) The facsimile signature of any 

party to the Reduction Agreement shall 

constitute the duly authorized, 

irrevocable execution and delivery of 

the Reduction Agreement as fully as if 

the Reduction Agreement contained the 

original ink signatures of the party or 

parties supplying a facsimile signature. 

(ii) [Reserved] 

(i) Amendment. Subsector Member 

acknowledges that the Reduction 

Agreement, the Reduction Contract, and 

the Reduction Plan may be subject to 

amendment to conform to the 

requirements for approval of the 

Reduction Plan by NMFS on behalf of 

the Secretary. The Auditor shall 

distribute to each Subsector Member in 

electronic format the amended form of 


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the Reduction Agreement, the 

Reduction Contract, and the Reduction 

Plan, which amended documents in the 

form distributed by the Auditor and 

identified by the Auditor by date and 

version, the version of each such 

document then in effect at the time of 

any dispute arising or action taken shall 

be deemed binding upon the parties 

with respect to such dispute and/or 

action. 

(j) Warranties. Subsector Member 

must expressly warrant and represent in 

the Reduction Agreement that: 

(1) Subsector Member has had an 

opportunity to consult with Subsector 

Member’s attorney or other advisors of 

Subsector Member with respect to the 

Reduction Agreement, the Reduction 

Contract, and the Act and the 

ramifications of the ratification of the 

Reduction Plan contemplated therein; 

(2) Subsector Member has full 

understanding and appreciation of the 

ramifications of executing and 

delivering the Reduction Agreement 

and, free from coercion of any kind by 

the FLCC or any of its members, officers, 

agents and/or employees, executes and 

delivers the Reduction Agreement as the 

free and voluntary act of Subsector 

Member; 

(3) The execution and delivery of the 

Reduction Agreement, does not and will 

not conflict with any provisions of the 

governing documents of Subsector 

Member; 

(4) The person executing the 

Reduction Agreement has been duly 

authorized by Subsector Member to 

execute and deliver the Reduction 

Agreement and to undertake and 

perform the actions contemplated 

herein; and 

(5) Subsector Member has taken all 

actions necessary for the Reduction 

Agreement to constitute the valid and 

binding obligation of Subsector 

Member, enforceable in accordance with 

its terms. 

(k) Approval of the Reduction Plan. 

Acceptance of the Offers are at the sole 

discretion of NMFS on behalf of the 

Secretary of Commerce. To be approved 

by NMFS, on behalf of the Secretary, 

any Reduction Plan developed and 

submitted in accordance with this 

section and Subpart M to this part must 

be found by the Assistant Administrator 

of NMFS, to: 

(1) Be consistent with the 

requirements of Section 219(e) of the FY 

2005 Appropriations Act (Public Law 

108–447); 

(2) Be consistent with the 

requirements of Section 312(b) of the 

Magnuson-Stevens Fishery 

Conservation and Management Act (16 

U.S.C. 1861(a)) except for the 

requirement that a Council or Governor 

of a State request such a program (as set 

out in section 312(b)(1)) and for the 

requirements of section 312(b)(4); 

(3) Contain provisions for a fee system 

that provides for full and timely 

repayment of the capacity reduction 

loan by the Longline Subsector and that 

it provide for the assessment of such 

fees; 

(4) Not require a bidding or auction 

process; 

(5) Result in the maximum sustained 

reduction in fishing capacity at the least 

cost and in the minimum amount of 

time; and 

(6) Permit vessels in the Longline 

Subsector to be upgraded to achieve 

efficiencies in fishing operations 

provided that such upgrades do not 

result in the vessel exceeding the 

applicable length, tonnage, or 

horsepower limitations set out in 

Federal law or regulation. 

(l) Referenda. The provisions of 

§ 600.1010 (including §§ 600.1004(a), 

600.1008, 600.1009, 600.1013, 600.1014, 

and 600.1017(a)(5), (6) and (7)) shall 

apply to the Reduction Plan of this 

section to the extent that they do not 

conflict with this section or with 

subpart M of this part. 

Appendix to § 600.1105—Fishing 

Capacity Reduction Contract: Bering 

Sea and Aleutian Islands Longline 

Catcher Processor Subsector 

Fishing Capacity Reduction Contract: Bering 

Sea and Aleutian Islands Longline Catcher 

Processor Subsector 

This agreement, (the ‘‘Reduction Contract’’) 

is entered into by and between the party or 

parties named in section 46 of this contract 

entitled, ‘‘Fishing Capacity Reduction Offer 

Submission Form and Reduction Fishing 

Interests Identification,’’ as the qualifying 

Offeror and as the co-Offeror (if there is a coOfferor) (collectively the ‘‘Offeror’’) and the 

United States of America, acting by and 

through the Secretary of Commerce, National 

Oceanic and Atmospheric Administration, 

National Marine Fisheries Service, Financial 

Services Division (‘‘NMFS’’). The Reduction 

Contract is effective when NMFS signs the 

Reduction Contract and, thereby, accepts the 

Offeror’s offer, subject to the condition 

subsequent of NMFS’ formal notification of a 

successful referendum. 

Witnesseth 

Whereas, Section 219, Title II, Division B 

of the Consolidated Appropriations Act, 

2005, as enacted on December 8, 2004, (the 

‘‘Act’’) authorizes a fishing capacity 

reduction program implementing capacity 

reduction plans submitted to NMFS by 

catcher processor subsectors of the Bering 

Sea and Aleutian Islands (‘‘BSAI’’) nonpollock groundfish fishery as set forth in the 

Act; 

Whereas, the longline catcher processor 

subsector (the ‘‘Longline Subsector’’) is 

among the catcher processor subsectors 

eligible to submit to NMFS a capacity 

reduction plan under the terms of the Act; 

Whereas, the Freezer Longline 

Conservation Cooperative (the ‘‘FLCC’’) has 

developed and is submitting to NMFS 

concurrently with this Reduction Contract a 

capacity reduction plan for the Longline 

Subsector (the ‘‘Reduction Plan’’); 

Whereas, the selection process will be 

pursuant to the fishing capacity Reduction 

Contract and the Reduction Plan; 

Whereas, the term ‘‘Reduction Fishery’’ is 

defined by the Reduction Plan as the longline 

catcher processor subsector of the BSAI nonpollock groundfish fishery; 

Whereas, the Reduction Plan’s express 

objective is to permanently reduce harvesting 

capacity in the Reduction Fishery; Whereas, 

NMFS implements the Reduction Plan 

pursuant to Section 219 of the Act as well as 

the Magnuson-Stevens Fishery Conservation 

and Management Act (16 U.S.C. 1861a(b)–

(e))(as excepted by the Act, including inter 

alia, any requirement that the Reduction Plan 

include a bidding or auction process) and 

other applicable law; 

Whereas, NMFS has promulgated 

framework regulations generally applicable 

to all fishing capacity reduction programs, 

portions of which are applicable to the 

Reduction Plan, (50 CFR 600.1000 et seq.); 

Whereas, NMFS can implement the 

Reduction Plan only after giving notice to all 

members of the Longline Subsector of the 

Reduction Plan pursuant to Section 219(3)(b) 

of the Act and approval of the Reduction 

Plan by referendum of the Longline 

Subsector; and 

Whereas, this Reduction Contract is 

submitted by Offeror and the FLCC as an 

integral element of the Reduction Plan and is 

expressly subject to the terms and conditions 

set forth herein, the framework regulations, 

the final rule (as used in this contract ‘‘final 

rule’’ means the final rule promulgated by 

NMFS which sets forth the regulations 

implementing the Reduction Plan for the 

Longline Subsector) and applicable law. 

Now therefore, for good and valuable 

consideration and the premises and 

covenants hereinafter set forth the receipt 

and sufficiency of which the parties to the 

Reduction Contract hereby acknowledge, and 

intending to be legally bound hereby, the 

parties hereto agree as follows: 

1. Incorporation of Recitals. The foregoing 

recitals are true and correct and are expressly 

incorporated herein by this reference. 

2. Further Incorporation. The Act, 

framework regulations, final rule and any 

other rule promulgated pursuant to the Act 

are expressly incorporated herein by this 

reference. In the event of conflicting 

language, the framework regulations, the 

final rule and any other rule promulgated 

pursuant to the Act, take precedence over the 

Reduction Contract. 

3. Contract Form. By completing and 

submitting the Reduction Contract to NMFS 

the Offeror hereby irrevocably offers to 

relinquish its Reduction Fishing Interests. If 

NMFS discovers any deficiencies in the 

Offeror’s submission to NMFS, NMFS may, at 

its sole discretion, contact the Offeror in an 

attempt to correct such offer deficiency. 


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‘‘Reduction Fishing Interests’’ means all of 

Offeror(s) rights, title and interest to the 

Groundfish Reduction Permit, Reduction 

Permit(s), Reduction Fishing Privilege and 

Reduction Fishing History as defined in this 

Reduction Contract. 

4. Groundfish Reduction Permit. Offeror 

expressly acknowledges that it hereby offers 

to permanently surrender, relinquish, and 

have NMFS permanently revoke the valid 

non-interim Federal License Limitation 

Program groundfish license issued pursuant 

to 50 CFR 679.4(k) (or successor regulation) 

endorsed for Bering Sea or Aleutian Islands 

catcher processor fishing activity, C/P, 

Pacific cod, and hook and line gear identified 

in section 46 of this contract as well as any 

present or future claims of eligibility for any 

fishery privilege based upon such permit, 

including any Latent License and any offered 

and accepted interim permit that Offeror 

causes to become a non-interim permit, (the 

‘‘Groundfish Reduction Permit’’). 

5. Reduction Permit(s). Offeror hereby 

acknowledges that it offers to permanently 

surrender, relinquish, and have NMFS 

permanently revoke any and all Federal 

fishery licenses, fishery permits, and area 

and species endorsements issued for any 

vessel named on the Groundfish Reduction 

Permit as well as any present or future claims 

of eligibility for any fishery privilege based 

upon such permit, including any Latent 

License, (the ‘‘Reduction Permits’’). 

6. Reduction Privilege Vessel. The 

Reduction Privilege Vessel is the vessel listed 

on the Offeror’s License Limitation Program 

license. 

7. Reduction Fishing Privilege. If a vessel 

is specified in section 46 of this contract (the 

‘‘Reduction Privilege Vessel’’), Offeror hereby 

acknowledges that Offeror offers to 

relinquish and surrender the Reduction 

Privilege Vessel’s fishing privilege and 

consents to the imposition of Federal vessel 

documentation restrictions that have the 

effect of permanently revoking the Reduction 

Privilege Vessel’s legal ability to fish 

anywhere in the world as well as its legal 

ability to operate under foreign registry or 

control—including the Reduction Privilege 

Vessel’s: fisheries trade endorsement under 

the Commercial Fishing Industry Vessel 

Anti-Reflagging Act (46 U.S.C. 12108); 

eligibility for the approval required under 

section 9(c)(2) of the Shipping Act, 1916 (46 

U.S.C. App. 808(c)(2)), for the placement of 

a vessel under foreign flag or registry, as well 

as its operation under the authority of a 

foreign country; and the privilege otherwise 

to ever fish again anywhere in the world (the 

‘‘Reduction Fishing Privilege’’). Offeror 

agrees to instruct the United States Coast 

Guard’s Vessel Documentation Center to 

remove the fishery endorsement from the 

Reduction Privilege Vessel. If the Reduction 

Privilege Vessel is not a federally 

documented vessel, the Offeror offers to 

promptly scrap the vessel and allow NMFS 

whatever access to the scrapping NMFS 

deems reasonably necessary to document and 

confirm the scrapping. 

8. Reduction Fishing History. Offeror 

surrenders, relinquishes, and consents to 

NMFS’ permanent revocation of the 

following Reduction Fishing History (the 

‘‘Reduction Fishing History’’): 

a. The Reduction Privilege Vessel’s full and 

complete documented harvest of groundfish; 

b. For any documented harvest of the 

Reduction Privilege Vessel whatsoever, 

including that specified in section 8 of this 

contract, any right or privilege to make any 

claim in any way related to any fishery 

privilege derived in whole or in part from 

any such other and documented harvest 

which could ever qualify any party for any 

future limited access system fishing license, 

permit, and other harvest authorization of 

any kind; including without limitation crab 

LLP licenses linked to License Limitation 

Program (‘‘LLP’’) licenses, state fishing rights 

appurtenant to Reduction Fishing Vessels, 

and all fishing history associated therewith, 

but without prejudice to any party who 

before submission of this offer may have for 

value independently acquired the fishing 

history involving any such documented 

harvest; 

c. Any documented harvest on any other 

vessel (Reduction Fishing Vessel) that gave 

rise to the Groundfish Reduction Permit; and 

d. All fishing history associated with the 

latent LLP license identified on the Selected 

Offer and any fishing history associated with 

the fishing vessel that gave rise to the latent 

LLP license that remains in the Offeror’s 

possession as of August 11, 2006 (i.e., date 

of publication of the proposed rule in the 

Federal Register). 

9. Halibut, Sablefish and Crab IFQs 

Excluded. Notwithstanding any other 

provision of this Reduction Contract, no 

right, title and/or interest to harvest, process 

or otherwise utilize individual fishing quota 

(‘‘IFQ’’) quota share in the halibut, sablefish 

and crab fisheries pursuant to 50 CFR parts 

679 and 680, nor crab LLP license history to 

the extent necessary for the issuance of crab 

IFQ pursuant to 50 CFR part 680 as in effect 

as of the date of this Contract, shall be 

included among Offeror’s Reduction Fishing 

Interests. 

10. Representations and Warranties. 

Offeror represents and warrants that, as of the 

date of submission of this Reduction 

Contract, Offeror is: 

a. The holder of record, according to 

NMFS’ official fishing license records, at the 

time of offer, of the Groundfish Reduction 

Permit and the Reduction Permit(s). 

b. The Reduction Privilege Vessel’s owner 

of record, according to the National Vessel 

Documentation Center’s official vessel 

documentation records, at the time of offer, 

and that the Reduction Privilege Vessel is 

neither lost nor destroyed at the time of offer. 

c. In retention of and fully and legally 

entitled to offer and dispose of hereunder, 

full and complete rights to the Reduction 

Privilege Vessel’s full and complete 

Reduction Fishing History necessary to fully 

and completely comply with the 

requirements of section 8 of this contract. 

11. Offer Amount. NMFS’ payment to 

Offeror in the exact amount of the amount set 

forth by Offeror in section 46 of this contract 

is full and complete consideration for the 

Offeror’s offer. 

12. Additional Offer Elements. Offeror 

shall include with its offer an exact 

photocopy of the Reduction Privilege 

Vessel’s official vessel documentation or 

registration (i.e., the certificate of 

documentation the U.S. Coast Guard’s 

National Vessel Documentation Center issued 

for federally documented vessels or the 

registration a State issues for State registered 

vessels) and an exact photocopy of the 

Groundfish Reduction Permit and all 

Reduction Permit(s). The Offeror shall also 

include with the offer all other information 

required in this Reduction Contract and 

otherwise comply with Reduction Contract 

requirements. 

13. Use of Official Fishing License or 

Permit Databases. Offeror expressly 

acknowledges that NMFS shall use the 

appropriate official governmental fishing 

license or permit database to: 

Determine the Offeror’s address of record; 

verify the Offeror’s qualification to offer; 

determine the holder of record of the 

Groundfish Reduction Permit and Reduction 

Permit(s); and verify the Offeror’s inclusion 

in the offer of all permits and licenses 

required to be offered in the Offer. 

14. Use of National Vessel Documentation 

Center Database. Offeror expressly 

acknowledges that NMFS shall use the 

records of the National Vessel 

Documentation Center to determine the 

owner of record for a federally documented 

Reduction Privilege Vessel and the 

appropriate State records to determine the 

owner of record of a non-federally 

documented Reduction Privilege Vessel. 

15. Offeror to Ensure Accurate Records. 

Offeror shall, to the best of its ability, ensure 

that the records of the databases relevant to 

sections 13 and 14 of this contract are true, 

accurate, and complete. 

16. Submissions are Irrevocable. The 

parties hereto expressly acknowledge as the 

essence hereof that the Offeror voluntarily 

submits to NMFS this firm and irrevocable 

offer. The Offeror expressly acknowledges 

that it hereby waives any privilege or right 

to withdraw, change, modify, alter, rescind, 

or cancel any portion of the Reduction 

Contract and that the receipt date and time 

which NMFS marks on the Reduction 

Contract constitutes the date and time of the 

offer’s submission. 

17. Offer Rejection. NMFS shall reject an 

offer that NMFS deems is in any way 

unresponsive or not in conformance with the 

Reduction Contract, and the applicable law 

or regulations unless the Offeror corrects the 

defect and NMFS, in its sole discretion, 

accepts the correction. 

18. Notarized Offeror Signature(s) 

Required. NMFS shall deem as nonresponsive and reject an offer whose Offer 

Submission Form does not contain the 

notarized signatures of all persons required 

to sign the form on behalf of the Offeror. 

19. Offer Rejections Constitute Final 

Agency Action. NMFS’s offer rejections are 

conclusive and constitute final agency action 

as of the rejection date. 

20. Effect of Offer Submission. Submitting 

an irrevocable offer conforming to the 

requirements stated herein entitles the 

Offeror to have NMFS accept the offer if 

NMFS, in its sole discretion, deems that the 

offer is fully responsive and complies with 

the Act, the final rule and any other rule 

promulgated pursuant to the Act. 


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21. Offeror Retains Use. After submitting 

an offer, the Offeror shall continue to hold, 

own, or retain unimpaired every aspect of 

any and all LLP License(s) and or vessels set 

forth on an Offer included as Reduction 

Fishing Interests, until such time as: NMFS 

notifies the Offeror that the Reduction Plan 

is not in compliance with the Act or other 

applicable law and will not be approved by 

NMFS; notifies the Offeror that the 

referendum was unsuccessful; NMFS tenders 

the reduction payment and the Offeror 

complies with its obligations under the 

Reduction Contract; or NMFS otherwise 

excuses the Offeror’s performance. 

22. Acceptance by Referendum. NMFS 

shall formally notify the Offeror in writing 

whether the referendum is successful, which 

written notice shall inform Offeror that the 

condition subsequent has been satisfied. 

Therefore, Offeror expressly acknowledges 

that all parties must perform under the 

Reduction Contract and the Reduction 

Contract is enforceable against, and binding 

on, the Reduction Contract parties in 

accordance with the terms and conditions 

herein. 

23. Reduction Contract Subject to Federal 

Law. The Reduction Contract is subject to 

Federal law. 

24. Notice to Creditors. Upon NMFS’ offer 

acceptance notice to the Offeror, Offeror 

agrees to notify all parties with secured 

interests in the Reduction Fishing Interests 

that the Offeror has entered into the 

Reduction Contract. 

25. Referendum. Offeror acknowledges that 

the outcome of the referendum of the 

Reduction Plan is an occurrence over which 

NMFS has no control. 

26. Unsuccessful Referendum Excuses 

Performance. An unsuccessful referendum 

excuses all parties hereto from every 

obligation to perform under the Reduction 

Contract. In such event, NMFS need not 

tender reduction payment and the Offeror 

need not surrender and relinquish or allow 

the revocation or restriction of any element 

of the Reduction Fishing Interest specified in 

the Reduction Contract. An unsuccessful 

referendum shall cause the Reduction 

Contract to have no further force or effect. 

27. Offeror Responsibilities upon 

Successful Referendum. Upon NMFS’ formal 

notification to the Offeror that the 

referendum was successful and that NMFS 

had accepted the Reduction Contract, Offeror 

shall immediately become ready to surrender 

and relinquish and allow the revocation or 

restriction of (as NMFS deems appropriate) 

the Reduction Fishing Interests. 

28. Written Payment Instructions. After a 

successful referendum, NMFS shall tender 

reduction payment by requesting the Offeror 

to provide to NMFS, and the Offeror shall 

subsequently so provide, written payment 

instructions for NMFS’ disbursement of the 

reduction payment to the Offeror or to the 

Offeror’s order. 

29. Request for Written Payment 

Instructions Constitutes Tender. NMFS’

request to the Offeror for written payment 

instructions constitutes reduction payment 

tender, as specified in 50 CFR 600.1011. 

30. Offeror Responsibilities upon Tender. 

Upon NMFS’ reduction payment tender to 

the Offeror, the Offeror shall immediately 

surrender and relinquish and allow the 

revocation or restriction of (as NMFS deems 

appropriate) the Reduction Fishing Interests. 

The Offeror must then return the original of 

its Groundfish Reduction Permit and 

Reduction Permit(s) to NMFS. Concurrently 

with NMFS’ reduction payment tender, the 

Offeror shall forever cease all fishing for any 

species with the Reduction Privilege Vessel 

and immediately retrieve all fishing gear, 

irrespective of ownership, previously 

deployed from the Reduction Privilege 

Vessel. Offeror agrees to authorize the United 

States Coast Guard to cancel the fishery 

endorsement in the Reduction Privilege 

Vessel. 

31. Reduction Privilege Vessel Lacking 

Federal Documentation. Upon NMFS’

reduction payment tender to the Offeror, the 

Offeror shall immediately scrap any vessel 

which the Offeror specified as a Reduction 

Privilege Vessel and which is documented 

solely under state law or otherwise lacks 

documentation under Federal law. The 

Offeror shall scrap such vessel at the 

Offeror’s expense. The Offeror shall allow 

NMFS, its agents, or its appointees 

reasonable opportunity to observe and 

confirm such scrapping. The Offeror shall 

conclude such scrapping within a reasonable 

time. 

32. Future Harvest Privilege and Reduction 

Fishing History Extinguished. Upon NMFS’

reduction payment tender to the Offeror, the 

Offeror shall surrender and relinquish and 

consent to the revocation, restriction, 

withdrawal, invalidation, or extinguishment 

by other means (as NMFS deems 

appropriate), of any claim in any way related 

to any fishing privilege derived, in whole or 

in part, from the use or holdership of the 

Groundfish Reduction Permits and the 

Reduction Permit(s), from the use or 

ownership of the Reduction Privilege Vessel 

(subject to and in accordance with the 

provisions of section 8 of this contract), and 

from any documented harvest fishing history 

arising under or associated with the same 

which could ever qualify the Offeror for any 

future limited access fishing license, fishing 

permit, and other harvest authorization of 

any kind. 

33. Post Tender Use of Federally 

Documented Reduction Privilege Vessel. 

After NMFS’ reduction payment tender to the 

Offeror, the Offeror may continue to use a 

federally documented Reduction Privilege 

Vessel for any lawful purpose except 

‘‘fishing’’ as defined under the MagnusonStevens Act and may transfer—subject to all 

restrictions in the Reduction Contract, other 

applicable regulations, and the applicable 

law—the vessel to a new owner. The Offeror 

or any subsequent owner shall only operate 

the Reduction Privilege Vessel under the 

United States flag and shall not operate such 

vessel under the authority of a foreign 

country. In the event the Offeror fails to abide 

by such restrictions, the Offeror expressly 

acknowledges and hereby agrees to allow 

NMFS to pursue any and all remedies 

available to it, including, but not limited to, 

recovering the reduction payment and 

seizing the Reduction Privilege Vessel and 

scrapping it at the Offeror’s expense. 

34. NMFS’ Actions upon Tender. 

Contemporaneously with NMFS’ reduction 

payment tender to the Offeror, and without 

regard to the Offeror’s refusal or failure to 

perform any of its Reduction Contract duties 

and obligations, NMFS shall: Permanently 

revoke the Offeror’s Groundfish Reduction 

Permit and Reduction Permit(s); notify the 

National Vessel Documentation Center to 

permanently revoke the Reduction Privilege 

Vessel’s fishery trade endorsement; notify the 

U.S. Maritime Administration to make the 

Reduction Privilege Vessel permanently 

ineligible for the approval of requests to 

place the vessel under foreign registry or 

operate the vessel under a foreign country’s 

authority; record in the appropriate NMFS 

records that the Reduction Fishing History 

represented by any documented harvest 

fishing history accrued on, under, or as a 

result of the operation of the Reduction 

Privilege Vessel and/or Reduction Fishing 

Vessel (subject to and in accordance with the 

provisions of section 8 of this contract), the 

Groundfish Reduction Permit, and the 

Reduction Permit(s) which could ever qualify 

the Offeror for any future limited access 

fishing license, fishing permit, or other 

harvesting privilege of any kind shall never 

again be available to anyone for any fisheries 

purpose; and implement any other 

restrictions the applicable law or regulations 

impose. 

35. Material Disputes to be Identified. 

Members of the public shall, up until NMFS 

receives the Offeror’s written payment 

instructions, be able to advise NMFS in 

writing of any material dispute with regard 

to any aspect of any accepted Reduction 

Contract. Such a material dispute shall 

neither relieve the Offeror of any Reduction 

Contract duties or obligations nor affect 

NMFS’ right to enforce performance of the 

Reduction Contract terms and conditions. 

36. Reduction Payment Disbursement. 

Once NMFS receives the Offeror’s written 

payment instructions and certification of 

compliance with the Reduction Contract, 

NMFS shall as soon as practicable disburse 

the reduction payment to the Offeror. 

Reduction payment disbursement shall be in 

strict accordance with the Offeror’s written 

payment instructions. Unless the Offeror’s 

written payment instructions direct NMFS to 

the contrary, NMFS shall disburse the whole 

of the reduction payment to the Offeror. If the 

qualifying Offeror offers with a co-Offeror, 

both the qualifying Offeror and the co-Offeror 

must approve and sign the written payment 

instructions. 

37. Reduction Payment Withheld for 

Scrapping or for Other Reasons. In the event 

that a Reduction Privilege Vessel which is 

not under Federal documentation must be 

scrapped, NMFS shall withhold from 

reduction payment disbursement an amount 

sufficient to scrap such vessel. NMFS shall 

withhold such sum until the vessel is 

completely scrapped before disbursing any 

amount withheld. NMFS may confirm, if 

NMFS so chooses, that the vessel has been 

scrapped before disbursing any amount 

withheld. If NMFS has reason to believe the 

Offeror has failed to comply with any of the 

Reduction Contract terms and conditions, 

NMFS shall also withhold reduction 


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payment disbursement until such time as the 

Offeror performs in accordance with the 

Reduction Contract terms and conditions. 

38. Offeror Assistance with Restriction. The 

Offeror shall, upon NMFS’ request, furnish 

such additional documents, undertakings, 

assurances, or take such other actions as may 

be reasonably required to enable NMFS’

revocation, restriction, invalidation, 

withdrawal, or extinguishment by other 

means (as NMFS deems appropriate) of all 

components of the Reduction Contract’s 

Reduction Fishing Interest in accordance 

with the requirements of the Reduction 

Contract terms and conditions, applicable 

regulations and the applicable law. 

39. Recordation of Restrictions. Upon the 

Reduction Fishing Privilege’s revocation, the 

Offeror shall do everything reasonably 

necessary to ensure that such revocation is 

recorded on the Reduction Privilege Vessel’s 

Federal documentation (which the National 

Vessel Documentation Center maintains in 

accordance with Federal maritime law and 

regulations) in such manner as is acceptable 

to NMFS and as shall prevent the Reduction 

Privilege Vessel, regardless of its subsequent 

ownership, from ever again being eligible for 

a fishery trade endorsement or ever again 

fishing. The term ‘‘fishing’’ includes the full 

range of activities defined in the MagnusonStevens Fishery Conservation and 

Management Act (16 U.S.C. 1802). 

40. Reduction Element Omission. In the 

event NMFS accepts the offer and the Offeror 

has failed, for any reason, to specify in the 

Reduction Contract any Groundfish 

Reduction Permit, non-Groundfish Reduction 

Permit(s), Reduction Privilege Vessel, 

Reduction Fishing Vessel, Reduction Fishing 

History, or any other element of the 

Reduction Fishing Interest which the Offeror 

should under Reduction Contract, applicable 

regulations and the applicable law have 

specified in Reduction Contract, such 

omitted element shall nevertheless be 

deemed to be included in the Reduction 

Contract and to be subject to the Reduction 

Contract’s terms and conditions; and all 

Reduction Contract terms and conditions 

which should have applied to such omitted 

element had it not be omitted shall apply as 

if such element had not been omitted. Upon 

the Offeror discovering any such omission, 

the Offeror shall immediately and fully 

advise NMFS of such omission. Upon either 

NMFS or the Offeror discovering any such 

omission, the Offeror shall act in accordance 

with the Reduction Contract, applicable 

regulations and the applicable law. 

41. Remedy for Breach. Because money 

damages are not a sufficient remedy for the 

Offeror breaching any one or more of the 

Reduction Contract terms and conditions, the 

Offeror explicitly agrees to and hereby 

authorizes specific performance of the 

Reduction Contract, in addition to any 

money damages, as a remedy for such breach. 

In the event of such breach, NMFS shall take 

any reasonable action, including requiring 

and enforcing specific performance of the 

Reduction Contract, NMFS deems necessary 

to carry out the Reduction Contract, 

applicable regulations and the applicable 

law. 

42. Waiver of Data Confidentiality. The 

Offeror consents to the public release of any 

information provided in connection with the 

Reduction Contract or pursuant to Reduction 

Plan requirements, including any 

information provided in the Reduction 

Contract or by any other means associated 

with, or necessary for evaluation of, the 

Offeror’s Reduction Contract if NMFS finds 

that the release of such information is 

necessary to achieve the Reduction Plan’s 

authorized purpose. The Offeror hereby 

explicitly waives any claim of confidentiality 

otherwise afforded to catch, or harvest data 

and fishing histories otherwise protected 

from release under the Magnuson-Stevens 

Fishery Conservation and Management Act 

(16 U.S.C. 1881 a(b)) or any other law. In the 

event of such information release, the Offeror 

hereby forever fully and unconditionally 

releases and holds harmless the United States 

and its officers, agents, employees, 

representatives, of and from any and all 

claims, demands, debts, damages, duties, 

causes of action, actions and suits 

whatsoever, in law or equity, on account of 

any act, failure to act or event arising from, 

out of, or in any way related to, the release 

of any information associated with the 

Reduction Program. 

43. Oral Agreement Invalid. The Reduction 

Contract, any addendums to section 46 of 

this contract, and enclosures of photocopies 

of licenses and permits required under 

section 46 of this contract, contain the final 

terms and conditions of the agreement 

between the Offeror and NMFS and represent 

the entire and exclusive agreement between 

them. NMFS and the Offeror forever waive 

all right to sue, or otherwise counterclaim 

against each other, based on any claim of 

past, present, or future oral agreement 

between them. 

44. Severable Provisions. The Reduction 

Contract provisions are severable; and, in the 

event that any portion of the Reduction 

Contract is held to be void, invalid, nonbinding, or otherwise unenforceable, the 

remaining portion thereof shall remain fully 

valid, binding, and enforceable against the 

Offeror and NMFS. 

45. Disputes. Any and all disputes 

involving the Reduction Contract, and any 

other Reduction Plan aspect affecting them 

shall in all respects be governed by the 

Federal laws of the United States; and the 

Offeror and all other parties claiming under 

the Offeror irrevocably submit themselves to 

the jurisdiction of the Federal courts of the 

United States and/or to any other Federal 

administrative body which the applicable 

law authorizes to adjudicate such disputes. 

46. Fishing Capacity Reduction Offer 

Submission Form and Reduction Fishing 

Interests Identification. 

a. Completion and Submission. The Offeror 

must fully, faithfully, and accurately 

complete this section 46 of this contract and 

thereafter submit the full and complete 

Reduction Contract to NMFS in accordance 

with the Reduction Contract. If completing 

this section requires inserting more 

information than the places provided for the 

insertion of such information allows, the 

Offeror should attach an addendum to the 

Reduction Contract that: Includes and 

identifies the additional information, states 

that the addendum is a part of the Reduction 

Fishing Interests Identification portion of the 

Reduction Contract, states (as a means of 

identifying the Reduction Contract to which 

the addendum relates) the NMFS license 

number designated on the Reduction 

Contract’s Groundfish Reduction Permit, and 

is signed by all persons who signed the 

Reduction Contract as the Offeror. 

b. Offeror Information. 

(1) Offeror name(s). Insert in the table 

provided under this section 46.b(1) of this 

contract the name(s) of the qualifying Offeror 

and of the co-Offeror (if there is a co-Offeror), 

and check the appropriate box for each name 

listed. 

Each name the Offeror inserts must be the 

full and exact legal name of record of each 

person, partnership, corporation or other 

business entity identified on the offer. If any 

Reduction Fishing Interest element is coowned by more than one person, partnership, 

corporation or other business entity, the 

Offeror must insert each co-owner’s name. 

In each case, the Offeror is the holder of 

record, at the time of Offeror’s execution of 

this Reduction Contract, of the Groundfish 

Reduction Permit and the Reduction 

Permit(s). A co-Offeror is not allowed for 

either the Groundfish Reduction Permit or 

the Reduction Permit(s). If the Offeror is also 

the owner of record, at the time of offering, 

of the Reduction Privilege Vessel, the 

qualifying Offeror is the sole Offeror. If, 

however, the owner of record, at the time of 

execution of this Reduction Contract, of the 

Reduction Privilege Vessel is not exactly the 

same as the Offeror, then the owner of record 

is the co-Offeror; and the Offeror and the coOfferor jointly offer together as the Offeror. 

OFFEROR NAME(S) 

If Offeror or co-Offeror consists of more than one owner, use one row of 

this column to name each co-Offeror. If not, use only one row for Offeror 

and one row for any co-Offeror 

Check appropriate box for each name listed in the adjacent column 

Offeror Co-Offeror 

(if any) 

(1) 

(2) 

(3) 


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OFFEROR NAME(S) 

If Offeror or co-Offeror consists of more than one owner, use one row of 

this column to name each co-Offeror. If not, use only one row for Offeror 

and one row for any co-Offeror 

Check appropriate box for each name listed in the adjacent column 

Offeror Co-Offeror 

(if any) 

(4) 

(5) 

(2) Offeror address(s) of record. Insert in 

the table provided under this section 46.b(2) 

of this contract the Offeror’s and the coOfferor’s (if there is a co-Offeror) full and exact address(s) of record, and check the 

appropriate box for each address listed. 

OFFEROR ADDRESS(S) 

If Offeror or co-Offeror consists of more than one owner, use one row of 

this column for address of each co-owner. If not, use only one row for 

Offeror and one row for any co-Offeror. 

Always use the same row order as is Offeror Name(s) table in section 

46.b(1), i.e., address (1) is for name (1), address (2) is for name (2), address (3) is for name (3), etc. 

Check appropriate box for each address listed in the adjacent column 

Offeror Co-Offeror 

(if any) 

(1) 

(2) 

(3) 

(4) 

(5) 

(3) Offeror business telephone number(s). 

Insert in the table provided under this 

section 46.b(3) the Offeror’s and the coOfferor’s (if there is a co-Offeror) full and 

exact business telephone number(s), and 

check the appropriate box for each number 

listed. 

OFFEROR BUSINESS TELEPHONE NUMBER(S) 

If Offeror or co-Offeror consists of more than one owner, use one row of 

this column for the telephone number of each co-owner. If not, use only 

one row for Offeror and one row for any co-Offeror. 

Always use the same row order as is Offeror Name(s) table in section 

46.b(1), i.e., telephone number (1) is for name (1), telephone number (2) 

is for name (2), telephone number (3) is for name (3), etc. 

Check appropriate box for each telephone number listed in the adjacent column 

Offeror Co-Offeror 

(if any) 

(1) 

(2) 

(3) 

(4) 

(5) 

(4) Offeror electronic mail address(s) (if 

available). Insert in the table printed under 

this section 46.b(4) the Offeror’s and the coOfferor’s (if there is a co-Offeror) full and exact electronic mail (e-mail) address(s), and 

check the appropriate box for each address. 

OFFEROR E-MAIL ADDRESS(S) 

If Offeror or co-Offeror consists of more than one owner, use one row of 

this column for the e-mail address of each co-owner. If not, use only one 

row for Offeror and one row for any co-Offeror. Always use the same row 

order as is Offeror Name in section 46.b(1) of this contract, i.e., e-mail 

(1) is for name (1), e-mail (2) is for name (2), e-mail (3) is for name (3), 

etc 

Check appropriate box for each e-mail address listed in the adjacent column 

Offeror Co-Offeror 

(if any) 

(1) 

(2) 

(3) 

(4) 

(5) 


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c. LLP license number for Groundfish 

Reduction Permit. Insert in the place this 

section 46.c provides the full and exact 

license number which NMFS designated on 

the LLP license which the Offeror specifies 

as the Groundfish Reduction Permit. Attach 

with the Reduction Contract an exact 

photocopy of such license. 

LLP LICENSE NUMBER(S) AND FISHERY(S) OF Of LLP LICENSE(S) SPECIFIED AS GROUNDFISH REDUCTION 

PERMIT(S) 

License 

number(s) Fishery(s) 

(1) 

(2) 

(3) 

(4) 

(5) 

d. License number(s) for Reduction 

Permit(s). Insert in the place this section 46.d 

provides the fishery(s) involved in, and the 

full and exact license number(s) with NMFS 

designated on the license(s) which the 

Offeror specifies in the Reduction Contract as 

the Reduction Permit(s). Enclose with the 

Reduction Contract an exact photocopy of 

each such license. 

LLP LICENSE NUMBER(S) AND FISHERY 

OF LICENSE(S) SPECIFIED AS REDUCTION PERMITS 

License 

number(s) Fishery(s) 

(1) 

(2) 

(3) 

(4) 

(5) 

e. Reduction Fishing History. For all 

Reduction Fishing History insert in the place 

provided in the table under this section 46.e 

the chronological and other information with 

each column heading therein requires. The 

information required does not include any 

actual landing data. Any Offeror whose 

Groundfish Reduction Permit whose issuance 

NMFS based on the fishing history of a lost 

or destroyed vessel plus a replacement vessel 

must insert information for both vessels and 

meet the requirements of the framework 

regulations, final rule and any other 

regulations promulgated pursuant to the Act. 

Any Offeror whose Groundfish Reduction 

Permit whose issuance NMFS in any part 

based on acquisition of fishing history from 

another party must insert information 

regarding such catch history. 

NAMES(S) AND OFFICIAL NUMBER OF REDUCTION PRIVILEGE VESSEL AND NAME(S) 

AND OFFICIAL NUMBER(S) OF 

ANY VESSEL FROM WHICH 

FISHING HISTORY WAS ACQUIRED 

FOR EACH REDUCTION PRIVILEGE VESSEL IN 1ST COLUMN 

PROVIDE FROM TO DATE OF 

EACH FISHING HISTORY OFFEROR POSSESSES 

FOR EACH FISHING HISTORY IN 2ND COLUMN 

License No. of each Groundfish 

Reduction Permit and Reduction 

Permit(s) associated with each 

vessel involved 

If Reduction Privilege Vessel acquired fishing history from another party, provide name of 

party, manner in which acquired, 

and date acquired 

(1) 

(2) 

(3) 

(4) 

(5) 

f. Reduction Privilege Vessel. Insert the full 

and exact name and official number which 

the National Vessel Documentation Center 

designated for the Reduction Privilege Vessel 

which the Offeror or the co-Offeror (if there 

is a co-Offeror) specifies in the Reduction 

Contract, and check the box appropriate for 

the vessel’s ownership of record. 

Enclose with the Reduction Contract an 

exact photocopy of such vessel’s official 

certificate of documentation. 

REDUCTION PRIVILEGE VESSEL Check appropriate ownership box below 

Official name Official No. Offeror Co-Offeror (if any) 

g. Offer Amount. Insert in the place this 

section 46.g provides the Offeror’s full and 

exact offer amount, both in words and in 

numbers. 

OFFER AMOUNT [U.S. DOLLARS] 

In words In numbers 

h. Reduction Contract Signature. In 

compliance with the Reduction Contract, 

applicable regulations and the applicable 

law, the Offeror submits the Reduction 

Contract as the Offeror’s irrevocable offer to 

NMFS for the permanent surrender and 

relinquishment and revocation, restriction, 

withdrawal, invalidation, or extinguishment 

by other means (as NMFS deems appropriate) 

of the Groundfish Reduction Permit, any 

Reduction Permit(s), the Reduction Fishing 

Privilege, and the Reduction Fishing 

History—all as identified in the Reduction 

Contract or as required under applicable 

regulations, or the applicable law. 

The Offeror expressly acknowledges that 

NMFS’ acceptance of the Offeror’s offer 

hereunder and NMFS’ tender, following a 

successful referendum, of a reduction 

payment in the same amount specified in 

section 46.g of this contract (less any sum 

withheld for scrapping any Reduction 

Privilege Vessel lacking Federal 

documentation or for any other purpose) to 

the Offeror shall, among other things, render 

the Reduction Privilege Vessel permanently 

ineligible or any fishing worldwide, 

including, but not limited to, fishing on the 

high seas or in the jurisdiction of any foreign 

country while operating under United States 

flag, and shall impose or create other legal 

and contractual restrictions, impediments, 

limitations, obligations, or other provisions 

which restrict, revoke, withdraw, invalidate, 

or extinguish by other means (as NMFS 

deems appropriate) the complete Reduction 

Fishing Interest and any other fishery 


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Federal Register / Vol. 71, No. 189 / Friday, September 29, 2006 / Rules and Regulations 57713 

privileges or claims associated with the 

Groundfish Reduction Permit, any Reduction 

Permit(s), the Reduction Privilege Vessel, and 

the Reduction Fishing History—all as more 

fully set forth in the Reduction Contract, 

applicable regulations, and the applicable 

law. 

By completing and signing the Reduction 

Contract, the Offeror expressly acknowledges 

that the Offeror has fully and completely read 

the entire Reduction Contract. The Offeror 

expressly states, declares, affirms, attests, 

warrants, and represents to NMFS that the 

Offeror is fully able to enter into the 

Reduction Contract and that the Offeror 

legally holds, owns, or retains, and is fully 

able under the Reduction Contract provisions 

to offer and dispose of, the full Reduction 

Fishing Interest which the Reduction 

Contract specifies and the applicable 

regulations, and the applicable law requires 

that any person or entity completing the 

Reduction Contract and/or signing the 

Reduction Contract on behalf of another 

person or entity, expressly attests, warrants, 

and represents to NMFS that such 

completing and/or signing person or entity 

has the express and written permission or 

other grant of authority to bind such other 

person or entity to the Reduction Contract’s 

terms and conditions. The Offeror expressly 

attests, warrants, and represents to NMFS 

that every co-owner of the Offeror necessary 

to constitute the Offeror’s full and complete 

execution of the Reduction Contract has 

signed the Reduction Contract. The Offeror 

expressly attests, warrants, and represents to 

NMFS that the Offeror: Fully understands the 

consequences of submitting the completed 

Reduction Contract of which it is a party to 

NMFS; pledges to abide by the terms and 

conditions of the Reduction Contract; and is 

aware of, understands, and consents to, any 

and all remedies available to NMFS for the 

Offeror’s breach of the Reduction Contract or 

submission of an offer which fails to conform 

with the Reduction Contract, final rule, 

applicable regulations and the applicable 

law. The Offeror expressly attests, warrants, 

and represents to NMFS that all information 

which the Offeror inserted in the Reduction 

Contract is true, accurate, complete, and fully 

in accordance with the Reduction Contract, 

final rule, other applicable regulations and 

the applicable law. 

In witness whereof, the Offeror has, in the 

place provided below, executed the 

Reduction Contract either as an Offeror 

offering alone or as an Offeror and co-Offeror 

(if there is a co-Offeror) jointly offering 

together, in accordance with the 

requirements specified above, and on the 

date written below. The Reduction Contract 

is effective as of the date NMFS accepts the 

Offeror’s offer by signing the Reduction 

Contract. 

The Offeror and co-Offeror (if there is a coOfferor) must each sign the Reduction 

Contract exactly as instructed herein. Each 

co-owner (if there is a co-owner) of each 

Offeror and co-Offeror (if there is a coOfferor) must also sign the Reduction 

Contract exactly as instructed herein. A 

notary public must, for each person or entity 

signing on behalf of the Offeror, complete 

and sign the acknowledgment and 

certification provision associated with each 

such person or entity’s signature. 

I. Offeror and co-Offeror’s (if there is a coOfferor) signature(s) and notary’s 

acknowledgment(s) and certification(s). 

OFFEROR’S SIGNATURE AND NOTARY’S ACKNOWLEDGMENT AND CERTIFICATION 

If Offeror or co-Offeror consists of more than one owner, use one row of column 1 for each co-owner’s signature. If not, use only one row for 

Offeror and one row for co-Offeror (if any). 

Always use same Offeror row order as in Offeror Name in the table under section 46.b(1) of this contract (i.e., signature (1) is for name (1), 

signature (2) is for name (2) signature (3) is for name (3), etc.) 

OFFEROR SIGNATURE 

(1) Sign. (2) Print: the following: 

(a) signer’s name, (b) signer’s title 

(if signing for corporation or other 

business entity), and (c) signing 

date 

Check appropriate column for each signature in 1st column 

NOTARY SIGNATURE 

(1) Sign. (2) Print: the following: 

(a) name, (b) signing date, (3) 

date commission expires, and (4) 

State and county. Each notary 

signature attests to the following: 

‘‘I certify that I know or have satisfactory evidence that the person who signed in the 1st column 

of this same row is the person 

who appeared before me and: (1) 

acknowledged his/her signature; 

(2) on oath, stated that he/she 

was authorized to sign; and (3) 

acknowledged that he/she did so 

freely and voluntarily.’’ 

Qualifying Offeror Co-Offeror (if any) 

(1) 

(2) 

(3) 

II. United States of America’s signature. 

United States of America, Acting by and 

through the Secretary of Commerce, National 

Oceanic and Atmospheric Administration, 

National Marine Fisheries Service, Financial 

Services Division. 

Dated: lllllllllllllllll

By: lllllllllllllllllll

Leo C. Erwin, Chief, 

Financial Services Division, National Marine 

Fisheries Service. 

[FR Doc. 06–8354 Filed 9–26–06; 11:08 am] 

BILLING CODE 3510–22–P 


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